[Special Note Regarding Forward-Looking Statements](index=4&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights forward-looking statements in the report, subject to risks and uncertainties that could cause actual results to differ materially - This section highlights that the Quarterly Report contains forward-looking statements subject to 'safe harbor' provisions, which involve substantial risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these statements and to review the 'Risk Factors' section[9](index=9&type=chunk)[10](index=10&type=chunk)[11](index=11&type=chunk) - Forward-looking statements include expectations regarding capital requirements, regulatory submissions, clinical trial timing and conduct, clinical utility and approval likelihood of selonabant, future growth, intellectual property, licensing arrangements, commercial potential, supplier performance, competition, economic/political impacts, and governmental regulations[12](index=12&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed financial statements and management's discussion and analysis for the reported periods [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Anebulo Pharmaceuticals, Inc.'s unaudited condensed financial statements for periods ended December 31, 2024, and June 30, 2024 [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) This statement provides a snapshot of the company's financial position, detailing assets, liabilities, and stockholders' equity at specific points in time Condensed Balance Sheets Data | Metric | December 31, 2024 ($) | June 30, 2024 ($) | Change ($) | % Change | | :-------------------------- | :------------------ | :---------------- | :------- | :------- | | Cash and cash equivalents | $14,998,467 | $3,094,200 | $11,904,267 | 384.7% | | Total current assets | $15,395,489 | $3,507,990 | $11,887,499 | 338.9% | | Total assets | $15,841,220 | $4,073,114 | $11,768,106 | 289.0% | | Total liabilities | $878,799 | $260,583 | $618,216 | 237.2% | | Total stockholders' equity | $14,962,421 | $3,812,531 | $11,149,890 | 292.4% | - The **significant increase** in **cash and cash equivalents**, total assets, and total stockholders' equity is **primarily due to** net proceeds of approximately **$15.0 million** from a **private placement offering** in **December 2024**[14](index=14&type=chunk)[27](index=27&type=chunk)[95](index=95&type=chunk) [Condensed Statements of Operations](index=6&type=section&id=Condensed%20Statements%20of%20Operations) This statement reports the company's revenues, expenses, and net loss over specific reporting periods, reflecting operational performance Condensed Statements of Operations Data | Metric | Three Months Ended Dec 31, 2024 ($) | Three Months Ended Dec 31, 2023 ($) | Change (YoY) ($) | Six Months Ended Dec 31, 2024 ($) | Six Months Ended Dec 31, 2023 ($) | Change (YoY) ($) | | :-------------------------- | :------------------------------ | :------------------------------ | :----------- | :---------------------------- | :---------------------------- | :----------- | | Research and development | $1,220,535 | $1,062,672 | $157,863 | $2,535,394 | $2,332,892 | $202,502 | | General and administrative | $1,367,616 | $1,697,787 | $(330,171) | $2,464,881 | $2,971,245 | $(506,364) | | Total operating expenses | $2,588,151 | $2,760,459 | $(172,308) | $5,000,275 | $5,304,137 | $(303,862) | | Net loss | $(2,463,030) | $(2,717,369) | $254,339 | $(4,663,766) | $(5,198,192) | $534,426 | | Net loss per share (basic & diluted) | $(0.09) | $(0.11) | $0.02 | $(0.17) | $(0.20) | $0.03 | | Grant income | $(177,703) | $- | $(177,703) | $(423,065) | $- | $(423,065) | - Net loss **decreased by** **$254,339** for the three months and **$534,426** for the six months ended **December 31, 2024**, **primarily due to a decrease** in general and administrative expenses and the **recognition of grant income**, **partially offset by increased** research and development expenses[17](index=17&type=chunk)[86](index=86&type=chunk)[91](index=91&type=chunk)[94](index=94&type=chunk) [Condensed Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Statements%20of%20Stockholders%27%20Equity) This statement details changes in the company's equity accounts, including common stock, additional paid-in capital, and accumulated deficit, over the reporting period Condensed Statements of Stockholders' Equity Data | Metric | Balance at June 30, 2024 ($) | Balance at December 31, 2024 ($) | Change ($) | | :-------------------------- | :----------------------- | :--------------------------- | :----- | | Common Stock Shares | 25,933,217 | 41,084,731 | 15,151,514 | | Common Stock Amount | $25,934 | $41,086 | $15,152 | | Additional Paid-in Capital | $69,190,341 | $84,988,845 | $15,798,504 | | Accumulated Deficit | $(65,403,744) | $(70,067,510) | $(4,663,766) | | Total Stockholders' Equity | $3,812,531 | $14,962,421 | $11,149,890 | - The **significant increase** in **common stock shares** and additional paid-in capital is **primarily due to** the issuance of **15,151,514 shares** in a private placement in **December 2024**, **generating approximately** **$15.0 million** in gross proceeds[20](index=20&type=chunk)[47](index=47&type=chunk) - Stock-based compensation expense recognized during the six months ended **December 31, 2024**, was **$851,253**, **contributing to the increase** in additional paid-in capital[20](index=20&type=chunk)[54](index=54&type=chunk) [Condensed Statements of Cash Flows](index=8&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) This statement summarizes cash inflows and outflows from operating, investing, and financing activities for the reporting periods Condensed Statements of Cash Flows Data | Cash Flow Activity ($) | Six Months Ended Dec 31, 2024 ($) | Six Months Ended Dec 31, 2023 ($) | Change ($) | | :-------------------------- | :---------------------------- | :---------------------------- | :----- | | Net cash used in operating activities | $(3,095,733) | $(4,540,532) | $1,444,799 | | Net cash provided by (used in) financing activities | $15,000,000 | $(62,354) | $15,062,354 | | Net increase (decrease) in cash | $11,904,267 | $(4,602,886) | $16,507,153 | | Cash, end of the period | $14,998,467 | $6,644,517 | $8,353,950 | - The company experienced a **significant net increase in cash** during the six months ended **December 31, 2024**, **primarily driven by** **$15.0 million** in proceeds from the **issuance of common stock** through a private placement[23](index=23&type=chunk)[100](index=100&type=chunk) - Net cash used in operating activities **decreased by approximately** **$1.4 million** compared to the prior year period, mainly due to a **lower net loss and favorable changes** in operating assets and liabilities[23](index=23&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) [Notes to Unaudited Condensed Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) These notes provide essential context for the condensed financial statements, covering business nature, liquidity, accounting policies, and specific financial line items - Anebulo Pharmaceuticals, Inc. is a clinical-stage pharmaceutical company developing treatments for cannabis-induced toxicity, with its principal operations in Lakeway, Texas[26](index=26&type=chunk) - The company has incurred an accumulated deficit of **$70.1 million** as of **December 31, 2024**, and **expects to continue generating operating losses**, **necessitating additional funding** for its development and commercialization objectives[27](index=27&type=chunk)[29](index=29&type=chunk)[127](index=127&type=chunk) - In **December 2024**, the company completed a private placement, issuing **15,151,514 shares of common stock** for **approximately $15.0 million** in gross proceeds, **significantly boosting its cash and cash equivalents**[47](index=47&type=chunk)[79](index=79&type=chunk) - The company was **awarded a two-year cooperative grant** of up to **$1.9 million** from NIDA in **July 2024** to **support the development of intravenous selonabant** for pediatric cannabis-induced toxicities, **recognizing** **$0.4 million** in grant income for the six months ended **December 31, 2024**[59](index=59&type=chunk)[61](index=61&type=chunk)[78](index=78&type=chunk)[94](index=94&type=chunk) - The **Loan and Security Agreement (LSA)** with 22NW, LP and JFL Capital Management LLC, initially allowing up to **$10 million**, was **modified in February 2025** to **reduce the maximum advance to** **$3 million**, **remove securitization