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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

From the transition period from                   to                  

Commission File Number 001-37853

FIRST WAVE BIOPHARMA, INC.

(Exact name of registrant as specified in its charter)

Delaware

    

46-4993860

(State or other jurisdiction of

incorporation or organization)

(I.R.S Employer

Identification No.)

777 Yamato Road, Suite 502

Boca Raton, Florida 33431

(Address of principal executive offices) (Zip Code)

(561) 589-7020

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

    

Trading Symbol

    

Name of Each Exchange on Which Registered

Common stock, par value $0.0001 per share

 

FWBI

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

There were 13,499,979 shares of the registrant’s common stock, par value $0.0001 per share (the “Common Stock”), outstanding as of November 10, 2023.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) contains forward-looking statements that involve substantial risks and uncertainties. All statements contained in this Quarterly Report other than statements of historical facts, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “target”, “potential”, “will”, “would”, “could”, “should”, “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements include, among other things, statements about:

our ability to regain and maintain compliance with the continued listing requirements of The Nasdaq Stock Market LLC;
our ability to satisfy our payment obligations under the First Wave Acquisition (as defined below);
statements regarding the impact of the COVID-19 pandemic and other geopolitical events, including the wars in Israel and Ukraine and their effects on our operations, access to capital, research and development and clinical trials and potential disruption in the operations and business of third-party vendors, contract research organizations (“CROs”), contract development and manufacturing organizations (“CDMOs”), other service providers, and collaborators with whom we conduct business;
the availability of capital to satisfy our working capital requirements;
our current and future capital requirements and our ability to raise additional funds to satisfy our capital needs;
the integration and effects of our acquisitions and other strategic transactions;
the accuracy of our estimates regarding expense, future revenue and capital requirements;
our ability to continue operating as a going concern;
our plans to develop and commercialize our product candidates, including Capeserod, the biologic Adrulipase and Niclosamide;
our ability to initiate and complete our clinical trials and to advance our principal product candidates into additional clinical trials, including pivotal clinical trials, and successfully complete such clinical trials;
regulatory developments in the U.S. and foreign countries;
the performance of our third-party vendor(s), CROs, CDMOs and other third-party non-clinical and clinical development collaborators and regulatory service providers;
our ability to obtain and maintain intellectual property protection for our core assets;
the size of the potential markets for our product candidates and our ability to serve those markets;
the rate and degree of market acceptance of our product candidates for any indication once approved;
the success of competing products and product candidates in development by others that become available for the indications that we are pursuing;

-1-

the loss of key scientific, clinical and nonclinical development, and/or management personnel, internally or from one of our third-party collaborators; and
other risks and uncertainties, including those listed under Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K.

Factors that may cause actual results to differ materially from current expectations include, among other things, those set forth in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K and for the reasons described elsewhere in this Quarterly Report on Form 10-Q. Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current view with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, industry and future growth. Given these uncertainties, you should not rely on these forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

This Quarterly Report on Form 10-Q also contains estimates, projections and other information concerning our industry, our business and the markets for certain drugs and consumer products, including data regarding the estimated size of those markets, their projected growth rates and the incidence of certain medical conditions. Information that is based on estimates, forecasts, projections or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained these industry, business, market and other data from reports, research surveys, studies and similar data prepared by third parties, industry, medical and general publications, government data and similar sources and we have not independently verified the data from third party sources. In some cases, we do not expressly refer to the sources from which these data are derived.

In this Quarterly Report on Form 10-Q, unless otherwise stated or as the context otherwise requires, references to “First Wave,” the “Company,” “we,” “us,” “our” and similar references are to First Wave BioPharma, Inc. and its subsidiaries on a consolidated basis. References to “First Wave BioPharma” refer to First Wave BioPharma, Inc. on an unconsolidated basis. References to “AzurRx SAS” refer to AzurRx SAS, First Wave BioPharma’s former wholly-owned subsidiary through which we conducted our European operations, which was dissolved effective October 26, 2022. References to “FWB” refer to First Wave Bio, Inc., First Wave BioPharma’s wholly-owned subsidiary.

-2-

PART I

FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly our financial position, results of operations, and cash flows for the interim periods presented. We have consolidated such financial statements in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Therefore, such financial statements do not include all disclosures required by accounting principles generally accepted in the United States of America. In preparing these unaudited condensed consolidated financial statements, the Company has evaluated events and transactions for potential recognition or disclosure through the date the unaudited condensed consolidated financial statements were issued by filing with the SEC.

These financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2022 included in our Annual Report filed on Form 10-K, filed with the SEC on March 20, 2023.

The results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2023.

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FIRST WAVE BIOPHARMA, INC.

Condensed Consolidated Balance Sheets

    

September 30, 

    

2023

December 31, 

(unaudited)

2022

ASSETS

Current Assets:

Cash and cash equivalents

$

3,292,327

$

1,362,910

Other receivables

 

93,014

Prepaid expenses

 

684,273

1,956,831

Total Current Assets

 

3,976,600

3,412,755

Property, equipment, and leasehold improvements, net

 

21,884

43,839

Other Assets:

Goodwill

1,684,182

1,684,182

Restricted cash

 

21,521

21,513

Operating lease right-of-use assets

 

211,832

259,261

Deposits

 

11,250

18,149

Total Other Assets

 

1,928,785

1,983,105

Total Assets

$

5,927,269

$

5,439,699

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts payable

$

579,291

$

720,040

Accrued expenses

834,540

320,176

Accrued dividend payable

 

992,535

761,488

Note payable

 

603,494

Operating lease liabilities

65,322

66,151

Other current liabilities

 

10,806

 

12,138

Total Current Liabilities

 

2,482,494

 

2,483,487

Non-current operating lease liabilities

165,970

214,060

Total Liabilities

 

2,648,464

 

2,697,547

Stockholders’ Equity:

Common stock - Par value $0.0001 per share; 50,000,000 shares authorized; 13,463,479 and 995,003 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

1,346

 

100

Series B preferred stock- Par value $0.0001 per share; 5,194.81 shares designated; 521.72 and 550.17 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

Series C preferred stock- Par value $0.0001 per share; 75,000 shares designated; 0 shares issued and outstanding at September 30, 2023 and December 31, 2022

 

 

Series D preferred stock- Par value $0.0001 per share; 150 shares designated; 0 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Series E preferred stock- Par value $0.0001 per share; 150 shares designated; 0 shares issued and outstanding at September 30, 2023 and December 31, 2022

Series F preferred stock- Par value $0.0001 per share; 7,000 shares designated; 0 shares issued and outstanding at September 30, 2023 and December 31, 2022

Additional paid-in capital

 

183,505,191

 

171,275,741

Accumulated deficit

 

(180,227,732)

 

(168,533,689)

Total Stockholders’ Equity

 

3,278,805

 

2,742,152

Total Liabilities and Stockholders’ Equity

$

5,927,269

$

5,439,699

See accompanying notes to unaudited condensed consolidated financial statements

-4-

FIRST WAVE BIOPHARMA, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)

    

Three Months Ended September 30, 

Nine Months Ended September 30, 

2023

    

2022

    

2023

    

2022

Operating expenses:

Research and development expenses

$

1,011,055

$

791,067

$

3,725,833

$

8,674,480

Research and development recovery - intellectual property acquired

(8,085,045)

(8,085,045)

General and administrative expenses

 

2,422,082

2,904,448

7,951,373

9,808,960

Total operating expenses (recovery)

 

3,433,137

(4,389,530)

11,677,206

10,398,395

(Loss) income from operations

 

(3,433,137)

4,389,530

(11,677,206)

(10,398,395)

Other (expenses) income:

 

Interest expense

 

(1,250)

(863)

(15,415)

(9,686)

Interest income

 

229

2,664

2,307

3,729

Other expense

 

(3,729)

(239,301)

Total other (expenses) income

 

(1,021)

1,801

(16,837)

(245,258)

Net (loss) income

$

(3,434,158)

$

4,391,331

$

(11,694,043)

$

(10,643,653)

Other comprehensive (loss) income:

 

Foreign currency translation adjustment

 

(35,235)

(230,586)

Total comprehensive (loss) income

$

(3,434,158)

$

4,356,096

$

(11,694,043)

$

(10,874,239)

Net (loss) income

$

(3,434,158)

$

4,391,331

$

(11,694,043)

$

(10,643,653)

Deemed dividend on warrant modifications

(47,300)

(47,300)

Preferred stock dividends

 

(49,292)

(110,278)

(231,047)

(298,195)

Net (loss) income applicable to common shareholders

$

(3,483,450)

$

4,233,753

$

(11,925,090)

$

(10,989,148)

Basic weighted average shares outstanding

7,566,018

228,773

3,763,506

136,113

Diluted weighted average shares outstanding

7,566,018

232,248

3,763,506

136,113

Net (loss) income per share – basic

$

(0.46)

$

18.51

$

(3.17)

$

(80.74)

Net (loss) income per share – diluted

$

(0.46)

$

18.23

$

(3.17)

$

(80.74)

See accompanying notes to unaudited condensed consolidated financial statements

-5-

FIRST WAVE BIOPHARMA, INC.

Condensed Consolidated Statements of Changes in StockholdersEquity (Deficit) (unaudited)

    

  

    

  

    

  

    

  

    

  

    

  

    

Accumulated

    

  

Series B Convertible

Additional

Other

Total

Preferred Stock

Common Stock

Paid In

Accumulated

Comprehensive

Stockholders’

    

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Loss

    

Equity

Balance, July 1, 2023

546

$

 

4,208,995

$

421

$

177,675,113

$

(176,793,574)

$

$

881,960

Issuance of common stock, pre-funded warrants and warrants in July 2023 offering, net of issuance costs

610,000

61

1,833,866

1,833,927

Issuance of common stock in connection with the exercise of warrants in the September 2023 Inducement Offering, net of offering costs

 

 

5,882,036

 

588

 

3,706,183

 

 

 

3,706,771

Exercise of pre-funded warrants into common stock

2,675,000

267

267

Deemed dividend of Series B preferred stock

 

 

 

 

(49,292)

 

 

 

(49,292)

Conversion of Series B preferred shares into common stock

(24)

417

Common stock issued to consultants

50,000

5

75,995

76,000

Issuance of common stock from RSU vest

37,031

4

(4)

Stock-based compensation

 

 

 

 

263,330

 

 

 

263,330

Net loss

 

 

 

 

 

(3,434,158)

 

 

(3,434,158)

Balance, September 30, 2023

522

 

13,463,479

1,346

183,505,191

(180,227,732)

3,278,805

    

    

    

    

    

    

Accumulated

Series E Convertible

Series D Convertible

Series B Convertible

  

  

Additional

  

Other

Total

Preferred Stock

Preferred Stock

Preferred Stock

Common Stock

Paid In

Accumulated

Comprehensive

Stockholders’

Shares

Amount

Shares

Amount

Shares

    

Amount

    

Shares

    

Amount

    

Capital

    

Deficit

    

Loss

Deficit

Balance, July 1, 2022

631

$

 

108,094

$

10

$

156,168,644

$

(168,939,031)

$

(1,419,486)

$

(14,189,863)

Issuance of Series D preferred stock and warrants for cash, net of offering costs

150

 

 

 

 

178,336

 

 

 

178,336

Issuance of Series E preferred stock, net of offering costs

150

20,664

20,664

Issuance of common stock from the conversion of Series D preferred stock

(150)

4,761

1

(1)

Issuance of common stock from the conversion of Series E preferred stock

(150)

4,761

1

(1)

Issuance of common stock at-the-market for cash, net of offering costs

211,968

21

7,373,334

7,373,355

Deemed dividend of Series B preferred stock

 

 

 

 

(110,278)

 

 

 

(110,278)

Effect of cancelled shares from the 1-for-30 reverse stock split

(12)

Stock-based compensation

 

 

 

 

91,641

 

 

 

91,641

Foreign currency translation adjustment

 

 

 

 

 

 

(35,235)

 

(35,235)

Net income

 

 

 

 

 

4,391,331

 

 

4,391,331

Balance, September 30, 2022

$

$

631

$

 

329,572

$

33

$

163,722,339

$

(164,547,700)

$

(1,454,721)

$

(2,280,049)

See accompanying notes to unaudited condensed consolidated financial statements

-6-

FIRST WAVE BIOPHARMA, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (unaudited)

Accumulated

Series B Convertible

  

Additional

Other

Total

Preferred Stock

Common Stock

Paid In

Accumulated

Comprehensive

Stockholders’

   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Loss

   

Equity

Balance, January 1, 2023

 

550

$

 

995,003

$

100

$

171,275,741

$

(168,533,689)

$

$

2,742,152

Issuance of common stock, pre-funded warrants and warrants in March 2023 offering, net of issuance costs

 

 

 

128,000

 

13

 

3,690,960

 

 

3,690,973

Issuance of common stock in connection with the exercise of warrants in the June 2023 Inducement Offering, net of offering costs

 

 

 

1,724,332

 

173

 

2,238,892

 

 

2,239,065

Issuance of common stock, pre-funded warrants and warrants in July 2023 offering, net of issuance costs

610,000

61

1,833,866

1,833,927

Issuance of common stock in connection with the exercise of warrants in the September 2023 Inducement Offering, net of offering costs

5,882,036

588

3,706,183

3,706,771

Exercise of pre-funded warrants into common stock

 

 

 

3,999,493

 

398

 

259

 

 

657

Deemed dividend of Series B preferred stock

 

 

 

 

 

(231,047)

 

 

(231,047)

Conversion of Series B preferred shares into common stock

 

(28)

 

 

487

 

 

 

 

Common stock issued to consultants

50,000

5

75,995

76,000

Issuance of common stock from RSU vest

 

 

 

77,095

 

8

 

(8)

 

 

Effect of cancelled shares from the 1-for-7 reverse stock split

 

 

 

(2,967)

 

 

 

 

Stock-based compensation

 

 

 

 

 

914,350

 

 

914,350

Net loss

 

 

 

 

 

 

(11,694,043)

 

(11,694,043)

Balance, September 30, 2023

 

522

 

13,463,479

1,346

183,505,191

(180,227,732)

3,278,805

Accumulated

Series E Convertible

Series D Convertible

Series B Convertible

Additional

Other

Total

Preferred Stock

Preferred Stock

Preferred Stock

Common Stock

Paid In

Accumulated

Comprehensive

Stockholders’

   

Shares

   

Amount

   

Shares

   

Amount

   

Shares

   

Amount

   

Shares

   

Amount

   

Capital

   

Deficit

   

Loss

   

Deficit

Balance, January 1, 2022

    

662

    

$

    

70,742

    

$

7

    

$

147,306,625

    

$

(153,904,047)

    

$

(1,224,135)

    

$

(7,821,550)

Issuance of Series D preferred stock and warrants for cash, net of offering costs

 

150

 

 

 

 

178,336

 

 

 

178,336

Issuance of Series E preferred stock, net of offering costs

150

20,664

20,664

Issuance of common stock from the conversion of Series D preferred stock

(150)

4,761

1

(1)

Issuance of common stock from the conversion of Series E preferred stock

(150)

4,761

1

(1)

Issuance of common stock, pre-funded warrants and warrants in registered direct offering, net of offering costs

7,857

1

7,971,931

7,971,932

Issuance of common stock at-the-market for cash, net of offering costs

217,038

21

7,691,201

7,691,222

Exercise of pre-funded warrants into common stock

 

 

 

23,086

 

2

 

48,011

 

 

 

48,013

Deemed dividend of Series B preferred stock

 

 

 

 

 

(298,195)

 

 

 

(298,195)

Warrant modification

47,300

47,300

Deemed dividend on warrant modification

(47,300)

(47,300)

Conversion of Series B preferred shares into common stock

 

(31)

 

 

910

 

 

 

 

 

Common stock issued to consultants

 

 

 

429

 

 

118,990

 

 

 

118,990

Effect of cancelled shares from the 1-for-30 reverse stock split

(12)

Stock-based compensation

 

 

 

 

 

684,778

 

 

 

684,778

Foreign currency translation adjustment

 

 

 

 

 

 

 

(230,586)

 

(230,586)

Net loss

 

 

 

 

 

 

(10,643,653)

 

 

(10,643,653)

Balance, September 30, 2022

 

$

$

631

$

 

329,572

$

33

$

163,722,339

$

(164,547,700)

$

(1,454,721)

$

(2,280,049)

See accompanying notes to unaudited condensed consolidated financial statements

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FIRST WAVE BIOPHARMA, INC.

Condensed Consolidated Statements of Cash Flows (unaudited)

    

Nine Months Ended September 30, 

2023

    

2022

Cash flows from operating activities:

Net loss

$

(11,694,043)

$

(10,643,653)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

 

21,955

21,953

Change in right-of-use assets

 

47,429

61,681

Stock-based compensation

 

914,350

684,778

Common stock granted to consultants

 

76,000

 

118,990

Changes in assets and liabilities:

Other receivables

 

93,014

(191,984)

Prepaid expenses

 

1,272,558

614,809

Lease liabilities

 

(48,919)

(93,438)

Deposits

 

6,899

9,714

Accounts payable

 

(140,749)

875,257

Accrued expenses

514,364

(120,985)

Payable related to acquisition

(8,085,045)

Other liabilities

 

(1,332)

(3,867)

Net cash used in operating activities

 

(8,938,474)

(16,751,790)

Cash flows from financing activities:

Proceeds from issuance of preferred stock, net

 

199,000

Proceeds from issuance of common stock, pre-funded warrants and warrants, net

 

5,525,010

7,971,932

Proceeds from exercise of warrants, net of issuance costs

5,946,383

48,013

Issuance of common stock at-the-market for cash, net of offering costs

7,691,222

Deferred offering costs

 

(138,684)

Payment made related to acquisition

(4,914,955)

Repayments of note payable

 

(603,494)

(641,236)

Net cash provided by financing activities

 

10,867,899

10,215,292

Net increase (decrease) in cash and restricted cash

 

1,929,425

(6,536,498)

Effect of exchange rate changes on cash

 

(33,668)

Cash, cash equivalents and restricted cash, beginning balance

 

1,384,423

8,248,684

Cash, cash equivalents and restricted cash, ending balance

$

3,313,848

$

1,678,518

Supplemental disclosures of cash flow information:

Cash paid for interest

$

15,414

$

8,824

Non-cash investing and financing activities:

Deemed dividend on warrant modifications

$

$

(47,300)

Accrued dividends on preferred stock

$

(231,047)

$

(298,195)

See accompanying notes to unaudited condensed consolidated financial statements

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FIRST WAVE BIOPHARMA, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2023

Note 1 - The Company and Basis of Presentation

The Company

First Wave BioPharma, Inc. (“First Wave”) and its wholly-owned subsidiary, First Wave Bio, Inc. (“FWB”), are collectively referred to as the “Company”. Effective October 26, 2022, the Company’s wholly-owned subsidiary, AzurRx SAS, was dissolved. The Company is engaged in the research and development of targeted, non-systemic therapies for the treatment of patients with gastrointestinal (“GI”) diseases. Non-systemic therapies are non-absorbable drugs that act locally, i.e., in the intestinal lumen, skin or mucosa, without reaching an individual’s systemic circulation.

The Company is currently focused on developing a therapeutic pipeline with multiple Phase 2 clinical stage programs built around three proprietary technologies – the biologic Adrulipase, a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients in cystic fibrosis and chronic pancreatitis patients with exocrine pancreatic insufficiency; Capeserod, a selective 5-HT4 receptor partial agonist which we will pursue for GI indications; and Niclosamide, an oral small molecule with anti-inflammatory properties for patients with inflammatory bowel diseases such as ulcerative colitis and Crohn’s disease.

The Company is developing its product candidates for a host of GI diseases where there are significant unmet clinical needs and limited therapeutic options, resulting in painful, life threatening and discomforting consequences for patients. Since its inception, the Company has devoted substantially all its efforts to research and development, business development, and raising capital, and has financed its operations through issuance of Common Stock, convertible preferred stock, convertible debt, and other debt/equity instruments.

Risks and Uncertainties

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development and regulatory success, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, and ability to secure additional capital to fund clinical trials and operations.

In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.

In addition, the Company is subject to other challenges and risks specific to its business, its ability to maintain compliance with the continued listing requirements of The Nasdaq Stock Market LLC and its ability to execute on its strategy, as well as risks and uncertainties common to companies in the biotechnology and pharmaceutical industries with development and commercial operations, including, without limitation, risks and uncertainties associated with: obtaining regulatory approval of its drug candidates; delays or problems in the manufacture and supply of its drug candidates; loss of single source suppliers or failure to comply with manufacturing regulations; identifying, acquiring or in-licensing additional products or drug candidates; pharmaceutical product development and the inherent uncertainty of clinical success; the challenges of protecting and enhancing our intellectual property rights; and complying with applicable regulatory requirements.

Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of First Wave and its wholly owned subsidiaries, FWB and AzurRx SAS, which was dissolved effective October 26, 2022. Intercompany transactions and balances have been eliminated upon consolidation.

-9-

In our opinion, the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations, and cash flows. The condensed consolidated balance sheet at December 31, 2022, has been derived from audited financial statements of that date. The unaudited interim condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim condensed consolidated financial statements are read in conjunction with the audited financial statements and notes previously distributed in our Annual Report Form 10-K for the year ended December 31, 2022, filed with the SEC on March 20, 2023.

Going Concern Uncertainty

The accompanying unaudited interim condensed consolidated financial statements have been prepared as if the Company will continue as a going concern. The Company has incurred significant operating losses and negative cash flows from operations since inception. On September 30, 2023, the Company had cash and cash equivalents of approximately $3.3 million, accumulated deficit of approximately $180.2 million, and working capital of approximately $1.5 million. The Company has incurred recurring losses, has experienced recurring negative operating cash flows, and requires significant cash resources to execute its business plans. The Company anticipates having sufficient cash to fund planned operations through December 2023, however, the acceleration or reduction of cash outflows by Company management can significantly impact the timing for the need to raise additional capital to complete development of its products. Historically, the Company’s major sources of cash have been comprised of proceeds from various public and private offerings of its capital stock. The Company is dependent on obtaining additional working capital funding from the sale of equity and/or debt securities in order to continue to execute its development plans and continue operations.

Without adequate working capital, the Company may not be able to meet its obligations and continue as a going concern. These conditions raise substantial doubt about the Company’s ability to continue as a going concern one year from the date these financial statements are issued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 2 - Significant Accounting Policies and Recent Accounting Pronouncements

Use of Estimates

The accompanying unaudited condensed consolidated financial statements are prepared in conformity with GAAP and include certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements (including goodwill), and the reported amounts of revenue and expense during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates.

Reverse Stock Split

On January 18, 2023, the Company effected a reverse stock split, whereby every seven shares of the Company’s issued and outstanding Common Stock was converted automatically into one issued and outstanding share of Common Stock, but without any change in the number of authorized shares of Common Stock and the par value per share.

On August 26, 2022, the Company effected a reverse stock split, whereby every thirty shares of the Company’s issued and outstanding common stock was converted automatically into one issued and outstanding share of common stock, but without any change in the number of authorized shares of common stock and the par value per share.

All share and per share amounts have been retroactively restated to reflect the reverse stock splits referenced above.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. All cash and cash equivalent balances were highly liquid at September 30, 2023 and December 31, 2022. As of September 30, 2023 and December 31, 2022, the Company has classified approximately $0.02 million as restricted cash.

-10-

Concentrations of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash. The Company primarily maintains its cash balances with financial institutions in federally insured accounts in the U.S. The Company may from time to time have cash in banks in excess of FDIC insurance limits. At September 30, 2023 the Company had approximately $3.2 million in one account in the U.S. which was in excess of these limits. The Company has not experienced any losses to date resulting from this practice. The Company mitigates its risk by maintaining the majority of its cash and equivalents with high quality financial institutions.

Fair Value Measurements

The Company follows Accounting Standards Codification (ASC”) Topic 820-10, Fair Value Measurements and Disclosures (ASC 820”), which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions, which reflect those that a market participant would use.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.

The Company recognizes transfers between levels as if the transfers occurred on the last day of the reporting period.

Foreign Currency Translation

For foreign subsidiaries with operations denominated in a foreign currency, assets and liabilities were translated to U.S. dollars, which was the functional currency, at period end exchange rates. Income and expense items were translated at average rates of exchange prevailing during the periods presented. Gains and losses from translation adjustments were accumulated in a separate component of stockholders’ equity up until the dissolution of AzurRx SAS in October 2022, at which time cumulative translation adjustments were recognized as a loss for the year ended December 31, 2022.

Goodwill

Goodwill represents the excess of the purchase price of the acquired business over the fair value of amounts assigned to assets acquired and liabilities assumed. Goodwill and other intangible assets with indefinite useful lives are reviewed for impairment annually or more frequently if events or circumstances indicate impairment may be present. Any excess in carrying value over the estimated fair value is charged to results of operations. The Company has not recognized any impairment charges through September 30, 2023 related to goodwill.

Impairment of Long-Lived Assets

The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC Topic 360, Property, Plant and Equipment (ASC 360”). Potential impairment is assessed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. Recoverability of these assets is assessed based on undiscounted expected future cash flows from the assets, considering a number of factors, including past operating results, budgets and economic projections, market trends and product development cycles. If impairments are identified, assets are written down to their estimated fair value. The Company has not recognized any impairment charges through September 30, 2023.

-11-

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use (“ROU”) assets, and lease liability obligations are included in the Company’s balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liability obligations represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases typically do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives and lease direct costs. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Please refer to Note 13 for additional information.

License Agreements

The Company records payments related to license agreements for assets acquired that have not reached technological feasibility and which have no alternative future use, as research and development expenses. On September 13, 2023, the Company entered into a license agreement with Sanofi to license Capeserod, a selective 5-HT4 receptor partial agonist, which the Company will repurpose and develop for gastrointestinal (“GI”) indications. Under the terms of the agreement, the Company received from Sanofi an exclusive, global license for Capeserod and assumed responsibility for all future clinical development (see Note 12).

Research and Development

Research and development costs are charged to operations when incurred and are included in operating expense, except for goodwill related to patents. Research and development costs consist principally of compensation of employees and consultants that perform the Company’s research activities, payments to third parties for preclinical and non-clinical activities, expenses with clinical research organizations (“CROs”), investigative sites, consultants and contractors that conduct or provide other services relating to clinical trials, costs to acquire drug product, drug supply and clinical trial materials from contract development and manufacturing organization (“CDMOs”) and third-party contractors relating to chemistry, manufacturing and controls (“CMC”) efforts, the fees paid for and to maintain the Company’s licenses, and research and development costs related to Adrulipase, Capeserod, and Niclosamide. Depending upon the timing of payments to the service providers, the Company recognizes prepaid expenses or accrued expenses related to these costs. These accrued or prepaid expenses are based on management’s estimates of the work performed under service agreements, milestones achieved and experience with similar contracts. The Company monitors each of these factors and adjusts estimates accordingly.

Research and Development  Intellectual Property Acquired

The Company records intellectual property in asset acquisitions that have not reached technological feasibility and which have no alternative future use, as an expense at the acquisition date. On September 13, 2021, the Company entered into an agreement with FWB for the acquisition of intellectual property and patents for the worldwide, exclusive right to develop, manufacture, and commercialize proprietary formulations of Niclosamide for the fields of treating ICI-AC and COVID-19 in humans, which was accounted for as an asset acquisition (see Note 4).

