Anebulo Pharmaceuticals(ANEB) - 2025 Q4 - Annual Report

Special Note Regarding Forward-Looking Statements This section cautions readers about forward-looking statements, which involve substantial risks and uncertainties that could cause actual results to differ materially - This Annual Report contains forward-looking statements subject to 'safe harbor' provisions, which involve substantial risks and uncertainties that could cause actual results to differ materially[12] - Key areas of forward-looking statements include capital requirements, regulatory submissions, clinical trial timing and results, intellectual property, commercial potential, and the impact of economic/political events[15] - Readers are cautioned not to place undue reliance on these statements and to review the 'Risk Factors' section, as the company undertakes no obligation to update or revise them[14] Summary of Risk Factors The business faces numerous risks and uncertainties across various categories, including financial, intellectual property, product development, and regulatory aspects - The business is subject to numerous risks and uncertainties, categorized into several key areas[17] - Risk categories include those related to business, financial condition, capital requirements, intellectual property, product development, regulatory approval, manufacturing, commercialization, reliance on third parties, government regulation, and common stock ownership[17][18][19] - Specific risks highlighted include no revenue generation, future losses, need for additional capital, reliance on key personnel, challenges in obtaining and maintaining patent protection, and delays in clinical trials or regulatory approvals for selonabant[18] Part I This part provides a comprehensive overview of Anebulo Pharmaceuticals' business, including its product candidate, market, strategy, and regulatory environment Item 1. Business Anebulo Pharmaceuticals is a clinical-stage company developing selonabant, a CB1 antagonist, to treat cannabis-induced toxicity, prioritizing an IV formulation for pediatric patients Overview Anebulo Pharmaceuticals is a clinical-stage company developing selonabant to rapidly reverse cannabis-induced toxicity, prioritizing an IV formulation for pediatric patients - Anebulo Pharmaceuticals is a clinical-stage company developing selonabant (formerly ANEB-001) for cannabis-induced toxicity, including ACI in adults and unintentional cannabis poisoning in children[22] - There are no approved medical treatments specifically for cannabis-induced toxicity, and selonabant is positioned as a potential first-in-class treatment[22] - The company is prioritizing the development of an intravenous (IV) selonabant formulation for pediatric patients, anticipating a faster timeline to approval compared to the adult oral product, and has initiated a SAD study in healthy adults[26][27] Our Lead Product Candidate Selonabant, a potent CB1 receptor antagonist, is Anebulo's lead product candidate, available in oral and IV formulations, protected by multiple patents - Selonabant is a potent, small molecule antagonist of the cannabinoid receptor type-1 (CB1), the primary receptor for cannabinoids' psychotropic effects[28] - It is orally bioavailable, rapidly absorbed, and has also been formulated for intravenous treatment, with both forms designed to rapidly reverse cannabis toxicity symptoms[28] - The company's proprietary position is protected by three issued US patents and rights to six additional patent applications, two pending PCT applications, and other international patent applications[28] Our Market Opportunity The market for cannabis toxicity treatments is growing significantly in the U.S. due to increasing legalization, with edibles and synthetic cannabinoids driving emergency visits - Cannabis-induced toxicity is a widespread health issue in the U.S., with emergency department visits increasing from an estimated 1.1 million in 2014 to approximately 1.8 million in 2021[24][32] - Edible products, often mistaken for regular consumer items, are a major cause of THC-related emergency room visits, especially for children, due to their high potency and delayed onset of effects[23][37] - Intoxication from synthetic cannabinoids represents a high unmet medical need, as synthetics can be up to 85 times more potent than THC and cause more severe and longer-lasting negative effects[39] Our Growth Strategy Anebulo's growth strategy focuses on developing and commercializing selonabant in the U.S., prioritizing the IV formulation for pediatric use and leveraging outsourcing for capital efficiency - The company's primary goal is to develop and commercialize selonabant in the U.S., prioritizing the IV formulation for pediatric unintentional cannabis poisoning due to its potential for a faster approval timeline[40] - Strategic principles include capital efficiency through outsourcing R&D, manufacturing, and data management, and exploring collaborations for commercialization[46] - The strategy also involves introducing promising product candidate extensions, such as the developed IV selonabant formulation and investigating additional routes of administration[46] Our Clinical Trials and Milestones Anebulo is developing selonabant for acute cannabis toxicity, with positive Phase 2 data showing rapid symptom reduction and ongoing studies for pediatric applications Preclinical Data - Preclinical characterization of selonabant by Vernalis (2003-2006) showed high affinity (0.55 nM) and >1000x selectivity for the human CB1 receptor over other receptors[42] - Oral selonabant (30 mg/kg) significantly reversed THC-induced hypolocomotion in mice after 30 minutes, demonstrating effective central CB1 antagonism[42] Historical Clinical Studies - Two Phase 1 studies for obesity (2006-2007) and a third 4-week daily dosing study were conducted by Vernalis, showing selonabant was well tolerated at doses between 1 mg and 150 mg[43][49] - Pharmacokinetic measurements showed rapid absorption and blood concentrations sufficient to block the CB1 receptor, with statistically significant decreases in body weight observed[47][50] - No serious adverse events were reported; the most common adverse event was gastrointestinal discomfort, also seen in placebo groups[44][47][52] Anebulo