SAN DIEGO, CA / ACCESS Newswire / December 4, 2025 / Dermata Therapeutics, Inc. (NASDAQ:DRMA)(NASDAQ:DRMAW) ("Dermata" or the "Company"), a science-driven leader in dermatologic solutions, today announced that it will soon reveal its new brand name for its over-the-counter ("OTC") skincare business representing its evolution toward a more direct, science-first era of dermatologic innovation. While the name remains confidential until the formal unveiling, the Company is offering a first look at the mission a ...

Financial Performance - Total assets increased to $5,071,410 as of September 30, 2025, up from $3,533,888 as of December 31, 2024, representing a growth of 43.5%[11] - Net loss for the nine months ended September 30, 2025, was $5,696,669, a reduction of 37.5% from $9,136,523 for the same period in 2024[22] - The company reported a net loss per share of $1.65 for the three months ended September 30, 2025, compared to a loss of $20.41 for the same period in 2024[14] - The Company experienced a net cash used in operating activities of $6,428,362 for the nine months ended September 30, 2025, compared to $8,249,334 for the same period in 2024, indicating improved cash flow management[22] - The net loss for Q3 2025 was $1.69 million, improving by $1.48 million from a net loss of $3.17 million in Q3 2024[140] Cash and Capital Management - Cash and cash equivalents at the end of the period were $4,664,127, compared to $6,143,752 at the end of September 30, 2024, reflecting a decrease of 23.9%[22] - The Company anticipates continuing to incur net losses for at least the next twelve months and plans to launch its first product candidate in mid-2026[30] - The Company expects to need additional capital to sustain operations, particularly for marketing and commercialization activities[31] - Management's plans to raise additional capital include proceeds from equity securities or debt offerings and generating product revenue from OTC products[33] - Cash used in operating activities for the nine months ended September 30, 2025, was $6.4 million, an improvement from $8.2 million in the same period in 2024[146] Research and Development - Research and development expenses for the nine months ended September 30, 2025, totaled $2,403,363, slightly down from $6,011,201 for the same period in 2024[14] - For the three months ended September 30, 2025, total research and development expenses were $504,387, compared to $2,401,359 for the same period in 2024, indicating a significant reduction[95] - The Company reported a total contract amount of approximately $7.2 million for the XYNGARI™ Phase 3 STAR-1 clinical trial, with $0.7 million recognized in research and development expense during the nine months ended September 30, 2025[86] - The Company achieved statistically significant results in its Phase 3 STAR-1 clinical trial of XYNGARI for moderate-to-severe acne, leading to a strategic shift towards OTC products[106] - Research and development expenses decreased by $1.9 million from $2.4 million in Q3 2024 to $0.5 million in Q3 2025, primarily due to reduced clinical expenses from the XYNGARI™ STAR-1 acne study[141] Product Development and Launch Plans - The Company plans to launch its first OTC product, a once-weekly topical acne kit, in mid-2026, targeting patients with mild to severe acne[109] - The initial acne kit will utilize salicylic acid as the active ingredient combined with Spongilla technology, aiming to penetrate the skin effectively[111] - The company is exploring the use of Spongilla technology for the topical delivery of botulinum toxin, potentially expanding its applications in dermatology[115] - The company plans to launch its first OTC pharmaceutical product for dermatology in mid-2026, focusing on direct-to-consumer sales[126] - The Company is currently finalizing components for the acne kit and completing brand identity development[111] Equity and Securities - Total stockholders' equity increased to $3,960,102 as of September 30, 2025, from $1,561,094 as of December 31, 2024, marking a growth of 153.5%[11] - The weighted-average basic and diluted Common Stock increased to 1,026,457 for the three months ended September 30, 2025, compared to 155,465 for the same period in 2024[14] - The company has 844,457 shares of common stock issued and outstanding as of September 30, 2025, with a total of 2,103,974 equity securities authorized[58] - The company has a total of 1,238,949 warrants outstanding as of September 30, 2025, with a fair value of $5.02 per share[69] - The company has not issued any preferred stock as of September 30, 2025, despite having 10,000,000 shares authorized[68] Legal and Regulatory Risks - The Company has not generated any revenue or commercialized any product candidates since its inception[29] - The financial statements have been prepared assuming the Company will continue as a going concern, despite substantial doubt about its ability to do so[33] - The company is currently engaged in a dispute regarding a license agreement with Villani, which could materially affect its business if unresolved[180] - The company has received a notice of material breach from Villani, alleging failure to comply with obligations under the license agreement[186] - Regulatory risks associated with the transition from Rx to OTC pathways could delay product launches and increase costs[170] Market and Competitive Landscape - The