GRI Bio(GRI) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements The company's Q1 2025 financial statements show decreased cash and assets, increased liabilities, a higher net loss, and subsequent capital raising Consolidated Balance Sheets As of March 31, 2025, the company's cash, total assets, and stockholders' equity decreased, while total liabilities increased Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $3,281 | $5,028 | | Total current assets | $3,930 | $5,615 | | Total assets | $4,042 | $5,739 | | Liabilities & Equity | | | | Total current liabilities | $2,779 | $1,636 | | Total liabilities | $2,837 | $1,707 | | Total stockholders' equity | $1,205 | $4,032 | Consolidated Statements of Operations For Q1 2025, the company reported a net loss of $3.0 million, up from $1.9 million in Q1 2024, driven by increased operating expenses Quarterly Operating Results (in thousands, except per share data) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Research and development | $1,640 | $933 | | General and administrative | $1,411 | $962 | | Total operating expenses | $3,051 | $1,895 | | Loss from operations | ($3,051) | ($1,895) | | Net loss | ($3,046) | ($1,887) | | Net loss per share, basic and diluted | ($5.80) | ($101.05) | Consolidated Statements of Cash Flows In Q1 2025, net cash used in operations decreased, but financing activities shifted to usage, leading to a net cash decrease Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Cash used in operating activities | ($1,736) | ($2,203) | | Cash (used in) provided by financing activities | ($11) | $4,486 | | Net (decrease) increase in cash | ($1,747) | $2,283 | | Cash and cash equivalents at end of period | $3,281 | $4,091 | Notes to Unaudited Interim Consolidated Financial Statements Notes detail the company's biopharmaceutical focus, significant going concern doubt, and recent financing activities including an April 2025 public offering - The company is a clinical-stage biopharmaceutical firm developing therapies for inflammatory, fibrotic, and autoimmune disorders. Its lead product, GRI-0621, targets idiopathic pulmonary fibrosis (IPF), while GRI-0803 targets autoimmune disorders like lupus and MS[21] - There is substantial doubt about the company's ability to continue as a going concern. Existing cash of $3.3 million (as of March 31, 2025) is projected to fund operations only through the third quarter of 2025, necessitating additional capital raising[23][28][29] - In April 2025, the company executed a public offering, raising gross proceeds of $5.0 million through the sale of common stock, pre-funded warrants, and several series of common stock warrants[65] - The company has engaged in multiple financing activities, including a February 2024 offering (net proceeds $4.4M), a May 2024 At-The-Market (ATM) offering (gross proceeds $3.6M as of Q1 2025), a June 2024 offering (net proceeds $3.2M), and an October 2024 warrant repricing[24][25][26] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses GRI-0621 development, increased Q1 2025 net loss from higher expenses, and critical funding needs due to going concern doubt Overview and Recent Developments The company is advancing GRI-0621 for IPF, with GRI-0803 on hold; recent developments include a reverse stock split and a $5.0 million capital raise - The company is advancing its lead product, GRI-0621, in a Phase 2a study for IPF, with interim data anticipated in Q2 2025 and topline results in Q3 2025[72] - Development of the second product candidate, GRI-0803 for lupus and MS, is on hold pending additional funding, with plans to file an IND in 2025 if capital is secured[73] - A 1-for-17 reverse stock split was effected in February 2025, and the company regained Nasdaq compliance in March 2025[74][79] - In April 2025, the company entered into a securities purchase agreement for gross proceeds of $5.0 million[75] Results of Operations Q1 2025 saw R&D expenses increase by $0.7 million and G&A expenses by $0.4 million, leading to a higher net loss of $3.0 million Comparison of Operating Results (in thousands) | Expense Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $1,640 | $933 | +$707 | | General and administrative | $1,411 | $962 | +$449 | | Net loss | ($3,046) | ($1,887) | +($1,159) | - The $0.7 million increase in R&D expenses was mainly due to increased costs for the GRI-0621 registration development program[87] - The $0.4 million increase in G&A expenses was primarily due to a $0.3 million rise in personnel expenses (including stock compensation) and a $0.2 million increase in professional fees[88] Liquidity and Capital Resources The company faces significant liquidity challenges with limited cash, an accumulated deficit, and a critical need for additional funding, raising substantial doubt about its going concern ability - The company had $3.3 million in cash and an accumulated deficit of $42.8 million as of March 31, 2025[91][97] - Existing cash and cash equivalents are expected to fund operating expenses and capital requirements only through the third quarter of 2025[98] - The company will need to obtain substantial additional funding to continue operations. Failure to secure financing may force it to delay or discontinue development programs or cease operations entirely[99][100] Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash used in Operating activities | ($1,736) | ($2,203) | | Net cash (used in) provided by Financing activities | ($11) | $4,486 | Quantitative and Qualitative Disclosures About Market Risk This disclosure is not applicable as the company qualifies as a smaller reporting company - Disclosure is not required as the company is a smaller reporting company[105] Controls and Procedures Management concluded that disclosure controls were ineffective due to a material weakness in accounting for a warrant repricing, with a remediation plan underway - Management concluded that disclosure controls and procedures were not effective as of March 31, 2025[108] - A material weakness was identified related to the inaccurate accounting for a warrant repricing transaction, specifically the computation of the non-cash deemed dividend[109] - A remediation plan has been implemented, involving the engagement of third-party experts and refinement of internal communication and documentation processes for complex transactions[110][112] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings, nor is it aware of any pending or threatened actions - The company is not currently involved in any material legal proceedings[115] Risk Factors No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes from the risk factors disclosed in the Annual Report[116] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or issuer purchases were reported during the period - None reported[117] Other Information No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter - No directors or officers adopted or terminated Rule 10b5-1 trading arrangements during the quarter[120] Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications and documents incorporated by reference