10-Q

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 June 30, 2021

OR

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

For the transition period from ______ to ______

Commission File Number 001-37411

TIMBER PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware	59-3843182
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

110 Allen Road, Suite 410
Basking Ridge, NJ 07920
(Address of principal executive offices and zip code)
(908) 636-7160
(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	TMBR	The NYSE American, 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, if any, 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 definition 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 registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class of Common Stock	Outstanding Shares as of August 6, 2021
Common Stock, $0.001 par value	36,659,685

TIMBER PHARMACEUTICALS, INC. & SUBSIDIARIES

Form 10-Q

For the Quarter Ended June 30, 2021

Table of Contents

		Page No.
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2021 (unaudited) and December 31, 2020	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020  (unaudited)	4
	Condensed Consolidated Statements of Members’ and Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2021 and 2020 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (unaudited)	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of the Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	33
PART II. OTHER INFORMATION		33
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Recent Sales of Unregistered Securities	33
Item 6.	Exhibits	34
Signatures		35

2

Item 1. Financial Statements.

Timber Pharmaceuticals, Inc. & Subsidiaries

Condensed Consolidated Balance Sheets

	June 30,		December 31,
	2021		2020
ASSETS		(unaudited)
Current assets
Cash	$	6,129,035	$	10,348,693
Other receivable		253,892		—
Other current assets		378,382		377,290
Total current assets		6,761,309		10,725,983
Deposits		127,534		114,534
Property and equipment, net		16,728		—
Right of use asset		784,674		787,432
Total assets	$	7,690,245	$	11,627,949
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	1,385,852	$	395,049
Accrued expenses		568,732		768,661
Lease liability, current portion		295,045		217,651
Total current liabilities		2,249,629		1,381,361
Notes payable		37,772		37,772
Lease liability		505,998		579,455
Deferred tax liability		37,842		37,842
Other liabilities		73,683		73,683
Total liabilities		2,904,924		2,110,113
Commitments and contingencies (Note 7)
Redeemable Series A convertible preferred stock, par value $0.001; 2,500 shares authorized; 1,819 shares issued and outstanding as of June 30, 2021 and December 31, 2020		1,981,978		1,909,805
Stockholders' equity
Common stock, par value $0.001; 450,000,000 shares authorized; 36,659,685 shares issued and outstanding as of June 30, 2021, and 27,132,420 shares issued and outstanding as of December 31, 2020		36,660		27,132
Additional paid-in capital		25,852,542		25,826,295
Accumulated deficit		(23,085,859)		(18,245,396)
Total stockholders' equity		2,803,343		7,608,031
Total liabilities, redeemable convertible preferred stock, and stockholders' equity	$	7,690,245	$	11,627,949

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

Timber Pharmaceuticals, Inc. & Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)

	Three months ended June 30,				Six months ended June 30,
	2021		2020		2021		2020
Grant revenue	$	134,927	$	—	$	175,661	$	26,907
Milestone revenue		253,892		—		253,892		—
Total revenue		388,819		—		429,553		26,907
Operating costs and expenses
Research and development		1,800,100		536,170		2,649,618		1,554,401
Research and development - license acquired		—		12,371,332		—		12,371,332
Transaction costs		—		311,291		—		1,501,133
Selling, general and administrative		1,556,012		1,055,084		2,621,401		1,511,878
Total operating expenses		3,356,112		14,273,877		5,271,019		16,938,744
Loss from operations		(2,967,293)		(14,273,877)		(4,841,466)		(16,911,837)
Other income (expense)
Interest expense		—		(3,314,140)		—		(4,416,746)
Interest income		—		359,880		—		816,655
Change in fair value of investment in BioPharmX		—		476,245		—		559,805
Change in fair value of warrant liability		—		1,504,511		—		1,183,460
Gain on foreign currency exchange		1,090		1,772		1,003		4,454
Total other income (expense)		1,090		(971,732)		1,003		(1,852,372)
Net loss		(2,966,203)		(15,245,609)		(4,840,463)		(18,764,209)
Accrued dividend on preferred stock units		—		(18,188)		—		(52,669)
Cumulative dividends on Series A preferred stock		(36,286)		(17,146)		(72,173)		(17,146)
Net loss attributable to common stockholders	$	(3,002,489)	$	(15,280,943)	$	(4,912,636)	$	(18,834,024)
Basic and diluted net loss per share attributable to common stockholders	$	(0.08)	$	(1.36)	$	(0.14)	$	(2.15)
Basic and diluted weighted average number of shares outstanding		36,659,685		11,222,258		35,873,780		8,758,991

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Timber Pharmaceuticals, Inc. & Subsidiaries

Condensed Consolidated Statements of Members’ and Stockholders’ Equity (Deficit)
(Unaudited)

For the Three Months Ended June 30, 2021

											Total
	Series A Preferred Stock			Common Stock			Additional		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Equity
Balance at April 1, 2021	1,819	$	1,945,692	36,659,685	$	36,660	$	25,839,395	$	(20,119,656)	$	5,756,399
Accrued dividend Series A preferred stock	—		36,286	—		—		(36,286)		—		(36,286)
Stock-based compensation	—		—	—		—		49,433		—		49,433
Net loss	—		—	—		—		—		(2,966,203)		(2,966,203)
Balance at June 30, 2021	1,819	$	1,981,978	36,659,685	$	36,660	$	25,852,542	$	(23,085,859)	$	2,803,343

For the Three Months Ended June 30, 2020

																	Total Members'
	Series A Preferred Stock			Preferred Units			Common Units			Common Stock			Additional		Accumulated		and Stockholders'
	Shares	Amount		Units	Amount		Units	Amount		Shares	Amount		Paid-in Capital		Deficit		Deficit
Balance at April 1, 2020	—	$	—	1,801,101	$	1,801,101	10,000	$	92,884	—	$	—	$	—	$	(6,628,194)	$	(4,734,209)
Issuance of common stock for acquisition of BioPharmX	—		—	—		—	—		—	1,367,326		1,367		8,366,665		—		8,368,032
Issuance of common stock and warrants, net of costs	—		—	—		—	—		—	4,180,208		4,180		17,495,820		—		17,500,000
Series A liability classified warrants	—		—	—		—	—		—	—		—		(16,511,634)		—		(16,511,634)
Bridge loan converted to equity	—		—	—		—	—		—	—		—		5,000,000		—		5,000,000
Reclassification of bridge warrant	—		—	—		—	—		—	—		—		3,423,204		—		3,423,204
Accrued preferred unit dividend	—		—	18,188		18,188	—		—	—		—		—		(18,188)		—
Conversion of common units to common stock pursuant to BioPharmX acquisition	—		—	—		—	(10,000)		(92,884)	6,295,724		6,296		86,588		—		—
Conversion of preferred units to Series A preferred stock pursuant to BioPharmX acquisition	1,819		1,819,289	(1,819,289)		(1,819,289)	—		—	—		—		—		—		(1,819,289)
Accrued dividend Series A preferred stock	—		17,146	—		—	—		—	—		—		—		(17,146)		(17,146)
Stock-based compensation	—		—	—		—	—		—	—		—		43,445		—		43,445
Net loss	—		—	—		—	—		—	—		—		—		(15,245,609)		(15,245,609)
Balance at June 30, 2020	1,819	$	1,836,435	—	$	—	—	$	—	11,843,258	$	11,843	$	17,904,088	$	(21,909,137)	$	(3,993,206)

5

Timber Pharmaceuticals, Inc. & Subsidiaries

Condensed Consolidated Statements of Members’ and Stockholders’ Equity
(Unaudited)

For the Six Months Ended June 30, 2021

											Total
	Series A Preferred Stock			Common Stock			Additional		Accumulated		Stockholders'
	Shares	Amount		Shares	Amount		Paid-in Capital		Deficit		Equity
Balance at January 1, 2021	1,819	$	1,909,805	27,132,420	$	27,132	$	25,826,295	$	(18,245,396)	$	7,608,031
Accrued dividend Series A preferred stock	—		72,173	—		—		(72,173)		—		(72,173)
Exercise of Series A warrants	—		—	2,059,613		2,060		(2,060)		—		—
Exercise of Series B warrants	—		—	7,467,652		7,468		(7,468)		—		—
Stock-based compensation	—		—	—		—		107,948		—		107,948
Net loss	—		—	—		—		—		(4,840,463)		(4,840,463)
Balance at June 30, 2021	1,819	$	1,981,978	36,659,685	$	36,660	$	25,852,542	$	(23,085,859)	$	2,803,343

6

Timber Pharmaceuticals, Inc. & Subsidiaries

Condensed Consolidated Statements of Members’ and Stockholders’ Deficit

(Unaudited)

For the Six Months Ended June 30, 2020

																	Total Members'
	Series A Preferred Stock			Preferred Units			Common Units			Common Stock			Additional		Accumulated		and Stockholder's
	Shares	Amount		Units	Amount		Units	Amount		Shares	Amount		Paid-in Capital		Deficit		Deficit
Balance at January 1, 2020	—	$	—	1,624,228	$	1,624,228	10,000	$	74,667	—	$	—	$	—	$	(3,075,113)	$	(1,376,218)
Issuance of common stock for acquisition of BioPharmX	—		—	—		—	—		—	1,367,326		1,367		8,366,665		—		8,368,032
Issuance of common stock and warrants, net of costs	—		—	—		—	—		—	4,180,208		4,180		17,495,820		—		17,500,000
Series A liability classified warrants	—		—	—		—	—		—	—		—		(16,511,634)		—		(16,511,634)
Bridge loan converted to equity	—		—	—		—	—		—	—		—		5,000,000		—		5,000,000
Reclassification of bridge warrant	—		—	—		—	—		—	—		—		3,423,204		—		3,423,204
Non-cash contribution from TardiMed	—		—	142,392		142,392	—		—	—		—		—		—		142,392
Accrued preferred unit dividend	—		—	52,669		52,669	—		—	—		—		—		(52,669)		—
Conversion of common units to common stock pursuant to BioPharmX acquisition	—		—	—		—	(10,000)		(74,667)	6,295,724		6,296		68,371		—		—
Conversion of preferred units to Series A preferred stock pursuant to BioPharmX acquisition	1,819		1,819,289	(1,819,289)		(1,819,289)	—		—	—		—		—		—		(1,819,289)
Accrued dividend Series A preferred stock	—		17,146	—		—	—		—	—		—		—		(17,146)		(17,146)
Stock-based compensation	—		—	—		—	—		—	—		—		61,662		—		61,662
Net loss	—		—	—		—	—		—	—		—		—		(18,764,209)		(18,764,209)
Balance at June 30, 2020	1,819	$	1,836,435	—	$	—	—	$	—	11,843,258	$	11,843	$	17,904,088	$	(21,909,137)	$	(3,993,206)

(a) On May 18, 2020, an exchange ratio of approximately 629.57 shares of the Timber Pharmaceuticals, Inc. common stock, par value $0.001 per share, was used for each Timber Pharmaceuticals LLC (“Timber Sub”) unit. The exchange ratio of 0.001 was used for conversion of the preferred units of Timber Sub to the newly created convertible Series A preferred stock. All share information has been retroactively adjusted to reflect the stock split within the condensed consolidated statements of member’s and stockholders’ equity (deficit) and proceeding disclosures.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

Timber Pharmaceuticals, Inc. & Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six months ended June 30,
	2021		2020
Cash flows from operating activities
Net loss	$	(4,840,463)	$	(18,764,209)
Adjustments to reconcile net loss to net cash used in operating activities:
Research and development-licenses acquired		—		12,371,332
Non-cash contribution from TardiMed		—		142,392
Stock-based compensation		107,948		61,662
Change in fair value of warrant liability		—		(1,183,460)
Change in fair value of investment in BioPharmX		—		(559,805)
Amortization of loan discount		—		(775,000)
Amortization of debt discount		—		4,232,718
Amortization of right of use assets		125,567		16,140
Depreciation		175		—
Accrued interest on BioPharmX loan		—		(41,655)
Accrued interest on bridge notes		—		183,333
Changes in assets and liabilities:
Other receivable		(253,892)
Other current assets		(1,092)		(211,799)
Deposits		(13,000)		—
Accounts payable		990,803		(498,761)
Accrued expenses		(199,929)		(39,210)
Lease liability		(118,872)		(16,140)
Net cash used in operating activities		(4,202,755)		(5,082,462)
Cash flows from investing activities
Cash acquired with acquisition of BioPharmX		—		340,786
Loan to BioPharmX		—		(2,250,000)
Purchase of property and equipment		(16,903)		—
Purchase of research and development licenses - AFT Pharmaceuticals Limited		—		(750,000)
Net cash used in investing activities		(16,903)		(2,659,214)
Cash flows from financing activities
Proceeds from PPP loan		—		37,772
Proceeds from the issuance of common stock and warrants, net of issuance costs		—		17,500,000
Proceeds from bridge notes payable		—		3,700,000
Net cash provided by financing activities		—		21,237,772
Net (decrease) increase in cash and cash equivalents		(4,219,658)		13,496,096
Cash and cash equivalents, beginning of period		10,348,693		57,073
Cash and cash equivalents, end of period	$	6,129,035	$	13,553,169
Supplemental disclosure of cash flow information:
Cash paid for interest	$	—	$	183,333
Non cash investing and financing activities:
Issuance of common stock for acquisition of BioPharmX	$	—	$	8,368,032
Conversion of preferred units to Series A preferred stock pursuant to BioPharmX acquisition	$	—	$	1,819,289
Conversion of common units to common stock pursuant to BioPharmX acquisition	$	—	$	6,296
Bridge loan converted to equity	$	—	$	5,000,000
Reclassification of bridge warrant	$	—	$	3,423,204
Series A liability classified warrants	$	—	$	16,511,634
Accrued Series A preferred stock dividend	$	72,173	$	—
Cashless exercise of Series A warrants	$	2,060	$	—
Cashless exercise of Series B warrants	$	7,468	$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

8

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Organization and description of business operations

Timber Pharmaceuticals, Inc., formerly known as BioPharmX Corporation (together with its subsidiaries Timber Pharmaceuticals Australia Pty Ltd., BioPharmX Inc. and Timber Pharmaceuticals LLC, the “Company” or “Timber”) is incorporated under the laws of the state of Delaware. Timber was founded in 2019 to develop treatments for unmet needs in medical dermatology. Timber has a particular focus on rare diseases or conditions of the skin for which there are no current treatments. Timber is initially targeting multiple indications in rare/orphan dermatology with no approved treatments.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended December 31, 2020.

Merger Agreement

On May 18, 2020, BioPharmX Corporation (“BioPharmX”) completed its business combination with Timber Pharmaceuticals LLC, a Delaware limited liability company (“Timber Sub”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of January 28, 2020 (the “Merger Agreement”), by and among BioPharmX, Timber Sub and BITI Merger, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), as amended by Amendment No. 1 thereto made and entered into as of March 24, 2020 (the “First Amendment”) and Amendment No. 2 thereto made and entered into as of April 27, 2020 (the “Second Amendment”) (the Merger Agreement, as amended by the First Amendment and the Second Amendment, the “Amended Merger Agreement”), pursuant to which Merger Sub merged with and into Timber Sub, with Timber Sub surviving as a wholly-owned subsidiary of the Company (the “Merger”). In connection with, and immediately prior to the completion of, the Merger, BioPharmX effected a reverse stock split of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a ratio of 1-for-12 (the “Reverse Stock Split”). Immediately after completion of the Merger, BioPharmX changed its name to “Timber Pharmaceuticals, Inc.” and the officers and directors of Timber Sub became the officers and directors of the Company.

Under the terms of the Amended Merger Agreement, BioPharmX issued shares of Common Stock to the holders of common units of Timber Sub. Immediately after the Merger, there were approximately 11,849,031 shares of Common Stock outstanding (after the Reverse Stock Split). Pursuant to the terms of the Amended Merger Agreement, the former holders of common units of Timber Sub (including the Investors, as defined below, but excluding Value Appreciation Rights of Timber Sub (“VARs”), as defined below) owned in the aggregate approximately 88.5% of the outstanding Common Stock, with the Company’s stockholders immediately prior to the Merger owning approximately 11.5% of the outstanding Common Stock. The number of shares of Common Stock issued to the holders of common units of Timber Sub for each common unit of Timber Sub outstanding immediately prior to the Merger was calculated using an exchange ratio of approximately 629.57 shares of Common Stock for each Timber Sub unit. In addition, the 584 VARs that were outstanding immediately prior to Merger became denoted and payable in 367,670 shares of Common Stock at the Effective Time of the Merger (the “Effective Time”). Further, the holder of the 1,819,289 preferred units of Timber Sub outstanding immediately prior to the Merger received 1,819 shares of the newly created convertible Series A preferred stock at the Effective Time.