dermatology market is shifting towards OTC treatments, with over 70% of acne patients opting for OTC products before consulting a dermatologist[107] - The company faces intense competition from major consumer products companies, including Procter & Gamble and Unilever, which have greater financial resources[178] - Shifting consumer behavior towards online shopping is increasing competition from both legacy competitors and digitally native brands[179] - Advertising and promotional effectiveness is critical for maintaining market position and driving sales growth[179] - Ongoing inflationary pressures could lead to price increases on products, potentially adversely impacting demand[179] Future Outlook - The Company expects that its cash and cash equivalents will fund operations into the second quarter of 2026[29] - Future financing will be necessary to support operations, with potential funding through public or private equity or debt[119] - The company anticipates continued growth in selling, general, and administrative expenses, necessitating additional capital to sustain operations until operating income is generated[152] - Future funding requirements will depend on revenues from OTC product candidates and may involve raising additional capital through equity or debt financings[158] - The anticipated shift to over-the-counter pharmaceutical products may impact the company's relationship with licensors and its product development strategy[180]

Strategic Direction - Dermata announced a strategic pivot to develop and commercialize over-the-counter (OTC) skin care treatments, with plans to launch its first OTC product, a once-weekly acne kit, in mid-2026[1][3][10]. - The company plans to sell the acne kit directly to consumers, estheticians, and dermatologists for in-office treatments[3][10]. - Dermata is working with a branding agency to create a unique brand identity for its new OTC product portfolio[10]. Financial Performance - As of September 30, 2025, Dermata had $4.7 million in cash and cash equivalents, an increase of $1.5 million from $3.2 million as of December 31, 2024[5][12]. - The net loss for the quarter ended September 30, 2025, was $1.7 million, compared to a net loss of $3.2 million for the same period in 2024[14]. - The total operating expenses for the quarter ended September 30, 2025, were $1.8 million, down from $3.2 million for the same period in 2024[14]. - Dermata expects its current cash resources to be sufficient to fund operations into the second quarter of 2026[5]. Research and Development - Research and development expenses decreased to $0.5 million for the quarter ended September 30, 2025, down from $2.4 million for the same period in 2024, primarily due to reduced clinical expenses from the XYNGARI™ STAR-1 acne study[6][14]. - Dermata's XYNGARI™ Phase 3 STAR-1 clinical trial for moderate-to-severe acne met all three primary endpoints, showing statistically significant results versus placebo[3]. Operating Expenses - Selling, general and administrative expenses increased to $1.3 million for the quarter ended September 30, 2025, compared to $0.8 million for the same period in 2024, driven by higher marketing expenses[7][14].

Core Insights - Dermata Therapeutics is shifting its strategy to focus on developing and commercializing over-the-counter (OTC) skin care treatments [1] - The company plans to launch its first OTC product, a once-weekly acne kit utilizing its Spongilla technology, in mid-2026 [1] - Dermata reported financial results for the third quarter ended September 30, 2025, highlighting recent corporate progress [1] Company Developments - Dermata is positioned as a science-driven leader in dermatologic solutions [1] - The company's mission emphasizes delivering scientifically developed innovations to those in need [1]

Core Insights - Dermata Therapeutics has received acceptance for its patent application in Australia for its Spongilla technology aimed at treating acne [1] - The company plans to launch a new Over-the-Counter (OTC) pharmaceutical acne kit utilizing this technology by mid-2026 [1] - Acne affects over 3.3 million individuals in Australia, indicating a significant market opportunity for Dermata's product [1] Company Summary - Dermata Therapeutics, Inc. is a leader in dermatologic solutions, focusing on science-driven approaches to skin conditions [1] - The accepted patent is titled "Compositions and methods for the treatment of skin conditions," which highlights the innovative nature of Dermata's technology [1] Industry Summary - The acne treatment market is substantial, with over 3.3 million diagnosed cases in Australia, suggesting a strong demand for effective treatment options [1]

Core Insights - Dermata Therapeutics, Inc. announced the presentation of an abstract from its Phase 3 STAR-1 clinical study of XYNGARI™ for treating moderate-to-severe acne at the EADV Congress 2025 in Paris [1] Group 1: Clinical Study Details - The abstract titled "Once Weekly Topical Treatment with DMT310 Demonstrates Significant and Early Onset of Effect in Patients with Moderate to Severe Acne Vulgaris - Results from the STAR-1 Phase 3 Study" will be presented [1] - The full abstract will be released on September 16, 2025, at 10:00 PM (PST) [1]