provisions**, and **assign 22NW's interest to** 22NW Fund, LP. **No balance was outstanding** as of **December 31, 2024**, or **February 14, 2025**[56](index=56&type=chunk)[62](index=62&type=chunk)[63](index=63&type=chunk)[77](index=77&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) - Stock-based compensation expense for the six months ended **December 31, 2024**, was **approximately $0.9 million**, an **increase from $0.4 million** in the prior year, due to grants of options with immediate vesting terms in June and **December 2024**[54](index=54&type=chunk)[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition, results of operations, business developments, liquidity, and critical accounting estimates [Overview](index=16&type=section&id=Overview) This overview introduces Anebulo Pharmaceuticals, Inc.'s focus on developing selonabant for cannabis-induced toxicity, prioritizing an intravenous formulation for pediatric patients - Anebulo is a clinical-stage pharmaceutical company focused on developing selonabant (formerly ANEB-001) to rapidly reverse cannabis-induced toxicity, including unintentional poisoning in children and acute cannabinoid intoxication (ACI) in adults[65](index=65&type=chunk)[73](index=73&type=chunk) - The company is **prioritizing the advancement** of an intravenous (IV) selonabant formulation for pediatric patients with cannabis-induced CNS depression, believing it offers a **faster path to approval** compared to the adult oral product[70](index=70&type=chunk)[71](index=71&type=chunk)[89](index=89&type=chunk) - The FDA has acknowledged the **unmet need** for pediatric cannabis toxicity treatment and proposed close collaboration. A Phase I single ascending dose (SAD) study of IV selonabant in healthy adults is planned for 1H25[70](index=70&type=chunk) - The company holds U.S. Patent No. **11,795,146** for crystalline forms of selonabant and methods of use, providing **patent protection through** **2042**[75](index=75&type=chunk)[76](index=76&type=chunk) [Components of Results of Operations](index=19&type=section&id=Components%20of%20Results%20of%20Operations) This section describes primary components influencing financial performance, including R&D, G&A expenses, and the absence of revenue - The company has **not generated any revenue since inception** and **expects to continue generating operating losses** and negative cash flows as it advances clinical development[80](index=80&type=chunk) - Research and development expenses, which are expensed as incurred, are **expected to significantly increase** as the company develops selonabant and conducts clinical trials, particularly for the IV formulation[82](index=82&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk)[89](index=89&type=chunk) - General and administrative expenses primarily consist of professional fees, insurance, personnel costs (including stock-based compensation), and rent[85](index=85&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 operating expenses, grant income, and net loss Results of Operations Data | Metric | Three Months Ended Dec 31, 2024 ($) | Three Months Ended Dec 31, 2023 ($) | Change (YoY) ($) | Six Months Ended Dec 31, 2024 ($) | Six Months Ended Dec 31, 2023 ($) | Change (YoY) ($) | | :-------------------------- | :------------------------------ | :------------------------------ | :----------- | :---------------------------- | :---------------------------- | :----------- | | Research and development | $1,220,535 | $1,062,672 | $157,863 | $2,535,394 | $2,332,892 | $202,502 | | General and administrative | $1,367,616 | $1,697,787 | $(330,171) | $2,464,881 | $2,971,245 | $(506,364) | | Net loss | $(2,463,030) | $(2,717,369) | $254,339 | $(4,663,766) | $(5,198,192) | $534,426 | | Grant income | $(177,703) | $- | $(177,703) | $(423,065) | $- | $(423,065) | - Research and development expenses **increased by** **$0.2 million** for the six months ended **December 31, 2024**, driven by increased pre-clinical, nonclinical, and clinical studies expenses as the company **prioritizes the IV selonabant formulation**[89](index=89&type=chunk) - General and administrative expenses **decreased by** **$0.5 million** for the six months ended **December 31, 2024**, **primarily due to** reduced compensation and professional/consultant fees, **partially offset by higher** stock-based compensation[91](index=91&type=chunk) - The company **recognized** **$0.4 million** in grant income for the six months ended **December 31, 2024**, from the NIDA grant, with no comparable income in the prior year[94](index=94&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet financial obligations, detailing cash position, funding sources, and future capital requirements - As of **December 31, 2024**, the company had **$15.0 million** in **cash and cash equivalents**, **significantly bolstered by a $15.0 million private placement offering** in **December 2024**[95](index=95&type=chunk) - The company **expects its current cash** and available funding under the Loan Agreement to **fund operations and capital expenditures for at least the next 12 months** from the filing date[102](index=102&type=chunk) - Future funding will be required through equity/debt financings or collaboration agreements, with **potential risks of dilution** for existing stockholders and restrictions from debt financing[103](index=103&type=chunk)[130](index=130&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) Liquidity and Capital Resources Data | Cash Flow Activity ($) | Six Months Ended Dec 31, 2024 ($) | Six Months Ended Dec 31, 2023 ($) | Change ($) | | :-------------------------- | :---------------------------- | :---------------------------- | :----- | | Net cash used in operating activities | $(3,095,733) | $(4,540,532) | $1,444,799 | | Net cash provided by (used in) financing activities | $15,000,000 | $(62,354) | $15,062,354 | | Net increase (decrease) in cash | $11,904,267 | $(4,602,886) | $16,507,153 | [Contractual Obligations and Commitments](index=24&type=section&id=Contractual%20Obligations%20and%20Commitments) This section outlines the company's significant contractual obligations, including licensing agreements and manufacturing commitments, and their potential financial impact - The company has an exclusive worldwide royalty-bearing license agreement with Vernalis Development Limited for selonabant, involving **potential development milestone payments** up to **$29.9 million** (of which **$0.4 million** paid) and **sales milestone payments** up to **$35.0 million**, plus **single-digit royalties**[106](index=106&type=chunk) - A manufacturing agreement with a third-party CMO for **approximately $3.0 million** was **substantially completed** as of **June 30, 2024**, with the stability study aspect expected to be incurred during calendar **2026**[109](index=109&type=chunk) [Critical Accounting Estimates](index=26&type=section&id=Critical%20Accounting%20Estimates) This section describes accounting policies requiring management's most difficult judgments and estimates, such as accrued R&D and stock-based compensation - Key accounting estimates include **accrued research and development expenses**, which involve estimating services performed by CROs, investigative sites, and vendors when invoices are not yet received[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - **Stock-based compensation expense is estimated** using the Black-Scholes option pricing model, relying on subjective assumptions such as expected stock price volatility, expected term, risk-free rate, and expected dividends[117](index=117&type=chunk) - The company, as an 'emerging growth company' under the JOBS Act, **elects to use extended transition periods** for new or revised accounting standards, which **may affect comparability** with other public companies[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not required for smaller reporting companies, thus no disclosures regarding quantitative and qualitative market risk are provided - The company is a smaller reporting company and is **not required to provide** quantitative and qualitative disclosures about market risk[120](index=120&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of disclosure controls and procedures and reports on any changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section presents management's conclusion on the effectiveness of the company's disclosure controls and procedures as of the reporting period - As of **December 31, 2024**, management, including the CEO and CFO, concluded that the design and operation of the company's disclosure controls and procedures were **effective at a reasonable assurance level**[121](index=121&type=chunk)[122](index=122&type=chunk) [Changes in Internal Control over Financial Reporting](index=28&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports on any material changes in the company's internal control over financial reporting during the most recent fiscal quarter - There were **no changes in internal control over financial reporting** during the three months ended **December 31, 2024**, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[123](index=123&type=chunk) [PART II. OTHER INFORMATION](index=29&type=section&id=PART%20II.