UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

(Mark One)

For the quarterly period ended SeptemberJune 30, 20172018

For the transition period from                    to                    

Commission file number001-13467

HedgePath Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number (including area code):813-864-2559

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or anon-accelerated filer or a smaller reporting company. See definition of “large accelerated filer”,filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” inRule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of October 30, 2017,July 23, 2018, there were 369,599,266369,959,064 shares of company common stock issued and outstanding.

HedgePath Pharmaceuticals, Inc.

Quarterly Report on Form10-Q

TABLE OF CONTENTS

HEDGEPATH PHARMACEUTICALS, INC.

CONDENSED BALANCE SHEETS

AS OF SEPTEMBERJUNE 30, 20172018 AND DECEMBER 31, 20162017

(Unaudited)

See notes to condensed financial statements

HEDGEPATH PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINESIX MONTH PERIODS ENDED SEPTEMBERJUNE 30, 20172018 AND 20162017

(Unaudited)

See notes to condensed financial statements

HEDGEPATH PHARMACEUTICALS, INC.

CONDENSED STATEMENT OF STOCKHOLDERS’ (DEFICIT) EQUITY AND REDEEMABLE PREFERRED STOCK

FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172018

(Unaudited)

See notes to condensed financial statements

HEDGEPATH PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172018 AND 20162017

(Unaudited)

See notes to condensed financial statements

HEDGEPATH PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172018 AND 20162017

(Unaudited)

Overview

The accompanying unaudited condensed financial statements of HedgePath Pharmaceuticals, Inc., a Delaware corporation (the “Company”, “HPPI”, “we”, “us” or similar terminology), have been prepared by the Company without audit. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of SeptemberJune 30, 2017,2018, and for all periods presented, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the Securities and Exchange Commission (“SEC”) rules and regulations. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2016,2017, which are included in the Company’s 2016 Annual Report on Form10-K for the fiscal year ended December 31, 2017, which was filed with the SEC on February 17, 201716, 2018 (the “2016“2017 Annual Report”). The accompanying condensed balance sheet as of December 31, 20162017 has been derived from the audited financial statements at that date, but does not include all information and footnotes required by GAAP for complete financial statements.

As used herein, the term “Common Stock” means the Company’s common stock, $0.0001 par value per share.

The results of operations for the three and ninesix month periods ended SeptemberJune 30, 20172018 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year. Readers of this Quarterly Report are strongly encouraged to review the risk factors relating to the Company which are set forth in the 2016Company’s 2017 Annual Report on Form10-K and our other filings with the SEC.

The accompanying unaudited condensed financial statements have been prepared on a going concern basis which contemplates the realization of assets and satisfaction of liabilities of the Company in the normal course of business. If the Company is unable to raise required funding to continue to pursue its business plan, it may have to cease operations. The unaudited condensed financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Nature of the Business and Background

The Company is a clinical stage biopharmaceutical company that is seeking to discover, develop and commercialize innovative therapeutics for patients with certain cancers. The Company may also explore acquiring or licensing other innovative therapeutics addressing unmet needs and orphan indications beyond cancer. The Company’s initial product candidate is based upon the use of SUBA™-Itraconazole, which is a patented, oral formulation of the currently marketed anti-fungal drug itraconazole to which the Company holds an exclusive U.S. license.

The Company’s current focus is on the development of therapies for skin, lung and prostate cancers in the U.S. market, with the first indication targeting basal cell carcinoma in patients with Basal Cell Carcinoma Nevus Syndrome (also known as Gorlin Syndrome) (“BCCNS”), for which the Company commenced aan open label, Phase 2(b) clinical trial in the third quarter of 2015.

The Company’s proposed therapy is based uponCompany continues to interact with the useU.S. Food and Drug Administration (“FDA”) regarding the results of its Phase 2(b) trial in order to gain further guidance regarding the filing of the New Drug Application (“NDA”) for SUBA-Itraconazole for the treatment of BCCNS (“SUBA^TM-Itraconazole, BCCNS”). In June 2018, the Company announced the FDA granted the Company aface-to-face meeting to discuss the results obtained in the Phase 2(b) clinical trial. The Company believes that this meeting (known as a Type C Meeting, which is scheduled to occur on July 23, 2018), will provide the opportunity for the Company to advocate for and gain further guidance from FDA relating to the anticipated filing by the Company of a patented, oral formulation of the currently marketed anti-fungal drug itraconazole. New Drug Application (NDA) for SUBA BCCNS later in 2018.