Core Insights - Dermata Therapeutics will present at the Life Sciences Virtual Investor Forum on September 18, 2025, led by CEO Gerry Proehl [1][9] - The event will allow real-time interaction between investors and the company, with archived webcasts available for those unable to attend live [2][10] Company Highlights - Dermata has announced a strategic pivot towards over-the-counter (OTC) skin care treatments to meet the increasing demand for high-quality, scientifically validated products [7][14] - The company plans to launch a once-weekly OTC acne kit in mid-2026, which is expected to be significantly differentiated from existing acne treatments [7][14] Event Details - The presentation is scheduled for September 18 at 11:30 AM EST, with opportunities for one-on-one meetings available from September 16-26 [2][10] - Investors are encouraged to pre-register and conduct system checks to facilitate participation [3][11] About Virtual Investor Conferences - Virtual Investor Conferences (VIC) is a leading platform for publicly traded companies to engage directly with investors [4][12] - VIC provides enhanced capabilities for companies to connect with investors, schedule meetings, and present dynamic content [5][13]

Core Insights - Dermata Therapeutics, Inc. is shifting its strategic focus towards the development and distribution of over-the-counter (OTC) pharmaceutical dermatology products aimed at direct consumer sales [1] Company Strategy - The decision to pivot towards OTC products is based on insights gained from the development of the Company's Spongilla technology [1] - The strategic change is also influenced by current market dynamics, indicating a responsive approach to evolving consumer needs [1]

[Part I Financial Information](index=3&type=section&id=Part%20I%20Financial%20Information) [Item 1: Financial Statements (unaudited)](index=3&type=section&id=Item%201%3A%20Financial%20Statements%20(unaudited)) This section presents the unaudited interim financial statements for Dermata Therapeutics, Inc., including the Balance Sheets, Statements of Operations, Statements of Stockholders' Equity, Statements of Cash Flows, and accompanying Notes to Financial Statements, providing a snapshot of the company's financial position and performance for the periods ended June 30, 2025 [Balance Sheets](index=4&type=section&id=Balance%20Sheets) Balance Sheets Summary | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------- | :-------------- | :------------------ | | Cash and cash equivalents | $6,480,930 | $3,161,570 | | Total assets | $6,640,516 | $3,533,888 | | Total liabilities | $1,026,265 | $1,972,794 | | Total stockholders' equity | $5,614,251 | $1,561,094 | [Statements of Operations](index=5&type=section&id=Statements%20of%20Operations) Statements of Operations Summary | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $617,835 | $2,009,102 | $1,898,976 | $3,609,843 | | General and administrative | $1,154,896 | $874,640 | $2,213,559 | $2,477,459 | | Total operating expenses | $1,772,731 | $2,883,742 | $4,112,535 | $6,087,302 | | Net loss | $(1,701,093) | $(2,829,106) | $(4,004,680) | $(5,963,368) | | Net loss per share, basic and diluted | $(1.66) | $(41.82) | $(5.18) | $(106.44) | [Statements of Stockholders' Equity](index=6&type=section&id=Statements%20of%20Stockholders'%20Equity) - Total stockholders' equity increased significantly from **$1,561,094** at December 31, 2024, to **$5,614,251** at June 30, 2025, primarily driven by the issuance of common stock and warrants from the January 2025 PIPE and March 2025 Warrant Inducement, which generated net proceeds of **$2,254,721** and **$5,750,828** respectively, despite a net loss of **$(4,004,680)** for the six months ended June 30, 2025[16](index=16&type=chunk)[19](index=19&type=chunk)[14](index=14&type=chunk) [Statements of Cash Flows](index=8&type=section&id=Statements%20of%20Cash%20Flows) Statements of Cash Flows Summary (Six Months Ended June 30) | Cash Flow Activity | 2025 | 2024 | | :----------------- | :------------ | :------------ | | Operating activities | $(4,624,547) | $(4,830,407) | | Financing activities | $7,943,907 | $2,339,372 | | Net increase (decrease) in cash and cash equivalents | $3,319,360 | $(2,491,035) | | Cash and cash equivalents at end of period | $6,480,930 | $4,947,100 | [Notes to Financial Statements](index=9&type=section&id=Notes%20to%20Financial%20Statements) The notes provide detailed information on the company's organization, significant accounting policies, financial instruments, equity activities, commitments, and contingencies, highlighting key events such as reverse stock splits, capital raises, and clinical trial progress, along with the ongoing going concern uncertainty [1. Organization and Basis of Presentation](index=9&type=section&id=1.