Stock-Based Compensation

The Company’s board of directors (the “Board”) and stockholders have adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”) which took effect on May 12, 2014, and the 2020 Omnibus Equity Incentive Plan, which took effect on September 11, 2020 (the “2020 Plan”). From the effective date of the 2020 Plan, no new awards have been or will be made under the 2014 Plan. The Company accounts for its stock-based compensation awards to employees, consultants, and Board members in accordance with ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees, consultants, and Board members, including grants of employee stock options, to be recognized in the statements of operations by measuring the fair value of the award on the date of grant and recognizing this fair value as stock-based compensation using a straight-line method over the requisite service period, generally the vesting period.

-12-

For awards with performance conditions that affect their vesting, such as the occurrence of certain transactions or the achievement of certain operating or financial milestones, recognition of fair value of the award occurs when vesting becomes probable.

The Company estimates the grant date fair value of stock option awards using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock.

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (the “FASB”) issued accounting pronouncement ASU 2020-06 – Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity’s own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. As a smaller reporting company, as defined by the U.S. Securities and Exchange Commission (the “SEC”), this pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company early adopted ASU 2020-06 effective January 1, 2022.

In June 2016, the FASB issued accounting pronouncement ASU 2016-13 – Measurement of Credit Losses on Financial Statements (“ASU 2016-13”). The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. In November 2019, the FASB issued ASU 2019-10 – Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended the effective date for certain companies. The standard is effective for public companies eligible to be smaller reporting companies for annual and interim periods beginning after December 15, 2022. The Company adopted ASU 2016-13 effective for the year ended December 31, 2022 and its adoption did not have a material effect on its financial statements and related disclosures.

In June 2022, the FASB issued ASU 2022-03 - Fair Value Measurement, or Topic 820: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). This new standard clarifies the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The Company has assessed the impact of the update and determined it does not have a material impact on the accompanying financial statements and disclosures.

The Company has evaluated other recently issued accounting pronouncements and has concluded that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

Note 3 - Fair Value Disclosures

Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value.

-13-

The fair value of the Company’s financial instruments are as follows:

Fair Value Measured at Reporting Date

Using

Carrying

    

Amount

    

Level 1

    

Level 2

    

Level 3

    

Fair Value

September 30, 2023 (unaudited):

Money market funds

$

12,086

$

12,086

$

$

$

12,086

Note payable

 

 

 

 

 

December 31, 2022:

Money market funds

509,890

509,890

509,890

Note payable

$

603,494

$

$

603,494

$

$

603,494

At September 30, 2023 and December 31, 2022, the Company had no other assets or liabilities that are subject to fair value methodology and estimation in accordance with U.S. GAAP.

Note 4 – Asset Acquisition

The Asset Acquisition

During the nine months ended September 30, 2022, the Company paid an aggregate of $2.4 million in cash towards the purchase price of FWB in accordance with the terms of an Agreement and Plan of Merger dated as of September 13, 2021 (the “Merger Agreement”) and a settlement agreement reached on November 21, 2021 (the “November 2021 Settlement Agreement”).

On May 19, 2022, Fortis Advisors LLC, the hired representative (in such capacity, the “Representative”) of the former stockholders of FWB in connection with the Merger Agreement, filed a complaint against the Company in the Court of Chancery in the State of Delaware (the “FWB Action”) for breach of contract and anticipatory repudiation or for unjust enrichment. The FWB Action sought specific performance of the Company’s obligations under the Merger Agreement and the November 2021 Settlement Agreement, including all payments then owed and to be owed to the Representative, and damages at the maximum amount permitted by law. On July 29, 2022, the Company reached an agreement with the Representative to settle the FWB Action and to restructure the Company’s obligations to the former FWB stockholders (the “July 2022 Term Sheet”). The Company agreed to pay the Representative: (i) $1.5 million in cash on July 29, 2022; (2) $1.0 million in cash no later than September 29, 2022 (the “Second Payment”); and (iii) $2.0 million on the earlier of November 30, 2022 and the completion by the Company of one or more qualifying equity offerings (collectively, the “Payments”). The Representative is also entitled to receive future cash payments conditioned on the achievement of certain development milestones for Adrulipase and to a percentage of any consideration received by the Company in the event of a license or sale of Adrulipase, subject to a cap. The Representative is also entitled to receive a percentage of the consideration received by the Company in the event of a license or sale of Niclosamide and will retain its existing milestone payment rights with respect to Niclosamide. In the event that the consideration received by the Company in connection with the sale or license of Adrulipase or Niclosamide consists of securities or other non-cash consideration, the Representative will have the right to elect either to receive its payment in such form of consideration or to cause the licensee or acquirer to assume the obligations described herein. In the event of a “Company Sale” (as defined in the July 2022 Term Sheet), the Representative is entitled to receive a pro rata share of the total consideration received by the Company or its stockholders up to $4.0 million (plus any unpaid Payments whether or not then due) based on a formula set forth in the July 2022 Term Sheet. In certain circumstances, the Representative has the right to treat a “Company Sale” as a sale of ardulipase or Niclosamide, as applicable, and to treat the Company Sale as a sale of the related asset and to receive the consideration with respect thereto described herein.

In the July 2022 Term Sheet, the Representative agreed to stay the FWB Action for a period of 90 days and to eliminate the Company’s obligation to pay a portion of any offering proceeds to the Representative. In addition, the Company’s obligation to use commercially reasonable efforts to develop Niclosamide will be deferred for a period of 24 months from the date of the July 2022 Term Sheet. Effective upon the Second Payment, the Representative dismissed the FWB Action with prejudice and extinguished the remaining fixed payment obligations owed to the former FWB shareholders. On November 30, 2022, the Company entered into a formal settlement agreement with the Representative on substantially the same terms as the July 2022 Term Sheet (the “November 2022 Settlement Agreement”).

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Accounting Treatment

Under the July 2022 Term Sheet, the $1.5 million in cash due and paid on July 29, 2022, as well as the Second Payment due and paid in September 2022, were recorded as a reduction to current liabilities for the three months ended September 30, 2022. Effective upon the Second Payment, the approximately $10.1 million of remaining fixed payment obligations previously owed to the former FWB shareholders was settled. The third payment obligation of $2.0 million due and paid by November 30, 2022 was recorded as research and development expense in the three months ended December 31, 2022.

The remaining unachieved potential milestone payments and revenue share are not yet considered probable, therefore have not been accrued as of September 30, 2023. Depending on the status of development at the time a contingent payment is recognized, the Company may determine that the payment should be expensed as research and development or be capitalized as an intangible asset. This determination will be based on the facts and circumstances that exist at the time a contingent payment is recognized.

Note 5 – Property, Equipment and Leasehold Improvements

Property, equipment, and leasehold improvements consisted of the following:

September 30, 

    

2023

    

December 31, 

(unaudited)

2022

Computer equipment and software

$

11,540

$

11,540

Office equipment

 

48,278

 

48,278

Leasehold improvements

 

28,000

 

28,000

Total property, plant, and equipment

 

87,818

 

87,818

Less accumulated depreciation

 

(65,934)

 

(43,979)

Property, plant and equipment, net

$

21,884

$

43,839

Depreciation expense for each of the three months ended September 30, 2023 and 2022 was approximately $7,300, and for each of the nine months ended September 30, 2023 and 2022 was approximately $22,000.

Note 6 –Goodwill

Goodwill is as follows:

    

Goodwill

Balance on January 1, 2022

$

1,911,705

Foreign currency translation

 

(227,523)

Balance on December 31, 2022

 

1,684,182

Foreign currency translation

 

Balance on September 30, 2023 (unaudited)

$

1,684,182

Note 7 - Accrued Expenses

Accrued expenses consisted of the following:

September 30, 

    

2023

    

December 31, 

(unaudited)

2022

License agreement

$

500,000

$

Professional fees

244,215

309,867

Consulting fees

82,974

4,969

Payroll and benefits

7,351

Clinical trials

5,340

Total accrued expenses

$

834,540

$

320,176

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Note 8 – Note Payable

Directors and Officers Liability Insurance

On November 30, 2022, the Company entered into 9-month financing agreements for its directors and officer’s liability insurance, as well as other corporate insurances, in the amount of approximately $677,000 that bears interest at an annual rate of 6.79%. Monthly payments, including principal and interest, of approximately $77,000 per month. The balance due under these financing agreements was approximately $0 and $603,000 at September 30, 2023 and December 31, 2022, respectively.

Note 9  Capital Stock

Common Stock and Preferred Stock

The Company’s amended and restated certificate of incorporation, as amended to date, (the “Charter”) authorizes the issuance of up to 50,000,000 shares of Common Stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share.

On January 18, 2023, the Company effected a reverse stock split, whereby every seven shares of the Company’s issued and outstanding Common Stock was converted automatically into one issued and outstanding share of Common Stock, but without any change in the number of authorized shares of Common Stock and the par value per share.

On August 26, 2022, the Company effected a reverse stock split, whereby every thirty shares of the Company’s issued and outstanding Common Stock was converted automatically into one issued and outstanding share of Common Stock, but without any change in the number of authorized shares of Common Stock and the par value per share.

All share and per share amounts have been retroactively restated to reflect the reverse stock splits referenced above.

The Company had 13,463,479 and 995,003 shares of its Common Stock issued and outstanding on September 30, 2023 and December 31, 2022, respectively.

The Company had approximately 521.72 and 550.17 shares of Series B preferred stock issued and outstanding on September 30, 2023 and December 31, 2022, respectively.

The Company had 0 shares of Series C, Series D, Series E and Series F preferred stock issued and outstanding on September 30, 2023 and December 31, 2022.

Most Favored Nations Exchange Right and Waiver Agreements

In the event the Company effects any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents for cash consideration, or a combination of units thereof (a “Subsequent Financing”), each holder of the Series B Preferred Stock had the right, subject to certain exceptions set forth in the Series B Certificate of Designations, at its option, to exchange (in lieu of cash subscription payments) all or some of the Series B Preferred Stock then held (with a value per share of Series B Preferred Stock equal to the stated value of each share of Series B Preferred Stock, or $7,700, plus accrued and unpaid dividends thereon, of the Series B Preferred Stock (the “Exchange Amount”) for any securities or units issued in a Subsequent Financing on dollar-for-dollar basis (the “Series B Exchange Right”).

Between February 1, 2022 and February 7, 2022, the Company entered into waiver agreements (the “Waiver”) with certain holders of Series B Preferred Stock, pursuant to which the Company agreed to pay a cash waiver fee equal to ten percent of the stated value of the shares of Series B Preferred Stock held by such holder (other than holders who are insiders who did not receive a cash waiver fee) and such holder agreed to irrevocably waive its Series B Exchange Right with respect to any Subsequent Financing that occurred from and after the date of the Waiver until December 31, 2022.

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During the nine months ended September 30, 2022, the Company entered into Waivers with holders of approximately $2.88 million of stated value of Series B Preferred Stock. The Company also entered into Waivers with Company insiders holding approximately $0.047 million of stated value of Series B Preferred Stock for which the Company did not pay a waiver fee. The cash waivers paid of approximately $0.233 million were recorded as other expense on the Company’s condensed consolidated statements of operations for the nine months ended September 30, 2022.

Effective May 12, 2022, the holders of 81.3% of the outstanding shares of the Series B Preferred Stock (the “Consenting Holders”) permanently waived for themselves and all other holders of the Series B Preferred Stock the Series B Exchange Right with respect to any Subsequent Financing occurring on or after January 1, 2022 (the “Permanent Waiver”). Holders of Series B Preferred Stock as of the April 27, 2022 record date were entitled to notice of and to consent to the Permanent Waiver (the “Record Holders”).

Pursuant to the terms of a Waiver Agreement entered into by the Company and the Consenting Holders (the “Waiver Agreement”), the Company permanently reduced the exercise price of the Series B Warrants originally issued on July 16, 2020 (the “Series B Warrants”) held by the Consenting Holders to $52.50 per share or, in the case of Consenting Holders who are officers and directors of the Company, $69.174 (the “Exercise Price Reduction”). Only Consenting Holders are entitled to the Exercise Price Reduction. Series B Warrants to purchase an aggregate of approximately 1,196 shares of Common Stock received the Exercise Price Reduction which was effective as of the Expiration Date. As a result of the Exercise Price Reduction of the Series B Warrants described above, the Company recorded a deemed dividend of approximately $0.047 million for the nine months ended September 30, 2022.

From inception through September 30, 2023, (i) holders of approximately 1,839.76 shares of Series B Preferred Stock with an aggregate Exchange Amount of approximately $14.4 million had previously elected to exercise their Series B Exchange Rights into Series C Preferred Stock, convertible into an aggregate of 9,058 shares of Common Stock (which conversion the Company has elected to make in full), and additional warrants exercisable for up to an aggregate of 9,058 shares of Common Stock, (ii) holders of approximately 123.42 shares of Series B Preferred Stock with an aggregate Exchange Amount of approximately $1.1 million had previously elected to exercise their Series B Exchange Rights into 1,969 shares of Common Stock with no warrants, and (iii) holders of approximately 30.91 shares of Series B Preferred Stock with an aggregate Exchange Amount of approximately $265,000 had previously elected to exercise their Series B Exchange Rights into 909 shares of Common Stock, and additional Series C Warrants exercisable for up to an aggregate of 909 shares of Common Stock.

At The Market Agreement with H.C. Wainwright

On May 26, 2021, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), as sales agent, pursuant to which the Company may issue and sell, from time to time, through Wainwright, shares of its Common Stock, and pursuant to which Wainwright may sell its Common Stock by any method permitted by law deemed to be an “at the market offering” as defined by Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. The Company will pay Wainwright a commission of 3.0% of the aggregate gross proceeds from each sale of Common Stock. As of May 24, 2022, the Company was authorized to offer and sell up to $8.0 million of its Common Stock pursuant to the ATM Agreement over 12-month periods. During the year ended December 31, 2022, the Company issued and sold an aggregate of 217,036 shares of Common Stock under the ATM Agreement for which the Company received gross proceeds of approximately $8.0 million less issuance costs incurred of approximately $309,000. As of September 30, 2023, the maximum dollars authorized under the ATM Agreement were issued.

September 2023 Inducement Offering

On September 14, 2023, the Company entered into warrant exercise inducement offer letters with certain holders (the “September 2023 Holders”) of warrants to purchase shares of the Company’s Common Stock (the “September 2023 Existing Warrants”) pursuant to which the September 2023 Holders agreed to exercise for cash their September 2023 Existing Warrants to purchase 5,882,036 shares of the Company’s Common Stock, in the aggregate, at a reduced exercised price of $0.43 per share, in exchange for the Company’s agreement to issue new warrants (the “September 2023 Inducement Warrants”) on substantially the same terms as the September 2023 Existing Warrants as described below, to purchase up to 11,764,072 shares of the Company’s Common Stock (the “September 2023 Inducement Warrant Shares”) and a cash payment of $0.125 per September 2023 Inducement Warrant Share which was paid in full upon the exercise of the September 2023 Existing Warrants (the “September 2023 Inducement Offering”). The Company received aggregate gross proceeds of approximately $4.0 million from the exercise of the September 2023 Existing Warrants by the Holders and the sale of the September 2023 Inducement Warrants. The Company engaged Roth Capital Partners, LLC (“Roth”) to act as its financial advisor in connection with the transactions summarized above and paid Roth $220,000 for its services.

-17-

July 2023 Offering

On July 21, 2023, the Company completed an offering (the “July 2023 Offering”) for an aggregate of (i) 610,000 shares of Common Stock, (ii) pre-funded warrants (the “July 2023 Pre-Funded Warrants”) to purchase up to an aggregate of 2,675,000 shares of Common Stock, and (iii) common warrants (the “July 2023 Warrants”) to purchase up to an aggregate of 6,570,000 shares of Common Stock. The public offering price for each share of Common Stock and accompanying July 2023 Warrant to purchase one share of Common Stock was $0.64 per share. The July 2023 Pre-Funded Warrants have an exercise price of $0.0001 per share, are exercisable immediately and will expire when exercised in full. To date, pre-funded warrants have been exercised to purchase 2,675,000 shares of Common Stock. The July 2023 Warrants have an exercise price of $0.64 per share, are exercisable immediately and will expire five years from the initial exercise date.

The Company received gross proceeds of approximately $2.1 million less placement agent’s fees and other offering expenses of approximately $250,000.

June 2023 Inducement Offering

On June 13, 2023, the Company entered into warrant exercise inducement offer letters with certain holders (the “June 2023 Holders”) of warrants to purchase shares of the Company’s Common Stock (the “June 2023 Existing Warrants”) pursuant to which the June 2023 Holders agreed to exercise for cash their June 2023 Existing Warrants to purchase 1,724,332 shares of the Company’s Common Stock, in the aggregate, at a reduced exercised price of $1.15 per share, in exchange for the Company’s agreement to issue new warrants (the “June 2023 Inducement Warrants”) on substantially the same terms as the June 2023 Existing Warrants as described below, to purchase up to 3,448,664 shares of the Company’s Common Stock (the “June 2023 Inducement Warrant Shares”) and a cash payment of $0.125 per June 2023 Inducement Warrant Share which was paid in full upon the exercise of the June 2023 Existing Warrants (the “June 2023 Inducement Offering”). The Company received aggregate gross proceeds of approximately $2.4 million from the exercise of the June 2023 Existing Warrants by the June 2023 Holders and the sale of the June 2023 Inducement Warrants. The Company engaged Roth to act as its financial advisor in connection with the transactions summarized above and paid Roth $150,000 for its services.

March 2023 Private Placement

On March 15, 2023, the Company completed a private placement offering (the “March 2023 Offering”) priced at market under Nasdaq rules, for an aggregate of (i) 128,000 shares of Common Stock, (ii) pre-funded warrants (the “March 2023 Pre-Funded Warrants”) to purchase up to an aggregate of 895,018 shares of Common Stock and (iii) common warrants (the “March 2023 Warrants”) to purchase up to an aggregate of 2,046,036 shares of Common Stock. The public offering price for each share of Common Stock and accompanying March 2023 Warrant to purchase one share of Common Stock was $3.91 per share. The March 2023 Pre-Funded Warrants have an exercise price of $0.0001 per share, are exercisable immediately and will expire when exercised in full. The March 2023 Warrants have an exercise price of $3.66 per share, are exercisable immediately and will expire five years from the initial exercise date.

The Company received gross proceeds of approximately $4.0 million less placement agent’s fees and other offering expenses of approximately $300,000.

July 2022 Private Placement

On July 15, 2022, the Company completed a private placement (the “July 2022 Offering”) in which the Company issued an aggregate of (i) 150 shares of the Company’s Series D Preferred Stock, with a stated value $1,000 per share, convertible into an aggregate of 4,761 shares of the Common Stock, (ii) 150 shares of the Company’s Series E Preferred Stock, with a stated value $1,000 per share, convertible into an aggregate of 4,761 shares of Common Stock, and (iii) Series D Warrants to purchase up to an aggregate of 9,522 shares of Common Stock (the “July 2022 Warrants”). The Series D Preferred Stock are convertible into an aggregate of 4,761 shares of Common Stock at a conversion price of $31.50 per share and the Series E Preferred Shares are convertible, following the August 26, 2022 reverse stock split, into an aggregate of 4,761 shares of Common Stock at a conversion price of $31.50 per share. The July 2022 Warrants have an exercise price of $31.50 per share and will expire five years from the initial exercise date. The Company received gross proceeds of approximately $300,000 from the July 2022 Offering, before deducting the offering expenses payable by the Company.

-18-

As compensation to Wainwright, who was the exclusive placement agent in connection with the July 2022 Offering, the Company paid Wainwright a cash fee of 7% of the aggregate gross proceeds raised and reimbursement of certain expenses and legal fees. The Company also issued to designees of Wainwright in a private placement warrants (the “Placement Agent Warrants”) to purchase up to 571 shares of Common Stock. The Placement Agent Warrants were cancelled and terminated on October 5, 2022. None of the Placement Agent Warrants were exercised prior to cancellation and termination.

During the three months ended September 30, 2022, all of the Series D Preferred Shares and the Series E Preferred Shares were converted into 9,522 shares of Common Stock.

March 2022 Registered Direct Offering

On March 2, 2022, the Company completed a registered direct offering (the “March 2022 Offering”) priced at the market under Nasdaq rules for an aggregate of 7,857 shares of Common Stock, pre-funded warrants exercisable for an aggregate of up to 23,086 shares of Common Stock (the “March 2022 Pre-Funded Warrants”), and warrants (the “March 2022 Warrants”) exercisable for an aggregate of up to 30,943 shares of Common Stock. The public offering price for each share of Common Stock and accompanying March 2022 Warrant to purchase one share of Common Stock was $290.85, and the public offering price for each March 2022 Pre-Funded Warrant and accompanying March 2022 Warrant to purchase one share of Common Stock was $288.75. The total net proceeds from the March 2022 Offering were approximately $8.0 million. The March 2022 Warrants have an exercise price of $264.60 per share and will be exercisable for five years from the issuance date. The March 2022 Pre-Funded Warrants are exercisable for one share of Common Stock at an exercise price of $2.10 per share and will expire when exercised in full. Additionally, the Company issued warrants to the placement agent (the “March 2022 Placement Agent Warrants”) to purchase 1,856 shares of Common Stock, which was equal to 6.0% of the aggregate number of shares of Common Stock and March 2022 Pre-Funded Warrants placed in the March 2022 Offering. The March 2022 Placement Agent Warrants have a term of five years from the date of the prospectus supplement relating to the March 2022 Offering and an exercise price of $363.30 per share.

The Company received gross proceeds of approximately $9.0 million less placement agent’s fees and other offering expenses of approximately $1.0 million.

Common Stock Issuances

Issuances for the Three Months Ended September 30, 2023

During the three months ended September 30, 2023, the Company issued 610,000 shares of Common Stock under the July 2023 Offering for which the Company received net proceeds of approximately $1.8 million.

During the three months ended September 30, 2023, the Company issued 5,882,036 shares of Common Stock upon the exercise of an aggregate of 5,882,036 investor warrants for which the Company received net proceeds of approximately $3.7 million (See Note 10).

During the three months ended September 30, 2023, the Company issued an aggregate of 2,675,000 shares of Common Stock upon the conversion of pre-funded warrants issued at a par value of $0.0001.

During the three months ended September 30, 2023, the Company issued an aggregate of 417 shares of Common Stock upon the exchange of an aggregate of 24.22 shares of Series B Preferred Stock with a stated value of approximately $186,500 plus accrued dividends of approximately $43,300.

During the three months ended September 30, 2023, the Company issued an aggregate of 50,000 shares of its Common Stock to consultants with a grant date fair value of approximately $76,000 for investor relations services provided, which was recorded as stock-based compensation and included as part of general and administrative expense.

During the three months ended September 30, 2023, the Company issued an aggregate of 37,031 shares of Common Stock upon the vesting of restricted stock units (“RSUs”) (See Note 11).

-19-

Issuances for the Nine Months Ended September 30, 2023

During the nine months ended September 30, 2023, the Company issued 128,000 shares of Common Stock under the March 2023 Offering for which the Company received net proceeds of approximately $3.7 million.

During the nine months ended September 30, 2023, the Company issued 1,724,332 shares of Common Stock upon the exercise of an aggregate of 1,724,332 investor warrants for which the Company received net proceeds of approximately $2.2 million (See Note 10).

During the nine months ended September 30, 2023, the Company issued 610,000 shares of Common Stock under the July 2023 Offering for which the Company received net proceeds of approximately $1.8 million.

During the nine months ended September 30, 2023, the Company issued 5,882,036 shares of Common Stock upon the exercise of an aggregate of 5,882,036 investor warrants for which the Company received net proceeds of approximately $3.7 million (See Note 10).

During the nine months ended September 30, 2023, the Company issued an aggregate of 3,999,493 shares of Common Stock upon the conversion of pre-funded warrants issued at a par value of $0.0001 (See Note 10).

During the nine months ended September 30, 2023, the Company issued an aggregate of 487 shares of Common Stock upon the exchange of an aggregate of 28.45 shares of Series B Preferred Stock with a stated value of approximately $219,000 plus accrued dividends of approximately $49,500.

During the nine months ended September 30, 2023, the Company issued an aggregate of 50,000 shares of its Common Stock to consultants with a grant date fair value of approximately $76,000 for investor relations services provided, which was recorded as stock-based compensation and included as part of general and administrative expense.

During the nine months ended September 30, 2023, the Company issued an aggregate of 77,095 shares of Common Stock upon the vesting of RSUs (See Note 11).

During the nine months ended September 30, 2023, the Company cancelled an aggregate of 2,967 shares of Common Stock in connection with the 1-for-7 reverse stock split on January 18, 2023.

Issuances for the Three Months Ended September 30, 2022

During the three months ended September 30, 2022, the Company issued an aggregate of 9,522 shares of Common Stock upon the conversion of Series E and Series D preferred stock.

During the three months ended September 30, 2022, the Company issued and sold an aggregate of 211,968 shares of Common Stock under the ATM Agreement for which the Company received net proceeds of approximately $7.4 million.

During the three months ended September 30, 2022, the Company cancelled an aggregate of 12 shares of Common Stock in connection with the 30-for-1 reverse stock split on August 26, 2022.

Issuances for the Nine Months Ended September 30, 2022

During the nine months ended September 30, 2022, the Company issued an aggregate of 9,522 shares of Common Stock upon the conversion of Series E and Series D preferred stock.

During the nine months ended September 30, 2022, the Company issued 7,857 shares of Common Stock under the March 2022 Offering for which the Company received net proceeds of approximately $8.0 million.

During the nine months ended September 30, 2022, the Company issued and sold an aggregate of 217,038 shares of Common Stock under the ATM Agreement for which the Company received net proceeds of approximately $7.7 million.

During the nine months ended September 30, 2022, the Company issued an aggregate of 23,086 shares of Common Stock upon the conversion of the March 2022 Pre-Funded Warrants issued at a par value of $2.10 (See Note 10).

-20-

During the nine months ended September 30, 2022, the Company issued an aggregate of 910 shares of Common Stock and accompanying Exchange Warrants upon the exchange of an aggregate of 30.92 shares of Series B Preferred Stock with a stated value of approximately $238,000 plus accrued dividends of approximately $27,000.

During the nine months ended September 30, 2022, the Company issued an aggregate of 429 shares of its Common Stock to consultants with a grant date fair value of approximately $119,000 for investor relations services provided, which was recorded as stock-based compensation and included as part of general and administrative expense.

During the nine months ended September 30, 2022, the Company cancelled an aggregate of 12 shares of Common Stock in connection with the 30-for-1 reverse stock split on August 26, 2022.

Note 10  Warrants

Warrant activity for the nine months ended September 30, 2023 and 2022 was as follows:

Weighted

Weighted

Average

Average

Number of

Exercise Price

Remaining

    

Warrants

    

Per Share

    

Term in Years

Outstanding and exercisable on January 1, 2023

 

2,179,798

$

19.16

 

5.50

Issued

 

27,398,790

 

0.73

 

4.59

Expired

 

(116)

 

773.79

 

Exercised

 

(11,605,861)

 

0.96

 

4.72

Warrants outstanding and exercisable on September 30, 2023

 

17,972,611

$

2.38

 

4.89

Warrants outstanding and exercisable on January 1, 2022

 

26,089

$

1,992.90

 

3.95

Issued

 

66,317

 

142.52

 

4.49

Expired

 

(596)

 

7,880.46

 

Exercised

 

(23,086)

 

2.10

 

4.42

Warrants outstanding and exercisable on September 30, 2022

 

68,724

$

631.33

 

4.07

The outstanding warrants expire from 2024 through 2028.