Securities Purchase Agreement

On May 18, 2020, Timber and Timber Sub completed a private placement transaction (the “Pre-Merger Financing”) with the Investors pursuant to the Securities Purchase Agreement for an aggregate purchase price of approximately $25.0 million (comprised of (i) approximately $5 million credit with respect to the senior secured notes issued in connection with the bridge loan that certain of the Investors made to Timber Sub at the time of the execution of the Merger Agreement and (ii) approximately $20 million in cash from the Investors).

9

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Liquidity and Capital Resources

The Company has no product revenues, incurred operating losses since inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company had an accumulated deficit of approximately $23.1 million at June 30, 2021, a net loss of approximately $4.8 million, and approximately $4.2 million of net cash used in operating activities for the six months ended June 30, 2021.  As of June 30, 2021 the Company had $6.1 million of cash.

Going Concern

The Company has evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year beyond the filing of this Quarterly Report on Form 10-Q. Based on such evaluation and the Company's current plans, which are subject to change, management believes that the Company's existing cash and cash equivalents as of June 30, 2021 are not sufficient to satisfy our operating cash needs for the year after the filing of this Quarterly Report on Form 10-Q.

The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.

The Company’s future liquidity and capital funding requirements will depend on numerous factors, including:

● its ability to raise additional funds to finance its operations, including its ability to access financing that may be unavailable due to contractual limitations under the Securities Purchase Agreement;

● the dilutive effect of the Company's outstanding securities;

● the impact of the COVID-19 pandemic on the Company's operations, including on the Company's clinical development plans and timelines;

● the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates, including the timing, progress, costs and results of its Phase 2b clinical trial of TMB-001 for the treatment of congenital ichthyosis as well as its ongoing Phase 2b clinical trial of TMB-002 for the treatment of facial angiofibromas in tuberous sclerosis complex;

● the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;

● the emergence and effect of competing or complementary products;

● its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;

● the cost and timing of completion of commercial-scale manufacturing activities;

10

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

● the cost of establishing sales, marketing and distribution capabilities for its products in regions where it chooses to commercialize its products on its own;

● the initiation, progress, timing and results of the commercialization of its product candidates, if approved for commercial sale;

● the volatility of the price of the Company's common stock;

● acceptance of the Company's products in the Company's industry;

● the accuracy of the Company's estimates regarding expenses and capital requirements;

● its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel; and

● the terms and timing of any collaborative, licensing or other arrangements that it has or may establish.

The Company will need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity and/or the completion of a licensing or other commercial transaction for one or more of the Company's product candidates. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or convertible debt financings will likely have a dilutive effect on the holdings of the Company's existing stockholders.

The impact of the worldwide spread of a novel strain of coronavirus (“COVID-19”) has been unprecedented and unpredictable. Site activation and patient enrollment have been impacted by the COVID-19 pandemic in the TMB-002 study, especially at our contracted test sites in Eastern Europe. As of June 30, 2021, all 17 sites are open and 50% of patients in the Phase 2b study have been enrolled for the TMB-002 program.  The Company is also continuing to assess the effect of COVID-19 on the TMB-002 study as well as the Company’s overall operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus throughout the world.  The Company’s assessment of the impact of COVID-19 may change in the future.  

Note 2. Significant accounting policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10- Q and Article 8 of Regulation S-X of the SEC. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results.

The results for the unaudited condensed consolidated statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 2021 or for any future interim period. The unaudited condensed consolidated financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements.

11

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make 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 and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s unaudited condensed consolidated financial statements relate to the valuations of warrants, and equity-based awards and member units. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Loss Per Share

Basic net loss per share (“EPS”) of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

To calculate the basic EPS numerator, income available to common stockholders must be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not declared) from income from continuing operations and also from net income. If there is a loss from continuing operations or a net loss, the amount of the loss shall be increased by those preferred dividends. The outstanding Series A Preferred Stock has cumulative dividends, whether or not declared.

The basic and diluted net loss amounts are the same for the three and six months ended June 30, 2021 and 2020, as a result of the net loss and anti-dilutive impact of the potentially dilutive securities. Potentially dilutive shares are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, value appreciation rights, and warrants. Potentially dilutive shares issuable upon conversion of the Series A Preferred Stock are calculated using the if-converted method.

The following is a reconciliation of the numerator and denominator of the diluted net loss per share computations for the periods presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Basic and diluted loss per share:
Net loss	$	(2,966,203)	$	(15,245,609)	$	(4,840,463)	$	(18,764,209)
Accrued dividend on preferred stock units		—		(18,188)		—		(52,669)
Cumulative dividends on Series A preferred stock		(36,286)		(17,146)		(72,173)		(17,146)
Net loss attributable to common stockholders	$	(3,002,489)	$	(15,280,943)	$	(4,912,636)	$	(18,834,024)
Basic and diluted weighted average number of shares outstanding		36,659,685		11,222,258		35,873,780		8,758,991
Basic and diluted net loss per share attributable to common stockholders	$	(0.08)	$	(1.36)	$	(0.14)	$	(2.15)

12

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Securities that could potentially dilute loss per share in the future were not included in the computation of diluted loss per share for the six months ended June 30, 2021 and 2020, because their inclusion would be anti-dilutive are as follows (unaudited):

	June 30,
	2021	2020
Series A warrants	16,701,824	8,384,764
Bridge warrants	413,751	413,751
Value appreciation rights	367,670	367,670
Options to purchase common stock	184,456	232,996
Series A preferred stock	100,753	100,753
Legacy stock options	15,781	97,870
Legacy warrants	214,046	220,030
	17,998,281	9,817,834

Recent accounting pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company is currently evaluating the impact this ASU will have on its condensed consolidated financial statements and related disclosures.

Note 3. Acquisition of BioPharmX

As described in Note 1, on May 18, 2020, the Company completed its acquisition of BioPharmX in accordance with the terms of the Merger Agreement. The acquisition was accounted for as an asset acquisition/reverse merger.

Pursuant to the Merger Agreement, following the Merger, the Timber Sub members, including the investors funding the $20 million investment and the bridge investors, owned approximately 88.5% of the outstanding common stock of BioPharmX, and the BioPharmX stockholders own approximately 11.5% of the outstanding common stock as of the date of the merger. The cost of the BioPharmX acquisition, which represents the consideration transferred to BioPharmX stockholders in the BioPharmX acquisition, of $12.4 million consists of the following:

Number of shares of the combined company owned by BioPharmX stockholders		1,367,326
Multiplied by the fair value per share of BioPharmX common stock	$	6.12
Total estimated fair value of common stock		8,368,033
Add: net liabilities acquired		(2,833,453)
Add: investment in BioPharmX		(1,169,846)
Total consideration - recorded as research and development acquired	$	12,371,332

13

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The total cost of the BioPharmX acquisition was allocated to the net liabilities acquired as follows:

Cash and cash equivalents	$	340,786
Other current assets		2,027
Deposits		114,534
ROU asset		904,370
Accounts payable		(610,882)
Credit cards		760
Accrued expenses		(148,999)
Note - short term		(2,456,614)
Operating lease liability - short term		(259,712)
Other long term liabilities		(73,682)
Operating lease liability - long term		(646,041)
Net liabilities acquired	$	(2,833,453)

Note 4. Purchases of Assets

Acquisition of Intellectual Property Rights from Patagonia Pharmaceuticals LLC (“Patagonia”)

On February 28, 2019, the Company acquired the intellectual property rights to a topical formulation of isotretinoin for the treatment of congenital ichthyosis and identified as TMB-001, formerly PAT-001, from Patagonia (the “TMB-001 Acquisition”).

Upon closing of the TMB-001 Acquisition, the Company paid a one-time upfront payment of $50,000 to Patagonia. Patagonia is entitled to up to $27.0 million of cash milestone payments relating to certain regulatory and commercial achievements of TMB-001, with the first being $4.0 million for the initiation of a Phase 3 pivotal trial, as agreed with the FDA. In addition, Patagonia is entitled to net sales earn-out payments ranging from low single digits to mid-double digits. The Company is responsible for all development activities. The potential regulatory and commercial milestones are not yet considered probable, and no milestone payments have been accrued at June 30, 2021 and December 31, 2020.

On June 26, 2019 the Company acquired the intellectual property rights to a locally administered formulation of Sitaxsentan for the treatment of cutaneous fibrosis and/or pigmentation disorders, and identified as TMB-003, formerly PAT-S03, from Patagonia (the “TMB-003 Acquisition”).

Upon closing of the TMB-003 Acquisition, the Company paid a one-time upfront payment of $20,000 to Patagonia. Patagonia is entitled to up to $10.25 million of cash milestone payments relating to certain regulatory and commercial achievements of TMB-003, with the first being a one-time payment of $250,000 upon the opening of an IND with the FDA. In addition, Patagonia is entitled to net sales earn-out payments ranging from low to mid-single digits. The Company is responsible for all development activities. The potential regulatory and commercial milestones are not yet considered probable, and no milestone payments have been accrued at June 30, 2021 and December 31, 2020.

On January 12, 2021, the Company announced that the U.S. Food and Drug Administration has granted orphan drug designation to TMB-003.

Acquisition of License from AFT Pharmaceuticals Limited (“AFT”)

On July 5, 2019, the Company and AFT entered into a license agreement which provides the Company with (i) an exclusive license to certain licensed patents, licensed know-how and AFT trademarks to commercialize the Pascomer product in the United States, Canada and Mexico and (2) a co-exclusive license to develop the Pascomer product in this territory.

14

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Concurrently, the Company granted to AFT an exclusive license to commercialize the Pascomer product outside of the Company’s territory and co-exclusive sublicense to develop and manufacture the licensed product for commercialization outside of the Company’s territory (the “AFT License Agreement”).

The development of the Pascomer product is being conducted pursuant to a written development plan, written by AFT and approved by the joint steering committee, which is reviewed on at least an annual basis. AFT shall perform clinical trials of the Pascomer product in the specified territory and shall perform all CMC (chemistry, manufacturing and controls) and related activities to support regulatory approval. The Company is responsible for all expenses incurred by AFT during the term of the AFT License Agreement and shall equally share all costs and expenses with AFT, incurred by AFT for development and marketing work performed in furtherance of regulatory approval and commercialization worldwide, outside of the specified territory. The Company is entitled to receive a significant percentage of the economics (royalties and milestones) in any licensing transaction that AFT executes outside of North America, Australia, New Zealand, and Southeast Asia.  In March 2021 the Company announced that its development partner, AFT Pharmaceuticals Limited has signed an exclusive license and supply agreement with Desitin Arzneimittel GmbH (“Desitin”) for Pascomer® (TMB-002 topical rapamycin) for the treatment of facial angiofibromas (FA) associated with Tuberous Sclerosis Complex (TSC) in Europe. The Company is entitled to €213,750 related to an upfront milestone payment paid to AFT by Desitin during the quarter ending June 30, 2021 and has recorded approximately $0.3 million in these financial statements.

Pursuant to the AFT License Agreement, the Company was obligated to reimburse AFT for previously spent development costs, subject to certain limitations, and to pay a one-time, irrevocable and non-creditable upfront payment to AFT, payable in scheduled installments. The Company paid $0.25 million in October 2019 and the remaining $0.75 million was  paid during the year ended December 31, 2020.

AFT is entitled to up to $25.5 million of cash milestone payments relating to certain regulatory and commercial achievements of the AFT License. In addition, AFT is entitled to net sales royalties ranging from high single digits to low double digits for the program licensed. The potential regulatory and commercial milestones are not yet considered probable, and no milestone payments have been accrued at June 30, 2021 and December 31, 2020.

Note 5. Accrued Expenses

As of June 30, 2021 and December 31, 2020, the Company’s accrued expenses consisted of the following:

	June 30,		December 31,
	2021		2020
Research and development	$	45,443	$	158,911
Professional fees		181,234		142,599
Personnel expenses		342,055		438,722
Other		—		28,429
Total	$	568,732	$	768,661

15

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 6. Temporary Equity, and Members’ and Stockholder’s Equity (Deficit)

The Company entered into a Merger Agreement with BioPharmX and effective May 18, 2020, the Company converted its common and preferred units into shares of common and preferred stock.

Common Stock

On May 18, 2020, pursuant to the Merger Agreement (see Note 1), 1,367,326 shares of common stock were issued for the acquisition of BioPharmX, with a fair value of approximately $8.4 million or $6.12 per share.

On May 18, 2020, pursuant to the Merger Agreement, 4,185,981 shares of common stock were issued to the investors in the $20 million private placement financing (see Note 1), with aggregate net proceeds received totaling $17.5 million) and to settle the $5 million Bridge Notes.

Series B Warrants

During the six months ended June 30, 2021, the remaining Series B Warrants outstanding totaling 7,474,033 were exercised on a cashless basis, and the Company issued 7,467,652 shares of its common stock.

	Shares	Weighted		Aggregate
	Underlying	Average		Intrinsic
	Options	Exercise Price		Value
Outstanding as of December 31, 2020	7,474,033	$	0.001	$	7,474
Exercised	(7,474,033)	$	0.001		—
Outstanding and exercisable as of June 30, 2021	—	$	—	$	—

Series A Warrants

During the six months ended June 30, 2021, 3,476,390 Series A Warrants were exercised on a cashless basis, and the Company issued 2,059,613 shares of its common stock. The following is a summary of Series A Warrants outstanding as of June 30, 2021:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Options	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2020	20,178,214	$	1.16	4.4	$	—
Exercised	(3,476,390)	$	1.16	—		—
Outstanding and exercisable as of June 30, 2021	16,701,824	$	1.16	3.9	$	1,002,109

16

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Bridge Warrants

The following table summarizes the Company's Bridge Warrants for the six months ended June 30, 2021:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Options	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2020	413,751	$	2.24	4.4	$	—
Outstanding and exercisable as of June 30, 2021	413,751	$	2.24	3.9	$	—

Redeemable Series A Convertible Preferred Stock

In connection with the Merger, on May 18, 2020, the Company filed a Certificate of Designation of Preferences, Rights and Limitations (the “Certificate of Designations”) with the Secretary of State of the State of Delaware designating 2,500 shares of the Company’s previously undesignated preferred stock as Series A Preferred (the “Series A Preferred Stock”), and issued to the holder of 1,819,289 preferred units of Timber Sub outstanding immediately prior to the Merger, 1,819 shares of the newly created Series A Preferred Stock. The shares of Series A Preferred Stock have no voting rights. The holders of the Series A Preferred Stock are entitled to cumulative dividends from and after the date of issuance at a per annum of eight percent (8.00%) of the stated value. Dividends will be payable as and if declared by the Board of Directors of the Company (the “Board”) out of amounts legally available therefore or upon a liquidation or redemption. Each share of Series A Preferred Stock is convertible at any time at the holder’s option into a number of shares of common stock (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions as specified in the Certificate of Designations) at a conversion price equal to the stated value of the Series A Preferred Stock of $1,000 (plus any accrued dividends) divided by the conversion price of $18.054. Holders of the Series A Preferred Stock are entitled to a liquidation preference in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company. In addition, upon a Change of Control, the Series A Preferred Stock is redeemable for cash at the option of the holders, in whole or in part.

As a Change of Control has occurred, the Company’s Series A Preferred Stock is currently redeemable at June 30, 2021 at the option of the holder and has been recorded at the redemption value of $2.0 million. Redemption is subject to certain limitations under Delaware law, so that the Company’s ability to pay the redemption price to such holder is limited. The following table summarizes the Company’s Series A preferred stock for the six months ended June 30, 2021:

	Series A Preferred Stock
	Shares	Amount
Total temporary equity as of December 31, 2020	1,819	$	1,909,805
Cumulative dividends on Series A Preferred Stock	—		72,173
Total temporary equity as of June 30, 2021	1,819	$	1,981,978

17

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 7. Equity-based compensation

On May 18, 2020, the Company’s 2020 Omnibus Equity Incentive Plan (the “2020 Plan”) became effective, and the 2020 Plan reserved a total of 970,833 shares of common stock for issuance. The 2020 Plan provides for options to purchase shares of common stock, stock appreciation rights, restricted stock units, restricted or unrestricted shares of common stock, performance shares, performance units, incentive bonus awards, other stock-based awards and other cash-based awards. Options granted generally vest over a period of three years and have a maximum term of ten years from the date of grant. As of June 30, 2021, 2,056,130 shares of common stock were reserved for issuance under the 2020 Plan.  On April 20, 2021, the Board of Directors of the Company approved an amendment increasing the number of shares available for issuance under the 2020 Plan from 2,056,130 to 4,668,319, which was approved by the Company's stockholders on July 1, 2021.