The Company believes that the dosing of oral capsules of this formulationSUBA-Itraconazole can affect the Hedgehog signaling pathway, a major regulator of many fundamental cellular processes, which, in turn, can impact the development and growth of cancers such as basal cell carcinoma. Itraconazole has been approved by the U.S. Food and Drug Administration (the “FDA”)FDA for, and has been extensively used to treat, fungal infections and has an extensive history of safe and effective use in humans. The Company has developed, optioned and licensed intellectual property andknow-how related to the treatment of cancer patients using itraconazole. The Company is the exclusive U.S. licensee of SUBA-Itraconazole for the treatment of cancer as described below.

The Company has been able to follow and report the progress of the Phase 2(b) clinical trial, and the impact of therapy has been impressive, with only one target tumor requiring surgical excision and 99% of target tumors being controlled. As of the date of this filing, the Company has measured the response of 467 individual target tumors, with 54% exhibiting a 30% or greater reduction in size since dosing began and 28% completely disappearing. Approximately 60% of responding lesions have continued to respond during ongoing treatment with a duration of response yet to be determined, but currently exceeding one year at this point in time. The patient dropout rate has been only 11%, with SUBA-Itraconazole being well-tolerated with no reports of hair loss, loss of taste, or disabling muscle cramps typical of other hedgehog inhibitors. In addition, no serious adverse events attributable to SUBA-Itraconazole have been reported.

HEDGEPATH PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Unaudited)

Based on the results above and the company’s on-going communications with the FDA, the Company believes the data from this trial will support the filing of a New Drug Application (“NDA”) for the management of basal cell carcinomas in BCCNS. In order to reach this objective, the Company has begun the process of locking the study database, which the Company intends to achieve by year-end, with the goal to complete a Clinical Study Report during the first quarter of 2018 while at the same time preparing for submission of a pre-NDA meeting request to FDA.

While the clinical data observed to date appear to be predictive of the desired final study results while the Company seeks further guidance from FDA, readers are cautioned that no assurances can be given that (i) the final study results will match these latest results or (ii) the study, when and if completed, will achieve its primary and secondary endpoints or (iii) that the study will be found by FDA to be sufficient for the filing of an NDA or (iv) if an NDA is filed, that it will be approved by FDA. Further, the Company is not committing to providing further interim updates prior to the reporting of the final study results.

Relationship with Mayne Pharma Ventures Pty Ltd.

The Company has exclusive rights in the U.S. to develop and to commercialize SUBA-Itraconazole capsules for the treatment of human cancer via oral administration. SUBA-Itraconazole was developed and is licensed to us by the Company’s manufacturing partner and majority shareholder Mayne Pharma Ventures Pty Ltd. and its affiliates (“Mayne Pharma”), under a supply and license agreement, originally dated September 3, 2013, as amended and restated on June 24, 2014 and May 15, 2015, and as further amended on November 22, 2016 (theand January 10, 2018 (collectively, the “SLA”). Mayne Pharma is an Australian specialty pharmaceutical company that develops and manufactures branded and generic products, which it distributes directly or through distribution partners and also provides contract development and manufacturing services. In addition to being the Company’s licensor and supply partner, under the SLA and related agreements, Mayne Pharma holds a majority equity stake in the Company and holds important contractual rights with respect to the Company, such as the right to maintain its percentage ownershipappoint members to the Company’s board of directors, and in particular with respect to SUBA BCCNS, as further explained below.

HEDGEPATH PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017

(Unaudited)

Series B Preferred Stock Purchase Agreement

On January 8, 2018, the Company entered into a definitive securities purchase agreement (the “Purchase Agreement”) with Mayne Pharma, pursuant to which Mayne Pharma agreed to purchase from the Company, and the Company agreed to issue to Mayne Pharma (over three closings as described further below, each a “Closing”):

The transactions contemplated by the Purchase Agreement are referred to herein as the “Financing.” The Financing contemplates three closings (each, a “Closing”), as follows:

The funding of the Third Closing shall be conditioned upon the acceptance of filing by the FDA of the Company’s NDA for SUBA BCCNS, provided that such date shall be automatically extended in the event that such NDA is filed with the FDA during December 2018 to a date which is 30 days from the date of such filing.

In addition, as part of the Financing, the Company and Mayne Pharma agreed to amend the SLA, most notably to eliminate the provision that would have allowed Mayne Pharma to terminate the SLA in the event that the Company had not received an NDA approval for a product covered by the SLA by October 31, 2018.

