Core Viewpoint - Fresh Tracks Therapeutics, Inc. has filed an Answer to a Delaware Petition requesting the appointment of a custodian to oversee the potential dissolution of the company [1][2]. Group 1: Delaware Petition and Custodian Appointment - The Delaware Petition was filed by David R. McAvoy, a stockholder and former General Counsel, seeking the appointment of Albert N. Marchio, II as custodian to manage the dissolution process of Fresh Tracks [1][2]. - The requested actions for the custodian include dissolving the company, winding down affairs, and distributing cash to stockholders [2]. Group 2: Actions Proposed in the Answer - The Answer outlines the company's agreement with the petition, detailing steps such as filing a certificate of dissolution, marshalling assets, and paying liabilities [2]. - It also includes provisions for reserving funds for potential future claims and distributing remaining cash to stockholders in a pro rata manner [2]. Group 3: Court Proceedings - The Court of Chancery has not yet set a hearing date regarding the Delaware Petition, and the company plans to keep investors informed through future press releases [3].

Dissolution and Financial Distribution - The company held Special Meetings on multiple dates in late 2023 and early 2024 to seek stockholder approval for the Dissolution, but did not receive the necessary majority vote[59]. - The Board retains discretion regarding the timing and execution of the Dissolution, which may not proceed if deemed not in the best interest of the company or stockholders[59]. - Stockholders may not receive distributions until after the Certificate of Dissolution is filed, and the timing and amount of such distributions remain uncertain[61]. - The company plans to use any available cash first to settle outstanding liabilities and ongoing operational costs before any distributions to stockholders[64]. - Stockholders may face tax implications related to liquidating distributions, which could vary based on individual circumstances and timing of distributions[75]. Financial Condition and Market Environment - The company is currently operating in a volatile economic environment influenced by geopolitical conflicts, which may adversely affect its financial condition and results[76]. - The market price of the company's common stock has experienced significant volatility, particularly in the biotechnology sector, which may continue to impact stockholder value[80]. - The company does not anticipate paying any dividends in the foreseeable future, as it plans to retain future earnings to maximize distributions to stockholders pending approval of the Dissolution and the Plan of Dissolution[84]. Tax and Operating Losses - As of December 31, 2023, the company had approximately $432.7 million of federal and $452.3 million of state net operating loss (NOL) carryforwards available to offset future taxable income[85]. - $217.4 million of the NOL carryforwards will carryforward indefinitely, while the remainder will expire in varying amounts beginning in 2024 if unused[85]. - The company has approximately $217.4 million in federal NOLs that can be carried forward indefinitely, but utilization is limited to 80% of current-year taxable income[85]. Regulatory and Compliance Risks - The company is classified as a "smaller reporting company," which allows it to rely on reduced disclosure requirements, potentially making its common stock less attractive to some investors[83]. - The company incurs significant legal, accounting, and compliance costs associated with operating as a public company, which may increase due to regulatory requirements[95]. - The company is subject to strict healthcare laws and regulations, and failure to comply could expose it to liability and adversely affect its financial condition[90]. Legal and Operational Risks - The company faces risks related to product liability exposure, which could result in substantial liabilities if claims are successful and insurance coverage is inadequate[88]. - The company may face litigation related to its intellectual property, which could adversely affect its business and financial condition[96]. - The company relies on cloud-based software for operations, which exposes it to cybersecurity risks that could disrupt business operations[86]. Asset Management Challenges - The company may incur significant expenses during the winding-down process, including legal and consulting fees, which will reduce amounts available for distribution to stockholders[63]. - The company may face challenges in finding buyers for its non-cash assets, which could limit additional distributions to stockholders[72]. - The company plans to initiate steps to exit from certain reporting requirements under the Exchange Act, which may reduce publicly available information about its operations[70].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 000-21088 FRESH TRACKS THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware 93-0948554 (State or ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 000-21088 FRESH TRACKS THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware 93-0948554 (State or other ...

