Jupiter Neurosciences Inc(JUNS) - 2024 Q4 - Annual Report

Part I Business Jupiter Neurosciences is a clinical-stage R&D company developing JOTROL, an enhanced resveratrol formulation, for neuro-inflammation - The company is a clinical-stage R&D firm whose platform product, JOTROL, is an enhanced oral formulation of resveratrol targeting neuro-inflammation[15] - Primary large-market indications are Parkinson's Disease and Mild Cognitive Impairment (MCI)/early Alzheimer's disease, with rare disease programs for Mucopolysaccharidoses Type 1, Friedreich's ataxia, and MELAS[17] - In December 2024, the company completed a public offering, raising gross proceeds of $11 million, and its common stock began trading on The Nasdaq Capital Market under the symbol "JUNS"[16] - The company has entered into strategic service agreements to accelerate business development, manufacturing, and clinical trial management in the South-East Asian market[21][107] Overview and JOTROL Platform JOTROL, the company's core asset, is a proprietary enhanced oral resveratrol formulation designed for improved bioavailability and reduced GI side effects - JOTROL is an enhanced oral resveratrol formulation designed to deliver therapeutic doses without severe GI side effects, a common issue with standard resveratrol at high doses[18] - The company holds an exclusive global license from Aquanova AG for the micellar technology used in JOTROL, with the patent expiring in 2036 and granted in key markets[28] - A Phase I pharmacokinetic study in healthy volunteers was completed in 2021, with results meeting targeted goals for future clinical trial cross-referencing[27] Product Pipeline and Clinical Development The company's pipeline focuses on JOTROL for Parkinson's (JNS115) and MCI/early Alzheimer's (JNS108), alongside rare disease programs, with clinical trial timelines dependent on funding and partnerships - The top priority is JNS115 for Parkinson's Disease, with a Phase 2a trial expected to begin in Q3 2025 and initial results within 12 months[33][39][40] - The second priority is JNS108 for MCI/early Alzheimer's Disease, with a pending grant application for a Phase II trial, where failure to secure funding could cause delays[33][41] - The company was granted Orphan Drug Designation (ODD) by the FDA on August 16, 2017, for JNS101 for the treatment of Friedreich's Ataxia[58] - In March 2025, the company partnered with Aquanova AG to develop nutritional products targeting longevity and aging, with the first products expected to launch in Q3 2025 via a Direct-to-Consumer model[22] Competition, Strategy, and Operations The company faces intense competition across its target indications, leveraging JOTROL's multi-indication potential and oral delivery, while operating virtually and focusing on out-licensing and Asian market expansion - The company faces competition from numerous companies in Parkinson's, Alzheimer's, and rare diseases, including major pharmaceutical players[75][77][79] - Competitive advantages include JOTROL's high bioavailability, oral delivery, and its potential applicability across multiple indications as a platform product[84][85] - The company operates a virtual model, outsourcing R&D, clinical trials, and manufacturing to partners such as the University of Miami and Catalent[97] - A key strategy is to out-license JOTROL, with a strong focus on the Asian market, facilitated by agreements with partners like Dominant Treasure Health[90][107][111] Risk Factors The company faces significant risks including limited operating history, ongoing losses, going concern doubt, reliance on JOTROL, lengthy clinical trials, intellectual property issues, and the need for substantial additional capital - The company is an early-stage entity with a limited operating history, no approved products, and significant net losses, raising substantial doubt about its ability to continue as a going concern[118][122][127] - The business is substantially dependent on the success of its single product candidate, JOTROL; failure in its development, approval, or commercialization would severely harm operations[117][150] - The company requires substantial additional capital to finance operations, and failure to raise it may lead to delays, reductions, or elimination of R&D programs[134] - The company relies on third parties for clinical trials and manufacturing, and on a critical license agreement with Aquanova AG for its core technology, the loss of which would materially harm the business[297][355][359] - The company received a notice from Nasdaq on March 21, 2025, for non-compliance with the minimum bid price requirement, potentially leading to delisting[375] Unresolved Staff Comments The company reports no unresolved staff comments - None[419] Cybersecurity The company is developing an integrated cybersecurity risk management program, overseen by management and the Board, and has identified no material cybersecurity threats to date - The company is implementing a cybersecurity risk management program to protect confidential information and critical systems, integrated with its enterprise risk management[421] - The executive management team and an IT service provider manage cybersecurity risks, with oversight from the Board of Directors[423][425] - The company has not identified any known cybersecurity threats that have materially affected or are reasonably likely to materially affect its operations or financial condition[422] Properties The company leases its corporate headquarters in Jupiter, Florida, and a small additional office in Boston, Massachusetts, which are deemed adequate for current needs - Corporate headquarters are leased in Jupiter, FL (1,206 sq. ft.) with a lease expiring May 31, 2026, at a base rent of $3,783 per month[427] - An additional small office is leased in Boston, MA (120 sq. ft.)