Under the Purchase Agreement, the Company has agreed to use the proceeds from the Financing solely for purposes of funding the continued development of SUBA BCCNS and for general corporate purposes; provided, however, that the Company may use the proceeds from the Third Closing (in a manner consistent with the SLA) for the development of other SUBA-Itraconazole treatments for cancer and for general operating purposes of the Company. In addition, the Purchase Agreement provides for additional limitations on the use of proceeds from the Financing including, without limitation, that the Company shall not use the proceeds from any Closing for: (i) the satisfaction of any portion of the Company’s indebtedness (other than payment of trade payables in the ordinary course of the Company’s business and prior practices) or (ii) the redemption of any Common Stock or other Company securities.

In addition, under the Purchase Agreement, the Company agreed that for the period from the date of the Initial Closing through December 31, 2018 (the “Market Standoff Period”), the Company will not undertake external financing (which shall specifically exclude exercise of existing options and warrants) without the approval of Mayne Pharma, such approval not to be unreasonably withheld, conditioned or delayed, and giving due consideration to the fiduciary duties and business judgment of the Company’s Board of Directors; provided, however, that if, during the Market Standoff Period, any existing warrants or options of the Company are exercised, the proceeds of such exercises may, in the discretion of the Company’s Board of

HEDGEPATH PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017

(Unaudited)

Directors, be used for preliminary work on SUBA-Itraconazole cancer indications other than SUBA BCCNS, in each case in accordance with the SLA.

Under the Purchase Agreement, Mayne Pharma has been afforded certain demand and “piggyback” rights to cause the Company to register the shares of Common Stock underlying the Series B Preferred Stock and the Warrants for public resale; provided, however, that such rights shall only become effective and exercisable from and after the termination of the SLA.

The negotiations with Mayne Pharma and preparation of related transaction documentation associated with Financing and amendment to the SLA was undertaken on behalf of the Company by a special committee of disinterested, independent members of the Company’s Board of Directors.

Terms of the Series B Preferred Stock

The Series B Preferred Stock carries the following provisions:

Price Per Share. The purchase price for each share of Series B Preferred Stock is $0.69 (which is equal to three times (3x) the Conversion Price (as defined below)) (the “Per Share Price”). An applicable number of shares of Series B Preferred Stock will be issued at each Closing based on the Per Share Price.

Dividends. The shares of Series B Preferred Stock will accrue dividends at a rate of 5% of the Per Share Price per annum per share. Dividends will be paid semi-annually as of June 30 (with a payment date of July 15) and December 31 (with a payment date of January 15) each year. The Company shall have the option in its discretion to pay dividends in cash or shares of Common Stock. If the Company elects to pay dividends in shares of Common Stock, the number of shares to be paid being calculated by dividing (i) the principal value of the dividend to be paid by (ii) the6-month volume-weighted average price of the Common Stock prior to the measurement date (being December 31st, or June 30th) of the applicable year.

Voluntary and Mandatory Conversion. The shares of Series B Preferred Stock shares will be convertible as provided for below into an aggregate of 21,739,131 shares of Common Stock (assuming all three Closings occur) based on a conversion price per share of $0.23 (the “Conversion Price”). Each share of Series B Preferred Stock shall be convertible into three (3) shares of Common Stock at any time at the election of Mayne Pharma at a price per share equal to the Conversion Price. The Conversion Price shall be subject to customary stock-based, but not price-based, anti-dilution protection. Each share of Series B Preferred Stock shall automatically convert into three (3) shares of Common Stock based on the Conversion Price upon the approval by the FDA of an NDA for any SUBA-based therapeutic under the SLA (including SUBA BCCNS).

Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, Mayne Pharma (with respect to its holdings of Series B Preferred Stock only) will be entitled to be paid out of the assets of the Company available for distribution to its stockholders before any payment will be made to the holders of all other capital stock of the Company (including the Common Stock) an amount per share of Series B Preferred Stock equal to the Per Share Price plus any dividends accrued but unpaid thereon.

Seniority. So long as the shares of Series B Preferred Stock are outstanding, the Company shall not, without the prior written approval of from the holders of a majority of the then outstanding shares of Series B Preferred Stock: (i) establish any security nor incur any secured or unsecured indebtedness (other than trade debt in the ordinary course of business) or (ii) establish any security that is pari passu or senior (or reclassify any junior security so as to make it pari passu or senior) in liquidation preference or senior to the Series B Preferred Stock.