%20OTHER%20INFORMATION) This part provides additional non-financial information, including legal proceedings, risk factors, equity sales, and other material disclosures [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms the company is not currently a party to any material legal proceedings that could adversely affect its financial condition - The company is **not currently a party to any material legal proceedings**, and management believes there are no claims or actions pending that could have a material adverse effect on its results of operations or financial condition[125](index=125&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various risks that could materially impact the company's financial position, results of operations, or cash flows - The company has **not generated any revenue since inception** and has an accumulated deficit of **$70.1 million** as of **December 31, 2024**, **expecting to incur significant future operating losses and negative cash flows**[127](index=127&type=chunk) - The company **will need to raise additional capital** to fund operations and development, which may not be available on acceptable terms or at all, potentially leading to **substantial dilution** for existing stockholders through equity issuances[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk) - Changes in U.S. government policies, including **potential limits on NIH research funding** for 'indirect costs' and **trade policies, could adversely affect** the company's ability to realize grant benefits and obtain future funding[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk) - The **future success of the business is uncertain**, with **challenges including inadequate financial resources**, **inability to manufacture commercially**, **delays in clinical testing**, and **difficulties in obtaining regulatory approval and market acceptance** for its product candidates[128](index=128&type=chunk)[129](index=129&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on the company's unregistered sales of equity securities and any issuer purchases or repurchases during the quarter - The company **did not sell any equity securities in unregistered transactions** during the quarter ended **December 31, 2024**, other than previously disclosed filings[138](index=138&type=chunk) - There were **no issuer purchases or repurchases of equity securities** during the reported period[139](index=139&type=chunk)[140](index=140&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item confirms that the company has not defaulted on any senior securities during the reported period - The company reported **no defaults upon senior securities**[141](index=141&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - This item is **not applicable to the company**[142](index=142&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) This section discloses material events not otherwise reported, specifically a modification to the Loan and Security Agreement and insider trading arrangements - On **February 10, 2025**, the **Loan and Security Agreement (LSA)** was **modified**, **reducing the maximum loan advance to** **$3 million**, **removing all securitization provisions**, and **assigning 22NW's interest to** 22NW Fund, LP. The loan will accrue interest at **0.25%** per annum and is due **February 10, 2028**[143](index=143&type=chunk) - As of **December 31, 2024**, and **February 14, 2025**, there was **no balance outstanding** under the LSA or the **amended Loan Agreement**[143](index=143&type=chunk) - **No director or officer adopted or terminated** a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended **December 31, 2024**[144](index=144&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance documents, material agreements, and certifications - The exhibits include corporate documents (e.g., Certificate of Incorporation, Bylaws), material agreements (e.g., Securities Purchase Agreement, Amended and Restated Loan Agreement), and **certifications pursuant to Sarbanes-Oxley Act**[146](index=146&type=chunk) [Signatures](index=35&type=section&id=Signatures) This section contains the required signatures of the registrant's authorized officers, certifying the filing of the report - The report is **signed by Richard Anthony Cunningham, Chief Executive Officer, and Daniel George, Chief Financial Officer**, on **February 14, 2025**, **certifying its submission**[149](index=149&type=chunk)[150](index=150&type=chunk)

[Report Overview and Recent Highlights](index=1&type=section&id=Report%20Overview%20and%20Recent%20Highlights) [Introduction](index=1&type=section&id=Introduction) Anebulo Pharmaceuticals announced financial results for the second quarter of fiscal year 2025, which ended December 31, 2024, along with key recent updates regarding its clinical development and financing activities - Anebulo Pharmaceuticals, a clinical-stage company, reported Q2 FY2025 financial results and recent updates[1](index=1&type=chunk)[2](index=2&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Richie Cunningham expressed gratitude for continued investor support, highlighting confidence in the company's future, and emphasized the significant unmet medical need for an emergency antidote to acute cannabis-induced toxicity, particularly in children - CEO Richie Cunningham acknowledged strong investor confidence and the significant unmet medical need for an emergency antidote to acute cannabis-induced toxicity, especially in children[4](index=4&type=chunk)[5](index=5&type=chunk) - Research indicates children are more sensitive to cannabis toxicity, leading to more serious outcomes and higher hospitalization risk[5](index=5&type=chunk) - FDA confirmed the unmet need for pediatric cannabis toxicity treatment and suggested close collaboration for selonabant's development in this indication[6](index=6&type=chunk) [Second Quarter Fiscal Year 2025 and Subsequent Highlights](index=1&type=section&id=Second%20Quarter%20Fiscal%20Year%202025%20and%20Subsequent%20Highlights) Anebulo provided key updates including progress in clinical development for intravenous selonabant, particularly for pediatric cannabis toxicity, and significant financing activities [Clinical Development Updates](index=1&type=section&id=Clinical%20Development%20Updates) Anebulo met with the FDA to discuss the development of intravenous selonabant, receiving acknowledgment of the unmet need for pediatric cannabis toxicity treatment and a proposal for close collaboration, and plans to initiate a Phase 1 SAD study in 1H25 - In December 2024, Anebulo met with the FDA to discuss intravenous selonabant development, with the FDA acknowledging the unmet need for pediatric cannabis toxicity treatment and proposing close collaboration[7](index=7&type=chunk) - Anebulo plans to begin its Phase 1 single ascending dose (SAD) study of intravenous selonabant in healthy adults in 1H25[7](index=7&type=chunk) [Financing and Corporate Updates](index=1&type=section&id=Financing%20and%20Corporate%20Updates) The company secured $15 million in gross proceeds from a private placement offering in December 2024 and amended its Loan and Security Agreement in February 2025, reducing the maximum loan size to $3 million and removing securitization provisions - In December 2024, Anebulo completed a private placement offering, issuing **15.2 million shares** of common stock for gross proceeds of **$15 million**[7](index=7&type=chunk) - In February 2025, the Loan and Security Agreement with 22NW and JFL Capital Management was amended, reducing the maximum loan size to approximately **$3 million** and removing all securitization provisions[7](index=7&type=chunk) [Financial Results for Q2 FY2025](index=2&type=section&id=Financial%20Results%20for%20the%20three%20months%20ended%20December%2031%2C%202024) [Summary