During the nine months ended September 30, 2023, the Company issued warrants and pre-funded warrants to purchase 2,941,054 shares of the Company’s Common Stock in connection with the March 2023 Offering, warrants to purchase 3,448,664 shares of the Company’s Common Stock in connection with the June 2023 Inducement Offering, warrants and pre-funded warrants to purchase 9,245,000 shares of the Company’s Common Stock in connection with the July 2023 Offering, and warrants to purchase 11,764,072 shares of the Company’s Common Stock in connection with the September 2023 Inducement Offering (See Note 9).

During the nine months ended September 30, 2023, an investor exercised pre-funded warrants to purchase 3,999,493 shares of the Company’s Common Stock in connection with previous offerings. During the nine months ended September 30, 2023, an investor exercised warrants to purchase 7,606,368 shares of the Company’s Common Stock in connection with previous offerings as a result of the June 2023 and September 2023 Inducement Offerings (see Note 9).

During the nine months ended September 30, 2022, the Company issued warrants, pre-funded warrants, and placement agent warrants to purchase 55,885 shares of the Company’s Common Stock in connection with the March 2022 Offering, Series C warrants to purchase 910 shares of the Company’s Common Stock in connection with a Series B Preferred Stock exchange, as well as July 2022 Warrants to purchase 9,522 shares of Common Stock in connection with the July 2022 Offering (see Note 9).

During the nine months ended September 30, 2022, an investor exercised pre-funded warrants to purchase 23,086 shares of the Company’s Common Stock in connection with previous offerings.

-21-

In connection with the March 2022 Offering, the Company entered into a warrant amendment agreement with an investor pursuant to which the Company agreed to amend the investor’s existing warrants to purchase up to 5,080 shares of Common Stock at an exercise price of $1,680 per share issued in January 2021 and warrants to purchase up to 1,872 shares of Common Stock at an exercise price of $2,541 per share issued in March 2021 (the “March Existing Warrants”), in consideration for such investor’s purchase of $9.0 million of securities in the March 2022 Offering and payment of $5.901 per share for each share of Common Stock issuable upon exercise of the March Existing Warrants to (i) lower the exercise price of the March Existing Warrants to $264.60 per share and (ii) extend the termination date of the March Existing Warrants to March 2, 2027.

Note 11 – Equity Incentive Plan

The Company’s Board and stockholders adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”), which took effect on May 12, 2014. The Company’s Board and stockholders adopted and approved the 2020 Omnibus Equity Incentive Plan (the “2020 Plan”), which took effect on September 11, 2020. From the adoption and approval of the 2020 Plan, no new awards have been or will be made under the 2014 Plan.

The 2020 Plan allows for the issuance of securities, including stock options to employees, Board members and consultants. The initial number of shares of Common Stock available for issuance under the 2020 Plan was 4,761 shares, which will, on January 1 of each calendar year, unless the Board decides otherwise, automatically increase to equal ten percent (10)% of the total number of shares of Common Stock outstanding on December 31 of the immediately preceding calendar year, calculated on an As Converted Basis. As Converted Shares include all outstanding shares of Common Stock and all shares of Common Stock issuable upon the conversion of outstanding preferred stock, warrants and other convertible securities, but will not include any shares of Common Stock issuable upon the exercise of options and other convertible securities issued pursuant to either the 2014 Plan or the 2020 Plan. The number of shares permitted to be issued as “incentive stock options” (“ISOs”) is 7,142 under the 2020 Plan.

On April 20, 2023, the Company’s board of directors approved an amendment (i) increasing the number of shares of Common Stock available for issuance under the 2020 Plan from 317,480 to 1,167,480 and (ii) increasing the number of shares of our Common Stock otherwise available under the 2020 Plan that may be granted as ISOs to 5,000,000 shares. The board of directors directed that the amendment be submitted to the stockholders of the Company at the Company’s annual meeting of stockholders. On June 22, 2023, the stockholders approved the amendment to the 2020 Plan at the annual meeting of stockholders.

As of January 1, 2023, the number of shares of Common Stock available for issuance under the 2020 Plan automatically increased to 317,480 under the 2020 Plan’s evergreen provision.

As of June 22, 2023, as a result of approval at the annual shareholders’ meeting, the number of shares of Common Stock available for issuance under the 2020 Plan increased to 1,167,480.

As of September 30, 2023, there were an aggregate of 1,024 total shares available (but un-issuable) under the 2014 Plan, of which 732 are issued and outstanding, and 292 shares are reserved subject to issuance of restricted stock and RSUs.

As of September 30, 2023, 1,167,480 total shares were authorized under the 2020 Plan, of which 158,313 were issued and outstanding and 1,009,167 shares were available for potential issuances.

-22-

During the nine months ended September 30, 2023 and 2022, stock option activity under the 2014 Plan and 2020 Plan was as follows:

Average

Remaining

Number

Exercise

Contract

Intrinsic

    

of Shares

    

Price

    

Life (Years)

    

Value

Outstanding at January 1, 2023

 

4,076

$

958.14

 

8.22

$

Granted

 

5,000

 

3.73

 

9.40

 

Forfeited

(11)

573.68

Expired

(109)

4,363.67

Outstanding at September 30, 2023

 

8,956

$

397.33

 

8.68

$

Exercisable at September 30, 2023

 

6,625

$

464.22

 

8.62

$

Outstanding at January 1, 2022

 

1,941

$

2,470.99

 

7.28

$

Granted

 

3,266

 

288.19

 

7.50

 

Forfeited

(678)

841.40

Cancelled

 

(535)

 

2,485.98

 

 

Outstanding at September 30, 2022

 

3,994

$

970.41

 

8.45

$

Exercisable at September 30, 2022

 

1,962

$

1,509.13

 

7.75

$

During the nine months ended September 30, 2023 and 2022, the Board approved the grant of options to purchase 5,000 and 3,266 shares of Common Stock, respectively. All option grants were pursuant to the 2020 Plan. In general, options granted under the 2020 Plan vest monthly over a 36-month period.

During the nine months ended September 30, 2023 and 2022, stock options to purchase 11 and 678 shares of Common Stock, respectively, were forfeited. During the nine months ended September 30, 2023, stock options to purchase 109 shares of Common Stock expired. During the nine months ended September 30, 2022, stock options to purchase 535 shares of Common Stock were cancelled.

For the nine months ended September 30, 2023 and 2022, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

    

2023

    

2022

 

Contractual term (in years)

 

6.50

6.50

Expected Volatility

 

98.80

%

90.92

%

Risk-free interest rate

 

4.08

%

1.11

%

Expected Dividend yield

 

0

%

0

%

Using the Black-Scholes Option Pricing Model, the estimated weighted average fair value of an option to purchase one share of common stock granted during the nine months ended September 30, 2023 and 2022 was $3.05 and $223.72, respectively.

Restricted Stock and Restricted Stock Units

Restricted stock refers to shares of Common Stock subject to vesting based on certain service, performance, and market conditions. Restricted stock units (“RSUs”) refer to an award which constitutes a promise to grant shares of Common Stock at the end of a specified restriction period.

As of September 30, 2023 and 2022, under the 2014 Plan, the Company had 130 shares of restricted stock outstanding and an aggregate unrecognized restricted Common Stock expense of approximately $388,000, which will be recognized when vesting of certain milestones become probable.

-23-

During the nine months ended September 30, 2023, RSU activity under the 2020 Plan was as follows:

    

Weighted-Average

    

Weighted-Average

Number

Grant Date

Remaining Recognition

    

of Shares

    

Fair Value

    

Period (Years)

Non-vested Outstanding at January 1, 2023

$

Awarded

 

160,239

 

6.20

 

  

Vested

(113,595)

6.20

Cancelled

 

(10,150)

 

6.20

 

  

Non-vested Outstanding at September 30, 2023

 

36,494

$

6.20

 

0.25

During the nine months ended September 30, 2023, the Board approved the grant of 160,239 RSUs. All grants of RSUs were pursuant to the 2020 Plan, vest quarterly over a one-year period and are issued in the following quarter. During the nine months ended September 30, 2023, 113,595 RSUs vested, of which 36,500 were issued in October 2023.

The total stock-based compensation expense for employees and non-employees is included in the accompanying condensed consolidated statements of operations and as follows:

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2023

    

2022

    

2023

    

2022

Research and development

$

34,847

$

22,623

$

111,092

$

93,870

General and administrative

 

228,483

 

69,018

 

803,258

 

590,908

Total stock-based compensation expense

$

263,330

$

91,641

$

914,350

$

684,778

As of September 30, 2023, the Company had unrecognized stock-based compensation expense related to stock options and RSUs of approximately $0.6 million. Approximately $0.4 million of this unrecognized expense will be recognized over the average remaining vesting term of the stock awards of 0.66 years. Approximately $0.2 million of this unrecognized expense will vest upon achieving certain clinical and/or corporate milestones. The Company will recognize the expense related to these milestones when the milestones become probable.

As of September 30, 2022, the Company had unrecognized stock-based compensation expense of approximately $0.9 million. Approximately $0.4 million of this unrecognized expense will be recognized over the average remaining vesting term of the stock options of 8.44 years. Approximately $0.5 million of this unrecognized expense will vest upon achieving certain clinical and/or corporate milestones. The Company will recognize the expense related to these milestones when the milestones become probable.

Note 12 – Agreements

License Agreement with Sanofi

On September 13, 2023, the Company entered into a License Agreement with Sanofi, pursuant to which the Company received a license to obtain certain exclusive worldwide rights to develop and commercialize Capeserod, a selective 5-HT4 receptor partial agonist which the Company intends to repurpose and develop for gastrointestinal indications.

The Company paid Sanofi an upfront payment of $500,000 in October 2023 and Sanofi will be eligible to receive up to $46 million in potential development and regulatory milestone payments and up to $235 million in potential commercial milestone payments. Sanofi will also be eligible to receive mid-to-high single-digit royalties on net sales, as well as a percentage of sublicense and transfer revenues with respect to Capeserod. Sanofi will also have a right of first refusal with respect to Capeserod out-licensing transactions.

The upfront payment of $500,000 was recorded as research and development expense in the three and nine months ended September 30, 2023. Depending on the status of development at the time a contingent payment is recognized, the Company may determine that the payment should be expensed as research and development or be capitalized as an intangible asset. This determination will be based on the facts and circumstances that exist at the time a contingent payment is recognized.

-24-

The License Agreement shall expire on a country-by-country basis upon the later of: (i) the expiration of the last to expire valid claim of an applicable patent in such country covering such licensed product, (ii) the expiration of the regulatory exclusivity for such licensed product in the applicable country and (iii) the tenth anniversary of the date of first commercial sale of a licensed product in such country. Each party may terminate the License Agreement if the other party materially breaches its obligations under the License Agreement and fails to cure such material breach within 60 days from the date of such notice of breach, except in the case of payment breach, as to which the breaching party will have only a ten-day cure period. Sanofi may terminate the License Agreement upon any bankruptcy proceedings by the Company. The Company may terminate the License Agreement by providing Sanofi with at least 60 days prior written notice; provided, however, that Sanofi shall be entitled to any and all payments due and owed to Sanofi prior to the effective date of termination.

Note 13 – Leases

The Company leases its office under an operating lease which is subject to various rent provisions and escalation clauses.

The Company is a party to one real property operating lease for the rental of office space. The Company has office space of 3,472 square feet in Boca Raton, Florida that is used for its corporate headquarters with a term through August 31, 2026. The Company previously had office space in Brooklyn, New York on a month-to-month basis, which was terminated in June 2023. The Company was also previously a party to office space in Hayward, California with a term through May 31, 2022, which was not renewed upon its expiration.

The Company’s lease expires in 2026. The escalation clause is indeterminable and considered not material and has been excluded from minimum future annual rental payments.

Lease expense was approximately $42,000 and $36,000, respectively, for the three months ended September 30, 2023 and 2022 and $114,000 and $115,000, respectively, for the nine months ended September 30, 2023 and 2022.

The weighted-average remaining lease term and weighted-average discount rate under operating leases as of September 30, 2023 are:

September 30, 

 

    

2023

 

Lease term and discount rate

 

2.9

Weighted-average remaining lease term (years)

 

Weighted-average discount rate

 

7.00

%

Maturities of operating lease liabilities as of September 30, 2023, were as follows:

2023 (remainder of year)

$

42,360

2024

 

86,202

2025

 

88,788

2026

 

60,593

Total lease payments

 

277,943

Less imputed interest

 

(46,651)

Present value of lease liabilities

$

231,292

Note 14 - Net (Loss) Income per Common Share

Basic net loss per share is computed by dividing net loss available to Common Stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants and conversion of convertible debt that are not deemed to be anti-dilutive. The dilutive effect of the outstanding stock options and warrants is computed using the treasury stock method.

-25-

All shares of Common Stock that may potentially be issued in the future are as follows:

Three Months Ended

    

Nine Months Ended

    

September 30, 2023

    

September 30, 2022

    

September 30, 2023

    

September 30, 2022

Net (loss) income applicable to common shareholders

$

(3,483,450)

$

4,233,753

$

(11,925,090)

$

(10,989,148)

Basic weighted average shares outstanding

 

7,566,018

 

228,773

 

3,763,506

 

136,113

Convertible preferred stock

 

 

3,475

 

 

Diluted weighted average shares outstanding

 

7,566,018

 

232,248

 

3,763,506

 

136,113

Basic net (loss) income per share

$

(0.46)

$

18.51

$

(3.17)

$

(80.74)

Diluted net (loss) income per share

$

(0.46)

$

18.23

$

(3.17)

$

(80.74)

All shares of Common Stock that may potentially be issued in the future are as follows:

September 30, 2023

September 30, 2022

    

(unaudited)

    

(unaudited)

Common stock warrants

 

17,972,611

 

68,724

Stock options

 

8,956

 

3,994

RSUs not yet issued

72,994

Convertible preferred stock (1)

 

3,084

 

3,475

Restricted stock not yet issued

 

162

 

162

Total shares of common stock issuable

 

18,057,807

 

76,355

(1)Convertible preferred stock is assumed to be converted at the rate of $1,617 per common share, which is the conversion price as of September 30, 2023.

Note 15 - Employee Benefit Plans

401(k) Plan

Since 2015, the Company has sponsored a multiple employer defined contribution benefit plan, which complies with Section 401(k) of the Internal Revenue Code covering substantially all employees of the Company. All employees are eligible to participate in the plan. Employees may contribute from 1% to 100% of their compensation and the Company matches an amount equal to 100% on the first 6% of the employee contribution and may also make discretionary profit-sharing contributions.

Employer contributions under this 401(k) plan amounted to approximately $21,000 for each of the three months ended September 30, 2023 and 2022, and approximately $68,000 and $97,000 for the nine months ended September 30, 2023 and 2022, respectively.

Note 16 - Subsequent Event

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were available to be issued. The Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements except for the item noted below.

On October 26, 2023, the Company received a notice from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that in connection with the July 2023 Offering, the Company was not in compliance with Nasdaq’s shareholder approval requirements set forth in listing rule 5635(d), which requires prior shareholder approval for transactions, other than public offerings, involving the issuance of 20% or more of the pre-transaction shares outstanding at less than the Minimum Price. The Company has 45 calendar days to submit a plan to regain compliance. If the plan is accepted, the Staff can grant an extension of up to 180 calendar days from the date of the letter to evidence compliance.

-26-

ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this report to First Wave,” “AzurRx,” “Company,” “we,” “us,” “our, or similar references mean First Wave BioPharma, Inc. and its subsidiaries on a consolidated basis. References to First Wave BioPharma refer to First Wave BioPharma, Inc. on an unconsolidated basis. References to AzurRx SAS refer to First Wave BioPharmas former wholly owned subsidiary through which we previously conducted our European operations. References to the SEC refer to the U.S. Securities and Exchange Commission.

Forward-Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and the related notes included elsewhere in this interim report. Our consolidated financial statements have been prepared in accordance with U.S. GAAP. The following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words expect, anticipate, intend, believe, or similar language. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our business and financial performance are subject to substantial risks and uncertainties. Actual results could differ materially from those projected in the forward-looking statements. In evaluating our business, you should carefully consider the information set forth under the heading Risk Factors included in our Annual Report filed on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 20, 2023. Readers are cautioned not to place undue reliance on these forward-looking statements.

Overview

We are engaged in the research and development of targeted, non-systemic therapies for the treatment of patients with gastrointestinal (“GI”) diseases. Non-systemic therapies are non-absorbable drugs that act locally, i.e., in the intestinal lumen, skin or mucosa, without reaching an individual’s systemic circulation.

We are currently focused on developing a therapeutic pipeline with multiple Phase 2 clinical stage programs built around three proprietary technologies –the biologic Adrulipase, a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients in cystic fibrosis and chronic pancreatitis patients with exocrine pancreatic insufficiency; Capeserod, a selective 5-HT4 receptor partial agonist which we will pursue for GI indications; and Niclosamide, an oral small molecule with anti-inflammatory properties for patients with inflammatory bowel diseases such as ulcerative colitis and Crohn’s disease.

Our Adrulipase programs are focused on the development of an oral, non-systemic, biologic capsule for the treatment of exocrine pancreatic insufficiency (“EPI”) in patients with cystic fibrosis (“CF”) and chronic pancreatitis (“CP”). Our goal is to provide CF and CP patients with a safe and effective therapy to control EPI that is non-animal derived and offers the potential to dramatically reduce their daily pill burden. In July 2023, we announced topline results from our Phase 2b monotherapy bridging study using a new enteric microgranule formulation of Adrulipase While the initial data from the study indicated that the enhanced Adrulipase formulation was safe and well tolerated and demonstrated an improvement over prior formulations of Adrulipase, it also indicated that it is likely that the primary efficacy endpoint was not achieved. We are continuing to assess this data, along with secondary efficacy endpoint data, and plan to schedule a Type C meeting with the FDA in 2024 to discuss next steps for the Adrulipase program.

Our Capeserod program was in-licensed from Sanofi in September 2023. Sanofi conducted Phase 1 and Phase 2 Central Nervous System (“CNS”) trials with over 600 patients. In Sanofi’s Phase 1 CNS trial, Capeserod appeared safe and well-tolerated. Research on Capeserod and subsequent artificial intelligence (“AI”) empowered analyses suggest that the drug possesses a unique mechanism of action that is applicable to several GI indications underserved by currently available therapeutics. We plan to repurpose Capeserod for GI indications and expect to initiate a Phase 2 clinical development program in either pediatric ulcerative colitis or gastroparesis. Sanofi retains the right of first refusal to develop and commercialize Capeserod.

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Our Niclosamide programs leverage proprietary oral and topical formulations to address multiple GI conditions, including inflammatory bowel diseases (“IBD”) indications. In 2022 we advanced two separate Phase 2 clinical programs of our Niclosamide formulations, including FW-COV for Severe Acute Respiratory Syndrome Coronavirus 2 (“COVID-19”) GI infections, and FW-UP for ulcerative proctitis (“UP”) and ulcerative proctosigmoiditis (“UPS”).

We announced the completion of enrollment in the FW-COV trial in January 2022 and topline results in August 2022. In September 2022 we announced that we would no longer pursue the anti-viral COVID-GI clinical indication as a result of the mixed results from the FW-COVID-19 trial. Additionally, we are devoting fewer resources to the FW-UP/UPS Niclosamide program due to inconclusive data from a small Phase 2 trial in Europe, the need for a new FDA-IND cleared protocol, and financial constraints.

We are further developing FW-ICI-AC for Immune Checkpoint Inhibitor-associated colitis (“ICI-AC”) and diarrhea in advanced stage oncology patients, which received FDA IND clearance for a Phase 2a clinical trial in October 2021, and two pre-IND programs of our Niclosamide therapies for additional IBD indications, including FW-UC for ulcerative colitis (“UC”) and FW-CD for Crohn’s disease (“CD”). However, the FW-ICI-AC program is currently on hold due to financial constraints.

Nasdaq Continued Listing Requirements

On August 17, 2023, we received a letter from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that we were not in compliance with the $2.5 million minimum stockholders’ equity requirement for continued listing of our common stock on Nasdaq as set forth in Nasdaq Listing Rule 5550(b)(1) (the “Minimum Stockholder’s Equity Rule”). In that regard, we reported stockholders’ equity of $881,960 in our Quarterly Report on Form 10-Q for the period ended June 30, 2023 (we did not then, and do not now, meet the alternative compliance standards relating to the market value of listed securities of $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years). On October 2, 2023, we submitted a plan to the Staff to regain compliance with the Minimum Stockholders’ Equity Rule. If our plan is accepted, the Staff can grant an extension of up to 180 calendar days from the date of the letter to evidence compliance. We are awaiting a determination from the Staff regarding our request for an extension to regain compliance.

On August 24, 2023, we received notice from the Staff indicating that, based upon the closing bid price of our common stock for the prior 30 consecutive business days, we were not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on Nasdaq as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). We have 180 days from August 24, 2023, or through February 20, 2024, to regain compliance with the Bid Price Rule.

On October 26, 2023, we received a notice from the Staff indicating that in connection with our July 2023 Offering, we were not in compliance with Nasdaq’s shareholder approval requirements set forth in listing rule 5635(d), which requires prior shareholder approval for transactions, other than public offerings, involving the issuance of 20% or more of the pre-transaction shares outstanding at less than the Minimum Price. We have 45 calendar days to submit a plan to regain compliance. If our plan is accepted, the Staff can grant an extension of up to 180 calendar days from the date of the letter to evidence compliance.

Liquidity and Capital Resources

To date, we have not generated any revenues and have experienced net losses and negative cash flows from our activities.

As of September 30, 2023, we had cash and cash equivalents of approximately $3.3 million, and had sustained cumulative losses attributable to common stockholders of approximately $180.2 million. We anticipate having sufficient cash to fund planned operations through December 2023, however, the acceleration or reduction of cash outflows by management can significantly impact the timing for the need to raise additional capital to complete development of our products. We have not yet achieved profitability and anticipate that we will continue to incur net losses for the foreseeable future. We expect that our expenses will continue to grow and, as a result, we will need to generate significant product revenues to achieve profitability. We may never achieve profitability. As such, we are dependent on obtaining, and are continuing to pursue, the necessary funding from outside sources, including obtaining additional funding from the sale of securities in order to continue our operations. Without adequate funding, we may not be able to meet our obligations. We believe these conditions may raise substantial doubt about our ability to continue as a going concern.

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We have funded our operations to date primarily through the issuance of debt, convertible debt securities, preferred stock, as well as the issuance of Common Stock in various public offerings and private placement transactions. We expect to incur substantial expenditures in the foreseeable future for the development of Adrulipase, Capeserod, Niclosamide and any other drug candidates. We will require additional financing to develop our drug candidates, run clinical trials, prepare regulatory filings and obtain regulatory approvals, fund operating losses, and, if deemed appropriate, establish manufacturing, sales and marketing capabilities. Our current financial condition raises substantial doubt about our ability to continue as a going concern. Our failure to raise capital as and when needed would have a material adverse impact on our financial condition, our ability to meet our obligations, and our ability to pursue our business strategies. We will seek funds through additional equity and/or debt financings, collaborative or other arrangements with corporate sources, or through other sources of financing.

Although, we are primarily focused on the development of our drug candidates, including Adrulipase, Capeserod, and Niclosamide, we are also opportunely focused on expanding our product pipeline of clinical assets through collaborations, and also through acquisitions of products and companies. We are continually evaluating potential asset acquisitions business combinations, and other partnership opportunities. To finance such acquisitions, we might raise additional equity capital, incur additional debt, or both.

We are able to sell securities on a shelf registration statement pursuant to the ATM Agreement with H.C. Wainwright & Co., LLC. Under current SEC regulations, because our public float was less than $75 million at the relevant measurement period pursuant to General Instruction I.B.6. to Form S-3, the amount we can raise through primary public offerings of securities in any subsequent twelve-month period under our shelf registration statement is limited to an aggregate of one-third of our public float until such time, if any, as our public float is $75 million or more. As a result, we are currently restricted from using the ATM Agreement.

Our ability to issue securities is subject to market conditions. Each issuance under a shelf registration statement will require the filing of a prospectus supplement identifying the amount and terms of the securities to be issued.

Consolidated Results of Operations for the Three Months Ended September 30, 2023 and 2022

The following table summarizes our consolidated results of operations for the periods indicated:

    

Three Months Ended

September 30,

Increase

    

2023

    

2022

    

(decrease)

Operating expenses:

 

  

 

  

 

  

Research and development expenses

$

1,011,055

$

791,067

$

219,988

Research and development recovery - intellectual property acquired

(8,085,045)

(8,085,045)

General and administrative expenses

 

2,422,082

 

2,904,448

 

(482,366)

Total operating expenses (recovery)

 

3,433,137

 

(4,389,530)

 

7,822,667

Other expenses (income)

1,021

(1,801)

2,822

Net loss (income)

$

3,434,158

$

(4,391,331)

$

7,825,489

Research and Development Expenses

Research and development expenses include expenses primarily relating to the development of our Adrulipase, Capeserod and Niclosamide drug candidates.

Research and development expenses for the three months ended September 30, 2023 totaled approximately $1.0 million, an increase of approximately $0.2 million, or 28%, over the approximately $0.8 million for the three months ended September 30, 2022. The increase in research and development expenses was primarily attributable to the up-front payment of $0.5 million due to Sanofi recorded in the three months ended September 30, 2023 per the executed license agreement for Capeserod. This increase was partially offset by decreases of approximately $0.2 million in personnel related costs and approximately $0.1 million in manufacturing costs related to Adrulipase.

Research and development recovery, related to intellectual property acquired, for the three months ended September 30, 2023, totaled $0 million as compared to $8.1 million for the three months ended September 30, 2022. This decrease was due to the liability reduction recorded in the three months ended September 30, 2022 of approximately $8.1 million in accordance with the July 2022 Term Sheet with Fortis Advisors LLC.

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We expect research and development expenses to decrease during the remainder of this fiscal year as we close out the Phase 2b Adrulipase SPAN clinical trial.

General and Administrative Expenses

General and administrative expenses include expenses primarily relating to our overall operations and being a public company, including personnel, legal and financial professional services, insurance, corporate communication and investor relations, listing and compliance related costs, rent, and expenses associated with obtaining and maintaining intellectual property and patents, among others.

General and administrative expenses for the three months ended September 30, 2023 totaled approximately $2.4 million, a decrease of approximately $0.5 million, or 17% over the approximately $2.9 million recorded for the three months ended September 30, 2022. The decrease in general and administrative expenses was primarily due to decreases of approximately $0.5 million in public company costs, including investor relations and corporate communications; and approximately $0.3 million in professional fees, including audit and legal expenses; partially offset by an increase of approximately $0.3 million in non-cash stock-based compensation costs.

We expect general and administrative expenses to remain stable during the remainder of this fiscal year.

Other Expenses

Other expenses for the three months ended September 30, 2023 were essentially flat with other expenses recorded for the three months ended September 30, 2022.

