OS Therapies Incorporated(OSTX) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section details the company's unaudited financial statements, management's financial analysis, market risk, and internal controls Item 1. Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, operations, equity, and cash flows, highlighting increased net loss, asset growth, and liquidity concerns Balance Sheets The balance sheets show significant asset growth driven by patent acquisition and a shift from stockholders' deficit to positive equity Balance Sheet Summary (unaudited) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash | $2,802,013 | $5,533,527 | | Total Current Assets | $3,553,976 | $5,533,527 | | Patents (Net) | $6,752,619 | $0 | | Total Assets | $10,310,475 | $5,538,797 | | Liabilities & Equity | | | | Total Current Liabilities | $3,458,034 | $4,627,310 | | Total Liabilities | $3,558,034 | $4,727,310 | | Total Stockholders' Equity (Deficit) | $4,943,647 | ($3,266,538) | - Total assets increased significantly from $5.5 million to $10.3 million, primarily driven by the acquisition of patents valued at $6.8 million[9] - The company's financial position improved from a stockholders' deficit of ($3.3 million) at the end of 2024 to a positive stockholders' equity of $4.9 million as of June 30, 2025[9] Statements of Operations The statements of operations reveal a substantial increase in net loss due to higher research and development and general and administrative expenses Statements of Operations Summary (unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Research & Development | $2,499,498 | $396,567 | $3,808,653 | $758,376 | | General & Administrative | $2,339,230 | $383,233 | $6,029,561 | $651,656 | | Loss from Operations | ($4,838,728) | ($779,800) | ($9,838,214) | ($1,410,032) | | Net Loss | ($4,536,622) | ($1,557,480) | ($8,413,481) | ($3,016,472) | | Basic & Diluted Loss per Share | ($0.19) | ($0.26) | ($0.35) | ($0.52) | - Net loss for the six months ended June 30, 2025, increased to $8.4 million from $3.0 million in the same period of 2024, driven by a substantial rise in both Research & Development and General & Administrative expenses[11] Statements of Stockholders' Equity (Deficit) This section details the increase in common shares outstanding and the drivers of the shift to positive stockholders' equity, including conversions and stock issuances - The number of common shares issued and outstanding increased from 20.9 million at the end of 2024 to 29.7 million by June 30, 2025[14] - The increase in stockholders' equity during the first half of 2025 was driven by several non-cash and financing activities, including the conversion of preferred shares and warrants to common stock, and issuance of common stock for a patent purchase and services[14] Statements of Cash Flows The cash flow statements show a significant increase in cash used in operating activities, partially offset by cash provided from financing activities Cash Flow Summary (unaudited) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($5,802,138) | ($1,522,920) | | Net cash used in investing activities | ($466,423) | $0 | | Net cash provided by financing activities | $3,537,047 | $1,578,863 | | Net change in cash | ($2,731,514) | $55,943 | | Cash – end of period | $2,802,013 | $94,925 | - Cash used in operating activities significantly increased to $5.8 million in the first six months of 2025, compared to $1.5 million in the prior year period, reflecting the higher net loss[17] - Financing activities provided $3.5 million in cash, primarily from the sale of preferred stock and warrant conversions, which partially offset the cash used in operations and investing[17] Notes to the Financial Statements These notes detail critical accounting policies, significant transactions like the HER2 asset acquisition, debt conversions, and the company's going concern assessment - The company's financial statements are prepared on a going concern basis, but its history of net losses and negative operating cash flows raises substantial doubt about its ability to continue as a going concern. As of June 30, 2025, the company had cash of $2.8 million and is dependent on raising additional capital[22][23] - On April 9, 2025, the company acquired HER2 Assets from Ayala Pharmaceuticals for a total fair value of $6,864,438, consisting of cash and common stock. This is accounted for as an asset acquisition[33][34] - All convertible notes were converted into common stock on August 2, 2024, upon the consummation of the company's IPO, resulting in a zero balance for convertible debt as of June 30, 2025[75][80] - Subsequent to the quarter end, the company issued an aggregate of 1,621,060 shares of common stock upon the exercise of Series A Warrants and filed a registration statement on Form S-3 for a potential offering of up to $100 million in securities[189][190] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical-stage biopharmaceutical focus, recent financing activities, significant increases in operating expenses leading to higher net loss, and ongoing liquidity challenges requiring additional capital - The company is a clinical-stage biopharmaceutical firm focused on treatments for Osteosarcoma (OS), with its lead product candidate being OST-HER2. A clinical study for OST-HER2 achieved full enrollment in October 2023, and the company plans to submit a Biologics License Application (BLA) following an anticipated End of Phase 2 meeting with the FDA in Q3 2025[196] - Recent financing activities include a PIPE financing in late 2024/early 2025 raising gross proceeds of ~$7.1 million and a warrant exercise inducement offer completed in July 2025 raising gross proceeds of ~$4.2 million[198][207][210] - On April 9, 2025, the company acquired Lm-based immune-oncology programs and related intellectual property assets (the "HER2 Assets") from Ayala Pharmaceuticals, Inc[203] Comparison of Operating Results (Six Months Ended June 30) | Expense Category | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Research & Development | ~$3.8 million | ~$0.8 million | +$3.0 million | | General & Administrative | ~$6.0 million | ~$0.7 million | +$5.3 million | | Net Loss | ~$8.4 million | ~$3.0 million | +$5.4 million | - As of June 30, 2025, the company had approximately $2.8 million in cash. Management believes this, along with proceeds from recent financing, will fund operations and capital requirements for the next 9 to 12 months[241] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company, as a smaller reporting company, has indicated that this section is not applicable and has not provided any disclosures regarding market risk - This section is marked as 'Not applicable', which is common for smaller reporting companies[279] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were ineffective as of June 30, 2025, due to limited personnel and insufficient policies, with no material changes to internal controls during the quarter - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were not effective[281] - The identified weakness is a lack of segregation of duties due to limited personnel and insufficient written policies for accounting, IT, and financial reporting[281] PART II. OTHER INFORMATION This section provides additional information including legal proceedings, updated risk factors, unregistered sales of equity securities, and a list of exhibits Item 1. Legal Proceedings The company reports no pending legal proceedings, though an arbitration claim from a former investment advisor regarding IPO compensation is disclosed in Note 6 - The company is not currently a party to any pending legal proceedings[284] - Note 6 to the financial statements discloses an arbitration claim brought by a former investment advisor regarding underwriter compensation for the IPO, which the company believes is meritless[159][284] Item 1A. Risk Factors This section references existing risk factors and introduces a new one concerning the potential adverse impact on common stock price from the issuance and resale of shares related to a recent warrant inducement offering - A new risk factor has been added concerning the potential for the market price of common stock to be adversely affected by the issuance of 3,764,995 shares in connection with the recent warrant inducement offering and the potential resale of these shares[286] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q2 2025, the company issued 10,000 shares of common stock to an advisor for services, relying on a Section 4(a)(2) Securities Act registration exemption - In Q2 2025, the company issued 10,000 shares of common stock to an advisor for services, exempt from registration under Section 4(a)(2) of the Securities Act[288] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including warrant and inducement offer forms, and required CEO/CFO certifications - The report includes several exhibits, notably the Form of Warrant and Form of Inducement Offer Letter from the June 2025 financing activities, and CEO/CFO certifications as required by the Sarbanes-Oxley Act[289]