Clinical Studies - The Netherlands Trial (Phase 2 THC Challenge Study) in healthy volunteers (134 subjects in Parts A and B, 20 in Part C) evaluated safety, tolerability, pharmacokinetics, and effectiveness of oral selonabant[54][55] - Part A showed significant, robust, and sustained reduction in 'feeling high' (p < 0.0001) and improvement in alertness (p < 0.01) with 50 or 100 mg selonabant co-administered with THC[56] - Part B demonstrated that a single 10 mg oral dose of selonabant, administered 1 hour after THC challenge (up to 30 mg), rapidly and significantly reversed psychotropic effects, including reduced 'feeling high' (p=<0.0001), improved alertness (p=0.0042), and reduced body sway (p=0.0196)[60] Vernalis License Agreement Anebulo holds an exclusive worldwide license for selonabant from Vernalis, involving milestone payments and royalties, with Anebulo responsible for development and commercialization - Anebulo entered an exclusive worldwide royalty-bearing license agreement with Vernalis Development Limited on May 26, 2020, for selonabant[66] Vernalis License Agreement Payments | Payment Type | Amount ($) | | :------------- | :----- | | Signature Fee | $0.2 million | | Development Milestones (potential) | Up to $29.9 million | | Development Milestones (paid) | $0.4 million | | Sales Milestones (potential) | Up to $35.0 million | | Royalties | Low to mid-single digit on net sales | - Anebulo has sole discretion and responsibility for selonabant's development and commercialization, including regulatory approvals, and is obligated to use commercially reasonable efforts in the U.S. and certain European countries[67] Competition Anebulo faces intense competition from larger biotechnology and pharmaceutical companies developing treatments for cannabis use disorders and acute overdose - The clinical biotechnology industry is highly competitive, with Anebulo facing larger and better-funded competitors including other biotechnology and pharmaceutical companies, academic institutions, and research institutions[70] - Potential current competitors include Aelis Farma (developing a pregnenolone derivative for cannabis use disorders) and Indivior PLC (developing drinabant injection for acute cannabis overdose)[70][228] - The company's ability to keep pace with technological developments and other market factors is a significant competitive challenge[70] Research and Development Anebulo incurs substantial R&D expenditures for selonabant's preclinical and clinical development, with expenses increasing to $4.3 million in FY2025 - Anebulo incurs substantial expenditures for proprietary R&D of selonabant, including preclinical testing and clinical trials, with efforts advanced by its R&D team and a third-party CRO[72] Research and Development Expenses | Fiscal Year Ended June 30, | Amount (approx.) | | :------------------------- | :--------------- | | 2025 | $4.3 million | | 2024 | $3.5 million | Regulation Anebulo operates in a highly regulated industry, with selonabant subject to extensive governmental regulations covering all aspects from research to commercialization and post-approval oversight Government Regulation and Product Approval - The pharmaceutical industry is extensively regulated by governmental authorities in the U.S. and other countries, covering all aspects from research and testing to marketing and sales[73] - Selonabant is subject to FDA regulation under the FDCA, requiring rigorous preclinical and clinical testing, and substantial time and financial resources for approval[74] - Failure to comply with regulatory processes can lead to delays, adverse commercialization effects, and sanctions such as refusal of approval, product recalls, or fines[74][75] U.S. Review and Approval Processes - After successful clinical testing, an NDA is submitted to the FDA, requiring substantial user fees and potentially a Risk Evaluation and Mitigation Strategy (REMS)[83][84][85] - The FDA conducts an in-depth review, may consult advisory committees, and inspect manufacturing facilities for CGMP compliance before issuing an approval or complete response letter[86][87][90] - Post-approval, products are subject to ongoing FDA oversight, including reporting, record-keeping, and compliance with CGMP, with potential sanctions for non-compliance[93][94][99] Pharmaceutical Coverage, Pricing and Reimbursement - Commercial sales of pharmaceutical products depend on third-party payor coverage and reimbursement, which is highly uncertain and varies widely[100][101] - Payors may limit coverage to specific formularies, impose restrictions, or challenge product prices and cost-effectiveness, potentially requiring expensive pharmacoeconomic studies[102] - Federal and state governments are increasingly implementing cost containment programs, which could limit or exclude coverage for Anebulo's products[103][104] Current Legislation - Anebulo's business arrangements are subject to federal and state healthcare fraud and abuse laws, including the Anti-Kickback Statute and False Claims Act, which broadly regulate interactions with healthcare professionals and payors[105][106] - Compliance with these laws involves substantial ongoing costs, and violations could lead to significant penalties, including civil, criminal, and administrative sanctions, and exclusion from government healthcare programs[107] - Other relevant laws include the FDCA (prohibiting adulteration/misbranding), HIPAA (privacy/security of health information), and the Physician Payments Sunshine Act (reporting payments to healthcare professionals)[106] Healthcare Reform - The Affordable Care Act (ACA) introduced significant healthcare reform provisions, including annual fees on drug manufacturers, changes to Medicaid rebates, and a Medicare Part D discount program[109] - The Inflation Reduction Act of 2022 (IRA) further impacts the pharmaceutical industry by directing HHS to negotiate drug prices under Medicare and imposing rebates for price increases exceeding inflation[110][112] - Future legislative changes, including potential new models from the CMS Innovation Center and the Biden administration's initiative on march-in rights, could limit government payments for healthcare products and reduce profitability[112] Data Privacy - Anebulo's data