Furthermore, as a result of the Merger, the Company assumed the TardiMed 2019 Equity Incentive Plan (the “2019 Plan”) from Timber Sub. The 2019 Plan permits the granting of incentive units (the “Incentive Units”). The maximum aggregate Incentive Units that may be subject to awards and issued under the Plan is 699,454. At June 30, 2021 and December 31, 2020, Incentive Units outstanding under the 2019 Plan were 367,670 units for each period comprised of VARs.

During the three and six months ended June 30, 2021 and 2020 equity-based compensation expenses were as follows (unaudited):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
General and administrative value appreciation right awards	$	12,247	$	21,430	$	25,468	$	45,109
Research and development value appreciation right awards		549		2,242		1,092		(3,220)
General and administrative stock options		36,637		19,773		81,388		19,773
	$	49,433	$	43,445	$	107,948	$	61,662

Value Appreciation Rights

In 2019 the Company granted equity-based awards similar to stock options under the 2019 Plan as VARs. The VARs have an exercise price, a vesting period and an expiration date, in addition to other terms similar to typical equity option grant terms.

During the period ended June 30, 2021 there were no grants or forfeitures of VARs. The following is a summary of VARs outstanding as of June 30, 2021:

						Weighted
						Average
		Weighted				Remaining
		Average		Total Intrinsic		Contractual Life
	Number of Units	Exercise Price		Value		(in years)
Outstanding as of December 31, 2020	367,670	$	0.01	$	269,502	8.4
Outstanding as of June 30, 2021	367,670	$	0.01	$	444,881	7.9
Value appreciation right awards vested and exercisable at June 30, 2021	113,953	$	0.01	$	137,883	7.8

As of June 30, 2021, the unrecognized compensation costs were approximately $0.1 million, which will be recognized over an estimated weighted-average amortization period of 0.8 years.

18

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Stock Options

During the period ended June 30, 2021 there were no grants or forfeitures of stock options. The following is a summary of the options outstanding as of June 30, 2021:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Options	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2020	184,456	$	2.87	9.4	$	—
Outstanding as of June 30, 2021	184,456	$	2.87	8.9	$	—
Exercisable at June 30, 2021	57,240	$	2.87	8.9	$	—

In accordance with the "evergreen" provision in the 2020 Plan, an additional 1,085,297 shares of common stock were automatically made available for issuance on the first day of 2021, which represents 4% of the number of shares of common stock outstanding on December 31, 2020.

As part of the Merger, the Company assumed the following legacy stock options and warrants:

				Weighted
	Shares			Average
	Underlying	Weighted		Remaining	Aggregate
	Options and	Average		Contractual	Intrinsic
	Warrants	Exercise Price		Term (Years)	Value
Legacy BioPharmX options - December 31, 2020	15,781	$	75.27	2.3	$	—
Legacy BioPharmX options - June 30, 2021	15,781	$	75.27	1.9	$	—
Legacy BioPharmX warrants - December 31, 2020	219,928	$	164.09	2.5	$	—
Expired	(5,882)	$	360.00	—		—
Legacy BioPharmX warrants - June 30, 2021	214,046	$	87.25	2.2	$	—

The fair value of stock option grants is estimated on the date of grant using the Black-Scholes option-pricing model. The Company was historically a private company and lacked company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. Additionally, due to an insufficient history with respect to stock option activity and post-vesting cancellations, the expected term assumption for employee grants is based on a permitted simplified method, which is based on the vesting period and contractual term for each tranche of awards. The mid-point between the weighted-average vesting term and the expiration date is used as the expected term under this method. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect for time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

As of June 30, 2021, the unrecognized compensation costs related to stock options were approximately $0.1 million, which will be recognized over an estimated weighted-average amortization period of 0.7 years.

19

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 8. Commitments and contingencies

Leases

On March 10, 2021, the Company entered into a lease agreement with SIG 110 LLC with respect to a 3,127 square foot office space at 110 Allen Road, Suite 401, Basking Ridge, New Jersey. Pursuant to the terms of the lease agreement, the initial term is for twenty-four (24) months expiring on March 10, 2023. The initial base rent is $4,690.50 per month for the first twelve (12) months and $6,514.58 for the remaining twelve (12) months. During the six months ended June 30, 2021, in connection with the lease, the Company paid a security deposit of $13,000, which is included in deposits on the accompanying condensed consolidated balance sheet as of June 30, 2021.

In connection with the Merger of BioPharmX, the Company acquired a lease and corresponding sublease for the BioPharmX facility in San Jose, California. The sublease is to be used for general office and research laboratory purposes, has an effective date of February 1, 2020, and has a lease term of 4 years which expires on December 30, 2023. The lease expense is significantly reduced by the payments received in connection with the sublease.

The components of lease expense were as follows:

	Three Months Ended		Six Months Ended
	June 30, 2021
Operating leases:
Operating lease cost	$	99,142	$	185,273
Variable lease cost		26,760		52,151
Operating lease expense	$	125,902	$	237,424
Lease income - sub lease		(108,256)		(211,563)
Net rent expense	$	17,646	$	25,861

Other information:

	Three Months Ended				Six Months Ended
	June 30, 2021
Operating cash flows - operating leases	$	94,735		$	178,577
Right-of-use assets obtained in exchange for operating lease liabilities	$	—		$	122,809
Weighted-average remaining lease term – operating leases		2.4			2.4
Weighted-average discount rate – operating leases		14.1	%		14.1	%

As of June 30, 2021, future minimum payments for the lease are as follows:

	Operating
	Leases
Remaining Months in Year Ended December 31, 2021	$	189,471
Year Ended December 31, 2022		406,506
Year Ended December 31, 2023		357,599
Total	$	953,576
Less present value discount		(152,533)
Operating lease liabilities	$	801,043

20

Timber Pharmaceuticals, Inc. & Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Litigation

From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party, for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position.

Note 9. Related party transactions

Patagonia

Patagonia is a private, family-owned company founded in 2013 to address the medical needs of people with rare and serious dermatological conditions. On February 28, 2019 and June 26, 2019, the Company acquired the TMB-001 and TMB-003 licenses from Patagonia (see Note 3 for the payment terms and more details), respectively. The Chief Operating Officer, Executive Vice-President and Secretary of the Company is also the President of Patagonia. On February 27, 2019, the Company issued 1,000 founder common units to Patagonia for $10. As of December 31, 2019, Patagonia held 1,000 common units which represented 10% of the total voting units outstanding. During the year ended December 31, 2020, the 1,000 common units were converted to 629,572 shares of the Company's common stock in connection with its merger with BioPharmX (See Note 1). As of June 30, 2021 and December 31, 2020, Patagonia owns 45 shares of the Company's common stock.

TardiMed

The former Chairman of the Board of the Company is a Managing Member of TardiMed. The Chief Operating Officer, Executive Vice President and Secretary and the Chief Financial Officer, Treasurer and Executive Vice President of the Company are partners of TardiMed. As of June 30, 2021, TardiMed holds 4,609,067 shares of common stock, which represents 12.5% of the total voting shares outstanding. During the year ended December 31, 2020, TardiMed contributed an additional $0.1 million in exchange for 142,392 preferred units. In connection with the Merger Agreement, these preferred units and dividends have converted into 1,819 shares of Series A preferred stock. The Company reimbursed TardiMed $63,936 and $319,790 for management fees and reimbursed expenses for the six month period ended June 30, 2021 and 2020, respectively.

Note 10. Subsequent Events

On July 1, 2021, the Company issued 587,023 grants of options at an exercise price of $1.18 to an employee and non-employee directors. For the non-employee directors, each stock option award vests and becomes exercisable in equal monthly installments over one year from the vesting commencement date, subject to such non-employee director’s continued service on the Board. Each of the non-employee director awards have 10 year terms from the date of grant, subject to termination three years following the date such director ceases to be one of our directors or consultants. For Dr. Mendelsohn, 25% of his stock option award will vest one year from the date of grant and the remainder become exercisable in equal monthly installments over 36 months following the anniversary of the date of grant. Dr. Mendelsohn’s award has a 10 year term from the date of grant.

21

Item 2. Financial Information.

Management’s Discussion and Analysis of the Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and the related notes and the other financial information included elsewhere in this Quarterly Report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Quarterly Report, particularly those under “Risk Factors.” Additionally, many of these risks and uncertainties are currently elevated by and may or will continue to be elevated by the COVID-19 pandemic. We undertake no obligation to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect actual outcomes.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future.

There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:

· our lack of operating history and history of operating losses;

· our current and future capital requirements and our ability to satisfy our capital needs, including our ability to access financing that may be unavailable due to contractual limitations under the Securities Purchase Agreement (as defined below);

· the dilutive effect of our outstanding convertible securities;

· our ability to successfully complete required clinical trials of our products and obtain approval from the U.S. Food and Drug Administration (“FDA”) or other regulatory agents in different jurisdictions;

· the impact of the recent COVID-19 pandemic on our operations, including on our clinical development plans and timelines;

· the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates;

· our ability to maintain or protect the validity of our patents and other intellectual property;

· the volatility of the price of our common stock;

· our ability to retain key executives;

· our ability to internally develop new inventions and intellectual property;

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· interpretations of current laws and future laws;

· acceptance of our products in our industry;

· the accuracy of our estimates regarding expenses and capital requirements; and

· our ability to adequately support growth.

Overview

Timber Pharmaceuticals, Inc. (“Timber”, the “Company”, “we”, “us”) is a clinical-stage biopharmaceutical company focused on the development and commercialization of treatments for orphan dermatologic diseases. Our investigational therapies have proven mechanisms-of-action backed by decades of clinical experience and well-established CMC (chemistry, manufacturing and control) and safety profiles. We are initially focused on developing non-systemic treatments for rare dermatologic diseases including congenital ichthyosis (“CI”), facial angiofibromas (“FAs”) in tuberous sclerosis complex (“TSC”), and other sclerotic skin diseases. Our lead programs are TMB-001, TMB-002 and TMB-003.

TMB-001

TMB-001, a patented topical formulation of isotretinoin, is currently being evaluated in a Phase 2b clinical trial for the treatment of moderate to severe subtypes of congenital ichthyosis (“CI”), a group of rare genetic keratinization disorders that lead to dry, thickened, and scaling skin. A prior Phase 1/2 study involving 19 patients with CI demonstrated safety and a signal of preliminary efficacy of TMB-001, as well as minimal systemic absorption. In 2018, the FDA awarded us the first tranche of a $1.5 million grant in the amount of $500,000 to support clinical trials evaluating TMB-001 through its Orphan Products Grant program. In March 2020 and March 2021, the FDA awarded us the second and third tranches of the grant, respectively, each in the amount of $500,000.

On July 1, 2020, we announced that all 11 sites across the United States and Australia in the Phase 2b CONTROL study evaluating TMB-001 in patients with moderate to severe CI were enrolling patients. As of December 31, 2020, all sites participating in a Phase 2b clinical trial evaluating TMB-001 were opened and enrolling patients. On May 31, 2021, we completed patient enrollment in the Phase 2b clinical trial with 34 patients randomized. We continue to anticipate topline data readout at the end of the third quarter for the Phase IIb TMB-001 trial.

On December 15, 2020, we announced that we had received a notice of allowance from the USPTO for a Company patent application covering TMB-001 (U.S. Patent Application No.: 15/772,456) and the application subsequently issued on February 10, 2021 as US 10,933,018.

On April 28, 2021, we announced that the Japanese Patent Office had decided to grant a patent (No. 2018542677) for TMB-001.

On May 18, 2021, we received notice that the Australian Patent Office had decided to grant a patent (No. 2016346203) for TMB-001.

TMB-002

TMB-002, a proprietary topical formulation of rapamycin, is currently being evaluated in a Phase 2b clinical trial for the treatment of FAs in TSC, a multisystem genetic disorder resulting in the growth of hamartomas in multiple organs. TSC results from dysregulation in the mTOR pathway, and as a topical mTOR inhibitor, TMB-002 may address FAs in TSC without the systemic absorption of an oral agent.

As of April 30, 2021, all sites participating in a Phase 2b clinical trial evaluating TMB-002 were opened and are currently enrolling patients. Site activation and patient enrollment and data collection have been impacted by the COVID-19 pandemic in the larger and longer TMB-002 study, especially at our contracted test sites in Eastern Europe. As of June 30, 2021, all 17 sites are open and 50% of patients in the Phase 2b study have been enrolled for the TMB-002 program. We

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expect recruitment to be completed by the end of Q3 2021 and anticipate topline data readout in mid-2022. The Company is also continuing to assess the effect of COVID-19 on the TMB-002 study as well as the Company’s overall operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus throughout the world.  The Company’s assessment of the impact of COVID-19 may change in the future.

On March 17, 2021, we announced that AFT Pharmaceuticals Limited (“AFT”), one of our development partners, entered into a license and supply agreement with Desitin Arzneimittel GmbH (“Desitin”) for Pascomer® (TMB-002 topical rapamycin) for the treatment of FAs associated with TSC in Europe. Pursuant to the AFT Licensing and Development Agreement, we are entitled to receive a significant percentage of the economics (royalties and milestones) in any licensing transaction that AFT executes outside of North America, Australia, New Zealand, and Southeast Asia. The current transaction with Desitin is included in the scope of this provision and as such in Q2 the Company has recorded a €213,750 receivable related to an upfront milestone payment paid to AFT by Desitin during the quarter ending June 30, 2021 and has recorded approximately $0.3 million in these financial statements..

TMB-003

The product in its earliest stage in our pipeline is TMB-003, a proprietary formulation of Sitaxsentan, a new chemical entity in the U.S., which is a selective endothelin-A receptor antagonist. It is currently in preclinical development as a locally applied formulation for the treatment of fibrotic and sclerotic skin disorders, such as scleroderma, a rare connective tissue disorder characterized by abnormal thickening of the skin.

On January 12, 2021, we announced that the FDA has granted orphan drug designation for TMB-003, our locally delivered formulation of Sitaxsentan, for the treatment of systemic sclerosis. We are planning to pursue additional orphan drug designations in other indications.

BPX-01 and BPX-04

Pursuant to the Merger Agreement, BPX-01 (Topical Minocycline, 2%) and BPX-04 (Topical Minocycline, 1%) were added to our portfolio. BPX-01 and BPX-04 are assets currently in development for acne vulgaris and papulopustular rosacea, respectively. On July 22, 2020, we announced that we had received notice from the European Patent Office that it intends to grant a patent for the Company’s topical composition of pharmaceutical tetracycline (including minocycline) for dermatological use (European Patent Application No. 16714168.8) and the application subsequently issued on December 16, 2020 as EP 3273940. Patents covering the BPX-01 and BPX-04 assets have previously been granted in the United States, Japan, South Africa, and Australia. We are currently evaluating our strategic options regarding these assets.

On September 15, 2020, we announced that we had received a notice of allowance from the U.S. Patent and Trademark Office (USPTO) for a Company patent application covering BPX-01 and BPX-04, our pharmaceutical tetracycline (including minocycline) compositions for dermatological use (U.S. Patent Application No.: 16/514,459) and the application subsequently issued on January 5, 2021 as US 10,881,672.

The Merger, Reverse Stock Split and Name Change

On May 18, 2020, we completed our business combination with Timber Pharmaceuticals, LLC (
“Timber Sub”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of January 28, 2020, as amended, by and among Timber, Timber Sub and BITI Merger Sub Inc., a wholly-owned subsidiary of Timber (“Merger Sub”) (as amended, the “Merger Agreement”), pursuant to which Merger Sub merged with and into Timber Sub, with Timber Sub surviving as a wholly owned subsidiary of Timber (the “Merger”).

In connection with, and immediately prior to the completion of, the Merger, we effected a reverse stock split of our common stock, at a ratio of 1-for-12 (the “Reverse Stock Split”). Under the terms of the Merger Agreement, after taking into account the Reverse Stock Split, we issued shares of common stock to Timber Sub’s unitholders at an exchange rate of 629.57 shares of common stock for each Timber Sub common unit outstanding immediately prior to the Merger. In

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connection with the Merger, we changed our name from “BioPharmX Corporation” to “Timber Pharmaceuticals, Inc.,” and the business conducted by the Company became the business conducted by Timber Sub.

Private Placement of Common Stock and Warrants

On May 18, 2020, Timber and Timber Sub completed a private placement transaction (the “Pre-Merger Financing”) with the Investors pursuant to the Securities Purchase Agreement, dated March 27, 2020  (as amended, the “Securities Purchase Agreement”) for an aggregate purchase price of approximately $25.0 million (comprised of (i) approximately $5 million credit with respect to the senior secured notes issued in connection with the bridge loan that certain of the Investors made to Timber Sub at the time of the execution of the Merger Agreement and (ii) approximately $20 million in cash from the Investors).