Voting. With respect to its shares of Series B Preferred Stock, Mayne Pharma shall be entitled to vote together with the holders of Common Stock as a single class the number of votes Mayne Pharma would have if the Series B Preferred Stock were converted into Common Stock.

Redemption. On or after the five (5) year anniversary of the Initial Closing, Mayne Pharma shall have the right to cause the Company to redeem all (but not less than all) of the outstanding shares of Series B Preferred Stock for a price per share equal to the Per Share Price plus any accrued but unpaid dividends on such shares. As such, the proceeds from the sale of the Series B Preferred Stock have been classified as mezzanine equity in the June 30, 2018 condensed balance sheet.

HEDGEPATH PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017

(Unaudited)

Terms of the Warrants

The Warrants are divided equally between the Series A Warrants and the Series B Warrants (i.e., with each being exercisable for an aggregate of 5,434,783 shares of Common Stock if all Closings occur), which represents fifty percent (50%) warrant coverage on the shares of Common Stock underlying the Series B Preferred Stock. The Warrants have been and will continue to be issued, pro rata in relation to the total investment in the Series B Preferred Stock, at each Closing.

The Warrants are substantially identical in form, except that: (i) the exercise price per share of the Series A Warrants shall be $0.23 per share and the exercise price per share of the Series B Warrants shall be $0.275 per share (collectively, the “Warrant Exercise Price”) and (ii) The Series A Warrants shall have a term of two (2) years from the date of issuance and the Series B Warrants shall have term of five (5) years from the date of issuance. The Warrant Exercise Price shall be subject to customary stock-based, but not price-based, anti-dilution protection. The Warrants will not be eligible for “cashless” exercise.

Amendment to Supply and License Agreement

In connection with equity financings.the Initial Closing, on January 10, 2018, the Company and Mayne Pharma entered into an amendment to the SLA to eliminate Mayne Pharma’s right to terminate the SLA if the Company fails to secure NDA approval for aSUBA-Itraconazole-based treatment for cancer by October 31, 2018 and replace such right with provisions that grant to Mayne Pharma a60-day right (exercisable only on a Target Failure (as defined below)) to elect to assume all responsibility and control for clinical, regulatory and commercial activities for SUBA BCCNS (the “Mayne BCCNS Assumption Right”) by way of an exclusive license from the Company and full access (the “Company BCCNS License”) solely to the Company’s SUBA BCCNS clinical data and the Company’s own itraconazole intellectual property solely for the field of the treatment of Basal Cell Carcinoma Nevus Syndrome.

Mayne Pharma’s election to trigger the Mayne BCCNS Assumption Right shall not terminate the SLA or impact the Company’s ability to pursue other product development opportunities under and in accordance with the terms of the SLA.

The Company BCCNS License includes: (i) a cash royalty to the Company from Mayne Pharma on all net sales of SUBA BCCNS in the United States, (ii) the forfeiture by Mayne Pharma under the Sublicense Agreement (as defined below) of (x) royalties from the Company with respect to SUBA BCCNS sales and (y) a portion of the milestone payments due by the Company to Mayne Pharma under the Sublicense Agreement and (iii) indemnification of the Company by Mayne Pharma for any claims incurred by the Company arising out of Mayne Pharma’s SUBA BCCNS activities following the exercise of the Mayne BCCNS Assumption Right.

The term “Target Failure” means if: (i) the FDA has not accepted for filing the Company’s NDA for SUBA BCCNS by December 31, 2018, provided that such date shall be automatically extended in the event that such NDA is filed with FDA during December 2018 to a date which is 30 days from the date of such filing or (ii) the commercial launch of SUBA BCCNS is not achieved by June 30, 2020.

The SLA Amendment also amends corresponding provisions of that certain Sublicense Agreement, dated August 31, 2015, between Mayne Pharma International Pty Ltd, an affiliate of Mayne Pharma (“Mayne Pharma International”), and the Company, in order to conform to the business terms agreed to in the SLA Amendment.

The Company had cash and cash equivalents of approximately $0.9$0.8 million as of SeptemberJune 30, 2017.2018. Based on the Company’s current operational plan and budget (including the receipt of $1.6 million in July 2018 from Mayne Pharma following the Second Closing of the Financing as contemplated by the Purchase Agreement), the Company expects that it has sufficient cash to manage its business into approximately the firstsecond quarter of 2018,2019, although this estimation assumes that the Company does not accelerate the development of the existing product candidate (including expanding the therapeutic indications for such product candidate),build a commercial division, acquire other drug development opportunities, or otherwise face unexpected events, costs or contingencies, any of which could affect the Company’s cash requirements. Available resources may be consumed more rapidly than anticipated, potentially resulting in the need for additional funding.

