Virios Therapeutics(VIRI) - 2025 Q1 - Quarterly Report

Part I: Financial Information Item 1. Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2025, detailing a $10.9 million net loss, $97.0 million total assets, and financing activities that improved equity and Nasdaq compliance, despite going concern doubts Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Cash | $17,539,004 | $14,847,949 | | Total Assets | $96,984,688 | $94,308,246 | | Total Liabilities | $14,235,733 | $30,027,223 | | Total Stockholders' Equity (Deficit) | $7,086,931 | $(10,124,339) | Condensed Consolidated Statements of Operations and Comprehensive Loss Condensed Consolidated Statements of Operations (Unaudited) | Account | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Revenue | $0 | $0 | | Research and development | $2,436,998 | $343,717 | | General and administrative expenses | $1,992,928 | $970,384 | | Loss from operations | $(4,429,926) | $(1,314,101) | | Loss on debt conversion with related party | $(6,134,120) | $0 | | Net loss | $(10,924,952) | $(1,291,335) | | Net loss per common share, basic and diluted | $(8.45) | $(1.68) | Condensed Consolidated Statements of Changes in Series A Non-Voting Convertible Preferred Stock and Stockholders' Equity (Deficit) - Stockholders' equity (deficit) improved from a deficit of $(10.1) million at year-end 2024 to positive equity of $7.1 million at March 31, 2025, primarily driven by the conversion of debt into $25.0 million of Series A-1 Preferred Stock and $4.3 million in net proceeds from a common stock offering, which offset the $10.9 million net loss for the quarter[14] Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Unaudited) | Cash Flow Activity | Three Months Ended March 31, 2025 ($) | Three Months Ended March 31, 2024 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(4,682,554) | $(937,414) | | Net cash provided by financing activities | $7,372,378 | $0 | | Net increase (decrease) in cash | $2,689,824 | $(937,414) | | Cash, end of period | $17,539,004 | $2,379,532 | Notes to Condensed Consolidated Financial Statements These notes detail accounting policies, the company's pre-revenue biopharmaceutical nature, significant development risks, and substantial doubt about going concern, alongside the Pharmagesic acquisition and Q1 2025 financing activities crucial for Nasdaq compliance - The company is a pre-revenue, development-stage biopharmaceutical company focused on developing medicines for pain and fatigue-related disorders, with a pipeline including Halneuron® for pain and antiviral therapies IMC-1 and IMC-2[19] - Management has concluded there is substantial doubt about the Company's ability to operate as a going concern for at least 12 months from the financial statement issuance date, as current cash is insufficient to fund operations beyond Q1 2026[24] - In March 2025, the company converted $19.5 million in principal and $0.4 million in accrued interest from a related-party loan into 284.2638 shares of Series A-1 Preferred Stock, resulting in a $6.1 million loss on debt extinguishment[83][86] - In March 2025, the company raised approximately $4.25 million in net proceeds through a registered direct offering of 578,950 shares of common stock at $8.26 per share[23][110] - The company regained compliance with Nasdaq's minimum stockholders' equity requirement on April 8, 2025, following the debt conversion and equity offering[25][26][141] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and operational results, highlighting its pre-revenue biopharmaceutical status, increased R&D and G&A expenses, and liquidity challenges with $17.5 million cash funding operations only through Q1 2026, raising going concern doubts - The company's lead product candidate, Halneuron®, commenced its Phase 2b clinical trial (HALT-CINP-203) in Q1 2025 for chemotherapy-induced neuropathic pain, with an interim analysis expected in Q4 2025 and top-line data anticipated in the second half of 2026[129] Operating Expense Comparison (Q1 2025 vs. Q1 2024) | Expense Category | Q1 2025 ($) | Q1 2024 ($) | Change ($) | | :--- | :--- | :--- | :--- | | Research and Development | $2.4 million | $0.3 million | +$2.1 million | | General and Administrative | $2.0 million | $1.0 million | +$1.0 million | - The increase in R&D expenses was primarily due to $1.8 million in costs for the HALT-CINP-203 study, while the rise in G&A expenses was driven by $0.6 million in legal/professional fees related to the Combination and increased personnel costs[143][144] - As of March 31, 2025, the company had $17.5 million in cash, which is anticipated to fund operations only through the first quarter of 2026, raising substantial doubt about the company's ability to continue as a going concern[145][150] Item 3. Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the company is not required to provide disclosures on quantitative and qualitative market risk - This item is not required for smaller reporting companies[162] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[164] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, such controls[165] Part II: Other Information Item 1. Legal Proceedings The company reports no pending or ongoing material legal proceedings - The company does not currently have any pending or ongoing material litigation[167] Item 1A. Risk Factors This section refers readers to the detailed risk factors outlined in the company's 2024 Annual Report on Form 10-K - Readers are referred to the risk factors section of the 2024 Annual Report on Form 10-K for information on risks that could materially affect the business[168] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported[169] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None reported[170] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[171] Item 5. Other Information This section discloses no Rule 10b5-1 trading arrangement changes by directors or officers, and the board's ratification of a Series A Preferred Stock dividend payment on May 8, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[172] - On May 8, 2025, the board of directors ratified the payment of a dividend of 55.345 shares of Series A Preferred Stock to holders of Series A Preferred Stock[173] Item 6. Exhibits This section refers to the Exhibit Index, listing all documents filed as exhibits with this Quarterly Report on Form 10-Q - Refers to the Exhibit Index for a list of filed documents[174]