FORWARD-LOOKING STATEMENTS [FORWARD-LOOKING STATEMENTS](index=2&type=section&id=FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements regarding future financial, business, and research performance, including strategy, operations, financial position, liquidity, revenue, expenses, clinical trials, intellectual property, regulatory approvals, and commercialization prospects, based on management's current expectations and projections - This report contains forward-looking statements regarding future financial, business, and research performance, including strategy, operations, financial position, liquidity, revenue, expenses, clinical trials, intellectual property, regulatory approvals, and commercialization prospects. These statements are based on management's current expectations and projections[6](index=6&type=chunk)[7](index=7&type=chunk) - Forward-looking statements involve substantial risks and uncertainties, including those detailed in the Annual Report on Form 10-K and this Quarterly Report's 'Risk Factors' section. Actual results may differ materially due to competitive and rapidly changing environments, and the company undertakes no obligation to revise these statements, except as required by law[6](index=6&type=chunk)[7](index=7&type=chunk)[8](index=8&type=chunk) PART I. FINANCIAL INFORMATION [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [ITEM 1. Financial Statements](index=4&type=section&id=ITEM%201.%20Financial%20Statements) This section presents Fresh Tracks Therapeutics, Inc.'s unaudited condensed consolidated financial statements, encompassing balance sheets, statements of operations, stockholders' equity, and cash flows, with detailed notes on organization, accounting policies, strategic agreements, and capital structure [Condensed Consolidated Balance Sheets](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2023 | December 31, 2022 | Change ($) | Change (%) | | :-------------------- | :------------- | :---------------- | :--------- | :--------- | | Cash and cash equivalents | $10,764 | $8,680 | $2,084 | 24.01% | | Total current assets | $11,813 | $10,083 | $1,730 | 17.16% | | Total assets | $11,967 | $10,271 | $1,696 | 16.51% | | Total current liabilities | $2,101 | $3,077 | $(976) | -31.72% | | Total stockholders' equity | $9,866 | $7,194 | $2,672 | 37.14% | - The company's cash and cash equivalents increased by **$2.084 million**, or **24.01%**, from December 31, 2022, to March 31, 2023[13](index=13&type=chunk) - Total current liabilities decreased by **$976 thousand**, or **31.72%**, primarily due to a reduction in accrued liabilities[13](index=13&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Condensed Consolidated Statements of Operations (in thousands, except per share) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change ($) | Change (%) | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Total revenue | $9 | $92 | $(83) | -90.22% | | Research and development | $1,936 | $6,013 | $(4,077) | -67.79% | | General and administrative | $2,414 | $3,486 | $(1,072) | -30.75% | | Total operating expenses | $4,350 | $9,499 | $(5,149) | -54.21% | | Net loss attributable to common stockholders | $(4,276) | $(9,410) | $5,134 | -54.56% | | Net loss per common share, basic and diluted | $(1.14) | $(3.55) | $2.41 | -67.89% | - Net loss significantly decreased by **$5.134 million**, or **54.56%**, for the three months ended March 31, 2023, compared to the same period in 2022, primarily due to reduced operating expenses[15](index=15&type=chunk) - Total revenue decreased by **$83 thousand**, or **90.22%**, from $92 thousand in Q1 2022 to $9 thousand in Q1 2023[15](index=15&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY) Condensed Consolidated Statements of Stockholders' Equity (in thousands, except shares) | Metric | December 31, 2022 | March 31, 2023 | Change ($) | Change (%) | | :----------------------------------- | :---------------- | :------------- | :--------- | :--------- | | Common Stock (Shares) | 3,018,940 | 5,906,475 | 2,887,535 | 95.65% | | Common Stock (Par Value) | $30 | $59 | $29 | 96.67% | | Additional Paid-In Capital | $173,633 | $180,552 | $6,919 | 3.98% | | Accumulated Deficit | $(166,469) | $(170,745) | $(4,276) | 2.57% | | Total Stockholders' Equity | $7,194 | $9,866 | $2,672 | 37.14% | - The number of common shares issued and outstanding **nearly doubled**, increasing by **2,887,535 shares**, primarily due to issuances under ATM agreements[17](index=17&type=chunk) - Total stockholders' equity increased by **$2.672 million**, or **37.14%**, driven by proceeds from common stock issuance and stock-based compensation, partially offset by net loss[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change ($) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :--------- | | Net cash used in operating activities | $(4,485) | $(9,540) | $5,055 | | Net cash provided by (used in) financing activities | $6,569 | $(55) | $6,624 | | Net increase (decrease) in cash and cash equivalents | $2,084 | $(9,595) | $11,679 | | Cash and cash equivalents—Ending | $10,764 | $17,289 | $(6,525) | - Net cash used in operating activities decreased by **$5.055 million**, or **53%**, for the three months ended March 31, 2023, compared to the same period in 2022[20](index=20&type=chunk) - Net cash provided by financing activities significantly increased by **$6.624 million**, primarily due to proceeds from common stock issuance under ATM agreements in Q1 2023[20](index=20&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) [Note 1. Organization and Nature of Operations](index=8&type=section&id=Note%201.