Pursuant to the Pre-Merger Financing, (i) Timber Sub issued and sold to the Investors common units of Timber Sub which converted pursuant to the exchange ratio in the Merger into an aggregate of approximately 4,137,509 shares (the “Converted Shares”) of common stock; and (ii) the Company agreed to issue to each Investor, on the tenth trading day following the consummation of the Merger, (A) Series A Warrants representing the right to acquire shares of common stock equal to 75% of the sum of (a) the number of Converted Shares issued to the Investor, without giving effect to any limitation on delivery contained in the Securities Purchase Agreement, and (b) the number of shares of common stock underlying the Series B Warrants issued to the Investor (the “Series B Warrants”) and (B) the Series B Warrants. On June 2, 2020, pursuant to the terms of the Securities Purchase Agreement, the Company issued the Series A Warrants and the Series B Warrants.

In addition, pursuant to the terms of the Securities Purchase Agreement, dated as of January 28, 2020 between Timber Sub and several of the Investors, the Company issued to such purchasers, on May 22, 2020, warrants to purchase 413,751 shares of our common stock (the “Bridge Warrants”) which have an exercise price of $2.2362 per share, subject to full ratchet anti-dilution and adjustment if shares are sold for a price less than the exercise price of the warrants.

Pursuant to the Waiver Agreements we entered into with the Selling Stockholders on November 19, 2020, (A) the exercise price of the Series A Warrants was definitively set at $1.16 per share, (B) the number of shares underlying all of the Series A Warrants was definitively set at 20,178,214 and (C) the number of shares underlying all of the Series B Warrants was definitively set at 22,766,776. As of March 4, 2021, all Series B Warrants had been exercised in full.

Corporate History

We have a limited operating history as the Company was formed on February 26, 2019. Since inception, Timber’s operations have focused on establishing its intellectual property portfolio, including acquiring rights to the proprietary formulations of isotretinoin, rapamycin and Sitaxsentan, as described above, organizing and staffing the Company, business planning, raising capital, and conducting clinical trials. Since inception, we have financed our operations with net proceeds totaling a net of $18.9 million through capital contributions.

Since inception, we have incurred significant operating losses. For the six months ended June 30, 2021, our net loss was $4.8 million. As of June 30, 2021, we had an accumulated deficit of $23.1 million. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we continue to develop the pipeline of programs.

Asset Purchase Agreements with Patagonia Pharmaceuticals LLC (“Patagonia”)

On February 28, 2019, we acquired the intellectual property rights for a topical formulation of isotretinoin for the treatment of CI and identified as TMB-001, formerly PAT-001 including the IPEG^TM brand, from Patagonia (the “TMB-001 Acquisition”).

Under the terms of the TMB-001 Acquisition, we paid a one-time upfront payment of $50,000 to Patagonia. Patagonia is entitled to up to $27.0 million of cash milestone payments relating to certain regulatory and commercial achievements of the TMB-001 Acquisition, with the first being $4.0 million from the initiation of a Phase 3 pivotal trial, as agreed with the

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FDA. In addition, Patagonia is entitled to net sales earn-out payments ranging from low single digits to mid-double digits for the program licensed. We are responsible for all development activities under the license. The potential regulatory and commercial milestones are not yet considered probable, and no milestone payments have been accrued at June 30, 2021 and December 31, 2020.

On June 26, 2019, we acquired the intellectual property rights for a locally administered formulation of Sitaxsentan for the treatment of cutaneous fibrosis and/or pigmentation disorders, and identified as TMB-003, formerly PAT-S03, from Patagonia (the “TMB-003 Acquisition”).

Upon closing of the TMB-003 Acquisition, we paid a one-time upfront payment of $20,000 to Patagonia. Patagonia is entitled to up to $10.25 million of cash milestone payments subject to adjustments relating to certain regulatory and commercial achievements of the TMB-003 License, with the first being a one-time payment of $250,000 upon the opening of an IND with the FDA. In addition, Patagonia is entitled to net sales earn-out payments ranging from low to mid-single digits for the program licensed. We are responsible for all development activities under the license. The potential regulatory and commercial milestones are not yet considered probable, and no milestone payments have been accrued at June 30, 2021 and December 31, 2020.

Acquisition of License from AFT Pharmaceuticals Limited

On July 5, 2019, we entered into a license agreement with AFT which provides us with (i) an exclusive license to certain licensed patents, licensed know-how and AFT trademarks to commercialize the Pascomer® product in the United States, Canada and Mexico and (2) a co-exclusive license to develop the Pascomer product in this territory. Concurrently, we granted to AFT an exclusive license to commercialize the Pascomer product outside of its territory and co-exclusive sublicense to develop and manufacture the licensed product for commercialization outside of its territory (the “AFT License Agreement”).

The AFT License Agreement also provides for the formation of a joint steering committee to oversee, coordinate and review recommendations and approve decisions in respect of the matters related to the development and commercialization of the Pascomer product, in which both the Company and AFT have the right to appoint two members. The committee is currently comprised of three members. We have final decision-making authority on all matters relating to the commercialization of the Pascomer product in the specified territory and on all matters related to the development (and regulatory approval) of the Pascomer product, with certain exceptions.

The development of the Pascomer product is being conducted pursuant to a written development plan, written by AFT and approved by the joint steering committee, which is reviewed on at least an annual basis. AFT shall perform clinical trials of the Pascomer product in the specified territory and shall perform all CMC (chemistry, manufacturing and controls) and related activities to support regulatory approval. We are responsible for all expenses incurred by AFT during the term of the AFT License Agreement and shall equally share all costs and expenses with AFT, incurred by AFT for development and marketing work performed in furtherance of regulatory approval and commercialization worldwide, outside of the specified territory. We are also entitled to receive a significant percentage of the economics (royalties and milestones) in any licensing transaction that AFT executes outside of North America, Australia, New Zealand, and Southeast Asia.  In March 2021 the Company announced that its development partner, AFT Pharmaceuticals Limited has signed an exclusive license and supply agreement with Desitin Arzneimittel GmbH (“Desitin”) for Pascomer® (TMB-002 topical rapamycin) for the treatment of facial angiofibromas (FA) associated with Tuberous Sclerosis Complex (TSC) in Europe. The Company is entitled to €213,750 related to an upfront milestone payment paid to AFT by Desitin during the quarter ending June 30, 2021 and has recorded approximately $0.3 million in these financial statements.

Upon closing of the AFT License Agreement, we were obligated to reimburse AFT for previously spent development costs, subject to certain limitations and were obligated to pay a one-time, irrevocable and non-creditable upfront payment to AFT, payable in scheduled installments. AFT is entitled to up to $25.5 million of cash milestone payments relating to certain regulatory and commercial achievements of the AFT License. In addition, AFT is entitled to net sales royalties ranging from high single digits to low double digits for the program licensed. The potential regulatory and commercial milestones are not yet considered probable, and no milestone payments have been accrued at June 30, 2021 and December 31, 2020.

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Results of Operations

Comparison of the Three Months Ended June 30, 2021 and 2020

	Three Months Ended June 30,
	2021		2020		Change $		Change %
Grant revenue	$	134,927	$	—	$	134,927	N/A	%
Milestone revenue		253,892		—		253,892	N/A
Total revenue		388,819		—		388,819	N/A
Research and development		1,800,100		536,170		1,263,930	236	%
Research and development - license acquired		—		12,371,332		(12,371,332)	(100)	%
Transaction costs		—		311,291		(311,291)	(100)	%
Selling, general and administrative		1,556,012		1,055,084		500,928	47	%
Loss from operations		(2,967,293)		(14,273,877)		11,306,584	(79)	%
Interest expense		—		(3,314,140)		3,314,140	(100)	%
Interest income		—		359,880		(359,880)	(100)	%
Change in fair value of investment in BioPharmX		—		476,245		(476,245)	(100)	%
Change in fair value of warrant liability		—		1,504,511		(1,504,511)	(100)	%
Gain (loss) on foreign currency exchange		1,090		1,772		(682)	(38)	%
Net loss		(2,966,203)		(15,245,609)		12,279,406	(81)	%
Accrued dividend on preferred stock units		—		(18,188)		18,188	(100)	%
Cumulative dividends on Series A preferred stock		(36,286)		(17,146)		(19,140)	112	%
Net loss attributable to common stockholders	$	(3,002,489)	$	(15,280,943)	$	12,278,454	(80)	%

Grant and milestone revenue

During the three months ended June 30, 2021 and 2020, we recognized revenue of $388,819 and zero, respectively. The revenue consisted of reimbursements received from the FDA as a result of achieving certain clinical milestones in the development of TMB-001 and from milestone for a licensing agreement with AFT.

In September 2018, Patagonia was awarded a $1.5 million grant (the “Grant”) from the FDA as part of the Orphan Products Clinical Trials Grants Program of the Office of Orphan Products Development. The Grant funds are available in three annual installments of $500,000 per year, which commenced in September 2018. The Grant was transferred to Timber pursuant to its TMB-001 Acquisition Agreement with Patagonia in February 2019. A six-month no cost extension was granted to Timber in September 2019 and ended in February 2020. During the course of each year for which the Grant was active, the Company submitted its allowable expenses and is reimbursed up to the maximum amount of each installment.

Pursuant to the AFT Licensing and Development Agreement, we are entitled to receive a significant percentage of the economics (royalties and milestones) in any licensing transaction that AFT executes outside of North America, Australia, New Zealand, and Southeast Asia. The current transaction with Desitin is included in the scope of this provision and as such in Q2 the Company is entitled to €213,750 related to an upfront milestone payment paid to AFT by Desitin during the quarter ending June 30, 2021 and has recorded approximately $0.3 million in these financial statements.

Operating costs and expenses

Research and development expense

During the three months ended June 30, 2021 and 2020, research and development expenses were $1.8 and $0.5 million respectively. Research and development expenses are primarily related to costs incurred related to our Phase 2a clinical trials of TMB-001 and TMB-002, such as CRO direct and pass-through expenses.

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Research and development costs are expensed as incurred. Costs for certain activities, such as preclinical studies and clinical trials, are generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to it by Timber’s vendors and collaborators.

Transaction Costs

There were no transaction costs for the three months ended June 30, 2021. For the three months ended June 30, 2020, transaction costs were $0.3 million, consisting of legal and professional fees related to our acquisition of BioPharmX.

General and administrative expense

During the three months ended June 30, 2021, general and administrative expense was $1.6 million compared to $1.1 million for the three months ended June 30, 2020. The increase in general and administrative expenses of approximately $0.5 million was due to increased personnel and related costs of $0.2 million due to increased professional expense, and other overhead expenses of $0.3 million.

Other income (expense)

During the three months ended June 30, 2021 and 2020, respectively, other expense was zero and $1.0 million. For the three months ended June 30, 2020, other expense primarily consisted of interest expense of $3.3 million related to amortization of the debt discount for our bridge loan offset by $1.5 million for the change in fair value of our warrant liability, $0.5 million related to change in investment in BioPharmX and by $0.3 million of interest income related to our BioPharmX loan.

Income Taxes

The Company did not record tax expense for the three-months ended June 30, 2021 due to the Company’s loss position and full valuation allowance. The Company did not record tax expense for the three-months ended June 30, 2020 as the Company was a non-taxable flow-through entity for US federal income tax purposes through May 18, 2020 and the Company’s loss position and full valuation allowance through June 30, 2020.

Comparison of the Six Months Ended June 30, 2021 and 2020

	Six Months Ended June 30,
	2021		2020		Change $		Change %
Grant revenue	$	175,661	$	26,907	$	148,754	553	%
Milestone revenue		253,892		—		253,892	N/A
Total revenue		429,553		26,907		402,646	1,496
Research and development		2,649,618		1,554,401		1,095,217	70	%
Research and development - license acquired		—		12,371,332		(12,371,332)	(100)	%
Transaction costs		—		1,501,133		(1,501,133)	(100)	%
Selling, general and administrative		2,621,401		1,511,878		1,109,523	73	%
Loss from operations		(4,841,466)		(16,911,837)		12,070,371	(71)	%
Interest expense		—		(4,416,746)		4,416,746	(100)	%
Interest income		—		816,655		(816,655)	(100)	%
Change in fair value of investment in BioPharmX		—		559,805		(559,805)	(100)	%
Change in fair value of warrant liability		—		1,183,460		(1,183,460)	(100)	%
Gain (loss) on foreign currency exchange		1,003		4,454		(3,451)	(77)	%
Net loss		(4,840,463)		(18,764,209)		13,923,746	(74)	%
Accrued dividend on preferred stock units		—		(52,669)		52,669	(100)	%
Cumulative dividends on Series A preferred stock		(72,173)		(17,146)		(55,027)	321	%
Net loss attributable to common stockholders	$	(4,912,636)	$	(18,834,024)	$	13,921,388	(74)	%

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Grant and milestone revenue

For the six months ended June 30, 2021, revenue was approximately $429,554 compared to $26,907 revenue for the six months ended June 30, 2020. Revenue for the six months ended June 30, 2021 consisted of reimbursements received from the FDA as a result of achieving certain clinical milestones in the development of TMB-001 and from milestone for a licensing agreement with AFT. In September 2018, Patagonia was awarded a $1.5 million grant (the “Grant”) from the FDA as part of the Orphan Products Clinical Trials Grants Program of the Office of Orphan Products Development. The Grant funds are available in three annual installments of $500,000 per year, which commenced in September 2018. The Grant was transferred to Timber pursuant to its TMB-001 Acquisition Agreement with Patagonia in February 2019. A six-month no cost extension was granted to Timber in September 2019 and ended in February 2020. During the course of each year for which the Grant is active, the Company submits its allowable expenses and is reimbursed up to the maximum amount of each installment. The Company is entitled to €213,750 related to an upfront milestone payment paid to AFT by Desitin during the six months ending June 30, 2021 and has recorded approximately $0.3 million in these financial statements.

Operating costs and expenses

Research and development expense

For the six months ended June 30, 2021, research and development expenses were $2.6 million compared to $1.6 million for the six months ended June 30, 2020. The increase of $1.0 million is primarily related to increased costs incurred related to our Phase 2a clinical trials of TMB-001 and TMB-002, such as CRO direct and pass through expenses.

Research and development costs are expensed as incurred. Costs for certain activities, such as preclinical studies and clinical trials, are generally recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to it by Timber’s vendors and collaborators.

Research and development expense- license acquired

For the six months ended June 30, 2021, the research and development expense – license acquired was zero compared to $12.4 million as of June 30, 2020, primarily related to our acquisition of BioPharmX.

Transaction Costs

For the six months ended June 30, 2021, transaction costs were zero compared to $1.5 million as of June 30, 2020, consisting of legal and professional fees related to our acquisition of BioPharmX.

General and administrative expense

For the six months ended June 30, 2021, general and administrative expense were $2.6 million compared to $1.5 million for the six months ended June 30, 2020. The increase in general and administrative expenses of approximately $1.1 million was due to increased legal and professional fees of $0.2 million, increased personnel and related costs of $0.5 million due to increased headcount, and other overhead expenses of $0.4 million.

Liquidity and Capital Resources

Since inception, Timber has not generated revenue from product sales and has incurred net losses and negative cash flows from its operations. At June 30, 2021, we had working capital of approximately $4.5 million, which included cash and cash equivalents of $6.1 million. We reported a net loss of $4.8 million during the six months ended June 30, 2021.

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Cash Flows for the Six Months Ended June 30, 2021 and 2020

	Six Months Ended June 30,
	2021		2020
Cash provided by (used in) continuing operations:
Operating activities	$	(4,202,755)	$	(5,082,462)
Investing activities		(16,903)		(2,659,214)
Financing activities		—		21,237,772
Net increase in cash and cash equivalents	$	(4,219,658)	$	13,496,096

Operating Activities

For the six months ended June 30 2021, net cash used in operating activities was $4.2 million, which primarily consisted of our net loss of $4.8 million, adjusted for non-cash expenses of $0.1 million of stock-based compensation expense offset by the change in assets and liabilities of $0.5 million, which is primarily due to increase in other receivable of $0.3 million and offset by an increase in accounts payable of $1.0 million and a decrease in accrued expenses of $0.2 million.

For the six months ended June 30, 2020, net cash used in operating activities was $5.1 million, which primarily consisted of our net loss of $18.8 million, adjusted for non-cash expenses of $14.4 million primarily consisting of, $12.4 million of research and development – licenses acquired, $4.2 million of amortization expense related to the Bridge Notes, $0.2 million of accrued interest on the Bridge Notes, offset by $1.2 million for the change in fair value of our warrant liability, $0.8 million for the amortization of our loan discount, and $0.6 million for the change in fair value of our investment in BioPharmX. The change in assets and liabilities of $0.8 million is primarily due to increases in prepaid insurance of $0.2 million and a decrease in accounts payable, accrued expenses and other liabilities of $0.6 million.