HEDGEPATH PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017

(Unaudited)

The Company intends to finance itsadditional research and development, commercialization and distribution efforts and its working capital needs primarily through:

However, there is a material risk that none of these plans will be implemented in a manner necessary to sustain the Company for an extended period of time and that the Company will be unable to obtain additional financing when needed on commercially reasonable terms, if at all. If adequate funds are not available when needed, the Company may be required to significantly reduce or refocus operations or to obtain funds through arrangements that may require the Company to relinquish rights to technologies or potential markets, any of which could have a material adverse effect on the Company, its viability, its financial condition and its results of operations beyond the firstsecond quarter of 2018. To2019. In addition, a lack of adequate funds may force the extent that additional capital is raised through the sale of equity or convertible debt securities or exercise of warrants and options, the issuance of such securities would result in ownership dilutionCompany to existing stockholders.

HEDGEPATH PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Unaudited)

Estimates

The preparation of condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Revenue Recognition

The Company currently has no ongoing source of revenues. Miscellaneous income is recognized when earned by the Company.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. At times, the Company may maintain cash balances in excess of Federal Deposit Insurance Corporation insured amounts which is $250,000 for substantially all depository accounts. As of SeptemberJune 30, 2017,2018, the Company had approximately $0.4$0.5 million in excess of the amount covered by the Federal Deposit Insurance Corporation with one financial institution.

Mezzanine Equity

The Company issued Preferred Stock to Mayne Pharma pursuant to the Series B Preferred Stock Purchase Agreement. Based upon its initial analysis, the Company originally classified the proceeds from the sale of the Preferred Stock as permanent stockholders’ equity at March 31, 2018. Based on further analysis of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, which requires that conditionally redeemable securities be classified outside of permanent stockholders’ equity, the Company reclassified the original amount of the proceeds from the sale of these shares as mezzanine equity as reflected in the accompanying Condensed Balance Sheet at June 30, 2018 and Condensed Statement of Stockholders’ (Deficit) Equity and Redeemable Preferred Stock for the six months ended June 30, 2018 which resulted in no change to total assets, total liabilities, net loss, earnings per share, or cash flow.

Research and Development Expenses

Research and development costs are expensed in the period in which they are incurred and include the expenses paid to third parties who conduct research and development activities on behalf of the Company and purchasedin-process research and development.

HEDGEPATH PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2018 AND 2017

(Unaudited)

Stock-Based Compensation

The Company accounts for stock-based awards to employees andnon-employees using Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)FASB ASC Topic 718 – Accounting for Share-Based Payments, which provides for the use of the fair value based method to determine compensation for all arrangements where shares of stock or equity instruments are issued for compensation. Fair values of restricted stock units issued are determined by the Company based predominantly on the trading price of the common stock on the date of grant. Fair value of each common stock option is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatility is based on historical volatility of a peer group’s common stock and other factors estimated over the expected term of the options. The expected term of the options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield.

In applying the Black-Scholes options pricing model for options issued in March 2018 (see note 4), the assumptions were as follows: 1) for the options vesting on the grant date – expected price volatility of 113.67%; risk-free interest rate of 2.64%; weighted average expected life of 5 years; and no dividend yield, and 2) for the options vesting on the first anniversary of the grant date – expected price volatility of 116.59%; risk-free interest rate of 2.64%; weighted average expected life of 5.5 years; and no dividend yield. In applying the Black-Scholes options pricing model for options issued in June 2018 (see note 4) which vest on the first anniversary of the grant date, the assumptions were as follows: expected price volatility of 112.6%; risk-free interest rate of 2.81%; weighted average expected life of 5.5 years; and no dividend yield

Income Taxes

Deferred tax assets and liabilities are recognized for future tax consequences attributed to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that are expected to apply to the differences in the periods that they are expected to reverse. These differences occur primarily in share-based compensation,in-process research and development, and net operating loss carry forward. In accordance with GAAP, it is required thatforward which are offset by a net deferred tax asset be reduced by a valuation allowance if, based ondue to the weight of available evidence it is more likely than not that some portion or all of the deferred tax assets will not be realized. At September 30, 2017 and December 31, 2016, the Company recorded a 100% valuation allowance against its deferred tax assets as it has determined such amounts will not be currently realizable.Company’s recurring net losses.