Net Loss (Income)

As a result of the factors above, our net loss for the three months ended September 30, 2023 totaled approximately $3.4 million, an increase of approximately $7.8 million, or 157%, over the approximately $4.4 million net income recorded for the three months ended September 30, 2022.

Consolidated Results of Operations for the Nine Months Ended September 30, 2023 and 2022

The following table summarizes our consolidated results of operations for the periods indicated:

Nine Months Ended

September 30, 

Increase

    

2023

    

2022

    

(decrease)

Operating expenses:

 

  

 

  

 

  

Research and development expenses

$

3,725,833

$

8,674,480

$

(4,948,647)

Research and development recovery – intellectual property acquired

(8,085,045)

8,085,045

General and administrative expenses

 

7,951,373

 

9,808,960

 

(1,857,587)

Total operating expenses

 

11,677,206

 

10,398,395

 

1,278,811

Other expenses

16,837

245,258

(228,421)

Net loss

$

11,694,043

$

10,643,653

$

1,050,390

Research and Development Expenses

Research and development expenses include expenses primarily relating to the development of our Adrulipase, Capeserod and Niclosamide drug candidates.

Research and development expenses for the nine months ended September 30, 2023 totaled approximately $3.7 million, a decrease of approximately $4.9 million, or 57%, over the approximately $8.7 million recorded for the nine months ended September 30, 2022. The decrease in research and development expenses was primarily attributable to decreases of approximately $3.7 million for clinical related expenses in connection with our Phase 2b Adrulipase SPAN clinical trial during the nine months ended September 30, 2023, as compared to our Phase 2 RESERVOIR COVID-19 GI clinical trial during the nine months ended September 30, 2022; approximately $1.0 million in manufacturing costs related to Adrulipase; and approximately $0.9 million in personnel related costs. These decreases were partially offset by the up-front payment of $0.5 million due to Sanofi per the executed license agreement for Capeserod.

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Research and development recovery, related to intellectual property acquired, for the nine months ended September 30, 2023 totaled $0 million as compared to $8.1 million for the nine months ended September 30, 2022. This increase was due to the liability reduction recorded in the nine months ended September 30, 2022 of approximately $8.1 million in accordance with the July 2022 Term Sheet with Fortis Advisors LLC.

We expect research and development expenses to decrease during the remainder of this fiscal year as we work to close out the Phase 2b Adrulipase SPAN clinical trial.

General and Administrative Expenses

General and administrative expenses include expenses primarily relating to our overall operations and being a public company, including personnel, legal and financial professional services, insurance, corporate communication and investor relations, listing and compliance related costs, rent, and expenses associated with obtaining and maintaining intellectual property and patents, among others.

General and administrative expenses for the nine months ended September 30, 2023 totaled approximately $8.0 million, a decrease of approximately $1.9 million, or 19% over the approximately $9.8 million recorded for the nine months ended September 30, 2022. The decrease in general and administrative expenses was primarily due to decreases of approximately $0.8 million in professional fees, including audit and legal expenses; approximately $0.6 million in public company costs, including investor relations and corporate communications; and approximately $0.3 million in corporate costs.

We expect general and administrative expenses to remain stable during the remainder of this fiscal year.

Other Expenses

Other expenses for the nine months ended September 30, 2023 decreased approximately $0.2 million, or 93% over the approximately $0.2 million of other expenses recorded for the nine months ended September 30, 2022. The decrease in other expenses was mainly due to the $0.2 million of Waiver fees paid in the nine months ended September 30, 2023.

Net Loss

As a result of the factors above, our net loss for the nine months ended September 30, 2023 totaled approximately $11.7 million, an increase of approximately $1.1 million, or 10%, over the approximately $10.6 million recorded for the nine months ended September 30, 2022.

Cash Flows for the Nine Months Ended September 30, 2023 and 2022

The following table summarizes our cash flows for the periods indicated:

Nine Months Ended

September 30,

    

2023

    

2022

Net cash provided by (used in):

 

  

 

  

Operating activities

$

(8,438,474)

$

(16,751,790)

Investing activities

 

(500,000)

 

Financing activities

10,867,899

10,215,292

Net increase (decrease) in cash, cash equivalents and restricted cash

$

1,929,425

$

(6,536,498)

Operating Activities

Net cash used in operating activities during the nine months ended September 30, 2023 of approximately $8.9 million was primarily attributable to our net loss of approximately $11.7 million; partially offset by a decrease in prepaid expenses of approximately $1.3 million, non-cash expenses of approximately $1.0 million, mainly related to stock-based compensation and common stock issued to consultants; and a net increase in accrued expenses and accounts payable of approximately $0.4 million.

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Net cash used in operating activities during the nine months ended September 30, 2022 of approximately $16.8 million was primarily attributable to our net loss of approximately $10.6 million and the decrease in other liabilities in accordance with the July 2022 Term Sheet of approximately $8.1 million, partially offset by non-cash expenses of approximately $0.9 million, mainly related to common stock issued to consultants of approximately $0.1 million and stock-based compensation of approximately $0.7 million, as well as increases in accounts payable and accrued expense of approximately $0.8 million and a decrease in prepaid expenses of $0.6 million.

Investing Activities

For the nine months ended September 30, 2023 and 2022, we did not use any cash for investing activities.

Financing Activities

Net cash provided by financing activities of approximately $10.9 million for the nine months ended September 30, 2023 was due to the net proceeds of approximately $5.9 million from the exercise of warrants, the net proceeds of approximately $5.5 million from the March 2023 and July 2023 offerings of our common stock, partially offset by repayments of approximately $0.6 million related to the note payable.

Net cash provided by financing activities of approximately $10.2 million for the nine months ended September 30, 2022 was primarily due to the net proceeds of approximately $8.0 million from the March 2022 registered direct offering of our common stock and warrants, the issuance of Common Stock of approximately $7.7 million from sales made under our ATM offering program, partially offset by approximately $4.9 million of cash payments made related to the Merger Agreement and July 2022 Term Sheet, as well as repayments of approximately $0.6 million related to the note payable.

Critical Accounting Policies and Estimates

Our accounting policies are essential to understanding and interpreting the financial results reported on the consolidated financial statements. The significant accounting policies used in the preparation of our consolidated financial statements are summarized in Note 2 to the consolidated financial statements and notes thereto found in our Annual Report on Form 10-K for the year ended December 31, 2022. Certain of those policies are considered to be particularly important to the presentation of our financial results because they require us to make difficult, complex or subjective judgments, often as a result of matters that are inherently uncertain.

During the nine months ended September 30, 2023, there were no material changes to matters discussed under the heading “Critical Accounting Policies and Significant Judgments and Estimates” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”) conducted an evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, our CEO and our CFO each concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act, (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) is accumulated and communicated to our management, including our CEO and our CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the period covered by this Quarterly Report on Form 10-Q that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On January 27, 2023, David Hoffman, a former member of the Company’s board of directors, filed a complaint in the Court of Chancery of the State of Delaware against the Company seeking advancement of his attorneys’ fees and expenses relating to certain aspects of his service as a director of the Company (the “Complaint”). The Complaint alleges that Mr. Hoffman is entitled to reimbursement of approximately $250,000 of alleged fees and expenses he has purportedly incurred in the lawsuit filed in the Court of Chancery. The case went to trial in May 2023 and the court found in favor of the Company in September 2023. Mr. Hoffman filed a motion to reargue or amend in October 2023 and the court denied this request.

ITEM 1A. RISK FACTORS

You should carefully consider the factors discussed in Part I, Item 1A., “Risk Factors” in our Annual Report for the fiscal year ended December 31, 2022, which could materially affect our business, financial position, or future results of operations. The risks described in our Annual Report for the fiscal year ended December 31, 2022, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial position, or future results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. The risk factor set forth below supplements and updates the risk factors previously disclosed and should be read together with the risk factors described in our Annual Report for the fiscal year ended December 31, 2022 and with any risk factors we may include in subsequent periodic filings with the SEC.

Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our Common Stock.

Our common stock is currently listed for trading on The Nasdaq Stock Market LLC. We must satisfy the continued listing requirements of Nasdaq, to maintain the listing of our common stock on The Nasdaq Stock Market LLC.

On August 17, 2023, we received notice from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that we were not in compliance with the $2.5 million minimum stockholders’ equity requirement for continued listing of the Common Stock on Nasdaq, as set forth in Nasdaq Listing Rule 5550(b)(1) (the “Minimum Stockholders’ Equity Rule”). In that regard, we reported a stockholders’ deficit of $(881,960) in our Quarterly Report on Form 10-Q for the period ended June 30, 2023 (we did not then, and do not now, meet the alternative compliance standards relating to the market value of listed securities of $35 million or net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the last three most recently completed fiscal years). On October 2, 2023, we submitted a plan to the Staff to regain compliance with the Minimum Stockholders’ Equity Rule.

On August 24, 2023, we received notice from the Staff indicating that, based upon the closing bid price of our common stock for the prior 30 consecutive business days, we were not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on Nasdaq as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). We have 180 days from August 24, 2023, or through February 20, 2024, to regain compliance with the Bid Price Rule.

On October 26, 2023, we received notice from the Staff of Nasdaq indicating that, in connection with our July 2023 Offering, we were not in compliance with Nasdaq’s shareholder approval requirements set forth in Listing Rule 5635(d), which requires prior shareholder approval for transactions, other than public offerings, involving the issuance of 20% or more of the pre-transaction shares outstanding at less than the Minimum Price. We have 45 calendar days to submit a plan to regain compliance. If our plan is accepted, Nasdaq can grant an extension of up to 180 calendar days from the date of the letter to evidence compliance.

There can be no assurance that we will be able to regain and sustain compliance with all applicable requirements for continued listing on The Nasdaq Stock Market LLC. In the event that we are unable to regain and sustain compliance with all applicable requirements for continued listing on the Nasdaq, our common stock may be delisted from Nasdaq.

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If our common stock were delisted from Nasdaq, trading of our common stock would most likely take place on an over-the-counter market established for unlisted securities, such as the OTCQB or the Pink Market maintained by OTC Markets Group Inc. An investor would likely find it less convenient to sell, or to obtain accurate quotations in seeking to buy, our common stock on an over-the-counter market, and many investors would likely not buy or sell our common stock due to difficulty in accessing over-the-counter markets, policies preventing them from trading in securities not listed on a national exchange or other reasons. In addition, as a delisted security, our common stock would be subject to SEC rules as a “penny stock,” which impose additional disclosure requirements on broker-dealers. The regulations relating to penny stocks, coupled with the typically higher cost per trade to the investor of penny stocks due to factors such as broker commissions generally representing a higher percentage of the price of a penny stock than of a higher-priced stock, would further limit the ability of investors to trade in our common stock. In addition, delisting would materially and adversely affect our ability to raise capital on terms acceptable to us, or at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. For these reasons and others, delisting would adversely affect the liquidity, trading volume and price of our common stock, causing the value of an investment in us to decrease and having an adverse effect on our business, financial condition and results of operations, including our ability to attract and retain qualified employees and to raise capital.

If we breach our license or other intellectual property-related agreements for our product candidates or otherwise experience disruptions to our business relationships with our licensor, we could lose the ability to continue the development and commercialization of our product candidates.

On September 13, 2023, we entered into a license agreement with Sanofi (the “Sanofi License Agreement”), pursuant to which we received a license to obtain certain exclusive worldwide rights to develop and commercialize Capeserod, a selective 5-HT4 receptor partial agonist which we intend to repurpose and develop for gastrointestinal indications. Our license may not cover all intellectual property rights owned or controlled by our licensor and relevant to our product candidates. If we have not obtained a license to all intellectual property rights owned or controlled by our licensor that are relevant to our product candidates, we may need to obtain additional licenses to such intellectual property rights which may not be available on an exclusive basis, on commercially reasonable terms or at all. In addition, if our licensor breaches such agreement, we may not be able to enforce such agreements against our licensor or their parent entity or affiliates. Under the Sanofi License Agreement, in exchange for licensing to us the right to develop and commercialize the applicable product candidate, Sanofi will be eligible to receive from us milestone payments, tiered royalties from commercial sales of such product candidates, assuming relevant approvals from government authorities are obtained, or other payments.

If we fail to meet any of our obligations under our license and intellectual property-related agreements, our licensors may have the right to terminate our licenses and sublicenses and, upon the effective date of such termination, have the right to re-obtain the licensed and sublicensed technology and intellectual property. If any of our licensors terminate any of our licenses or sublicenses, we will lose the right to develop and commercialize our applicable product candidates and other third parties may be able to market product candidates similar or identical to ours. In such case, we may be required to provide a grant back license to the licensors under our own intellectual property with respect to the terminated products. While we would expect to exercise all rights and remedies available to us, including seeking to cure any breach by us, and otherwise seek to preserve the intellectual property rights licensed and sublicensed to us, we may not be able to do so in a timely manner, at an acceptable cost or at all. In particular, some of the milestone payments are payable upon our product candidates reaching development milestones before we have commercialized, or received any revenue from, sales of such product candidate, and we cannot guarantee that we will have sufficient resources to make such milestone payments. Any uncured, material breach under the license agreements could result in our loss of exclusive rights and may lead to a complete termination of our rights to the applicable product candidate. Any of the foregoing could have a material adverse effect on our business, financial conditions, results of operations and prospects.

In addition, disputes may further arise regarding intellectual property subject to a license agreement, including, but not limited to:

the scope of rights granted under the license agreement and other interpretation-related issues;
the extent to which our technology and processes infringe, misappropriate or otherwise violate intellectual property of the licensor that is not subject to the licensing agreement;
the sublicensing of patent and other rights under our collaborative development relationships;
our diligence obligations under the license agreement and what activities satisfy those diligence obligations;
the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and
the priority of invention of patented technology.

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In addition, the agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology, or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations, and prospects. Moreover, if disputes over intellectual property that we have licensed or sublicensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse effect on our business, financial conditions, results of operations and prospects.

If we experience disruptions to our business relationships with our licensors, we could lose the ability to continue to source, develop and commercialize our product candidates, including ultimately losing our rights to such product candidates.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

(b)

Exhibits

Exhibit 
No.

    

Description

3.1

Amended and Restated Certificate of Incorporation of First Wave BioPharma, Inc., as amended to date (incorporated by reference to Exhibit 3.1 of the Company’s Annual Report on Form 10-K filed with the SEC on March 20, 2023).

3.2

Amended and Restated Bylaws of First Wave BioPharma, Inc., as amended to date (incorporated by reference to Exhibit 3.2 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 15, 2022).

4.1

Form of Warrant (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 18, 2023).

4.2

Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the SEC on July 18, 2022).

4.3

Form of Inducement Warrant (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the SEC on September 15, 2023).

4.4

Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed with the SEC on July 21, 2023).

4.5

Form of Warrant (incorporated by reference to Exhibit 4.2 of the Current Report on Form 8-K filed with the SEC on July 21, 2023).

10.1

Form of Purchase Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 18, 2023).

10.2

Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on July 18, 2023).

10.3

Form of Term Sheet (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on July 29, 2022).

10.4

License Agreement, dated September 13, 2023 (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on October 10, 2023).

10.5

Form of Purchase Agreement (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the SEC on July 21, 2023).

10.6

Form of Inducement Letter (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the SEC on September 15, 2023).

31.1*

 

Certification of the Principal Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

 

Certification of the Principal Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**

 

Certification of the Principal Executive Officer and Principal Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*

 

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH*

 

Inline XBRL Taxonomy Extension Schema Document

101.CAL*

 

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*

 

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*

 

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*

 

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL Document and included in Exhibit 101)

*filed herewith

**furnished, not filed

-37-

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

FIRST WAVE BIOPHARMA, INC.

By

/s/ James Sapirstein

James Sapirstein

President, Chief Executive Officer and
Chairman

(Principal Executive Officer)

By

/s/ Sarah Romano

Sarah Romano

Chief Financial Officer

Date: November 13, 2023

(Principal Financial and Accounting
Officer)

-38-

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James Sapirstein, Chief Executive Officer of First Wave BioPharma, Inc. (the “Company”), certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of the Company;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2023

/s/ James Sapirstein

James Sapirstein

Chief Executive Officer

(Principal Executive Officer)


EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13A-14 OF THE SECURITIES EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Sarah Romano, Chief Financial Officer of First Wave BioPharma, Inc. (the “Company”), certify that:

1.

I have reviewed this Quarterly Report on Form 10-Q of the Company;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2023

/s/ Sarah Romano

Sarah Romano

Chief Financial Officer

(Principal Financial and Accounting Officer)


EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of First Wave BioPharma, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James Sapirstein, Chief Executive Officer of the Company, and Sarah Romano, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 13, 2023

/s/ James Sapirstein

James Sapirstein

President and Chief Executive Officer

(Principal Executive Officer)

/s/ Sarah Romano

Sarah Romano

Chief Financial Officer

(Principal Financial and Accounting Officer)


v3.23.3
Document And Entity Information - shares
9 Months Ended
Sep. 30, 2023
Nov. 10, 2023
Document And Entity Information    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2023  
Document Transition Report false  
Entity File Number 001-37853  
Entity Registrant Name First Wave BioPharma, Inc.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 46-4993860  
Entity Address, Address Line One 777 Yamato Road, Suite 502  
Entity Address, City or Town Boca Raton  
Entity Address, State or Province FL  
Entity Address, Postal Zip Code 33431  
City Area Code 561  
Local Phone Number 589-7020  
Title of 12(b) Security Common stock, par value $0.0001 per share  
Trading Symbol FWBI  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   13,499,979
Entity Central Index Key 0001604191  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q3  
Amendment Flag false  
v3.23.3
Condensed Consolidated Balance Sheets - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Current Assets:    
Cash and cash equivalents $ 3,292,327 $ 1,362,910
Other receivables   93,014
Prepaid expenses 684,273 1,956,831
Total Current Assets 3,976,600 3,412,755
Property, equipment, and leasehold improvements, net 21,884 43,839
Other Assets:    
Goodwill 1,684,182 1,684,182
Restricted cash 21,521 21,513
Operating lease right-of-use assets 211,832 259,261
Deposits 11,250 18,149
Total Other Assets 1,928,785 1,983,105
Total Assets 5,927,269 5,439,699
Current Liabilities:    
Accounts payable 579,291 720,040
Accrued expenses 834,540 320,176
Accrued dividend payable 992,535 761,488
Note payable   603,494
Operating lease liabilities 65,322 66,151
Other current liabilities 10,806 12,138
Total Current Liabilities 2,482,494 2,483,487
Non-current operating lease liabilities 165,970 214,060
Total Liabilities 2,648,464 2,697,547
Stockholders' Equity:    
Common stock - Par value $0.0001 per share; 50,000,000 shares authorized; 13,463,479 and 995,003 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively 1,346 100
Additional paid-in capital 183,505,191 171,275,741
Accumulated deficit (180,227,732) (168,533,689)
Total Stockholders' Equity 3,278,805 2,742,152
Total Liabilities and Stockholders' Equity 5,927,269 5,439,699
Series B Preferred Stock    
Stockholders' Equity:    
Preferred stock
Series C Preferred Stock    
Stockholders' Equity:    
Preferred stock
Series D Preferred Stock    
Stockholders' Equity:    
Preferred stock
Series E Preferred Stock    
Stockholders' Equity:    
Preferred stock
Series F Preferred Stock    
Stockholders' Equity:    
Preferred stock
v3.23.3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares
Sep. 30, 2023
Dec. 31, 2022
Sep. 30, 2022
Common stock, par value (in dollars per share) $ 0.0001 $ 0.0001  
Common stock, shares authorized (in shares) 50,000,000 50,000,000  
Common stock, shares issued (in shares) 13,463,479 995,003 995,003
Common stock, shares outstanding (in shares) 13,463,479 995,003  
Preferred stock, par value (in dollars per share) $ 0.0001    
Preferred stock, shares designated (in shares) 10,000,000    
Series B Preferred Stock      
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001  
Preferred stock, shares designated (in shares) 5,194.81 5,194.81  
Preferred stock, shares issued (in shares) 521.72 550.17  
Preferred stock, shares outstanding (in shares) 521.72 550.17  
Series C Preferred Stock      
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001  
Preferred stock, shares designated (in shares) 75,000 75,000  
Preferred stock, shares issued (in shares) 0 0  
Preferred stock, shares outstanding (in shares) 0 0  
Series D Preferred Stock      
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001  
Preferred stock, shares designated (in shares) 150 150  
Preferred stock, shares issued (in shares) 0 0  
Preferred stock, shares outstanding (in shares) 0 0  
Series E Preferred Stock      
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001  
Preferred stock, shares designated (in shares) 150 150  
Preferred stock, shares issued (in shares) 0 0  
Preferred stock, shares outstanding (in shares) 0 0  
Series F Preferred Stock      
Preferred stock, par value (in dollars per share) $ 0.0001 $ 0.0001  
Preferred stock, shares designated (in shares) 7,000 7,000  
Preferred stock, shares issued (in shares) 0 0  
Preferred stock, shares outstanding (in shares) 0 0  
v3.23.3
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Operating expenses:        
Research and development expenses $ 1,011,055 $ 791,067 $ 3,725,833 $ 8,674,480
Research and development recovery - intellectual property acquired   (8,085,045)   (8,085,045)
General and administrative expenses 2,422,082 2,904,448 7,951,373 9,808,960
Total operating expenses (recovery) 3,433,137 (4,389,530) 11,677,206 10,398,395
(Loss) income from operations (3,433,137) 4,389,530 (11,677,206) (10,398,395)
Other (expenses) income:        
Interest expense (1,250) (863) (15,415) (9,686)
Interest income 229 2,664 2,307 3,729
Other expense     (3,729) (239,301)
Total other (expenses) income (1,021) 1,801 (16,837) (245,258)
Net (loss) income (3,434,158) 4,391,331 (11,694,043) (10,643,653)
Other comprehensive (loss) income:        
Foreign currency translation adjustment   (35,235)   (230,586)
Total comprehensive (loss) income (3,434,158) 4,356,096 (11,694,043) (10,874,239)
Net (loss) income (3,434,158) 4,391,331 (11,694,043) (10,643,653)
Deemed dividend on warrant modifications   (47,300)   (47,300)
Preferred stock dividends (49,292) (110,278) (231,047) (298,195)
Net (loss) income applicable to common shareholders $ (3,483,450) $ 4,233,753 $ (11,925,090) $ (10,989,148)
Basic weighted average shares outstanding 7,566,018 228,773 3,763,506 136,113
Diluted weighted average shares outstanding 7,566,018 232,248 3,763,506 136,113
Net (loss) income per share - basic $ (0.46) $ 18.51 $ (3.17) $ (80.74)
Net (loss) income per share - diluted $ (0.46) $ 18.23 $ (3.17) $ (80.74)
v3.23.3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (unaudited) - USD ($)
Issuance of Common Stock, Pre Funded Warrants in March 2023 Offering
Common Stock
Issuance of Common Stock, Pre Funded Warrants in March 2023 Offering
Additional Paid-in Capital
Issuance of Common Stock, Pre Funded Warrants in March 2023 Offering
Issuance of Common Stock, Pre Funded Warrants in July 2023 Offering
Common Stock
Issuance of Common Stock, Pre Funded Warrants in July 2023 Offering
Additional Paid-in Capital
Issuance of Common Stock, Pre Funded Warrants in July 2023 Offering
Issuance of Common Stock in Connection With Exercise of Warrants in June 2023 Inducement Offering
Common Stock
Issuance of Common Stock in Connection With Exercise of Warrants in June 2023 Inducement Offering
Additional Paid-in Capital
Issuance of Common Stock in Connection With Exercise of Warrants in June 2023 Inducement Offering
Issuance of Common Stock in Connection With Exercise of Warrants in September 2023 Inducement Offering
Common Stock
Issuance of Common Stock in Connection With Exercise of Warrants in September 2023 Inducement Offering
Additional Paid-in Capital
Issuance of Common Stock in Connection With Exercise of Warrants in September 2023 Inducement Offering
Issuance of Series D Preferred Stock And Warrants
Convertible preferred stock
Series D Convertible Preferred Stock
Issuance of Series D Preferred Stock And Warrants
Common Stock
Series D Convertible Preferred Stock
Issuance of Series D Preferred Stock And Warrants
Additional Paid-in Capital
Series D Convertible Preferred Stock
Issuance of Series D Preferred Stock And Warrants
Additional Paid-in Capital
Issuance of Series D Preferred Stock And Warrants
Issuance Of Series E Preferred Stock And Warrants
Convertible preferred stock
Series E Convertible Preferred Stock
Issuance Of Series E Preferred Stock And Warrants
Convertible preferred stock
Series D Convertible Preferred Stock
Issuance Of Series E Preferred Stock And Warrants
Common Stock
Series E Convertible Preferred Stock
Issuance Of Series E Preferred Stock And Warrants
Common Stock
Issuance Of Series E Preferred Stock And Warrants
Additional Paid-in Capital
Series E Convertible Preferred Stock
Issuance Of Series E Preferred Stock And Warrants
Additional Paid-in Capital
Issuance Of Series E Preferred Stock And Warrants
Convertible preferred stock
Series B Convertible Preferred Stock
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss
Total
Balance at the beginning (in shares) at Dec. 31, 2021                                                 662 70,742        
Balance at the beginning at Dec. 31, 2021                                                   $ 7 $ 147,306,625 $ (153,904,047) $ (1,224,135) $ (7,821,550)
Issuance of common stock, pre-funded warrants, net of issuance costs (in shares)                                                   7,857        
Issuance of common stock, pre-funded warrants, net of issuance costs                                                   $ 1 7,971,931     7,971,932
Exercise of pre-funded warrants into common stock (in shares)                                                   23,086        
Exercise of pre-funded warrants into common stock                                                   $ 2 48,011     48,013
Deemed dividend of Series B preferred stock                                                     (298,195)     (298,195)
Issuance of common stock at-the-market for cash, net of offering costs (in shares)                                                   217,038        
Issuance of common stock at-the-market for cash, net of offering costs                                                   $ 21 7,691,201     7,691,222
Warrant modification                                                     47,300     47,300
Deemed dividend on warrant modifications                                                     (47,300)     (47,300)
Conversion of Series B preferred shares into common stock (in shares)                                                 (31) 910        
Common Stock issued to consultants                                                     118,990     118,990
Common stock issued to consultants (in shares)                                                   429        
Issuance of preferred stock and warrants for cash, net of offering costs                               $ 178,336 $ 178,336                          
Issuance of preferred stock and warrants for cash, net of offering costs (in shares)                         150                                  
Issuance of Series E preferred stock, net of offering costs                                             $ 20,664 $ 20,664            
Issuance of Series E preferred stock, net of offering costs (in shares)                                   150                        
Common stock issued upon conversion of preferred stock                           $ 1 $ (1)         $ 1   $ (1)                
Common stock issued upon conversion of preferred stock (in shares)                         (150) 4,761       (150)   4,761                    
Effect of cancelled shares from the reverse stock split (in shares)                                                   (12)        
Stock-based compensation                                                     684,778     684,778
Foreign currency translation adjustment                                                         (230,586) (230,586)
Net loss                                                       (10,643,653)   (10,643,653)
Balance at the end (in shares) at Sep. 30, 2022                                                 631 329,572        
Balance at the end at Sep. 30, 2022                                                   $ 33 163,722,339 (164,547,700) (1,454,721) (2,280,049)
Balance at the beginning (in shares) at Dec. 31, 2021                                                 662 70,742        
Balance at the beginning at Dec. 31, 2021                                                   $ 7 147,306,625 (153,904,047) (1,224,135) (7,821,550)
Balance at the end (in shares) at Dec. 31, 2022                                                 550 995,003        
Balance at the end at Dec. 31, 2022                                                   $ 100 171,275,741 (168,533,689)   2,742,152
Balance at the beginning (in shares) at Jun. 30, 2022                                                 631 108,094        
Balance at the beginning at Jun. 30, 2022                                                   $ 10 156,168,644 (168,939,031) (1,419,486) (14,189,863)
Deemed dividend of Series B preferred stock                                                     (110,278)     (110,278)
Issuance of common stock at-the-market for cash, net of offering costs (in shares)                                                   211,968        
Issuance of common stock at-the-market for cash, net of offering costs                               $ 178,336 $ 178,336                 $ 21 7,373,334     7,373,355
Issuance of preferred stock and warrants for cash, net of offering costs (in shares)                         150                                  
Issuance of Series E preferred stock, net of offering costs                                             20,664 $ 20,664            
Issuance of Series E preferred stock, net of offering costs (in shares)                                   150                        
Common stock issued upon conversion of preferred stock                                         $ 1   $ (1)              
Common stock issued upon conversion of preferred stock (in shares)                                   (150) (150)   4,761                  
Effect of cancelled shares from the reverse stock split (in shares)                                                   (12)        
Stock-based compensation                                                     91,641     91,641
Foreign currency translation adjustment                                                         (35,235) (35,235)
Net loss                                                       4,391,331   4,391,331
Balance at the end (in shares) at Sep. 30, 2022                                                 631 329,572        
Balance at the end at Sep. 30, 2022                                                   $ 33 163,722,339 (164,547,700) $ (1,454,721) (2,280,049)
Balance at the beginning (in shares) at Dec. 31, 2022                                                 550 995,003        
Balance at the beginning at Dec. 31, 2022                                                   $ 100 171,275,741 (168,533,689)   2,742,152
Issuance of common stock, pre-funded warrants, net of issuance costs (in shares) 128,000     610,000                                                    
Issuance of common stock, pre-funded warrants, net of issuance costs $ 13 $ 3,690,960 $ 3,690,973 $ 61 $ 1,833,866 $ 1,833,927                                                
Issuance of common stock in connection with the exercise of warrants, net of offering costs (in shares)             1,724,332     5,882,036                                        
Issuance of common stock in connection with the exercise of warrants, net of offering costs             $ 173 $ 2,238,892 $ 2,239,065 $ 588 $ 3,706,183 $ 3,706,771                                    
Exercise of pre-funded warrants into common stock (in shares)                                                   3,999,493        
Exercise of pre-funded warrants into common stock                                                   $ 398 259     657
Deemed dividend of Series B preferred stock                                                     (231,047)     (231,047)
Conversion of Series B preferred shares into common stock (in shares)                                                 (28) 487        
Common Stock issued to consultants                                                   $ 5 75,995     76,000
Common stock issued to consultants (in shares)                                                   50,000        
Issuance of common stock from RSU vest (in shares)                                                   77,095        
Issuance of common stock from RSU vest                                                   $ 8 (8)      
Effect of cancelled shares from the reverse stock split (in shares)                                                   (2,967)        
Stock-based compensation                                                     914,350     914,350
Net loss                                                       (11,694,043)   (11,694,043)
Balance at the end (in shares) at Sep. 30, 2023                                                 522 13,463,479        
Balance at the end at Sep. 30, 2023                                                   $ 1,346 183,505,191 (180,227,732)   3,278,805
Balance at the beginning (in shares) at Jun. 30, 2023                                                 546 4,208,995        
Balance at the beginning at Jun. 30, 2023                                                   $ 421 177,675,113 (176,793,574)   881,960
Issuance of common stock, pre-funded warrants, net of issuance costs (in shares)                                                   610,000        
Issuance of common stock, pre-funded warrants, net of issuance costs                                                   $ 61 1,833,866     1,833,927
Issuance of common stock in connection with the exercise of warrants, net of offering costs (in shares)                                                   5,882,036        
Issuance of common stock in connection with the exercise of warrants, net of offering costs                                                   $ 588 3,706,183     3,706,771
Exercise of pre-funded warrants into common stock (in shares)                                                   2,675,000        
Exercise of pre-funded warrants into common stock                                                   $ 267       267
Deemed dividend of Series B preferred stock                                                     (49,292)     (49,292)
Conversion of Series B preferred shares into common stock (in shares)                                                 (24) 417        
Common Stock issued to consultants                                                   $ 5 75,995     76,000
Common stock issued to consultants (in shares)                                                   50,000        
Issuance of common stock from RSU vest (in shares)                                                   37,031        
Issuance of common stock from RSU vest                                                   $ 4 (4)      
Stock-based compensation                                                     263,330     263,330
Net loss                                                       (3,434,158)   (3,434,158)
Balance at the end (in shares) at Sep. 30, 2023                                                 522 13,463,479        
Balance at the end at Sep. 30, 2023                                                   $ 1,346 $ 183,505,191 $ (180,227,732)   $ 3,278,805
v3.23.3
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (unaudited) (Parenthetical) - shares
3 Months Ended 9 Months Ended
Jan. 18, 2023
Aug. 26, 2022
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (unaudited)          
Reverse stock splits (in shares) 7 30 1 1 1
v3.23.3
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($)
9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Cash flows from operating activities:    
Net loss $ (11,694,043) $ (10,643,653)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation 21,955 21,953
Change in right-of-use assets 47,429 61,681
Stock-based compensation 914,350 684,778
Common stock granted to consultants 76,000 118,990
Changes in assets and liabilities:    
Other receivables 93,014 (191,984)
Prepaid expenses 1,272,558 614,809
Lease liabilities (48,919) (93,438)
Deposits 6,899 9,714
Accounts payable (140,749) 875,257
Accrued expenses 514,364 (120,985)
Payable related to acquisition   (8,085,045)
Other liabilities (1,332) (3,867)
Net cash used in operating activities (8,938,474) (16,751,790)
Cash flows from financing activities:    
Proceeds from issuance of preferred stock, net   199,000
Proceeds from issuance of common stock, pre-funded warrants and warrants, net 5,525,010 7,971,932
Proceeds from exercise of warrants, net of issuance costs 5,946,383 48,013
Issuance of common stock at-the-market for cash, net of offering costs   7,691,222
Deferred offering costs   (138,684)
Payment made related to acquisition   (4,914,955)
Repayments of note payable (603,494) (641,236)
Net cash provided by financing activities 10,867,899 10,215,292
Net increase (decrease) in cash and restricted cash 1,929,425 (6,536,498)
Effect of exchange rate changes on cash   (33,668)
Cash, cash equivalents and restricted cash, beginning balance 1,384,423 8,248,684
Cash, cash equivalents and restricted cash, ending balance 3,313,848 1,678,518
Supplemental disclosures of cash flow information:    
Cash paid for interest 15,414 8,824
Non-cash investing and financing activities:    
Deemed dividend on warrant modifications   (47,300)
Accrued dividends on preferred stock $ (231,047) $ (298,195)
v3.23.3
The Company and Basis of Presentation
9 Months Ended
Sep. 30, 2023
The Company and Basis of Presentation  
The Company and Basis of Presentation