%20Organization%20and%20Nature%20of%20Operations) - Fresh Tracks Therapeutics, Inc. is a clinical-stage pharmaceutical company focused on developing innovative prescription therapeutics for autoimmune, inflammatory, and other debilitating diseases, with a pipeline including **FRTX-02 (DYRK1A inhibitor)** and **FRTX-10 (STING inhibitor)**[23](index=23&type=chunk) - The company effected a **1-for-45 reverse stock split on July 5, 2022**, adjusting all common stock shares and per-share amounts retrospectively[24](index=24&type=chunk) - As of March 31, 2023, the company had **$10.8 million in cash and cash equivalents** and an accumulated deficit of **$170.7 million**, expecting current cash to fund operations for at least the next 12 months. The Board is exploring strategic options, including financing, asset sales/licensing, or mergers, to fund pipeline development[25](index=25&type=chunk)[26](index=26&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=8&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim reporting, including the accounts of Fresh Tracks Therapeutics, Inc. and its wholly-owned subsidiary, Brickell Subsidiary, Inc[27](index=27&type=chunk)[28](index=28&type=chunk) - Revenue recognition follows a five-step model, primarily from upfront fees, milestones, research reimbursements, consulting services, and royalties. The company evaluates performance obligations to determine if revenue is recognized over time or at a point in time[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - Research and development costs are expensed as incurred, including formulation, nonclinical/clinical studies, manufacturing, in-licensing fees, and personnel costs. Milestone payments for acquired assets are expensed when probable and estimable[49](index=49&type=chunk)[51](index=51&type=chunk) - Basic and diluted net loss per share are computed by dividing net loss by the weighted-average common shares outstanding. Potentially dilutive securities are excluded when anti-dilutive[52](index=52&type=chunk) [Note 3. Strategic Agreements](index=14&type=section&id=Note%203.%20Strategic%20Agreements) - The company holds exclusive worldwide rights to FRTX-02 and other next-generation kinase inhibitors through a License and Development Agreement with Voronoi, with potential milestone payments up to **$211.0 million for FRTX-02** and **$107.5 million** for the kinase inhibitor platform, plus tiered royalties[57](index=57&type=chunk)[58](index=58&type=chunk) - An Exclusive License Agreement with Carna Biosciences grants worldwide rights to STING inhibitors, involving a **$2.0 million upfront payment** (expensed in Q1 2022) and potential success-based payments up to **$258.0 million**, plus tiered royalties[59](index=59&type=chunk)[60](index=60&type=chunk) - The company sold its rights to sofpironium bromide assets to Botanix in May 2022, receiving an upfront payment, development reimbursements, and a **$2.0 million milestone** for FDA NDA acceptance. It is eligible for up to **$168.0 million** in additional regulatory/sales milestones and tiered earnout payments on net sales[62](index=62&type=chunk)[65](index=65&type=chunk) - Under a Transition Services Agreement (TSA) with Botanix, the company provides consulting services for sofpironium bromide gel, 15% NDA filing and approval, recognizing **$9 thousand in contract revenue** for Q1 2023[69](index=69&type=chunk) [Note 4. Detailed Account Balances](index=17&type=section&id=Note%204.%20Detailed%20Account%20Balances) Prepaid Expenses and Other Current Assets (in thousands) | Prepaid Expenses and Other Current Assets | March 31, 2023 | December 31, 2022 | | :------------------------------------------------------- | :------------- | :---------------- | | Prepaid insurance | $496 | $521 | | Contract asset | $220 | $254 | | Prepaid research and development expenses | $159 | $254 | | Accounts receivable | $45 | $250 | | Total | $1,049 | $1,403 | Accrued Liabilities (in thousands) | Accrued Liabilities | March 31, 2023 | December 31, 2022 | | :--------------------------------- | :------------- | :---------------- | | Accrued compensation | $731 | $1,320 | | Accrued professional fees | $404 | $705 | | Accrued research and development expenses | $303 | $432 | | Total | $1,438 | $2,457 | - Accrued liabilities decreased by **$1.019 million** from December 31, 2022, to March 31, 2023, primarily due to reductions in accrued compensation and professional fees[75](index=75&type=chunk) [Note 5. Commitments and Contingencies](index=18&type=section&id=Note%205.%20Commitments%20and%20Contingencies) - The company's Colorado office lease (Boulder Lease) was amended in December 2022, extending the term to December 31, 2025, but with an option to terminate by June 30, 2023, if notice is provided by April 30, 2023[76](index=76&type=chunk) - As of March 31, 2023, the present value of the lease liability was **$28 thousand**, with total maturities through December 31, 2023, of **$29 thousand**[78](index=78&type=chunk) - On May 4, 2023, the company further amended the Boulder Lease to terminate it effective August 31, 2023, to reduce operating expenses[78](index=78&type=chunk)[191](index=191&type=chunk) [Note 6. Capital Stock](index=18&type=section&id=Note%206.%20Capital%20Stock) - As of March 31, 2023, the company had **5,906,475 shares** of common stock issued and outstanding, with **300,000,000 shares** authorized[13](index=13&type=chunk) Reserved Shares (March 31, 2023) | Reserved Shares | Number of Shares | | :------------------------------- | :--------------- | | Common stock warrants | 621,063 | | Common stock options outstanding | 197,055 | | Unvested restricted stock units | 141,250 | | ESPP shares available for grant | 42,728 | | Omnibus Plan shares available for grant | 18,854 | | Total | 1,020,950 | - During the three months ended March 31, 2023, the company sold **2,887,535 shares** of common stock under the 2021 ATM Agreement, generating net proceeds of **$6.6 million**[85](index=85&type=chunk) - The company is subject to SEC's 'baby shelf rules,' limiting equity issuances under shelf registration statements to **one-third of its public float** in a 12-month period, which may restrict future capital raising[87](index=87&type=chunk) [Note 7. Stock-Based Compensation](index=21&type=section&id=Note%207.