of Financial Performance](index=2&type=section&id=Summary%20of%20Financial%20Performance) For Q2 FY2025, Anebulo's operating expenses decreased slightly to $2.6 million, leading to a reduced net loss of $2.5 million, or $(0.09) per share, while cash and cash equivalents significantly increased to $15.0 million, with an additional $3 million available via a loan agreement Key Financial Highlights (Q2 FY2025 vs. Q2 FY2024) | Metric | Q2 FY2025 (3 months ended Dec 31, 2024) | Q2 FY2024 (3 months ended Dec 31, 2023) | Change | | :----------------------- | :-------------------------------------- | :-------------------------------------- | :----- | | Operating Expenses | $2.6 million | $2.8 million | -7.1% | | Net Loss | $(2.5) million | $(2.7) million | -7.4% | | Net Loss per Share | $(0.09) | $(0.11) | -18.2% | - Cash and cash equivalents were **$15.0 million** as of December 31, 2024, with an additional **$3 million** accessible through a Loan Agreement[10](index=10&type=chunk) [Condensed Balance Sheets](index=4&type=section&id=Condensed%20Balance%20Sheets) As of December 31, 2024, Anebulo's cash and cash equivalents significantly increased to nearly $15.0 million from $3.1 million at June 30, 2024, driving a substantial increase in total assets and stockholders' equity Condensed Balance Sheet Data (as of Dec 31, 2024 vs. Jun 30, 2024) | Metric | Dec 31, 2024 ($) | Jun 30, 2024 ($) | Change | | :---------------------- | :----------- | :----------- | :----- | | Cash and cash equivalents | $14,998,467 | $3,094,200 | +384.7% | | Total assets | $15,841,220 | $4,073,114 | +288.9% | | Total liabilities | $878,799 | $260,583 | +237.3% | | Total stockholders' equity | $14,962,421 | $3,812,531 | +292.5% | [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) For the three months ended December 31, 2024, Anebulo reported a net loss of $2.46 million, an improvement from $2.72 million in the prior year, primarily due to decreased general and administrative expenses and the recognition of grant income Condensed Statements of Operations (3 months ended Dec 31) | Metric | 2024 ($) | 2023 ($) | Change | | :-------------------------- | :----------- | :----------- | :----- | | Research and development | $1,220,535 | $1,062,672 | +14.8% | | General and administrative | $1,367,616 | $1,697,787 | -19.4% | | Total operating expenses | $2,588,151 | $2,760,459 | -6.2% | | Loss from operations | $(2,588,151) | $(2,760,459) | -6.2% | | Interest expense | $59,696 | $31,838 | +87.5% | | Interest income | $(7,067) | $(75,522) | -90.7% | | Grant income | $(177,703) | $- | N/A | | Total other income, net | $(125,121) | $(43,090) | +190.4% | | Net loss | $(2,463,030) | $(2,717,369) | -9.4% | | Weighted average common shares outstanding | 27,415,430 | 25,789,739 | +6.3% | | Net loss per share | $(0.09) | $(0.11) | -18.2% | [About Selonabant (ANEB-001)](index=2&type=section&id=About%20Selonabant%20%28ANEB-001%29) [Product Overview and Clinical Status](index=2&type=section&id=Product%20Overview%20and%20Clinical%20Status) Selonabant (ANEB-001) is Anebulo's lead product candidate, a CB1 receptor antagonist, being developed as an antidote for acute cannabis-induced toxicity in both adults and pediatric subjects, showing promise in Phase 2 studies for oral administration and now being developed as an intravenous treatment with a strategic focus on the pediatric indication - Selonabant (ANEB-001) is a potent, small molecule antagonist of the cannabinoid receptor type-1 (CB1), developed as an antidote for acute cannabis-induced toxicity[9](index=9&type=chunk) - Oral selonabant successfully blocked or reversed key CNS effects of THC in a Phase 2 proof-of-concept study in adults and was well tolerated[9](index=9&type=chunk) - The company is developing selonabant for intravenous administration, with a strategic focus on pediatric patients with acute cannabis-induced toxicity, believing this offers a faster timeline to approval[9](index=9&type=chunk)[11](index=11&type=chunk) - An observational study is ongoing in Emergency Departments to gather data on cannabinoid concentrations, signs/symptoms, and patient disposition[9](index=9&type=chunk) [About Anebulo Pharmaceuticals, Inc.](index=3&type=section&id=About%20Anebulo%20Pharmaceuticals%2C%20Inc.) [Company Profile and Strategic Focus](index=3&type=section&id=Company%20Profile%20and%20Strategic%20Focus) Anebulo Pharmaceuticals is a clinical-stage company focused on developing novel solutions for cannabis-induced toxicity, strategically prioritizing the development of an intravenous formulation of selonabant for pediatric patients, aiming for a faster regulatory pathway compared to the adult oral product - Anebulo Pharmaceuticals is a clinical-stage company developing solutions for cannabis-induced toxicity[11](index=11&type=chunk) - The company is prioritizing the advancement of an IV formulation of selonabant for pediatric patients with acute cannabis-induced toxicity, expecting a faster approval timeline than the adult oral product[11](index=11&type=chunk) - Selonabant is a competitive antagonist at the human CB1 receptor[11](index=11&type=chunk) [Legal and Contact Information](index=3&type=section&id=Legal%20and%20Contact%20Information) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The forward-looking statements caution investors about risks and uncertainties related to Anebulo's regulatory strategy, clinical trial success, funding, regulatory approvals, market acceptance, intellectual property, and ability to retain key employees or maintain Nasdaq listing - Statements regarding future performance are subject to risks and uncertainties, including Anebulo's ability to pursue its regulatory strategy, complete clinical trials, obtain funding, and achieve regulatory approvals[12](index=12&type=chunk) - Key risks include the ability of selonabant to rapidly reverse cannabis toxicity symptoms, the IV formulation's potential for faster approval, and maintaining license agreements and patent estate[12](index=12&type=chunk) [Contacts](index=3&type=section&id=CONTACTS) Contact information for Anebulo Pharmaceuticals' Chief Financial Officer, Daniel George, is provided for inquiries - For inquiries, contact Daniel George, Chief Financial Officer of Anebulo Pharmaceuticals, Inc[13](index=13&type=chunk)

[Special Note Regarding Forward-Looking Statements](index=4&type=section&id=Special%20Note%20Regarding%20Forward-Looking%20Statements) The report contains forward-looking statements regarding future financial condition, business strategy, plans, and management objectives, which are subject to substantial risks and uncertainties - The report contains forward-looking statements regarding future financial condition, business strategy, plans, and management objectives, which are subject to substantial risks and uncertainties[5](index=5&type=chunk) - Key areas of forward-looking statements include capital requirements, timing/outcome of regulatory submissions, clinical trial conduct, clinical utility and approval likelihood of selonabant, future growth, intellectual property, licensing, commercial potential, supplier performance, competition, economic/political impacts, and governmental regulations[6](index=6&type=chunk) [PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&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 detailed notes explaining the nature of business, accounting policies, and specific financial line items [Condensed Balance Sheets as of September 30, 2024 and June 30, 2024](index=5&type=section&id=Condensed%20Balance%20Sheets%20as%20of%20September%2030,%202024%20and%20June%2030,%202024) The balance sheets show a decrease in total assets from **$4.07 million** at June 30, 2024, to **$2.47 million** at September 30, 2024, primarily driven by a reduction in cash and cash equivalents. Total liabilities increased significantly from **$0.26 million** to **$0.57 million**, while total stockholders' equity decreased from **$3.81 million** to **$1.90 million** Condensed Balance Sheet Highlights | Metric | Sep 30, 2024 | Jun 30, 2024 | Change | | :------------------------- | :----------- | :----------- | :----- | | Cash and cash equivalents | $1,404,211 | $3,094,200 | $(1,689,989) | | Total current assets | $1,962,513 | $3,507,990 | $(1,545,477) | | Total assets | $2,467,940 | $4,073,114 | $(1,605,174) | | Total liabilities | $569,225 | $260,583 | $308,642 | | Total stockholders' equity | $1,898,715 | $3,812,531 | $(1,913,816) | [Condensed Statements of Operations for the Three Months Ended September 30, 2024 and September 30, 2023](index=6&type=section&id=Condensed%20Statements%20of%20Operations%20for%20the%20Three%20Months%20Ended%20September%2030,%202024%20and%20September%2030,%202023) For the three months ended September 30, 2024, the company reported a net loss of **$2.20 million**, an improvement from **$2.48 million** in the prior year period, primarily due to decreased general and administrative expenses and increased grant income Condensed Statements of Operations Highlights | Metric | Sep 30, 2024 | Sep 30, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Research and development | $1,314,859 | $1,270,220 | $44,639 | | General and administrative | $1,097,265 | $1,273,458 | $(176,193) | | Total operating expenses | $2,412,124 | $2,543,678 | $(131,554) | | Loss from operations | $(2,412,124) | $(2,543,678) | $131,554 | | Interest expense | $59,697 | $0 | $59,697 | | Interest income | $(26,006) | $(55,198) | $29,192 | | Grant income | $(245,362) | $0 | $(245,362) | | Net loss | $(2,200,736) | $(2,480,823) | $280,087 | | Net loss per share, basic and diluted | $(0.08) | $(0.10) | $0.02 | [Condensed Statements of Stockholders' Equity for the Three Months Ended September 30, 2024 and September 30, 2023](index=6&type=section&id=Condensed%20Statements%20of%20Stockholders'%20Equity%20for%20the%20Three%20Months%20Ended%20September%2030,%202024%20and%20September%2030,%202023) Total stockholders' equity decreased from **$3.81 million** at June 30, 2024, to **$1.90 million** at September 30, 2024, primarily due to the net loss incurred, partially offset by stock-based compensation expense Condensed Statements of Stockholders' Equity Highlights | Metric | Jun 30, 2024 | Sep 30, 2024 | Change | | :--------------------------- | :----------- | :----------- | :----- | | Common Stock Amount | $25,934 | $25,934 | $0 | | Additional Paid-in Capital | $69,190,341 | $69,477,261 | $286,920 | | Accumulated Deficit | $(65,403,744) | $(67,604,480) | $(2,200,736) | | Total Stockholders' Equity | $3,812,531 | $1,898,715 | $(1,913,816) | [Condensed Statements of Cash Flows for the Three Months Ended September 30, 2024 and September 30, 2023](index=8&type=section&id=Condensed%20Statements%20of%20Cash%20Flows%20for%20the%20Three%20Months%20Ended%20September%2030,%202024%20and%20September%2030,%202023) Net cash used in operating activities decreased significantly to **$1.69 million** for the three months ended September 30, 2024, compared to **$2.73 million** in the prior year, driven by lower net loss and favorable changes in operating assets and liabilities Condensed Statements of Cash Flows Highlights (Operating Activities) | Metric | Sep 30, 2024 | Sep 30, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Net loss | $(2,200,736) | $(2,480,823) | $280,087 | | Stock-based compensation | $286,920 | $210,797 | $76,123 | | Amortization of loan commitment fee | $59,697 | $0 | $59,697 | | Grant receivable | $(245,362) | $0 | $(245,362) | | Prepaid expenses | $100,850 | $(104,558) | $205,408 | | Accounts payable | $95,716 | $31,404 | $64,312 | | Accrued expenses | $212,926 | $(383,645) | $596,571 | | Net cash used in operating activities | $(1,689,989) | $(2,726,825) | $1,036,836 | | Cash, end of period | $1,404,211 | $8,520,578 | $(7,116,367) | [Notes to Unaudited Condensed Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) This section provides detailed explanations and disclosures for the unaudited condensed financial statements, covering the company's nature of business, accounting policies, and specific financial line items [Note 1. Nature of business and basis of presentation](index=8&type=section&id=Note%201.%20Nature%20of%20business%20and%20basis%20of%20presentation) Anebulo Pharmaceuticals, Inc. is a clinical-stage company developing treatments for cannabis toxicity, with an accumulated deficit of **$67.6 million** as of September 30, 2024, and expects to require additional funding for long-term development - Anebulo Pharmaceuticals, Inc. is a clinical-stage pharmaceutical company developing treatments for cannabis toxicity, including unintentional cannabis poisoning and acute cannabinoid intoxication (ACI)[14](index=14&type=chunk) - The company has incurred a net loss of approximately **$2.2 million** for the three months ended September 30, 2024, and an accumulated deficit of **$67.6 million** as of September 30, 2024[15](index=15&type=chunk) - The company expects its cash and cash equivalents, along with available funding under the Loan and Security Agreement (LSA), to fund operations and capital expenditures for at least **12 months** from the financial statements' issuance date[15](index=15&type=chunk) - Future funding will be sought through equity and debt financings or collaboration agreements, with risks of dilution or inability to secure funding on acceptable terms, potentially delaying or eliminating product development[16](index=16&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=10&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) The company's unaudited interim condensed financial statements are prepared in accordance with U.S. GAAP and SEC rules, with no material changes to significant accounting policies since June 30, 2024, except for research and development grants - Unaudited interim condensed financial statements are prepared in accordance with U.S. GAAP and SEC rules, with certain information and footnote disclosures omitted as permitted[19](index=19&type=chunk)[20](index=20&type=chunk) - No material changes to significant accounting policies have occurred since June 30, 2024, other than the policy for accounting for research and development grants[22](index=22&type=chunk) [Note 3. Prepaid Expenses](index=11&type=section&id=Note%203.%20Prepaid%20Expenses) Prepaid expenses decreased from **$413,790** at June 30, 2024, to **$312,940** at September 30, 2024, primarily due to a decrease in prepaid research and development, partially offset by an increase in prepaid insurance Prepaid Expenses | Category | Sep 30, 2024 | Jun 30, 2024 | | :------------------------- | :----------- | :----------- | | Prepaid insurance | $155,507 | $95,871 | | Prepaid research and development | $118,893 | $274,879 | | Prepaid other | $38,540 | $43,040 | | **Total prepaid expenses** | **$312,940** | **$413,790** | [Note 4. Accrued Expenses](index=11&type=section&id=Note%204.%20Accrued%20Expenses) Accrued expenses significantly increased from **$104,157** at June 30, 2024, to **$317,083** at September 30, 2024, primarily driven by a substantial increase in accrued research and development costs Accrued Expenses | Category | Sep 30, 2024 | Jun 30, 2024 | | :------------------------- | :----------- | :----------- | | Accrued payroll related expenses | $32,843 | $29,512 | | Accrued research and development | $248,685 | $47,554 | | Accrued professional fees | $35,555 | $27,091 | | **Total accrued expenses** | **$317,083** | **$104,157** | [Note 5. Other Assets](index=11&type=section&id=Note%205.%20Other%20Assets) Other assets, primarily loan commitment fees, decreased from **$0.6 million** at June 30, 2024, to **$0.5 million** at September 30, 2024, due to amortization, resulting in **$0.1 million** interest expense - Loan commitment fees, included in other assets, decreased from **$0.6 million** at June 30, 2024, to **$0.5 million** at September 30, 2024, due to amortization over a three-year loan term[26](index=26&type=chunk) - Interest expense related to the amortization of loan commitment fees was **$0.1 million** for the three months ended September 30, 2024, compared to zero in the prior year period[26](index=26&type=chunk) [Note 6. License Agreement](index=11&type=section&id=Note%206.%20License%20Agreement) The company licensed selonabant intellectual property from Vernalis Development Limited, involving potential development milestone payments up to **$29.9 million** and sales milestone payments up to **$35.0 million**, plus single-digit royalties - The company licensed intellectual property for selonabant from Vernalis Development Limited in May 2020, involving potential development milestone payments up to **$29.9 million** and sales milestone payments up to **$35.0 million**, plus single-digit royalties[27](index=27&type=chunk) - As part of the May 2021 IPO, **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, 2024[28](index=28&type=chunk) [Note 7. Stockholders' Equity](index=11&type=section&id=Note%207.