Note 1 - The Company and Basis of Presentation

The Company

First Wave BioPharma, Inc. (“First Wave”) and its wholly-owned subsidiary, First Wave Bio, Inc. (“FWB”), are collectively referred to as the “Company”. Effective October 26, 2022, the Company’s wholly-owned subsidiary, AzurRx SAS, was dissolved. The Company is engaged in the research and development of targeted, non-systemic therapies for the treatment of patients with gastrointestinal (“GI”) diseases. Non-systemic therapies are non-absorbable drugs that act locally, i.e., in the intestinal lumen, skin or mucosa, without reaching an individual’s systemic circulation.

The Company is currently focused on developing a therapeutic pipeline with multiple Phase 2 clinical stage programs built around three proprietary technologies – the biologic Adrulipase, a recombinant lipase enzyme designed to enable the digestion of fats and other nutrients in cystic fibrosis and chronic pancreatitis patients with exocrine pancreatic insufficiency; Capeserod, a selective 5-HT4 receptor partial agonist which we will pursue for GI indications; and Niclosamide, an oral small molecule with anti-inflammatory properties for patients with inflammatory bowel diseases such as ulcerative colitis and Crohn’s disease.

The Company is developing its product candidates for a host of GI diseases where there are significant unmet clinical needs and limited therapeutic options, resulting in painful, life threatening and discomforting consequences for patients. Since its inception, the Company has devoted substantially all its efforts to research and development, business development, and raising capital, and has financed its operations through issuance of Common Stock, convertible preferred stock, convertible debt, and other debt/equity instruments.

Risks and Uncertainties

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development and regulatory success, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, and ability to secure additional capital to fund clinical trials and operations.

In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements and the specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements.

In addition, the Company is subject to other challenges and risks specific to its business, its ability to maintain compliance with the continued listing requirements of The Nasdaq Stock Market LLC and its ability to execute on its strategy, as well as risks and uncertainties common to companies in the biotechnology and pharmaceutical industries with development and commercial operations, including, without limitation, risks and uncertainties associated with: obtaining regulatory approval of its drug candidates; delays or problems in the manufacture and supply of its drug candidates; loss of single source suppliers or failure to comply with manufacturing regulations; identifying, acquiring or in-licensing additional products or drug candidates; pharmaceutical product development and the inherent uncertainty of clinical success; the challenges of protecting and enhancing our intellectual property rights; and complying with applicable regulatory requirements.

Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of First Wave and its wholly owned subsidiaries, FWB and AzurRx SAS, which was dissolved effective October 26, 2022. Intercompany transactions and balances have been eliminated upon consolidation.

In our opinion, the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly our financial position, results of operations, and cash flows. The condensed consolidated balance sheet at December 31, 2022, has been derived from audited financial statements of that date. The unaudited interim condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim condensed consolidated financial statements are read in conjunction with the audited financial statements and notes previously distributed in our Annual Report Form 10-K for the year ended December 31, 2022, filed with the SEC on March 20, 2023.

Going Concern Uncertainty

The accompanying unaudited interim condensed consolidated financial statements have been prepared as if the Company will continue as a going concern. The Company has incurred significant operating losses and negative cash flows from operations since inception. On September 30, 2023, the Company had cash and cash equivalents of approximately $3.3 million, accumulated deficit of approximately $180.2 million, and working capital of approximately $1.5 million. The Company has incurred recurring losses, has experienced recurring negative operating cash flows, and requires significant cash resources to execute its business plans. The Company anticipates having sufficient cash to fund planned operations through December 2023, however, the acceleration or reduction of cash outflows by Company management can significantly impact the timing for the need to raise additional capital to complete development of its products. Historically, the Company’s major sources of cash have been comprised of proceeds from various public and private offerings of its capital stock. The Company is dependent on obtaining additional working capital funding from the sale of equity and/or debt securities in order to continue to execute its development plans and continue operations.

Without adequate working capital, the Company may not be able to meet its obligations and continue as a going concern. These conditions raise substantial doubt about the Company’s ability to continue as a going concern one year from the date these financial statements are issued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

v3.23.3
Significant Accounting Policies and Recent Accounting Pronouncements
9 Months Ended
Sep. 30, 2023
Significant Accounting Policies and Recent Accounting Pronouncements  
Significant Accounting Policies and Recent Accounting Pronouncements

Note 2 - Significant Accounting Policies and Recent Accounting Pronouncements

Use of Estimates

The accompanying unaudited condensed consolidated financial statements are prepared in conformity with GAAP and include certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements (including goodwill), and the reported amounts of revenue and expense during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates.

Reverse Stock Split

On January 18, 2023, the Company effected a reverse stock split, whereby every seven shares of the Company’s issued and outstanding Common Stock was converted automatically into one issued and outstanding share of Common Stock, but without any change in the number of authorized shares of Common Stock and the par value per share.

On August 26, 2022, the Company effected a reverse stock split, whereby every thirty shares of the Company’s issued and outstanding common stock was converted automatically into one issued and outstanding share of common stock, but without any change in the number of authorized shares of common stock and the par value per share.

All share and per share amounts have been retroactively restated to reflect the reverse stock splits referenced above.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. All cash and cash equivalent balances were highly liquid at September 30, 2023 and December 31, 2022. As of September 30, 2023 and December 31, 2022, the Company has classified approximately $0.02 million as restricted cash.

Concentrations of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash. The Company primarily maintains its cash balances with financial institutions in federally insured accounts in the U.S. The Company may from time to time have cash in banks in excess of FDIC insurance limits. At September 30, 2023 the Company had approximately $3.2 million in one account in the U.S. which was in excess of these limits. The Company has not experienced any losses to date resulting from this practice. The Company mitigates its risk by maintaining the majority of its cash and equivalents with high quality financial institutions.

Fair Value Measurements

The Company follows Accounting Standards Codification (ASC”) Topic 820-10, Fair Value Measurements and Disclosures (ASC 820”), which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions, which reflect those that a market participant would use.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.

The Company recognizes transfers between levels as if the transfers occurred on the last day of the reporting period.

Foreign Currency Translation

For foreign subsidiaries with operations denominated in a foreign currency, assets and liabilities were translated to U.S. dollars, which was the functional currency, at period end exchange rates. Income and expense items were translated at average rates of exchange prevailing during the periods presented. Gains and losses from translation adjustments were accumulated in a separate component of stockholders’ equity up until the dissolution of AzurRx SAS in October 2022, at which time cumulative translation adjustments were recognized as a loss for the year ended December 31, 2022.

Goodwill

Goodwill represents the excess of the purchase price of the acquired business over the fair value of amounts assigned to assets acquired and liabilities assumed. Goodwill and other intangible assets with indefinite useful lives are reviewed for impairment annually or more frequently if events or circumstances indicate impairment may be present. Any excess in carrying value over the estimated fair value is charged to results of operations. The Company has not recognized any impairment charges through September 30, 2023 related to goodwill.

Impairment of Long-Lived Assets

The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC Topic 360, Property, Plant and Equipment (ASC 360”). Potential impairment is assessed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. Recoverability of these assets is assessed based on undiscounted expected future cash flows from the assets, considering a number of factors, including past operating results, budgets and economic projections, market trends and product development cycles. If impairments are identified, assets are written down to their estimated fair value. The Company has not recognized any impairment charges through September 30, 2023.

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use (“ROU”) assets, and lease liability obligations are included in the Company’s balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liability obligations represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases typically do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives and lease direct costs. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Please refer to Note 13 for additional information.

License Agreements

The Company records payments related to license agreements for assets acquired that have not reached technological feasibility and which have no alternative future use, as research and development expenses. On September 13, 2023, the Company entered into a license agreement with Sanofi to license Capeserod, a selective 5-HT4 receptor partial agonist, which the Company will repurpose and develop for gastrointestinal (“GI”) indications. Under the terms of the agreement, the Company received from Sanofi an exclusive, global license for Capeserod and assumed responsibility for all future clinical development (see Note 12).

Research and Development

Research and development costs are charged to operations when incurred and are included in operating expense, except for goodwill related to patents. Research and development costs consist principally of compensation of employees and consultants that perform the Company’s research activities, payments to third parties for preclinical and non-clinical activities, expenses with clinical research organizations (“CROs”), investigative sites, consultants and contractors that conduct or provide other services relating to clinical trials, costs to acquire drug product, drug supply and clinical trial materials from contract development and manufacturing organization (“CDMOs”) and third-party contractors relating to chemistry, manufacturing and controls (“CMC”) efforts, the fees paid for and to maintain the Company’s licenses, and research and development costs related to Adrulipase, Capeserod, and Niclosamide. Depending upon the timing of payments to the service providers, the Company recognizes prepaid expenses or accrued expenses related to these costs. These accrued or prepaid expenses are based on management’s estimates of the work performed under service agreements, milestones achieved and experience with similar contracts. The Company monitors each of these factors and adjusts estimates accordingly.

Research and Development  Intellectual Property Acquired

The Company records intellectual property in asset acquisitions that have not reached technological feasibility and which have no alternative future use, as an expense at the acquisition date. On September 13, 2021, the Company entered into an agreement with FWB for the acquisition of intellectual property and patents for the worldwide, exclusive right to develop, manufacture, and commercialize proprietary formulations of Niclosamide for the fields of treating ICI-AC and COVID-19 in humans, which was accounted for as an asset acquisition (see Note 4).

Stock-Based Compensation

The Company’s board of directors (the “Board”) and stockholders have adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”) which took effect on May 12, 2014, and the 2020 Omnibus Equity Incentive Plan, which took effect on September 11, 2020 (the “2020 Plan”). From the effective date of the 2020 Plan, no new awards have been or will be made under the 2014 Plan. The Company accounts for its stock-based compensation awards to employees, consultants, and Board members in accordance with ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees, consultants, and Board members, including grants of employee stock options, to be recognized in the statements of operations by measuring the fair value of the award on the date of grant and recognizing this fair value as stock-based compensation using a straight-line method over the requisite service period, generally the vesting period.

For awards with performance conditions that affect their vesting, such as the occurrence of certain transactions or the achievement of certain operating or financial milestones, recognition of fair value of the award occurs when vesting becomes probable.

The Company estimates the grant date fair value of stock option awards using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock.

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (the “FASB”) issued accounting pronouncement ASU 2020-06 – Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity’s own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. As a smaller reporting company, as defined by the U.S. Securities and Exchange Commission (the “SEC”), this pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company early adopted ASU 2020-06 effective January 1, 2022.

In June 2016, the FASB issued accounting pronouncement ASU 2016-13 – Measurement of Credit Losses on Financial Statements (“ASU 2016-13”). The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. In November 2019, the FASB issued ASU 2019-10 – Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended the effective date for certain companies. The standard is effective for public companies eligible to be smaller reporting companies for annual and interim periods beginning after December 15, 2022. The Company adopted ASU 2016-13 effective for the year ended December 31, 2022 and its adoption did not have a material effect on its financial statements and related disclosures.

In June 2022, the FASB issued ASU 2022-03 - Fair Value Measurement, or Topic 820: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). This new standard clarifies the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The Company has assessed the impact of the update and determined it does not have a material impact on the accompanying financial statements and disclosures.

The Company has evaluated other recently issued accounting pronouncements and has concluded that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

v3.23.3
Fair Value Disclosures
9 Months Ended
Sep. 30, 2023
Fair Value Disclosures  
Fair Value Disclosures

Note 3 - Fair Value Disclosures

Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value.

The fair value of the Company’s financial instruments are as follows:

Fair Value Measured at Reporting Date

Using

Carrying

    

Amount

    

Level 1

    

Level 2

    

Level 3

    

Fair Value

September 30, 2023 (unaudited):

Money market funds

$

12,086

$

12,086

$

$

$

12,086

Note payable

 

 

 

 

 

December 31, 2022:

Money market funds

509,890

509,890

509,890

Note payable

$

603,494

$

$

603,494

$

$

603,494

At September 30, 2023 and December 31, 2022, the Company had no other assets or liabilities that are subject to fair value methodology and estimation in accordance with U.S. GAAP.

v3.23.3
Asset Acquisition
9 Months Ended
Sep. 30, 2023
Asset Acquisition  
Asset Acquisition

Note 4 – Asset Acquisition

The Asset Acquisition

During the nine months ended September 30, 2022, the Company paid an aggregate of $2.4 million in cash towards the purchase price of FWB in accordance with the terms of an Agreement and Plan of Merger dated as of September 13, 2021 (the “Merger Agreement”) and a settlement agreement reached on November 21, 2021 (the “November 2021 Settlement Agreement”).

On May 19, 2022, Fortis Advisors LLC, the hired representative (in such capacity, the “Representative”) of the former stockholders of FWB in connection with the Merger Agreement, filed a complaint against the Company in the Court of Chancery in the State of Delaware (the “FWB Action”) for breach of contract and anticipatory repudiation or for unjust enrichment. The FWB Action sought specific performance of the Company’s obligations under the Merger Agreement and the November 2021 Settlement Agreement, including all payments then owed and to be owed to the Representative, and damages at the maximum amount permitted by law. On July 29, 2022, the Company reached an agreement with the Representative to settle the FWB Action and to restructure the Company’s obligations to the former FWB stockholders (the “July 2022 Term Sheet”). The Company agreed to pay the Representative: (i) $1.5 million in cash on July 29, 2022; (2) $1.0 million in cash no later than September 29, 2022 (the “Second Payment”); and (iii) $2.0 million on the earlier of November 30, 2022 and the completion by the Company of one or more qualifying equity offerings (collectively, the “Payments”). The Representative is also entitled to receive future cash payments conditioned on the achievement of certain development milestones for Adrulipase and to a percentage of any consideration received by the Company in the event of a license or sale of Adrulipase, subject to a cap. The Representative is also entitled to receive a percentage of the consideration received by the Company in the event of a license or sale of Niclosamide and will retain its existing milestone payment rights with respect to Niclosamide. In the event that the consideration received by the Company in connection with the sale or license of Adrulipase or Niclosamide consists of securities or other non-cash consideration, the Representative will have the right to elect either to receive its payment in such form of consideration or to cause the licensee or acquirer to assume the obligations described herein. In the event of a “Company Sale” (as defined in the July 2022 Term Sheet), the Representative is entitled to receive a pro rata share of the total consideration received by the Company or its stockholders up to $4.0 million (plus any unpaid Payments whether or not then due) based on a formula set forth in the July 2022 Term Sheet. In certain circumstances, the Representative has the right to treat a “Company Sale” as a sale of ardulipase or Niclosamide, as applicable, and to treat the Company Sale as a sale of the related asset and to receive the consideration with respect thereto described herein.

In the July 2022 Term Sheet, the Representative agreed to stay the FWB Action for a period of 90 days and to eliminate the Company’s obligation to pay a portion of any offering proceeds to the Representative. In addition, the Company’s obligation to use commercially reasonable efforts to develop Niclosamide will be deferred for a period of 24 months from the date of the July 2022 Term Sheet. Effective upon the Second Payment, the Representative dismissed the FWB Action with prejudice and extinguished the remaining fixed payment obligations owed to the former FWB shareholders. On November 30, 2022, the Company entered into a formal settlement agreement with the Representative on substantially the same terms as the July 2022 Term Sheet (the “November 2022 Settlement Agreement”).

Accounting Treatment

Under the July 2022 Term Sheet, the $1.5 million in cash due and paid on July 29, 2022, as well as the Second Payment due and paid in September 2022, were recorded as a reduction to current liabilities for the three months ended September 30, 2022. Effective upon the Second Payment, the approximately $10.1 million of remaining fixed payment obligations previously owed to the former FWB shareholders was settled. The third payment obligation of $2.0 million due and paid by November 30, 2022 was recorded as research and development expense in the three months ended December 31, 2022.

The remaining unachieved potential milestone payments and revenue share are not yet considered probable, therefore have not been accrued as of September 30, 2023. Depending on the status of development at the time a contingent payment is recognized, the Company may determine that the payment should be expensed as research and development or be capitalized as an intangible asset. This determination will be based on the facts and circumstances that exist at the time a contingent payment is recognized.

v3.23.3
Property, Equipment and Leasehold Improvements
9 Months Ended
Sep. 30, 2023
Property, Equipment and Leasehold Improvements  
Property, Equipment and Leasehold Improvements

Note 5 – Property, Equipment and Leasehold Improvements

Property, equipment, and leasehold improvements consisted of the following:

September 30, 

    

2023

    

December 31, 

(unaudited)

2022

Computer equipment and software

$

11,540

$

11,540

Office equipment

 

48,278

 

48,278

Leasehold improvements

 

28,000

 

28,000

Total property, plant, and equipment

 

87,818

 

87,818

Less accumulated depreciation

 

(65,934)

 

(43,979)

Property, plant and equipment, net

$

21,884

$

43,839

Depreciation expense for each of the three months ended September 30, 2023 and 2022 was approximately $7,300, and for each of the nine months ended September 30, 2023 and 2022 was approximately $22,000.

v3.23.3
Goodwill
9 Months Ended
Sep. 30, 2023
Goodwill  
Goodwill

Note 6 –Goodwill

Goodwill is as follows:

    

Goodwill

Balance on January 1, 2022

$

1,911,705

Foreign currency translation

 

(227,523)

Balance on December 31, 2022

 

1,684,182

Foreign currency translation

 

Balance on September 30, 2023 (unaudited)

$

1,684,182

v3.23.3
Accrued Expenses
9 Months Ended
Sep. 30, 2023
Accrued Expenses  
Accrued Expenses

Note 7 - Accrued Expenses

Accrued expenses consisted of the following:

September 30, 

    

2023

    

December 31, 

(unaudited)

2022

License agreement

$

500,000

$

Professional fees

244,215

309,867

Consulting fees

82,974

4,969

Payroll and benefits

7,351

Clinical trials

5,340

Total accrued expenses

$

834,540

$

320,176

v3.23.3
Note Payable
9 Months Ended
Sep. 30, 2023
Note Payable  
Note Payable

Note 8 – Note Payable

Directors and Officers Liability Insurance

On November 30, 2022, the Company entered into 9-month financing agreements for its directors and officer’s liability insurance, as well as other corporate insurances, in the amount of approximately $677,000 that bears interest at an annual rate of 6.79%. Monthly payments, including principal and interest, of approximately $77,000 per month. The balance due under these financing agreements was approximately $0 and $603,000 at September 30, 2023 and December 31, 2022, respectively.

v3.23.3
Capital Stock
9 Months Ended
Sep. 30, 2023
Capital Stock  
Capital Stock

Note 9  Capital Stock

Common Stock and Preferred Stock

The Company’s amended and restated certificate of incorporation, as amended to date, (the “Charter”) authorizes the issuance of up to 50,000,000 shares of Common Stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share.

On January 18, 2023, the Company effected a reverse stock split, whereby every seven shares of the Company’s issued and outstanding Common Stock was converted automatically into one issued and outstanding share of Common Stock, but without any change in the number of authorized shares of Common Stock and the par value per share.

On August 26, 2022, the Company effected a reverse stock split, whereby every thirty shares of the Company’s issued and outstanding Common Stock was converted automatically into one issued and outstanding share of Common Stock, but without any change in the number of authorized shares of Common Stock and the par value per share.

All share and per share amounts have been retroactively restated to reflect the reverse stock splits referenced above.

The Company had 13,463,479 and 995,003 shares of its Common Stock issued and outstanding on September 30, 2023 and December 31, 2022, respectively.

The Company had approximately 521.72 and 550.17 shares of Series B preferred stock issued and outstanding on September 30, 2023 and December 31, 2022, respectively.

The Company had 0 shares of Series C, Series D, Series E and Series F preferred stock issued and outstanding on September 30, 2023 and December 31, 2022.

Most Favored Nations Exchange Right and Waiver Agreements

In the event the Company effects any issuance by the Company or any of its subsidiaries of Common Stock or Common Stock equivalents for cash consideration, or a combination of units thereof (a “Subsequent Financing”), each holder of the Series B Preferred Stock had the right, subject to certain exceptions set forth in the Series B Certificate of Designations, at its option, to exchange (in lieu of cash subscription payments) all or some of the Series B Preferred Stock then held (with a value per share of Series B Preferred Stock equal to the stated value of each share of Series B Preferred Stock, or $7,700, plus accrued and unpaid dividends thereon, of the Series B Preferred Stock (the “Exchange Amount”) for any securities or units issued in a Subsequent Financing on dollar-for-dollar basis (the “Series B Exchange Right”).