%20Stock-Based%20Compensation) - The 2020 Omnibus Long-Term Incentive Plan (Omnibus Plan) replaced prior plans for new award grants. As of March 31, 2023, **323,364 shares** were authorized, and **18,854 shares** remained available for grant under the Omnibus Plan[95](index=95&type=chunk)[96](index=96&type=chunk) - The Employee Stock Purchase Plan (ESPP) allows qualified employees to purchase common stock at 85% of the lower of the opening or closing price of a six-month purchase period. As of March 31, 2023, **42,728 shares** were available for issuance under the ESPP[97](index=97&type=chunk)[98](index=98&type=chunk) Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $92 | $103 | | General and administrative | $287 | $448 | | Total stock-based compensation expense | $379 | $551 | [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=ITEM%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis covers the company's financial condition and operational results for the three months ended March 31, 2023, including strategic focus, pipeline development, financial performance, liquidity, and future outlook [Overview](index=22&type=section&id=Overview) - Fresh Tracks Therapeutics is a clinical-stage pharmaceutical company developing innovative prescription therapeutics for autoimmune, inflammatory, and other debilitating diseases, aiming to disrupt existing treatment paradigms with first-in-class potential new chemical entities[100](index=100&type=chunk) [Exploration of Strategic Options](index=22&type=section&id=Exploration%20of%20Strategic%20Options) - The Board and executive management are exploring strategic options to advance the pipeline, including financing, asset sales/licensing, acquisitions, mergers, or other strategic transactions, with MTS Health Partners, LP retained as financial advisor[101](index=101&type=chunk) [Research and Development Programs](index=23&type=section&id=Research%20and%20Development%20Programs) - **FRTX-02** is a novel, orally bioavailable DYRK1A inhibitor, the lead development-stage program, with first-in-class potential for autoimmune and inflammatory diseases. It has shown promising preclinical results in atopic dermatitis and rheumatoid arthritis models, aiming to restore immune balance[103](index=103&type=chunk)[104](index=104&type=chunk) - **FRTX-10** is a preclinical-stage covalent STING inhibitor candidate, acquired in February 2022, targeting excessive STING signaling linked to autoimmune, inflammatory, and rare genetic diseases. It aims to inhibit both wild-type and gain-of-function STING mutants[107](index=107&type=chunk)[109](index=109&type=chunk) - The company also has a platform of next-generation kinase inhibitors, including DYRK1, LRRK2, CLK, and TTK inhibitors, with potential for neuroinflammatory conditions (e.g., Down Syndrome, Alzheimer's, Parkinson's) and other autoimmune, inflammatory, and oncology areas[111](index=111&type=chunk) [Topline Results of FRTX-02 (Phase 1 Part A and B) Clinical Trial](index=25&type=section&id=Topline%20Results%20of%20FRTX-02%20(Phase%201%20Part%20A%20and%20B)%20Clinical%20Trial) - The **Phase 1 clinical trial (FRTX-02-101)** for FRTX-02, initiated in May 2022, is a randomized, double-blind, placebo-controlled study evaluating safety, tolerability, pharmacokinetics (PK), and pharmacodynamics (PD) in healthy subjects and patients with atopic dermatitis (AD). **Parts 1A (SAD) and 1B (MAD) were completed in Q4 2022**, with **positive topline results reported in March 2023**[104](index=104&type=chunk)[105](index=105&type=chunk)[113](index=113&type=chunk) - FRTX-02 was **generally safe and well-tolerated** in SAD and MAD cohorts (75 mg and 150 mg), with no discontinuations due to TEAEs. **QTc prolongation was observed** in two subjects in the 300 mg MAD cohort, which resolved after dosing cessation[114](index=114&type=chunk) - PK data showed **dose-proportional exposure**, supporting once-daily oral dosing, with Cmax and AUC values at or above pharmacologically active levels. Exploratory PD assessment demonstrated FRTX-02 **reduced disease-relevant proinflammatory cytokines** (e.g., IFNγ, IL-23, IL-10, IL-6, TNFα) in whole blood[115](index=115&type=chunk)[116](index=116&type=chunk) [Strategic, Licensing, and Other Arrangements](index=26&type=section&id=Strategic,%20Licensing,%20and%20Other%20Arrangements) - The company has a License and Development Agreement with Voronoi for FRTX-02 and next-generation kinase inhibitors, with potential milestone payments up to **$318.5 million** and tiered royalties[117](index=117&type=chunk)[118](index=118&type=chunk) - An Exclusive License Agreement with Carna Biosciences provides rights to STING inhibitors, including a **$2.0 million upfront payment** in Q1 2022 and potential success-based payments up to **$258.0 million**, plus tiered royalties[119](index=119&type=chunk)[120](index=120&type=chunk) - In May 2022, the company sold its sofpironium bromide assets to Botanix, receiving an upfront payment, development reimbursements, and a **$2.0 million milestone** for FDA NDA acceptance. It is eligible for up to **$168.0 million** in additional regulatory/sales milestones and tiered earnout payments[121](index=121&type=chunk)[124](index=124&type=chunk) - The company recognized **$9 thousand in contract revenue** for Q1 2023 from consulting services provided to Botanix under a Transition Services Agreement (TSA) related to the sofpironium bromide gel NDA[128](index=128&type=chunk) [Reverse Stock Split](index=29&type=section&id=Reverse%20Stock%20Split) - On July 5, 2022, the company effected a **1-for-45 reverse stock split** of its outstanding common stock, which was approved by stockholders on June 30, 2022. All share and per-share amounts in the financial statements and MD&A reflect this adjustment[133](index=133&type=chunk)[134](index=134&type=chunk) [Significant Financing Arrangements](index=29&type=section&id=Significant%20Financing%20Arrangements) - In Q1 2023, the company sold **2,887,535 shares** of common stock under the 2021 ATM Agreement, generating aggregate net proceeds of **$6.6 million**. Approximately **$38.0 million of shares remained available** for sale under this agreement as of March 31, 2023[139](index=139&type=chunk)[140](index=140&type=chunk) - The company is subject to SEC's 'baby shelf rules,' which limit equity issuances under a shelf registration statement to **one-third of its public float** in a 12-month period, potentially restricting future capital raising under ATM agreements or other offerings[142](index=142&type=chunk) - Under a Purchase Agreement with Lincoln Park Capital Fund, LLC, the company has the right, but not the obligation, to sell up to **$28.0 million** in common stock. As of March 31, 2023, approximately **$26.9 million remained available** for sale[144](index=144&type=chunk)[146](index=146&type=chunk) [Financial