Financial Results - Anebulo Pharmaceuticals reported its financial results for Q3 2024 on November 13, 2024[2] - The financial results announcement includes a business update alongside the earnings report[2] - The report does not specify detailed financial metrics or performance indicators in the provided content[3] Company Classification - The company is classified as an emerging growth company under the Securities Act[2] Stock Information - Anebulo Pharmaceuticals' common stock is traded on The Nasdaq Stock Market under the symbol ANEB[1] Press Release - The press release detailing the financial results is included as Exhibit 99.1[4]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 or FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2024 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-40388 ANEBULO PHARMACEUTICALS, INC. (Exact name of Registrant as specified in its charter) Delaware 85-1170950 (State or other jurisdiction of incorporation or organization) (I ...

[Executive Summary & Recent Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Recent%20Highlights) Anebulo Pharmaceuticals secured a NIDA grant to prioritize the IV formulation of selonabant for unintentional cannabis poisoning in children, targeting clinical studies by early 2025 [Fourth Quarter Fiscal Year 2024 and Subsequent Highlights](index=1&type=section&id=Fourth%20Quarter%20Fiscal%20Year%202024%20and%20Subsequent%20Highlights) Anebulo Pharmaceuticals received a significant grant from NIDA to advance its intravenous (IV) formulation of selonabant, prioritizing its development for unintentional cannabis poisoning in children - Anebulo was awarded the first tranche of a two-year cooperative grant of up to approximately **$1.9 million** from the National Institute on Drug Abuse (NIDA)[2](index=2&type=chunk) - The Company prioritizes the development of selonabant IV formulation for unintentional cannabis poisoning in children, in response to growing medical need and impending DEA scheduling change for marijuana[2](index=2&type=chunk) - Anebulo aims to complete IND-enabling activities and scale up its IV formulation of selonabant around calendar year-end 2024, with the first healthy adult volunteer expected to be enrolled in clinical studies in the first half of calendar 2025[2](index=2&type=chunk) [Financial Results](index=2&type=section&id=Financial%20Results) The company reported significant reductions in operating expenses and net losses for both Q4 and full fiscal year 2024, maintaining a stable cash position [Financial Results for the Three Months Ended June 30, 2024 (Q4 FY2024)](index=2&type=section&id=Financial%20Results%20for%20the%20three%20months%20ended%20June%2030%2C%202024) Anebulo Pharmaceuticals reported a significant reduction in operating expenses and net loss for the fourth quarter of fiscal year 2024 compared to the prior year, alongside a cash balance of $3.1 million Q4 Fiscal Year 2024 Financial Highlights | Metric | Q4 FY2024 (USD) | Q4 FY2023 (USD) | Change (YoY) | | :----------------- | :-------------- | :-------------- | :----------- | | Operating Expenses | $1,300,000 | $2,500,000 | -48.0% | | Net Loss | $(1,300,000) | $(2,500,000) | -48.0% | | Net Loss Per Share | $(0.05) | $(0.10) | -50.0% | - Cash and cash equivalents were **$3.1 million** as of June 30, 2024[4](index=4&type=chunk) - The Company has access to an additional **$10 million** in cash through a Loan and Security Agreement executed on November 13, 2023[4](index=4&type=chunk) [Financial Results for the Twelve Months Ended June 30, 2024 (FY2024)](index=2&type=section&id=Financial%20Results%20for%20the%20twelve%20months%20ended%20June%2030%2C%202024) For the full fiscal year 2024, Anebulo Pharmaceuticals significantly reduced its operating expenses and net loss, primarily due to the completion of its Phase 2 clinical trial and a strategic shift in development focus Fiscal Year 2024 Financial Highlights | Metric | FY2024 (USD) | FY2023 (USD) | Change (YoY) | | :----------------- | :-------------- | :-------------- | :----------- | | Operating Expenses | $8,300,000 | $11,800,000 | -29.66% | | Net Loss | $(8,200,000) | $(11,700,000) | -30.00% | | Net Loss Per Share | $(0.32) | $(0.47) | -31.91% | - Research and Development expenses decreased approximately **$2.1 million** from the prior year, mainly due to the completion of the Phase 2 proof of concept clinical trial for ACI and prioritizing the selonabant IV formulation[5](index=5&type=chunk) - General and Administrative expenses decreased **$1.4 million** from the prior period, primarily due to reductions in compensation, professional fees, and insurance premiums[5](index=5&type=chunk) [Condensed Financial Statements](index=4&type=section&id=Condensed%20Financial%20Statements) The condensed financial statements provide a detailed breakdown of Anebulo's financial position and operational performance for the periods ended June 30, 2024 and 2023, reflecting reduced expenses and net losses [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) Anebulo's balance sheet as of June 30, 2024, shows a decrease in cash and total assets compared to the prior year, alongside a significant reduction in total liabilities and stockholders' equity Condensed Balance Sheet (as of June 30) | Metric | 2024 (USD) | 2023 (USD) | Change (YoY) | | :---------------------- | :------------ | :------------- | :----------- | | Cash and cash equivalents | $3,094,200 | $11,247,403 | -72.53% | | Total assets | $4,073,114 | $11,670,151 | -65.09% | | Total liabilities | $260,583 | $1,068,801 | -75.61% | | Total stockholders' equity| $3,812,531 | $10,601,350 | -64.04% | [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) The statements of operations detail the company's reduced operating expenses and net losses for both the fourth quarter and the full fiscal year 2024, driven by lower R&D and G&A costs Condensed Statements of Operations (Q4 and FY Ended June 30) | Metric | Q4 2024 (USD) | Q4 2023 (USD) | FY 2024 (USD) | FY 2023 (USD) | | :-------------------------- | :------------ | :------------ | :------------ | :------------ | | Research and development | $467,706 | $1,417,159 | $3,548,937 | $5,600,197 | | General and administrative | $872,661 | $1,077,230 | $4,759,818 | $6,183,402 | | Total operating expenses | $1,340,367 | $2,494,389 | $8,308,755 | $11,783,599 | | Loss from operations | $(1,340,367) | $(2,494,389) | $(8,308,755) | $(11,783,599) | | Net loss | $(1,349,969) | $(2,495,580) | $(8,201,703) | $(11,732,338) | | Net loss per share | $(0.05) | $(0.10) | $(0.32) | $(0.47) | [Product and Company Information](index=2&type=section&id=Product%20and%20Company%20Information) This section details Selonabant (ANEB-001) as the lead product candidate for cannabis toxicity and provides an overview of Anebulo Pharmaceuticals' strategic development focus [About Selonabant (ANEB-001)](index=2&type=section&id=About%20Selonabant%20%28ANEB-001%29) Selonabant (ANEB-001) is Anebulo's lead product candidate, a potent CB1 receptor antagonist being developed as a specific antidote for cannabis toxicity, including acute cannabinoid intoxication (ACI) and unintentional cannabis poisoning, with a strategic focus on an IV formulation for pediatric patients - Selonabant (ANEB-001) is a potent, small molecule antagonist of the cannabinoid receptor type-1 (CB1), developed to address unmet medical needs for cannabis toxicity[7](index=7&type=chunk) - It is under development as both an orally bioavailable and an intravenous (IV) treatment, with the IV formulation being prioritized for unintentional cannabis poisoning in children[7](index=7&type=chunk)[8](index=8&type=chunk) - Selonabant is protected by two issued patents covering methods of use and composition of matter, with multiple pending applications[7](index=7&type=chunk) [About Anebulo Pharmaceuticals, Inc.](index=3&type=section&id=About%20Anebulo%20Pharmaceuticals%2C%20Inc.) Anebulo Pharmaceuticals is a clinical-stage biopharmaceutical company focused on developing novel solutions for acute cannabinoid intoxication and unintentional cannabis intoxication, strategically shifting its primary development focus to an IV formulation of selonabant for pediatric patients - Anebulo Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company developing novel solutions for acute cannabinoid intoxication and unintentional cannabis intoxication[8](index=8&type=chunk) - The company has completed dosing in a Phase 2 clinical trial for oral selonabant but is prioritizing the advancement of an IV formulation for pediatric patients with unintentional cannabis poisoning, believing it offers a faster timeline to approval[8](index=8&type=chunk) [Additional Information](index=3&type=section&id=Additional%20Information) This section outlines the company's forward-looking statements, emphasizing inherent risks and uncertainties, and provides essential contact information [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section provides a cautionary statement regarding forward-looking statements, highlighting that future performance is subject to various risks, uncertainties, and assumptions, and Anebulo undertakes no obligation to update these statements - Statements in the press release that are not historical facts are forward-looking statements, identifiable by words such as 'anticipate,' 'expect,' 'may,' 'will,' and 'should'[9](index=9&type=chunk) - Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, including the ability to pursue regulatory strategy, obtain approvals, secure funding, complete clinical trials, and maintain patents[9](index=9&type=chunk) - Anebulo undertakes no obligation to update or revise forward-looking statements to reflect new information, future events, or changed conditions, except as required by law[9](index=9&type=chunk) [Contacts](index=3&type=section&id=CONTACTS) Contact information for Anebulo Pharmaceuticals' Chief Financial Officer is provided for inquiries - Contact for Anebulo Pharmaceuticals, Inc.: Daniel George, Part-time Chief Financial Officer, (512) 598-0931, Dan@anebulo.com[10](index=10&type=chunk)

[Special Note Regarding Forward-Looking Statements](index=4&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to risks, and actual results may differ materially from expectations - This Quarterly Report contains forward-looking statements subject to substantial risks and uncertainties, and actual results may differ materially from those anticipated. The company does not undertake to update or revise these statements unless required by law[6](index=6&type=chunk)[8](index=8&type=chunk) [Risk Factors Summary](index=5&type=section&id=Risk%20Factors%20Summary) This section provides a concise overview of the primary risks facing the company, including financial, operational, and developmental challenges - The company has not generated revenue since inception and expects future losses, potentially never achieving profitability[9](index=9&type=chunk) - Business is highly dependent on its lead product candidate, selonabant, requiring completion of clinical testing for regulatory approval and commercialization[10](index=10&type=chunk) - Substantial additional funding is required; inability to raise capital could force delays or elimination of product development programs[10](index=10&type=chunk) - The Loan and Security Agreement (LSA) with 22NW and JFL for a debt facility may be secured by substantially all company assets, and a default would have material adverse consequences[10](index=10&type=chunk) - Clinical drug development is a lengthy, expensive process with uncertain outcomes, and failure to successfully conduct trials and obtain regulatory approval would substantially harm the business[12](index=12&type=chunk) [PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's financial position, performance, and significant accounting policies for the periods ended March 31, 2024, and June 30, 2023 [Condensed Balance Sheets](index=7&type=section&id=Condensed%20Balance%20Sheets) This statement presents the company's financial position, including assets, liabilities, and equity, at specific points in time | Metric | March 31, 2024 | June 30, 2023 | | :------------------------- | :------------- | :------------ | | Cash and cash equivalents | $5,147,139 | $11,247,403 | | Prepaid expenses | $223,676 | $422,748 | | Total current assets | $5,370,815 | $11,670,151 | | Loan commitment fees | $624,820 | - | | Total assets | $5,995,635 | $11,670,151 | | Accounts payable | $384,920 | $534,545 | | Accrued expenses | $625,401 | $534,256 | | Total liabilities | $1,010,321 | $1,068,801 | | Common stock | $25,934 | $25,634 | | Additional paid-in capital | $69,013,155 | $67,777,757 | | Accumulated deficit | $(64,053,775) | $(57,202,041) | | Total stockholders' equity | $4,985,314 | $10,601,350 | | Total liabilities and stockholders' equity | $5,995,635 | $11,670,151 | [Condensed Statements of Operations](index=8&type=section&id=Condensed%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net loss over specific reporting periods | Metric | 3 Months Ended Mar 31, 2024 | 3 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2024 | 9 Months Ended Mar 31, 2023 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Research and development | $748,339 | $1,089,342 | $3,081,231 | $4,183,038 | | General and administrative | $915,912 | $1,774,699 | $3,887,157 | $5,106,172 | | Total operating expenses | $1,664,251 | $2,864,041 | $6,968,388 | $9,289,210 | | Loss from operations | $(1,664,251) | $(2,864,041) | $(6,968,388) | $(9,289,210) | | Interest expense | $59,696 | - | $91,534 | - | | Interest income | $(68,084) | $(79,152) | $(198,804) | $(92,401) | | Other income, net | $(10,709) | $(66,070) | $(116,654) | $(52,452) | | Net loss | $(1,653,542) | $(2,797,971) | $(6,851,734) | $(9,236,758) | | Weighted average common shares outstanding | 25,933,217 | 25,633,217 | 25,784,853 | 24,888,916 | | Net loss per share, basic and diluted | $(0.06) | $(0.11) | $(0.27) | $(0.37) | [Condensed Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Statements%20of%20Stockholders%27%20Equity) This statement tracks changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit | Metric | Balance at June 30, 2023 | Balance at March 31, 2024 | | :-------------------------- | :----------------------- | :------------------------ | | Common Shares | 25,633,217 | 25,933,217 | | Common Stock Amount | $25,634 | $25,934 | | Additional Paid-in Capital | $67,777,757 | $69,013,155 | | Accumulated Deficit | $(57,202,041) | $(64,053,775) | | Total Stockholders' Equity | $10,601,350 | $4,985,314 | - The company issued 300,000 shares of common stock in the nine months ended March 31, 2024, increasing common stock amount by $300 and additional paid-in capital by $653,700[19](index=19&type=chunk) - Net loss for the nine months ended March 31, 2024, was $(6,851,734), contributing to the accumulated deficit[19](index=19&type=chunk) [Condensed Statements of Cash Flows](index=10&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities over specific periods | Cash Flow Activity | Nine Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2023 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(6,037,910) | $(6,833,887) | | Net cash (used in) provided by financing activities | $(62,354) | $6,450,221 | | Net decrease in cash | $(6,100,264) | $(383,666) | | Cash, beginning of period | $11,247,403 | $14,548,471 | | Cash, end of period | $5,147,139 | $14,164,805 | - A noncash financing commitment fee of $654,000 was funded through the issuance of common stock during the nine months ended March 31, 2024[20](index=20&type=chunk) [Notes to Unaudited Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) [Note 1. Nature of business and basis of presentation](index=11&type=section&id=Note%201.%20Nature%20of%20business%20and%20basis%20of%20presentation) Anebulo Pharmaceuticals, Inc. is a clinical-stage biotechnology company founded in April 2020, focusing on treatments for Acute Cannabinoid Intoxication (ACI) and unintentional cannabis poisoning. The company has incurred significant losses since inception, with an accumulated deficit of $64.1 million as of March 31, 2024, but expects current cash and a debt facility to fund operations for at least the next 12 months - Anebulo Pharmaceuticals, Inc. was founded on April 23, 2020, as a clinical-stage biotechnology company developing treatments for Acute Cannabinoid Intoxication (ACI) and unintentional cannabis poisoning[23](index=23&type=chunk) - The company incurred a net loss of approximately $6.9 million for the nine-month period ended March 31, 2024, and had an accumulated deficit of $64.1 million as of that date[24](index=24&type=chunk) - Current cash, along with access to the Loan and Security Agreement (LSA) facility, is expected to fund operating expenses and capital expenditure requirements for at least 12 months from the financial statements' issuance date[24](index=24&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=12&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note confirms that there have been no material changes to the company's significant accounting policies since the audited financial statements for the year ended June 30, 2023 [Note 3. Prepaid Expenses](index=13&type=section&id=Note%203.%20Prepaid%20Expenses) Prepaid expenses decreased from $422,748 at June 30, 2023, to $223,676 at March 31, 2024, primarily due to a significant reduction in prepaid insurance | Prepaid Expense Category | March 31, 2024 | June 30, 2023 | | :----------------------- | :------------- | :------------ | | Prepaid insurance | $39,175 | $391,750 | | Prepaid research and development | $122,711 | - | | Prepaid other | $61,790 | $30,998 | | **Total prepaid expenses** | **$223,676** | **$422,748** | [Note 4. Accrued Expenses](index=13&type=section&id=Note%204.%20Accrued%20Expenses) Accrued expenses increased from $534,256 at June 30, 2023, to $625,401 at March 31, 2024, mainly driven by an increase in accrued research and development costs | Accrued Expense Category | March 31, 2024 | June 30, 2023 | | :----------------------- | :------------- | :------------ | | Accrued payroll related expenses | $170,040 | $190,121 | | Accrued research and development | $441,748 | $344,135 | | Accrued professional fees | $13,613 | - | | **Total accrued expenses** | **$625,401** | **$534,256** | [Note 5. Other Assets](index=13&type=section&id=Note%205.%20Other%20Assets) Other assets primarily consist of loan commitment fees, which totaled $0.6 million as of March 31, 2024, and are being amortized over the three-year term of the loan, resulting in $0.1 million in interest expense for the three and nine months ended March 31, 2024 - Loan commitment fees, included in other assets, totaled approximately **$0.6 million** as of March 31, 2024 (zero as of June 30, 2023)[34](index=34&type=chunk) - Interest expense of **$0.1 million** was recorded for both the three and nine months ended March 31, 2024, related to the amortization of these loan commitment fees[34](index=34&type=chunk) [Note 6. License Agreement](index=13&type=section&id=Note%206.