Recent accounting pronouncements:

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements of ASC Topic 605, “Revenue Recognition” and most industry-specific guidance on revenue recognition throughout the ASC. The new standard is principles-based and provides a five-step model to determine when and how revenue is recognized. The core principle of the new standard is that revenue should be recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new standard also requires disclosure of qualitative and quantitative information surrounding the amount, nature, timing and uncertainty of revenues and cash flows arising from contracts with customers. The Company has evaluated the impact of this revised guidance on its financial statements, which was effective January 1, 2018, and determined it had no material impact.

In April 2016, the FASB issued Accounting Standards Update (“ASU”)2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” ASU2016-10 clarifies the implementation guidance on identifying performance obligations. These ASUs apply to all companies that enter into contracts with customers to transfer goods or services. This ASUs is effective for public entities for interim and annual reporting periods beginning after December 15, 2017. The Company has evaluated the impact of this revised guidance on its financial statements, which was effective January 1, 2018, and determined it had no material impact.

In June 2018, the FASB issued ASU2018-07, “Compensation – Stock Compensation (Topic 718).” ASU2018-07 simplifies the accounting for nonemployee share-based payment transactions. This ASU is effective for public entities for interim and annual reporting periods beginning after December 15, 2018. The Company has evaluated the potential impact of this guidance and does not believe that it will have a material impact on the Company’s financial statements.

Management has considered all recent accounting pronouncements issued, but not effective, and does not believe that they will have a significant impact on the Company’s financial statements.

HEDGEPATH PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINESIX MONTHS ENDED SEPTEMBERJUNE 30, 20172018 AND 20162017

(Unaudited)

Employee Stock Plans

Total stock-basedOn March 13, 2018, as compensation for the nine months ended September 30, 2017 service, management was approximately $1.9 million and is related to certain restricted stock units (“RSUs”) and commonawarded 570,000 stock options issued pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”). with an exercise price of $0.2722 and Black-Scholes value of $0.22 per share that vested on the grant date. Independent Board members were awarded a total of 188,000 stock options pursuant to the Plan with an exercise price of $0.2722 and Black-Scholes value of $0.22 that also vested on the grant date. 75,000 common shares were issued to the former Secretary of the Company for the prior year’s service.

In addition, Board members were awarded approximately 1.1 million stock options pursuant to the Plan with an exercise price of $0.2722 and Black-Scholes value of $0.23 that vest on the first anniversary of the grant date. The grant date fair value of common stock options was determined using the Black-Scholes model on the date of issuance and the number of shares expected to vest. The total Black-Scholes value of the March 13, 2018 stock options grants was approximately $0.4 million.

On June 15, 2018, as compensation for 2018 service, Board members were awarded a total of 912,000 stock options pursuant to the Company’s 2014 Equity Incentive Plan (the “Plan”) with an exercise price of $0.33 and Black-Scholes value of $0.273 per share that vest on the first anniversary of the grant date.

Total stock-based compensation for the six months ended June 30, 2018 was approximately $0.3 million and is primarily related to common stock options issued pursuant to the Plan in March and June 2018. The expense is classified as research and development expense and general and administrative expense in the accompanying 2017 condensed statementstatements of operations. The grant date fair value of RSUs was determined using the quoted market price of the Common Stock on the date of issuance and the number of shares expected to vest. As of SeptemberJune 30, 2017,2018, there were 650,0003,424,000 outstanding common stock options vested and outstanding with an intrinsic value of approximately $0.1 million.

On March 8, 2017, approximately 26.5 million previously vested but unpaid RSUs were settled by issuing shares of Common Stock. Upon settlement ofunder the RSUs, the Company issued 15,739,594 shares of Common Stock to employees (including the Company’s executive officers), current and former Board members, and contractors (“RSU recipients”). Additionally, 10,802,144 shares of Common Stock, valued at approximately $3.7 million, were withheld from issuance representing estimated income taxes due from the RSU recipients as the fair value of the shares is considered taxable income upon issuance. The Company subsequently remitted to the appropriate taxing authorities in cash both the Company and the RSU recipient portions of the tax withholdings in the amount of approximately $3.7 million.

As of September 30, 2017, there were 125,000 outstanding RSUs, allPlan of which vest on January 1, 2018. These RSUs1,408,000 were issued in May 2017 to recently added Board members pursuant to the Plan.vested. There was $14,060approximately $0.4 million in unamortized stock-based compensation relating to these outstanding RSUs at SeptemberJune 30, 2017.2018.

The Company is currently not subject to any legal proceedings. However, the Company may from time to time become a party to various legal proceedings arising in the ordinary course of business.