Between February 1, 2022 and February 7, 2022, the Company entered into waiver agreements (the “Waiver”) with certain holders of Series B Preferred Stock, pursuant to which the Company agreed to pay a cash waiver fee equal to ten percent of the stated value of the shares of Series B Preferred Stock held by such holder (other than holders who are insiders who did not receive a cash waiver fee) and such holder agreed to irrevocably waive its Series B Exchange Right with respect to any Subsequent Financing that occurred from and after the date of the Waiver until December 31, 2022.

During the nine months ended September 30, 2022, the Company entered into Waivers with holders of approximately $2.88 million of stated value of Series B Preferred Stock. The Company also entered into Waivers with Company insiders holding approximately $0.047 million of stated value of Series B Preferred Stock for which the Company did not pay a waiver fee. The cash waivers paid of approximately $0.233 million were recorded as other expense on the Company’s condensed consolidated statements of operations for the nine months ended September 30, 2022.

Effective May 12, 2022, the holders of 81.3% of the outstanding shares of the Series B Preferred Stock (the “Consenting Holders”) permanently waived for themselves and all other holders of the Series B Preferred Stock the Series B Exchange Right with respect to any Subsequent Financing occurring on or after January 1, 2022 (the “Permanent Waiver”). Holders of Series B Preferred Stock as of the April 27, 2022 record date were entitled to notice of and to consent to the Permanent Waiver (the “Record Holders”).

Pursuant to the terms of a Waiver Agreement entered into by the Company and the Consenting Holders (the “Waiver Agreement”), the Company permanently reduced the exercise price of the Series B Warrants originally issued on July 16, 2020 (the “Series B Warrants”) held by the Consenting Holders to $52.50 per share or, in the case of Consenting Holders who are officers and directors of the Company, $69.174 (the “Exercise Price Reduction”). Only Consenting Holders are entitled to the Exercise Price Reduction. Series B Warrants to purchase an aggregate of approximately 1,196 shares of Common Stock received the Exercise Price Reduction which was effective as of the Expiration Date. As a result of the Exercise Price Reduction of the Series B Warrants described above, the Company recorded a deemed dividend of approximately $0.047 million for the nine months ended September 30, 2022.

From inception through September 30, 2023, (i) holders of approximately 1,839.76 shares of Series B Preferred Stock with an aggregate Exchange Amount of approximately $14.4 million had previously elected to exercise their Series B Exchange Rights into Series C Preferred Stock, convertible into an aggregate of 9,058 shares of Common Stock (which conversion the Company has elected to make in full), and additional warrants exercisable for up to an aggregate of 9,058 shares of Common Stock, (ii) holders of approximately 123.42 shares of Series B Preferred Stock with an aggregate Exchange Amount of approximately $1.1 million had previously elected to exercise their Series B Exchange Rights into 1,969 shares of Common Stock with no warrants, and (iii) holders of approximately 30.91 shares of Series B Preferred Stock with an aggregate Exchange Amount of approximately $265,000 had previously elected to exercise their Series B Exchange Rights into 909 shares of Common Stock, and additional Series C Warrants exercisable for up to an aggregate of 909 shares of Common Stock.

At The Market Agreement with H.C. Wainwright

On May 26, 2021, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (“Wainwright”), as sales agent, pursuant to which the Company may issue and sell, from time to time, through Wainwright, shares of its Common Stock, and pursuant to which Wainwright may sell its Common Stock by any method permitted by law deemed to be an “at the market offering” as defined by Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended. The Company will pay Wainwright a commission of 3.0% of the aggregate gross proceeds from each sale of Common Stock. As of May 24, 2022, the Company was authorized to offer and sell up to $8.0 million of its Common Stock pursuant to the ATM Agreement over 12-month periods. During the year ended December 31, 2022, the Company issued and sold an aggregate of 217,036 shares of Common Stock under the ATM Agreement for which the Company received gross proceeds of approximately $8.0 million less issuance costs incurred of approximately $309,000. As of September 30, 2023, the maximum dollars authorized under the ATM Agreement were issued.

September 2023 Inducement Offering

On September 14, 2023, the Company entered into warrant exercise inducement offer letters with certain holders (the “September 2023 Holders”) of warrants to purchase shares of the Company’s Common Stock (the “September 2023 Existing Warrants”) pursuant to which the September 2023 Holders agreed to exercise for cash their September 2023 Existing Warrants to purchase 5,882,036 shares of the Company’s Common Stock, in the aggregate, at a reduced exercised price of $0.43 per share, in exchange for the Company’s agreement to issue new warrants (the “September 2023 Inducement Warrants”) on substantially the same terms as the September 2023 Existing Warrants as described below, to purchase up to 11,764,072 shares of the Company’s Common Stock (the “September 2023 Inducement Warrant Shares”) and a cash payment of $0.125 per September 2023 Inducement Warrant Share which was paid in full upon the exercise of the September 2023 Existing Warrants (the “September 2023 Inducement Offering”). The Company received aggregate gross proceeds of approximately $4.0 million from the exercise of the September 2023 Existing Warrants by the Holders and the sale of the September 2023 Inducement Warrants. The Company engaged Roth Capital Partners, LLC (“Roth”) to act as its financial advisor in connection with the transactions summarized above and paid Roth $220,000 for its services.

July 2023 Offering

On July 21, 2023, the Company completed an offering (the “July 2023 Offering”) for an aggregate of (i) 610,000 shares of Common Stock, (ii) pre-funded warrants (the “July 2023 Pre-Funded Warrants”) to purchase up to an aggregate of 2,675,000 shares of Common Stock, and (iii) common warrants (the “July 2023 Warrants”) to purchase up to an aggregate of 6,570,000 shares of Common Stock. The public offering price for each share of Common Stock and accompanying July 2023 Warrant to purchase one share of Common Stock was $0.64 per share. The July 2023 Pre-Funded Warrants have an exercise price of $0.0001 per share, are exercisable immediately and will expire when exercised in full. To date, pre-funded warrants have been exercised to purchase 2,675,000 shares of Common Stock. The July 2023 Warrants have an exercise price of $0.64 per share, are exercisable immediately and will expire five years from the initial exercise date.

The Company received gross proceeds of approximately $2.1 million less placement agent’s fees and other offering expenses of approximately $250,000.

June 2023 Inducement Offering

On June 13, 2023, the Company entered into warrant exercise inducement offer letters with certain holders (the “June 2023 Holders”) of warrants to purchase shares of the Company’s Common Stock (the “June 2023 Existing Warrants”) pursuant to which the June 2023 Holders agreed to exercise for cash their June 2023 Existing Warrants to purchase 1,724,332 shares of the Company’s Common Stock, in the aggregate, at a reduced exercised price of $1.15 per share, in exchange for the Company’s agreement to issue new warrants (the “June 2023 Inducement Warrants”) on substantially the same terms as the June 2023 Existing Warrants as described below, to purchase up to 3,448,664 shares of the Company’s Common Stock (the “June 2023 Inducement Warrant Shares”) and a cash payment of $0.125 per June 2023 Inducement Warrant Share which was paid in full upon the exercise of the June 2023 Existing Warrants (the “June 2023 Inducement Offering”). The Company received aggregate gross proceeds of approximately $2.4 million from the exercise of the June 2023 Existing Warrants by the June 2023 Holders and the sale of the June 2023 Inducement Warrants. The Company engaged Roth to act as its financial advisor in connection with the transactions summarized above and paid Roth $150,000 for its services.

March 2023 Private Placement

On March 15, 2023, the Company completed a private placement offering (the “March 2023 Offering”) priced at market under Nasdaq rules, for an aggregate of (i) 128,000 shares of Common Stock, (ii) pre-funded warrants (the “March 2023 Pre-Funded Warrants”) to purchase up to an aggregate of 895,018 shares of Common Stock and (iii) common warrants (the “March 2023 Warrants”) to purchase up to an aggregate of 2,046,036 shares of Common Stock. The public offering price for each share of Common Stock and accompanying March 2023 Warrant to purchase one share of Common Stock was $3.91 per share. The March 2023 Pre-Funded Warrants have an exercise price of $0.0001 per share, are exercisable immediately and will expire when exercised in full. The March 2023 Warrants have an exercise price of $3.66 per share, are exercisable immediately and will expire five years from the initial exercise date.

The Company received gross proceeds of approximately $4.0 million less placement agent’s fees and other offering expenses of approximately $300,000.

July 2022 Private Placement

On July 15, 2022, the Company completed a private placement (the “July 2022 Offering”) in which the Company issued an aggregate of (i) 150 shares of the Company’s Series D Preferred Stock, with a stated value $1,000 per share, convertible into an aggregate of 4,761 shares of the Common Stock, (ii) 150 shares of the Company’s Series E Preferred Stock, with a stated value $1,000 per share, convertible into an aggregate of 4,761 shares of Common Stock, and (iii) Series D Warrants to purchase up to an aggregate of 9,522 shares of Common Stock (the “July 2022 Warrants”). The Series D Preferred Stock are convertible into an aggregate of 4,761 shares of Common Stock at a conversion price of $31.50 per share and the Series E Preferred Shares are convertible, following the August 26, 2022 reverse stock split, into an aggregate of 4,761 shares of Common Stock at a conversion price of $31.50 per share. The July 2022 Warrants have an exercise price of $31.50 per share and will expire five years from the initial exercise date. The Company received gross proceeds of approximately $300,000 from the July 2022 Offering, before deducting the offering expenses payable by the Company.

As compensation to Wainwright, who was the exclusive placement agent in connection with the July 2022 Offering, the Company paid Wainwright a cash fee of 7% of the aggregate gross proceeds raised and reimbursement of certain expenses and legal fees. The Company also issued to designees of Wainwright in a private placement warrants (the “Placement Agent Warrants”) to purchase up to 571 shares of Common Stock. The Placement Agent Warrants were cancelled and terminated on October 5, 2022. None of the Placement Agent Warrants were exercised prior to cancellation and termination.

During the three months ended September 30, 2022, all of the Series D Preferred Shares and the Series E Preferred Shares were converted into 9,522 shares of Common Stock.

March 2022 Registered Direct Offering

On March 2, 2022, the Company completed a registered direct offering (the “March 2022 Offering”) priced at the market under Nasdaq rules for an aggregate of 7,857 shares of Common Stock, pre-funded warrants exercisable for an aggregate of up to 23,086 shares of Common Stock (the “March 2022 Pre-Funded Warrants”), and warrants (the “March 2022 Warrants”) exercisable for an aggregate of up to 30,943 shares of Common Stock. The public offering price for each share of Common Stock and accompanying March 2022 Warrant to purchase one share of Common Stock was $290.85, and the public offering price for each March 2022 Pre-Funded Warrant and accompanying March 2022 Warrant to purchase one share of Common Stock was $288.75. The total net proceeds from the March 2022 Offering were approximately $8.0 million. The March 2022 Warrants have an exercise price of $264.60 per share and will be exercisable for five years from the issuance date. The March 2022 Pre-Funded Warrants are exercisable for one share of Common Stock at an exercise price of $2.10 per share and will expire when exercised in full. Additionally, the Company issued warrants to the placement agent (the “March 2022 Placement Agent Warrants”) to purchase 1,856 shares of Common Stock, which was equal to 6.0% of the aggregate number of shares of Common Stock and March 2022 Pre-Funded Warrants placed in the March 2022 Offering. The March 2022 Placement Agent Warrants have a term of five years from the date of the prospectus supplement relating to the March 2022 Offering and an exercise price of $363.30 per share.

The Company received gross proceeds of approximately $9.0 million less placement agent’s fees and other offering expenses of approximately $1.0 million.

Common Stock Issuances

Issuances for the Three Months Ended September 30, 2023

During the three months ended September 30, 2023, the Company issued 610,000 shares of Common Stock under the July 2023 Offering for which the Company received net proceeds of approximately $1.8 million.

During the three months ended September 30, 2023, the Company issued 5,882,036 shares of Common Stock upon the exercise of an aggregate of 5,882,036 investor warrants for which the Company received net proceeds of approximately $3.7 million (See Note 10).

During the three months ended September 30, 2023, the Company issued an aggregate of 2,675,000 shares of Common Stock upon the conversion of pre-funded warrants issued at a par value of $0.0001.

During the three months ended September 30, 2023, the Company issued an aggregate of 417 shares of Common Stock upon the exchange of an aggregate of 24.22 shares of Series B Preferred Stock with a stated value of approximately $186,500 plus accrued dividends of approximately $43,300.

During the three months ended September 30, 2023, the Company issued an aggregate of 50,000 shares of its Common Stock to consultants with a grant date fair value of approximately $76,000 for investor relations services provided, which was recorded as stock-based compensation and included as part of general and administrative expense.

During the three months ended September 30, 2023, the Company issued an aggregate of 37,031 shares of Common Stock upon the vesting of restricted stock units (“RSUs”) (See Note 11).

Issuances for the Nine Months Ended September 30, 2023

During the nine months ended September 30, 2023, the Company issued 128,000 shares of Common Stock under the March 2023 Offering for which the Company received net proceeds of approximately $3.7 million.

During the nine months ended September 30, 2023, the Company issued 1,724,332 shares of Common Stock upon the exercise of an aggregate of 1,724,332 investor warrants for which the Company received net proceeds of approximately $2.2 million (See Note 10).

During the nine months ended September 30, 2023, the Company issued 610,000 shares of Common Stock under the July 2023 Offering for which the Company received net proceeds of approximately $1.8 million.

During the nine months ended September 30, 2023, the Company issued 5,882,036 shares of Common Stock upon the exercise of an aggregate of 5,882,036 investor warrants for which the Company received net proceeds of approximately $3.7 million (See Note 10).

During the nine months ended September 30, 2023, the Company issued an aggregate of 3,999,493 shares of Common Stock upon the conversion of pre-funded warrants issued at a par value of $0.0001 (See Note 10).

During the nine months ended September 30, 2023, the Company issued an aggregate of 487 shares of Common Stock upon the exchange of an aggregate of 28.45 shares of Series B Preferred Stock with a stated value of approximately $219,000 plus accrued dividends of approximately $49,500.

During the nine months ended September 30, 2023, the Company issued an aggregate of 50,000 shares of its Common Stock to consultants with a grant date fair value of approximately $76,000 for investor relations services provided, which was recorded as stock-based compensation and included as part of general and administrative expense.

During the nine months ended September 30, 2023, the Company issued an aggregate of 77,095 shares of Common Stock upon the vesting of RSUs (See Note 11).

During the nine months ended September 30, 2023, the Company cancelled an aggregate of 2,967 shares of Common Stock in connection with the 1-for-7 reverse stock split on January 18, 2023.

Issuances for the Three Months Ended September 30, 2022

During the three months ended September 30, 2022, the Company issued an aggregate of 9,522 shares of Common Stock upon the conversion of Series E and Series D preferred stock.

During the three months ended September 30, 2022, the Company issued and sold an aggregate of 211,968 shares of Common Stock under the ATM Agreement for which the Company received net proceeds of approximately $7.4 million.

During the three months ended September 30, 2022, the Company cancelled an aggregate of 12 shares of Common Stock in connection with the 30-for-1 reverse stock split on August 26, 2022.

Issuances for the Nine Months Ended September 30, 2022

During the nine months ended September 30, 2022, the Company issued an aggregate of 9,522 shares of Common Stock upon the conversion of Series E and Series D preferred stock.

During the nine months ended September 30, 2022, the Company issued 7,857 shares of Common Stock under the March 2022 Offering for which the Company received net proceeds of approximately $8.0 million.

During the nine months ended September 30, 2022, the Company issued and sold an aggregate of 217,038 shares of Common Stock under the ATM Agreement for which the Company received net proceeds of approximately $7.7 million.

During the nine months ended September 30, 2022, the Company issued an aggregate of 23,086 shares of Common Stock upon the conversion of the March 2022 Pre-Funded Warrants issued at a par value of $2.10 (See Note 10).

During the nine months ended September 30, 2022, the Company issued an aggregate of 910 shares of Common Stock and accompanying Exchange Warrants upon the exchange of an aggregate of 30.92 shares of Series B Preferred Stock with a stated value of approximately $238,000 plus accrued dividends of approximately $27,000.

During the nine months ended September 30, 2022, the Company issued an aggregate of 429 shares of its Common Stock to consultants with a grant date fair value of approximately $119,000 for investor relations services provided, which was recorded as stock-based compensation and included as part of general and administrative expense.

During the nine months ended September 30, 2022, the Company cancelled an aggregate of 12 shares of Common Stock in connection with the 30-for-1 reverse stock split on August 26, 2022.

v3.23.3
Warrants
9 Months Ended
Sep. 30, 2023
Warrants  
Warrants

Note 10  Warrants

Warrant activity for the nine months ended September 30, 2023 and 2022 was as follows:

Weighted

Weighted

Average

Average

Number of

Exercise Price

Remaining

    

Warrants

    

Per Share

    

Term in Years

Outstanding and exercisable on January 1, 2023

 

2,179,798

$

19.16

 

5.50

Issued

 

27,398,790

 

0.73

 

4.59

Expired

 

(116)

 

773.79

 

Exercised

 

(11,605,861)

 

0.96

 

4.72

Warrants outstanding and exercisable on September 30, 2023

 

17,972,611

$

2.38

 

4.89

Warrants outstanding and exercisable on January 1, 2022

 

26,089

$

1,992.90

 

3.95

Issued

 

66,317

 

142.52

 

4.49

Expired

 

(596)

 

7,880.46

 

Exercised

 

(23,086)

 

2.10

 

4.42

Warrants outstanding and exercisable on September 30, 2022

 

68,724

$

631.33

 

4.07

The outstanding warrants expire from 2024 through 2028.

During the nine months ended September 30, 2023, the Company issued warrants and pre-funded warrants to purchase 2,941,054 shares of the Company’s Common Stock in connection with the March 2023 Offering, warrants to purchase 3,448,664 shares of the Company’s Common Stock in connection with the June 2023 Inducement Offering, warrants and pre-funded warrants to purchase 9,245,000 shares of the Company’s Common Stock in connection with the July 2023 Offering, and warrants to purchase 11,764,072 shares of the Company’s Common Stock in connection with the September 2023 Inducement Offering (See Note 9).

During the nine months ended September 30, 2023, an investor exercised pre-funded warrants to purchase 3,999,493 shares of the Company’s Common Stock in connection with previous offerings. During the nine months ended September 30, 2023, an investor exercised warrants to purchase 7,606,368 shares of the Company’s Common Stock in connection with previous offerings as a result of the June 2023 and September 2023 Inducement Offerings (see Note 9).

During the nine months ended September 30, 2022, the Company issued warrants, pre-funded warrants, and placement agent warrants to purchase 55,885 shares of the Company’s Common Stock in connection with the March 2022 Offering, Series C warrants to purchase 910 shares of the Company’s Common Stock in connection with a Series B Preferred Stock exchange, as well as July 2022 Warrants to purchase 9,522 shares of Common Stock in connection with the July 2022 Offering (see Note 9).

During the nine months ended September 30, 2022, an investor exercised pre-funded warrants to purchase 23,086 shares of the Company’s Common Stock in connection with previous offerings.

In connection with the March 2022 Offering, the Company entered into a warrant amendment agreement with an investor pursuant to which the Company agreed to amend the investor’s existing warrants to purchase up to 5,080 shares of Common Stock at an exercise price of $1,680 per share issued in January 2021 and warrants to purchase up to 1,872 shares of Common Stock at an exercise price of $2,541 per share issued in March 2021 (the “March Existing Warrants”), in consideration for such investor’s purchase of $9.0 million of securities in the March 2022 Offering and payment of $5.901 per share for each share of Common Stock issuable upon exercise of the March Existing Warrants to (i) lower the exercise price of the March Existing Warrants to $264.60 per share and (ii) extend the termination date of the March Existing Warrants to March 2, 2027.

v3.23.3
Equity Incentive Plan
9 Months Ended
Sep. 30, 2023
Equity Incentive Plan  
Equity Incentive Plan

Note 11 – Equity Incentive Plan

The Company’s Board and stockholders adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”), which took effect on May 12, 2014. The Company’s Board and stockholders adopted and approved the 2020 Omnibus Equity Incentive Plan (the “2020 Plan”), which took effect on September 11, 2020. From the adoption and approval of the 2020 Plan, no new awards have been or will be made under the 2014 Plan.

The 2020 Plan allows for the issuance of securities, including stock options to employees, Board members and consultants. The initial number of shares of Common Stock available for issuance under the 2020 Plan was 4,761 shares, which will, on January 1 of each calendar year, unless the Board decides otherwise, automatically increase to equal ten percent (10)% of the total number of shares of Common Stock outstanding on December 31 of the immediately preceding calendar year, calculated on an As Converted Basis. As Converted Shares include all outstanding shares of Common Stock and all shares of Common Stock issuable upon the conversion of outstanding preferred stock, warrants and other convertible securities, but will not include any shares of Common Stock issuable upon the exercise of options and other convertible securities issued pursuant to either the 2014 Plan or the 2020 Plan. The number of shares permitted to be issued as “incentive stock options” (“ISOs”) is 7,142 under the 2020 Plan.

On April 20, 2023, the Company’s board of directors approved an amendment (i) increasing the number of shares of Common Stock available for issuance under the 2020 Plan from 317,480 to 1,167,480 and (ii) increasing the number of shares of our Common Stock otherwise available under the 2020 Plan that may be granted as ISOs to 5,000,000 shares. The board of directors directed that the amendment be submitted to the stockholders of the Company at the Company’s annual meeting of stockholders. On June 22, 2023, the stockholders approved the amendment to the 2020 Plan at the annual meeting of stockholders.

As of January 1, 2023, the number of shares of Common Stock available for issuance under the 2020 Plan automatically increased to 317,480 under the 2020 Plan’s evergreen provision.

As of June 22, 2023, as a result of approval at the annual shareholders’ meeting, the number of shares of Common Stock available for issuance under the 2020 Plan increased to 1,167,480.

As of September 30, 2023, there were an aggregate of 1,024 total shares available (but un-issuable) under the 2014 Plan, of which 732 are issued and outstanding, and 292 shares are reserved subject to issuance of restricted stock and RSUs.

As of September 30, 2023, 1,167,480 total shares were authorized under the 2020 Plan, of which 158,313 were issued and outstanding and 1,009,167 shares were available for potential issuances.

During the nine months ended September 30, 2023 and 2022, stock option activity under the 2014 Plan and 2020 Plan was as follows:

Average

Remaining

Number

Exercise

Contract

Intrinsic

    

of Shares

    

Price

    

Life (Years)

    

Value

Outstanding at January 1, 2023

 

4,076

$

958.14

 

8.22

$

Granted

 

5,000

 

3.73

 

9.40

 

Forfeited

(11)

573.68

Expired

(109)

4,363.67

Outstanding at September 30, 2023

 

8,956

$

397.33

 

8.68

$

Exercisable at September 30, 2023

 

6,625

$

464.22

 

8.62

$

Outstanding at January 1, 2022

 

1,941

$

2,470.99

 

7.28

$

Granted

 

3,266

 

288.19

 

7.50

 

Forfeited

(678)

841.40

Cancelled

 

(535)

 

2,485.98

 

 

Outstanding at September 30, 2022

 

3,994

$

970.41

 

8.45

$

Exercisable at September 30, 2022

 

1,962

$

1,509.13

 

7.75

$

During the nine months ended September 30, 2023 and 2022, the Board approved the grant of options to purchase 5,000 and 3,266 shares of Common Stock, respectively. All option grants were pursuant to the 2020 Plan. In general, options granted under the 2020 Plan vest monthly over a 36-month period.

During the nine months ended September 30, 2023 and 2022, stock options to purchase 11 and 678 shares of Common Stock, respectively, were forfeited. During the nine months ended September 30, 2023, stock options to purchase 109 shares of Common Stock expired. During the nine months ended September 30, 2022, stock options to purchase 535 shares of Common Stock were cancelled.

For the nine months ended September 30, 2023 and 2022, the fair value of each option grant has been estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

    

2023

    

2022

 

Contractual term (in years)

 

6.50

6.50

Expected Volatility

 

98.80

%

90.92

%

Risk-free interest rate

 

4.08

%

1.11

%

Expected Dividend yield

 

0

%

0

%

Using the Black-Scholes Option Pricing Model, the estimated weighted average fair value of an option to purchase one share of common stock granted during the nine months ended September 30, 2023 and 2022 was $3.05 and $223.72, respectively.

Restricted Stock and Restricted Stock Units

Restricted stock refers to shares of Common Stock subject to vesting based on certain service, performance, and market conditions. Restricted stock units (“RSUs”) refer to an award which constitutes a promise to grant shares of Common Stock at the end of a specified restriction period.

As of September 30, 2023 and 2022, under the 2014 Plan, the Company had 130 shares of restricted stock outstanding and an aggregate unrecognized restricted Common Stock expense of approximately $388,000, which will be recognized when vesting of certain milestones become probable.

During the nine months ended September 30, 2023, RSU activity under the 2020 Plan was as follows:

    

Weighted-Average

    

Weighted-Average

Number

Grant Date

Remaining Recognition

    

of Shares

    

Fair Value

    

Period (Years)

Non-vested Outstanding at January 1, 2023

$

Awarded

 

160,239

 

6.20

 

  

Vested

(113,595)

6.20

Cancelled

 

(10,150)

 

6.20

 

  

Non-vested Outstanding at September 30, 2023

 

36,494

$

6.20

 

0.25

During the nine months ended September 30, 2023, the Board approved the grant of 160,239 RSUs. All grants of RSUs were pursuant to the 2020 Plan, vest quarterly over a one-year period and are issued in the following quarter. During the nine months ended September 30, 2023, 113,595 RSUs vested, of which 36,500 were issued in October 2023.

The total stock-based compensation expense for employees and non-employees is included in the accompanying condensed consolidated statements of operations and as follows:

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2023

    

2022

    

2023

    

2022

Research and development

$

34,847

$

22,623

$

111,092

$

93,870

General and administrative

 

228,483

 

69,018

 

803,258

 

590,908

Total stock-based compensation expense

$

263,330

$

91,641

$

914,350

$

684,778

As of September 30, 2023, the Company had unrecognized stock-based compensation expense related to stock options and RSUs of approximately $0.6 million. Approximately $0.4 million of this unrecognized expense will be recognized over the average remaining vesting term of the stock awards of 0.66 years. Approximately $0.2 million of this unrecognized expense will vest upon achieving certain clinical and/or corporate milestones. The Company will recognize the expense related to these milestones when the milestones become probable.

As of September 30, 2022, the Company had unrecognized stock-based compensation expense of approximately $0.9 million. Approximately $0.4 million of this unrecognized expense will be recognized over the average remaining vesting term of the stock options of 8.44 years. Approximately $0.5 million of this unrecognized expense will vest upon achieving certain clinical and/or corporate milestones. The Company will recognize the expense related to these milestones when the milestones become probable.

v3.23.3
Agreements
9 Months Ended
Sep. 30, 2023
Agreements  
Agreements

Note 12 – Agreements

License Agreement with Sanofi

On September 13, 2023, the Company entered into a License Agreement with Sanofi, pursuant to which the Company received a license to obtain certain exclusive worldwide rights to develop and commercialize Capeserod, a selective 5-HT4 receptor partial agonist which the Company intends to repurpose and develop for gastrointestinal indications.

