Citius Oncology, Inc.(CTOR) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for March 31, 2025, reveal a $14.4 million net loss and negative working capital, raising substantial doubt about the company's going concern Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2025, shows increased assets and liabilities, leading to a decrease in total stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Total Current Assets | $18,039 | $10,969 | | Total Assets | $91,439 | $84,369 | | Liabilities & Equity | | | | Total Current Liabilities | $49,740 | $32,700 | | Total Liabilities | $55,797 | $38,229 | | Total Stockholders' Equity | $35,643 | $46,140 | Condensed Consolidated Statements of Operations The company reported no revenue for the six months ended March 31, 2025, with net loss increasing to $14.4 million due to higher operating expenses Statement of Operations Summary (in thousands) | Metric | Six Months Ended Mar 31, 2025 | Six Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Revenues | $0 | $0 | | Total Operating Expenses | $13,866 | $9,275 | | Net Loss | $(14,395) | $(9,563) | | Net Loss Per Share | $(0.20) | $(0.14) | Condensed Consolidated Statements of Changes in Stockholders' Equity Total stockholders' equity decreased to $35.6 million at March 31, 2025, primarily due to the period's net loss - Total stockholders' equity declined to $35.6 million at March 31, 2025, from $46.1 million at September 30, 2024, primarily due to the period's net loss[18] Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities was zero for the six months ended March 31, 2025, with expenditures funded by the parent company - Net cash provided by operating activities for the six months ended March 31, 2025 was zero, with the cash balance remaining at $112[21] - The company's expenditures are paid by its parent, Citius Pharma, and reflected in the 'due to related party' account, explaining the lack of cash flow from operations[63] Notes to Condensed Consolidated Financial Statements Notes detail the company's focus on LYMPHIR, merger, accounting policies, going concern uncertainty, reliance on parent funding, license agreements, and manufacturing commitments - There is substantial doubt about the Company's ability to continue as a going concern, given its net loss of $14.4 million for the six months ended March 31, 2025, negative working capital of $31.7 million, and reliance on funding from Citius Pharma, which is only secured through May 2025[38] - Following FDA approval of LYMPHIR, milestone payments became due. As of March 31, 2025, a balance of $22.5 million is owed to Dr. Reddy's and $5.9 million is owed to Eisai, with a payment plan established for the latter[44][45] - The company has minimum purchase commitments of approximately $17.3 million for drug substance and $4.5 million for finished drug products for calendar years 2025 and 2026[58][59] - On April 7, 2025, the company increased its authorized shares of common stock from 100 million to 400 million[52] Management's Discussion and Analysis of Financial Condition and Results of Operations MD&A discusses LYMPHIR commercialization, increased net loss due to higher expenses, and critical liquidity challenges with parent funding expiring soon Results of Operations For the six months ended March 31, 2025, the company reported no revenue and a $14.4 million net loss, driven by increased R&D and G&A expenses Comparison of Operating Results (Six Months Ended March 31) | Account (in thousands) | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $4,404 | $2,497 | +$1,907 | | General and administrative | $5,565 | $2,903 | +$2,662 | | Stock-based compensation | $3,897 | $3,874 | +$23 | | Net loss | $(14,395) | $(9,563) | +$(4,832) | - The increase in R&D expenses was primarily related to costs for a drug substance batch needed for a pre-license inspection of the manufacturer[88] - The increase in G&A expenses was driven by pre-commercial and commercial launch activities for LYMPHIR, including market research, marketing, and distribution[89] Liquidity and Capital Resources The company faces a severe liquidity crisis with minimal cash, negative working capital, and reliance on parent funding expiring in May 2025 - As of March 31, 2025, the company had $112 in cash, an accumulated deficit of $53.7 million, and negative working capital of approximately $31.7 million[93] - Funding from parent company Citius Pharma is only expected to sustain operations through May 2025, creating an immediate need to raise additional capital[96] - Significant financial obligations for 2025 include a $22.5 million milestone payment to Dr. Reddy's, a structured payment plan to Eisai, and minimum purchase commitments of $11.9 million for drug substance and $2.9 million for finished drug products[99] Quantitative and Qualitative Disclosures about Market Risk The company states that this section is not applicable, indicating no significant exposure to market risks at its current stage - The company has determined that disclosures about market risk are not applicable[102] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[104] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[105] PART II. OTHER INFORMATION Legal Proceedings The company reported no legal proceedings to disclose for the period - The company reported no legal proceedings[108] Risk Factors Substantial doubt exists about the company's going concern due to losses and limited parent funding, alongside a recent Nasdaq non-compliance notice - The independent registered public accounting firm's report includes an explanatory paragraph stating there is substantial doubt about the company's ability to continue as a going concern[110] - The company expects to have sufficient funds to continue operations only through May 2025 and will need to raise additional capital to support operations beyond that date[111] - On April 23, 2025, the company received a non-compliance notice from Nasdaq because its stock price closed below $1.00 for 30 consecutive business days. It has until October 20, 2025, to regain compliance[65] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - The company reported no unregistered sales of equity securities[112] Defaults Upon Senior Securities The company reported no defaults upon senior securities - The company reported no defaults upon senior securities[113] Mine Safety Disclosures This section is not applicable to the company's business operations - The company states that mine safety disclosures are not applicable[114] Other Information No directors or officers adopted or terminated any plan for the purchase or sale of company securities during the quarter - During the quarter ended March 31, 2025, none of the company's directors or officers adopted or terminated any plan for the purchase or sale of the company's securities[115] Exhibits This section lists exhibits filed with the 10-Q report, including stock amendment and officer certifications - Key exhibits filed with this report include the Certificate of Amendment to the Certificate of Incorporation, and certifications from the Principal Executive and Financial Officers[116]