[427] Legal Proceedings The company is not currently involved in any litigation expected to have a material adverse effect on its business or financial condition - The company is not presently a party to any litigation expected to have a material adverse effect on its business[429] Mine Safety Disclosures This item is not applicable to the company - Not applicable[430] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq under "JUNS", with 33.1 million shares outstanding, no history of dividends, and active equity incentive plans, with no issuer share repurchases - Common stock is listed on The Nasdaq Capital Market under the symbol "JUNS"[432] - As of March 28, 2025, there were 33,103,860 shares of common stock outstanding[433] - The company has never paid cash dividends and does not intend to in the foreseeable future[434] - The 2023 Equity Incentive Plan is the active plan, authorizing 4,012,785 shares, with 2,139,240 shares available for issuance as of March 28, 2025[437] Reserved This item is reserved - None Management's Discussion and Analysis of Financial Condition and Results of Operations The company reported a reduced net loss of $2.4 million in 2024 due to debt extinguishment gains and lower operating expenses, bolstered by a $9.7 million IPO, yet faces ongoing going concern doubts requiring additional capital Results of Operations The company's net loss decreased to $2.4 million in 2024 from $4.8 million in 2023, primarily due to a significant gain on debt extinguishment and reduced operating expenses Comparison of Fiscal Years Ended December 31, 2024 and 2023 | Financial Metric | 2024 ($) | 2023 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Revenue | $0 | $0 | - | | Research & Development Expenses | $492,660 | $954,793 | ($462,133) | | General & Administrative Expenses | $2,598,622 | $2,915,978 | ($317,356) | | Gain (Loss) on Extinguishment of Debt | $857,723 | ($887,946) | $1,745,669 | | Net Loss | ($2,439,625) | ($4,783,689) | $2,344,064 | - The decrease in G&A expenses was directly related to the reduction of employee salaries that began in December 2023[454] Liquidity and Capital Resources As of December 31, 2024, the company had $3.8 million in cash, bolstered by a $9.7 million IPO, but recurring losses and negative cash flows raise substantial doubt about its going concern ability - The company had $3,769,510 in cash and cash equivalents as of December 31, 2024[458] - In December 2024, an initial public offering yielded net proceeds of $9,725,213[459] Summary of Cash Flows | Cash Flow Activity | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($3,911,004) | ($480,953) | | Net cash provided by financing activities | $7,652,036 | $445,000 | - Management has concluded that historical recurring losses and negative cash flows raise substantial doubt about the company's ability to continue as a going concern[460] Contractual Obligations and Other Agreements The company's key contractual obligations include an office lease, a $1.1 million Senior Secured Convertible Note fully repaid for $2.1 million in December 2024, related-party notes to its CEO, and a $2.3 million Strategic Services Agreement with Dominant Treasure Health - The company has a 61-month operating lease for its Florida office, which commenced in May 2021[472] - A Senior Secured Note, originating as a convertible note in April 2022, was fully repaid in December 2024 for $2,102,797 after complex amendments[473][484][488] - As of December 31, 2024, the company owed its CEO $146,432 from working capital loans provided since inception[495] - Entered into a Strategic Services Agreement with Dominant Treasure Health in December 2024, agreeing to a one-time payment of $2,300,000 for services to accelerate product development and distribution in Southeast Asia[851] Critical Accounting Policies Critical accounting policies include US GAAP basis, going concern assumption despite doubt, valuation of stock-based compensation, uncertain tax positions, expensing R&D costs, and fair value measurement of convertible notes with embedded derivatives - Financial statements are prepared assuming the company is a going concern, although management has expressed substantial doubt about this ability[738] - Significant estimates include the valuation of stock-based compensation, uncertain tax positions, and the valuation allowance for deferred tax assets[512] - Convertible notes with embedded derivatives were accounted for as liabilities and marked-to-market at each balance sheet date using a Monte Carlo valuation model (Level 3 inputs)[516][813] - Research and development costs, including for clinical trials, are expensed as incurred[513] Quantitative and Qualitative Disclosures About Market Risk This item is not applicable to the company - Not applicable[517] Financial Statements and Supplementary Data Audited financial statements for 2024 and 2023 are presented, with the auditor expressing substantial doubt about going concern due to recurring losses, despite a $3.8 million cash balance post-IPO - The independent auditor's report contains an explanatory paragraph highlighting substantial doubt about the Company's ability to continue as a going concern[710] Balance Sheet Summary (As of December 31) | Metric | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Cash | $3,769,510 | $28,478 | | Total Assets | $6,202,409 | $148,592 | | Total Liabilities | $2,030,401 | $5,949,946 | | Total Stockholders' Equity (Deficit) | $4,172,008 | ($5,801,354) | Statement of Operations Summary (For the Year Ended December 31) | Metric | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Total Operating Expenses | $3,091,282 | $3,870,771 | | Net Loss | ($2,439,625) | ($4,783,689) | | Net Loss Per Share (Basic & Diluted) | ($0.08) | ($0.18) | - As of December 31, 2024, the company had federal and state net operating loss (NOL) carryforwards of $26 million and federal orphan drug tax credit carryforwards of approximately $1.06 million, for which a full valuation allowance has been recorded[840] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure This item is not applicable