%20Stockholders'%20Equity) The company's authorized common stock increased to **50,000,000 shares** in November 2023, with **25,933,217 shares** issued and outstanding as of September 30, 2024, following a **$6.3 million** private placement and issuance of **300,000 shares** for a Loan and Security Agreement - The authorized common stock was increased from **40,000,000** to **50,000,000 shares** in November 2023[28](index=28&type=chunk) - As of September 30, 2024, **25,933,217 shares** of common stock were issued and outstanding[9](index=9&type=chunk)[10](index=10&type=chunk) - A private placement in September 2022 generated approximately **$6.3 million** in net proceeds from the issuance of **2,264,650 units**, each comprising one common share and a warrant[29](index=29&type=chunk) - **300,000 shares** of common stock were issued in November 2023 in connection with a Loan and Security Agreement[30](index=30&type=chunk) [Note 8. Stock-Based Compensation](index=12&type=section&id=Note%208.%20Stock-Based%20Compensation) The 2020 Stock Incentive Plan has **324,452 shares** available for future issuance, with stock-based compensation expense of approximately **$0.3 million** for the three months ended September 30, 2024, and **$2.1 million** in unrecognized expense - The 2020 Stock Incentive Plan has **324,452 shares** available for future issuance as of September 30, 2024, out of a total authorized **3,650,000 shares**[31](index=31&type=chunk) - Stock-based compensation expense was approximately **$0.3 million** for the three months ended September 30, 2024, compared to **$0.2 million** for the same period in 2023[37](index=37&type=chunk) - As of September 30, 2024, unrecognized stock-based compensation expense related to unvested stock options totaled approximately **$2.1 million**, to be recognized over a weighted average period of **2.3 years**[37](index=37&type=chunk) Stock Option Activity (Three Months Ended September 30, 2024) | Metric | Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | | :-------------------------- | :--------------- | :------------------------------ | :------------------------------------------ | | Outstanding at June 30, 2024 | 2,319,048 | $3.00 | 6.0 | | Granted | - | - | - | | Exercised | - | - | - | | Forfeited/cancelled | - | - | - | | Outstanding at Sep 30, 2024 | 2,319,048 | $3.00 | 5.8 | | Options exercisable at Sep 30, 2024 | 903,994 | $3.15 | 3.0 | [Note 9. Net Loss Per Share Attributable to Common Stockholders](index=14&type=section&id=Note%209.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Stockholders) Net loss per share was **$(0.08)** for the three months ended September 30, 2024, an improvement from **$(0.10)** in the prior year, with **4,583,698** common stock equivalents excluded due to anti-dilutive effect Common Stock Equivalents Excluded from EPS Calculation | Category | Sep 30, 2024 | Sep 30, 2023 | | :-------------------- | :----------- | :----------- | | Stock options outstanding | 2,319,048 | 2,054,893 | | Warrants outstanding | 2,264,650 | 2,264,650 | | **Total** | **4,583,698** | **4,319,543** | - Net loss per share, basic and diluted, was **$(0.08)** for the three months ended September 30, 2024, compared to **$(0.10)** for the same period in 2023[11](index=11&type=chunk) [Note 10. Loan and Security Agreement](index=14&type=section&id=Note%2010.%20Loan%20and%20Security%20Agreement) The company entered into a Loan and Security Agreement (LSA) on November 13, 2023, providing access to up to **$10 million** at **0.25%** annual interest, with **300,000 shares** issued upon signing and no outstanding balance as of September 30, 2024 - The company entered into a Loan and Security Agreement (LSA) on November 13, 2023, allowing it to draw up to **$10 million** at **0.25%** annual interest, due on November 13, 2026[39](index=39&type=chunk) - **300,000 shares** of common stock were issued to 22NW upon signing the LSA, with additional shares (**0.03** per dollar loaned, up to **300,000** aggregate) to be issued upon advances[40](index=40&type=chunk) - As of September 30, 2024, there was no outstanding balance under the LSA[40](index=40&type=chunk) [Note 11. Research and Development Grant](index=14&type=section&id=Note%2011.%20Research%20and%20Development%20Grant) The company received the first tranche of **$0.9 million** from a **$1.9 million** NIDA grant in July 2024, supporting IV selonabant development for pediatric cannabis toxicity, recognizing **$0.2 million** in grant income and a **$0.2 million** grant receivable - On July 16, 2024, the company was awarded the first tranche of **$0.9 million** from a two-year NIDA grant totaling up to **$1.9 million** to support the development of intravenous selonabant for pediatric cannabis toxicity[42](index=42&type=chunk) - The company recognized **$0.2 million** in grant income and recorded a **$0.2 million** grant receivable for the three months ended September 30, 2024, with no comparable income in the prior year[44](index=44&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&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 and results of operations, highlighting its focus on developing selonabant for cannabis toxicity, recent financial performance, liquidity, capital resources, and critical accounting estimates [Overview](index=15&type=section&id=Overview) Anebulo Pharmaceuticals is a clinical-stage company developing selonabant for cannabis toxicity, prioritizing an IV formulation for pediatric use due to faster approval, and recently secured a U.S. patent and a **$1.9 million** NIDA grant - Anebulo Pharmaceuticals is a clinical-stage company developing selonabant (formerly ANEB-001) to rapidly reverse the negative effects of cannabis toxicities, including unintentional cannabis poisoning in children and ACI in adults[46](index=46&type=chunk) - The company is prioritizing the advancement of an intravenous (IV) selonabant formulation for pediatric patients with unintentional cannabis poisoning, believing it offers a faster timeline to approval compared to the adult oral product[51](index=51&type=chunk)[52](index=52&type=chunk) - A U.S. patent (No. **11,795,146**) was issued on October 24, 2023, covering crystalline forms of selonabant and methods of use to treat acute cannabinoid overdose, providing patent protection through **2042**[56](index=56&type=chunk) - On July 16, 2024, the company was awarded the first tranche of **$0.9 million** from a two-year NIDA grant totaling up to **$1.9 million** to support the development of intravenous selonabant for emergency treatment of acute cannabis-induced toxicities in children[59](index=59&type=chunk) [Components of Results of Operations](index=18&type=section&id=Components%20of%20Results%20of%20Operations) This section outlines the company's key operational components: Revenue, Research and Development Expenses, and General and Administrative Expenses, noting no revenue generation since inception and expected significant operating losses [Revenue](index=18&type=section&id=Revenue) The company has not generated any revenue since its inception and expects to continue incurring significant operating losses and negative cash flows, with future revenue contingent on successful product development 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[60](index=60&type=chunk) - Future revenue is dependent on successful development and marketing approval of selonabant or other product candidates, or through collaboration/license agreements[60](index=60&type=chunk) [Research and Development Expenses](index=19&type=section&id=Research%20and%20Development%20Expenses) Research and development expenses are a significant portion of operating costs, expensed as incurred, and are expected to increase as the company advances selonabant's clinical development and expands its pipeline - Research and development expenses are expected to significantly increase as the company continues to develop selonabant and conduct clinical trials for cannabis toxicity, and expand its product-candidate pipeline[63](index=63&type=chunk)[64](index=64&type=chunk) - R&D expenses include employee costs, third-party CRO/CMO costs, consultant fees, other direct third-party expenses, and amortization for asset purchases[63](index=63&type=chunk) [General and Administrative Expenses](index=19&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 include professional fees, stock-based compensation, insurance, personnel costs, and rent[65](index=65&type=chunk) [Results