Overview](index=31&type=section&id=Financial%20Overview) - The company has incurred significant operating losses and had an accumulated deficit of **$170.7 million** as of March 31, 2023, with a net loss of **$4.3 million** for Q1 2023[150](index=150&type=chunk) - Operations are financed primarily through common stock and warrant sales, convertible preferred stock, debt, and payments from license/collaboration agreements. The company expects to incur substantial losses for several years and will need to raise additional capital[150](index=150&type=chunk)[151](index=151&type=chunk) - The Board is exploring strategic options (financing, asset sales/licensing, M&A) to fund the development of its pipeline, as timely financing or strategic partnerships are crucial for conducting additional R&D activities[152](index=152&type=chunk)[153](index=153&type=chunk) [Key Components of Operations](index=32&type=section&id=Key%20Components%20of%20Operations) - Revenue is recognized from strategic agreements, including upfront fees, milestones, sublicense income, earnout payments, and royalties. The company expects to continue recognizing contract revenue related to sofpironium bromide gel royalties after March 31, 2023[154](index=154&type=chunk) - Research and development expenses primarily consist of payments to CROs, upfront in-licensing fees, personnel costs, supplies, and facility overhead[155](index=155&type=chunk) - General and administrative expenses include personnel costs (executive, sales, marketing, finance, HR) and professional fees (legal, accounting, sublicensing)[156](index=156&type=chunk) [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) - Critical accounting estimates include revenue recognition and accrued research and development expenses, which require management judgment and assumptions that may differ from actual results[158](index=158&type=chunk) - There were no changes to critical accounting estimates during the three months ended March 31, 2023, as disclosed in the Annual Report on Form 10-K for December 31, 2022[159](index=159&type=chunk) [Recent Accounting Pronouncements](index=33&type=section&id=Recent%20Accounting%20Pronouncements) - The adoption of recently issued accounting standards is not expected to have a material impact on the company's condensed consolidated financial statements or disclosures[160](index=160&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) [Comparison of the Three Months Ended March 31, 2023 and 2022](index=33&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20March%2031,%202023%20and%202022) Comparison of the Three Months Ended March 31, 2023 and 2022 (in thousands) | Metric | March 31, 2023 | March 31, 2022 | Change ($) | Change (%) | | :-------------------- | :------------- | :------------- | :--------- | :--------- | | Revenue | $9 | $92 | $(83) | -90.22% | | R&D expenses | $(1,936) | $(6,013) | $4,077 | -67.79% | | G&A expenses | $(2,414) | $(3,486) | $1,072 | -30.75% | | Other income (expense), net | $65 | $(3) | $68 | -2266.67% | | Net loss | $(4,276) | $(9,410) | $5,134 | -54.56% | [Revenue](index=33&type=section&id=Revenue) - Revenue decreased by approximately **$0.1 million (90.22%)** for Q1 2023 compared to Q1 2022. Q1 2023 revenue primarily consisted of contract revenue from services under the TSA with Botanix, while Q1 2022 revenue was royalty revenue from ECCLOCK sales in Japan[162](index=162&type=chunk) [Research and Development Expenses](index=34&type=section&id=Research%20and%20Development%20Expenses) R&D Program Expenses (in thousands) | R&D Program Expenses | March 31, 2023 | March 31, 2022 | Change ($) | | :---------------------------------- | :------------- | :------------- | :--------- | | Sofpironium bromide | $0 | $2,168 | $(2,168) | | DYRK1A inhibitor (FRTX-02) | $936 | $728 | $208 | | STING inhibitor (FRTX-10) | $102 | $2,010 | $(1,908) | | Personnel and other unallocated | $898 | $1,107 | $(209) | | Total R&D expenses | $1,936 | $6,013 | $(4,077) | - Total R&D expenses decreased by **$4.1 million (67.79%)** for Q1 2023, primarily due to a **$2.2 million reduction** in sofpironium bromide clinical expenses (following asset sale to Botanix) and a **$1.9 million decrease** in STING inhibitor program costs (due to Q1 2022 upfront in-licensing fees)[163](index=163&type=chunk)[164](index=164&type=chunk) - Costs for the DYRK1A inhibitor program (FRTX-02) increased by **$0.2 million** due to ongoing Phase 1 clinical trial activities[163](index=163&type=chunk)[164](index=164&type=chunk) [General and Administrative Expenses](index=34&type=section&id=General%20and%20Administrative%20Expenses) - General and administrative expenses decreased by **$1.1 million (30.75%)** for Q1 2023 compared to Q1 2022, driven by lower legal and compliance fees (**$0.6 million**), other expenses (**$0.3 million**), and compensation-related expenses (**$0.2 million**)[165](index=165&type=chunk) [Total Other Income (Expense), Net](index=35&type=section&id=Total%20Other%20Income%20(Expense),%20Net) - Total other income (expense), net increased by **$0.1 million** for Q1 2023 compared to Q1 2022, primarily due to higher interest income earned on money market funds and interest-bearing accounts[166](index=166&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) [Cash Flows](index=36&type=section&id=Cash%20Flows) Cash Flow Activity (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(4,485) | $(9,540) | | Net cash provided by (used in) financing activities | $6,569 | $(55) | | Total net increase (decrease) | $2,084 | $(9,595) | [Operating Activities](index=36&type=section&id=Operating%20Activities) - Net cash used in operating activities decreased by **$5.1 million to $4.5 million** in Q1 2023, compared to $9.5 million in Q1 2022, primarily due to a decrease in net loss and changes in working capital[172](index=172&type=chunk) [Financing Activities](index=36&type=section&id=Financing%20Activities) - Net cash provided by financing activities increased by **$6.6 million** in Q1 2023, primarily from **$6.6 million in net proceeds** from common stock sales under the 2021 ATM Agreement[173](index=173&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=ITEM%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Fresh Tracks Therapeutics, Inc. is exempt from providing quantitative and qualitative disclosures regarding market risk - The company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and is therefore not required to provide information under this item[174](index=174&type=chunk) [ITEM 4. Controls and Procedures](index=36&type=section&id=ITEM%204.