%20License%20Agreement) The company holds an exclusive license from Vernalis Development Limited for selonabant, involving potential development and sales milestone payments up to $29.9 million and $35.0 million respectively, plus single-digit royalties. In 2021, 192,857 common shares were issued to Vernalis in lieu of $1.4 million in future milestone payments - In May 2020, the company licensed intellectual property, know-how, and clinical trial data from Vernalis Development Limited[35](index=35&type=chunk) - The license includes potential development milestone payments ranging from **$0.4 million to $3.0 million**, up to a total of **$29.9 million**, and sales milestone payments of **$10.0 million and $25.0 million**, plus single-digit royalties on product sales[35](index=35&type=chunk) - As part of its IPO in May 2021, the company issued **192,857 shares** of common stock to Vernalis, valued at approximately **$1.4 million**, in lieu of future milestone payments[36](index=36&type=chunk) [Note 7. Stockholders' Equity](index=14&type=section&id=Note%207.%20Stockholders%27%20Equity) The company increased its authorized common stock from 40,000,000 to 50,000,000 shares in November 2023. Additionally, 300,000 shares of common stock were issued in November 2023 in connection with a Loan and Security Agreement - On November 20, 2023, the authorized number of common stock shares increased from **40,000,000 to 50,000,000**[37](index=37&type=chunk) - On November 13, 2023, **300,000 shares** of common stock were issued in conjunction with a Loan and Security Agreement[38](index=38&type=chunk) [Note 8. Stock-Based Compensation](index=14&type=section&id=Note%208.%20Stock-Based%20Compensation) The 2020 Stock Incentive Plan allows for various awards, with 635,315 shares available for future issuance as of March 31, 2024. Stock options are valued using the Black-Scholes model, and unrecognized stock-based compensation expense totaled approximately $2.1 million as of March 31, 2024, to be recognized over 3.1 years - As of March 31, 2024, **635,315 shares** were available for future issuance under the 2020 Stock Incentive Plan[39](index=39&type=chunk) - The fair value of stock options is estimated using the Black-Scholes option pricing model[40](index=40&type=chunk) - Unrecognized stock-based compensation expense related to unvested stock options totaled approximately **$2.1 million** as of March 31, 2024, expected to be recognized over a weighted average period of **3.1 years**[43](index=43&type=chunk) | Metric | 3 Months Ended Mar 31, 2024 | 3 Months Ended Mar 31, 2023 | 9 Months Ended Mar 31, 2024 | 9 Months Ended Mar 31, 2023 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Stock-based compensation expense | $0.2 million | $0.2 million | $0.6 million | $0.7 million | [Note 9. Net Loss Per Share Attributable to Common Stockholders](index=16&type=section&id=Note%209.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Stockholders) This note identifies the common stock equivalents, including stock options and warrants, that were excluded from the calculation of net loss per share due to their anti-dilutive effect for the periods presented | Common Stock Equivalents | March 31, 2024 | March 31, 2023 | | :----------------------- | :------------- | :------------- | | Stock options outstanding | 2,008,185 | 2,049,313 | | Warrants outstanding | 2,264,650 | 2,264,650 | | **Total** | **4,272,835** | **4,313,963** | [Note 10. Loan and Security Agreement](index=16&type=section&id=Note%2010.%20Loan%20and%20Security%20Agreement) The company entered into a Loan and Security Agreement (LSA) on November 13, 2023, with 22NW and JFL, providing access to up to $10 million. The facility accrues interest at 0.25% per annum and will be collateralized by substantially all company assets upon drawing at least $3 million. As consideration, 300,000 common shares were issued to 22NW upon signing, with potential for additional shares based on advances. No balance was outstanding as of March 31, 2024 - Entered into a Loan and Security Agreement (LSA) on November 13, 2023, with 22NW and JFL, providing access to up to **$10 million** (Facility Amount) until November 13, 2026[48](index=48&type=chunk) - The outstanding balance accrues interest at **0.25% per annum**, and the LSA will be collateralized by substantially all company assets upon drawing at least **$3 million**[48](index=48&type=chunk) - **300,000 shares** of common stock were issued to 22NW upon signing the LSA, with potential for up to an additional **300,000 'Advance Shares'** based on amounts loaned[49](index=49&type=chunk) - As of March 31, 2024, there was **no balance outstanding** under the LSA[49](index=49&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Anebulo Pharmaceuticals, Inc.'s business, a detailed discussion of its financial condition, and an analysis of its results of operations for the three and nine months ended March 31, 2024, compared to the same periods in 2023. It highlights the company's strategic shift to prioritize an intravenous formulation of selonabant for pediatric unintentional cannabis poisoning, its liquidity, and critical accounting estimates [Overview](index=17&type=section&id=Overview) This section provides a high-level summary of the company's business, strategic focus, and recent operational highlights - Anebulo Pharmaceuticals is a clinical-stage biotechnology company developing selonabant (formerly ANEB-001) for Acute Cannabinoid Intoxication (ACI) and unintentional cannabis poisoning[52](index=52&type=chunk) - The company completed its Phase 2 Netherlands Trial (Parts A, B, and C) with a total of **154 subjects**, and the data supports its development pathway[52](index=52&type=chunk) - Anebulo is now prioritizing the advancement of a selonabant IV formulation for pediatric unintentional cannabis poisoning, believing it offers a faster timeline to approval compared to the adult oral product[53](index=53&type=chunk)[54](index=54&type=chunk) - Cannabis-related emergency department visits in the U.S. increased from an estimated **450,000 annually** before legalization to approximately **1.7 million in 2019**, growing at about a **15% compounded annual rate**[56](index=56&type=chunk) - The company's proprietary position is protected by two issued U.S. patents (through **2040 and 2042**) covering methods of use and crystalline forms of selonabant[58](index=58&type=chunk)[61](index=61&type=chunk) [Components of Results of Operations](index=19&type=section&id=Components%20of%20Results%20of%20Operations) [Revenue](index=19&type=section&id=Revenue) The company has not generated any revenue since its inception and anticipates continued operating losses, with future revenue contingent on successful product development, marketing approval, or collaboration agreements - The company has not generated any revenue since inception and expects to incur significant operating losses and negative cash flows in the future[65](index=65&type=chunk) [Research and Development Expenses](index=20&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses are a significant portion of operating costs, covering consulting, nonclinical and clinical study costs, and manufacturing. These costs are expensed as incurred and are expected to increase with the advancement of selonabant and pipeline expansion - Research and development expenses include consulting, nonclinical and clinical study costs, and manufacturing for selonabant[67](index=67&type=chunk) - The company expects to significantly increase R&D efforts as it continues to develop selonabant and expand its product-candidate pipeline[67](index=67&type=chunk) [General and Administrative Expenses](index=20&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses primarily consist of professional fees, stock-based compensation, insurance, personnel costs, and rent - General and administrative expenses primarily consist of professional fees, stock-based compensation, insurance, personnel costs, and rent[69](index=69&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) [Comparison of the Three and Nine Months Ended March 31, 2024 and 2023](index=20&type=section&id=Comparison%20of%20the%20Three%20and%20Nine%20Months%20Ended%20March%2031%2C%202024%20and%202023) Total operating expenses decreased by $1.2 million for the three months and $2.3 million for the nine months ended March 31, 2024, compared to the prior year, leading to a reduced net loss of $(1.7) million and $(6.9) million, respectively | Metric | 3 Months Ended Mar 31, 2024 | 3 Months Ended Mar 31, 2023 | Period Change | 9 Months Ended Mar 31, 2024 | 9 Months Ended Mar 31, 2023 | Period Change | | :-------------------------- | :-------------------------- | :-------------------------- | :------------ | :-------------------------- | :-------------------------- | :------------ | | Research and development | $748,339 | $1,089,342 | $(341,003) | $3,081,231 | $4,183,038 | $(1,101,807) | | General and administrative | $915,912 | $1,774,699 | $(858,787) | $3,887,157 | $5,106,172 | $(1,219,015) | | Total operating expenses | $1,664,251 | $2,864,041 | $(1,199,790) | $6,968,388 | $9,289,210 | $(2,320,822) | | Net loss | $(1,653,542) | $(2,797,971) | $1,144,429 | $(6,851,734) | $(9,236,758) | $2,385,024 | [Research and Development Expenses](index=21&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses decreased by $341,003 for the three months and $1,101,807 for the nine months ended March 31, 2024, primarily due to the completion of the Phase 2 proof-of-concept trial | R&D Category | 3 Months Ended Mar 31, 2024 | 3 Months Ended Mar 31, 2023 | Period Change | 9 Months Ended Mar 31, 2024 | 9 Months Ended Mar 31, 2023 | Period Change | | :-------------------------- | :-------------------------- | :-------------------------- | :------------ | :-------------------------- | :-------------------------- | :------------ | | Pre-clinical and clinical studies | $199,560 | $442,852 | $(243,292) | $1,341,352 | $1,934,116 | $(592,764) | | Contract manufacturing | $257,411 | $118,197 | $139,214 | $898,943 | $957,430 | $(58,487) | | Other research and development | $291,368 | $528,293 | $(236,925) | $840,936 | $1,246,811 | $(405,875) | | **Total R&D expenses** | **$748,339** | **$1,089,342** | **$(341,003)** | **$3,081,231** | **$4,183,038** | **$(1,101,807)** | - The overall decrease in research and development expenses was primarily attributable to the completion of the Phase 2 proof-of-concept trial for ACI[73](index=73&type=chunk) [General and Administrative Expenses](index=21&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased by $858,787 for the three months and $1,219,015 for the nine months ended March 31, 2024, mainly due to strategic cost reductions in professional and consultant fees and a decrease in directors' and officers' insurance premiums | G&A Category | 3 Months Ended Mar 31, 2024 | 3 Months Ended Mar 31, 2023 | Period Change | 9 Months Ended Mar 31, 2024 | 9 Months Ended Mar 31, 2023 | Period Change | | :-------------------------- | :-------------------------- | :-------------------------- | :------------ | :-------------------------- | :-------------------------- | :------------ | | Compensation and related benefits | $324,439 | $615,690 | $(291,251) | $1,437,319 | $1,573,662 | $(136,343) | | Professional and consultant fees | $265,134 | $633,804 | $(368,670) | $1,293,137 | $1,838,999 | $(545,862) | | Stock-based compensation expense | $151,639 | $223,637 | $(71,998) | $581,698 | $661,158 | $(79,460) | | Directors' and officers' insurance | $117,525 | $235,000 | $(117,475) | $352,575 | $711,877 | $(359,302) | | Facilities, fees and other costs | $57,175 | $66,568 | $(9,393) | $222,428 | $320,476 | $(98,048) | | **Total G&A expenses** | **$915,912** | **$1,774,699** | **$(858,787)** | **$3,887,157** | **$5,106,172** | **$(1,219,015)** | - The decrease in general and administrative expenses was primarily due to strategic cost reductions in professional and consultant fees and a lower yearly premium for directors' and officers' insurance[75](index=75&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) [Overview](index=21&type=section&id=Overview) The company has incurred significant operating losses since inception and expects this trend to continue. As of March 31, 2024, cash and cash equivalents stood at $5.1 million. The company plans to seek additional funding through equity, debt, or collaboration agreements to support future operations - The company has incurred significant operating losses since inception and expects to continue incurring significant expenses and operating losses[76](index=76&type=chunk) - As of March 31, 2024, cash and cash equivalents were approximately **$5.1 million**[76](index=76&type=chunk) - Additional funds will be sought through equity and debt financings or collaboration, license, and development agreements[76](index=76&type=chunk) [Loan and Security Agreement](index=21&type=section&id=Loan%20and%20Security%20Agreement) The company entered into an LSA on November 13, 2023, providing access to up to $10 million for future operations until November 13, 2026, with an interest rate of 0.25% per annum. The LSA will be collateralized by substantially all company assets upon drawing at least $3 million. As of March 31, 2024, no balance was outstanding, but 300,000 common shares were issued to 22NW upon signing - The LSA provides access to up to **$10 million** for future operations until November 13, 2026, with an interest rate of **0.25% per annum**[77](index=77&type=chunk) - Upon drawing at least **$3 million**, the LSA will be collateralized by substantially all of the company's assets[77](index=77&type=chunk) - **300,000 shares** of common stock were issued to 22NW upon signing the LSA, with potential for additional shares based on advances[78](index=78&type=chunk) - No balance was outstanding under the LSA as of March 31, 2024[79](index=79&type=chunk) [Cash Flows](index=23&type=section&id=Cash%20Flows) For the nine months ended March 31, 2024, net cash used in operating activities was $6.0 million, primarily due to a $6.9 million net loss, resulting in a net decrease in cash of $6.1 million, bringing the cash balance to $5.1 million | Cash Flow Activity | Nine Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2023 | | :---------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(6,037,910) | $(6,833,887) | | Net cash (used in) provided by financing activities | $(62,354) | $6,450,221 | | Net (decrease) increase in cash | $(6,100,264) | $(383,666) | - Net cash used in operating activities for the nine months ended March 31, 2024, was approximately **$6.0 million**, primarily driven by a net loss of **$6.9 million**[81](index=81&type=chunk) [Funding and Material Cash Requirements](index=23&type=section&id=Funding%20and%20Material%20Cash%20Requirements) The company anticipates its current cash and the LSA facility will fund operations for at least the next 12 months. However, due to uncertainties in program development, additional equity or debt financing, or collaboration agreements, will be necessary to meet future capital requirements, which may lead to dilution or restrictive covenants - Current cash and the LSA Facility Amount are expected to fund operating expenses and capital expenditures for at least the next **12 months** from the report filing date[83](index=83&type=chunk) - Additional funding will be required through equity offerings, debt financings, or collaboration agreements due to the numerous risks and uncertainties in program development[84](index=84&type=chunk) - Raising additional capital through equity may dilute existing stockholders, while debt financing could involve liens on assets and restrictive covenants[85](index=85&type=chunk) [Contractual Obligations and Commitments](index=24&type=section&id=Contractual%20Obligations%20and%20Commitments) [License Agreement with Vernalis Development Limited](index=24&type=section&id=License%20Agreement%20with%20Vernalis%20Development%20Limited) The company has an exclusive worldwide royalty-bearing license for selonabant from Vernalis, involving potential development milestone payments up to $29.9 million and sales milestone payments up to $35.0 million, plus low to mid-single digit royalties. In 2021, 192,857 common shares were issued to Vernalis in lieu of $1.4 million in future milestone payments - The company holds an exclusive worldwide royalty-bearing license from Vernalis Development Limited for selonabant[87](index=87&type=chunk) - The agreement includes potential development milestone payments up to **$29.9 million**, sales milestone payments up to **$35.0 million**, and low to mid-single digit royalties on net sales[87](index=87&type=chunk) - In May 2021, **192,857 shares** of common stock were issued to Vernalis in lieu of approximately **$1.4 million** in future milestone payments[87](index=87&type=chunk) [Office Lease, Manufacturing Contract and CRO Contract](index=25&type=section&id=Office%20Lease%2C%20Manufacturing%20Contract%20and%20CRO%20Contract) The company has an office sublease for approximately $400 per month, a manufacturing agreement with a third-party CMO for approximately $3.0 million (manufacturing aspect expected to be incurred by Q2 2024, stability study by 2026), and a CRO agreement for the Phase 2 clinical trial totaling approximately €2.8 million, which was substantially completed by December 31, 2023 - Office lease costs approximately **$400 per month**[90](index=90&type=chunk) - A manufacturing agreement with a third-party CMO has a total cost of approximately **$3.0 million**, with the manufacturing aspect expected to be fully incurred by **Q2 2024** and the stability study aspect by calendar **2026**[90](index=90&type=chunk) - A CRO agreement for the Phase 2 clinical trial, totaling approximately **€2.8 million**, was substantially completed as of December 31, 2023[90](index=90&type=chunk) [Critical Accounting Estimates](index=25&type=section&id=Critical%20Accounting%20Estimates) [Accrued Research and Development Expenses](index=25&type=section&id=Accrued%20Research%20and%20Development%20Expenses) The company estimates accrued R&D expenses by reviewing contracts, communicating with personnel, and estimating services performed when invoices are not yet received. These estimates cover fees for CROs, investigative sites, vendors for NDA filing/marketing, and product manufacturing/distribution, acknowledging potential for differences from actual costs - The company estimates accrued research and development expenses by reviewing open contracts, communicating with personnel, and estimating services performed when invoices are