%20Organization%20and%20Basis%20of%20Presentation) - Dermata Therapeutics, Inc. is a clinical-stage biotechnology company focused on skin conditions, which converted to a Delaware C-corporation in March 2021[25](index=25&type=chunk) - The company effected a **1-for-10 reverse stock split** on August 1, 2025, and a **1-for-15 reverse stock split** on May 16, 2024, retroactively adjusting all share and per share amounts[26](index=26&type=chunk)[27](index=27&type=chunk) - As of June 30, 2025, the company had **$6.5 million** in cash and an accumulated deficit of **$69.7 million**, with cash expected to fund operations into Q2 2026, raising substantial doubt about its ability to continue as a going concern[28](index=28&type=chunk)[31](index=31&type=chunk) [2. Summary of Significant Accounting Policies](index=10&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The company operates as a single segment focused on developing and commercializing pharmaceutical candidates for skin conditions[34](index=34&type=chunk) - Research and development costs, including license fees and milestone payments without commercial value, are expensed as incurred[40](index=40&type=chunk) - All warrants issued and modified are equity-classified, recorded as a component of additional paid-in capital[46](index=46&type=chunk) Potentially Dilutive Securities (as of June 30) | Security Type | 2025 | 2024 | | :-------------- | :---------- | :-------- | | Common Stock options | 20,477 | 2,727 | | Common Stock warrants | 1,238,949 | 110,924 | | Total | 1,259,426 | 113,651 | [3. Balance Sheet Details](index=13&type=section&id=3.%20Balance%20Sheet%20Details) Prepaid Expenses and Other Current Assets | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Prepaid insurance | $68,061 | $349,824 | | Prepaid research and development costs | $7,993 | $12,600 | | Prepaid other and other current assets | $83,532 | $9,894 | | **Total** | **$159,586** | **$372,318** | Accrued and Other Current Liabilities | Category | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Accrued research and development costs | $28,197 | $295,392 | | Accrued compensation and benefits | $490,703 | $731,632 | | Accrued other | $93,678 | $137,759 | | **Total** | **$612,578** | **$1,164,783** | [4. Equity Securities](index=13&type=section&id=4.%20Equity%20Securities) Equity Securities Summary (as of June 30, 2025) | Description | Authorized | Issued | Abeyance | Reserved | Outstanding | | :-------------------------- | :------------ | :-------- | :-------- | :------- | :---------- | | Common Stock | 250,000,000 | 637,757 | 388,700 | - | 637,757 | | Preferred Stock | 10,000,000 | - | - | - | - | | Warrants | - | 1,238,949 | - | - | 1,238,949 | | 2021 Omnibus Equity Incentive Plan | - | 20,568 | - | 13 | 20,477 | | **Total** | **260,000,000** | **1,897,274** | **388,700** | **13** | **1,897,183** | - In March 2025, the company received approximately **$5.7 million** in net proceeds from a warrant inducement, where a holder exercised **483,447** existing warrants at a reduced price in exchange for new Series A and B warrants[55](index=55&type=chunk)[66](index=66&type=chunk) - In January 2025, the company closed a private placement (PIPE) generating approximately **$2.2 million** in net cash proceeds from the sale of **193,539** shares of Common Stock, pre-funded warrants, and **200,785** PIPE warrants[56](index=56&type=chunk) - As of June 30, 2025, **1,238,949** warrants were outstanding, with an aggregate intrinsic value of zero, based on a closing trading price of **$5.85** per share[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) [5. Equity Incentive Plan](index=17&type=section&id=5.%20Equity%20Incentive%20Plan) - The 2021 Omnibus Equity Incentive Plan was amended to increase authorized shares to **7,993** and the evergreen provision to **5%** of outstanding common stock, adding **12,588** shares as of January 1, 2025[68](index=68&type=chunk) Stock-Based Compensation Expense | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $8,100 | $4,623 | $15,720 | $241,960 | | General and administrative | $31,134 | $14,985 | $60,702 | $364,882 | | **Total** | **$39,234** | **$19,608** | **$76,422** | **$606,842** | - As of June 30, 2025, **20,477** stock options were outstanding with a weighted-average exercise price of **$25.27**, and total unrecognized compensation cost was approximately **$0.3 million**, expected to be recognized over **2.7 years**[75](index=75&type=chunk)[78](index=78&type=chunk) [6. Commitments and Contingencies](index=19&type=section&id=6.%20Commitments%20and%20Contingencies) - The XYNGARI™ Phase 3 STAR-1 clinical trial is completed, with **$0.7 million** in R&D expense recognized for the six months ended June 30, 2025[79](index=79&type=chunk) - The company relies on an exclusive supply agreement with a Russian entity for Spongilla raw material, with sufficient quantities on hand to initiate and complete two Phase 3 studies for XYNGARI™ in acne, but future supply could be impacted by sanctions[80](index=80&type=chunk) - A license agreement with Villani, Inc. requires future milestone payments up to **$40.5 million** and single-digit royalties, but no accrual was required as of June 30, 2025, as the likelihood of achievement was not yet probable[81](index=81&type=chunk) - A Clinical Trial Collaboration Agreement with Revance Therapeutics, Inc. was entered into in January 2025 to conduct a Phase 2a clinical trial evaluating XYNGARI™ with Daxxify for primary axillary hyperhidrosis, with no expenses incurred as of June 30, 2025[83](index=83&type=chunk) [7. Segment Information](index=21&type=section&id=7.%20Segment%20Information) - The company operates as a single operating segment focused on identifying, developing, and commercializing pharmaceutical products for skin conditions, with the CEO acting as the chief operating decision maker[87](index=87&type=chunk)[88](index=88&type=chunk) Segment Expenses (Six Months Ended June 30) | Expense Category | 2025 | 2024 | | :----------------- | :------------ | :------------ | | Clinical R&D | $705,645 | $2,439,727 | | Nonclinical R&D | $311,179 | $212,034 | | Personnel related R&D | $882,152 | $958,082 | | Total R&D | $1,898,976 | $3,609,843 | | General and administrative | $2,213,559 | $2,477,459 | | Net loss | $(4,004,680) | $(5,963,368) | [8. Related Party Transaction](index=22&type=section&id=8.