Adial Pharmaceuticals(ADIL) - 2024 Q3 - Quarterly Report

Financial Performance - The company reported a net loss of approximately $11.1 million for the nine months ended September 30, 2024, compared to a net loss of $5.1 million for the year ended December 31, 2023, resulting in accumulated deficits of approximately $79.9 million as of September 30, 2024[93]. - Total operating expenses for the three months ended September 30, 2024, were $2.2 million, an increase of $854,000 compared to the same period in 2023[100]. - The loss from discontinued operations decreased by approximately $37,000 (100%) in the three months ended September 30, 2024, as the business of Purnovate, Inc. was sold in June 2023[107]. - The gain from discontinued operations decreased by approximately $1,894,000 (100%) in the nine months ended September 30, 2024, due to the sale of Purnovate, Inc. in June 2023[114]. - Net cash used in operating activities increased by approximately $870,000 in the nine months ended September 30, 2024, driven by higher operating expenses[125]. Research and Development - Research and development expenses increased by approximately $825,000 (399%) during the three months ended September 30, 2024, primarily due to direct clinical trial expenses associated with the Phase 1b trial[103]. - Research and development expenses increased by approximately $1,495,000 (149%) during the nine months ended September 30, 2024, compared to the same period in 2023, driven by clinical trial expenses and CMC expenses[18]. - The company has focused on completing the clinical development program for AD04, targeting specific genetic subgroups to meet regulatory requirements[88]. - The company plans to begin a Phase III study of AD04 in the second half of 2025, contingent on securing sufficient funding[120]. Cash Flow and Financing - Cash and cash equivalents are not expected to be sufficient to fund operations for the next twelve months from the date of filing the Quarterly Report[92]. - The company expects to finance operations through a combination of equity offerings, debt financings, and other funding arrangements[95]. - Net cash provided by financing activities increased by approximately $7,846,000 in the nine months ended September 30, 2024, due to sales of common stock and warrant exercises[127]. - The company expects to use between approximately $13 million and $16 million in cash during the twelve months ended September 30, 2025, for AD04 development costs and general corporate expenses[121]. General and Administrative Expenses - General and administrative expenses increased by approximately $29,000 (3%) during the three months ended September 30, 2024, due to increased patent and investor relations expenses[104]. - General and administrative expenses decreased by approximately $256,000 (6%) during the nine months ended September 30, 2024, due to lower corporate legal expenses and insurance premiums[110]. Other Income and Expenses - Inducement expense of approximately $4,464,000 was recognized as a one-time, noncash expense related to the issuance of new warrants during the nine months ended September 30, 2024[112]. - Total other income, excluding specific losses, increased by $117,000 (1671%) in the nine months ended September 30, 2024, primarily due to increased interest income[113]. - Losses from equity method investment increased by approximately $443,000 in the nine months ended September 30, 2024, attributed to the acquisition of Adovate, LLC in June 2023[111]. Warrant Inducement - The company entered into a warrant inducement agreement resulting in gross proceeds of approximately $3.5 million from the exercise of existing warrants[96].