Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 as may be amended, supplemented or superseded from time to time by other reports we file with the SEC. All amounts in this report are in U.S. dollars, unless otherwise noted.

Overview

We are a clinical-stage biopharmaceutical company focused on developing new generation therapies for unmet medical needs. We are focused on developing (i) a topical formulation for treating side effects from drugs used for the treatment of cancer (HT-001); (ii) a treatment for mast-cell derived cancers and anaphylaxis (HT-KIT); and (iii) a treatment and/or prevention for Alzheimer's or other neuroinflammatory diseases (HT-ALZ). We also have assets being developed for (i) atopic dermatitis (also known as eczema) (BioLexa); (ii) a treatment for asthma and allergies using inhalational administration (HT-004); and (iii) a treatment for obesity, and obesity-related diseases and conditions (HT-VA).

Recent Developments

In June 2025, we entered into a non-binding letter of intent with Silo Pharma, Inc. to pursue a strategic joint venture focused on developing and commercializing a treatment for obesity and metabolic disease utilizing technology licensed to us from the U.S. Department of Veterans Affairs ("VA"). Both parties have mutually agreed to not proceed with the joint venture. In July 2025, we entered into a Cooperative Research and Development Agreement with the VA and recently initiated a VA-backed study aimed at assessing the technology underlying this license, glial cell line-derived neurotrophic factor ("GDNF"), as a potential new therapy for obesity and fatty liver disease (hepatic steatosis). The studies are underway and we expect results in early 2026.

Results of Operations

Comparison of Our Results of Operations for the Three Months Ended September 30, 2025 and 2024

Operating Costs and Expenses

Research and Development Expenses

For the three months ended September 30, 2025, research and development expenses were approximately $1.6 million. Specifically, during the three months ended September 30, 2025, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $1.48 million related to manufacturing and clinical activities; and (ii) HT-KIT, approximately $125,000 related to manufacturing and preclinical activities. In addition to the foregoing, we also incurred fees of approximately $31,200 payable to members of our scientific advisory board for services.

For the three months ended September 30, 2024, research and development expenses were approximately $0.9 million related to ongoing research and development projects. Specifically, during the quarter ended September 30, 2024, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $0.7 million related to manufacturing, preclinical and clinical activities; (ii) HT-KIT, approximately $154,300 related to manufacturing and preclinical activities; (iii) HT-004, approximately $18,700 in sponsored research activities; and (iv) HT-ALZ, approximately $96,500 related to manufacturing and preclinical activities. In addition to the foregoing, we also incurred fees of approximately $37,200 payable to members of our scientific advisory board for services.

We expect our research and development activities to increase as we develop our existing product candidates and potentially acquire new product candidates, reflecting increasing costs associated with the following:

●

employee-related expenses, which include salaries and benefits, and rent expenses;

●

fees related to in-licensed products and technology;

●

expenses incurred under agreements with clinical research organizations, investigative sites and consultants that conduct our clinical trials and a substantial portion of our pre-clinical activities;

●

the cost of acquiring and manufacturing clinical trial materials; and

●

costs associated with non-clinical activities and regulatory approvals.

General and Administrative Expenses

For the three months ended September 30, 2025, general and administrative expenses amounted to approximately $2.5 million as compared to approximately $1.2 million for the three months ended September 30, 2024, an increase of approximately $1.2 million, or 98.2%. For the three months ended September 30, 2025 and 2024, general and administrative expenses consisted of the following (rounded to the nearest $1,000):

		Three Months Ended September 30,
		2025				2024
Compensation and related expenses		$	1,376,000			$	621,000
Professional and consulting expenses			894,000				452,000
Rent expense			15,000				15,000
Other general and administrative expenses			162,000				147,000
Total		$	2,447,000			$	1,235,000

During the three months ended September 30, 2025, the increase in general and administrative expenses of approximately $1.2 million was primarily attributed to an increase in compensation and related expenses of $755,000, primarily attributable to the issuance of 800,000 shares of common stock to our Chief Executive Officer valued at $968,000, which was offset by a decrease in stock-based compensation of approximately $281,000 in connection with the issuance of stock options during the three months ended September 30, 2024 as compared to $0 for the three months ended September 30, 2025. Additionally, during the three months ended September 30, 2025, professional and consulting expenses increased by approximately $442,000 which was primarily attributable to an increase in legal and consulting fees of approximately $208,000, an increase in accounting fees of approximately $61,000, an increase in stock-based professional fees of $167,000 and an increase in directors fees of $6,000.