%20Related%20Party%20Transaction) - Company insiders, including the CEO, CFO, and board members, participated in the January 2025 PIPE financing, purchasing an aggregate of **122,047** Common Stock and warrants for approximately **$1.55 million**, at the same price as other investors[90](index=90&type=chunk) [9. Subsequent Events](index=22&type=section&id=9.%20Subsequent%20Events) - Subsequent to June 30, 2025, **43,800** abeyance shares related to the March 2025 Warrant Inducement were delivered, leaving **344,900** shares still in abeyance[91](index=91&type=chunk) - The company received a Nasdaq delisting notice for not meeting the **$1.00** minimum bid price requirement but was granted an exception until August 14, 2025, to regain compliance[92](index=92&type=chunk)[94](index=94&type=chunk) - Stockholders approved a reverse stock split, and the board set a **1-for-10** ratio, effective August 1, 2025, which retrospectively adjusted all share and per share amounts in the financial statements[95](index=95&type=chunk)[96](index=96&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202%3A%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition, operational results, and liquidity for the reported periods, including an overview of its business, recent developments, critical accounting policies, and future funding requirements, emphasizing the ongoing need for capital and the associated going concern uncertainty [Cautionary Note Regarding Forward-Looking Statements](index=23&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) - The report contains forward-looking statements subject to known and unknown risks and uncertainties, which may cause actual results to differ materially from expectations[99](index=99&type=chunk) - Key risk factors include lack of operating history, significant expected operating losses, need for additional capital, dependence on product candidates in clinical development, ability to acquire raw materials, manufacturing capabilities, regulatory approvals, and intellectual property protection[100](index=100&type=chunk)[101](index=101&type=chunk) [Overview](index=24&type=section&id=Overview) - Dermata Therapeutics is a late-stage medical dermatology company developing XYNGARI™ and DMT410, both utilizing proprietary Spongilla technology for various skin conditions[103](index=103&type=chunk)[105](index=105&type=chunk) - XYNGARI™ Phase 3 STAR-1 trial for acne met all co-primary endpoints, showing statistically significant reductions in inflammatory and noninflammatory lesions and improvement in IGA at week 12[108](index=108&type=chunk) - DMT410, designed for topical delivery of botulinum toxin, demonstrated **80%** reduction in gravimetric sweat production in a Phase 1 hyperhidrosis trial, and a Phase 2a clinical trial with Revance for primary axillary hyperhidrosis is anticipated[110](index=110&type=chunk)[111](index=111&type=chunk) - The company has a limited operating history, no product revenue, and incurred net losses of **$4.0 million** for the six months ended June 30, 2025, with an accumulated deficit of **$69.7 million**[112](index=112&type=chunk)[113](index=113&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) - In January 2025, the company completed a private placement (PIPE) raising approximately **$2.3 million** in net cash proceeds from the sale of common stock and warrants[116](index=116&type=chunk) - In March 2025, the company announced positive topline results for its XYNGARI™ Phase 3 STAR-1 trial, meeting all co-primary endpoints for acne treatment[117](index=117&type=chunk) - A March 2025 warrant inducement generated approximately **$5.7 million** in net proceeds from the exercise of existing warrants at a reduced price in exchange for new warrants[119](index=119&type=chunk) - As of June 30, 2025, the company has no remaining capacity under its At The Market (ATM) Offering Agreement[120](index=120&type=chunk) [Critical Accounting Policies and Use of Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) - The preparation of financial statements requires management to make estimates and judgments, particularly concerning accrued research and development expenses and the classification of equity instruments like warrants[121](index=121&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - Warrants are assessed upon issuance for proper classification, and all current warrants are equity-classified, recorded as additional paid-in capital[124](index=124&type=chunk)[125](index=125&type=chunk) [Fluctuations in Operating Results](index=29&type=section&id=Fluctuations%20in%20Operating%20Results) - Operating results have fluctuated significantly in the past and are expected to continue doing so, primarily due to the timing and expenditures related to product candidate development, making period-to-period comparisons unreliable indicators of future performance[126](index=126&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Operating Results (Three Months Ended June 30) | Metric | 2025 | 2024 | Difference | | :-------------------------- | :------------ | :------------ | :------------ | | Research and development | $617,835 | $2,009,102 | $(1,391,267) | | General and