not yet received[94](index=94&type=chunk) - Estimated expenses include fees paid to CROs, investigative sites, vendors for NDA filing/marketing, and product manufacturing/distribution[94](index=94&type=chunk) [Stock-Based Compensation Expense](index=26&type=section&id=Stock-Based%20Compensation%20Expense) The 2020 Stock Incentive Plan allows for various stock-based awards, with the fair value of stock options estimated using the Black-Scholes option pricing model. Compensation expense is recognized over the vesting period, typically four years - The 2020 Stock Incentive Plan provides for the grant of qualified incentive stock options and nonqualified stock options or other awards[96](index=96&type=chunk) - The fair value of stock options is estimated using the Black-Scholes option pricing model, considering factors like volatility, expected term, risk-free rate, and dividend yield[97](index=97&type=chunk) - Stock-based compensation is measured at grant date fair value and recognized as expense over the requisite service period, generally the four-year vesting period[96](index=96&type=chunk) [JOBS Act Accounting Election](index=26&type=section&id=JOBS%20Act%20Accounting%20Election) As an 'emerging growth company' under the JOBS Act, the company has elected to utilize extended transition periods for new or revised financial accounting standards, which may affect the comparability of its financial statements to other public companies - As an 'emerging growth company' under the JOBS Act, the company has elected to take advantage of extended transition periods for complying with new or revised financial accounting standards[98](index=98&type=chunk) - This election may make the company's financial statements less comparable to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods[98](index=98&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Anebulo Pharmaceuticals, Inc. is not required to provide quantitative and qualitative disclosures about market risk in this report [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=27&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section assesses the effectiveness of the company's controls designed to ensure timely and accurate disclosure of financial and non-financial information - Management, with the CEO and CFO, concluded that the design and operation of disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2024[101](index=101&type=chunk) [Changes in Internal Control over Financial Reporting](index=27&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any modifications to the company's internal control system that occurred during the reporting period - There were no material changes in internal control over financial reporting during the three months ended March 31, 2024[102](index=102&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings and believes that any ordinary course claims will not have a material adverse effect on its business or financial condition - The company is not currently a party to any material legal proceedings[104](index=104&type=chunk) - Management believes that the final outcome of ordinary course matters will not have a material adverse effect on the business[104](index=104&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various risks that could significantly impact the company's business, financial condition, and operational results. These risks span across business and capital requirements, intellectual property, product development and regulatory approval, reliance on third parties, government regulation, and ownership of common stock, as well as general operational risks [Risks Related to our Business, Financial Condition and Capital Requirements](index=28&type=section&id=Risks%20Related%20to%20our%20Business%2C%20Financial%20Condition%20and%20Capital%20Requirements) This section highlights challenges related to profitability, funding needs, debt agreements, and dependence on key personnel - The company has not generated any revenue since inception and had an accumulated deficit of approximately **$64.1 million** as of March 31, 2024, expecting to incur future losses[106](index=106&type=chunk) - Future success is uncertain due to challenges in product development, manufacturing, sales, and regulatory approval, with inadequate financial resources being a key concern[108](index=108&type=chunk) - The company will need to raise additional capital, as current cash and the LSA facility are expected to fund operations only through the end of **Q2 2025**; failure to secure funding could lead to delays or elimination of programs[118](index=118&type=chunk) - The Loan and Security Agreement (LSA) with 22NW and JFL for a debt facility may be secured by substantially all company assets, and a default would have material adverse consequences, potentially leading to insolvency[121](index=121&type=chunk) - The company's operations are substantially dependent on its Founder and CEO, and the ability to hire other key personnel; loss of these individuals could disrupt business[123](index=123&type=chunk) [Risks Related to Our Intellectual Property](index=34&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section addresses potential issues with obtaining, maintaining, and enforcing patent protection for the company's product candidates - Inability to obtain and maintain broad patent protection for selonabant could allow competitors to develop and commercialize similar products, adversely affecting the company's ability to commercialize its product candidates[130](index=130&type=chunk)[131](index=131&type=chunk) - Existing and future patents may be challenged, narrowed, circumvented, or invalidated by third parties, leading to loss of exclusivity or inability to prevent competition[132](index=132&type=chunk)[137](index=137&type=chunk) - Failure to obtain patent term extension and data exclusivity for selonabant could materially harm the business by allowing competitors to enter the market sooner[143](index=143&type=chunk) - Protecting intellectual property rights globally is challenging due to varying laws and enforcement, potentially limiting the company's ability to prevent infringement in foreign jurisdictions[146](index=146&type=chunk)[147](index=147&type=chunk) [Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization](index=39&type=section&id=Risks%20Related%20to%20Product%20Development%2C%20Regulatory%20Approval%2C%20Manufacturing%20and%20Commercialization) This section covers uncertainties in clinical trials, regulatory hurdles, market acceptance, and potential side effects of product candidates - Clinical drug development is a lengthy, expensive, and uncertain process, with results of earlier studies not necessarily predictive of future trial outcomes[156](index=156&type=chunk)[193](index=193&type=chunk) - Failure to obtain required regulatory approvals for selonabant would prevent commercialization and limit revenue generation, as the approval process is complex and uncertain[158](index=158&type=chunk)[159](index=159&type=chunk) - Even if approved, commercial success depends on market acceptance by physicians, patients, and healthcare payors, influenced by factors like clinical safety, efficacy, pricing, and reimbursement[166](index=166&type=chunk)[167](index=167&type=chunk) - Selonabant may have undesirable side effects during clinical development or after marketing, which could delay or prevent approval, lead to restrictive labeling, or require market withdrawal[197](index=197&type=chunk)[198](index=198&type=chunk) - The company currently lacks a marketing and sales organization; inability to establish one or partner with third parties could prevent product revenue generation[200](index=200&type=chunk)[201](index=201&type=chunk) - New drugs developed by competitors, such as Aelis Farma and Opiant Pharmaceuticals, could obtain regulatory approval before selonabant, impairing the company's competitive position[202](index=202&type=chunk) [Risks Related to Our Reliance on Third Parties](index=50&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) This section discusses the risks associated with outsourcing preclinical testing, clinical trials, and manufacturing to external partners - The company depends on third parties for preclinical testing and clinical trials, which reduces control over these activities and may result in costs and delays, hindering regulatory approval or commercialization[205](index=205&type=chunk) - Complete reliance on third parties to manufacture selonabant means commercialization could be halted or delayed if manufacturers fail to obtain regulatory approval, provide sufficient quantities, or meet quality/price standards[209](index=209&type=chunk)[211](index=211&type=chunk) - Reliance on collaborations with third parties is subject to inherent risks, including termination rights, reduced payments, and loss of control over product development, which could restrict commercialization and profitability[218](index=218&type=chunk)[220](index=220&type=chunk) [Risks Related to Government Regulation of our Industry](index=53&type=section&id=Risks%20Related%20to%20Government%20Regulation%20of%20our%20Industry) This section examines the impact of healthcare reforms and regulatory requirements on product development and commercialization - Legislative or regulatory reforms in healthcare, such as the ACA and IRA, may increase commercialization costs, affect product pricing, and impact relationships with healthcare professionals[223](index=223&type=chunk)[226](index=226&type=chunk) - Clinical trials for selonabant conducted outside the United States and not under an IND may not be accepted by the FDA, potentially requiring additional costly and time-consuming trials[230](index=230&type=chunk) [Risks Related to Ownership of Our Common Stock](index=55&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) This section details factors affecting stock price volatility, potential dilution, control by principal stockholders, and anti-takeover provisions - The trading price and volume of the company's common stock have experienced and may continue to experience volatility due to various factors beyond its control, potentially leading to investment losses[231](index=231&type=chunk) - Future sales, or the perception of future sales, of a substantial number of common stock shares by the company or its stockholders could depress the trading price[235](index=235&type=chunk) - Principal stockholders and management own a substantial majority of the stock and can exert significant control over matters requiring stockholder approval, potentially preventing unsolicited acquisition proposals[235](index=235&type=chunk) - Anti-takeover provisions in charter documents and Delaware corporate law could discourage, delay, or prevent a change in control of the company[236](index=236&type=chunk)[238](index=238&type=chunk) - The company does not expect to pay any dividends on its common stock, as future earnings are expected to be retained for operations, expansion, and debt repayment[242](index=242&type=chunk) [General Risk Factors](index=58&type=section&id=General%20Risk%20Factors) This section encompasses broader operational risks, including internal control deficiencies, public company compliance costs, and data privacy and security concerns - Failure to establish and maintain proper and effective internal control over financial reporting could harm operating results and business, potentially leading to inaccurate financial statements and a decline in stock price[245](index=245&type=chunk)[246](index=246&type=chunk) - Operating as a public company incurs significantly increased costs and requires substantial management time for compliance efforts[247](index=247&type=chunk) - As an 'emerging growth company,' the election to delay adoption of new accounting standards may make financial statements less comparable and securities less attractive to investors[250](index=250&type=chunk) - The company is subject to stringent and evolving U.S. and foreign laws, regulations, and obligations related to data privacy and security; actual or perceived failure to comply could lead to regulatory actions, litigation, fines, and business disruptions[266](index=266&type=chunk)[274](index=274&type=chunk) - Compromised information technology systems or sensitive information, including those of third-party contractors, could lead to material disruption of product development, regulatory investigations, litigation, and reputational harm[277](index=277&type=chunk)[281](index=281&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell any unregistered equity securities during the quarter ended March 31, 2024. The proceeds from the initial public offering (IPO) have been exhausted, with no material changes to their planned use - No unregistered equity securities were sold during the quarter ended March 31, 2024[287](index=287&type=chunk) - Proceeds from the IPO have been exhausted, and there were no material changes in the planned use of proceeds[287](index=287&type=chunk) [Item 3. Defaults Upon Senior Securities](index=67&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period [Item 4. Mine Safety Disclosures](index=67&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company [Item 5. Other Information](index=67&type=section&id=Item%205.%20Other%20Information) During the three months ended March 31, 2024, no director or officer of the company adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'nonRule10b5-1 trading arrangement' - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'nonRule10b5-1 trading arrangement' during the three months ended March 31, 2024[288](index=288&type=chunk) [Item 6. Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, securities agreements, and certifications [Signatures](index=69&type=section&id=Signatures) This section confirms the official certification and submission of the report by authorized executive officers - The report is duly signed by Richard Anthony Cunningham, Chief Executive Officer, and Daniel George, Chief Financial Officer, on May 15, 2024[293](index=293&type=chunk)

[Filing Information](index=1&type=section&id=Filing%20Information) This section provides essential identification details and filing status for Anebulo Pharmaceuticals, Inc [Registrant Details](index=1&type=section&id=Registrant%20Details) This section details Anebulo Pharmaceuticals, Inc.'s core identification, incorporation, SEC filing, and stock listing | Detail | Value | | :--- | :--- | | Registrant Name | Anebulo Pharmaceuticals, Inc. | | Jurisdiction of Incorporation | Delaware | | Commission File Number | 001-40388 | | IRS Employer Identification No. | 85-1170950 | | Principal Executive Offices | 1017 Ranch Road 620 South, Suite 107 Lakeway, TX 78734 | | Telephone Number | (512) 598-0931 | | Trading Symbol | ANEB | | Exchange | Nasdaq Stock Market LLC | [Filing Status](index=1&type=section&id=Filing%20Status) Anebulo Pharmaceuticals, Inc. has indicated its status as an emerging growth company in this filing - Anebulo Pharmaceuticals, Inc. is designated as an emerging growth company[3](index=3&type=chunk) [Item 2.02 Results of Operations and Financial Condition](index=3&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) This section details the company's financial performance and business updates for the quarter ended March 31, 2024 [Quarterly Financial Results and Business Update](index=3&type=section&id=Quarterly%20Financial%20Results%20and%20Business%20Update) Anebulo Pharmaceuticals, Inc. announced Q1 2024 financial results and a business update via a May 15, 2024 press release, furnished as Exhibit 99.1 - On May 15, 2024, Anebulo Pharmaceuticals, Inc. issued a press release announcing financial results for the quarter ended March 31, 2024, and providing a business update[4](index=4&type=chunk) - The press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K[4](index=4&type=chunk) - The information in this report (including Exhibit 99.1) is furnished, not deemed 'filed,' for purposes of Section 18 of the Securities Exchange Act of 1934, and is not incorporated by reference in other filings unless expressly stated[4](index=4&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=3&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This section lists the financial statements and exhibits included in the Form 8-K filing [Exhibits](index=3&type=section&id=Exhibits) This section lists the Form 8-K exhibits, including the financial results press release and interactive data file | Exhibit Number | Description | | :--- | :--- | | 99.1 | Press Release dated May 15, 2024 | | 104 | Cover Page of Interactive Data File (embedded within the Inline XBRL document) | [Signatures](index=4&type=section&id=Signatures) This section provides details regarding the official signatory of the report [Report Signatory](index=4&type=section&id=Report%20Signatory) The report was officially signed by Anebulo Pharmaceuticals, Inc.'s CEO, Richard Anthony Cunningham, on May 15, 2024 - The report was signed on May 15, 2024, by Richard Anthony Cunningham, Chief Executive Officer (Principal Executive Officer) of Anebulo Pharmaceuticals, Inc.[6](index=6&type=chunk)[7](index=7&type=chunk)

Core Insights - Anebulo Pharmaceuticals is focused on developing treatments for acute cannabinoid intoxication (ACI) and has made significant progress towards becoming the first company to receive FDA approval for such a treatment [2][3][6]. Company Developments - Richie Cunningham has been appointed as the Chief Executive Officer, indicating a leadership change [2]. - The United States Adopted Names (USAN) has officially adopted "selonabant" as the generic name for the company's lead product candidate, ANEB-001 [2][3]. - Anebulo is advancing an intravenous (IV) formulation of selonabant, which is being scaled up for initial clinical safety studies, particularly for pediatric patients who may experience severe outcomes from cannabis exposure [2][3]. - The company has secured a credit facility of up to $10 million, reflecting investor confidence as it prepares for Phase 3 trials [4]. Financial Performance - For the three months ended December 31, 2023, operating expenses were $2.8 million, a decrease from $3.8 million in the same period of fiscal 2023 [5]. - The net loss for the second quarter of fiscal 2024 was $2.7 million, or $(0.11) per share, compared to a net loss of $3.8 million, or $(0.15) per share, in the same quarter of the previous year [5][12]. - As of December 31, 2023, the company had cash reserves of $6.6 million [5][10]. Product Information - Selonabant (ANEB-001) is a small molecule antagonist of cannabinoid receptor type 1 (CB1) and is being developed as a specific antidote for cannabis toxicity, including ACI [6][8]. - The company is targeting the initiation of Phase 3 registrational studies for oral selonabant in the first half of calendar 2024 [6][9].