processing activities, including sensitive information from clinical trials, are subject to stringent and evolving U.S. and foreign data privacy and security laws (e.g., HIPAA, CCPA, GDPR)[113][114][116] - Non-compliance can lead to significant consequences, including regulatory investigations, litigation (including class actions), substantial fines (e.g., up to 20 million Euros or 4% of global revenue under GDPR), and reputational harm[116][122][123] - Cross-border data transfer restrictions, particularly from Europe to the U.S., pose significant challenges and risks, potentially leading to operational disruptions or relocation expenses[119] Environmental, Health, and Safety Regulation - The company is subject to federal, state, and local EHS laws and regulations concerning safe working conditions, environmental protection, and handling of hazardous materials and medical waste[124] - Compliance requires licenses and permits, and failure to comply could result in substantial fines, permit revocation, or operational limitations[124] - EHS laws are complex and frequently change, making future compliance costs and impacts uncertain[124] Protection of Intellectual Property Anebulo protects its intellectual property through patents, regulatory exclusivity, a license agreement, trademarks, trade secrets, and confidentiality agreements - Anebulo protects its intellectual property through patents, regulatory exclusivity, a license agreement, trademarks, trade secrets, and confidentiality agreements[126][127][128][129][131] - The company holds three issued U.S. patents for selonabant, covering formulations and methods for treating acute cannabinoid overdose (through 2040) and crystalline forms of the CB1 modulator (through 2042)[126] - Regulatory exclusivity options include five years for New Chemical Entities (NCE), seven years for Orphan Drug designation, and a six-month extension for Pediatric Drug designation[127] Employees and Human Capital Resources Anebulo maintains a small team of employees and consultants, focusing on attracting and retaining talent through competitive compensation and benefits - As of June 30, 2025, Anebulo had two full-time and one part-time employee, with additional outside consultants for scientific R&D[132] - Human capital objectives include identifying, recruiting, retaining, incentivizing, and integrating employees through competitive pay, company-paid benefits, and long-term incentives like stock-based and cash bonus awards[132] Implications of Being an Emerging Growth Company and a Smaller Reporting Company Anebulo benefits from reduced SEC disclosure requirements as an emerging growth and smaller reporting company, potentially affecting financial statement comparability - Anebulo qualifies as an 'emerging growth company' and 'smaller reporting company,' enabling it to use reduced disclosure obligations[133][135] - Exemptions include presenting only two years of audited financial statements, reduced executive compensation disclosures, and delaying adoption of new accounting standards[133] - The election to use extended transition periods for accounting standards may make financial statements less comparable to other public companies, potentially affecting investor attractiveness[133][134] Corporate Information Anebulo Pharmaceuticals, Inc. was incorporated in Delaware in April 2020, with its principal executive offices located in Lakeway, Texas - Anebulo Pharmaceuticals, Inc. was incorporated in Delaware in April 2020[136] - The principal executive offices are located at 1017 Ranch Road 620 South, Suite 107, Lakeway, Texas 78734[136] Available Information Anebulo provides public access to its SEC filings, including Annual and Quarterly Reports, free of charge on its investor relations website - Anebulo's website (www.anebulo.com) provides free access to its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments[137] - All electronic filings are also available on the SEC's website (http://www.sec.gov)[137](index=137&type=chunk) Item 1A. Risk Factors This section details significant risks and uncertainties that could materially affect Anebulo's business, financial condition, operations, and future growth Risks Related to our Business, Financial Condition and Capital Requirements Anebulo faces risks related to its lack of revenue, accumulated deficit, need for additional capital, and reliance on key personnel for future success - Anebulo has not generated revenue since inception, has an accumulated deficit of $73.9 million as of June 30, 2025, and expects to incur future losses, potentially never achieving profitability[140] - The company will need to raise additional capital in the future, which may not be available on acceptable terms or could cause significant dilution to existing stockholders[144][146] - Success is highly dependent on the continued service of its Founder and CEO, Joseph F. Lawler and Richard Anthony Cunningham, and the ability to attract and retain other key personnel[150] Risks Related to Our Intellectual Property Commercial success depends on robust patent protection for selonabant, with risks including patent challenges, lack of exclusivity, and compliance with license agreements - Commercial success depends on obtaining and maintaining broad patent protection for selonabant, but patent applications may not issue, or issued patents may be challenged, narrowed, or invalidated[153][156][159][160] - Failure to obtain patent term extension and data exclusivity for selonabant could materially harm the business by allowing competitors to enter the market sooner[167][168] - Reliance on the Vernalis license agreement means failure to comply with obligations or disruptions in the relationship could lead to loss of intellectual property rights critical to selonabant's development[170][171][172] Risks Related to Product Development, Regulatory Approval, Manufacturing and Commercialization Anebulo faces risks from clinical trial delays, failure to obtain regulatory approvals, manufacturing challenges, and uncertain market acceptance for selonabant - Delays or termination of clinical trials for selonabant, which are expensive and unpredictable, could adversely affect the business by increasing costs, shortening patent protection, and allowing competitors