Investing Activities

For the six months ended June 30, 2021, net cash used in investing activities was de minimis spending related to property and equipment.

For the six months ended June 30, 2020, net cash used in investing activities was approximately $2.7 million which primarily consisted of our loan to BioPharmX of $2.3 million and our payment of $0.7 million for research and development licenses, offset by the cash acquired with our acquisition of BioPharmX of $0.3 million.

Financing Activities

For the six months Ended June 30, 2021, net cash provided by financing activities was zero.

For the six months ended June 30, 2020, net cash provided by financing activities was approximately $21.2 million, which consisted of the net proceeds received from the issuance of common stock related to our financing of $17.5 million and the proceeds received from our Bridge Notes of $3.7 million.

Funding requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of our pipeline of programs. Furthermore, following the completion of the Merger, we have been incurring additional costs as a public company. Accordingly, we will need to obtain additional funding. If we are unable to raise capital or otherwise obtain funding when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

As discussed above, Timber Sub and BioPharmX entered into the Securities Purchase Agreement pursuant to which, among other things, we issued the Investor Warrants to the Investors in a private placement transaction for an aggregate

30

purchase price of approximately $25 million (which amount is comprised of (x) a $5 million credit with respect to the Bridge Notes and (y) $20 million in cash from the Investors).

In addition, on July 17, 2020, we entered into an Amended and Restated Registration Rights Agreement (as amended, the “Registration Rights Agreement”) with the Investors. Pursuant to the Registration Rights Agreement, we agreed to provide certain demand registration rights to the Investors relating to the registration of the shares underlying the Investor Warrants and the Bridge Warrants. In connection with the entry into the Registration Rights Agreement and pursuant to the Securities Purchase Agreement, we were restricted from various financing activities until August 16, 2022. On November 19, 2020 we entered into Waiver Agreements with the investors revising the restriction date to April 30, 2021.

Further, the Company has a class of Series A Preferred Stock which is currently subject to redemption at any time in whole or in part at the request of the holder, TardiMed. The redemption price is equal to approximately $1.9 million in the aggregate, including accumulated and unpaid dividends which accrue at the rate of 8% per annum. Redemption is subject to certain limitations under Delaware law, so that our ability to pay the redemption price to TardiMed is and may be limited.

We have evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year beyond the filing of this Annual Report on Form 10-K. Based on such evaluation and the Company’s current plans, which are subject to change, management believes that the Company’s existing cash and cash equivalents as of June 30, 2021 are not sufficient to satisfy our operating cash needs for the year after the filing of the Quarterly Report on Form 10-Q and are sufficient only to satisfy our operating cash needs through the third quarter of 2021.

The Company’s future liquidity and capital funding requirements will depend on numerous factors, including:

● our ability to raise additional funds to finance our operations, including our ability to access financing that may be unavailable due to contractual limitations under the Securities Purchase Agreement;

● the dilutive effect of our outstanding securities;

● the impact of the recent COVID-19 pandemic on our operations, including on our clinical development plans and timelines;

● the outcome, costs and timing of clinical trial results for our current or future product candidates, including the timing, progress, costs and results of our Phase 2b clinical trial of TMB-001 for the treatment of congenital ichthyosis as well as our ongoing Phase 2b clinical trial of TMB-002 for the treatment of facial angiofibromas in tuberous sclerosis complex;

● the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;

● the emergence and effect of competing or complementary products;

● our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;

● the cost and timing of completion of commercial-scale manufacturing activities;

● the cost of establishing sales, marketing and distribution capabilities for our products in regions where we choose to commercialize our products on our own;

● the initiation, progress, timing and results of the commercialization of our product candidates, if approved for commercial sale;

31

● the volatility of the price of our common stock;

● acceptance of our products in our industry;

● the accuracy of our estimates regarding expenses and capital requirements;

● our ability to retain our current employees and the need and ability to hire additional management and scientific and medical personnel; and

● the terms and timing of any collaborative, licensing or other arrangements that we have or may establish.

We will need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity and/or the completion of a licensing or other commercial transaction for one or more of our product candidates. If we are unable to maintain sufficient financial resources, our business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. There can be no assurance that we will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or convertible debt financings will likely have a dilutive effect on the holdings of our existing stockholders.

As discussed above, the impact of the worldwide spread of COVID-19 has been unprecedented and unpredictable. Site activation and patient enrollment have recently been impacted by the COVID-19 pandemic in the larger and longer TMB-002 study, especially at our contracted test sites in Eastern Europe. As of June 30, 2021, all 17 sites are open and 50% of patients in the Phase 2b study have been enrolled for the TMB-002 program.  We expect recruitment to be completed by the end of Q3 2021 and anticipate topline data readout in mid-2022.  We are also continuing to assess the effect of COVID-19 on the TMB-002 study as well as the Company’s overall operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus throughout the world.  Our assessment of the impact of COVID-19 may change in the future.

Off-balance sheet arrangements

Timber does not have any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Timber does not engage in off-balance sheet financing arrangements. In addition, Timber does not engage in trading activities involving non-exchange traded contracts. Timber therefore believe that Timber is not materially exposed to any financing, liquidity, market or credit risk that could arise if it had engaged in these relationships.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financials statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the revenue and expenses incurred during the reporting periods. On an ongoing basis, we evaluate our estimates and adjustments, including those related to accrued expenses and share-based compensation. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our latest Annual report Form 10-K.

32

Item 3. Quantitative and Qualitative Disclosures about Market Risk

N/A.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures.

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15 (e) or 15d-15(e) of the Exchange Act) that are designed to ensure that information required to be disclosed in periodic reports filed with the SEC under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13(a)-15(e) under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of June 30, 2021.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal period ended June 30, 2021, which have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings.

We are not involved in any litigation that we believe could have a material adverse effect on our financial position or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of our executive officers, threatened against or affecting our Company or our officers or directors in their capacities as such.

Item 1A. Risk Factors

As a smaller reporting company, we are not required to provide the information required by this item.

There have been no material changes in or additions to the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2020 and in our Quarterly Report on Form 10-Q for the period ended March 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

During the period covered by this report, we have not issued any unregistered securities. We have not furnished information under this item as such information previously has been included in our Annual Report on Form 10-K.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosure.

Not applicable.

33

Item 5. Other Information.

None.

Item 6. Exhibits

Exhibit No.	Description
31.1*	Certification of Chief Executive Officer of Timber Pharmaceuticals, Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 10, 2021.
31.2*	Certification of Principal Financial Officer of Timber Pharmaceuticals, Inc. pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 10, 2021.
32.1**	Certification of Chief Executive Officer of Timber Pharmaceuticals, Inc. pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 10, 2021.
32.2**	Certification of Principal Financial Officer of Timber Pharmaceuticals, Inc. pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated August 10, 2021.
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 (formatted as Inline XBRL and contained in Exhibits 101).

*Filed herewith.

**The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference

34

SIGNATURES

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

	Timber Pharmaceuticals, Inc.
Date: August 10, 2021	By:	/s/ John Koconis
	John Koconis
	Chief Executive Officer and Chairman of the Board of Directors
	(Principal Executive Officer)

35

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULES 13A-14(A) AND 15D-14(A) UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES
OXLEY ACT OF 2002

I, John Koconis, certify that:

1.I have reviewed this report on Form 10-Q of Timber Pharmaceuticals, Inc.;

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 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 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 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.

/s/ John Koconis

John Koconis

Chief Executive Officer and Chairman of the Board of Directors

(Principal Executive Officer)

August 10, 2021

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULES 13A-14(A)
AND 15D-14(A) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph Lucchese, certify that:

1.I have reviewed this report on Form 10-Q of Timber Pharmaceuticals, Inc.;

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 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 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 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.

/s/ Joseph Lucchese

Joseph Lucchese

Chief Financial Officer

(Principal Financial Officer)

August 10, 2021

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, John Koconis, Chief Executive Officer of Timber Pharmaceuticals, Inc. (the “Company”), in compliance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that, to the best of my knowledge, the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2021 (the “Report”) filed with the Securities and Exchange Commission:

·Fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

/s/ John Koconis

John Koconis

Chief Executive Officer and Chairman of the Board of Directors

(Principal Executive Officer)

August 10, 2021

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Joseph Lucchese, Chief Financial Officer of Timber Pharmaceuticals, Inc. (the “Company”), in compliance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that, to the best of my knowledge, the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2021 (the “Report”) filed with the Securities and Exchange Commission:

·Fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

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

/s/ Joseph Lucchese

Joseph Lucchese

Chief Financial Officer

(Principal Financial Officer)

August 10, 2021

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Aug. 06, 2021
Document and Entity Information
Entity Registrant Name	Timber Pharmaceuticals, Inc.
Document Type	10-Q
Document Period End Date	Jun. 30, 2021
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	001-37411
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	59-3843182
Entity Address, Address Line One	110 Allen Road, Suite 410
Entity Address, City or Town	Basking Ridge
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07920
City Area Code	908
Local Phone Number	636-7160
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		36,659,685
Entity Central Index Key	0001504167
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false
Trading Symbol	TMBR
Title of 12(b) Security	Common Stock, par value $0.001 per share
Security Exchange Name	NYSEAMER

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Current assets
Cash	$ 6,129,035	$ 10,348,693
Other receivable	253,892
Other current assets	378,382	377,290
Total current assets	6,761,309	10,725,983
Deposits	127,534	114,534
Property and equipment, net	16,728
Right of use asset	784,674	787,432
Total assets	7,690,245	11,627,949
Current liabilities
Accounts payable	1,385,852	395,049
Accrued expenses	568,732	768,661
Lease liability, current portion	295,045	217,651
Total current liabilities	2,249,629	1,381,361
Notes payable	37,772	37,772
Lease liability	505,998	579,455
Deferred tax liability	37,842	37,842
Other liabilities	73,683	73,683
Total liabilities	2,904,924	2,110,113
Commitments and contingencies (Note 7)
Redeemable Series A convertible preferred stock, par value $0.001; 2,500 shares authorized; 1,819 shares issued and outstanding as of June 30, 2021 and December 31, 2020	1,981,978	1,909,805
Stockholders' equity
Common stock, par value $0.001; 450,000,000 shares authorized; 36,659,685 shares issued and outstanding as of June 30, 2021, and 27,132,420 shares issued and outstanding as of December 31, 2020	36,660	27,132
Additional paid-in capital	25,852,542	25,826,295
Retained earnings (accumulated deficit)	(23,085,859)	(18,245,396)
Total stockholders' equity	2,803,343	7,608,031
Total liabilities, redeemable convertible preferred stock, and stockholders' equity	$ 7,690,245	$ 11,627,949

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	450,000,000	450,000,000
Common stock, shares issued	36,659,685	27,132,420
Common stock, shares outstanding	36,659,685	27,132,420
Series A preferred stock
Series A convertible preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Series A convertible preferred stock, shares authorized	2,500	2,500
Series A convertible preferred stock, shares issued	1,819	1,819
Total temporary equity, Shares	1,819	1,819

XML

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Total revenue	$ 388,819		$ 429,553	$ 26,907
Operating costs and expenses
Research and development	1,800,100	$ 536,170	2,649,618	1,554,401
Research and development - license acquired		12,371,332		12,371,332
Transaction costs		311,291		1,501,133
Selling, general and administrative	1,556,012	1,055,084	2,621,401	1,511,878
Total operating expenses	3,356,112	14,273,877	5,271,019	16,938,744
Loss from operations	(2,967,293)	(14,273,877)	(4,841,466)	(16,911,837)
Other income (expense)
Interest expense		(3,314,140)		(4,416,746)
Interest income		359,880		816,655
Change in fair value of investment in BioPharmX		476,245		559,805
Change in fair value of warrant liability		1,504,511		1,183,460
Gain on foreign currency exchange	1,090	1,772	1,003	4,454
Total other income (expense)	1,090	(971,732)	1,003	(1,852,372)
Net loss	(2,966,203)	(15,245,609)	(4,840,463)	(18,764,209)
Accrued dividend on preferred stock units		(18,188)		(52,669)
Cumulative dividends on Series A preferred stock	(36,286)	(17,146)	(72,173)	(17,146)
Net loss attributable to common stockholders	$ (3,002,489)	$ (15,280,943)	$ (4,912,636)	$ (18,834,024)
Basic and diluted net loss per share attributable to common stockholders	$ (0.08)	$ (1.36)	$ (0.14)	$ (2.15)
Basic and diluted weighted average number of shares outstanding	36,659,685	11,222,258	35,873,780	8,758,991
Grant revenue
Total revenue	$ 134,927		$ 175,661	$ 26,907
Milestone revenue
Total revenue	$ 253,892		$ 253,892

XML

Condensed Consolidated Statements of Members' and Stockholders' Equity (Deficit) - USD ($)	Series A preferred stock Preferred Stock	Series A warrants Common Stock	Series A warrants Additional Paid-in Capital	Series B Warrants Common Stock	Series B Warrants Additional Paid-in Capital	Preferred stock units	Common stock units	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Beginning Balance at Dec. 31, 2019						$ 1,624,228	$ 74,667			$ (3,075,113)	$ (1,376,218)
Beginning Balance (in shares) at Dec. 31, 2019						1,624,228	10,000
Increase (decrease) in stockholders' equity (deficit)
Issuance of common stock for acquisition of BioPharmX								$ 1,367	$ 8,366,665		8,368,032
Issuance of common stock for acquisition of BioPharmX (in shares)								1,367,326
Issuance of common stock and warrants, net of costs								$ 4,180	17,495,820		17,500,000
Issuance of common stock and warrants, net of costs (in shares)								4,180,208
Issuance of Series A warrants									(16,511,634)		(16,511,634)
Bridge Loan converted to equity									5,000,000		5,000,000
Reclassification of bridge warrant									3,423,204		3,423,204
Non-cash contribution from TardiMed						$ 142,392					142,392
Non-cash contribution from TardiMed (in shares)						142,392
Accrued preferred unit dividend						$ 52,669				(52,669)
Accrued preferred unit dividend (in shares)						52,669
Conversion of common units to common stock pursuant to BioPharmX acquisition							$ (74,667)	$ 6,296	68,371		6,296
Conversion of common units to common stock pursuant to BioPharmX acquisition (in shares)							(10,000)	6,295,724
Conversion of preferred units to Series A preferred stock pursuant to BioPharmX acquisition	$ 1,819,289					$ (1,819,289)					(1,819,289)
Conversion of preferred units to Series A preferred stock pursuant to BioPharmX acquisition (in shares)	1,819					(1,819,289)
Accrued dividend Series A preferred stock	$ 17,146									(17,146)	(17,146)
Stock-based compensation									61,662		61,662
Net income (loss)										(18,764,209)	(18,764,209)
Ending Balance at Jun. 30, 2020	$ 1,836,435							$ 11,843	17,904,088	(21,909,137)	(3,993,206)
Ending Balance (in shares) at Jun. 30, 2020	1,819							11,843,258
Beginning Balance at Mar. 31, 2020						$ 1,801,101	$ 92,884			(6,628,194)	(4,734,209)
Beginning Balance (in shares) at Mar. 31, 2020						1,801,101	10,000
Increase (decrease) in stockholders' equity (deficit)
Issuance of common stock for acquisition of BioPharmX								$ 1,367	8,366,665		8,368,032
Issuance of common stock for acquisition of BioPharmX (in shares)								1,367,326
Issuance of common stock and warrants, net of costs								$ 4,180	17,495,820		17,500,000
Issuance of common stock and warrants, net of costs (in shares)								4,180,208
Issuance of Series A warrants									(16,511,634)		(16,511,634)
Bridge Loan converted to equity									5,000,000		5,000,000
Reclassification of bridge warrant									3,423,204		3,423,204
Accrued preferred unit dividend						$ 18,188				(18,188)
Accrued preferred unit dividend (in shares)						18,188
Conversion of common units to common stock pursuant to BioPharmX acquisition							$ (92,884)	$ 6,296	86,588
Conversion of common units to common stock pursuant to BioPharmX acquisition (in shares)							(10,000)	6,295,724
Conversion of preferred units to Series A preferred stock pursuant to BioPharmX acquisition	$ 1,819,289					$ (1,819,289)					(1,819,289)
Conversion of preferred units to Series A preferred stock pursuant to BioPharmX acquisition (in shares)	1,819					(1,819,289)
Accrued dividend Series A preferred stock	$ 17,146									(17,146)	(17,146)
Stock-based compensation									43,445		43,445
Net income (loss)										(15,245,609)	(15,245,609)
Ending Balance at Jun. 30, 2020	$ 1,836,435							$ 11,843	17,904,088	(21,909,137)	(3,993,206)
Ending Balance (in shares) at Jun. 30, 2020	1,819							11,843,258
Beginning Balance at Dec. 31, 2020	$ 1,909,805							$ 27,132	25,826,295	(18,245,396)	7,608,031
Beginning Balance (in shares) at Dec. 31, 2020	1,819							27,132,420
Increase (decrease) in stockholders' equity (deficit)
Accrued dividend Series A preferred stock	$ 72,173								(72,173)		(72,173)
Exercise of warrants		$ 2,060	$ (2,060)	$ 7,468	$ (7,468)
Exercise of warrants ( in shares)		2,059,613		7,467,652
Stock-based compensation									107,948		107,948
Net income (loss)										(4,840,463)	(4,840,463)
Ending Balance at Jun. 30, 2021	$ 1,981,978							$ 36,660	25,852,542	(23,085,859)	2,803,343
Ending Balance (in shares) at Jun. 30, 2021	1,819							36,659,685
Beginning Balance at Mar. 31, 2021	$ 1,945,692							$ 36,660	25,839,395	(20,119,656)	5,756,399
Beginning Balance (in shares) at Mar. 31, 2021	1,819							36,659,685
Increase (decrease) in stockholders' equity (deficit)
Accrued dividend Series A preferred stock	$ 36,286								(36,286)		(36,286)
Stock-based compensation									49,433		49,433
Net income (loss)										(2,966,203)	(2,966,203)
Ending Balance at Jun. 30, 2021	$ 1,981,978							$ 36,660	$ 25,852,542	$ (23,085,859)	$ 2,803,343
Ending Balance (in shares) at Jun. 30, 2021	1,819							36,659,685