We anticipate that our general and administrative expenses will increase in future periods, reflecting continued and increasing costs associated with:

●

support of our research and development activities;

●

stock compensation granted to key employees and non-employees;

●

support of business development activities; and

●

increased professional fees and other costs associated with regulatory requirements that we are subject to.

Other Income (Expense), net

For the three months ended September 30, 2025, other expense, net was approximately $25,000, which resulted from the recording of an unrealized loss of crypto assets of $25,000.

For the three months ended September 30, 2024, other income, net was approximately, which $200 resulted from $200 of interest income.

Net Loss

For the three months ended September 30, 2025 and 2024, we incurred a net loss of approximately $4.11 million, or $0.30 per common share (basic and diluted), and $2.2 million, or $0.32 per common share (basic and diluted), respectively.

Comparison of Our Results of Operations for the Nine Months Ended September 30, 2025 and 2024

Operating Costs and Expenses

Research and Development Expenses

For the nine months ended September 30, 2025, research and development expenses were approximately $4.6 million. Specifically, during the nine months ended September 30, 2025, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $2,585,000 related to manufacturing and clinical activities; (ii) HT-KIT, approximately $674,000 related to manufacturing and preclinical activities; and (iii) HT-ALZ, approximately $12,000 related to preclinical studies. In addition to the foregoing, we also incurred fees of approximately $100,000 payable to members of our scientific advisory board for services and recorded approximately $1,260,000 of in-process research and development expenses in connection with the acquisition of patent applications.

For the nine months ended September 30, 2024, research and development expenses were approximately $2.21 million, of which approximately $18,100 was related to licenses acquired and approximately $2.2 million was related to other research and development expenses. Specifically, during the nine months ended September 30, 2024, our research and development costs consisted primarily of the following costs for each of our key research and development projects: (i) HT-001, approximately $1,508,000 related to manufacturing, preclinical and clinical activities; (ii) HT-ALZ, approximately $112,800 related to preclinical studies; (iii) HT-KIT, approximately $363,300 related to manufacturing and preclinical activities; and (iv) HT-004, approximately $96,100 in sponsored research activities. In addition to the foregoing, we also incurred fees of approximately $111,800 payable to members of our scientific advisory board for services.

We expect our research and development activities to increase as we develop our existing product candidates and potentially acquire new product candidates, reflecting increasing costs associated with the following:

●

employee-related expenses, which include salaries and benefits, and rent expenses;

●

fees related to in-licensed products and technology;

●

expenses incurred under agreements with clinical research organizations, investigative sites and consultants that conduct our clinical trials and a substantial portion of our pre-clinical activities;

●

the cost of acquiring and manufacturing clinical trial materials; and

●

costs associated with non-clinical activities and regulatory approvals.

General and Administrative Expenses

For the nine months ended September 30, 2025 and 2024, general and administrative expenses amounted to approximately $5.1 million and $3.9 million, respectively. For the nine months ended September 30, 2025 and 2024, general and administrative expenses consisted of the following (rounded to the nearest $1,000):

		Nine Months Ended September 30,
		2025				2024
Compensation and related expenses		$	2,384,000			$	1,838,000
Professional and consulting expenses			2,146,000				1,410,000
Rent expense			41,000				40,000
Other general and administrative expenses			554,000				615,000
Total		$	5,125,000			$	3,903,000

During the nine months ended September 30, 2025, the increase in general and administrative expenses of approximately $1,222,000 was primarily attributed to an increase in compensation and related expenses of $546,000, primarily attributable to the issuance of 800,000 shares of common stock to our chief executive officer valued at $968,000 and an increase in other compensation and related expenses of $152,000, which were offset by a decrease in stock-based compensation of approximately $574,000 in connection with the issuance of stock options during the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024. Additionally, during the nine months ended September 30, 2025, professional and consulting expenses increased by approximately $735,000 which was primarily attributable to an increase in legal and consulting fees of approximately $498,000, an increase in stock-based professional fees of $222,000 and an increase in directors' fees of approximately $15,000. These increases were offset by a decrease in other general and administrative expenses of approximately $61,000.

We anticipate that our general and administrative expenses will increase in future periods, reflecting continued and increasing costs associated with:

●

support of our research and development activities;

●

stock compensation granted to key employees and non-employees;

●

support of business development activities; and

●

increased professional fees and other costs associated with regulatory requirements that we are subject to.

Other Income (Expense), net

For the nine months ended September 30, 2025, other expense, net was approximately $25,000, which resulted from the recording of an unrealized loss of crypto assets of $25,000.