administrative | $1,154,896 | $874,640 | $280,256 | | Total operating expenses | $1,772,731 | $2,883,742 | $(1,111,011) | | Net loss | $(1,701,093) | $(2,829,106) | $1,128,013 | - Research and development expenses decreased by **$1.4 million** for the three months ended June 30, 2025, primarily due to decreased clinical expenses from the completed XYNGARI™ STAR-1 acne study[128](index=128&type=chunk) Operating Results (Six Months Ended June 30) | Metric | 2025 | 2024 | Difference | | :-------------------------- | :------------ | :------------ | :------------ | | Research and development | $1,898,976 | $3,609,843 | $(1,710,867) | | General and administrative | $2,213,559 | $2,477,459 | $(263,900) | | Total operating expenses | $4,112,535 | $6,087,302 | $(1,974,767) | | Net loss | $(4,004,680) | $(5,963,368) | $1,958,688 | - General and administrative expenses decreased by **$0.3 million** for the six months ended June 30, 2025, mainly due to decreased stock-based compensation from the cancellation of out-of-the-money stock options in Q1 2024[133](index=133&type=chunk) [Cash Flows](index=30&type=section&id=Cash%20Flows) Cash Flow Summary (Six Months Ended June 30) | Activity | 2025 | 2024 | | :-------------------------------- | :------------ | :------------ | | Net cash used in operating activities | $(4,624,547) | $(4,830,407) | | Net cash provided by financing activities | $7,943,907 | $2,339,372 | | Net increase (decrease) in cash and cash equivalents | $3,319,360 | $(2,491,035) | | Cash and cash equivalents at end of period | $6,480,930 | $4,947,100 | - Cash provided by financing activities significantly increased to **$7.9 million** in 2025 from **$2.3 million** in 2024, primarily driven by the January 2025 PIPE financing (**$2.2 million** net proceeds) and the March 2025 Inducement financing (**$5.7 million** net proceeds)[138](index=138&type=chunk)[139](index=139&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had **$6.5 million** in cash and cash equivalents and an accumulated deficit of **$69.7 million**, with existing cash expected to fund operations into the second quarter of 2026[140](index=140&type=chunk) - The company anticipates continued net losses and will require additional capital to complete Phase 3 studies for XYNGARI™, continue development of other candidates, and pursue new acquisitions or licenses, raising substantial doubt about its ability to continue as a going concern[140](index=140&type=chunk)[142](index=142&type=chunk)[145](index=145&type=chunk) - Future funding requirements are highly dependent on the scope and success of drug candidate development, regulatory approvals, manufacturing costs, and the ability to establish strategic collaborations[147](index=147&type=chunk)[149](index=149&type=chunk) [Item 3: Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company for the reported period [Item 4: Controls and Procedures](index=33&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the period - The company's disclosure controls and procedures were evaluated as effective at the reasonable assurance level as of June 30, 2025[154](index=154&type=chunk) - There were no material changes in internal control over financial reporting during the period[155](index=155&type=chunk) [Part II Other Information](index=34&type=section&id=Part%20II%20Other%20Information) [Item 1: Legal Proceedings](index=34&type=section&id=Item%201%3A%20Legal%20Proceedings) The company is not a party to any legal proceedings, nor is it aware of any threatened legal proceedings, that are expected to have a material adverse effect on its financial condition, results of operations, or liquidity [Item 1A: Risk Factors](index=34&type=section&id=Item%201A%3A%20Risk%20Factors) This section refers to the risk factors detailed in the company's Annual Report on Form 10-K for the year ended December 31, 2024, and states that no material changes to these risk factors have occurred during the six months ended June 30, 2025 [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities or use of proceeds during the period [Item 3: Defaults Upon Senior Securities](index=34&type=section&id=Item%203%3A%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities during the period [Item 4: Mine Safety Disclosures](index=34&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) This item is not applicable to the company [Item 5: Other Information](index=34&type=section&id=Item%205%3A%20Other%20Information) The company reported that no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the fiscal quarter ended June 30, 2025 [Item 6: Exhibits](index=35&type=section&id=Item%206%3A%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including the Certificate of Amendment to the Amended and Restated Certificate of Incorporation, officer certifications, and XBRL documents [Signatures](index=36&type=section&id=Signatures) The report is duly signed on behalf of Dermata Therapeutics, Inc. by Gerald T. Proehl, President and Chief Executive Officer, and Kyri K. Van Hoose, Senior Vice President, Chief Financial Officer