[Special Note Regarding Forward-Looking Statements](index=4&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section provides a cautionary note regarding forward-looking statements, advising readers of inherent risks and uncertainties [Forward-Looking Statements Overview](index=4&type=section&id=Forward-Looking%20Statements%20Overview) This section highlights that the report contains forward-looking statements subject to substantial risks and uncertainties, which could cause actual results to differ materially - Forward-looking statements are identified by terminology such as 'believe,' 'may,' 'could,' 'will,' 'estimate,' 'continue,' 'anticipate,' 'intend,' 'seek,' 'plan,' 'expect,' 'should,' 'would,' 'potentially' or the negative of these terms or similar expressions[9](index=9&type=chunk) - These statements are based largely on current expectations, beliefs, estimates, and projections, and various assumptions, many of which are inherently uncertain and beyond the company's control[10](index=10&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statements to reflect new information or future events or developments, unless required by law[11](index=11&type=chunk) - Forward-looking statements include expectations regarding capital requirements, regulatory submissions, clinical trials, selonabant's clinical utility and market opportunity, future growth, intellectual property, licensing arrangements, commercial potential, third-party performance, competition, and the impact of economic/political events and regulations[12](index=12&type=chunk) [Risk Factors Summary](index=5&type=section&id=Risk%20Factors%20Summary) This section summarizes key investment risks, including lack of revenue, dependence on selonabant, and funding needs [Key Investment Risks](index=5&type=section&id=Key%20Investment%20Risks) This section provides a concise overview of the main risks associated with investing in the company's common stock, emphasizing that it is not exhaustive and directs readers to the full 'Risk Factors' section - The company has not generated any revenue since its inception and expects to incur future losses, with no guarantee of profitability[13](index=13&type=chunk) - The business is highly dependent on its lead product candidate, selonabant, requiring successful clinical testing and regulatory approval before commercialization[13](index=13&type=chunk) - Substantial additional funding will be needed, and an inability to raise capital could force delays, reductions, or elimination of product discovery and development programs[13](index=13&type=chunk) - The company depends substantially on intellectual property licensed from third parties, and termination of these licenses could result in the loss of significant rights[13](index=13&type=chunk) - A Loan and Security Agreement (LSA) with 22NW and JFL provides a debt facility that may be secured by substantially all company assets, with a default having material adverse consequences[13](index=13&type=chunk) - Clinical drug development is a lengthy, expensive process with an uncertain outcome, and results from early trials are not necessarily predictive of future success[13](index=13&type=chunk) - The company faces substantial competition, and its product candidates may cause undesirable side effects, potentially delaying or preventing regulatory approval[14](index=14&type=chunk) - The company currently lacks a marketing and sales organization and depends on third parties for manufacturing, which could halt or delay commercialization[14](index=14&type=chunk) [PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements and management's discussion and analysis of financial condition [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This item includes the company's unaudited condensed balance sheets, statements of operations, stockholders' equity, and cash flows [Condensed Balance Sheets](index=7&type=section&id=Condensed%20Balance%20Sheets) Presents the company's financial position as of December 31, 2023, and June 30, 2023, showing a decrease in total assets and stockholders' equity, primarily driven by a reduction in cash and cash equivalents | Metric | Dec 31, 2023 | Jun 30, 2023 | | :------------------------ | :----------- | :----------- | | Cash and cash equivalents | $6,644,517 | $11,247,403 | | Prepaid expenses | $171,740 | $422,748 | | Total current assets | $6,816,257 | $11,670,151 | | Loan commitment fees | $684,516 | - | | Total assets | $7,500,773 | $11,670,151 | | Accounts payable | $318,679 | $534,545 | | Accrued expenses | $694,877 | $534,256 | | Total liabilities | $1,013,556 | $1,068,801 | | Common stock | $25,934 | $25,634 | | Additional paid-in capital| $68,861,516 | $67,777,757 | | Accumulated deficit | $(62,400,233)| $(57,202,041)| | Total stockholders' equity| $6,487,217 | $10,601,350 | | Total liabilities and stockholders' equity | $7,500,773 | $11,670,151 | - Total assets decreased by **$4,169,378** from June 30, 2023, to December 31, 2023, primarily due to a reduction in cash and cash equivalents[16](index=16&type=chunk) - Total stockholders' equity decreased by **$4,114,133**, largely influenced by the accumulated deficit increasing to **$(62,400,233)**[16](index=16&type=chunk) [Condensed Statements of Operations](index=8&type=section&id=Condensed%20Statements%20of%20Operations) Details the company's operating results for the three and six months ended December 31, 2023, and 2022, showing a reduced net loss in the current periods primarily due to lower research and development and general and administrative expenses Operating Results (Three Months Ended December 31) | Metric | 2023 | 2022 | Change | | :------------------------ | :----------- | :----------- | :------- | | Research and development | $1,062,672 | $1,869,920 | $(807,248) | | General and administrative| $1,697,787 | $1,943,202 | $(245,415) | | Total operating expenses | $2,760,459 | $3,813,122 | $(1,052,663) | | Loss from operations | $(2,760,459) | $(3,813,122) | $1,052,663 | | Other (income) expenses, net | $(43,090) | $13,830 | $(56,920) | | Net loss | $(2,717,369) | $(3,826,952) | $1,109,583 | | Net loss per share | $(0.11) | $(0.15) | $0.04 | Operating Results (Six Months Ended December 31) | Metric | 2023 | 2022 | Change | | :------------------------ | :----------- | :----------- | :------- | | Research and development | $2,332,892 | $3,093,696 | $(760,804) | | General and administrative| $2,971,245 | $3,331,473 | $(360,228) | | Total operating expenses | $5,304,137 | $6,425,169 | $(1,121,032) | | Loss from operations | $(5,304,137) | $(6,425,169) | $1,121,032 | | Other (income) expenses, net | $(105,945) | $13,618 | $(119,563) | | Net loss | $(5,198,192) | $(6,438,787) | $1,240,595 | | Net loss per share | $(0.20) | $(0.26) | $0.06 | - Interest income increased significantly from **$(8,816)** to **$(75,522)** for the three months ended December 31, and from **$(13,249)** to **$(130,720)** for the six months ended December 31, year-over-year[19](index=19&type=chunk) [Condensed Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity) Outlines changes in stockholders' equity for various periods, showing a decrease in total equity from $10.6 million at June 30, 2023, to $6.5 million at December 31, 2023, primarily due to net losses, partially offset by stock-based compensation and issuance of common stock Stockholders' Equity Changes (Six Months Ended December 31, 2023) | Metric | Jun 30, 2023 | Dec 31, 2023 | Change | | :------------------------ | :----------- | :----------- | :------- | | Total Stockholders' Equity| $10,601,350 | $6,487,217 | $(4,114,133) | | Accumulated Deficit | $(57,202,041)| $(62,400,233)| $(5,198,192) | | Additional Paid-in Capital| $67,777,757 | $68,861,516 | $1,083,759 | | Common Stock Shares | 25,633,217 | 25,933,217 | 300,000 | - Net loss for the six months ended December 31, 2023, was **$(5,198,192)**[22](index=22&type=chunk) - Stock-based compensation expense contributed **$430,059** to additional paid-in capital during the six months ended December 31, 2023[22](index=22&type=chunk) - Issuance of common stock added **$654,000** to additional paid-in capital during the six months ended December 31, 2023[22](index=22&type=chunk) [Condensed Statements of Cash Flows](index=10&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Details the cash flow activities, indicating a net decrease in cash of approximately $4.6 million for the six months ended December 31, 2023, primarily due to cash used in operating activities, contrasting with a net increase in cash in the prior year period due to financing activities Cash Flow Summary (Six Months Ended December 31) | Metric | 2023 | 2022 | | :-------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(4,540,532) | $(4,643,342) | | Net cash (used in) provided by financing activities | $(62,354) | $6,450,221 | | Net (decrease) increase in cash | $(4,602,886) | $1,806,879 | | Cash, beginning of period | $11,247,403 | $14,548,471 | | Cash, end of the period | $6,644,517 | $16,355,350 | - Net cash used in operating activities for the six months ended December 31, 2023, was approximately **$4.5 million**, primarily from a net loss of **$5.2 million**, partially offset by non-cash adjustments of **$0.5 million** and changes in operating assets/liabilities of **$0.2 million**[84](index=84&type=chunk) - In 2023, noncash investing and financing activities included a **$654,000** financing commitment fee funded through the issuance of common stock[25](index=25&type=chunk) [Notes to Unaudited Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) This section provides detailed notes explaining the company's accounting policies and specific financial statement line items [Note 1. Nature of business and basis of presentation](index=11&type=section&id=Note%201%2E%20Nature%20of%20business%20and%20basis%20of%20presentation) Describes Anebulo Pharmaceuticals as a clinical-stage biotechnology company focused on treatments for Acute Cannabis Intoxication (ACI) and addiction, highlighting its ongoing development phase, accumulated deficit, and reliance on future funding - Anebulo Pharmaceuticals, Inc. is a clinical-stage biotechnology company focused on developing and commercializing new treatments for Acute Cannabis Intoxication (ACI) and addiction[27](index=27&type=chunk) - The company incurred a net loss of approximately **$5.2 million** for the six-month period ended December 31, 2023, and had an accumulated deficit of **$62.4 million** as of December 31, 2023[28](index=28&type=chunk) - Current cash, along with access to a **$10 million** debt facility (LSA), is expected to fund operating expenses and capital expenditure requirements for at least **12 months** from the financial statements' issuance date[28](index=28&type=chunk) - Future funding will be sought through equity and debt financings or collaboration agreements, with no assurance of obtaining funding on acceptable terms[28](index=28&type=chunk) - Key risks include uncertainty regarding clinical trial results, regulatory approval, market acceptance, competition, intellectual property protection, strategic relationships, and dependence on key individuals and sole source suppliers[29](index=29&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=12&type=section&id=Note%202%2E%20Summary%20of%20Significant%20Accounting%20Policies) States that there have been no material changes to the company's significant accounting policies since the filing of its Annual Report on Form 10-K for the year ended June 30, 2023 - No material changes to significant accounting policies have occurred since the audited financial statements for the year ended June 30, 2023, were filed[35](index=35&type=chunk) [Note 3. Prepaid Expenses](index=13&type=section&id=Note%203%2E%20Prepaid%20Expenses) Details the composition of prepaid expenses, which primarily consist of prepaid insurance and other prepaid items, showing a decrease from June 30, 2023, to December 31, 2023 Prepaid Expenses (December 31, 2023 vs. June 30, 2023) | Category | Dec 31, 2023 | Jun 30, 2023 | | :--------------- | :----------- | :----------- | | Prepaid insurance| $156,700 | $391,750 | | Prepaid other | $15,040 | $30,998 | | Total | $171,740 | $422,748 | - Total prepaid expenses decreased by **$251,008** from June 30, 2023, to December 31, 2023[37](index=37&type=chunk) [Note 4. Accrued Expenses](index=13&type=section&id=Note%204%2E%20Accrued%20Expenses) Provides a breakdown of accrued expenses, indicating an increase in accrued payroll-related expenses and a decrease in accrued research and development expenses from June 30, 2023, to December 31, 2023 Accrued Expenses (December 31, 2023 vs. June 30, 2023) | Category | Dec 31, 2023 | Jun 30, 2023 | | :------------------------ | :----------- | :----------- | | Accrued payroll related expenses | $436,651 | $190,121 | | Accrued research and development | $258,226 | $344,135 | | Total | $694,877 | $534,256 | - Total accrued expenses increased by **$160,621** from June 30, 2023, to December 31, 2023[38](index=38&type=chunk) [Note 5. Other Assets](index=13&type=section&id=Note%205%2E%20Other%20Assets) States that other assets primarily consist of loan commitment fees, which were $0.7 million as of December 31, 2023, and are being amortized over the three-year term of the loan - Other assets include loan commitment fees, totaling approximately **$0.7 million ($684,516)** as of December 31, 2023, compared to zero at June 30, 2023[39](index=39&type=chunk) - These loan commitment fees are being amortized over the **three-year** term of the loan[39](index=39&type=chunk) [Note 6. License Agreement](index=13&type=section&id=Note%206%2E%20License%20Agreement) Details the company's license agreement with Vernalis Development Limited, under which it licensed intellectual property for selonabant, including potential development and sales milestone payments and single-digit royalties - In May 2020, the company licensed intellectual property, know-how, and clinical trial data from Vernalis Development Limited[40](index=40&type=chunk) - The license agreement includes potential development milestone payments ranging from **$0.4 million** to **$3.0 million**, up to a total of **$29.9 million**, and sales milestone payments of **$10.0 million** and **$25.0 million**[40](index=40&type=chunk) - The company is also required to pay single-digit royalties on product sales over the contract term[40](index=40&type=chunk) - As part of its IPO in May 2021, the company issued **192,857 shares** of common stock to Vernalis in lieu of approximately **$1.4 million** in future milestone payments[41](index=41&type=chunk) - No further milestone payments are considered probable as of December 31, 2023[41](index=41&type=chunk) [Note 7. Stockholders' Equity](index=14&type=section&id=Note%207%2E%20Stockholders'%20Equity) Describes changes in the company's authorized capital stock and common stock issuances, including an increase in authorized common stock to 50 million shares and the issuance of 300,000 shares in conjunction with a Loan and Security Agreement in November 2023 - On November 20, 2023, the company increased the authorized number of shares of its common stock from **40,000,000** to **50,000,000 shares**[43](index=43&type=chunk) - On September 28, 2022, the company completed a private placement financing, issuing **2,264,650 units** (common stock and warrants) for approximately **$6.6 million** in gross proceeds[44](index=44&type=chunk) - On November 13, 2023, the company issued **300,000 shares** of common stock in conjunction with a Loan and Security Agreement[45](index=45&type=chunk) [Note 8. Stock-Based Compensation](index=14&type=section&id=Note%208%2E%20Stock-Based%20Compensation) Details the company's 2020 Stock Incentive Plan, which authorizes the grant of various stock awards, provides key assumptions for valuing stock options, and summarizes stock option activity - The 2020 Stock Incentive Plan authorizes the grant of stock options and other awards for up to **3,650,000 shares** of common stock[46](index=46&type=chunk) - As of December 31, 2023, **270,327 shares** were available for future issuance under the plan[46](index=46&type=chunk) - The fair value of stock-based compensation is estimated using the Black-Scholes option pricing model, based on subjective variables like risk-free interest rate, expected term, and expected volatility[48](index=48&type=chunk) Key Assumptions for Stock Options (Six Months Ended December 31) | Metric | 2023 | 2022 | | :-------------------- | :----------- | :----------- | | Risk-free interest rate | 4.6%-4.8% | 2.9% – 4.3% | | Expected term (in years)| 6.25 | 4.5 – 6.25 | | Expected volatility | 60% | 50.0% – 60.0%| | Expected dividend yield | – | – | Stock Option Activity (Six Months Ended December 31, 2023) | Metric | Number of Shares | Weighted Average Exercise Price | | :------------------------ | :--------------- | :---------------------------- | | Outstanding at Jun 30, 2023 | 2,049,313 | $4.54 | | Granted | 776,097 | $3.03 | | Forfeited/cancelled | (452,237) | $6.58 | | Outstanding at Dec 31, 2023 | 2,373,173 | $3.66 | | Options exercisable at Dec 31, 2023 | 1,008,057 | $4.33 | - Unrecognized stock-based compensation expense related to unvested stock options totaled approximately **$3.4 million** as of December 31, 2023, to be recognized over a weighted average period of **2.0 years**[51](index=51&type=chunk) [Note 9. Net Loss Per Share Attributable to Common Stockholders](index=16&type=section&id=Note%209%2E%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Stockholders) Provides the number of common stock equivalents (stock options and warrants) excluded from the net loss per share calculation due to their anti-dilutive effect Anti-Dilutive Common Stock Equivalents (December 31) | Category | 2023 | 2022 | | :-------------------- | :----------- | :----------- | | Stock options outstanding | 2,373,173 | 2,060,113 | | Warrants outstanding | 2,264,650 | 2,264,650 | | Total | 4,637,823 | 4,324,763 | - These common stock equivalents were excluded from the net loss per share calculation due to their anti-dilutive effect[53](index=53&type=chunk) [Note 10. Loan and Security Agreement](index=16&type=section&id=Note%2010%2E%20Loan%20and%20Security%20Agreement) Describes the Loan and Security Agreement (LSA) entered into on November 13, 2023, allowing the company to draw up to $10 million, with no outstanding balance as of December 31, 2023 - On November 13, 2023, the company entered into a Loan and Security Agreement (LSA) with 22NW, LP and JFL Capital Management LLC[54](index=54&type=chunk) - The LSA allows the company to draw