For the nine months ended September 30, 2024, other income, net was approximately $27,000, which primarily resulted from approximately $27,300 of interest income, offset by a change in fair value of investment in joint venture of approximately $581.

Net Loss

For the nine months ended September 30, 2025 and 2024, we incurred a net loss of approximately $9.8 million, or $0.74 per common share (basic and diluted), and $6.1 million, or $1.00 per common share (basic and diluted), respectively.

Liquidity and Capital Resources

To date we have funded our operations primarily through the sale of equity and debt securities. As of September 30, 2025, we had approximately $7.8 million in cash and cash equivalents, working capital of approximately $7.9 million and an accumulated deficit of approximately $70.2 million. Net cash used in operating activities was approximately $7.65 million and $4.95 million for the nine months ended September 30, 2025 and 2024, respectively. We incurred net losses of approximately $9.8 million and $6.1 million for the nine months ended September 30, 2025 and 2024, respectively. We have incurred substantial operating losses since inception and expect to continue to incur significant operating losses for the foreseeable future as we continue our pre-clinical and clinical development of our product candidates. We have not yet commercialized any products and have never generated any revenue from product sales. We believe that our existing cash as of September 30, 2025 will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months from the date that our unaudited condensed consolidated financial statements are available to be issued.

During the nine months ended September 30, 2025, we issued 3,750,000 shares of our common stock upon the exercise of the 3,750,000 warrants issued in April 2024 for gross proceeds of approximately $5.6 million.

On November 8, 2024, we entered into an At The Market Offering Agreement (the "ATM Agreement") with H.C. Wainwright & Co., LLC ("Wainwright") under which we could offer and sell shares of our common stock having an aggregate sales price of up to $2,700,000 through Wainwright as the sales manager pursuant to our effective shelf registration statement on Form S-3 (File No. 333-272620), including an accompanying base prospectus and a prospectus supplement dated November 8, 2024. Sales of shares of the Company's common stock through Wainwright, if any, will be made by any method permitted by law deemed to be an "at the market offering" as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. Wainwright will use commercially reasonable efforts to sell shares of the Company's common stock from time to time, based on instructions from us (including any price, time or size limits or other parameters or conditions we may impose). We will pay Wainwright a commission equal to 3.0% of the aggregate gross proceeds from the sales of shares of the Company's common stock sold through Wainwright under the ATM Agreement and will also reimburse Wainwright for certain specified expenses in connection with the ATM Agreement. On February 7, 2025, the amount that the Company could offer and sell pursuant to the ATM Agreement was increased by $5,000,000 pursuant to a prospectus supplement dated February 7, 2025. The offering of shares pursuant to the ATM Agreement will terminate on the earlier of (1) the sale, pursuant to the ATM Agreement, of shares having an aggregate offering price of $7,700,000 and (2) the termination of the ATM Agreement by either us or Wainwright, as set forth therein. During the nine months ended September 30, 2025 we issued an aggregate of 2,395,619 shares of our common stock for net proceeds of approximately $3.5 million pursuant to the ATM Agreement. From October 1, 2025 to November 11, 2025, the Company issued an aggregate of 386,690 shares of its common stock for net proceeds of $607,309 pursuant to the ATM Agreement.

We have entered into certain license, sublicense, sponsored research and option agreements with third parties. Pursuant to such agreements, we may be required to make certain: (i) license maintenance fee payments; (ii) out-of-pocket expense payments, including, but not limited to, payments related to intellectual property and research related expenses; (iii) development and commercialization expense payments; (iv) annual and quarterly minimum payments; (v) diligence expense payments; and (vi) revenue interest payments. In addition, subject to the achievement of certain development and/or commercialization events, we may also be required to make certain: (i) minimum royalty payments, ranging from middle to high five figures, (ii) sales-based royalties and running royalties, ranging from low single digits to low double digits; and (iii) milestone payments, of up to approximately $35 million (if all milestones in all of our current agreements are achieved).

Additional funding will be necessary to fund our future clinical and pre-clinical activities. We may obtain additional financing through sales of our equity and debt securities or entering into strategic partnership arrangements, or a combination of the foregoing. There are no assurances that we will be successful in obtaining an adequate level of financing as and when needed to finance our operations on terms acceptable to us or at all, particularly in light of the economic downturn. If we are unable to secure adequate additional funding as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our product candidates.