to market products first[188] - Failure to obtain regulatory approvals for selonabant will prevent commercialization and limit revenue generation, as success in early trials does not guarantee later success or approval[190][191] - Even with regulatory approval, successful commercialization depends on market acceptance by physicians, patients, and payors, which is influenced by factors like clinical safety, efficacy, pricing, and competition[196][197] Risks Related to Our Reliance on Third Parties Anebulo's reliance on third parties for R&D, manufacturing, and collaborations introduces risks of delays, increased costs, and loss of critical intellectual property rights - Anebulo depends on third parties (CROs, CMOs) for preclinical testing, clinical trials, and manufacturing, which reduces control and can lead to delays, increased costs, or rejection of data if they fail to perform[233][234] - Complete reliance on third parties for selonabant manufacturing means commercialization could be halted or delayed if manufacturers fail to obtain/maintain FDA approval, provide sufficient quantities, or meet quality/price standards[237][239] - Reliance on collaborations, including the Vernalis license, carries risks such as termination rights, reduced payments, and loss of control, which could delay product development and reduce profitability[246][248][251] Risks Related to Government Regulation of our Industry Legislative and regulatory reforms, including healthcare and FDA approval processes, pose significant risks to Anebulo's product profitability and market access - Legislative and regulatory reforms in healthcare, such as the ACA and IRA, can significantly impact Anebulo's ability to sell products profitably, affecting pricing, coverage, and compliance costs[254][255][258] - Clinical trials conducted outside the U.S. and not under an IND may not be accepted by the FDA, potentially requiring additional costly and time-consuming trials[260] - Increased scrutiny by the U.S. Congress of the FDA's approval process could delay or prevent marketing approval and impose more stringent product labeling and post-marketing requirements[254] Risks Related to Ownership of Our Common Stock Risks include potential stock value decrease from a reverse stock split and delisting, volatile trading prices, and significant control by principal stockholders - Anebulo intends to seek stockholder approval for a reverse stock split as part of a plan to go private, delist from Nasdaq, and deregister with the SEC, which would significantly reduce public information and liquidity, potentially decreasing stock value[262][263] - The trading price and volume of common stock are volatile due to various factors, including operational results, analyst expectations, and general economic conditions, potentially leading to investment losses[264][265] - Principal stockholders and management own a substantial majority of the stock, enabling them to exert significant control over stockholder approval matters, potentially discouraging acquisition proposals[267] General Risk Factors General risks include ineffective internal controls, increased public company costs, and evolving data privacy and security obligations with potential for significant penalties - Failure to establish and maintain effective internal control over financial reporting could harm operating results and business operations, leading to inaccurate financial statements and potential sanctions[277][278] - Operating as a public company incurs significantly increased costs and requires substantial management time for compliance with SEC and Nasdaq requirements, diverting resources from business management[279] - The company is subject to stringent and evolving data privacy and security obligations (e.g., HIPAA, GDPR, CCPA), with actual or perceived failures to comply potentially leading to regulatory actions, litigation, fines, and business disruptions[297][298][299] Item 1B. Unresolved Staff Comments Anebulo Pharmaceuticals, Inc. has no unresolved staff comments from the SEC - There are no unresolved staff comments[321] Item 1C. Cybersecurity Anebulo Pharmaceuticals manages cybersecurity risks through a structured strategy and governance framework. Management identifies, assesses, and manages threats to sensitive data and IT systems, relying on third-party vendor diligence and threat intelligence. The Audit Committee oversees cybersecurity risks, receiving annual briefings and updates on material incidents. As of the report date, no material cybersecurity incidents have occurred Risk Management Strategy - Anebulo collects, processes, transmits, and stores sensitive data, including intellectual property and personal data, relying on third-party service providers like CROs and cloud vendors[322][323] - The company's risk management strategy includes vendor diligence, ongoing monitoring (e.g., SOC-1 reports), and leveraging threat intelligence from governmental, public, or private sources[323] - Processes are in place to identify, assess, and manage material cybersecurity risks, including internal/external threats to data security, confidentiality, integrity, and availability[324] Governance - Management is responsible for day-to-day cybersecurity risk management, while the board of directors, specifically the audit committee, provides oversight[325] - The audit committee is briefed on cybersecurity risks at least annually and after any material incidents, with periodic updates provided to the full board[325] - As of the report date, Anebulo has not experienced a cybersecurity incident with a material effect on its business strategy, operations, or financial condition[326] Item 2. Properties Anebulo Pharmaceuticals operates from a principal executive office in Lakeway, Texas, under a sublease with JFL Capital Management LLC, a related party. The monthly rent is approximately $400, and the company believes the current space is adequate for its present and near-term operations - Anebulo manages its business from a principal executive office in Lakeway, Texas, leased under a sublease with JFL Capital Management LLC, a company controlled by its founder[327] - The company pays approximately $400 per month in rent and considers its current office space adequate for present