up to **$10 million** (Facility Amount) to fund future operations until the **third anniversary** of the LSA (Maturity Date)[54](index=54&type=chunk) - The outstanding balance will accrue interest at **0.25%** per annum, with no fee on the unused balance[54](index=54&type=chunk) - Upon drawing at least **$3 million**, the LSA will be collateralized by substantially all of the company's assets[54](index=54&type=chunk) - The company issued **300,000 shares** of common stock to 22NW upon signing the LSA and will issue additional shares based on advances[55](index=55&type=chunk) - There was no balance outstanding under the LSA as of December 31, 2023[55](index=55&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202%2E%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This item provides management's perspective on the company's financial condition, results of operations, liquidity, and capital resources [Overview](index=17&type=section&id=Overview) Anebulo Pharmaceuticals is a clinical-stage biotech company developing selonabant for Acute Cannabinoid Intoxication (ACI) and substance addiction, with ongoing clinical trials and an expanding market due to cannabis legalization - Anebulo Pharmaceuticals is a clinical-stage biotechnology company developing selonabant (formerly ANEB-001) for acute cannabinoid intoxication (ACI) and substance addiction[58](index=58&type=chunk) - Selonabant is intended to rapidly reverse the negative effects of ACI, for which there is currently no approved medical treatment[58](index=58&type=chunk) - The company completed Phase 2 of the Netherlands Trial (Parts A, B, and C) in **134 subjects**, evaluating selonabant's safety, tolerability, pharmacokinetics, and effectiveness[58](index=58&type=chunk) - The FDA indicated that a single well-controlled study in ACI patients combined with a larger THC challenge study could potentially support a new drug application for selonabant[58](index=58&type=chunk) - An observational study in ACI patients presenting to emergency departments is currently ongoing[58](index=58&type=chunk) - The company is advancing an IV formulation of selonabant for patients unable to take oral doses[58](index=58&type=chunk) - Cannabis-related emergency department visits are estimated to have grown to approximately **1.7 million patients** in 2019, with a **15% compounded annual growth rate** between 2011 and 2019[60](index=60&type=chunk) - U.S. Patent No. **11,141,404** (through **2040**) and U.S. Patent No. **11,795,146** (through **2042**) protect selonabant's use and crystalline forms for ACI treatment[66](index=66&type=chunk) - Richard Anthony Cunningham was appointed Chief Executive Officer on **October 6, 2023**[69](index=69&type=chunk) - The USAN Council adopted 'selonabant' as the generic name for ANEB-001 on **January 31, 2024**[70](index=70&type=chunk) [Components of Results of Operations](index=19&type=section&id=Components%20of%20Results%20of%20Operations) Outlines the key components of the company's financial results: Revenue, Research and Development Expenses, and General and Administrative Expenses, with no revenue generated since inception - The company has not generated any revenue since inception and expects to incur significant operating losses and negative cash flows in the future[71](index=71&type=chunk) - Research and development expenses are expected to remain significant, covering consulting, nonclinical and clinical study costs, and other development costs for selonabant[73](index=73&type=chunk)[74](index=74&type=chunk) - R&D expenses include employee-related costs, third-party CRO/CMO expenses, consultant fees, CDMO costs for drug substance/product manufacturing, and amortization for asset purchases[77](index=77&type=chunk) - General and administrative expenses primarily consist of professional fees, stock-based compensation, insurance, personnel costs, and rent[76](index=76&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance, focusing on operating expenses and net loss for the reported periods [Comparison of the Three and Six Months Ended December 31, 2023 and 2022](index=20&type=section&id=Comparison%20of%20the%20Three%20and%20Six%20Months%20Ended%20December%2031%2C%202023%20and%202022) Provides a comparative analysis of operating expenses and net loss for the three and six months ended December 31, 2023, and 2022, showing a decrease in total operating expenses and a reduced net loss in the current periods Operating Expenses and Net Loss (Three Months Ended December 31) | Metric | 2023 | 2022 | Period to Period Change | | :------------------------ | :----------- | :----------- | :---------------------- | | Research and development | $1,062,672 | $1,869,920 | $(807,248) | | General and administrative| $1,697,787 | $1,943,202 | $(245,415) | | Total operating expenses | $2,760,459 | $3,813,122 | $(1,052,663) | | Net loss | $(2,717,369) | $(3,826,952) | $1,109,583 | Operating Expenses and Net Loss (Six Months Ended December 31) | Metric | 2023 | 2022 | Period to Period Change | | :------------------------ | :----------- | :----------- | :---------------------- | | Research and development | $2,332,892 | $3,093,696 | $(760,804) | | General and administrative| $2,971,245 | $3,331,473 | $(360,228) | | Total operating expenses | $5,304,137 | $6,425,169 | $(1,121,032) | | Net loss | $(5,198,192) | $(6,438,787) | $1,240,595 | - The net loss decreased by **$1,109,583** for the three months ended December 31, 2023, and by **$1,240,595** for the six months ended December 31, 2023, compared to the prior year periods[77](index=77&type=chunk) [Research and Development Expenses](index=21&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses decreased for both the three and six months ended December 31, 2023, compared to the prior year, primarily due to the completion of the Phase 2 proof-of-concept trial for ACI Research and Development Expenses (Three Months Ended December 31) | Category | 2023 | 2022 | Change | | :------------------------ | :----------- | :----------- | :------- | | Pre-clinical and clinical studies | $300,659 | $759,979 | $(459,320) | | Contract manufacturing | $498,230 | $653,066 | $(154,836) | | Compensation and related benefits | - | - | - | | Other research and development | $263,783 | $456,875 | $(193,092) | | Total research and development expenses | $1,062,672 | $1,869,920 | $(807,248) | Research and Development Expenses (Six Months Ended December 31) | Category | 2023 | 2022 | Change | | :------------------------ | :----------- | :----------- | :------- | | Pre-clinical and clinical studies | $1,141,792 | $1,491,264 | $(349,472) | | Contract manufacturing | $641,532 | $839,233 | $(197,701) | | Compensation and related benefits | - | $44,681 | $(44,681) | | Other research and development | $549,568 | $718,518 | $(168,950) | | Total research and development expenses | $2,332,892 | $3,093,696 | $(760,804) | - The overall decrease in research and development expenses was primarily attributable to the completion of the Phase 2 proof-of-concept trial for ACI and awaiting the start of Phase 3[78](index=78&type=chunk) [General and Administrative Expenses](index=21&type=section&id=General%20and%20Administrative%20Expenses) General and administrative expenses decreased for both the three and six months ended December 31, 2023, primarily due to strategic cost reductions in professional/consultant fees and lower directors' and officers' insurance premiums General and Administrative Expenses (Three Months Ended December 31) | Category | 2023 | 2022 | Change | | :------------------------ | :----------- | :----------- | :------- | | Compensation and related benefits | $848,171 | $602,341 | $245,830 | | Professional and consultant fees | $414,043 | $739,837 | $(325,794) | | Stock-based compensation expense | $219,262 | $225,621 | $(6,359) | | Directors' and officers' insurance | $117,525 | $235,000 | $(117,475) | | Facilities, fees and other costs | $98,786 | $140,403 | $(41,617) | | Total general and administrative expenses | $1,697,787 | $1,943,202 | $(245,415) | General and Administrative Expenses (Six Months Ended December 31) | Category | 2023 | 2022 | Change | | :------------------------ | :----------- | :----------- | :------- | | Compensation and related benefits | $1,112,881 | $957,972 | $154,909 | | Professional and consultant fees | $1,028,003 | $1,205,195 | $(177,192) | | Stock-based compensation expense | $430,059 | $437,521 | $(7,462) | | Directors' and officers' insurance | $235,050 | $476,877 | $(241,827) | | Facilities, fees and other costs | $165,252 | $253,908 | $(88,656) | | Total general and administrative expenses | $2,971,245 | $3,331,473 | $(360,228) | - The decrease in general and administrative expenses was primarily due to strategic cost reductions in professional and consultant fees and a decrease in directors' and officers' insurance premiums[79](index=79&type=chunk) - This decrease was partially offset by an increase in compensation and related benefits due to severance accrued for the former CEO[79](index=79&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, funding needs, and the Loan and Security Agreement [Liquidity and Capital Resources Overview](index=21&type=section&id=Liquidity%20and%20Capital%20Resources%20Overview) The company has incurred significant operating losses since inception and expects to continue doing so, with current cash of approximately $6.6 million, and plans to raise additional funds through equity, debt, or collaborations - The company has incurred significant operating losses since its inception in April 2020 and expects to continue incurring significant expenses and operating losses[80](index=80&type=chunk) - As of December 31, 2023, the company had cash of approximately **$6.6 million**[80](index=80&type=chunk) - The company plans to raise additional funds through equity and debt financings or collaboration, license, and development agreements, but cannot assure securing such funds on acceptable terms or at all[80](index=80&type=chunk) [Loan and Security Agreement (Liquidity)](index=21&type=section&id=Loan%20and%20Security%20Agreement%20(Liquidity)) The company entered into an LSA on November 13, 2023, providing access to up to $10 million for future operations until November 13, 2026, with no balance outstanding as of December 31, 2023 - On November 13, 2023, the company entered into a Loan and Security Agreement (LSA) with 22NW, LP and JFL Capital Management LLC[81](index=81&type=chunk) - The LSA allows the company to draw up to **$10 million** (Facility Amount) to fund future operations until **November 13, 2026** (Maturity Date)[81](index=81&type=chunk) - The outstanding balance will accrue interest at **0.25%** per annum, with no fee on the unused balance[81](index=81&type=chunk) - Upon drawing at least **$3 million**, the LSA will be collateralized by substantially all of the company's assets[81](index=81&type=chunk) - The company issued **300,000 shares** of common stock to 22NW upon signing the LSA and will issue additional shares (up to **300,000 total Advance Shares**) based on advances[82](index=82&type=chunk) - There was no balance outstanding under the LSA as of December 31, 2023[83](index=83&type=chunk) [Cash Flows](index=23&type=section&id=Cash%20Flows) For the six months ended December 31, 2023, net cash used in operating activities was approximately $4.5 million, primarily due to net loss, partially offset by non-cash adjustments and changes in operating assets/liabilities Summary of Cash Flows (Six Months Ended December 31) | Metric | 2023 | 2022 | | :-------------------------------- | :----------- | :----------- | | Net cash used in operating activities | $(4,540,532) | $(4,643,342) | | Net cash (used in) provided by financing activities | $(62,354) | $6,450,221 | | Net (decrease) increase in cash | $(4,602,886) | $1,806,879 | - Net cash used in operating activities for the six months ended December 31, 2023, was approximately **$4.5 million**, primarily from a net loss of **$5.2 million**, partially offset by **$0.5 million** in non-cash stock-based compensation and loan commitment amortization, and **$0.2 million** from changes in operating assets and liabilities[84](index=84&type=chunk) - In the prior year (2022), net cash provided by financing activities was approximately **$6.5 million**, primarily from the issuance of common stock and warrants[85](index=85&type=chunk) [Funding and Material Cash Requirements](index=23&type=section&id=Funding%20and%20Material%20Cash%20Requirements) The company expects its current cash and the LSA facility to fund operations for at least the next 12 months, but anticipates needing additional financing due to high drug development costs and uncertainties - Current cash and access to the LSA Facility Amount are expected to fund operating expenses and capital expenditures for at least the next **12 months** from the report filing date[86](index=86&type=chunk) - Additional equity or debt financing, or collaboration agreements, will be needed to maintain/expand operations, continue product development, build sales/marketing capabilities, and for general corporate purposes[88](index=88&type=chunk) - Raising additional capital through equity may reduce existing stockholders' ownership and cause substantial dilution[88](index=88&type=chunk) - Debt financing, including the LSA, may involve liens on assets and covenants limiting specific actions[88](index=88&type=chunk) - Failure to secure satisfactory financing could lead to delays, scaling back, or elimination of product development and other business activities[88](index=88&type=chunk) - Future funding requirements depend on factors such as clinical trial progress, regulatory approvals, operational expansion, strategic collaborations, intellectual property costs, and commercial sales revenue[89](index=89&type=chunk) [Contractual Obligations and Commitments](index=24&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's significant contractual obligations, including license agreements and operational contracts [License Agreement with Vernalis Development Limited (Contractual)](index=24&type=section&id=License%20Agreement%20with%20Vernalis%20Development%20Limited%20(Contractual)) The company holds an exclusive worldwide royalty-bearing license from Vernalis for selonabant, involving potential development and sales milestone payments, and low to mid-single digit royalties - The company entered into an exclusive worldwide royalty-bearing license agreement with Vernalis Development Limited on **May 26, 2020**, for selonabant[90](index=90&type=chunk) - The agreement includes potential development milestone payments up to **$29.9 million** and sales milestone payments up to **$35.0 million**, plus low to mid-single digit royalties on net sales[90](index=90&type=chunk) - The company is solely responsible for the development and commercialization of selonabant, including obtaining regulatory approvals and covering all associated costs[92](index=92&type=chunk) - The company agreed to use commercially reasonable efforts to develop and commercialize selonabant in the United States and certain European countries[92](index=92&type=chunk) [Office Lease, Manufacturing Contract and CRO Contract](index=25&type=section&id=Office%20Lease%2C%20Manufacturing%20Contract%20and%20CRO%20Contract) The company has an office lease for $400/month, a manufacturing agreement for approximately $2.9 million, and a CRO agreement for its Phase 2 clinical trial for approximately €2.8 million - The company leases its principal executive office in Lakeway, Texas, under a sublease with a related party for approximately **$400 per month**[93](index=93&type=chunk) - A manufacturing agreement with a third-party CMO has a total cost of approximately **$2.9 million**; the manufacturing aspect is expected to be fully incurred by **Q1 2024**, and the stability study aspect during calendar **2026**[94](index=94&type=chunk) - An agreement with a third-party CRO to manage the Phase 2 clinical trial for selonabant in the Netherlands had a total cost of approximately **€2.8 million** and was substantially completed as of December 31, 2023[95](index=95&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section details the key accounting policies and estimates that require significant management judgment [Accrued Research and Development Expenses](index=25&type=section&id=Accrued%20Research%20and%20Development%20Expenses) The company estimates accrued R&D expenses by reviewing contracts, communicating with personnel, and estimating service levels for unbilled services, acknowledging potential variations from actual incurred amounts - The company estimates accrued research and development expenses by reviewing open contracts, purchase orders, communicating with personnel, and estimating service levels for unbilled services[99](index=99&type=chunk) - Examples of estimated accrued R&D expenses include fees paid to CROs, investigative sites, vendors for NDA filing/marketing/medical education, and product manufacturing/clinical supplies[100](index=100&type=chunk) - Estimates are based on facts and circumstances known at each balance sheet date, and while material differences are not expected, actual results may vary[101](index=101&type=chunk) [Stock-Based Compensation Expense (Accounting Policy)](index=26&type=section&id=Stock-Based%20Compensation%20Expense%20(Accounting%20Policy)) The company grants stock options and other awards under its 2020 Stock Incentive Plan, valuing options using the Black-Scholes model based on subjective assumptions and Nasdaq closing prices - The 2020 Stock Incentive Plan allows for the grant of qualified incentive stock options, nonqualified stock options, and other awards[102](index=102&type=chunk) - The fair value of stock options is estimated using the Black-Scholes option pricing model, which relies on subjective assumptions including expected stock price volatility, expected term, risk-free interest rate, and expected dividends[103](index=103&type=chunk) - The fair value of common stock used in the model is based on the quoted closing market price on Nasdaq on the grant date[103](index=103&type=chunk) - No significant changes to Black-Scholes assumptions occurred during the six months ended December 31, 2023, except for stock and exercise prices[104](index=104&type=chunk) [JOBS Act Accounting Election](index=26&type=section&id=JOBS%20Act%20Accounting%20Election) As an 'emerging growth company' under the JOBS Act, the company has elected to use extended transition periods for complying with new or revised accounting standards, which may affect comparability with