[Executive Summary](index=1&type=section&id=Executive%20Summary) Dermata Therapeutics, a late-stage biotechnology company, announced additional positive data from its XYNGARI™ Phase 3 STAR-1 clinical trial for acne and reported raising $8.8 million in gross proceeds during the first half of 2025 [Company Introduction & Key Announcements](index=1&type=section&id=Company%20Introduction%20%26%20Key%20Announcements) Dermata Therapeutics, a late-stage biotechnology company, announced additional positive data from its XYNGARI™ Phase 3 STAR-1 clinical trial for acne and reported raising $8.8 million in gross proceeds during the first half of 2025 - Dermata Therapeutics is a late-stage biotechnology company focused on the treatment of medical skin diseases and aesthetic applications[1](index=1&type=chunk) - Announced additional positive data from its XYNGARI™ Phase 3 STAR-1 clinical trial, showing **statistically significant results** for its three co-primary endpoints at weeks 4 and 12[1](index=1&type=chunk)[2](index=2&type=chunk) - Raised **$8.8 million** in gross proceeds from a private placement and warrant inducement financings during the first half of 2025[1](index=1&type=chunk)[5](index=5&type=chunk) [Corporate Highlights & Milestones](index=1&type=section&id=Corporate%20Highlights) Dermata reported positive Phase 3 STAR-1 trial data for acne, is planning STAR-2, and secured $8.8 million in financing to extend operations into Q2 2026 [Clinical Trial Progress](index=1&type=section&id=Clinical%20Trial%20Progress) Dermata reported positive topline data from its XYNGARI™ Phase 3 STAR-1 trial for moderate-to-severe acne, meeting all primary endpoints. The company is evaluating next steps for the STAR-2 trial and collaborating with Revance on a Phase 2a study for DMT410 - XYNGARI™ Phase 3 STAR-1 trial for moderate-to-severe acne met all three primary endpoints with **highly statistically significant results** versus placebo at the end of the study and achieved statistically significant separation from placebo after just 4 weeks[2](index=2&type=chunk)[5](index=5&type=chunk) - The Company initiated additional manufacturing and is evaluating next steps for the XYNGARI™ Phase 3 STAR-2 clinical trial, which would be followed by a 9-month extension study[4](index=4&type=chunk) - Collaboration with Revance continues on the final study design and start-up procedures for the Phase 2a clinical study of XYNGARI™ with DAXXIFY® (DMT410) for the topical treatment of axillary hyperhidrosis[6](index=6&type=chunk) [Financing Activities & Liquidity Outlook](index=1&type=section&id=Financing%20Activities%20%26%20Liquidity%20Outlook) Dermata raised $8.8 million in gross proceeds during the first half of 2025, which is expected to fund operations into the second quarter of 2026 - Raised **$8.8 million** in gross proceeds during the first half of 2025[5](index=5&type=chunk) - The funds raised are expected to fund operations into the **second quarter of 2026**[5](index=5&type=chunk)[7](index=7&type=chunk) [Second Quarter 2025 Financial Results](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results) Dermata's cash increased to $6.5 million, driven by financing, while operating expenses decreased due to lower R&D, resulting in a reduced net loss [Cash Position](index=2&type=section&id=Cash%20Position) As of June 30, 2025, Dermata's cash and cash equivalents increased to $6.5 million, up from $3.2 million at December 31, 2024, primarily due to net financing proceeds offsetting operational cash usage Cash and Cash Equivalents | Metric | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | Change | | :----- | :------------------------------- | :----------------------------------- | :----- | | Cash and cash equivalents | $6,481 | $3,162 | +$3,319 | - The **$3.3 million increase** in cash and cash equivalents for the six months ended June 30, 2025, resulted from approximately **$7.9 million** of net financing proceeds offset by **$4.6 million** of cash used in operations[7](index=7&type=chunk) [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Research and development expenses decreased significantly due to the completion of the STAR-1 study, while general and administrative expenses increased due to public company compliance and personnel costs Operating Expenses Summary | Expense Category | Q2 2025 (in thousands USD) | Q2 2024 (in thousands USD) | Change (YoY) | | :--------------- | :------------------------- | :------------------------- | :----------- | | Research and development | $618 | $2,009 | -$1,391 | | General and administrative | $1,155 | $875 | +$280 | | Total operating expenses | $1,773 | $2,884 | -$1,111 | - The **$1.4 million decrease** in research and development expenses was primarily the result of **$1.6 million** of decreased clinical expenses from the XYNGARI™ STAR-1 acne study, partially offset by **$0.1 million** of increased chemistry, manufacturing, and controls (CMC) expenses and **$0.1 million** of increased personnel costs[8](index=8&type=chunk) - The **$0.3 million increase** in general and administrative expenses resulted from **$0.2 million** of increased public company compliance costs as well as **$0.1 million** of increased personnel costs[9](index=9&type=chunk) [Net Loss and EPS](index=3&type=section&id=Net%20Loss%20and%20EPS) Dermata reported a reduced net loss for Q2 2025 compared to Q2 2024, with a significantly lower net loss per common share due to a substantial increase in weighted average common shares outstanding Net Loss and EPS Summary | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :----- | :------ | :------ | :----------- | | Net loss (in thousands USD) | $(1,701) | $(2,829) | +$1,128 | | Net loss per common share, basic and diluted | $(1.66) | $(41.82) | +$40.16 | | Weighted average common shares outstanding, basic and diluted | 1,026,506 | 67,654 | +958,852 | [About Dermata Therapeutics](index=2&type=section&id=About%20Dermata%20Therapeutics) Dermata Therapeutics is a late-stage biotechnology company leveraging its Spongilla technology platform for lead product candidate XYNGARI™ and second candidate DMT410 [Company Profile and Product Candidates](index=2&type=section&id=Company%20Profile%20and%20Product%20Candidates) Dermata Therapeutics is a late-stage biotechnology company focused on medical skin diseases and aesthetic applications, leveraging its Spongilla technology platform for lead product candidate XYNGARI™ and second candidate DMT410 - Dermata Therapeutics is a late-stage biotechnology company focusing on the treatment of medical skin diseases and aesthetic applications[10](index=10&type=chunk) - The Company's lead product candidate, XYNGARI™, developed from its Spongilla technology platform, is a once-weekly, topical product candidate derived from a naturally sourced freshwater sponge, and has achieved **positive data** in its first Phase 3 clinical trial for acne, also studied for psoriasis and rosacea[10](index=10&type=chunk) - The Company's second product candidate, DMT410, uses its XYNGARI™ product candidate as a new method for needle-free intradermal delivery of botulinum toxin for the treatment of multiple aesthetic applications and medical skin diseases like hyperhidrosis, acne, and rosacea[10](index=10&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section contains cautionary statements regarding future events, clinical trials, regulatory approvals, financial performance, and product development, emphasizing that actual results may differ materially from projections due to inherent risks and uncertainties in drug development - Statements in this press release that are not strictly historical in nature are forward-looking statements, based on the Company's current beliefs and expectations, and are subject to known and unknown risks, uncertainties, assumptions, and other factors[11](index=11&type=chunk) - Risks include uncertainties inherent in clinical trials (e.g., patient enrollment, completion schedule), timing and ability to initiate clinical trials and generate data, expectations regarding clinical data nature, potential partnership opportunities, sufficiency of cash to fund operations, and the success, cost, and timing of product candidate development activities for XYNGARI™ and DMT410[11](index=11&type=chunk) - Actual events or results may differ materially from those projected due to various factors, including risks and uncertainties inherent in drug development, approval, and commercialization, and the fact that past results of clinical trials may not be indicative of future trial results[11](index=11&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) The financial statements present Dermata's balance sheet showing increased assets and equity, and statements of operations reflecting a reduced net loss for Q2 2025 [Balance Sheets](index=3&type=section&id=Balance%20Sheets) The balance sheet shows a significant increase in total assets and equity as of June 30, 2025, primarily driven by an increase in cash and cash equivalents, while total liabilities decreased Consolidated Balance Sheets | Metric (in thousands USD) | June 30, 2025 | December 31, 2024 | Change | | :------------------------ | :------------ | :---------------- | :----- | | Cash and cash equivalents | $6,481 | $3,162 | +$3,319 | | Prepaid expenses and other current assets | $160 | $372 | -$212 | | **Total assets** | **$6,641** | **$3,534** | **+$3,107** | | Accounts payable | $414 | $808 | -$394 | | Accrued liabilities | $612 | $1,165 | -$553 | | **Total liabilities** | **$1,026** | **$1,973** | **-$947** | | **Equity** | **$5,614** | **$1,561** | **+$4,053** | | **Total liabilities and equity** | **$6,640** | **$3,534** | **+$3,106** | [Statements of Operations](index=3&type=section&id=Statements%20of%20Operations) For Q2 2025, Dermata reported a reduced net loss compared to the prior year, driven by lower R&D expenses, despite an increase in G&A. The net loss per share significantly decreased due to a substantial increase in outstanding shares Consolidated Statements of Operations | Metric (in thousands USD) | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------ | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Research and development | $618 | $2,009 | $1,899 | $3,610 | | General and administrative | $1,155 | $875 | $2,214 | $2,477 | | Total operating expenses | $1,773 | $2,884 | $4,113 | $6,087 | | Loss from operations | $(1,773) | $(2,884) | $(4,113) | $(6,087) | | Interest income, net | $72 | $55 | $108 | $124 | | **Net loss** | **$(1,701)** | **$(2,829)** | **$(4,005)** | **$(5,963)** | | Net loss per common share, basic and diluted | $(1.66) | $(41.82) | $(5.18) | $(106.44) | | Weighted average common shares outstanding, basic and diluted | 1,026,506 | 67,654 | 772,397 | 56,025 | Stock-based Compensation Expense | Stock-based Compensation Expense (in thousands USD) | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :-------------------------- | :-------------------------- | :----------------------------- | :----------------------------- | | Research and development | $8 | $5 | $16 | $242 | | General and administrative | $31 | $15 | $61 | $365 |