The Company paid Sanofi an upfront payment of $500,000 in October 2023 and Sanofi will be eligible to receive up to $46 million in potential development and regulatory milestone payments and up to $235 million in potential commercial milestone payments. Sanofi will also be eligible to receive mid-to-high single-digit royalties on net sales, as well as a percentage of sublicense and transfer revenues with respect to Capeserod. Sanofi will also have a right of first refusal with respect to Capeserod out-licensing transactions.

The upfront payment of $500,000 was recorded as research and development expense in the three and nine months ended September 30, 2023. Depending on the status of development at the time a contingent payment is recognized, the Company may determine that the payment should be expensed as research and development or be capitalized as an intangible asset. This determination will be based on the facts and circumstances that exist at the time a contingent payment is recognized.

The License Agreement shall expire on a country-by-country basis upon the later of: (i) the expiration of the last to expire valid claim of an applicable patent in such country covering such licensed product, (ii) the expiration of the regulatory exclusivity for such licensed product in the applicable country and (iii) the tenth anniversary of the date of first commercial sale of a licensed product in such country. Each party may terminate the License Agreement if the other party materially breaches its obligations under the License Agreement and fails to cure such material breach within 60 days from the date of such notice of breach, except in the case of payment breach, as to which the breaching party will have only a ten-day cure period. Sanofi may terminate the License Agreement upon any bankruptcy proceedings by the Company. The Company may terminate the License Agreement by providing Sanofi with at least 60 days prior written notice; provided, however, that Sanofi shall be entitled to any and all payments due and owed to Sanofi prior to the effective date of termination.

v3.23.3
Leases
9 Months Ended
Sep. 30, 2023
Leases  
Leases

Note 13 – Leases

The Company leases its office under an operating lease which is subject to various rent provisions and escalation clauses.

The Company is a party to one real property operating lease for the rental of office space. The Company has office space of 3,472 square feet in Boca Raton, Florida that is used for its corporate headquarters with a term through August 31, 2026. The Company previously had office space in Brooklyn, New York on a month-to-month basis, which was terminated in June 2023. The Company was also previously a party to office space in Hayward, California with a term through May 31, 2022, which was not renewed upon its expiration.

The Company’s lease expires in 2026. The escalation clause is indeterminable and considered not material and has been excluded from minimum future annual rental payments.

Lease expense was approximately $42,000 and $36,000, respectively, for the three months ended September 30, 2023 and 2022 and $114,000 and $115,000, respectively, for the nine months ended September 30, 2023 and 2022.

The weighted-average remaining lease term and weighted-average discount rate under operating leases as of September 30, 2023 are:

September 30, 

 

    

2023

 

Lease term and discount rate

 

2.9

Weighted-average remaining lease term (years)

 

Weighted-average discount rate

 

7.00

%

Maturities of operating lease liabilities as of September 30, 2023, were as follows:

2023 (remainder of year)

$

42,360

2024

 

86,202

2025

 

88,788

2026

 

60,593

Total lease payments

 

277,943

Less imputed interest

 

(46,651)

Present value of lease liabilities

$

231,292

v3.23.3
Net (Loss) Income per Common Share
9 Months Ended
Sep. 30, 2023
Net (Loss) Income per Common Share  
Net (Loss) Income per Common Share

Note 14 - Net (Loss) Income per Common Share

Basic net loss per share is computed by dividing net loss available to Common Stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the impact of common shares issuable upon exercise of stock options and warrants and conversion of convertible debt that are not deemed to be anti-dilutive. The dilutive effect of the outstanding stock options and warrants is computed using the treasury stock method.

All shares of Common Stock that may potentially be issued in the future are as follows:

Three Months Ended

    

Nine Months Ended

    

September 30, 2023

    

September 30, 2022

    

September 30, 2023

    

September 30, 2022

Net (loss) income applicable to common shareholders

$

(3,483,450)

$

4,233,753

$

(11,925,090)

$

(10,989,148)

Basic weighted average shares outstanding

 

7,566,018

 

228,773

 

3,763,506

 

136,113

Convertible preferred stock

 

 

3,475

 

 

Diluted weighted average shares outstanding

 

7,566,018

 

232,248

 

3,763,506

 

136,113

Basic net (loss) income per share

$

(0.46)

$

18.51

$

(3.17)

$

(80.74)

Diluted net (loss) income per share

$

(0.46)

$

18.23

$

(3.17)

$

(80.74)

All shares of Common Stock that may potentially be issued in the future are as follows:

September 30, 2023

September 30, 2022

    

(unaudited)

    

(unaudited)

Common stock warrants

 

17,972,611

 

68,724

Stock options

 

8,956

 

3,994

RSUs not yet issued

72,994

Convertible preferred stock (1)

 

3,084

 

3,475

Restricted stock not yet issued

 

162

 

162

Total shares of common stock issuable

 

18,057,807

 

76,355

(1)Convertible preferred stock is assumed to be converted at the rate of $1,617 per common share, which is the conversion price as of September 30, 2023.
v3.23.3
Employee Benefit Plans
9 Months Ended
Sep. 30, 2023
Employee Benefit Plans  
Employee Benefit Plans

Note 15 - Employee Benefit Plans

401(k) Plan

Since 2015, the Company has sponsored a multiple employer defined contribution benefit plan, which complies with Section 401(k) of the Internal Revenue Code covering substantially all employees of the Company. All employees are eligible to participate in the plan. Employees may contribute from 1% to 100% of their compensation and the Company matches an amount equal to 100% on the first 6% of the employee contribution and may also make discretionary profit-sharing contributions.

Employer contributions under this 401(k) plan amounted to approximately $21,000 for each of the three months ended September 30, 2023 and 2022, and approximately $68,000 and $97,000 for the nine months ended September 30, 2023 and 2022, respectively.

v3.23.3
Subsequent Event
9 Months Ended
Sep. 30, 2023
Subsequent Event  
Subsequent Event

Note 16 - Subsequent Event

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were available to be issued. The Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements except for the item noted below.

On October 26, 2023, the Company received a notice from the Listing Qualifications Staff (the “Staff”) of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that in connection with the July 2023 Offering, the Company was not in compliance with Nasdaq’s shareholder approval requirements set forth in listing rule 5635(d), which requires prior shareholder approval for transactions, other than public offerings, involving the issuance of 20% or more of the pre-transaction shares outstanding at less than the Minimum Price. The Company has 45 calendar days to submit a plan to regain compliance. If the plan is accepted, the Staff can grant an extension of up to 180 calendar days from the date of the letter to evidence compliance.

v3.23.3
Significant Accounting Policies and Recent Accounting Pronouncements (Policies)
9 Months Ended
Sep. 30, 2023
Significant Accounting Policies and Recent Accounting Pronouncements  
Use of Estimates

Use of Estimates

The accompanying unaudited condensed consolidated financial statements are prepared in conformity with GAAP and include certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements (including goodwill), and the reported amounts of revenue and expense during the reporting period, including contingencies. Accordingly, actual results may differ from those estimates.

Reverse Stock Split

Reverse Stock Split

On January 18, 2023, the Company effected a reverse stock split, whereby every seven shares of the Company’s issued and outstanding Common Stock was converted automatically into one issued and outstanding share of Common Stock, but without any change in the number of authorized shares of Common Stock and the par value per share.

On August 26, 2022, the Company effected a reverse stock split, whereby every thirty shares of the Company’s issued and outstanding common stock was converted automatically into one issued and outstanding share of common stock, but without any change in the number of authorized shares of common stock and the par value per share.

All share and per share amounts have been retroactively restated to reflect the reverse stock splits referenced above.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. All cash and cash equivalent balances were highly liquid at September 30, 2023 and December 31, 2022. As of September 30, 2023 and December 31, 2022, the Company has classified approximately $0.02 million as restricted cash.

Concentrations of Credit Risk

Concentrations of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk consist of cash. The Company primarily maintains its cash balances with financial institutions in federally insured accounts in the U.S. The Company may from time to time have cash in banks in excess of FDIC insurance limits. At September 30, 2023 the Company had approximately $3.2 million in one account in the U.S. which was in excess of these limits. The Company has not experienced any losses to date resulting from this practice. The Company mitigates its risk by maintaining the majority of its cash and equivalents with high quality financial institutions.

Fair Value Measurements

Fair Value Measurements

The Company follows Accounting Standards Codification (ASC”) Topic 820-10, Fair Value Measurements and Disclosures (ASC 820”), which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

As a basis for considering such assumptions, a three-tier fair value hierarchy has been established, which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions, which reflect those that a market participant would use.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the overall fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.

The Company recognizes transfers between levels as if the transfers occurred on the last day of the reporting period.

Foreign Currency Translation

Foreign Currency Translation

For foreign subsidiaries with operations denominated in a foreign currency, assets and liabilities were translated to U.S. dollars, which was the functional currency, at period end exchange rates. Income and expense items were translated at average rates of exchange prevailing during the periods presented. Gains and losses from translation adjustments were accumulated in a separate component of stockholders’ equity up until the dissolution of AzurRx SAS in October 2022, at which time cumulative translation adjustments were recognized as a loss for the year ended December 31, 2022.

Goodwill

Goodwill

Goodwill represents the excess of the purchase price of the acquired business over the fair value of amounts assigned to assets acquired and liabilities assumed. Goodwill and other intangible assets with indefinite useful lives are reviewed for impairment annually or more frequently if events or circumstances indicate impairment may be present. Any excess in carrying value over the estimated fair value is charged to results of operations. The Company has not recognized any impairment charges through September 30, 2023 related to goodwill.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company periodically evaluates its long-lived assets for potential impairment in accordance with ASC Topic 360, Property, Plant and Equipment (ASC 360”). Potential impairment is assessed when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recovered. Recoverability of these assets is assessed based on undiscounted expected future cash flows from the assets, considering a number of factors, including past operating results, budgets and economic projections, market trends and product development cycles. If impairments are identified, assets are written down to their estimated fair value. The Company has not recognized any impairment charges through September 30, 2023.

Leases

Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in right-of-use (“ROU”) assets, and lease liability obligations are included in the Company’s balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liability obligations represent its obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases typically do not provide an implicit rate, the Company estimates its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company uses the implicit rate when readily determinable. The ROU asset also includes any lease payments made and excludes lease incentives and lease direct costs. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Please refer to Note 13 for additional information.

License Agreements

License Agreements

The Company records payments related to license agreements for assets acquired that have not reached technological feasibility and which have no alternative future use, as research and development expenses. On September 13, 2023, the Company entered into a license agreement with Sanofi to license Capeserod, a selective 5-HT4 receptor partial agonist, which the Company will repurpose and develop for gastrointestinal (“GI”) indications. Under the terms of the agreement, the Company received from Sanofi an exclusive, global license for Capeserod and assumed responsibility for all future clinical development (see Note 12).

Research and Development

Research and Development

Research and development costs are charged to operations when incurred and are included in operating expense, except for goodwill related to patents. Research and development costs consist principally of compensation of employees and consultants that perform the Company’s research activities, payments to third parties for preclinical and non-clinical activities, expenses with clinical research organizations (“CROs”), investigative sites, consultants and contractors that conduct or provide other services relating to clinical trials, costs to acquire drug product, drug supply and clinical trial materials from contract development and manufacturing organization (“CDMOs”) and third-party contractors relating to chemistry, manufacturing and controls (“CMC”) efforts, the fees paid for and to maintain the Company’s licenses, and research and development costs related to Adrulipase, Capeserod, and Niclosamide. Depending upon the timing of payments to the service providers, the Company recognizes prepaid expenses or accrued expenses related to these costs. These accrued or prepaid expenses are based on management’s estimates of the work performed under service agreements, milestones achieved and experience with similar contracts. The Company monitors each of these factors and adjusts estimates accordingly.

Research and Development  Intellectual Property Acquired

The Company records intellectual property in asset acquisitions that have not reached technological feasibility and which have no alternative future use, as an expense at the acquisition date. On September 13, 2021, the Company entered into an agreement with FWB for the acquisition of intellectual property and patents for the worldwide, exclusive right to develop, manufacture, and commercialize proprietary formulations of Niclosamide for the fields of treating ICI-AC and COVID-19 in humans, which was accounted for as an asset acquisition (see Note 4).

Stock-Based Compensation

Stock-Based Compensation

The Company’s board of directors (the “Board”) and stockholders have adopted and approved the Amended and Restated 2014 Omnibus Equity Incentive Plan (the “2014 Plan”) which took effect on May 12, 2014, and the 2020 Omnibus Equity Incentive Plan, which took effect on September 11, 2020 (the “2020 Plan”). From the effective date of the 2020 Plan, no new awards have been or will be made under the 2014 Plan. The Company accounts for its stock-based compensation awards to employees, consultants, and Board members in accordance with ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees, consultants, and Board members, including grants of employee stock options, to be recognized in the statements of operations by measuring the fair value of the award on the date of grant and recognizing this fair value as stock-based compensation using a straight-line method over the requisite service period, generally the vesting period.

For awards with performance conditions that affect their vesting, such as the occurrence of certain transactions or the achievement of certain operating or financial milestones, recognition of fair value of the award occurs when vesting becomes probable.

The Company estimates the grant date fair value of stock option awards using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the Common Stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the Common Stock.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board (the “FASB”) issued accounting pronouncement ASU 2020-06 – Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) related to the measurement and disclosure requirements for convertible instruments and contracts in an entity’s own equity. The pronouncement simplifies and adds disclosure requirements for the accounting and measurement of convertible instruments and the settlement assessment for contracts in an entity’s own equity. As a smaller reporting company, as defined by the U.S. Securities and Exchange Commission (the “SEC”), this pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company early adopted ASU 2020-06 effective January 1, 2022.

In June 2016, the FASB issued accounting pronouncement ASU 2016-13 – Measurement of Credit Losses on Financial Statements (“ASU 2016-13”). The new standard requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. It also limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. In November 2019, the FASB issued ASU 2019-10 – Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended the effective date for certain companies. The standard is effective for public companies eligible to be smaller reporting companies for annual and interim periods beginning after December 15, 2022. The Company adopted ASU 2016-13 effective for the year ended December 31, 2022 and its adoption did not have a material effect on its financial statements and related disclosures.

In June 2022, the FASB issued ASU 2022-03 - Fair Value Measurement, or Topic 820: Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). This new standard clarifies the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. The Company has assessed the impact of the update and determined it does not have a material impact on the accompanying financial statements and disclosures.

The Company has evaluated other recently issued accounting pronouncements and has concluded that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

v3.23.3
Fair Value Disclosures (Tables)
9 Months Ended
Sep. 30, 2023
Fair Value Disclosures  
Schedule of fair value of the Company's financial instruments

Fair Value Measured at Reporting Date

Using

Carrying

    

Amount

    

Level 1

    

Level 2

    

Level 3

    

Fair Value

September 30, 2023 (unaudited):

Money market funds

$

12,086

$

12,086

$

$

$

12,086

Note payable

 

 

 

 

 

December 31, 2022:

Money market funds

509,890

509,890

509,890

Note payable

$

603,494

$

$

603,494

$

$

603,494

v3.23.3
Property, Equipment and Leasehold Improvements (Tables)
9 Months Ended
Sep. 30, 2023
Property, Equipment and Leasehold Improvements  
Summary of property, equipment and leasehold improvements

September 30, 

    

2023

    

December 31, 

(unaudited)

2022

Computer equipment and software

$

11,540

$

11,540

Office equipment

 

48,278

 

48,278

Leasehold improvements

 

28,000

 

28,000

Total property, plant, and equipment

 

87,818

 

87,818

Less accumulated depreciation

 

(65,934)

 

(43,979)

Property, plant and equipment, net

$

21,884

$

43,839

v3.23.3
Goodwill (Tables)
9 Months Ended
Sep. 30, 2023
Goodwill  
Schedule of goodwill

    

Goodwill

Balance on January 1, 2022

$

1,911,705

Foreign currency translation

 

(227,523)

Balance on December 31, 2022

 

1,684,182

Foreign currency translation

 

Balance on September 30, 2023 (unaudited)

$

1,684,182

v3.23.3
Accrued Expenses (Tables)
9 Months Ended
Sep. 30, 2023
Accrued Expenses  
Schedule of accrued expenses

September 30, 

    

2023

    

December 31, 

(unaudited)

2022

License agreement

$

500,000

$

Professional fees

244,215

309,867

Consulting fees

82,974

4,969

Payroll and benefits

7,351

Clinical trials

5,340

Total accrued expenses

$

834,540

$

320,176

v3.23.3
Warrants (Tables)
9 Months Ended
Sep. 30, 2023
Warrants  
Schedule of warrant activity

Weighted

Weighted

Average

Average

Number of

Exercise Price

Remaining

    

Warrants

    

Per Share

    

Term in Years

Outstanding and exercisable on January 1, 2023

 

2,179,798

$

19.16

 

5.50

Issued

 

27,398,790

 

0.73

 

4.59

Expired

 

(116)

 

773.79

 

Exercised

 

(11,605,861)

 

0.96

 

4.72

Warrants outstanding and exercisable on September 30, 2023

 

17,972,611

$

2.38

 

4.89

Warrants outstanding and exercisable on January 1, 2022

 

26,089

$

1,992.90

 

3.95

Issued

 

66,317

 

142.52

 

4.49

Expired

 

(596)

 

7,880.46

 

Exercised

 

(23,086)

 

2.10

 

4.42

Warrants outstanding and exercisable on September 30, 2022

 

68,724

$

631.33

 

4.07

v3.23.3
Equity Incentive Plan (Tables)
9 Months Ended
Sep. 30, 2023
Equity Incentive Plan  
Schedule of stock option activity

Average

Remaining

Number

Exercise

Contract

Intrinsic

    

of Shares

    

Price

    

Life (Years)

    

Value

Outstanding at January 1, 2023

 

4,076

$

958.14

 

8.22

$

Granted

 

5,000

 

3.73

 

9.40

 

Forfeited

(11)

573.68

Expired

(109)

4,363.67

Outstanding at September 30, 2023

 

8,956

$

397.33

 

8.68

$

Exercisable at September 30, 2023

 

6,625

$

464.22

 

8.62

$

Outstanding at January 1, 2022

 

1,941

$

2,470.99

 

7.28

$

Granted

 

3,266

 

288.19

 

7.50

 

Forfeited

(678)

841.40

Cancelled

 

(535)

 

2,485.98

 

 

Outstanding at September 30, 2022

 

3,994

$

970.41

 

8.45

$

Exercisable at September 30, 2022

 

1,962

$

1,509.13

 

7.75

$

Schedule of option pricing model with the following weighted-average assumptions

    

2023

    

2022

 

Contractual term (in years)

 

6.50

6.50

Expected Volatility

 

98.80

%

90.92

%

Risk-free interest rate

 

4.08

%

1.11

%

Expected Dividend yield

 

0

%

0

%

Schedule of RSU activity under the 2020 Plan

    

Weighted-Average

    

Weighted-Average

Number

Grant Date

Remaining Recognition

    

of Shares

    

Fair Value

    

Period (Years)

Non-vested Outstanding at January 1, 2023

$

Awarded

 

160,239

 

6.20

 

  

Vested

(113,595)

6.20

Cancelled

 

(10,150)

 

6.20

 

  

Non-vested Outstanding at September 30, 2023

 

36,494

$

6.20

 

0.25

Schedule of stock-based compensation expense

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2023

    

2022

    

2023

    

2022

Research and development

$

34,847

$

22,623

$

111,092

$

93,870

General and administrative

 

228,483

 

69,018

 

803,258

 

590,908

Total stock-based compensation expense

$

263,330

$

91,641

$

914,350

$

684,778

v3.23.3
Leases (Tables)
9 Months Ended
Sep. 30, 2023
Leases  
Schedule of weighted-average remaining lease term and weighted-average discount rate under operating leases

September 30, 

 

    

2023

 

Lease term and discount rate

 

2.9

Weighted-average remaining lease term (years)

 

Weighted-average discount rate

 

7.00

%

Schedule of maturities of operating lease liabilities

Maturities of operating lease liabilities as of September 30, 2023, were as follows:

2023 (remainder of year)

$

42,360

2024

 

86,202

2025

 

88,788

2026

 

60,593

Total lease payments

 

277,943

Less imputed interest

 

(46,651)

Present value of lease liabilities

$

231,292

v3.23.3
Net (Loss) Income per Common Share (Tables)
9 Months Ended
Sep. 30, 2023
Net (Loss) Income per Common Share  
Schedule of Common Stock that may potentially be issued in the future

Three Months Ended

    

Nine Months Ended

    

September 30, 2023

    

September 30, 2022

    

September 30, 2023

    

September 30, 2022

Net (loss) income applicable to common shareholders

$

(3,483,450)

$

4,233,753

$

(11,925,090)

$

(10,989,148)

Basic weighted average shares outstanding

 

7,566,018

 

228,773

 

3,763,506

 

136,113

Convertible preferred stock

 

 

3,475

 

 

Diluted weighted average shares outstanding

 

7,566,018

 

232,248

 

3,763,506

 

136,113

Basic net (loss) income per share

$

(0.46)

$

18.51

$

(3.17)

$

(80.74)

Diluted net (loss) income per share

$

(0.46)

$

18.23

$

(3.17)

$

(80.74)

Schedule of Common Stock that may potentially be issued in the future

September 30, 2023

September 30, 2022

    

(unaudited)

    

(unaudited)

Common stock warrants

 

17,972,611

 

68,724

Stock options

 

8,956

 

3,994

RSUs not yet issued

72,994

Convertible preferred stock (1)

 

3,084

 

3,475

Restricted stock not yet issued

 

162

 

162

Total shares of common stock issuable

 

18,057,807

 