On July 5, 2018, the Company closed on a second tranche of funding from its majority shareholder, Mayne Pharma, as part of the Purchase Agreement executed in January 2018 as discussed further in note 1.

On July 16, 2018, the Company signed an exclusive option agreement with the University of Connecticut to license rights to patents and patent applications covering certain chemical analogues of the FDA-approved anti-fungal drug itraconazole. The option agreement, which goes into effect on August 1, 2018, is for an exclusive option period of six months, which is extendible to twelve months. The optioned field of use includes all therapeutic, prophylactic, and diagnostic uses for cancerous and non-cancerous cell proliferation disorders in humans. The cost of the agreement, including the option period, are not material relative to the Company’s financial position or results of operations.

Item 2.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the Condensed Financial Statements and Notes thereto included elsewhere in this Quarterly Report. This discussion contains certain forward-looking statements that involve risks and uncertainties. The Company’s actual results and the timing of certain events could differ materially from those discussed in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth herein and elsewhere in this Quarterly Report and in the Company’s other filings with the SEC. See “Cautionary Note Regarding Forward Looking Statements” below.

As used in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, unless otherwise indicated, the terms “the Company”, “we”, “us”, “our” and similar terminology refer to HedgePath Pharmaceuticals, Inc.

Critical Accounting Policies

See Note 3 of the Notes to Condensed Financial Statements included in Item 1 of this Quarterly Report for a summary of significant accounting policies and information on recently issued accounting pronouncements.

Results of Operations

For the three months ended SeptemberJune 30, 20172018 compared to the three months ended SeptemberJune 30, 20162017

Research and Development Expenses. We recognized approximately $0.4$0.5 million in research and development expenses during the three months ended SeptemberJune 30, 20172018 compared to approximately $0.7$0.4 million for the three months ended SeptemberJune 30, 2016.2017. Research and development expenses for both periods primarily include expenses related to our clinical trial for Basal Cell Carcinoma Nevus Syndrome, regulatory activities, legal expenses relating to patents, and stock-based compensation. The increase is due primarily to a increase in direct trial expenses primarily due to data analysis expense and consulting associated with the preparation for an NDA filing.

General and Administrative Expenses. We recognized approximately $0.4 million in general and administrative expenses during the three months ended June 30, 2018 compared to $0.3 million for the three months ended June 30, 2017. General and administrative expenses consist primarily of compensation and related costs for corporate administrative staff and Board members, facility expenditures, professional fees, consulting and taxes. The increase is due primarily to an increase in stock compensation expense associated with stock options issued in March and June of 2018.

Interest Income.We recognized interest income of $2,490 during the three months ended June 30, 2018 compared to $2,995 for the three months ended June 30, 2017 for interest earned on cash balances in our money market account.

For the six months ended June 30, 2018 compared to the six months ended June 30, 2017

Research and Development Expenses. We recognized approximately $1.2 million in research and development expenses during the six months ended June 30, 2018 compared to approximately $1.3 million for the six months ended June 30, 2017. Research and development expenses for both periods primarily include expenses related to our clinical trial for Basal Cell Carcinoma Nevus Syndrome, regulatory activities, legal expenses relating to patents, and stock-based compensation. The decrease is due primarily to a reduction of approximately $0.3 million in stock compensation expense as all RSUs previously expensed as researchof $0.1 million and development were fully vestedpatient site and paid duringtravel costs of $0.2 million offset by an increase in data management expense of $0.2 million associated with the three months ended March 31, 2017.preparation for an NDA filing.

General and Administrative Expenses. We recognized approximately $0.2$0.8 million in general and administrative expenses during the threesix months ended SeptemberJune 30, 20172018 compared to approximately $1.0$2.3 million for the threesix months ended SeptemberJune 30, 2016.2017. General and administrative expenses consist primarily of compensation and related costs for corporate administrative staff and Board members, facility expenditures, professional fees, consulting and taxes. The decrease in expense is due primarily to a reduction of approximately $0.6 million in stock compensation expense as all RSUs previously expensed as general and administrative were fully vested and paid during the three months ended March 31, 2017. In addition, we recognized approximately $0.1 million in legal and printing expense related to the filing of FormS-1 with the Securities and Exchange Commission during the three months ending September 30, 2016 with no corresponding filing in the current period.