of Operations (Comparison of the Three Months Ended September 30, 2024 and 2023)](index=19&type=section&id=Results%20of%20Operations%20(Comparison%20of%20the%20Three%20Months%20Ended%20September%2030,%202024%20and%202023)) The company's net loss decreased by **$280,087** to **$2.20 million** for the three months ended September 30, 2024, compared to **$2.48 million** in the prior year, driven by decreased general and administrative expenses and recognized grant income [Research and Development Expenses](index=20&type=section&id=Research%20and%20Development%20Expenses_Results) Research and development expenses increased slightly by **$44,639** to **$1.31 million** for the three months ended September 30, 2024, mainly due to increased contract manufacturing costs, and are expected to increase further for IV selonabant formulation and clinical safety studies Research and Development Expenses | Category | Sep 30, 2024 | Sep 30, 2023 | Change | | :------------------------------------- | :----------- | :----------- | :----- | | Pre-clinical, nonclinical and clinical studies | $833,861 | $841,133 | $(7,272) | | Contract manufacturing | $215,466 | $143,302 | $72,164 | | Other research and development | $265,532 | $285,785 | $(20,253) | | **Total research and development expenses** | **$1,314,859** | **$1,270,220** | **$44,639** | - Research and development expenses are expected to increase as the company scales up the IV selonabant formulation and commences clinical safety studies, following the completion of Phase 2 oral ACI trials[68](index=68&type=chunk) [General and Administrative Expenses](index=20&type=section&id=General%20and%20Administrative%20Expenses_Results) General and administrative expenses decreased by **$176,193** to **$1.10 million** for the three months ended September 30, 2024, primarily due to strategic cost reductions in professional and consultant fees General and Administrative Expenses | Category | Sep 30, 2024 | Sep 30, 2023 | Change | | :---------------------------------- | :----------- | :----------- | :----- | | Compensation and related benefits | $306,613 | $264,710 | $41,903 | | Professional and consultant fees | $315,794 | $613,960 | $(298,166) | | Stock-based compensation expense | $286,920 | $210,797 | $76,123 | | Directors' and officers' insurance | $117,158 | $117,525 | $(367) | | Facilities, fees and other costs | $70,780 | $66,466 | $4,314 | | **Total general and administrative expenses** | **$1,097,265** | **$1,273,458** | **$(176,193)** | - The decrease in general and administrative expenses was primarily due to strategic cost reductions in professional and consultant fees[69](index=69&type=chunk) [Interest Expense](index=20&type=section&id=Interest%20Expense_Results) Interest expense was **$0.1 million** for the three months ended September 30, 2024, attributed to the amortization of loan commitment fees related to the Loan and Security Agreement, which was not in effect in the prior year - Interest expense was **$0.1 million** for the three months ended September 30, 2024, due to the amortization of loan commitment fees from the LSA, which was not in effect in the prior year period[70](index=70&type=chunk) [Interest Income](index=20&type=section&id=Interest%20Income_Results) Interest income decreased to approximately **$26,000** for the three months ended September 30, 2024, from approximately **$55,000** in the prior year, due to lower cash balances and interest rates - Interest income decreased to approximately **$26,000** for the three months ended September 30, 2024, from **$55,000** in the prior year, attributed to lower cash balances and interest rates[71](index=71&type=chunk) [Grant Income](index=20&type=section&id=Grant%20Income_Results) The company recognized **$0.2 million** in grant income for the three months ended September 30, 2024, from the NIDA research and development grant, with no comparable income in the prior year period - Grant income of **$0.2 million** was recognized for the three months ended September 30, 2024, from the NIDA research and development grant, with no comparable income in the prior year period[72](index=72&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) The company has incurred significant operating losses and expects this trend to continue, with **$1.4 million** in cash as of September 30, 2024, and anticipates needing additional funding beyond the next **12 months** despite access to a **$10 million** LSA [Overview](index=20&type=section&id=Overview_Liquidity) The company has incurred significant operating losses since inception and expects to continue doing so, with **$1.4 million** in cash as of September 30, 2024, and plans to seek additional funding through equity, debt, or collaboration agreements - The company has incurred significant operating losses since inception and expects to continue incurring significant expenses and operating losses in the future[73](index=73&type=chunk) - As of September 30, 2024, cash and cash equivalents were **$1.4 million**[73](index=73&type=chunk) - The company plans to seek additional funding through equity and debt financings or collaboration agreements, with no assurance of securing funds on acceptable terms[73](index=73&type=chunk) [Loan and Security Agreement](index=21&type=section&id=Loan%20and%20Security%20Agreement_Liquidity) The LSA, entered into on November 13, 2023, provides access to up to **$10 million** at **0.25%** annual interest until November 13, 2026, with **300,000** common shares issued upon signing and no outstanding balance as of September 30, 2024 - 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[74](index=74&type=chunk) - **300,000** common shares were issued to 22NW upon signing the LSA, and **0.03 shares** per dollar loaned (up to **300,000** aggregate) will be issued upon advances[75](index=75&type=chunk) - As of September 30, 2024, there was no outstanding balance under the LSA[75](index=75&type=chunk) [Cash Flows](index=22&type=section&id=Cash%20Flows_Liquidity) Net cash used in operating activities for the three months ended September 30, 2024, was approximately **$1.7 million**, a significant decrease from **$2.7 million** in the prior year, due to lower net loss and favorable changes in operating assets and liabilities Net Cash Used in Operating Activities | Period | Net Cash Used in Operating Activities | | :------------------------- | :---------------------------------- | | Three Months Ended Sep 30, 2024 | $(1,689,989) | | Three Months Ended Sep 30, 2023 | $(2,726,825) | - The decrease in cash used in operating activities for the three months ended September 30, 2024, was primarily due to a lower net loss and favorable changes in operating assets and liabilities, partially offset by non-cash stock-based compensation and loan commitment amortization[78](index=78&type=chunk)[79](index=79&type=chunk) [Funding and Material Cash Requirements](index=22&type=section&id=Funding%20and%20Material%20Cash%20Requirements) The company expects current cash and LSA access to fund operations for at least the next **12 months**, but future funding needs are substantial and depend on clinical trial progress, regulatory approvals, and operational expansion, potentially leading to dilution or restrictive covenants - Current cash and LSA access are expected to fund operations for at least the next **12 months**, but estimates are imprecise, and capital resources may be exhausted sooner[80](index=80&type=chunk) - Future funding requirements depend on clinical trial progress, regulatory approvals, operational expansion, intellectual property costs, and new product candidates[81](index=81&type=chunk) - Additional equity or debt financing, or collaboration agreements, will be needed, potentially causing stockholder dilution, liens on assets, or relinquishing rights to products[82](index=82&type=chunk) [Contractual Obligations and Commitments](index=22&type=section&id=Contractual%20Obligations%20and%20Commitments) The company has contractual obligations including a license agreement with Vernalis for selonabant, requiring potential milestone payments and royalties, an office lease, manufacturing contract, and CRO contracts, with the **$3.0 million** manufacturing contract substantially completed by June 30, 2024 [License Agreement with Vernalis Development Limited](index=22&type=section&id=License%20Agreement%20with%20Vernalis%20Development%20Limited) The exclusive worldwide royalty-bearing license agreement with Vernalis for selonabant includes