76,355

(1)Convertible preferred stock is assumed to be converted at the rate of $1,617 per common share, which is the conversion price as of September 30, 2023.
v3.23.3
The Company and Basis of Presentation (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
The Company and Basis of Presentation    
Cash and cash equivalents $ 3,292,327 $ 1,362,910
Accumulated deficit (180,227,732) $ (168,533,689)
Working capital $ 1,500,000  
v3.23.3
Significant Accounting Policies and Recent Accounting Pronouncements (Details) - USD ($)
3 Months Ended 9 Months Ended
Jan. 18, 2023
Aug. 26, 2022
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Significant Accounting Policies and Recent Accounting Pronouncements            
Number of shares reduced due to reverse stock split 7 30 1 1 1  
Restricted cash       $ 20,000.00   $ 20,000.00
Cash in US banks in excess of FDIC insurance limits       3,200,000    
Asset impairment charges       $ 0    
v3.23.3
Fair Value Disclosures (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Fair Value Disclosures    
Money market funds $ 3,292,327 $ 1,362,910
Note payable   603,494
Carrying Amount    
Fair Value Disclosures    
Note payable   603,494
Fair Value, Inputs, Level 2    
Fair Value Disclosures    
Note payable   603,494
Money Market Funds    
Fair Value Disclosures    
Money market funds 12,086 509,890
Money Market Funds | Carrying Amount    
Fair Value Disclosures    
Money market funds 12,086 509,890
Money Market Funds | Fair Value, Inputs, Level 1    
Fair Value Disclosures    
Money market funds $ 12,086 $ 509,890
v3.23.3
Asset Acquisition (Details) - USD ($)
$ in Millions
1 Months Ended 3 Months Ended 9 Months Ended
Nov. 30, 2022
Sep. 29, 2022
Jul. 29, 2022
May 19, 2022
Jul. 31, 2022
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Asset Acquisition                
Stock cancelled during period, shares, acquisitions (in shares)           12 2,967 12
First Wave Bio Inc                
Asset Acquisition                
Asset acquisition consideration transferred $ 2.0 $ 1.0 $ 1.5         $ 2.4
Asset acquisition, consideration transferred, contingent consideration       $ 4.0        
Cash consideration         $ 1.5      
Asset acquisition, potential milestone payments             $ 10.1  
Milestone payment         $ 2.0      
v3.23.3
Property, Equipment and Leasehold Improvements (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Property, Equipment and Leasehold Improvements          
Total property, plant, and equipment $ 87,818   $ 87,818   $ 87,818
Less accumulated depreciation (65,934)   (65,934)   (43,979)
Property, plant and equipment, net 21,884   21,884   43,839
Depreciation expense 7,300 $ 7,300 22,000 $ 22,000  
Computer equipment and software          
Property, Equipment and Leasehold Improvements          
Total property, plant, and equipment 11,540   11,540   11,540
Office equipment          
Property, Equipment and Leasehold Improvements          
Total property, plant, and equipment 48,278   48,278   48,278
Leasehold improvements          
Property, Equipment and Leasehold Improvements          
Total property, plant, and equipment $ 28,000   $ 28,000   $ 28,000
v3.23.3
Goodwill (Details) - USD ($)
9 Months Ended 12 Months Ended
Sep. 30, 2023
Dec. 31, 2022
Goodwill    
Beginning balance $ 1,684,182 $ 1,911,705
Foreign currency translation 0 (227,523)
Ending balance $ 1,684,182 $ 1,684,182
v3.23.3
Accrued Expenses (Details) - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Accrued Expenses    
License agreement $ 500,000  
Professional fees 244,215 $ 309,867
Consulting fees 82,974 4,969
Payroll and benefits 7,351  
Clinical trials   5,340
Total accrued expenses $ 834,540 $ 320,176
v3.23.3
Note Payable (Details) - USD ($)
Nov. 30, 2022
Sep. 30, 2023
Dec. 31, 2022
Note Payable      
Notes payable balance   $ 0 $ 603,000
Financing Agreement for Directors and Officer's and Other Liability Insurances      
Note Payable      
Debt instrument, term 9 months    
Debt instrument, face amount $ 677,000    
Debt instrument, interest Rate 6.79%    
Debt instrument, periodic payment $ 77,000    
v3.23.3
Capital Stock (Details)
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 14, 2023
USD ($)
$ / shares
shares
Jul. 21, 2023
USD ($)
$ / shares
shares
Jun. 13, 2023
USD ($)
$ / shares
shares
Mar. 15, 2023
USD ($)
$ / shares
shares
Jan. 18, 2023
shares
Aug. 26, 2022
shares
Jul. 15, 2022
USD ($)
$ / shares
shares
May 24, 2022
shares
May 12, 2022
$ / shares
shares
Mar. 02, 2022
USD ($)
$ / shares
shares
May 26, 2021
Sep. 30, 2023
USD ($)
$ / shares
shares
Sep. 30, 2022
USD ($)
shares
Sep. 30, 2023
USD ($)
$ / shares
shares
Sep. 30, 2022
USD ($)
$ / shares
shares
Dec. 31, 2022
USD ($)
$ / shares
shares
Jul. 31, 2022
$ / shares
Mar. 31, 2022
$ / shares
Dec. 31, 2021
shares
Capital Stock                                      
Common stock, shares authorized (in shares)                       50,000,000   50,000,000   50,000,000      
Common stock, par or stated value per share (in dollars per share) | $ / shares                       $ 0.0001   $ 0.0001   $ 0.0001      
Preferred stock, shares designated (in shares)                       10,000,000   10,000,000          
Preferred stock, par or stated value per share (in dollars per share) | $ / shares                       $ 0.0001   $ 0.0001          
Common stock, shares, issued, total (in shares)                       13,463,479 995,003 13,463,479 995,003 995,003      
Warrant exercise price | $ / shares                   $ 264.60                  
Warrants to purchase of stock                   1                  
Purchase of aggregate common stock                       17,972,611 68,724 17,972,611 68,724 2,179,798     26,089
Deemed dividend on warrant modifications | $                         $ (47,300)   $ (47,300) $ 47,000.000      
Number of shares reduced due to reverse stock split         7 30             1 1 1        
Common stock, shares outstanding (in shares)                       13,463,479   13,463,479   995,003      
Proceeds from Issuance of Common Stock | $                   $ 8,000,000.0                  
Stock Issued During Period, Value, New Issues | $                         $ 7,373,355   $ 7,691,222        
Issuance of common stock, pre-funded warrants and warrants in registered direct offering, net of issuance costs (in shares)                   7,857                  
Shares issued, price per share (in dollars per share) | $ / shares                   $ 288.75                  
Warrants and rights outstanding, term (year)                   5 years                  
Reverse stock split ratio                         30 1 30        
Stock cancelled during period, shares, acquisitions (in shares)                         12 2,967 12        
March 2022 Warrants                                      
Capital Stock                                      
Warrants to purchase of stock                   30,943                  
Pre-Funded Warrant                                      
Capital Stock                                      
Warrant exercise price | $ / shares                   $ 363.30                  
Warrants to purchase of stock                   23,086                  
Shares issued, price per share (in dollars per share) | $ / shares                   $ 290.85                  
Warrants and rights outstanding, term (year)                   5 years                  
Number of common stock shares called by each warrant (in shares)                   1                  
March 2022 Pre-Funded warrants                                      
Capital Stock                                      
Warrants to purchase of stock                   1                  
Waiver                                      
Capital Stock                                      
Purchase of aggregate common stock                 1,196                    
Waiver | Common stock warrants                                      
Capital Stock                                      
Warrant exercise price | $ / shares                 $ 52.50                    
Series B Preferred Stock Converted into Common Stock                                      
Capital Stock                                      
Conversion of stock, shares converted (in shares)                             30.92        
Common stock issued upon conversion of preferred stock | $                             $ 238,000        
Conversion of stock, amount converted, accrued dividends | $                             $ 27,000        
Officers and Directors | Waiver                                      
Capital Stock                                      
Warrant exercise price | $ / shares                 $ 69.174                    
Consultants                                      
Capital Stock                                      
Stock issued during period, shares, settlement (in shares)                         50,000 50,000 429        
Stock issued during period, value, settlement | $                         $ 76,000 $ 76,000 $ 119,000        
Restricted Stock Units                                      
Capital Stock                                      
Conversion of stock, shares issued (in shares)                       37,031   77,095          
Market Agreement | H C Wainwright Co L L C                                      
Capital Stock                                      
Stock issued during period, shares, new issues (in shares)                             217,036 217,036      
Proceeds from Issuance of Common Stock | $                               $ 8,000,000.0      
Stock issuance costs | $                               $ 309,000      
September 2023 Inducement Offering                                      
Capital Stock                                      
Payment made for services rendered | $ $ 220,000                                    
Proceeds from issuance of shares | $ $ 4,000,000.0                                    
September 2023 Inducement Offering | Existing warrants                                      
Capital Stock                                      
Warrant exercise price | $ / shares $ 0.43                                    
Warrants to purchase of stock 5,882,036                                    
September 2023 Inducement Offering | September 2023 Inducement Warrants                                      
Capital Stock                                      
Warrant exercise price | $ / shares $ 0.125                                    
Warrants to purchase of stock 11,764,072                                    
At The Market Offering Agreement                                      
Capital Stock                                      
Stock issued during period, shares, new issues (in shares)                         211,968   217,038        
Stock Issued During Period, Value, New Issues | $                             $ 7,700,000        
Gross proceeds | $                         $ 7,400,000            
At The Market Offering Agreement | Wainwright                                      
Capital Stock                                      
Stock sales agreement, commission on shares sold, percentage                     3.00%                
Stock sales agreement, number of shares authorized (in shares)               8,000,000.0                      
July 2022 Private Placement                                      
Capital Stock                                      
Gross proceeds from private placement | $             $ 300,000                        
Percentage of cash fees paid to placement agent             7.00%                        
Gross proceeds | $       $ 4,000,000.0                              
Other offering expenses | $       $ 300,000                              
July 2022 Private Placement | Placement Agent Warrants                                      
Capital Stock                                      
Warrants to purchase of stock             571                        
March 2022 offering                                      
Capital Stock                                      
Warrant exercise price | $ / shares                                   $ 5.901  
Stock issued during period, shares, new issues (in shares)                             7,857        
Shares issued, price per share (in dollars per share) | $ / shares                                   $ 264.60  
Gross proceeds | $                             $ 8,000,000.0        
March 2023 offering                                      
Capital Stock                                      
Stock issued during period, shares, new issues (in shares)                           128,000          
Proceeds from Issuance of Common Stock | $                           $ 3,700,000          
March 2022 Registered Direct Offering                                      
Capital Stock                                      
Gross proceeds | $                   $ 9,000,000.0                  
Other offering expenses | $                   $ 1,000,000.0                  
Direct offering | Pre-Funded Warrant                                      
Capital Stock                                      
Warrants to purchase of stock                   1,856                  
Class of warrant or right, issued, percentage of common stock issued in offering                   6.00%                  
June 2023 Inducement Offering                                      
Capital Stock                                      
Warrant exercise price | $ / shares     $ 1.15                                
Warrants to purchase of stock     1,724,332                 3,448,664   3,448,664          
Payment made for services rendered | $     $ 150,000                                
June 2023 Inducement Offering | Existing warrants                                      
Capital Stock                                      
Warrant exercise price | $ / shares     $ 0.125                                
Proceeds from issuance of shares | $     $ 2,400,000                                
July 2023 Offering                                      
Capital Stock                                      
Warrants to purchase of stock                       9,245,000   9,245,000          
Stock issued during period, shares, new issues (in shares)   610,000                       610,000          
Proceeds from Issuance of Common Stock | $                           $ 1,800,000          
Shares of common stock | $ / shares   $ 0.64                                  
Number of common stock shares called by each warrant (in shares)   1                                  
July 2023 Pre-Funded Warrants                                      
Capital Stock                                      
Warrant exercise price | $ / shares   $ 0.0001                                  
Stock issued during period, shares, new issues (in shares)   2,675,000                                  
Number of common stock shares called by each warrant (in shares)   2,675,000                                  
July 2023 Warrants                                      
Capital Stock                                      
Warrant exercise price | $ / shares   $ 0.64                                  
Stock issued during period, shares, new issues (in shares)   6,570,000                                  
Warrants and rights outstanding, term (year)   5 years                                  
Public Offering                                      
Capital Stock                                      
Gross proceeds | $   $ 2,100,000                                  
Other offering expenses | $   $ 250,000                                  
Warrant | June 2023 Inducement Offering                                      
Capital Stock                                      
Proceeds from Issuance of Common Stock | $                       $ 3,700,000   $ 2,200,000          
Class of warrant or right, exercised during period (in shares)                       5,882,036   1,724,332          
Warrant | July 2023 Offering                                      
Capital Stock                                      
Proceeds from Issuance of Common Stock | $                           $ 3,700,000          
Pre-funded warrants                                      
Capital Stock                                      
Conversion of stock, shares issued (in shares)                       2,675,000   3,999,493          
Common stock issued upon exercise of warrants (in shares)                             23,086        
Par value per warrant | $ / shares                       $ 0.0001   $ 0.0001 $ 2.10        
Series B Preferred Stock                                      
Capital Stock                                      
Preferred stock, shares designated (in shares)                       5,194.81   5,194.81   5,194.81      
Preferred stock, par or stated value per share (in dollars per share) | $ / shares                       $ 0.0001   $ 0.0001   $ 0.0001      
Preferred stock, shares issued, total (in shares)                       521.72   521.72   550.17      
Exchange Amount | $                       $ 7,700   $ 7,700          
Warrants to purchase of stock                         9,522   9,522        
Preferred stock, shares outstanding (in shares)                       521.72   521.72   550.17      
Series B Preferred Stock | Waiver                                      
Capital Stock                                      
Value of preferred stock agreed to be waived with holders of preferred stock | $                         $ 2,880,000   $ 2,880,000        
Value of preferred stock agreed to be waived with insiders | $                         47,000.000   47,000.000        
Waiver fee paid | $                             233,000        
Percentage of outstanding shares                 81.30%                    
Series B Preferred Stock | Series B Preferred Stock Converted into Common Stock                                      
Capital Stock                                      
Conversion of stock, shares converted (in shares)                       24.22   28.45          
Common stock issued upon conversion of preferred stock | $                       $ 186,500   $ 219,000          
Conversion of stock, amount converted, accrued dividends | $                       43,300   49,500          
Series B Preferred Stock convertible into Series C Preferred Stock                                      
Capital Stock                                      
Exchange Amount | $                       14,400,000 $ 265,000 $ 14,400,000 $ 265,000        
Conversion of Series B preferred shares into common stock (in shares)                           9,058          
Conversion of stock, shares converted (in shares)                           1,839.76          
Series B Preferred Stock convertible into Series C Preferred Stock | Investor warrants                                      
Capital Stock                                      
Conversion of Series B preferred shares into common stock (in shares)                           9,058          
Series B Preferred Stock convertible into common stock with no warrants                                      
Capital Stock                                      
Exchange Amount | $                       $ 1,100,000   $ 1,100,000          
Conversion of Series B preferred shares into common stock (in shares)                           1,969          
Conversion of stock, shares converted (in shares)                           123.42          
Series B Preferred Stock Convertible Into Common Stock With Series C Warrants                                      
Capital Stock                                      
Conversion of Series B preferred shares into common stock (in shares)                           909          
Conversion of stock, shares converted (in shares)                           30.91          
Series B Preferred Stock Convertible Into Common Stock With Series C Warrants | March 2022 Warrants                                      
Capital Stock                                      
Warrants to purchase of stock                       909   909          
Series C Preferred Stock                                      
Capital Stock                                      
Preferred stock, shares designated (in shares)                       75,000   75,000   75,000      
Preferred stock, par or stated value per share (in dollars per share) | $ / shares                       $ 0.0001   $ 0.0001   $ 0.0001      
Preferred stock, shares issued, total (in shares)                       0   0   0      
Preferred stock, shares outstanding (in shares)                       0   0   0      
Series C Preferred Stock | July 2022 Private Placement                                      
Capital Stock                                      
Number of common shares issuable upon conversion       895,018     4,761                        
Series D Preferred Stock                                      
Capital Stock                                      
Preferred stock, shares designated (in shares)                       150   150   150      
Preferred stock, par or stated value per share (in dollars per share) | $ / shares                       $ 0.0001   $ 0.0001   $ 0.0001      
Preferred stock, shares issued, total (in shares)                       0   0   0      
Preferred stock, shares outstanding (in shares)                       0   0   0      
Series D Preferred Stock | July 2022 Private Placement                                      
Capital Stock                                      
Warrants to purchase of stock             9,522                        
Number of common shares issuable upon conversion             4,761                        
Convertible preferred stock, shares issued upon conversion (in shares)       3.91                              
Stock issued during period, shares, new issues (in shares)       128,000     150                        
preferred stock, stated value per share (in dollars per share) | $ / shares             $ 1,000                        
Preferred stock, convertible, conversion price (in dollars per share) | $ / shares       $ 0.0001     31.50                        
Series D Preferred Shares And Series E Preferred Shares                                      
Capital Stock                                      
Conversion of stock, shares issued (in shares)                         9,522   9,522        
Series D Preferred Shares And Series E Preferred Shares | July 2022 Private Placement                                      
Capital Stock                                      
Conversion of Series B preferred shares into common stock (in shares)                         9,522            
Series E Preferred Stock                                      
Capital Stock                                      
Preferred stock, shares designated (in shares)                       150   150   150      
Preferred stock, par or stated value per share (in dollars per share) | $ / shares                       $ 0.0001   $ 0.0001   $ 0.0001      
Preferred stock, shares issued, total (in shares)                       0   0   0      
Preferred stock, shares outstanding (in shares)                       0   0   0      
Series E Preferred Stock | July 2022 Private Placement                                      
Capital Stock                                      
Preferred stock, par or stated value per share (in dollars per share) | $ / shares       $ 2,046,036     $ 1,000                        
Warrant exercise price | $ / shares                                 $ 31.50    
Number of shares reduced due to reverse stock split       3.66     4,761                        
Number of common shares issuable upon conversion             4,761                        
Stock issued during period, shares, new issues (in shares)             150                        
Warrants and rights outstanding, term (year)                                 5 years    
Preferred stock, convertible, conversion price (in dollars per share) | $ / shares             $ 31.50                        
Series F Preferred Stock                                      
Capital Stock                                      
Preferred stock, shares designated (in shares)                       7,000   7,000   7,000      
Preferred stock, par or stated value per share (in dollars per share) | $ / shares                       $ 0.0001   $ 0.0001   $ 0.0001      
Preferred stock, shares issued, total (in shares)                       0   0   0      
Preferred stock, shares outstanding (in shares)                       0   0   0      
Common Stock                                      
Capital Stock                                      
Conversion of stock, shares issued (in shares)                       417   487 910        
Common Stock | Pre-Funded Warrant                                      
Capital Stock                                      
Warrant exercise price | $ / shares                   $ 2.10                  
Common Stock | June 2023 Inducement Offering                                      
Capital Stock                                      
Warrants to purchase of stock                       7,606,368   7,606,368          
Common stock issued upon exercise of warrants (in shares)                       5,882,036   1,724,332          
Common Stock | July 2023 Offering                                      
Capital Stock                                      
Stock issued during period, shares, new issues (in shares)                       610,000              
Common stock issued upon exercise of warrants (in shares)                           5,882,036          
Class of warrant or right, exercised during period (in shares)                           5,882,036          
Common Stock | Warrant | July 2023 Offering                                      
Capital Stock                                      
Proceeds from Issuance of Common Stock | $                       $ 1,800,000              
Maximum | June 2023 Inducement Offering                                      
Capital Stock                                      
Warrants to purchase of stock     3,448,664                                
v3.23.3
Warrants (Details) - USD ($)
$ / shares in Units, $ in Millions
9 Months Ended 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Dec. 31, 2021
Jun. 13, 2023
Mar. 31, 2022
Mar. 02, 2022
Mar. 31, 2021
Jan. 31, 2021
Number of Warrants                  
Outstanding and exercisable, beginning (in shares) 2,179,798 26,089 26,089            
Issued (in shares) 27,398,790 66,317              
Expired (in shares) (116) (596)              
Exercised (in shares) (11,605,861) (23,086)              
Warrants outstanding and exercisable, ending (in shares) 17,972,611 68,724 2,179,798 26,089          
Weighted Average Exercise Price Per Share                  
Outstanding and exercisable, beginning (in dollars per share) $ 19.16 $ 1,992.90 $ 1,992.90            
Issued (in dollars per share) 0.73 142.52              
Expired (in dollars per share) 773.79 7,880.46              
Exercised (in dollars per share) 0.96 2.10              
Warrants outstanding and exercisable, ending (in dollars per share) $ 2.38 $ 631.33 $ 19.16 $ 1,992.90          
Weighted Average Remaining Term in Years                  
Outstanding and exercisable (in years) 4 years 10 months 20 days 4 years 25 days 5 years 6 months 3 years 11 months 12 days          
Issued (in years) 4 years 7 months 2 days 4 years 5 months 26 days              
Exercised (in years) 4 years 8 months 19 days 4 years 5 months 1 day              
Warrants to purchase of stock             1    
Class of warrant or right, exercise price of warrants or rights (in dollars per share)             $ 264.60    
Shares issued, price per share (in dollars per share)             $ 288.75    
Series B Preferred Stock                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock   9,522              
March 2022 offering                  
Weighted Average Remaining Term in Years                  
Class of warrant or right, exercise price of warrants or rights (in dollars per share)           $ 5.901      
Consideration for purchase of securities           $ 9.0      
Shares issued, price per share (in dollars per share)           $ 264.60      
Warrant amendment agreement                  
Weighted Average Remaining Term in Years                  
Class of warrant or right, exercise price of warrants or rights (in dollars per share)               $ 2,541 $ 1,680
June 2023 Inducement Offering                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock 3,448,664       1,724,332        
Class of warrant or right, exercise price of warrants or rights (in dollars per share)         $ 1.15        
June 2023 Inducement Offering | Common Stock                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock 7,606,368                
July 2023 Offering                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock 9,245,000                
September 2023 Inducement Warrants                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock 11,764,072                
Maximum | Warrant amendment agreement                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock               1,872 5,080
Maximum | June 2023 Inducement Offering                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock         3,448,664        
Warrants, pre-funded warrants, and placement agent warrants                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock 23,086                
Warrants, pre-funded warrants, and placement agent warrants | Series B Preferred Stock                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock 910                
Warrants, pre-funded warrants, and placement agent warrants | March 2022 offering                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock   55,885              
Warrants, pre-funded warrants, and placement agent warrants | March 2023 offering                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock 2,941,054                
Warrants, pre-funded warrants, and placement agent warrants | June 2023 Inducement Offering | Common Stock                  
Weighted Average Remaining Term in Years                  
Warrants to purchase of stock 3,999,493                
v3.23.3
Equity Incentive Plan (Details) - USD ($)
9 Months Ended
Jun. 22, 2023
Sep. 11, 2020
Sep. 30, 2023
Sep. 30, 2022
Apr. 20, 2023
Jan. 01, 2023
Dec. 31, 2022
Equity Incentive Plan              
Granted (in shares)     5,000 3,266      
Unrecognized stock-based compensation expense     $ 600,000 $ 900,000      
Remaining term              
Equity Incentive Plan              
Unrecognized stock-based compensation expense     $ 400,000 $ 400,000      
Average remaining vesting term of the stock options (in years)     7 months 28 days 8 years 5 months 8 days      
Clinical, corporate milestones              
Equity Incentive Plan              
Unrecognized stock-based compensation expense     $ 200,000 $ 500,000      
Incentive Stock Options              
Equity Incentive Plan              
Granted (in shares)     7,142        
Stock option              
Equity Incentive Plan              
Weighted average fair value of warrants granted (in dollars per share)     $ 3.05 $ 223.72      
2020 Equity Incentive Plan              
Equity Incentive Plan              
Shares available under equity incentive plan (in shares)   4,761 1,009,167   5,000,000 317,480  
Shares available under equity incentive plan increased (in shares) 1,167,480            
Percentage of common stock reserved for issuance equity incentive plan   10.00%          
Options to purchase shares of common stock (in shares)     158,313        
Number of shares authorized under the plan     1,167,480        
Options forfeited     11 678      
Options cancelled     109 535      
Vesting period     36 months        
2020 Equity Incentive Plan | Maximum              
Equity Incentive Plan              
Shares available under equity incentive plan (in shares)         1,167,480    
2020 Equity Incentive Plan | Minimum              
Equity Incentive Plan              
Shares available under equity incentive plan (in shares)         317,480    
2020 Equity Incentive Plan | Restricted Stock Units              
Equity Incentive Plan              
Number of awards outstanding     36,494       0
Awards issued (in shares)     160,239        
Vesting period     1 year        
Equity Incentive Plan 2014              
Equity Incentive Plan              
Shares available under equity incentive plan (in shares)     1,024        
Options to purchase shares of common stock (in shares)     732        
Equity Incentive Plan 2014 | Restricted Stock              
Equity Incentive Plan              
Aggregate unrecognized restricted Common Stock expense     $ 388,000        
Number of awards outstanding     130        
Omnibus Equity Incentive Plan | Restricted Stock              
Equity Incentive Plan              
Shares reserved subject to issuance (in shares)     292        
v3.23.3
Equity Incentive Plan - Stock option activity (Details) - $ / shares
9 Months Ended 12 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Dec. 31, 2022
Dec. 31, 2021
Numbers of Shares        
Granted (in shares) 5,000 3,266    
Stock option        
Numbers of Shares        
Granted (in shares) 7,142      
Equity Incentive Plan | Stock option        
Numbers of Shares        
Outstanding at beginning (in shares) 4,076 1,941 1,941  
Granted (in shares) 5,000 3,266    
Forfeited (in shares) (11) (678)    
Expired (in shares) (109)      
Canceled (in shares)   (535)    
Outstanding at ending (in shares) 8,956 3,994 4,076 1,941
Exercisable (in shares) 6,625 1,962    
Average Exercise Price        
Outstanding at beginning (in dollars per share) $ 958.14 $ 2,470.99 $ 2,470.99  
Granted (in dollars per share) 3.73 288.19    
Forfeited (in dollars per share) 573.68 841.40    
Expired (in dollars per share) 4,363.67      
Canceled (in dollars per share)   2,485.98    
Outstanding at ending (in dollars per share) 397.33 970.41 $ 958.14 $ 2,470.99
Exercisable (in dollars per share) $ 464.22 $ 1,509.13    
Remaining Contract Life (Years)        
Stock option outstanding, remaining contractual life (Years) 8 years 8 months 4 days 8 years 5 months 12 days 8 years 2 months 19 days 7 years 3 months 10 days
Granted (in years) 9 years 4 months 24 days 7 years 6 months    
Forfeited (in years) 0 years      
Exercisable (in years) 8 years 7 months 13 days 7 years 9 months    
v3.23.3
Equity Incentive Plan - Weighted-average assumptions (Details) - Stock option
9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Equity Incentive Plan    
Contractual term (in years) 6 years 6 months 6 years 6 months
Expected Volatility 98.80% 90.92%
Risk-free interest rate 4.08% 1.11%
Expected Dividend yield 0.00% 0.00%
v3.23.3
Equity Incentive Plan - RSU activity under the 2020 Plan (Details) - 2020 Equity Incentive Plan - Restricted Stock Units - $ / shares
1 Months Ended 9 Months Ended
Oct. 31, 2023
Sep. 30, 2023
Number of Shares    
Outstanding at beginning (in shares) 36,494 0
Awards issued (in shares)   160,239
Vested (in shares)   (113,595)
Cancelled (in shares)   10,150
Outstanding at ending (in shares)   36,494
Weighted-Average Grant Date Fair Value    
Outstanding at beginning (in dollars per share) $ 6.20 $ 0
Awarded (in dollars per share)   6.20
Vested (in dollars per share)   6.20
Cancelled (in dollars per share)   6.20
Outstanding at ending (in dollars per share)   $ 6.20
Weighted-Average Remaining Recognition Period (Years)   3 months
Subsequent events    
Number of Shares    
Awards issued (in shares) 36,500  
v3.23.3
Equity Incentive Plan - Total stock-based compensation expense (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Equity Incentive Plan        
Total stock-based compensation expense $ 263,330 $ 91,641 $ 914,350 $ 684,778
Research and development        
Equity Incentive Plan        
Total stock-based compensation expense 34,847 22,623 111,092 93,870
General and administrative        
Equity Incentive Plan        
Total stock-based compensation expense $ 228,483 $ 69,018 $ 803,258 $ 590,908
v3.23.3
Agreements (Details) - USD ($)
1 Months Ended 3 Months Ended 9 Months Ended
Sep. 13, 2023
Oct. 31, 2023
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Agreements            
Research and development expenses     $ 1,011,055 $ 791,067 $ 3,725,833 $ 8,674,480
License agreement            
Agreements            
Upfront payment made to the third party   $ 500,000        
License agreement | Sanofi            
Agreements            
Research and development expenses     $ 500,000   $ 500,000  
Termination of contract, cure period         60 days  
Termination of contract, cure period for payment breach         10 days  
Number of days prior written notice to be issued         60 days  
License agreement | Sanofi | Development and regulatory milestone            
Agreements            
Amount eligible to receive by third party $ 46,000,000          
License agreement | Sanofi | Commercial milestone            
Agreements            
Amount eligible to receive by third party $ 235,000,000          
v3.23.3
Leases (Details)
3 Months Ended 9 Months Ended
Sep. 30, 2023
USD ($)
ft²
property
Sep. 30, 2022
USD ($)
Sep. 30, 2023
USD ($)
ft²
property
Sep. 30, 2022
USD ($)
Leases        
Number of real property operating leases | property 1   1  
Operating lease, expense | $ $ 42,000 $ 36,000 $ 114,000 $ 115,000
Boca Raton, Florida        
Leases        
Area of real estate property (Square Foot) | ft² 3,472   3,472  
v3.23.3
Leases - Weighted-average remaining lease term and discount rate (Details)
Sep. 30, 2023
Leases  
Weighted-average remaining lease term (years) 2 years 10 months 24 days
Weighted-average discount rate 7.00%
v3.23.3
Leases - Maturities of operating lease liabilities (Details)
Sep. 30, 2023
USD ($)
Leases  
2023 (remainder of year) $ 42,360
2024 86,202
2025 88,788
2026 60,593
Total lease payments 277,943
Less imputed interest (46,651)
Present value of lease liabilities $ 231,292
v3.23.3
Net (Loss) Income per Common Share - Common Stock that may potentially be issued (Details) - $ / shares
9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Net Loss per Common Share    
Total shares of Common Stock issuable 18,057,807 76,355
Common stock warrants    
Net Loss per Common Share    
Total shares of Common Stock issuable 17,972,611 68,724
Stock options    
Net Loss per Common Share    
Total shares of Common Stock issuable 8,956 3,994
RSUs not yet issued    
Net Loss per Common Share    
Total shares of Common Stock issuable 72,994  
Convertible preferred stock    
Net Loss per Common Share    
Total shares of Common Stock issuable 3,084 3,475
Preferred stock, convertible, conversion price (in dollars per share) $ 1,617  
Restricted stock not yet issued    
Net Loss per Common Share    
Total shares of Common Stock issuable 162 162
v3.23.3
Net (Loss) Income per Common Share - Tabular disclosure of earnings per share (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Net (Loss) Income per Common Share        
Net (loss) income applicable to common shareholders $ (3,483,450) $ 4,233,753 $ (11,925,090) $ (10,989,148)
Weighted Average Number of Shares Outstanding, Diluted [Abstract]        
Basic weighted average shares outstanding 7,566,018 228,773 3,763,506 136,113
Convertible preferred stock   3,475    
Diluted weighted average shares outstanding 7,566,018 232,248 3,763,506 136,113
Basic net income (loss) per share $ (0.46) $ 18.51 $ (3.17) $ (80.74)
Diluted net income (loss) per share $ (0.46) $ 18.23 $ (3.17) $ (80.74)
v3.23.3
Employee Benefit Plans (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2023
Sep. 30, 2022
Sep. 30, 2023
Sep. 30, 2022
Employee Benefit Plans        
Defined contribution plan, employers matching contribution, annual vesting percentage     6.00%  
Defined benefit plan, plan assets, contributions by employer $ 21,000 $ 21,000 $ 68,000 $ 97,000
Minimum        
Employee Benefit Plans        
Defined contribution plan, maximum annual contributions per employee, percent     1.00%  
Maximum        
Employee Benefit Plans        
Defined contribution plan, maximum annual contributions per employee, percent     100.00%  

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