and near-term expansion[327] Item 3. Legal Proceedings Anebulo Pharmaceuticals is not currently a party to any material legal proceedings. While litigation can arise in the ordinary course of business, management believes no pending claims would have a material adverse effect on its financial condition or results of operations - Anebulo is not currently a party to any material legal proceedings[329] - Management believes no pending claims would have a material adverse effect on the company's results of operations or financial condition[329] Item 4. Mine Safety Disclosures This item is not applicable to Anebulo Pharmaceuticals, Inc - This item is not applicable[330] Part II This part covers Anebulo's market for common equity, related stockholder matters, management's discussion and analysis, and financial statements Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Anebulo's common stock trades on the Nasdaq Capital Market under 'ANEB'. As of September 25, 2025, there were approximately 15 record holders. The company has not paid cash dividends since inception and does not anticipate doing so in the foreseeable future, intending to retain earnings for business operations and expansion. No issuer purchases of equity securities or unregistered sales occurred Market Information - Anebulo's common stock is traded on the Nasdaq Capital Market under the symbol 'ANEB'[331] Common Stock Closing Price | Date | Closing Price | | :--- | :------------ | | September 26, 2025 | $2.40 per share | Holders of Record - As of September 25, 2025, there were approximately 15 holders of record of the company's common stock[332] Dividends - Anebulo has not declared or paid any cash dividends on its capital stock since inception[333] - The company intends to retain future earnings for business operations and expansion and does not anticipate paying cash dividends in the foreseeable future[333] Equity Compensation Plan Information - Information on securities authorized for issuance under equity compensation plans is incorporated by reference from Part III – Item 12[334] Unregistered Sales of Equity Securities - There were no unregistered sales of equity securities[335] Issuer Purchases of Equity Securities - There were no issuer purchases of equity securities[336] Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section reviews Anebulo's financial condition and operational results, highlighting significant losses, liquidity, and strategic developments for selonabant Overview - Anebulo is a clinical-stage pharmaceutical company developing selonabant for cannabis-induced toxicity, prioritizing an IV formulation for pediatric patients due to unmet medical need and potential for faster approval[339][344][345] - The company received a $0.9 million first tranche of a two-year cooperative grant from NIDA (up to $1.9 million total) to support IV selonabant development[351] - A proposed reverse stock split (1-for-2,500 to 1-for-7,500) is planned to facilitate going private, delisting from Nasdaq, and deregistering with the SEC, aiming to keep record holders below 300[352][353] Components of Results of Operations - Anebulo has not generated any revenue since inception and expects future revenue from product sales or collaboration/license agreements, if development is successful[356] - Research and development expenses are significant and expensed as incurred, primarily covering third-party CRO/CMO costs, clinical trials, and consultant expenses for selonabant[357][359] - General and administrative expenses mainly consist of professional fees, insurance, personnel costs, stock-based compensation, and rent[361] Results of Operations Summary of Results of Operations (Years Ended June 30) | | 2025 ($) | 2024 ($) | Change ($) | | :-------------------------- | :----------- | :----------- | :----------- | | Research and development | $4,299,941 | $3,548,937 | $751,004 | | General and administrative | $4,923,540 | $4,759,818 | $163,722 | | Total operating expenses | $9,223,481 | $8,308,755 | $914,726 | | Loss from operations | $(9,223,481) | $(8,308,755) | $(914,726) | | Interest expense | $382,014 | $151,230 | $230,784 | | Interest income | $(257,913) | $(249,022) | $(8,891) | | Grant income | $(864,014) | $- | $(864,014) | | Other income, net | $(738,718) | $(107,052) | $(631,666) | | Net loss | $(8,484,763) | $(8,201,703) | $(283,060) | | Weighted average common shares outstanding, basic and diluted | 33,820,306 | 25,822,258 | 7,998,048 | | Net loss per share, basic and diluted | $(0.25) | $(0.32) | $0.07 | - Research and development expenses increased by $0.8 million in FY2025, primarily due to increased pre-clinical and clinical studies and contract manufacturing for IV selonabant development[364] - General and administrative expenses increased by $0.2 million in FY2025, driven by a $0.7 million increase in stock-based compensation, partially offset by decreases in compensation and professional fees[365] Liquidity and Capital Resources - As of June 30, 2025, Anebulo had cash and cash equivalents of approximately $11.6 million, an increase of $8.5 million from the prior year, primarily from a $14.9 million private placement[369][372] - The company expects current cash and a $3 million loan facility to fund operations for at least 12 months but will need additional funding for development and commercialization[369][370][375][553] - Future funding may come from equity/debt financings or collaboration agreements, with potential for dilution or unfavorable terms[376][554] Contractual Obligations and Commitments - Anebulo has an exclusive license agreement with Vernalis, requiring potential development milestone payments up to $29.9 million ($0.4 million paid) and sales milestones up to $35.0 million, plus low to mid-single digit royalties[377] - The company has a manufacturing agreement with a third-party CMO for approximately $3.0 million, substantially completed as of June 30, 2024, with stability studies extending into 2026[381] - An agreement with a third-party CRO for the Phase 1 SAD study totals approximately $3.5 million, expected to be substantially completed by Q3 2026[382] Critical Accounting Estimates - Critical accounting estimates include accrued research and development expenses, which involve estimating services