to the company - Not applicable[519] Controls and Procedures As of December 31, 2024, management concluded that disclosure controls and internal control over financial reporting were effective and adequate, with no material changes during the recent quarter - Management concluded that as of December 31, 2024, the company's disclosure controls and procedures were effective[520] - Based on an assessment using the COSO 2013 framework, management concluded that the company's internal control over financial reporting was adequate as of December 31, 2024[524] - No material changes to internal control over financial reporting occurred during the fourth quarter of 2024[526] Other Information No director or officer adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fourth quarter of 2024 - No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in the fourth quarter of 2024[527] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[528] Part III Directors, Executive Officers and Corporate Governance The company's Board comprises seven directors, with a majority independent, overseeing governance through Audit, Compensation, and Nominating committees, and has adopted key ethical and compensation policies - The Board of Directors consists of seven members, with four determined to be independent[564] - The positions of Chairman of the Board and Chief Executive Officer are combined and held by Christer Rosén[562] - The Board has established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee, each composed of independent directors[566][567][568] - A family relationship exists: Christer Rosén (CEO) is the father of Alexander Rosén (Chief Administrative Officer)[560] - The company has adopted a clawback policy in compliance with SEC and Nasdaq rules, allowing for the recovery of incentive-based compensation from executive officers in the event of an accounting restatement[574] Executive Compensation Executive compensation in 2024 primarily comprised base salaries, following significant 2023 equity awards in exchange for forgiven compensation, with non-employee directors receiving cash retainers and stock options 2024 Summary Compensation Table (Total Compensation) | Name and Principal Position | 2024 Total ($) | 2023 Total ($) | | :--- | :--- | :--- | | Christer Rosén, CEO | 154,076 | 1,437,367 | | Saleem Elmasri, CFO | 127,006 | 778,503 | | Marshall Hayward, CSO | 107,800 | 1,141,710 | | Alexander Rosén, CAO | 103,655 | 501,362 | | Alison Silva, President & CBO | 138,544 | 545,083 | - In 2023, NEOs agreed to forgive significant amounts of accrued compensation in exchange for stock options and restricted stock units[585][587][588] - Executive salaries were reduced in late 2023 to conserve cash and were adjusted to 105% of their original base salaries following the successful IPO[597][599][854] - Non-employee directors receive an annual cash retainer of $30,000 for board service, plus additional retainers for committee service, and an initial option grant to acquire 18,000 shares[657] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters As of March 12, 2025, executive officers and directors collectively beneficially owned 60.8% of common stock, with Christer Rosén holding 38.0%, and the 2023 Equity Incentive Plan serving as the primary vehicle for future grants - As of March 12, 2025, all executive officers and directors as a group beneficially owned approximately 60.8% of the company's common stock[668] Beneficial Ownership of Key Individuals (as of March 12, 2025) | Name | Percentage of Class | | :--- | :--- | | Christer Rosén (CEO) | 38.0% | | Marshall Hayward, Ph.D (CSO) | 11.0% | | Claes Wahlestedt, M.D., Ph.D. | 10.0% | | Shaun Brothers | 6.1% | - As of December 31, 2024, a total of 13,619,527 securities were issuable upon exercise of outstanding options, warrants, and rights, with 5,849,061 securities remaining available for future issuance[671] Certain Relationships and Related Transactions, and Director Independence The company engages in related-party transactions, including CEO loans and executive compensation forgiveness for equity, with the Board determining a majority of its directors are independent - The company's CEO has provided working capital loans since inception; the outstanding balance was $146,432 as of Dec 31, 2024[678] - In 2023, employees and board members forgave $4,189,626 in accrued compensation for equity awards, with further forgiveness in 2023 and 2024 for additional equity[682][683][685] - In April 2024, the CEO exchanged $266,667 of his related party notes as part of a complex amendment to a third-party senior secured note[680] - The Board has determined that four of its seven directors are independent, constituting a majority[688] Principal Accountant Fees and Services Total fees paid to independent auditor Assurance Dimensions were $98,300 in 2024 and $75,500 in 2023, primarily for audit and audit-related services, all pre-approved by the Audit Committee Accountant Fees | Fee Type | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Audit Fees | $84,000 | $70,000 | | Audit-Related Fees | $14,300 | $5,500 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | | Total | $98,300 | $75,500 | - All services provided by the independent registered public accounting firm were pre-approved by the Audit Committee[694] Part IV Exhibits and Financial Statement Schedules This section lists all documents filed with the Annual Report on Form 10-K, including financial statements, notes, and an exhibit index of key corporate and contractual agreements - This section contains the index to the company's financial statements and a list of all exhibits filed with the 10-K[695][697] - Key exhibits include corporate governance documents, employment agreements, the license agreement with Aquanova AG, the underwriting agreement for the IPO, and various service and financing agreements[701][702][705] Form 10-K Summary This item is not applicable to the company - Not applicable[704]