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Condensed Consolidated Statements of Members' and Stockholders' Equity (Deficit) (Parenthetical)	May 18, 2020 $ / shares
Preferred Stock
Conversion reverse stock split ratio	0.001
Merger Agreement
Common stock, par value (in dollars per share)	$ 0.001
Conversion reverse stock split ratio	0.0833
Timber Pharmaceuticals, Inc | Common Stock
Common stock, par value (in dollars per share)	$ 0.001
Timber Pharmaceuticals, Inc | Merger Agreement | Common Stock
Stock exchange ratio	629.57

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Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities
Net loss		$ (4,840,463)	$ (18,764,209)
Adjustments to reconcile net loss to net cash used in operating activities:
Research and development-licenses acquired	$ 12,371,332		12,371,332
Non-cash contribution from TardiMed			142,392
Stock-based compensation		107,948	61,662
Change in fair value of warrant liability	(1,504,511)		(1,183,460)
Change in fair value of investment in BioPharmX	(476,245)		(559,805)
Amortization of loan discount			(775,000)
Amortization of debt discount			4,232,718
Amortization of right of use assets		125,567	16,140
Depreciation		175
Accrued interest on BioPharmX loan			(41,655)
Accrued interest on bridge notes			183,333
Changes in assets and liabilities:
Other receivable		(253,892)
Other current assets		(1,092)	(211,799)
Deposits		(13,000)
Accounts payable		990,803	(498,761)
Accrued expenses		(199,929)	(39,210)
Lease liability		(118,872)	(16,140)
Net cash used in operating activities		(4,202,755)	(5,082,462)
Cash flows from investing activities
Cash acquired with acquisition of BioPharmX			340,786
Loan to BioPharmX			(2,250,000)
Purchase of property and equipment		(16,903)
Purchase of research and development licenses - AFT Pharmaceuticals Limited			(750,000)
Net cash used in investing activities		(16,903)	(2,659,214)
Cash flows from financing activities
Proceeds from PPP loan			37,772
Proceeds from the issuance of common stock and warrants, net of issuance costs			17,500,000
Proceeds from bridge notes payable			3,700,000
Net cash provided by financing activities			21,237,772
Net (decrease) increase in cash and cash equivalents		(4,219,658)	13,496,096
Cash and cash equivalents, beginning of period		10,348,693	57,073
Cash and cash equivalents, end of period	13,553,169	6,129,035	13,553,169
Supplemental disclosure of cash flow information:
Cash paid for interest			183,333
Non cash investing and financing activities:
Issuance of common stock for acquisition of BioPharmX			8,368,032
Conversion of preferred units to Series A preferred stock pursuant to BioPharmX acquisition			1,819,289
Conversion of common units to common stock pursuant to BioPharmX acquisition			6,296
Bridge loan converted to equity	5,000,000		5,000,000
Reclassification of bridge warrant	$ 3,423,204		3,423,204
Series A liability classified warrants			$ 16,511,634
Accrued Series A preferred stock dividend		72,173
Series A warrants
Non cash investing and financing activities:
Cashless exercise of warrants		2,060
Series B Warrants
Non cash investing and financing activities:
Cashless exercise of warrants		$ 7,468

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Organization and description of business operations

6 Months Ended

Jun. 30, 2021

Organization and description of business operations

Organization and description of business operations

Note 1. Organization and description of business operations

Timber Pharmaceuticals, Inc., formerly known as BioPharmX Corporation (together with its subsidiaries Timber Pharmaceuticals Australia Pty Ltd., BioPharmX Inc. and Timber Pharmaceuticals LLC, the “Company” or “Timber”) is incorporated under the laws of the state of Delaware. Timber was founded in 2019 to develop treatments for unmet needs in medical dermatology. Timber has a particular focus on rare diseases or conditions of the skin for which there are no current treatments. Timber is initially targeting multiple indications in rare/orphan dermatology with no approved treatments.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Item 8 of Part II, “Financial Statements and Supplementary Data,” of our Annual Report on Form 10-K for the year ended December 31, 2020.

Merger Agreement

On May 18, 2020, BioPharmX Corporation (“BioPharmX”) completed its business combination with Timber Pharmaceuticals LLC, a Delaware limited liability company (“Timber Sub”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization, dated as of January 28, 2020 (the “Merger Agreement”), by and among BioPharmX, Timber Sub and BITI Merger, Inc., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), as amended by Amendment No. 1 thereto made and entered into as of March 24, 2020 (the “First Amendment”) and Amendment No. 2 thereto made and entered into as of April 27, 2020 (the “Second Amendment”) (the Merger Agreement, as amended by the First Amendment and the Second Amendment, the “Amended Merger Agreement”), pursuant to which Merger Sub merged with and into Timber Sub, with Timber Sub surviving as a wholly-owned subsidiary of the Company (the “Merger”). In connection with, and immediately prior to the completion of, the Merger, BioPharmX effected a reverse stock split of the Company’s common stock, par value $0.001 per share (the “Common Stock”), at a ratio of 1-for-12 (the “Reverse Stock Split”). Immediately after completion of the Merger, BioPharmX changed its name to “Timber Pharmaceuticals, Inc.” and the officers and directors of Timber Sub became the officers and directors of the Company.

Under the terms of the Amended Merger Agreement, BioPharmX issued shares of Common Stock to the holders of common units of Timber Sub. Immediately after the Merger, there were approximately 11,849,031 shares of Common Stock outstanding (after the Reverse Stock Split). Pursuant to the terms of the Amended Merger Agreement, the former holders of common units of Timber Sub (including the Investors, as defined below, but excluding Value Appreciation Rights of Timber Sub (“VARs”), as defined below) owned in the aggregate approximately 88.5% of the outstanding Common Stock, with the Company’s stockholders immediately prior to the Merger owning approximately 11.5% of the outstanding Common Stock. The number of shares of Common Stock issued to the holders of common units of Timber Sub for each common unit of Timber Sub outstanding immediately prior to the Merger was calculated using an exchange ratio of approximately 629.57 shares of Common Stock for each Timber Sub unit. In addition, the 584 VARs that were outstanding immediately prior to Merger became denoted and payable in 367,670 shares of Common Stock at the Effective Time of the Merger (the “Effective Time”). Further, the holder of the 1,819,289 preferred units of Timber Sub outstanding immediately prior to the Merger received 1,819 shares of the newly created convertible Series A preferred stock at the Effective Time.

Securities Purchase Agreement

On May 18, 2020, Timber and Timber Sub completed a private placement transaction (the “Pre-Merger Financing”) with the Investors pursuant to the Securities Purchase Agreement for an aggregate purchase price of approximately $25.0 million (comprised of (i) approximately $5 million credit with respect to the senior secured notes issued in connection with the bridge loan that certain of the Investors made to Timber Sub at the time of the execution of the Merger Agreement and (ii) approximately $20 million in cash from the Investors).

Liquidity and Capital Resources

The Company has no product revenues, incurred operating losses since inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company had an accumulated deficit of approximately $23.1 million at June 30, 2021, a net loss of approximately $4.8 million, and approximately $4.2 million of net cash used in operating activities for the six months ended June 30, 2021.  As of June 30, 2021 the Company had $6.1 million of cash.

Going Concern

The Company has evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year beyond the filing of this Quarterly Report on Form 10-Q. Based on such evaluation and the Company's current plans, which are subject to change, management believes that the Company's existing cash and cash equivalents as of June 30, 2021 are not sufficient to satisfy our operating cash needs for the year after the filing of this Quarterly Report on Form 10-Q.

The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue to operate as a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from uncertainty related to its ability to continue as a going concern.

The Company’s future liquidity and capital funding requirements will depend on numerous factors, including:

● its ability to raise additional funds to finance its operations, including its ability to access financing that may be unavailable due to contractual limitations under the Securities Purchase Agreement;

● the dilutive effect of the Company's outstanding securities;

● the impact of the COVID-19 pandemic on the Company's operations, including on the Company's clinical development plans and timelines;

● the outcome, costs and timing of clinical trial results for the Company’s current or future product candidates, including the timing, progress, costs and results of its Phase 2b clinical trial of TMB-001 for the treatment of congenital ichthyosis as well as its ongoing Phase 2b clinical trial of TMB-002 for the treatment of facial angiofibromas in tuberous sclerosis complex;

● the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities;

● the emergence and effect of competing or complementary products;

● its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;

● the cost and timing of completion of commercial-scale manufacturing activities;

● the cost of establishing sales, marketing and distribution capabilities for its products in regions where it chooses to commercialize its products on its own;

● the initiation, progress, timing and results of the commercialization of its product candidates, if approved for commercial sale;

● the volatility of the price of the Company's common stock;

● acceptance of the Company's products in the Company's industry;

● the accuracy of the Company's estimates regarding expenses and capital requirements;

● its ability to retain its current employees and the need and ability to hire additional management and scientific and medical personnel; and

● the terms and timing of any collaborative, licensing or other arrangements that it has or may establish.

The Company will need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity and/or the completion of a licensing or other commercial transaction for one or more of the Company's product candidates. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or convertible debt financings will likely have a dilutive effect on the holdings of the Company's existing stockholders.

The impact of the worldwide spread of a novel strain of coronavirus (“COVID-19”) has been unprecedented and unpredictable. Site activation and patient enrollment have been impacted by the COVID-19 pandemic in the TMB-002 study, especially at our contracted test sites in Eastern Europe. As of June 30, 2021, all 17 sites are open and 50% of patients in the Phase 2b study have been enrolled for the TMB-002 program.  The Company is also continuing to assess the effect of COVID-19 on the TMB-002 study as well as the Company’s overall operations by monitoring the spread of COVID-19 and the actions implemented to combat the virus throughout the world.  The Company’s assessment of the impact of COVID-19 may change in the future.  

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Significant accounting policies

6 Months Ended

Jun. 30, 2021

Significant accounting policies

Significant accounting policies

Note 2. Significant accounting policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10- Q and Article 8 of Regulation S-X of the SEC. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results.

The results for the unaudited condensed consolidated statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 2021 or for any future interim period. The unaudited condensed consolidated financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make 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 and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s unaudited condensed consolidated financial statements relate to the valuations of warrants, and equity-based awards and member units. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Loss Per Share

Basic net loss per share (“EPS”) of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

To calculate the basic EPS numerator, income available to common stockholders must be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not declared) from income from continuing operations and also from net income. If there is a loss from continuing operations or a net loss, the amount of the loss shall be increased by those preferred dividends. The outstanding Series A Preferred Stock has cumulative dividends, whether or not declared.

The basic and diluted net loss amounts are the same for the three and six months ended June 30, 2021 and 2020, as a result of the net loss and anti-dilutive impact of the potentially dilutive securities. Potentially dilutive shares are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, value appreciation rights, and warrants. Potentially dilutive shares issuable upon conversion of the Series A Preferred Stock are calculated using the if-converted method.

The following is a reconciliation of the numerator and denominator of the diluted net loss per share computations for the periods presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Basic and diluted loss per share:
Net loss	$	(2,966,203)	$	(15,245,609)	$	(4,840,463)	$	(18,764,209)
Accrued dividend on preferred stock units		—		(18,188)		—		(52,669)
Cumulative dividends on Series A preferred stock		(36,286)		(17,146)		(72,173)		(17,146)
Net loss attributable to common stockholders	$	(3,002,489)	$	(15,280,943)	$	(4,912,636)	$	(18,834,024)
Basic and diluted weighted average number of shares outstanding		36,659,685		11,222,258		35,873,780		8,758,991
Basic and diluted net loss per share attributable to common stockholders	$	(0.08)	$	(1.36)	$	(0.14)	$	(2.15)

Securities that could potentially dilute loss per share in the future were not included in the computation of diluted loss per share for the six months ended June 30, 2021 and 2020, because their inclusion would be anti-dilutive are as follows (unaudited):

	June 30,
	2021	2020
Series A warrants	16,701,824	8,384,764
Bridge warrants	413,751	413,751
Value appreciation rights	367,670	367,670
Options to purchase common stock	184,456	232,996
Series A preferred stock	100,753	100,753
Legacy stock options	15,781	97,870
Legacy warrants	214,046	220,030
	17,998,281	9,817,834

Recent accounting pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company is currently evaluating the impact this ASU will have on its condensed consolidated financial statements and related disclosures.

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Acquisition of BioPharmX

6 Months Ended

Jun. 30, 2021

Acquisition of BioPharmX

Acquisition of BioPharmX

Note 3. Acquisition of BioPharmX

As described in Note 1, on May 18, 2020, the Company completed its acquisition of BioPharmX in accordance with the terms of the Merger Agreement. The acquisition was accounted for as an asset acquisition/reverse merger.

Pursuant to the Merger Agreement, following the Merger, the Timber Sub members, including the investors funding the $20 million investment and the bridge investors, owned approximately 88.5% of the outstanding common stock of BioPharmX, and the BioPharmX stockholders own approximately 11.5% of the outstanding common stock as of the date of the merger. The cost of the BioPharmX acquisition, which represents the consideration transferred to BioPharmX stockholders in the BioPharmX acquisition, of $12.4 million consists of the following:

Number of shares of the combined company owned by BioPharmX stockholders		1,367,326
Multiplied by the fair value per share of BioPharmX common stock	$	6.12
Total estimated fair value of common stock		8,368,033
Add: net liabilities acquired		(2,833,453)
Add: investment in BioPharmX		(1,169,846)
Total consideration - recorded as research and development acquired	$	12,371,332

The total cost of the BioPharmX acquisition was allocated to the net liabilities acquired as follows:

Cash and cash equivalents	$	340,786
Other current assets		2,027
Deposits		114,534
ROU asset		904,370
Accounts payable		(610,882)
Credit cards		760
Accrued expenses		(148,999)
Note - short term		(2,456,614)
Operating lease liability - short term		(259,712)
Other long term liabilities		(73,682)
Operating lease liability - long term		(646,041)
Net liabilities acquired	$	(2,833,453)

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Purchases of Assets

6 Months Ended

Jun. 30, 2021

Purchases of Assets

Purchases of Assets

Note 4. Purchases of Assets

Acquisition of Intellectual Property Rights from Patagonia Pharmaceuticals LLC (“Patagonia”)

On February 28, 2019, the Company acquired the intellectual property rights to a topical formulation of isotretinoin for the treatment of congenital ichthyosis and identified as TMB-001, formerly PAT-001, from Patagonia (the “TMB-001 Acquisition”).

Upon closing of the TMB-001 Acquisition, the Company paid a one-time upfront payment of $50,000 to Patagonia. Patagonia is entitled to up to $27.0 million of cash milestone payments relating to certain regulatory and commercial achievements of TMB-001, with the first being $4.0 million for the initiation of a Phase 3 pivotal trial, as agreed with the FDA. In addition, Patagonia is entitled to net sales earn-out payments ranging from low single digits to mid-double digits. The Company is responsible for all development activities. The potential regulatory and commercial milestones are not yet considered probable, and no milestone payments have been accrued at June 30, 2021 and December 31, 2020.