performed by CROs, investigative sites, and manufacturers when invoices are not yet received[386] - Stock-based compensation expense is estimated using the Black-Scholes option pricing model, requiring subjective assumptions for volatility, expected term, risk-free rate, and dividends[388] - As an 'emerging growth company,' Anebulo utilizes extended transition periods for new accounting standards, which may affect comparability of its financial statements[390] Item 7A. Quantitative and Qualitative Disclosures About Market Risk This item is not required for Anebulo Pharmaceuticals as it qualifies as a smaller reporting company - This item is not required for smaller reporting companies[392] Item 8. Financial Statements and Supplementary Data The financial statements and supplementary data are appended to this Annual Report under Item 15, Exhibits and Financial Statement Schedules, and are incorporated by reference - The financial statements and supplementary data are appended under Item 15 and incorporated by reference[393] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Anebulo Pharmaceuticals, Inc. reports no changes in or disagreements with accountants on accounting and financial disclosure matters - There are no changes in or disagreements with accountants on accounting and financial disclosure[394] Item 9A. Controls and Procedures Anebulo's management, including the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures as of June 30, 2025, concluding they were effective at a reasonable assurance level. Management also concluded that internal control over financial reporting was effective as of the same date, based on the COSO framework. As an emerging growth company, the independent registered public accounting firm's attestation report on internal control over financial reporting is not included Evaluation of Disclosure Controls and Procedures - Management, with the CEO and CFO, evaluated disclosure controls and procedures as of June 30, 2025[395] - They concluded that disclosure controls and procedures were effective at the reasonable assurance level[396] Management's Annual Report on Internal Control over Financial Reporting - Management is responsible for establishing and maintaining adequate internal control over financial reporting[397] - Based on the COSO framework, management concluded that internal control over financial reporting was effective as of June 30, 2025[397] - As an emerging growth company, the independent registered public accounting firm's attestation report on internal control over financial reporting is not included[399] Changes in Internal Control over Financial Reporting - There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025[400] Item 9B. Other Information During Q2 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement. Daniel George resigned as CFO, Principal Financial Officer, and Principal Accounting Officer effective September 30, 2025, to pursue another opportunity, with no disagreements with the company. Richard Anthony Cunningham, the current CEO, was appointed Interim CFO, Principal Financial Officer, and Principal Accounting Officer, effective September 30, 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[401] - Daniel George resigned as CFO, Principal Financial Officer, and Principal Accounting Officer, effective September 30, 2025, with no disagreements with the company[402] - Richard Anthony Cunningham, the current CEO, was appointed Interim CFO, Principal Financial Officer, and Principal Accounting Officer, effective September 30, 2025[403] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevents Inspections This item is not applicable to Anebulo Pharmaceuticals, Inc - This item is not applicable[406] Part III This part details Anebulo's directors, executive officers, corporate governance, executive compensation, security ownership, and related party transactions Item 10. Directors, Executive Officers and Corporate Governance This section provides information on Anebulo's directors and executive officers, their qualifications, and the company's corporate governance structure. The Board of Directors has determined that all non-employee directors are independent. The Board operates with three committees: Audit, Compensation, and Nominating and Corporate Governance, each composed of independent directors. The company also maintains a Code of Ethics and an Insider Trading Policy Information Regarding Our Board of Directors and Corporate Governance Independence of The Board of Directors - A majority of Anebulo's board members qualify as 'independent' under Nasdaq listing standards[411] - All current directors, except Mr. Cunningham (CEO), have been affirmatively determined to be independent, having no material or disqualifying relationship with the company[412] Information Regarding Committees of the Board of Directors - The Board has three committees: an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee[413] - Each committee member meets Nasdaq's independence rules and has authority to engage legal counsel or other experts[414] Audit Committee - The Audit Committee oversees corporate accounting, financial reporting, and audits, including evaluating independent auditors, reviewing financial statements, and overseeing cybersecurity risk[416] - It is composed of Mr. Shah (Chair), Mr. Aryeh, and Dr. Lin, all determined to be independent under Nasdaq rules[416][417] - Mr. Shah and Mr. Aryeh qualify as 'audit committee financial experts' as defined by SEC rules[418] Compensation Committee - The Compensation Committee reviews and recommends compensation strategy, policies, plans, and programs, including executive and director compensation[420][421] - It is composed of Ms. Kupchyk (Chair), Mr. Calloway, and Mr. Shah, all of whom are independent[419] Compensation Committee Processes and Procedures - The Compensation Committee typically meets annually and acts by written consent, with agendas developed by the Chair in consultation with the CEO[422] - It has full access to company books, records, facilities, and personnel, and can engage compensation consultants and other advisors at the company's expense[422] - Compensation decisions, including bonuses, are based on achievement of performance goals, individual