other companies - The company qualifies as an 'emerging growth company' under the JOBS Act[105](index=105&type=chunk) - The company has elected to take advantage of extended transition periods for complying with new or revised financial accounting standards, which may make its financial statements less comparable to other public companies[105](index=105&type=chunk) - As an EGC, the company benefits from reduced reporting requirements, including no auditor attestation for internal controls, less detailed compensation disclosure, and presenting only two years of audited financial statements[243](index=243&type=chunk)[246](index=246&type=chunk) - The company also qualifies as a 'smaller reporting company' and a 'non-accelerated filer,' providing additional reduced disclosure requirements[244](index=244&type=chunk)[245](index=245&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Anebulo Pharmaceuticals is not required to provide disclosures regarding quantitative and qualitative market risk - As a smaller reporting company, the registrant is not required to provide disclosure for this item[106](index=106&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204%2E%20Controls%20and%20Procedures) This item details the evaluation of the company's disclosure controls and procedures and any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=27&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of December 31, 2023, and concluded they were effective at a reasonable assurance level - As of December 31, 2023, management, with the participation of the CEO and CFO, evaluated the effectiveness of the design and operation of disclosure controls and procedures[107](index=107&type=chunk) - Based on this evaluation, the CEO and CFO concluded that the disclosure controls and procedures were effective at a reasonable assurance level[108](index=108&type=chunk) - Any controls and procedures, no matter how well designed, can provide only reasonable assurance, and management applies judgment in evaluating cost-benefit[108](index=108&type=chunk) [Changes in Internal Control over Financial Reporting](index=27&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no changes in the company's internal control over financial reporting during the three months ended December 31, 2023, that materially affected or are reasonably likely to materially affect it - There were no changes in internal control over financial reporting during the three months ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[109](index=109&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part covers legal proceedings, detailed risk factors, equity sales, and other miscellaneous information [Item 1. Legal Proceedings](index=28&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings and believes that the final outcome of any ordinary course claims will not have a material adverse effect on its business - The company is not currently a party to any material legal proceedings[112](index=112&type=chunk) - Management believes that the final outcome of ordinary course litigation or claims will not have a material adverse effect on the business[112](index=112&type=chunk) - Litigation can have an adverse impact due to defense and settlement costs, and diversion of management resources[112](index=112&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A%2E%20Risk%20Factors) This item provides a comprehensive discussion of the various risks that could materially affect the company's business, financial condition, and results of operations [Risks Related to our Business, Financial Condition and Capital Requirements](index=28&type=section&id=Risks%20Related%20to%20our%20Business%2C%20Financial%20Condition%20and%20Capital%20Requirements) The company faces significant risks due to its lack of revenue, accumulated deficit, and expected future losses, with success highly dependent on selonabant's development and commercialization, requiring substantial additional funding - The company has not generated any revenue since inception and had an accumulated deficit of approximately **$62.4 million** as of December 31, 2023, expecting to incur significant future losses[114](index=114&type=chunk) - The business is highly dependent on its lead product candidate, selonabant, and must complete clinical testing and obtain regulatory approval for commercialization[114](index=114&type=chunk) - The company will need substantial additional funding, and if unable to raise capital, it could be forced to delay, reduce, or eliminate product development programs[124](index=124&type=chunk) - The Loan and Security Agreement (LSA) with 22NW and JFL may be secured by substantially all of the company's assets, and a default would have material adverse consequences[129](index=129&type=chunk) - The company is highly dependent on its founder and CEO, and its ability to attract and retain other key personnel is crucial for implementing its business strategy[132](index=132&type=chunk) - Adverse developments in the financial services industry could significantly impair the company's access to cash and liquidity, impacting its operations and financial condition[134](index=134&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) [Risks Related to Our Intellectual Property](index=34&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) The company's commercial success depends on obtaining and maintaining broad patent protection for selonabant, facing risks of invalidation, circumvention, high prosecution costs, and limited international protection - Commercial success depends on obtaining and maintaining patent protection for selonabant; existing patents include U.S. Patent No. **11,141,404** (through **2040**) and U.S. Patent No. **11,795,146** (through **2042**)[139](index=139&type=chunk) - There is no assurance that new patent applications will issue as granted patents or provide sufficient protection, and existing patents may be found invalid or unenforceable[140](index=140&type=chunk)[141](index=141&type=chunk) - The patent prosecution process is expensive and time-consuming, with risks of failing to identify patentable aspects or competitors circumventing patents[142](index=142&type=chunk)[143](index=143&type=chunk) - The company relies on a license from Vernalis, and failure to comply with obligations or termination of the license could result in the loss of significant intellectual property rights[117](index=117&type=chunk)[118](index=118&type=chunk) - Patent term extensions may not be granted or may be shorter than requested, allowing competitors to enter the market sooner[151](index=151&type=chunk) - Protecting intellectual property rights globally is expensive and challenging, as foreign laws may offer less extensive protection[153](index=153&type=chunk) - Changes in patent law, such as the America Invents Act, could increase uncertainties and costs surrounding patent prosecution and enforcement[155](index=155&type=chunk)[157](index=157&type=chunk) [Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization](index=38&type=section&id=Risks%20Related%20to%20Product%20Development%2C%20Regulatory%20Approval%2C%20Manufacturing%20and%20Commercialization) Clinical drug development is a lengthy, expensive, and uncertain process, with delays or failures in selonabant's trials potentially harming the business, as regulatory approval and commercial success are not guaranteed - Clinical trials are expensive, time-consuming, unpredictable, and difficult to design and implement, with delays or termination adversely affecting the business[160](index=160&type=chunk) - Regulatory approval for selonabant is not guaranteed and requires successful completion of clinical trials, which may be unsuccessful, materially harming the business[162](index=162&type=chunk)[163](index=163&type=chunk) - Even if approved, commercial success depends on market acceptance by physicians, patients, and healthcare payors, which is influenced by factors like safety, efficacy, pricing, and competition[168](index=168&type=chunk)[173](index=173&type=chunk) - Interim, topline, and preliminary data from clinical trials are subject to change and audit, and adverse differences from final data could harm business prospects[172](index=172&type=chunk) - Selonabant may have undesirable side effects, which could delay or prevent marketing approval, or lead to product withdrawal or restrictive safety warnings if approved[196](index=196&type=chunk)[197](index=197&type=chunk) - The company has no internal marketing and sales organization and relies on third parties, which could limit its ability to generate product revenues if favorable agreements are not secured[199](index=199&type=chunk) - New drugs developed by competitors could render selonabant non-competitive or obsolete, impairing the company's ability to grow[200](index=200&type=chunk) [Risks Related to Our Reliance on Third Parties](index=49&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) The company heavily relies on third parties for preclinical testing, clinical trials, and manufacturing of selonabant, which reduces control and introduces risks such as delays, increased costs, and supply interruptions - The company depends on third parties for preclinical testing and clinical trials, which reduces control and may result in costs and delays preventing regulatory approval[202](index=202&type=chunk) - Third parties' ability to manufacture and supply product candidates can be impacted by raw material availability, facility capacity, regulatory compliance, and other factors, leading to delayed shipments or supply constraints[203](index=203&type=chunk) - The company is completely dependent on third parties to manufacture selonabant, and commercialization could be halted or delayed if manufacturers fail to obtain regulatory approval or provide sufficient quantities at acceptable quality/prices[205](index=205&type=chunk)[206](index=206&type=chunk) - Reliance on collaborations with third parties is subject to inherent risks, including potential termination of agreements, reduced payments, and loss of control over product development, which could adversely affect profitability[212](index=212&type=chunk)[214](index=214&type=chunk)[216](index=216&type=chunk) [Risks Related to Government Regulation of our Industry](index=52&type=section&id=Risks%20Related%20to%20Government%20Regulation%20of%20our%20Industry) The pharmaceutical industry is heavily regulated, and legislative or regulatory reforms, such as the ACA and IRA, could significantly impact the company's ability to commercialize products profitably, affecting pricing, coverage, and relationships with healthcare stakeholders - Legislative or regulatory reforms of the healthcare system, such as the ACA and IRA, may adversely affect the company's ability to sell products profitably, impacting pricing and coverage[219](index=219&type=chunk)[220](index=220&type=chunk)[222](index=222&type=chunk) - The Inflation Reduction Act (IRA) directs HHS to negotiate drug prices and imposes rebates for price increases, which is likely to have a significant impact on the pharmaceutical industry[222](index=222&type=chunk) - Clinical trials for selonabant conducted outside the United States and not under an IND may not be accepted by the FDA, potentially requiring additional costly and time-consuming trials[225](index=225&type=chunk) [Risks Related to Ownership of Our Common Stock](index=54&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) The company's common stock trading price is highly volatile due to various factors beyond its control, including operational results, analyst expectations, and general market conditions, with future sales and principal stockholder control posing additional risks - The trading price and volume of the common stock have experienced, and may in the future experience, volatility due to various factors beyond the company's control, including operational results, analyst expectations, and general economic conditions[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) - Future sales, or the perception of future sales, of a substantial number of common shares by the company or its stockholders could depress the trading price[229](index=229&type=chunk) - Principal stockholders and management own a substantial majority of the stock, enabling them to exert significant control over matters subject to stockholder approval[230](index=230&type=chunk) - Anti-takeover provisions in charter documents and Delaware corporate law could discourage, delay, or prevent a change in control of the company[231](index=231&type=chunk)[232](index=232&type=chunk)[233](index=233&type=chunk) - The certificate of incorporation designates specific forums for disputes, which could limit stockholders' ability to obtain a favorable judicial forum[234](index=234&type=chunk)[235](index=235&type=chunk) - The company does not expect to pay any dividends on its common stock, as future earnings are expected to be retained for operations and debt repayment[236](index=236&type=chunk) [General Risk Factors](index=57&type=section&id=General%20Risk%20Factors) The company faces increased costs and management time for public company compliance, including internal control over financial reporting, with changes in accounting principles or tax laws, economic instability, and data privacy risks posing additional challenges - Operating as a public company incurs significantly increased costs and requires substantial management time for compliance efforts, including internal control over financial reporting[238](index=238&type=chunk)[240](index=240&type=chunk) - Changes in accounting principles or guidance, or their interpretations, could result in unfavorable accounting charges or effects, potentially causing the stock price to decline[241](index=241&type=chunk) - As an 'emerging growth company,' the election to delay adoption of new accounting standards may make financial statements less comparable and securities less attractive to investors[242](index=242&type=chunk)[243](index=243&type=chunk)[247](index=247&type=chunk) - Changes in tax laws or regulations, or their adverse application, may materially affect the business, cash flow, and financial condition, potentially limiting the use of net operating loss carryforwards[248](index=248&type=chunk)[249](index=249&type=chunk) - Health epidemics or pandemics, unstable market and economic conditions, and inflation may adversely affect the business, financial condition, and results of operations[252](index=252&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) - The company is subject to stringent and evolving U.S. and foreign data privacy and security laws, with actual or perceived failure to comply potentially leading to regulatory investigations, litigation, fines, and business disruptions[256](index=256&type=chunk)[257](index=257&type=chunk)[259](index=259&type=chunk)[264](index=264&type=chunk) - Compromise of information technology systems or sensitive information, including through cyberattacks, could result in material disruption of product development, regulatory actions, and reputational harm[267](index=267&type=chunk)[268](index=268&type=chunk)[270](index=270&type=chunk)[273](index=273&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=66&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item reports on unregistered equity sales and the utilization of proceeds from the initial public offering [Unregistered Sales of Equity Securities](index=66&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities) On November 13, 2023, the company issued 300,000 shares of common stock to 22NW as partial consideration for entering into the Loan and Security Agreement, relying on Section 4(a)(2) and/or Regulation D exemptions from registration - On **November 13, 2023**, the company issued **300,000 shares** of common stock to 22NW, LP[276](index=276&type=chunk) - These shares were issued as partial consideration for entering into the Loan and Security Agreement[276](index=276&type=chunk) - The securities were issued in reliance on the exemption from registration requirements of the Securities Act by Section 4(a)(2) and/or Regulation D[276](index=276&type=chunk) [Use of Proceeds from our Initial Public Offering](index=66&type=section&id=Use%20of%20Proceeds%20from%20our%20Initial%20Public%20Offering) The company received approximately $19.8 million in net proceeds from its May 2021 IPO and has used approximately $19.4 million through December 31, 2023, primarily for research and development expenses for selonabant - The company received approximately **$19.8 million** in net proceeds from its Initial Public Offering (IPO) on **May 11, 2021**[277](index=277&type=chunk) - Through December 31, 2023, approximately **$19.4 million** of the net proceeds have been used[278](index=278&type=chunk) - Proceeds were primarily allocated to research and development expenses for selonabant, working capital, and other general corporate purposes, including costs associated with being a public company[278](index=278&type=chunk) - There has been no material change in the planned use of net proceeds from the IPO[278](index=278&type=chunk) [Item 3. Defaults Upon Senior Securities](index=66&type=section&id=Item%203%2E%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - None[279](index=279&type=chunk) [Item 4. Mine Safety Disclosures](index=66&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[280](index=280&type=chunk) [Item 5. Other Information](index=66&type=section&id=Item%205%2E%20Other%20Information) The company reported no other information - None[281](index=281&type=chunk) [Item 6. Exhibits](index=66&type=section&id=Item%206%2E%20Exhibits) Lists the exhibits filed as part of the Form 10-Q, including various corporate documents, agreements, and certifications - Exhibits include corporate organizational documents (e.g., Certificate of Incorporation, Bylaws)[282](index=282&type=chunk) - Key agreements such as the Securities Purchase Agreement, Common Stock Purchase Warrant, Executive Employment Agreement, and Loan and Security Agreement are filed as exhibits[283](index=283&type=chunk) - Certifications of the Principal Executive Officer and Principal Financial Officer, pursuant to the Sarbanes-Oxley Act, are included[283](index=283&type=chunk) - Inline XBRL Instance Document and Taxonomy Extension Documents are also part of the exhibits[283](index=283&type=chunk) [Signatures](index=68&type=section&id=Signatures) This section contains the official signatures of the company's principal executive and financial officers [Report Signatures](index=68&type=section&id=Report%20Signatures) The report is signed by Richard Anthony Cunningham, Chief Executive Officer, and Daniel George, Chief Financial Officer, on February 13, 2024 - The report was signed on **February 13, 2024**[286](index=286&type=chunk) - Signed by Richard Anthony Cunningham, Chief Executive Officer (Principal Executive Officer)[286](index=286&type=chunk) - Signed by Daniel George, Chief Financial Officer (Principal Financial and Accounting Officer)[286](index=286&type=chunk)