On June 26, 2019 the Company acquired the intellectual property rights to a locally administered formulation of Sitaxsentan for the treatment of cutaneous fibrosis and/or pigmentation disorders, and identified as TMB-003, formerly PAT-S03, from Patagonia (the “TMB-003 Acquisition”).

Upon closing of the TMB-003 Acquisition, the Company paid a one-time upfront payment of $20,000 to Patagonia. Patagonia is entitled to up to $10.25 million of cash milestone payments relating to certain regulatory and commercial achievements of TMB-003, with the first being a one-time payment of $250,000 upon the opening of an IND with the FDA. In addition, Patagonia is entitled to net sales earn-out payments ranging from low to mid-single digits. The Company is responsible for all development activities. The potential regulatory and commercial milestones are not yet considered probable, and no milestone payments have been accrued at June 30, 2021 and December 31, 2020.

On January 12, 2021, the Company announced that the U.S. Food and Drug Administration has granted orphan drug designation to TMB-003.

Acquisition of License from AFT Pharmaceuticals Limited (“AFT”)

On July 5, 2019, the Company and AFT entered into a license agreement which provides the Company with (i) an exclusive license to certain licensed patents, licensed know-how and AFT trademarks to commercialize the Pascomer product in the United States, Canada and Mexico and (2) a co-exclusive license to develop the Pascomer product in this territory.

Concurrently, the Company granted to AFT an exclusive license to commercialize the Pascomer product outside of the Company’s territory and co-exclusive sublicense to develop and manufacture the licensed product for commercialization outside of the Company’s territory (the “AFT License Agreement”).

The development of the Pascomer product is being conducted pursuant to a written development plan, written by AFT and approved by the joint steering committee, which is reviewed on at least an annual basis. AFT shall perform clinical trials of the Pascomer product in the specified territory and shall perform all CMC (chemistry, manufacturing and controls) and related activities to support regulatory approval. The Company is responsible for all expenses incurred by AFT during the term of the AFT License Agreement and shall equally share all costs and expenses with AFT, incurred by AFT for development and marketing work performed in furtherance of regulatory approval and commercialization worldwide, outside of the specified territory. The Company is entitled to receive a significant percentage of the economics (royalties and milestones) in any licensing transaction that AFT executes outside of North America, Australia, New Zealand, and Southeast Asia.  In March 2021 the Company announced that its development partner, AFT Pharmaceuticals Limited has signed an exclusive license and supply agreement with Desitin Arzneimittel GmbH (“Desitin”) for Pascomer® (TMB-002 topical rapamycin) for the treatment of facial angiofibromas (FA) associated with Tuberous Sclerosis Complex (TSC) in Europe. The Company is entitled to €213,750 related to an upfront milestone payment paid to AFT by Desitin during the quarter ending June 30, 2021 and has recorded approximately $0.3 million in these financial statements.

Pursuant to the AFT License Agreement, the Company was obligated to reimburse AFT for previously spent development costs, subject to certain limitations, and to pay a one-time, irrevocable and non-creditable upfront payment to AFT, payable in scheduled installments. The Company paid $0.25 million in October 2019 and the remaining $0.75 million was  paid during the year ended December 31, 2020.

AFT is entitled to up to $25.5 million of cash milestone payments relating to certain regulatory and commercial achievements of the AFT License. In addition, AFT is entitled to net sales royalties ranging from high single digits to low double digits for the program licensed. The potential regulatory and commercial milestones are not yet considered probable, and no milestone payments have been accrued at June 30, 2021 and December 31, 2020.

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Accrued Expenses

6 Months Ended

Jun. 30, 2021

Accrued Expenses

Accrued Expenses

Note 5. Accrued Expenses

As of June 30, 2021 and December 31, 2020, the Company’s accrued expenses consisted of the following:

	June 30,		December 31,
	2021		2020
Research and development	$	45,443	$	158,911
Professional fees		181,234		142,599
Personnel expenses		342,055		438,722
Other		—		28,429
Total	$	568,732	$	768,661

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Temporary Equity, and Members' and Stockholder's Equity (Deficit)

6 Months Ended

Jun. 30, 2021

Temporary Equity, and Members' and Stockholder's Equity (Deficit)

Temporary Equity, and Members' and Stockholder's Equity (Deficit)

Note 6. Temporary Equity, and Members’ and Stockholder’s Equity (Deficit)

The Company entered into a Merger Agreement with BioPharmX and effective May 18, 2020, the Company converted its common and preferred units into shares of common and preferred stock.

Common Stock

On May 18, 2020, pursuant to the Merger Agreement (see Note 1), 1,367,326 shares of common stock were issued for the acquisition of BioPharmX, with a fair value of approximately $8.4 million or $6.12 per share.

On May 18, 2020, pursuant to the Merger Agreement, 4,185,981 shares of common stock were issued to the investors in the $20 million private placement financing (see Note 1), with aggregate net proceeds received totaling $17.5 million) and to settle the $5 million Bridge Notes.

Series B Warrants

During the six months ended June 30, 2021, the remaining Series B Warrants outstanding totaling 7,474,033 were exercised on a cashless basis, and the Company issued 7,467,652 shares of its common stock.

	Shares	Weighted		Aggregate
	Underlying	Average		Intrinsic
	Options	Exercise Price		Value
Outstanding as of December 31, 2020	7,474,033	$	0.001	$	7,474
Exercised	(7,474,033)	$	0.001		—
Outstanding and exercisable as of June 30, 2021	—	$	—	$	—

Series A Warrants

During the six months ended June 30, 2021, 3,476,390 Series A Warrants were exercised on a cashless basis, and the Company issued 2,059,613 shares of its common stock. The following is a summary of Series A Warrants outstanding as of June 30, 2021:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Options	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2020	20,178,214	$	1.16	4.4	$	—
Exercised	(3,476,390)	$	1.16	—		—
Outstanding and exercisable as of June 30, 2021	16,701,824	$	1.16	3.9	$	1,002,109

Bridge Warrants

The following table summarizes the Company's Bridge Warrants for the six months ended June 30, 2021:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Options	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2020	413,751	$	2.24	4.4	$	—
Outstanding and exercisable as of June 30, 2021	413,751	$	2.24	3.9	$	—

Redeemable Series A Convertible Preferred Stock

In connection with the Merger, on May 18, 2020, the Company filed a Certificate of Designation of Preferences, Rights and Limitations (the “Certificate of Designations”) with the Secretary of State of the State of Delaware designating 2,500 shares of the Company’s previously undesignated preferred stock as Series A Preferred (the “Series A Preferred Stock”), and issued to the holder of 1,819,289 preferred units of Timber Sub outstanding immediately prior to the Merger, 1,819 shares of the newly created Series A Preferred Stock. The shares of Series A Preferred Stock have no voting rights. The holders of the Series A Preferred Stock are entitled to cumulative dividends from and after the date of issuance at a per annum of eight percent (8.00%) of the stated value. Dividends will be payable as and if declared by the Board of Directors of the Company (the “Board”) out of amounts legally available therefore or upon a liquidation or redemption. Each share of Series A Preferred Stock is convertible at any time at the holder’s option into a number of shares of common stock (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions as specified in the Certificate of Designations) at a conversion price equal to the stated value of the Series A Preferred Stock of $1,000 (plus any accrued dividends) divided by the conversion price of $18.054. Holders of the Series A Preferred Stock are entitled to a liquidation preference in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company. In addition, upon a Change of Control, the Series A Preferred Stock is redeemable for cash at the option of the holders, in whole or in part.

As a Change of Control has occurred, the Company’s Series A Preferred Stock is currently redeemable at June 30, 2021 at the option of the holder and has been recorded at the redemption value of $2.0 million. Redemption is subject to certain limitations under Delaware law, so that the Company’s ability to pay the redemption price to such holder is limited. The following table summarizes the Company’s Series A preferred stock for the six months ended June 30, 2021:

	Series A Preferred Stock
	Shares	Amount
Total temporary equity as of December 31, 2020	1,819	$	1,909,805
Cumulative dividends on Series A Preferred Stock	—		72,173
Total temporary equity as of June 30, 2021	1,819	$	1,981,978

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Equity-based compensation

6 Months Ended

Jun. 30, 2021

Equity-based compensation

Equity-based compensation

Note 7. Equity-based compensation

On May 18, 2020, the Company’s 2020 Omnibus Equity Incentive Plan (the “2020 Plan”) became effective, and the 2020 Plan reserved a total of 970,833 shares of common stock for issuance. The 2020 Plan provides for options to purchase shares of common stock, stock appreciation rights, restricted stock units, restricted or unrestricted shares of common stock, performance shares, performance units, incentive bonus awards, other stock-based awards and other cash-based awards. Options granted generally vest over a period of three years and have a maximum term of ten years from the date of grant. As of June 30, 2021, 2,056,130 shares of common stock were reserved for issuance under the 2020 Plan.  On April 20, 2021, the Board of Directors of the Company approved an amendment increasing the number of shares available for issuance under the 2020 Plan from 2,056,130 to 4,668,319, which was approved by the Company's stockholders on July 1, 2021.

Furthermore, as a result of the Merger, the Company assumed the TardiMed 2019 Equity Incentive Plan (the “2019 Plan”) from Timber Sub. The 2019 Plan permits the granting of incentive units (the “Incentive Units”). The maximum aggregate Incentive Units that may be subject to awards and issued under the Plan is 699,454. At June 30, 2021 and December 31, 2020, Incentive Units outstanding under the 2019 Plan were 367,670 units for each period comprised of VARs.

During the three and six months ended June 30, 2021 and 2020 equity-based compensation expenses were as follows (unaudited):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
General and administrative value appreciation right awards	$	12,247	$	21,430	$	25,468	$	45,109
Research and development value appreciation right awards		549		2,242		1,092		(3,220)
General and administrative stock options		36,637		19,773		81,388		19,773
	$	49,433	$	43,445	$	107,948	$	61,662

Value Appreciation Rights

In 2019 the Company granted equity-based awards similar to stock options under the 2019 Plan as VARs. The VARs have an exercise price, a vesting period and an expiration date, in addition to other terms similar to typical equity option grant terms.

During the period ended June 30, 2021 there were no grants or forfeitures of VARs. The following is a summary of VARs outstanding as of June 30, 2021:

						Weighted
						Average
		Weighted				Remaining
		Average		Total Intrinsic		Contractual Life
	Number of Units	Exercise Price		Value		(in years)
Outstanding as of December 31, 2020	367,670	$	0.01	$	269,502	8.4
Outstanding as of June 30, 2021	367,670	$	0.01	$	444,881	7.9
Value appreciation right awards vested and exercisable at June 30, 2021	113,953	$	0.01	$	137,883	7.8

As of June 30, 2021, the unrecognized compensation costs were approximately $0.1 million, which will be recognized over an estimated weighted-average amortization period of 0.8 years.

Stock Options

During the period ended June 30, 2021 there were no grants or forfeitures of stock options. The following is a summary of the options outstanding as of June 30, 2021:

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Options	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2020	184,456	$	2.87	9.4	$	—
Outstanding as of June 30, 2021	184,456	$	2.87	8.9	$	—
Exercisable at June 30, 2021	57,240	$	2.87	8.9	$	—

In accordance with the "evergreen" provision in the 2020 Plan, an additional 1,085,297 shares of common stock were automatically made available for issuance on the first day of 2021, which represents 4% of the number of shares of common stock outstanding on December 31, 2020.

As part of the Merger, the Company assumed the following legacy stock options and warrants:

				Weighted
	Shares			Average
	Underlying	Weighted		Remaining	Aggregate
	Options and	Average		Contractual	Intrinsic
	Warrants	Exercise Price		Term (Years)	Value
Legacy BioPharmX options - December 31, 2020	15,781	$	75.27	2.3	$	—
Legacy BioPharmX options - June 30, 2021	15,781	$	75.27	1.9	$	—
Legacy BioPharmX warrants - December 31, 2020	219,928	$	164.09	2.5	$	—
Expired	(5,882)	$	360.00	—		—
Legacy BioPharmX warrants - June 30, 2021	214,046	$	87.25	2.2	$	—

The fair value of stock option grants is estimated on the date of grant using the Black-Scholes option-pricing model. The Company was historically a private company and lacked company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. Additionally, due to an insufficient history with respect to stock option activity and post-vesting cancellations, the expected term assumption for employee grants is based on a permitted simplified method, which is based on the vesting period and contractual term for each tranche of awards. The mid-point between the weighted-average vesting term and the expiration date is used as the expected term under this method. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect for time periods approximately equal to the expected term of the award. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

As of June 30, 2021, the unrecognized compensation costs related to stock options were approximately $0.1 million, which will be recognized over an estimated weighted-average amortization period of 0.7 years.

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Commitments and contingencies

6 Months Ended

Jun. 30, 2021

Commitments and contingencies

Commitments and contingencies

Note 8. Commitments and contingencies

Leases

On March 10, 2021, the Company entered into a lease agreement with SIG 110 LLC with respect to a 3,127 square foot office space at 110 Allen Road, Suite 401, Basking Ridge, New Jersey. Pursuant to the terms of the lease agreement, the initial term is for twenty-four (24) months expiring on March 10, 2023. The initial base rent is $4,690.50 per month for the first twelve (12) months and $6,514.58 for the remaining twelve (12) months. During the six months ended June 30, 2021, in connection with the lease, the Company paid a security deposit of $13,000, which is included in deposits on the accompanying condensed consolidated balance sheet as of June 30, 2021.

In connection with the Merger of BioPharmX, the Company acquired a lease and corresponding sublease for the BioPharmX facility in San Jose, California. The sublease is to be used for general office and research laboratory purposes, has an effective date of February 1, 2020, and has a lease term of 4 years which expires on December 30, 2023. The lease expense is significantly reduced by the payments received in connection with the sublease.

The components of lease expense were as follows:

	Three Months Ended		Six Months Ended
	June 30, 2021
Operating leases:
Operating lease cost	$	99,142	$	185,273
Variable lease cost		26,760		52,151
Operating lease expense	$	125,902	$	237,424
Lease income - sub lease		(108,256)		(211,563)
Net rent expense	$	17,646	$	25,861

Other information:

	Three Months Ended				Six Months Ended
	June 30, 2021
Operating cash flows - operating leases	$	94,735		$	178,577
Right-of-use assets obtained in exchange for operating lease liabilities	$	—		$	122,809
Weighted-average remaining lease term – operating leases		2.4			2.4
Weighted-average discount rate – operating leases		14.1	%		14.1	%

As of June 30, 2021, future minimum payments for the lease are as follows:

	Operating
	Leases
Remaining Months in Year Ended December 31, 2021	$	189,471
Year Ended December 31, 2022		406,506
Year Ended December 31, 2023		357,599
Total	$	953,576
Less present value discount		(152,533)
Operating lease liabilities	$	801,043

Litigation

From time to time, the Company is involved in routine litigation that arises in the ordinary course of business. There are no pending significant legal proceedings to which the Company is a party, for which management believes the ultimate outcome would have a material adverse effect on the Company’s financial position.

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Related party transactions

6 Months Ended

Jun. 30, 2021

Related party transactions

Related party transactions

Note 9. Related party transactions

Patagonia

Patagonia is a private, family-owned company founded in 2013 to address the medical needs of people with rare and serious dermatological conditions. On February 28, 2019 and June 26, 2019, the Company acquired the TMB-001 and TMB-003 licenses from Patagonia (see Note 3 for the payment terms and more details), respectively. The Chief Operating Officer, Executive Vice-President and Secretary of the Company is also the President of Patagonia. On February 27, 2019, the Company issued 1,000 founder common units to Patagonia for $10. As of December 31, 2019, Patagonia held 1,000 common units which represented 10% of the total voting units outstanding. During the year ended December 31, 2020, the 1,000 common units were converted to 629,572 shares of the Company's common stock in connection with its merger with BioPharmX (See Note 1). As of June 30, 2021 and December 31, 2020, Patagonia owns 45 shares of the Company's common stock.

TardiMed

The former Chairman of the Board of the Company is a Managing Member of TardiMed. The Chief Operating Officer, Executive Vice President and Secretary and the Chief Financial Officer, Treasurer and Executive Vice President of the Company are partners of TardiMed. As of June 30, 2021, TardiMed holds 4,609,067 shares of common stock, which represents 12.5% of the total voting shares outstanding. During the year ended December 31, 2020, TardiMed contributed an additional $0.1 million in exchange for 142,392 preferred units. In connection with the Merger Agreement, these preferred units and dividends have converted into 1,819 shares of Series A preferred stock. The Company reimbursed TardiMed $63,936 and $319,790 for management fees and reimbursed expenses for the six month period ended June 30, 2021 and 2020, respectively.