contributions, retention risk, industry trends, and financial performance, rather than specific quantitative formulas[423] Nominating and Corporate Governance Committee - The Nominating and Corporate Governance Committee identifies, reviews, and evaluates director candidates, assesses board and committee performance, and discusses ESG matters[424] - It is composed of Mr. Aryeh (Chair), Mr. English, and Ms. Kupchyk, all of whom are independent[425] Shareholder Communications with the Board of Directors - Stockholders can communicate with the Board in writing by sending a letter to the Corporate Secretary at the company's principal executive office[426] Code of Ethics - Anebulo has adopted a written Code of Business Conduct and Ethics that applies to all directors, officers, and employees[427] - The Code of Ethics is available on the investor section of the company's website, and amendments or waivers will be disclosed there[427] Insider Trading Policy - Anebulo maintains an Insider Trading Policy prohibiting officers, directors, and employees from trading securities while in possession of material, non-public information[428] - Executives and directors are permitted to enter into Rule 10b5-1 trading plans[428] Item 11. Executive Compensation This section details executive and director compensation, including salaries, bonuses, equity awards, employment agreements, and potential termination payments Summary Compensation Table Summary Compensation Table for Fiscal 2025 | Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | All Other Compensation ($) | Total ($) | | :-------------------------- | :---------- | :--------- | :-------- | :--------------- | :---------------- | :------------------------- | :-------- | | Richard Anthony Cunningham Chief Executive Officer | 2025 | 461,250 | — | — | 532,146 | — | 993,396 | | | 2024 | 332,885 | — | — | 1,367,325 | — | 1,700,210 | | Kenneth C. Cundy Chief Scientific Officer | 2025 | 395,997 | 116,470 | — | 90,169 | — | 602,636 | | | 2024 | 380,766 | 111,990 | — | 119,395 | — | 612,151 | | Daniel George Part time Chief Financial Officer | 2025 | 208,755 | — | — | — | — | 208,755 | | | 2024 | 147,268 | — | — | — | — | 147,268 | - Dollar amounts for stock and option awards reflect aggregate grant date fair value, not actual economic value realized[437] Narrative to Summary Compensation Table Annual Base Salary Fiscal 2025 Annual Base Salaries | NAME | 2025 BASE ($) | | :-------------------------- | :------------ | | Richard Anthony Cunningham | 472,500 | | Kenneth C. Cundy | 403,761 | | Daniel George | — | - Mr. Cunningham's annual base salary increased from $450,000 to $472,500 effective January 1, 2025[439] - Dr. Cundy's annual base salary increased from $388,232 to $403,761 effective January 1, 2025[443] Discretionary Bonuses - In January 2025, Dr. Cundy received a one-time discretionary cash bonus of $116,470[440] - Bonuses were determined by the Compensation Committee based on subjective evaluations of product advancement, responsibilities, retention risk, industry trends, and financial performance, not specific quantitative formulas[441] Equity-Based Incentive Awards - Equity awards are designed to align executive interests with stockholders and for long-term retention, generally vesting over continuous service[442] - In April 2025, Dr. Cundy was granted an option to purchase 115,037 shares at $1.02, vesting quarterly over 15 installments after an initial vesting[444] - Mr. Cunningham received an option for 316,352 shares at $1.02 in April 2025 (similar vesting) and a fully vested option for 254,433 shares at $1.56 in December 2024[445][446] Employment Agreements with our Named Executive Officers - Employment for named executive officers is 'at will,' with agreements outlining initial base salaries, target bonuses, and equity awards[447] - Dr. Cundy's agreement (May 2022) includes an initial $350,000 base salary, 30% target bonus, and time-based (233,446 shares) and performance-based (116,723 shares) options[448] - Mr. Cunningham's agreement (October 2023) includes an initial $450,000 base salary, a time-based option for 600,000 shares, and a performance-based option for 140,000 shares[450] Potential Payments Upon Termination or Change in Control - Upon termination without 'Cause' or resignation for 'Good Reason,' Mr. Cunningham is entitled to 12 months of base compensation and COBRA reimbursement for up to 12 months[452] - Dr. Cundy is entitled to 6 months of base compensation and COBRA premiums for up to 6 months, plus immediate vesting of options that would have vested in the 6 months post-termination[453] - Both Mr. Cunningham and Dr. Cundy are eligible for 100% accelerated vesting of outstanding stock-based awards upon a 'Change in Control,' provided they are employed on that date[455][456] Outstanding Equity Awards at Fiscal Year End Outstanding Equity Awards at June 30, 2025 | Name | Vesting Commencement Date | Number of Securities Underlying Unexercised Options Exercisable () | Number of Securities Underlying Unexercised Options Unexercisable () | Number of Securities Underlying Unexercised Unearned Options () | Option Exercise Price ($) | Option Expiration Date | | :-------------------------- | :------------------------ | :---------------------------------------------------------------- | :------------------------------------------------------------------ | :---------------------------------------------------------------- | :----------------------- | :--------------------- | | Richard Anthony Cunningham | 10/6/2023 | 225,000 | 375,000 | — | 3.03 | 10/5/2033 | | | 10/6/2023 | 50,000 | — | 90,000 | 3.03 | 10/5/2033 | | | 12/9/2024 | 254,433 | — | — | 1.56 | 12/8/2034 | | | 4/4/2025 | 19,772 | 296,580 | — | 1.02 | 4/3/2035 | | Kenneth C. Cundy | 6/1/2022 | 175,085 | 58,361 | — | 2.91 | 6/30/2027 | | | 6/1/2022 | — | — | 116,723 | 2.91 | 6/30/2027 | | | 12/9/2022 | 21,880 | 13,137 | — | 3.37 | 12/08/2032 | | | 4/1/2024 | 22,690 | 49,923 | — | 2.72 | 2/28/2034 | | | 4/4/2025 | 7,190 | 107,847 | — | 1.02 | 4/3/2035 | | Daniel George | — | — | — | — | — | — | Perquisites, Health, Welfare and Retirement Benefits - Named executive officers are eligible for employee benefit plans, including family health, dental, and vision policies, on the same basis as other