%20Controls%20and%20Procedures) This section evaluates the company's disclosure controls and procedures, affirming their effectiveness and reporting no material changes in internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=36&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - The company maintains disclosure controls and procedures designed to ensure timely and accurate reporting of information required under the Exchange Act, acknowledging that such controls provide only reasonable assurance[175](index=175&type=chunk) [Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures](index=37&type=section&id=Conclusion%20Regarding%20the%20Effectiveness%20of%20Disclosure%20Controls%20and%20Procedures) - Based on an evaluation conducted by management, including the principal executive officer and principal financial officer, the company's disclosure controls and procedures were **concluded to be effective at a reasonable assurance level as of March 31, 2023**[176](index=176&type=chunk) [Changes in Internal Control over Financial Reporting](index=37&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - Management determined that there were **no changes in internal control over financial reporting** during the three months ended March 31, 2023, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[177](index=177&type=chunk) PART II. OTHER INFORMATION [PART II. OTHER INFORMATION](index=38&type=section&id=PART%20II.%20OTHER%20INFORMATION) [ITEM 1. Legal Proceedings](index=38&type=section&id=ITEM%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings that would materially adversely affect its business - The company is not presently involved in any legal proceedings that, if determined adversely, would individually or collectively have a material adverse effect on the company[180](index=180&type=chunk) [ITEM 1A. Risk Factors](index=38&type=section&id=ITEM%201A.%20Risk%20Factors) This section updates risk factors, emphasizing the company's non-compliance with Nasdaq listing requirements for independent directors and minimum bid price, and potential delisting consequences - The company received a **Nasdaq notice on August 19, 2022**, for noncompliance with independent director and audit committee requirements (Nasdaq Listing Rule 5605) due to a director's departure, and has a **cure period until July 28, 2023**, or January 24, 2023, depending on the annual meeting date[182](index=182&type=chunk)[183](index=183&type=chunk) - On **April 24, 2023**, the company received another Nasdaq notice for non-compliance with the **minimum $1.00 closing bid price requirement** (Nasdaq Marketplace Rule 5550(a)(2)), with a **180-calendar day period until October 23, 2023**, to regain compliance[185](index=185&type=chunk) - **Inability to regain Nasdaq compliance could lead to delisting**, resulting in limited market quotations, decreased trading liquidity, adverse effects on future financing, loss of investor confidence, and a potential decline in stock price[186](index=186&type=chunk)[187](index=187&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=ITEM%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds were reported during the period - No unregistered sales of equity securities or use of proceeds occurred during the reporting period[188](index=188&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=39&type=section&id=ITEM%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the current reporting period - This item is not applicable[189](index=189&type=chunk) [ITEM 4. Mine Safety Disclosures](index=39&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the current reporting period - This item is not applicable[190](index=190&type=chunk) [ITEM 5. Other Information](index=39&type=section&id=ITEM%205.%20Other%20Information) The company disclosed the termination of its Boulder Lease, effective August 31, 2023, aimed at reducing operating expenses - On **May 4, 2023**, the company **amended the Boulder Lease to terminate it effective August 31, 2023**, in exchange for a **$5,051 termination fee**. This action aims to reduce operating expenses for its corporate headquarters[191](index=191&type=chunk) [ITEM 6. Exhibits](index=39&type=section&id=ITEM%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents, employment agreements, and certifications - The report includes various exhibits such as the Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, several employment and consulting agreements, and certifications from the Principal Executive Officer and Principal Financial Officer[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)

Strategic Development and Financing - The company is exploring strategic options to progress the development of its pipeline assets, which may include financing, asset sales, mergers, or other transactions[117]. - The company requires additional funding to continue the development of its pipeline, including FRTX-02, and may face significant delays if financing is not secured[117]. - The company is exploring strategic options, including financing, asset sales, or partnerships, to progress the development of its pipeline[149]. - The company requires substantial additional financing to fund operations and develop its product candidates, which may not be available on favorable terms[146]. - The company faces risks related to liquidity and financial matters, including potential dilution of stockholders' ownership interests if additional capital is raised[147]. - The company is in the process of moving cash deposits from Silicon Valley Bank following its closure, which may impact liquidity[153]. - The company expects to continue incurring substantial losses due to ongoing research and development activities, necessitating additional funding[358]. - The company raised $6.6 million in net proceeds from common stock sales in March 2023, which is expected to fund operations for at