For the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016

Research and Development Expenses. We recognized approximately $1.7 million in research and development expenses during the nine months ended September 30, 2017 compared to approximately $1.9 million for the nine months ended September 30, 2016. Research and development expenses for both periods primarily include expenses related to our clinical trial for Basal Cell Carcinoma Nevus Syndrome, regulatory activities, legal expenses relating to patents, and stock-based compensation. The decrease is due primarily to a reduction of approximately $0.3 million$1.4 million. A change in stock compensation expense as all RSUs previously expensed as research and development were fully vested and paid during the three months ended March 31, 2017 offset by approximately $0.1 millioncontrol in expense related to market research studies for Basal Cell Carcinoma Nevus Syndrome, lung cancer, and prostate cancer during the nine months ended September 30, 2017.

General and Administrative Expenses. We recognized approximately $2.5 millionNovember 2016 resulted in general and administrative expenses during the nine months ended September 30, 2017 compared to approximately $2.4 million for the nine months ended September 30, 2016. General and administrative expenses consist primarily of compensation and related costs for corporate administrative staff and Board members, facility expenditures, professional fees, consulting and taxes. The increase in expense is due primarily to an increase in stock compensation expense relating to the revaluation of RSUs dueincreasing the expense which carried forward to the change in control which occurred in November 2016 offset by decreases in legal expense and consulting expense.six months ended June 30, 2017.

Interest Income.We recognized interest income of $16,726$6,712 during the ninesix months ended SeptemberJune 30, 2018 compared to $14,640 for the six months ended June 30, 2017 for interest earned on cash balances in our money market account. There was $10,230 interest income during the nine months ended September 30, 2016.

Liquidity and Capital Resources

We had approximately $0.9$0.8 million cash on hand at SeptemberJune 30, 2017.2018 (not including the receipt of $1.6 million in July 2018 from Mayne Pharma upon following the Second Closing of the Financing contemplated by the Purchase Agreement).

We intend to seek additional financing for our research and development, commercialization and distribution efforts and our working capital needs primarily through:

However, there is a material risk that none of these plans will be implemented and that we will be unable to obtain additional financing on commercially reasonable terms, if at all. If adequate funds are not available, we may be required to significantly reduce or refocus operations or to obtain funds through arrangements that may require us to relinquish rights to technologies or potential markets, any of which could have a material adverse effect on our company, our viability, our financial condition and our results of operations beyond the firstsecond quarter of 2018. To2019. In addition, a lack of adequate funds may force the extent that additional capital is raised through the sale of equity or convertible debt securities or exercise of warrants and options, the issuance of such securities would result in ownership dilutionCompany to existing stockholders.cease operations.

None.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report, the Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer (the “Certifying Officers”), conducted evaluations of our disclosure controls and procedures. As defined under Sections 13a–15(e) and 15d–15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying Officers, to allow timely decisions regarding required disclosures.

Based on this evaluation, the Certifying Officers have concluded that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the ninesix months ended SeptemberJune 30, 20172018 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Internal Controls

Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our control have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control 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 the policies or procedures may deteriorate.

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

Certain information set forth in this Quarterly Report on Form10-Q, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (and the “Liquidity and Capital Resources” section thereof) and elsewhere may address or relate to future events and expectations and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Act of 1995. Such forward-looking statements involve significant risks and uncertainties. Such statements may include, without limitation, statements with respect to our plans, objectives, projections, expectations and intentions and other statements identified by words such as “projects”, “may”, “could”, “would”, “should”, “believes”, “expects”, “anticipates”, “estimates”

“estimates”, “intends”, “plans” or similar expressions. These statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties, including those detailed in our filings with the SEC. Actual results, including, without limitation: (i) the results of our collaboration with Mayne Pharma, (ii) the application and availability of corporate funds and our need for future funds, or (iii) the timing for completion, and results of, scheduled or additional clinical trials and the FDA’s review and/or approval and potential commercial launch of our products and product candidates and regulatory filings related to the same, may differ significantly from those set forth in the forward-looking statements. Such forward-looking statements also involve other factors which may cause our actual results, performance or achievements to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements and to vary significantly from reporting period to reporting period. Such factors include, among others, those listed under Item 1A of our 20162017 Annual Report and other factors detailed from time to time in our other filings with the SEC. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual future results will not be different from the expectations expressed in this Report. We undertake no obligation to publically update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

PART II. OTHER INFORMATION

None.

Not required for smaller reporting companies.

None.

None.

Not applicable.

Not applicable.

Item 6.

Item 6.Exhibits.

Exhibits.

Number		Description
101.pre		XBRL Taxonomy Presentation Linkbase Document

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

S-1