employees[467] - No perquisites or personal benefits are provided to executive officers that are not generally available to other employees[467] 2020 Stock Incentive Plan - The 2020 Stock Incentive Plan, adopted in June 2020, aims to attract, retain, and motivate employees, officers, directors, consultants, and advisors by providing equity ownership opportunities[468] - The total authorized shares for issuance under the Plan increased from 1,650,000 to 3,650,000 in October 2021, and further to 6,150,000 in April 2025[468][472] - As of June 30, 2025, 3,218,255 shares were issuable upon option exercise, and 1,925,245 shares were available for future issuance[468][472] Clawback Policy - The Board adopted a clawback policy to recover performance-based compensation (cash or equity) from current or former executive officers in the event of an Accounting Restatement[487] - An Accounting Restatement is defined as a restatement of financial statements due to material noncompliance with securities laws' financial reporting requirements[487] - The Board has sole discretion over the form and timing of recovery, which can include repayment, forfeiture, or adjustments to future compensation[488] Company Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information - Anebulo does not have a formal policy on timing equity awards in relation to material nonpublic information disclosure, nor does it seek to time grants to take advantage of such information[489] - Option grants are effective on the award determination date, with exercise prices equal to the closing market price of common stock on that date (or prior business day for weekends/holidays)[489] - During FY2025, two option awards were granted to named executive officers on April 4, 2025, with a 1.0% decrease in stock price between the trading day prior to and following the disclosure of material nonpublic information[490] Director Compensation Director Compensation for Fiscal 2025 (Non-Employee Directors) | Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | Total ($) | | :---------------- | :------------------------------ | :---------------- | :-------- | | Joseph F. Lawler | 11,000 | 28,750 | 39,750 | | Aron R. English | 1,000 | 20,788 | 21,788 | | Jason M. Aryeh | 11,000 | 22,531 | 33,531 | | Areta Kupchyk | 11,000 | 20,788 | 31,788 | | Kenneth Lin | 1,000 | 22,531 | 23,531 | | Nathaniel Calloway | 1,000 | 21,286 | 22,286 | | Bimal Shah | 11,000 | 23,774 | 34,774 | Aggregate Option Awards Outstanding at June 30, 2025 (Non-Employee Directors) | Name | Number of Shares Subject to Outstanding Options | | :---------------- | :---------------------------------------------- | | Joseph F. Lawler | 199,236 | | Aron R. English | 183,353 | | Jason M. Aryeh | 186,828 | | Areta Kupchyk | 183,353 | | Kenneth Lin | 186,828 | | Nathaniel Calloway | 130,780 | | Bimal Shah | 102,691 | Non-Employee Director Compensation Policy - The non-employee director compensation policy, amended June 13, 2024, provides an annual cash retainer of $1,000, with additional retainers for Board Chair ($10,000) and Committee Chairs ($10,000)[495][497] - Directors receive an initial grant of options to acquire 50,000 shares (vesting monthly over three years) and an annual grant of options to purchase 25,000 shares (vesting on the earlier of one year or next annual meeting)[497] - In lieu of increased cash compensation, non-employee directors received options to purchase an aggregate of 19,194 shares in June 2024 and 38,385 shares on the date of the 2024 annual meeting[496] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section details the ownership of Anebulo's common stock by principal stockholders, executive officers, and directors as of September 26, 2025. Certain individuals and entities hold significant stakes, with Aron R. English and 22NW Fund, LP, along with Joseph F. Lawler, being major beneficial owners. All current executive officers and directors collectively own 79.9% of the total outstanding shares Securities Authorized for Issuance Under Equity Compensation Plans Equity Compensation Plan Information as of June 30, 2025 | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | | :------------------------------------------ | :-------------------------------------------------------------------------------- | :-------------------------------------------------------------------- | :------------------------------------------------------------------------------------------------------------------------------------ | | Equity compensation plans approved by security holders | 3,218,255 | $2.49 | 1,925,245 | | Equity compensation plans not approved by security holders | — | — | — | | Total | 3,218,255 | $2.49 | 1,925,245 | Security Ownership of Certain Beneficial Owners and Management Beneficial Ownership as of September 26, 2025 | Name of Beneficial Owner | Number of Shares | Percent of Total | | :------------------------------------------ | :--------------- | :--------------- | | 5% or Greater Stockholders | | | | Joseph F. Lawler | 12,158,464 | 29.5% | | Aron R. English | 21,978,575 | 51.2% | | 22NW Fund, LP | 17,170,877 | 40.1% | | Pharma Investors, LLC | 4,654,528 | 11.3% | | Nantahala Capital Partners Limited Partnership and related entities | 3,547,398 | 8.5% | | The Mangrove Partners Master Fund, Ltd. | 2,525,252 | 6.1% | | Named Executive Officers and Directors | | | | Richard Anthony Cunningham | 613,749 | 1.5% | | Kenneth C. Cundy | 269,261 | * | | Joseph F. Lawler | 12,158,464 | 29.5% | | Aron R. English | 21,978,575 | 51.2% | | Jason M. Aryeh | 154,328 | * | | Nathaniel Calloway | 87,683 | * | | Areta Kupchyk | 153,170 | * | | Kenneth Lin | 154,328 | * | | Daniel George | — | — | | Bimal Shah | 58,568 | * | | All current executive officers and directors as a group (10 persons) | 35,628,126 | 79.9% | - Aron R. English and 22NW Fund, LP are significant beneficial owners, with Mr. English controlling 51.2% of total shares, including those held by 22NW Fund, LP and Pharma Investors, LLC[504][507] - Joseph F. Lawler beneficially owns 29.5% of the common stock, including shares held in grantor retained annuity trusts and exercisable options[504][507] [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=92&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Tr