[Special Note Regarding Forward-Looking Statements](index=4&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) This section highlights that the report contains forward-looking statements subject to substantial risks and uncertainties that could cause actual results to differ materially - This Quarterly Report contains forward-looking statements subject to 'safe harbor' provisions, involving substantial risks and uncertainties that could cause actual results to differ materially from expectations[6](index=6&type=chunk) - Forward-looking statements are based on current expectations, beliefs, estimates, and projections, many of which are inherently uncertain and beyond the company's control[7](index=7&type=chunk) - Key areas of forward-looking statements include capital requirements, regulatory submissions, clinical trial timing and results, market opportunity for ANEB-001, intellectual property, and the impact of economic/political events[7](index=7&type=chunk) [Risk Factors Summary](index=5&type=section&id=Risk%20Factors%20Summary) This section summarizes key risks including lack of revenue, dependence on ANEB-001, funding needs, and reliance on intellectual property licenses - The company has not generated revenue since inception, expects future losses, and may never become profitable[9](index=9&type=chunk) - Business success is highly dependent on the lead product candidate, ANEB-001, requiring completion of clinical testing and regulatory approval[10](index=10&type=chunk) - Substantial additional funding is required, and inability to raise capital could force delays or elimination of development programs[10](index=10&type=chunk) - The company relies on intellectual property licensed from third parties, and termination of these licenses would harm the business[10](index=10&type=chunk) - Clinical drug development is lengthy, expensive, and uncertain, with no guarantee of favorable results or regulatory approval[12](index=12&type=chunk) [PART I. FINANCIAL INFORMATION](index=7&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part contains the unaudited condensed financial statements and management's discussion and analysis for the reporting period [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed financial statements for Anebulo Pharmaceuticals, Inc., including the balance sheets, statements of operations, stockholders' equity, and cash flows, along with accompanying notes, for the period ended September 30, 2023 [Condensed Balance Sheets](index=7&type=section&id=Condensed%20Balance%20Sheets) This section presents the company's financial position, detailing assets, liabilities, and stockholders' equity as of specific dates | Assets/Liabilities/Equity | September 30, 2023 (USD) | June 30, 2023 (USD) | | :------------------------ | :----------------------- | :------------------ | | Cash and cash equivalents | $8,520,578 | $11,247,403 | | Total assets | $9,047,884 | $11,670,151 | | Total liabilities | $716,560 | $1,068,801 | | Total stockholders' equity| $8,331,324 | $10,601,350 | - Cash and cash equivalents decreased by **$2.73 million** from June 30, 2023, to September 30, 2023[16](index=16&type=chunk) - Total assets decreased by **$2.62 million**, and total liabilities decreased by **$352,241** during the quarter[16](index=16&type=chunk) [Condensed Statements of Operations](index=8&type=section&id=Condensed%20Statements%20of%20Operations) This section outlines the company's financial performance, including revenues, expenses, and net loss for the reported periods | Expense/Income Item | Three Months Ended Sep 30, 2023 (USD) | Three Months Ended Sep 30, 2022 (USD) | | :-------------------------- | :------------------------------------ | :------------------------------------ | | Research and development | $1,270,220 | $1,223,776 | | General and administrative | $1,273,458 | $1,388,271 | | Total operating expenses | $2,543,678 | $2,612,047 | | Net loss | $(2,480,823) | $(2,611,835) | | Net loss per share (basic & diluted) | $(0.10) | $(0.11) | - Net loss decreased to **$2.48 million** for the three months ended September 30, 2023, from **$2.61 million** in the prior year period[19](index=19&type=chunk) - Total operating expenses slightly decreased by **$68,369**, primarily due to a reduction in general and administrative expenses[19](index=19&type=chunk) [Condensed Statements of Stockholders' Equity](index=9&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity) This section details changes in the company's equity components, including common stock, additional paid-in capital, and accumulated deficit | Item | Balance at June 30, 2023 (USD) | Stock-based Compensation Expense (USD) | Net Loss (USD) | Balance at Sep 30, 2023 (USD) | | :---------------------------------- | :----------------------------- | :------------------------------------- | :------------- | :---------------------------- | | Common Stock Amount | $25,634 | - | - | $25,634 | | Additional Paid-in Capital | $67,777,757 | $210,797 | - | $67,988,554 | | Accumulated Deficit | $(57,202,041) | - | $(2,480,823) | $(59,682,864) | | Total Stockholders' Equity | $10,601,350 | $210,797 | $(2,480,823) | $8,331,324 | - Total stockholders' equity decreased from **$10.6 million** at June 30, 2023, to **$8.3 million** at September 30, 2023, primarily due to the net loss[21](index=21&type=chunk) - Stock-based compensation expense contributed **$210,797** to additional paid-in capital during the quarter[21](index=21&type=chunk) [Condensed Statements of Cash Flows](index=10&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This section reports the cash inflows and outflows from operating, investing, and financing activities for the specified periods | Cash Flow Activity | Three Months Ended Sep 30, 2023 (USD) | Three Months Ended Sep 30, 2022 (USD) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(2,726,825) | $(2,033,922) | | Net cash provided by financing activities | - | $6,699,148 | | Net (decrease) increase in cash | $(2,726,825) | $4,665,226 | | Cash and cash equivalents, end of period | $8,520,578 | $19,213,697 | - Net cash used in operating activities increased to **$2.73 million** for the three months ended September 30, 2023, compared to **$2.03 million** in the prior year[22](index=22&type=chunk) - No cash was provided by financing activities in Q3 2023, a significant change from **$6.7 million** in Q3 2022 which included proceeds from common stock issuance[22](index=22&type=chunk) [Notes to Unaudited Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) This section provides detailed explanations and additional information supporting the unaudited condensed financial statements [Note 1. Nature of business and basis of presentation](index=11&type=section&id=Note%201.%20Nature%20of%20business%20and%20basis%20of%20presentation) This note describes the company's business, its focus on ACI treatment, and its financial condition, including accumulated losses and future funding needs - Anebulo Pharmaceuticals, Inc. is a clinical-stage biotechnology company focused on developing treatments for Acute Cannabis Intoxication (ACI) and addiction[25](index=25&type=chunk) - The company has incurred significant losses since inception, with an accumulated deficit of **$59.7 million** as of September 30, 2023, and expects continued operating losses[26](index=26&type=chunk) - Current cash and access to a **$10 million** debt facility are expected to fund operations for at least 12 months, but additional funding will be sought for development and commercialization[26](index=26&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=12&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements - No material changes to significant accounting policies have occurred since the audited financial statements for the year ended June 30, 2023[32](index=32&type=chunk) [Note 3. Prepaid Expenses](index=13&type=section&id=Note%203.%20Prepaid%20Expenses) This note details the composition and changes in the company's prepaid expenses over the reporting period | Prepaid Expense Category | September 30, 2023 (USD) | June 30, 2023 (USD) | | :----------------------------- | :----------------------- | :------------------ | | Prepaid insurance | $274,225 | $391,750 | | Prepaid research and development | $220,168 | - | | Prepaid other | $32,913 | $30,998 | | Total prepaid expenses | $527,306 | $422,748 | - Total prepaid expenses increased by **$104,558**, primarily driven by new prepaid research and development expenses of **$220,168**[34](index=34&type=chunk) [Note 4. Accrued Expenses](index=13&type=section&id=Note%204.%20Accrued%20Expenses) This note provides a breakdown and changes in the company's accrued expenses as of the reporting dates | Accrued Expense Category | September 30, 2023 (USD) | June 30, 2023 (USD) | | :----------------------------- | :----------------------- | :------------------ | | Accrued payroll related expenses | $116,200 | $190,121 | | Accrued professional fees | $34,411 | - | | Accrued research and development | - | $344,135 | | Total accrued expenses | $150,611 | $534,256 | - Total accrued expenses decreased significantly by **$383,645**, mainly due to the absence of accrued research and development expenses at quarter-end[35](index=35&type=chunk) [Note 5. License Agreement](index=13&type=section&id=Note%205.%20License%20Agreement) This note describes the key terms of the intellectual property license agreement with Vernalis Development Limited - The company licensed intellectual property, know-how, and clinical trial data from Vernalis Development Limited in May 2020[36](index=36&type=chunk) - The agreement includes potential development milestone payments up to **$29.9 million** and sales milestone payments up to **$35.0 million**, plus single-digit royalties[36](index=36&type=chunk) - In May 2021, 192,857 shares of common stock were issued to Vernalis in lieu of approximately **$1.4 million** in future milestone payments, and no further milestone payments are considered probable as of September 30, 2023[37](index=37&type=chunk) [Note 6. Stockholders' Equity](index=14&type=section&id=Note%206.%20Stockholders'%20Equity) This note outlines the company's authorized capital stock and significant equity transactions - The company's authorized capital stock consists of 40,000,000 shares of common stock and 2,000,000 shares of preferred stock[38](index=38&type=chunk) - In September 2022, a private placement of 2,264,650 units (common stock and warrants) generated approximately **$6.3 million** in net proceeds[39](index=39&type=chunk) [Note 7. Stock-Based Compensation](index=14&type=section&id=Note%207.%20Stock-Based%20Compensation) This note details the company's stock incentive plan, stock option activity, and unrecognized compensation expense - The 2020 Stock Incentive Plan authorizes the grant of up to 3,650,000 shares for stock options and other awards, with 588,607 shares available for future issuance as of September 30, 2023[40](index=40&type=chunk) | Stock Option Activity | Number of Shares | Weighted Average Exercise Price (USD) | | :------------------------------ | :--------------- | :------------------------------------ | | Outstanding at June 30, 2023 | 2,049,313 | $4.54 | | Granted | 10,000 | $3.27 | | Forfeited/cancelled | (4,420) | $6.00 | | Outstanding at September 30, 2023 | 2,054,893 | $4.53 | | Options exercisable at Sep 30, 2023 | 882,224 | $4.30 | - Unrecognized stock-based compensation expense totaled approximately **$2.2 million** as of September 30, 2023, to be recognized over a weighted average period of 2.4 years[45](index=45&type=chunk) [Note 8. Net Loss Per Share Attributable to Common Stockholders](index=16&type=section&id=Note%208.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Stockholders) This note explains the calculation of net loss per share and the treatment of common stock equivalents | Common Stock Equivalents | September 30, 2023 | September 30, 2022 | | :----------------------- | :----------------- | :----------------- | | Stock options outstanding| 2,054,893 | 1,895,701 | | Warrants outstanding | 2,264,650 | 2,264,650 | | Total | 4,319,543 | 4,160,351 | - Stock options and warrants were excluded from diluted EPS calculation due to their anti-dilutive effect[47](index=47&type=chunk) [Note 9. Subsequent Events](index=16&type=section&id=Note%209.%20Subsequent%20Events) This note discloses significant events that occurred after the balance sheet date, including executive changes and a new loan agreement - Simon Allen was terminated as CEO on October 5, 2023, and Richard Anthony Cunningham was appointed as the new CEO and Board member on October 6, 2023[49](index=49&type=chunk)[50](index=50&type=chunk) - Mr. Cunningham was granted stock options to purchase 600,000 shares (quarterly vesting) and 140,000 performance-based shares[50](index=50&type=chunk) - On November 13, 2023, the company entered into a Loan and Security Agreement (LSA) for up to **$10 million**, accruing 0.25% annual interest, collateralized by company assets upon drawing at least **$3 million**[51](index=51&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, results of operations, and liquidity for the three months ended September 30, 2023, highlighting key developments, financial performance, and future outlook [Overview](index=17&type=section&id=Overview) This section provides a general description of the company's business, its lead product candidate ANEB-001, and its clinical development status - Anebulo is a clinical-stage biotechnology company developing ANEB-001 to rapidly reverse Acute Cannabinoid Intoxication (ACI) symptoms, with no approved medical treatment currently available for ACI[54](index=54&type=chunk) - The company completed Part A and B of its Phase 2 Netherlands Trial in March 2023, with Part C dosing completed in August 2023, and received FDA feedback for Phase 3 development[54](index=54&type=chunk) - ACI-related emergency department visits are increasing, reaching an estimated **1.7 million** patients in 2019, indicating a significant unmet medical need[56](index=56&type=chunk) - The company secured U.S. Patent No. 11,141,404 in October 2021, protecting ANEB-001 for treating acute cannabinoid overdose through 2040[60](index=60&type=chunk) [Components of Results of Operations](index=19&type=section&id=Components%20of%20Results%20of%20Operations) This section describes the primary drivers of the company's operating results, including revenue and expense categories - The company has not generated any revenue since inception and expects to incur significant operating losses in the future[63](index=63&type=chunk) - Research and development expenses are expected to increase significantly as the company advances ANEB-001 and expands its product-candidate pipeline[65](index=65&type=chunk) - General and administrative expenses primarily consist of professional fees, stock-based compensation, insurance, personnel costs, and rent[67](index=67&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance for the reported periods, focusing on changes in expenses and net loss | Item | 2023 (3 months ended Sep 30) (USD) | 2022 (3 months ended Sep 30) (USD) | Change (USD) | | :---------------------------------- | :--------------------------------- | :--------------------------------- | :----------- | | Research and development | $1,270,220 | $1,223,776 | $46,444 | | General and administrative | $1,273,458 | $1,388,271 | $(114,813) | | Total operating expenses | $2,543,678 | $2,612,047 | $(68,369) | | Loss from operations | $(2,543,678) | $(2,612,047) | $68,369 | | Net loss | $(2,480,823) | $(2,611,835) | $131,012 | - Research and development expenses increased by **$46,444**, primarily due to increased nonclinical and clinical study activities for ANEB-001[71](index=71&type=chunk) - General and administrative expenses decreased by **$114,813**, mainly due to reduced compensation (decreased headcount) and lower directors' and officers' insurance premiums, partially offset by higher professional and consultant fees[73](index=73&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, funding sources, and ability to meet its short-term and long-term financial obligations - As of September 30, 2023, the company had **$8.5 million** in cash and expects this, combined with a new **$10 million** Loan and Security Agreement (LSA), to fund operations for at least the next 12 months[74](index=74&type=chunk)[80](index=80&type=chunk) - The LSA, entered into on November 13, 2023, allows for draws up to **$10 million**, accrues interest at 0.25% per annum, and will be collateralized by substantially all assets upon drawing at least **$3 million**[51](index=51&type=chunk)[75](index=75&type=chunk) - The company issued 300,000 shares of common stock to 22NW upon signing the LSA and will issue additional shares based on advances, up to a maximum of 300,000[52](index=52&type=chunk)[76](index=76&type=chunk) | Cash Flow Activity | Three Months Ended Sep 30, 2023 (USD) | Three Months Ended Sep 30, 2022 (USD) | | :-------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash used in operating activities | $(2,726,825) | $(2,033,922) | | Net cash provided by financing activities | - | $6,699,148 | | Net (decrease) increase in cash | $(2,726,825) | $4,665,226 | - Contractual obligations include a license agreement with Vernalis (potential milestones up to **$64.9 million** and royalties), a manufacturing agreement for **$0.9 million**, and a CRO agreement for **€2.8 million**, both expected to be fully incurred by Q4 2023[83](index=83&type=chunk)[86](index=86&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=25&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) This section outlines the accounting policies that require management's most difficult, subjective, or complex judgments and estimates - The company's critical accounting policies include estimating accrued research and development expenses, which involves reviewing contracts, communicating with personnel, and estimating service levels[90](index=90&type=chunk) - Stock-based compensation expense is estimated using the Black-Scholes option pricing model, with key assumptions including expected stock price volatility, expected term, risk-free rate, and expected dividends[93](index=93&type=chunk) - As an 'emerging growth company' under the JOBS Act, the company elects to use extended transition periods for new accounting standards, which may affect comparability with other public companies[94](index=94&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Anebulo Pharmaceuticals, Inc. is not required to provide quantitative and qualitative disclosures about market risk in this report - The company is exempt from providing quantitative and qualitative disclosures about market risk due to its status as a smaller reporting company[95](index=95&type=chunk) [Item 4. Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures as of September 30, 2023, concluding they were effective at a reasonable assurance level. There were no material changes in internal control over financial reporting during the quarter - As of September 30, 2023, management concluded that the design and operation of the company's disclosure controls and procedures were effective at a reasonable assurance level[97](index=97&type=chunk) - There were no changes in internal control over financial reporting during the three months ended September 30, 2023, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[97](index=97&type=chunk) [PART II. OTHER INFORMATION](index=28&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part includes legal proceedings, risk factors, equity sales, and other disclosures [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings, and management believes there are no pending claims or actions that could have a material adverse effect on its operations or financial condition - The company is not currently a party to any material legal proceedings[99](index=99&type=chunk) - Management believes there are no claims or actions pending that could have a material adverse effect on results of operations or financial condition[99](index=99&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) This section details various material risks that could negatively impact an investment in the company's common stock, covering business operations, financial condition, intellectual property, product development, regulatory approval, manufacturing, commercialization, reliance on third parties, government regulation, and common stock ownership [Risks Related to our Business, Financial Condition and Capital Requirements](index=28&type=section&id=Risks%20Related%20to%20our%20Business%2C%20Financial%20Condition%20and%20Capital%20Requirements) This section outlines risks concerning the company's financial viability, funding needs, dependence on ANEB-001, and reliance on key personnel - The company has not generated revenue since inception, has an accumulated deficit of **$59.7 million**, and expects to incur future losses, potentially never achieving profitability[101](index=101&type=chunk) - Future success is highly dependent on ANEB-001, requiring successful clinical testing, regulatory approval, and commercialization, with no guarantee of adequate financial resources or market acceptance[103](index=103&type=chunk) - The company relies on a license from Vernalis Development Limited for ANEB-001, and failure to comply with obligations or termination of the license could result in loss of significant intellectual property rights[107](index=107&type=chunk)[108](index=108&type=chunk) - Substantial additional funding is needed, and if unavailable on acceptable terms, the company may be forced to delay, reduce, or eliminate product development programs, leading to potential dilution for stockholders from equity financing or liens on assets from debt financing[113](index=113&type=chunk)[115](index=115&type=chunk) - The Loan and Security Agreement (LSA) with 22NW and JFL may be secured by substantially all company assets, and a default could have material adverse consequences, including insolvency[116](index=116&type=chunk) - The company's operations depend on its founder and CEO, Joseph F. Lawler and Richard Anthony Cunningham, and its ability to attract and retain other key personnel; loss of whom could disrupt business[118](index=118&type=chunk) - Adverse developments in the financial services industry, such as bank failures, could impair the company's access to cash and liquidity, potentially delaying operations or leading to uninsured losses[120](index=120&type=chunk)[122](index=122&type=chunk) [Risks Related to Our Intellectual Property](index=34&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) This section addresses risks associated with obtaining, maintaining, and enforcing patent protection for ANEB-001 and other intellectual property - Failure to obtain and maintain broad patent protection for ANEB-001 could allow competitors to commercialize similar products, adversely affecting the company's ability to commercialize its product candidates[125](index=125&type=chunk)[127](index=127&type=chunk) - The patent prosecution process is expensive and time-consuming, with no assurance that pending applications will issue as granted patents or provide meaningful protection[129](index=129&type=chunk)[130](index=130&type=chunk) - Issued patents may be challenged, narrowed, circumvented, or invalidated by third parties, potentially leading to loss of exclusivity or inability to stop competitors[131](index=131&type=chunk)[132](index=132&type=chunk) - Failure to obtain patent term extension or a shorter extension than requested could allow competitors to enter the market sooner, harming the business[139](index=139&type=chunk) - Protecting intellectual property rights globally is expensive and challenging, as foreign laws may offer less protection, potentially allowing competitors to sell infringing products[142](index=142&type=chunk)[143](index=143&type=chunk) - Changes in patent laws, such as the America Invents Act, increase uncertainties and costs in patent prosecution and enforcement, potentially diminishing the value of patents[145](index=145&type=chunk)[146](index=146&type=chunk) - The expiration or loss of patent protection could adversely affect future revenues and operating earnings by opening the market to generic competition[148](index=148&type=chunk) [Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization](index=38&type=section&id=Risks%20Related%20to%20Product%20Development%2C%20Regulatory%20Approval%2C%20Manufacturing%20and%20Commercialization) This section covers risks inherent in the development, regulatory approval, manufacturing, and market acceptance of ANEB-001 - Clinical trials for ANEB-001 are expensive, time-consuming, and unpredictable; delays or termination could significantly increase costs and affect product development plans[150](index=150&type=chunk) - The company relies on third-party clinical trials for ANEB-001, and regulatory authorities may not accept this data, leading to delays in approval[152](index=152&type=chunk) - Failure to obtain required regulatory approvals for ANEB-001 would prevent commercialization and limit revenue generation, as success in early trials does not guarantee later success[154](index=154&type=chunk)[155](index=155&type=chunk) - Even with marketing approval, commercial success depends on acceptance by the medical community, pricing, reimbursement, and competition, which may be limited[161](index=161&type=chunk)[163](index=163&type=chunk) - Interim, topline, and preliminary data from studies may change upon full review, and adverse differences could harm business prospects[166](index=166&type=chunk)[168](index=168&type=chunk) - Post-approval, ANEB-001 will be subject to ongoing regulatory review, potentially leading to restrictions, costly post-market studies, or withdrawal from the market if problems arise[169](index=169&type=chunk)[172](index=172&type=chunk) - Unfavorable pricing regulations, third-party coverage, and reimbursement practices or healthcare reform initiatives could harm the business by limiting market access and profitability[174](index=174&type=chunk)[176](index=176&type=chunk) - New drugs developed by competitors, such as Aelis Farma and Opiant Pharmaceuticals, could obtain regulatory approval before ANEB-001, impairing the company's competitive position[197](index=197&type=chunk) - ANEB-001 may have undesirable side effects, either during clinical development or after marketing, which could delay or prevent approval, require safety warnings, or limit sales[192](index=192&type=chunk)[193](index=193&type=chunk) - The company lacks a marketing and sales organization and direct experience; inability to establish these capabilities or partner with third parties could prevent product revenue generation[195](index=195&type=chunk)[196](index=196&type=chunk) [Risks Related to Our Reliance on Third Parties](index=49&type=section&id=Risks%20Related%20to%20Our%20Reliance%20on%20Third%20Parties) This section discusses risks arising from the company's dependence on third parties for clinical trials, manufacturing, and collaborations - The company depends on third parties for preclinical testing and clinical trials, and their failure to perform timely or adequately could result in increased costs, delays, or rejection of data[199](index=199&type=chunk)[200](index=200&type=chunk) - Complete dependence on third parties for ANEB-001 manufacturing means commercialization could be halted or delayed if manufacturers fail to obtain regulatory approval, provide sufficient quantities, or meet quality/price standards[204](index=204&type=chunk)[206](index=206&type=chunk) - Reliance on collaborations with third parties carries inherent risks, including potential termination of agreements, reduced payments, or loss of control over product development, which could delay development and reduce revenues[211](index=211&type=chunk)[213](index=213&type=chunk) [Risks Related to Government Regulation of our Industry](index=52&type=section&id=Risks%20Related%20to%20Government%20Regulation%20of%20our%20Industry) This section addresses risks stemming from healthcare legislative reforms and regulatory requirements impacting the pharmaceutical industry - Legislative or regulatory reforms of the healthcare system, such as the ACA and IRA, could impact the company's ability to sell products profitably, affecting pricing, coverage, and relationships with healthcare professionals[218](index=218&type=chunk)[219](index=219&type=chunk)[221](index=221&type=chunk) - Clinical trials conducted outside the United States and not under an IND may not be accepted by the FDA, potentially requiring additional costly and time-consuming trials[222](index=222&type=chunk)[223](index=223&type=chunk) [Risks Related to Ownership of Our Common Stock](index=54&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) This section details risks associated with the company's common stock, including price volatility, future sales, and corporate governance provisions - The trading price and volume of the common stock have experienced and may continue to experience volatility due to various factors beyond the company's control, including quarterly results, analyst expectations, and industry developments[224](index=224&type=chunk) - Future sales, or the perception of future sales, of a substantial number of common shares by the company or its stockholders could depress the stock's trading price and make future equity financing more difficult[227](index=227&type=chunk)[228](index=228&type=chunk) - Principal stockholders and management own a substantial majority of the stock, enabling them to exert significant control over stockholder approval matters, potentially discouraging acquisition proposals[229](index=229&type=chunk) - Anti-takeover provisions in charter documents and Delaware law could discourage, delay, or prevent a change in control, potentially affecting the common stock's trading price[230](index=230&type=chunk)[232](index=232&type=chunk) - The company's certificate of incorporation designates Delaware courts as the exclusive forum for most disputes and federal district courts for Securities Act claims, potentially limiting stockholders' ability to choose a favorable judicial forum[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk) - The company does not expect to pay dividends on its common stock, retaining earnings for operations, expansion, and debt repayment, meaning stockholders may only realize a return through stock sales[236](index=236&type=chunk) [General Risk Factors](index=57&type=section&id=General%20Risk%20Factors) This section covers broad risks such as internal control effectiveness, public company costs, accounting changes, and macroeconomic conditions - Failure to establish and maintain effective internal control over financial reporting could harm operating results and business operations, leading to potential sanctions or stock price decline[238](index=238&type=chunk)[239](index=239&type=chunk) - Operating as a public company incurs significantly increased costs and requires substantial management time for compliance efforts, potentially diverting attention from business management[241](index=241&type=chunk) - Changes in accounting principles or interpretations could result in unfavorable accounting charges or effects, including retroactive changes to financial statements, causing stock price decline[242](index=242&type=chunk) - As an 'emerging growth company,' the company utilizes reduced reporting requirements, which may make its financial statements less comparable and its securities less attractive to some investors[243](index=243&type=chunk)[244](index=244&type=chunk) - Changes in tax laws or regulations, such as the Tax Cuts and Jobs Act, could adversely affect the business, cash flow, and financial condition, including limitations on net operating loss carryforwards[248](index=248&type=chunk)[251](index=251&type=chunk) - If securities or industry analysts cease publishing research or change recommendations adversely, or if actual results differ from guidance, the stock price and trading volume could decline[252](index=252&type=chunk)[253](index=253&type=chunk) - Health epidemics or pandemics, like COVID-19, may adversely affect business, financial condition, and results of operations through operational disruptions, supply chain issues, and economic instability[254](index=254&type=chunk)[255](index=255&type=chunk) - Unstable market and economic conditions, including inflation, may seriously affect the business by increasing costs, making financing more difficult, and potentially delaying or abandoning clinical development plans[257](index=257&type=chunk)[258](index=258&type=chunk)[259](index=259&type=chunk) - The company is subject to stringent and evolving data privacy and security laws (e.g., HIPAA, CCPA, GDPR), and actual or perceived failure to comply could lead to regulatory actions, litigation, fines, and business disruptions[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[268](index=268&type=chunk) - Compromise of internal IT systems or sensitive information, or those of third-party contractors, could lead to material disruption of product development, regulatory investigations, litigation, and reputational harm[271](index=271&type=chunk)[275](index=275&type=chunk)[278](index=278&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=65&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no unregistered sales of equity securities and details the use of net proceeds from the company's Initial Public Offering (IPO) - No unregistered sales of equity securities occurred during the reporting period[281](index=281&type=chunk) - The company received approximately **$19.8 million** in net proceeds from its May 2021 IPO[281](index=281&type=chunk) - Through September 30, 2023, approximately **$17.6 million** of IPO net proceeds were used for research and development expenses for ANEB-001, working capital, and general corporate purposes[282](index=282&type=chunk) [Item 3. Defaults Upon Senior Securities](index=65&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there are no reported defaults upon senior securities - No defaults upon senior securities are reported[282](index=282&type=chunk) [Item 4. Mine Safety Disclosures](index=65&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures required for the company - No mine safety disclosures are applicable to the company[282](index=282&type=chunk) [Item 5. Other Information](index=65&type=section&id=Item%205.%20Other%20Information) This section provides additional information, specifically detailing the Loan and Security Agreement (LSA) entered into on November 13, 2023, with 22NW, LP and JFL Capital Management LLC - On November 13, 2023, the company entered into a Loan and Security Agreement (LSA) allowing it to draw up to **$10 million** to fund future operations until November 13, 2026[283](index=283&type=chunk) - The LSA accrues interest at 0.25% per annum, with no fee on the unused balance, and will be collateralized by substantially all company assets upon drawing at least **$3 million**[283](index=283&type=chunk) - The company issued 300,000 shares of common stock to 22NW upon signing the LSA and will issue additional shares (0.03 shares per dollar loaned) up to an aggregate maximum of 300,000 for each advance[284](index=284&type=chunk) [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including corporate documents, agreements, and certifications - The report includes various exhibits such as the Second Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Specimen Stock Certificate, Investors' Rights Agreement, Securities Purchase Agreement, Form of Common Stock Purchase Warrant, Executive Employment Agreement, Offer Letter, Loan and Security Agreement, and certifications[285](index=285&type=chunk)[287](index=287&type=chunk) [Signatures](index=67&type=section&id=Signatures) This section contains the official signatures of the company's executive officers, certifying the report's accuracy - The report is signed by Richard Anthony Cunningham, Chief Executive Officer, and Daniel George, Chief Financial Officer, on November 14, 2023[291](index=291&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock ANEB Nasdaq Stock Market LLC FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-40388 ANEBULO PHARMACEUTICALS, INC. (Exact name of Reg ...

Nasdaq: ANEB Corporate Presentation Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements Statements contained in this presentation that are not statements of historical fact are forward-looking statements as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, these forward-looking statements can be identified by words such as "anticipate," "believe," "targeting," "expect," "will," "sho ...