a **$0.2 million** signature fee, potential development milestone payments up to **$29.9 million**, sales milestone payments up to **$35.0 million**, and low to mid-single digit royalties - The license agreement with Vernalis for selonabant includes a **$0.2 million** signature fee, potential development milestone payments up to **$29.9 million** (**$0.4 million** paid), sales milestone payments up to **$35.0 million**, and low to mid-single digit royalties[83](index=83&type=chunk)[84](index=84&type=chunk) - The company has sole discretion and responsibility for selonabant's development and commercialization, including regulatory approvals and associated costs[86](index=86&type=chunk) [Office Lease, Manufacturing Contract and CRO Contract](index=24&type=section&id=Office%20Lease,%20Manufacturing%20Contract%20and%20CRO%20Contract) The company leases office space for approximately **$400** per month, and a **$3.0 million** manufacturing agreement was substantially completed by June 30, 2024, with stability study costs expected through **2026**, alongside cancellable CRO contracts - The company leases its principal executive office for approximately **$400** per month[87](index=87&type=chunk) - A manufacturing agreement for approximately **$3.0 million** was substantially completed by June 30, 2024, with stability study costs expected to be fully incurred during calendar **2026**[88](index=88&type=chunk) - The company enters into cancellable contracts with clinical trial sites and clinical supply manufacturers[89](index=89&type=chunk) [Critical Accounting Estimates](index=24&type=section&id=Critical%20Accounting%20Estimates) This section discusses critical accounting estimates requiring significant judgment, including accrued research and development expenses and stock-based compensation expense, and notes the company's election to use the extended transition period for new accounting standards under the JOBS Act [Accrued Research and Development Expenses](index=24&type=section&id=Accrued%20Research%20and%20Development%20Expenses) The company estimates accrued research and development expenses by reviewing contracts, communicating with personnel, and estimating service levels and costs for unbilled services, with potential adjustments for variations in service timing or effort - The company estimates accrued R&D expenses by reviewing contracts, communicating with personnel, and estimating service levels and costs for unbilled services from CROs, investigative sites, vendors, and manufacturers[92](index=92&type=chunk) - Estimates are made at each balance sheet date, and while not expected to be materially different, variations in actual service timing or effort may require adjustments[93](index=93&type=chunk) [Stock-Based Compensation Expense](index=25&type=section&id=Stock-Based%20Compensation%20Expense_Critical) Stock-based compensation expense is estimated using the Black-Scholes option pricing model, relying on subjective assumptions like expected stock price volatility and expected term, with no significant changes to these assumptions during the three months ended September 30, 2024 - The fair value of stock options is estimated using the Black-Scholes option pricing model, which depends on subjective assumptions including expected stock price volatility, expected term, risk-free rate, and expected dividends[95](index=95&type=chunk) - No significant changes to the assumptions used in the Black-Scholes model occurred during the three months ended September 30, 2024[96](index=96&type=chunk) [JOBS Act Accounting Election](index=25&type=section&id=JOBS%20Act%20Accounting%20Election) As an "emerging growth company," the company has elected to use the extended transition period for new accounting standards under the JOBS Act, which may affect comparability and investor attractiveness - As an "emerging growth company," the company has elected to use the extended transition period for complying with new or revised accounting standards under the JOBS Act[97](index=97&type=chunk) - This election may make the company's financial statements less comparable to those of other public companies and could potentially reduce investor attractiveness[97](index=97&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=26&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not required for smaller reporting companies - This item is not required for smaller reporting companies[99](index=99&type=chunk) [Item 4. Controls and Procedures](index=26&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=26&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) As of September 30, 2024, management concluded that the design and operation of the company's disclosure controls and procedures were effective at a reasonable assurance level - As of September 30, 2024, management, including the CEO and CFO, concluded that the design and operation of disclosure controls and procedures were effective at a reasonable assurance level[100](index=100&type=chunk)[101](index=101&type=chunk) [Changes in Internal Control over Financial Reporting](index=26&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) There were no material changes in the company's internal control over financial reporting during the three months ended September 30, 2024 - No material changes in internal control over financial reporting occurred during the three months ended September 30, 2024[102](index=102&type=chunk) [PART II. OTHER INFORMATION](index=27&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings, and management believes no pending claims could materially adversely affect its operations or financial condition - The company is not currently a party to any material legal proceedings, and management believes no pending claims could materially adversely affect its operations or financial condition[104](index=104&type=chunk) [Item 1A. Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The company faces various risks, including its inability to generate revenue, an accumulated deficit of **$67.6 million**, expected future losses, clinical trial delays, regulatory hurdles, competition, and the need for substantial additional capital - The company has not generated any revenue since inception and has an accumulated deficit of **$67.6 million** as of September 30, 2024, expecting to incur future losses[106](index=106&type=chunk) - Future success is uncertain due to potential clinical trial delays, regulatory challenges, competition, and the need for substantial additional capital, which may not be available on acceptable terms[106](index=106&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) - Raising additional capital through equity or equity-linked securities may result in substantial dilution for existing stockholders, and debt financing may involve liens on assets and restrictive covenants[111](index=111&type=chunk)[112](index=112&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not sell any equity securities in unregistered transactions during the quarter ended September 30, 2024, and there were no issuer purchases or repurchases of equity securities - No unregistered sales of equity securities occurred during the quarter ended September 30, 2024[115](index=115&type=chunk) - There were no issuer purchases or repurchases of equity securities during the quarter[115](index=115&type=chunk) [Item 3. Defaults Upon Senior Securities](index=30&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities - No defaults upon senior securities were reported[115](index=115&type=chunk) [Item 4. Mine Safety Disclosures](index=30&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[115](index=115&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended September 30, 2024 - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended September 30, 2024[115](index=115&type=chunk) [Item 6. Exhibits](index=30&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including various certificates of incorporation, bylaws, certifications of principal executive and financial officers, and Inline XBRL documents - The exhibits include various corporate governance documents (certificates of incorporation, bylaws), officer certifications (302 and 906), and Inline XBRL documents for financial data[116](index=116&type=chunk) [Signatures](index=32&type=section&id=Signatures) - The report was signed on November 13, 2024, by Richard Anthony Cunningham (CEO) and Daniel George (CFO)[119](index=119&type=chunk)

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)