Cash Flows from Operating Activities

For the nine months ended September 30, 2025, net cash used in operating activities was approximately $7.65 million, which primarily resulted from a net loss of approximately $9.78 million, an increase in prepaid expenses and other current assets of approximately $357,000 and an increase in accounts payable and accrued expenses of approximately $196,000, offset by approximately $850,000 of non-cash research and development-acquired patent, $1.4 million in stock-based compensation and professional fees, and unrealized loss on crypto assets of $25,000.

For the nine months ended September 30, 2024, net cash used in operations was approximately $5.0 million, which primarily resulted from a net loss of approximately $6.1 million, adjusted for the add back of stock-based compensation of approximately $804,000, a decrease in prepaid expenses and other current assets of approximately $200,000, and an increase in accounts payable and accrued expenses of $100,000.

Cash Flows from Investing Activities

During the nine months ended September 30, 2025, the Company purchased $300,000 in crypto assets. The Company did not have any cash flows from investing activities for the nine months ended September 30, 2024.

Cash Flows from Financing Activities

For the nine months ended September 30, 2025, net cash provided by financing activities was approximately $8.76 million, which primarily resulted from net proceeds from the issuance of common stock of approximately $3.5 million and proceeds from the exercise of warrants of approximately $5.6 million, offset by the payment of taxes related to the net share settlement of an equity award of $376,000.

For the nine months ended September 30, 2024, net cash provided by financing activities was approximately $3.7 million, which resulted from net proceeds from the exercise of warrants.

Critical Accounting Estimates

The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts and related disclosures in the financial statements. Management considers an accounting estimate to be critical if:

●

it requires assumptions to be made that were uncertain at the time the estimate was made; and

●

changes in the estimate or different estimates that could have been selected could have a material impact in our results of operations or financial condition.

While we base our estimates and judgments on our experience and on various other factors that we believe to be reasonable under the circumstances, actual results could differ from those estimates and the differences could be material.

See Note 2 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for an additional discussion of our significant accounting policies.

Stock-based compensation

The Company accounts for stock-based payment awards exchanged for services at the estimated grant date fair value of the award. Stock options issued under the Company's long-term incentive plans are granted with an exercise price equal to no less than the market price of the Company's stock at the date of grant and expire up to ten years from the date of grant. Options are generally issued fully vested. The Company accounts for forfeited awards as they occur.

The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model and the assumptions used in calculating the fair value of stock-based awards represent management's best estimates and involve inherent uncertainties and the application of management's judgment.

Expected Term - The expected term of options represents the period that the Company's stock-based awards are expected to be outstanding based on the simplified method, which is the half-life from vesting to the end of its contractual term.

Expected Volatility - The Company computes stock price volatility over expected terms based on its historical common stock trading prices.

Risk-Free Interest Rate - The Company bases the risk-free interest rate on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term.

Expected Dividend - The Company has never declared or paid any cash dividends on its common shares and does not plan to pay cash dividends in the foreseeable future, and, therefore, uses an expected dividend yield of zero in its valuation models.

The Company grants restricted stock awards under its equity incentive plan. Restricted stock awards are granted to employees and non-employees. The restricted stock awards are measured based on the grant-date fair value. In general, the restricted stock awards vest over a service period of zero to three years. Stock-based compensation expense is generally recognized based on the straight-line basis over the requisite service period and forfeitures are accounted for as they occur.

The Company has issued warrants to non-employees. The warrants are measured based on the grant-date fair value. In general, the warrants vest over a term of zero to ten years. Stock-based compensation expense is generally recognized based on the straight-line basis over the vesting term.

Income taxes

Income taxes are recorded in accordance with Accounting Standards Codification ("ASC") 740, Income Taxes ("ASC 740") which provides for deferred taxes using an asset and liability approach. We recognize deferred tax assets and liabilities for the expected future tax consequences of events that have been included in our unaudited condensed consolidated financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between our financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

We account for uncertain tax positions in accordance with the provisions of ASC 740. When uncertain tax positions exist, we recognize the tax benefit of tax positions to the extent that the benefit would more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances.

Recently Adopted Accounting Standards

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40), which requires entities to provide more detailed disaggregation of expenses in the income statement, focusing on the nature of the expenses rather than their function. The new disclosures will require entities to separately present expenses for significant line items, including but not limited to, depreciation, amortization, and employee compensation. Entities will also be required to provide a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, disclose the total amount of selling expenses and, in annual reporting periods, provide a definition of what constitutes selling expenses. This pronouncement is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company does not expect the adoption of this new guidance to have a material impact on its consolidated financial statements.