least the next 12 months[357]. Clinical Development and Regulatory Approvals - The lead asset FRTX-02 has just completed Part 1 of a two-part Phase 1 trial, with further investigation needed to confirm its safety and efficacy[121]. - The clinical development of pipeline assets is expensive and uncertain, with many candidates failing to achieve regulatory approval[120]. - The FDA has accepted the filing of a New Drug Application (NDA) for sofpironium bromide gel, with Botanix holding a 15% stake, but there is no assurance of regulatory approval[137]. - If regulatory approvals are obtained, the successful commercialization of sofpironium bromide gel may not generate sufficient revenue for the company to receive payments outlined in the Asset Purchase Agreement[137]. - The company faces risks related to regulatory approvals for product candidates, which could impact commercialization efforts and ongoing compliance obligations[172]. - The company may incur substantial costs and delays if the FDA does not accept data from foreign clinical trials[180]. - The company is subject to extensive regulation by the FDA and other authorities, which could impose restrictions on product commercialization and ongoing compliance[175]. Market and Competitive Landscape - The successful commercialization of pipeline assets is contingent on achieving regulatory approvals and market acceptance, which remains uncertain[118]. - The company faces intense competition in the pharmaceutical industry, which may hinder its ability to penetrate the market effectively[127]. - The ongoing COVID-19 pandemic has caused significant disruptions that may adversely impact the company's financial condition and operational results[122]. - The ongoing military conflict between Russia and Ukraine has led to market disruptions, which may adversely affect the company's financial condition and operations[150]. - The Inflation Reduction Act of 2022 allows Medicare to negotiate lower prices for certain drugs starting in 2026, which may impact the company's revenue potential[185]. - The company faces risks related to potential changes in healthcare reform that could limit drug pricing and access, impacting demand for its products[185]. Financial Performance and Position - Total revenue for the year ended December 31, 2022, was $6.943 million, a significant increase from $404 thousand in 2021[347]. - The company reported a net loss of $21.102 million for 2022, compared to a net loss of $39.474 million in 2021, representing a 46.5% improvement[347]. - Cash and cash equivalents decreased to $8.680 million as of December 31, 2022, down from $26.884 million at the end of 2021, reflecting a decrease of 67.7%[351]. - Total operating expenses for 2022 were $28.477 million, a decrease of 29.9% from $40.648 million in 2021[347]. - The accumulated deficit increased to $166.469 million as of December 31, 2022, compared to $145.367 million at the end of 2021[349]. - The company has provided a valuation allowance for its entire net deferred tax assets since inception due to its history of operating losses[389]. Intellectual Property and Legal Risks - The company is exposed to potential litigation risks related to third-party intellectual property rights, which could adversely affect its financial condition and operating results[224]. - The company relies on third-party licensors and partners, which could expose it to liability if those parties face infringement claims[225]. - The company must comply with various obligations under its intellectual property and license agreements to maintain its rights[220]. - The company faces risks related to patent infringement claims that could result in costly litigation and operational disruptions[224]. - Intellectual property rights may not be effectively protected in foreign jurisdictions, impacting the company's business prospects[210]. - Compulsory licensing laws in certain countries could compel the company to grant licenses to third parties, potentially diminishing patent value[216]. Operational Challenges - The company currently lacks marketing capabilities and sales organization, which may hinder the successful development and commercialization of product candidates[140]. - The company does not have internal capabilities for supply, manufacture, or distribution of drug substances, relying on third-party contractors[201]. - The company faces risks related to the quality and compliance of products from contract manufacturers and suppliers[203]. - The review process for strategic options may distract management from core business operations, potentially affecting business performance[195]. - The company may discontinue the development or commercialization of product candidates at any time, which could lead to a loss of investment returns[197]. - Significant fluctuations in stock price may occur due to developments or market speculation regarding product candidates[197]. Research and Development Expenses - The company incurred $14.0 million in research and development expenses for the year ended December 31, 2022[339]. - Research and development expenses for 2022 were $14.043 million, a decrease of 50.3% from $28.231 million in 2021[347]. - The company accrued $0.4 million and prepaid $0.3 million of research and development expenses at December 31, 2022[339]. Licensing Agreements and Revenue Recognition - The Company recognized revenue primarily from upfront fees, research and development milestones, and royalty fees on sales of sofpironium bromide gel, 5% in Japan[372]. - The Voronoi License Agreement includes potential payments to Voronoi of up to $211.0 million contingent upon achieving specified milestones[393]. - The Carna License Agreement entails success-based payments of up to $258.0 million contingent upon specified milestones[396]. - The Company received an upfront payment of $3.0 million and a milestone payment of $2.0 million upon FDA acceptance of the NDA for sofpironium bromide gel[401]. - The Company recognized total contract revenue of $6.851 million for the year ended December 31, 2022, including $794,000 from consulting services[406]. - The Asset Purchase Agreement allows for additional success-based regulatory and sales milestone payments of up to $168.0 million[401].

Financial Data and Key Metrics Changes - The company reported cash and cash equivalents of $11.3 million as of September 30, 2022, and expects this, along with up to $6 million from expected near-term payments, to fund operations for at least the next 12 months [17] - Revenue for Q3 2022 was approximately $0.5 million, up from $0.1 million in Q3 2021, primarily from contract revenue recognized under the asset purchase agreement with Botanix [18] - R&D expenses decreased to $3.6 million in Q3 2022 from $10.2 million in Q3 2021, mainly due to lower clinical expenses related to SB and other factors [19] - G&A expenses were $3 million in Q3 2022, down from $3.3 million in the same quarter of the previous year [20] - The net loss for Q3 2022 was $6 million, compared to a net loss of $13.3 million in Q3 2021 [20] Business Line Data and Key Metrics Changes - The company is advancing the Phase I clinical trial of FRTX-02, with completion of the Single Ascending Dose (SAD) part and initiation of the Multiple Ascending Dose (MAD) part [7] - FRTX-10, a novel STING inhibitor, is in preclinical development, showing strong proof of mechanism and favorable safety profiles [12] Market Data and Key Metrics Changes - The company is focusing on autoimmune and inflammatory diseases, with a pipeline that includes potential first-in-class therapies [5][6] Company Strategy and Development Direction - The company has undergone a rebranding to Fresh Tracks Therapeutics, reflecting a shift in corporate mission and strategy towards developing targeted therapies for autoimmune and inflammatory diseases [5] - The company aims to develop a library of next-generation kinase inhibitors for various conditions, including autoimmune and neuroinflammatory diseases [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the ongoing development of their pipeline, highlighting significant upcoming milestones that could create value for shareholders [21] - The company is encouraged by interest from potential partners regarding their novel assets, although no specific deals are currently in place [27] Other Important Information - The company has established a Scientific Advisory Board consisting of experts in immunology and inflammation to guide its development efforts [15] Q&A Session Summary Question: Can you discuss the therapies in the moderate AD patients for Part 2 of the FRTX-02 trial? - Management confirmed that patients will not have received biologics such as dupilumab for at least 6 months prior to entering the study [24] Question: Will these be JAK inhibitor naive patients? - Management indicated that these will most likely be JAK inhibitor naive patients, with specific exclusions in place [25] Question: When is the ideal time to seek a partner for the lead novel assets? - Management stated that the timing depends on the drug and the data available, and they are open to discussions with interested parties [26] Question: Do you have enough ability to differentiate the DYRK assets for licensing? - Management noted that it depends on the type of partnership, with potential for both compound-by-compound and platform-type deals [30] Question: How are you thinking about biomarkers in the crowded AD market? - Management emphasized that while the initial study is in AD, the biomarkers being collected will inform potential treatments for other autoimmune diseases [32]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 000-21088 FRESH TRACKS THERAPEUTICS, INC. (Exact name of registrant as specified in its charter) Delaware 93-0948554 (State or ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 000-21088 BRICKELL BIOTECH, INC. (Exact name of registrant as specified in its charter) Delaware 93-0948554 (State or other jurisdic ...

Brickell Biotech, Inc. (BBI) Q2 2022 Earnings Conference Call August 11, 2022 4:30 PM ET Company Participants Garth Russell - IR, LifeSci Advisors Robert Brown - Chief Executive Officer Monica Luchi - Chief Medical Officer Albert Marchio - Chief Financial Officer Deepak Chadha - Chief R&D Officer Conference Call Participants Ron Mather - Oppenheimer Thomas Flaten - Lake Street Operator Welcome everyone to the Brickell Biotech Second Quarter 2022 Financial Results Conference Call. At this time, all participa ...