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Subsequent Events

6 Months Ended

Jun. 30, 2021

Subsequent Events

Subsequent Events

Note 10. Subsequent Events

On July 1, 2021, the Company issued 587,023 grants of options at an exercise price of $1.18 to an employee and non-employee directors. For the non-employee directors, each stock option award vests and becomes exercisable in equal monthly installments over one year from the vesting commencement date, subject to such non-employee director’s continued service on the Board. Each of the non-employee director awards have 10 year terms from the date of grant, subject to termination three years following the date such director ceases to be one of our directors or consultants. For Dr. Mendelsohn, 25% of his stock option award will vest one year from the date of grant and the remainder become exercisable in equal monthly installments over 36 months following the anniversary of the date of grant. Dr. Mendelsohn’s award has a 10 year term from the date of grant.

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Significant accounting policies (Policies)

6 Months Ended

Jun. 30, 2021

Significant accounting policies

Basis of presentation

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10- Q and Article 8 of Regulation S-X of the SEC. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments, consisting of normal recurring adjustments, considered necessary for a fair presentation of such interim results.

The results for the unaudited condensed consolidated statement of operations are not necessarily indicative of results to be expected for the year ending December 31, 2021 or for any future interim period. The unaudited condensed consolidated financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements.

Use of estimates

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make 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 and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s unaudited condensed consolidated financial statements relate to the valuations of warrants, and equity-based awards and member units. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Loss Per Share

Loss Per Share

Basic net loss per share (“EPS”) of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

To calculate the basic EPS numerator, income available to common stockholders must be computed by deducting both the dividends declared in the period on preferred stock (whether or not paid) and the dividends accumulated for the period on cumulative preferred stock (whether or not declared) from income from continuing operations and also from net income. If there is a loss from continuing operations or a net loss, the amount of the loss shall be increased by those preferred dividends. The outstanding Series A Preferred Stock has cumulative dividends, whether or not declared.

The basic and diluted net loss amounts are the same for the three and six months ended June 30, 2021 and 2020, as a result of the net loss and anti-dilutive impact of the potentially dilutive securities. Potentially dilutive shares are determined by applying the treasury stock method to the assumed exercise of outstanding stock options, value appreciation rights, and warrants. Potentially dilutive shares issuable upon conversion of the Series A Preferred Stock are calculated using the if-converted method.

The following is a reconciliation of the numerator and denominator of the diluted net loss per share computations for the periods presented below:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Basic and diluted loss per share:
Net loss	$	(2,966,203)	$	(15,245,609)	$	(4,840,463)	$	(18,764,209)
Accrued dividend on preferred stock units		—		(18,188)		—		(52,669)
Cumulative dividends on Series A preferred stock		(36,286)		(17,146)		(72,173)		(17,146)
Net loss attributable to common stockholders	$	(3,002,489)	$	(15,280,943)	$	(4,912,636)	$	(18,834,024)
Basic and diluted weighted average number of shares outstanding		36,659,685		11,222,258		35,873,780		8,758,991
Basic and diluted net loss per share attributable to common stockholders	$	(0.08)	$	(1.36)	$	(0.14)	$	(2.15)

Securities that could potentially dilute loss per share in the future were not included in the computation of diluted loss per share for the six months ended June 30, 2021 and 2020, because their inclusion would be anti-dilutive are as follows (unaudited):

	June 30,
	2021	2020
Series A warrants	16,701,824	8,384,764
Bridge warrants	413,751	413,751
Value appreciation rights	367,670	367,670
Options to purchase common stock	184,456	232,996
Series A preferred stock	100,753	100,753
Legacy stock options	15,781	97,870
Legacy warrants	214,046	220,030
	17,998,281	9,817,834

Recent accounting pronouncements

Recent accounting pronouncements

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. This ASU is effective for annual reporting periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update permits the use of either the modified retrospective or fully retrospective method of transition. The Company is currently evaluating the impact this ASU will have on its condensed consolidated financial statements and related disclosures.

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Significant accounting policies (Tables)

6 Months Ended

Jun. 30, 2021

Significant accounting policies

Summary of reconciliation of numerator and denominator of the diluted net loss per share

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Basic and diluted loss per share:
Net loss	$	(2,966,203)	$	(15,245,609)	$	(4,840,463)	$	(18,764,209)
Accrued dividend on preferred stock units		—		(18,188)		—		(52,669)
Cumulative dividends on Series A preferred stock		(36,286)		(17,146)		(72,173)		(17,146)
Net loss attributable to common stockholders	$	(3,002,489)	$	(15,280,943)	$	(4,912,636)	$	(18,834,024)
Basic and diluted weighted average number of shares outstanding		36,659,685		11,222,258		35,873,780		8,758,991
Basic and diluted net loss per share attributable to common stockholders	$	(0.08)	$	(1.36)	$	(0.14)	$	(2.15)

Schedule of anti dilutive securities excluded in the computation of diluted loss per share

	June 30,
	2021	2020
Series A warrants	16,701,824	8,384,764
Bridge warrants	413,751	413,751
Value appreciation rights	367,670	367,670
Options to purchase common stock	184,456	232,996
Series A preferred stock	100,753	100,753
Legacy stock options	15,781	97,870
Legacy warrants	214,046	220,030
	17,998,281	9,817,834

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Acquisition of BioPharmX (Tables)

6 Months Ended

Jun. 30, 2021

Acquisition of BioPharmX

Schedule of total consideration

Number of shares of the combined company owned by BioPharmX stockholders		1,367,326
Multiplied by the fair value per share of BioPharmX common stock	$	6.12
Total estimated fair value of common stock		8,368,033
Add: net liabilities acquired		(2,833,453)
Add: investment in BioPharmX		(1,169,846)
Total consideration - recorded as research and development acquired	$	12,371,332

Schedule of total cost of the BioPharmX acquisition

Cash and cash equivalents	$	340,786
Other current assets		2,027
Deposits		114,534
ROU asset		904,370
Accounts payable		(610,882)
Credit cards		760
Accrued expenses		(148,999)
Note - short term		(2,456,614)
Operating lease liability - short term		(259,712)
Other long term liabilities		(73,682)
Operating lease liability - long term		(646,041)
Net liabilities acquired	$	(2,833,453)

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Accrued Expenses (Tables)

6 Months Ended

Jun. 30, 2021

Accrued Expenses

Schedule of accrued expenses

As of June 30, 2021 and December 31, 2020, the Company’s accrued expenses consisted of the following:

	June 30,		December 31,
	2021		2020
Research and development	$	45,443	$	158,911
Professional fees		181,234		142,599
Personnel expenses		342,055		438,722
Other		—		28,429
Total	$	568,732	$	768,661

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Temporary Equity, and Members' and Stockholder's Equity (Deficit) (Tables)

6 Months Ended

Jun. 30, 2021

Series A preferred stock

STOCKHOLDERS' DEFICIT

Summary of stock option plan activity

	Series A Preferred Stock
	Shares	Amount
Total temporary equity as of December 31, 2020	1,819	$	1,909,805
Cumulative dividends on Series A Preferred Stock	—		72,173
Total temporary equity as of June 30, 2021	1,819	$	1,981,978

Series A warrants

STOCKHOLDERS' DEFICIT

Schedule of warrants outstanding

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Options	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2020	20,178,214	$	1.16	4.4	$	—
Exercised	(3,476,390)	$	1.16	—		—
Outstanding and exercisable as of June 30, 2021	16,701,824	$	1.16	3.9	$	1,002,109

Series B Warrants

STOCKHOLDERS' DEFICIT

Schedule of warrants outstanding

	Shares	Weighted		Aggregate
	Underlying	Average		Intrinsic
	Options	Exercise Price		Value
Outstanding as of December 31, 2020	7,474,033	$	0.001	$	7,474
Exercised	(7,474,033)	$	0.001		—
Outstanding and exercisable as of June 30, 2021	—	$	—	$	—

Bridge warrants

STOCKHOLDERS' DEFICIT

Schedule of warrants outstanding

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Options	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2020	413,751	$	2.24	4.4	$	—
Outstanding and exercisable as of June 30, 2021	413,751	$	2.24	3.9	$	—

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Equity-based compensation (Tables)

6 Months Ended

Jun. 30, 2021

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Summary of equity-based compensation expenses

During the three and six months ended June 30, 2021 and 2020 equity-based compensation expenses were as follows (unaudited):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
General and administrative value appreciation right awards	$	12,247	$	21,430	$	25,468	$	45,109
Research and development value appreciation right awards		549		2,242		1,092		(3,220)
General and administrative stock options		36,637		19,773		81,388		19,773
	$	49,433	$	43,445	$	107,948	$	61,662

Summary of VARs issued and outstanding

During the period ended June 30, 2021 there were no grants or forfeitures of VARs. The following is a summary of VARs outstanding as of June 30, 2021:

						Weighted
						Average
		Weighted				Remaining
		Average		Total Intrinsic		Contractual Life
	Number of Units	Exercise Price		Value		(in years)
Outstanding as of December 31, 2020	367,670	$	0.01	$	269,502	8.4
Outstanding as of June 30, 2021	367,670	$	0.01	$	444,881	7.9
Value appreciation right awards vested and exercisable at June 30, 2021	113,953	$	0.01	$	137,883	7.8

Summary of stock options outstanding

				Weighted
				Average
	Shares	Weighted		Remaining	Aggregate
	Underlying	Average		Contractual	Intrinsic
	Options	Exercise Price		Term (Years)	Value
Outstanding as of December 31, 2020	184,456	$	2.87	9.4	$	—
Outstanding as of June 30, 2021	184,456	$	2.87	8.9	$	—
Exercisable at June 30, 2021	57,240	$	2.87	8.9	$	—

Stock options and warrants

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Summary of stock options outstanding

				Weighted
	Shares			Average
	Underlying	Weighted		Remaining	Aggregate
	Options and	Average		Contractual	Intrinsic
	Warrants	Exercise Price		Term (Years)	Value
Legacy BioPharmX options - December 31, 2020	15,781	$	75.27	2.3	$	—
Legacy BioPharmX options - June 30, 2021	15,781	$	75.27	1.9	$	—
Legacy BioPharmX warrants - December 31, 2020	219,928	$	164.09	2.5	$	—
Expired	(5,882)	$	360.00	—		—
Legacy BioPharmX warrants - June 30, 2021	214,046	$	87.25	2.2	$	—

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Commitments and contingencies (Tables)

6 Months Ended

Jun. 30, 2021

Commitments and contingencies

Schedule of components of lease expense

	Three Months Ended		Six Months Ended
	June 30, 2021
Operating leases:
Operating lease cost	$	99,142	$	185,273
Variable lease cost		26,760		52,151
Operating lease expense	$	125,902	$	237,424
Lease income - sub lease		(108,256)		(211,563)
Net rent expense	$	17,646	$	25,861

Schedule of other Information

	Three Months Ended				Six Months Ended
	June 30, 2021
Operating cash flows - operating leases	$	94,735		$	178,577
Right-of-use assets obtained in exchange for operating lease liabilities	$	—		$	122,809
Weighted-average remaining lease term – operating leases		2.4			2.4
Weighted-average discount rate – operating leases		14.1	%		14.1	%

Schedule of future minimum payments

	Operating
	Leases
Remaining Months in Year Ended December 31, 2021	$	189,471
Year Ended December 31, 2022		406,506
Year Ended December 31, 2023		357,599
Total	$	953,576
Less present value discount		(152,533)
Operating lease liabilities	$	801,043

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Organization and description of business operations - Merger Agreement (Details)	May 18, 2020 $ / shares shares	Jun. 30, 2021 $ / shares shares	Dec. 31, 2020 $ / shares shares
Merger Agreement
Common stock, par value (in dollars per share) | $ / shares		$ 0.001	$ 0.001
Common shares outstanding		36,659,685	27,132,420
VARs
Merger Agreement
Outstanding at the ending (in shares)		367,670	367,670
Merger Agreement
Merger Agreement
Common stock, par value (in dollars per share) | $ / shares	$ 0.001
Conversion reverse stock split ratio	0.0833
Common shares outstanding	11,849,031
Merger Agreement | BioPharmX
Merger Agreement
Outstanding common stock owned	88.50%
Merger Agreement | Timber Sub
Merger Agreement
Ownership held by stockholders	11.50%
Common stock issued per unit	629.57
Common stock issued for VARs	367,670
Preferred units before merger	1,819,289
Merger Agreement | Timber Sub | VARs
Merger Agreement
Outstanding at the ending (in shares)	584
Merger Agreement | Timber Sub | Series A preferred stock
Merger Agreement
Common stock on conversion of units	1,819

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Organization and description of business operations - Securities Purchase Agreement (Details) - Securities Purchase Agreement $ in Millions	May 18, 2020 USD ($)
Timber Sub
Securities Purchase Agreement
Cash proceeds from issuance of common units	$ 20.0
Private Placement
Securities Purchase Agreement
Aggregate purchase price	25.0
Private Placement | Bridge Loan
Securities Purchase Agreement
Aggregate purchase price	$ 5.0

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Organization and description of business operations - Liquidity and Capital Resources (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Dec. 31, 2020
Organization and description of business operations
Retained earnings (accumulated deficit)	$ (23,085,859)		$ (23,085,859)		$ (18,245,396)
Net income (loss)	(2,966,203)	$ (15,245,609)	(4,840,463)	$ (18,764,209)
Net cash provided by (used in) operating activities			(4,202,755)	$ (5,082,462)
Cash	$ 6,129,035		$ 6,129,035		$ 10,348,693

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Organization and description of business operations - Test Sites (Details) - TMB-002 License	Jun. 30, 2021 item
Test Sites [Line Items]
Number of study test sites open	17
Percentage of patients in study enrolled in program	50.00%

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Significant Accounting Policies - Summary of reconciliation of the numerator and denominator of diluted net income (loss) per share (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Basic and diluted income (loss) per share:
Net income (loss)	$ (2,966,203)	$ (15,245,609)	$ (4,840,463)	$ (18,764,209)
Accrued dividend on preferred stock units		(18,188)		(52,669)
Cumulative dividends on Series A preferred stock	(36,286)	(17,146)	(72,173)	(17,146)
Net loss attributable to common stockholders	$ (3,002,489)	$ (15,280,943)	$ (4,912,636)	$ (18,834,024)
Basic and diluted weighted average number of shares outstanding	36,659,685	11,222,258	35,873,780	8,758,991
Basic and diluted net loss per share attributable to common stockholders	$ (0.08)	$ (1.36)	$ (0.14)	$ (2.15)

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Significant Accounting Policies - Anti-dilutive loss per share (Details) - shares	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	17,998,281	9,817,834
Series A warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	16,701,824	8,384,764
Bridge warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	413,751	413,751
Variable appreciation rights
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	367,670	367,670
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	184,456	232,996
Series A preferred stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	100,753	100,753
Legacy stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	15,781	97,870
Legacy warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted loss per share	214,046	220,030

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Acquisition of BioPharmX (Details) - Merger Agreement	May 18, 2020 USD ($) $ / shares shares
Business Acquisition [Line Items]
Number of shares of the combined company owned by BioPharmX stockholders | shares	1,367,326
Multiplied by the fair value per share of BioPharmX common stock | $ / shares	$ 6.12
Total estimated fair value of common stock	$ 8,368,033
Add: net liabilities acquired	(2,833,453)
Add: investment in BioPharmX	(1,169,846)
Total consideration - recorded as research and development acquired	$ 12,371,332

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Acquisition of BioPharmX - Total cost (Details) - Merger Agreement	May 18, 2020 USD ($)
Business Acquisition [Line Items]
Cash and cash equivalents	$ 340,786
Other current assets	2,027
Deposits	114,534
ROU asset	904,370
Accounts payable	(610,882)
Credit cards	760
Accrued expenses	(148,999)
Note - short term	(2,456,614)
Operating lease liability - short term	(259,712)
Other long term liabilities	(73,682)
Operating lease liability - long term	(646,041)
Net liabilities acquired	$ (2,833,453)

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Acquisition of BioPharmX - Additional information (Details) - Merger Agreement	May 18, 2020 USD ($)
Business Acquisition [Line Items]
Investment received	$ 20,000,000
Total consideration	$ 12,371,332
BioPharmX
Business Acquisition [Line Items]
Percentage of voting interests acquired	88.50%
Percentage of interest held by BioPharmx	11.50%

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Purchases of Assets (Details)	1 Months Ended	3 Months Ended	6 Months Ended		12 Months Ended
	Oct. 31, 2019 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)	Jun. 30, 2021 EUR (€)
Finite-Lived Intangible Assets [Line Items]
Total revenue		$ 388,819	$ 429,553	$ 26,907
Milestone revenue
Finite-Lived Intangible Assets [Line Items]
Total revenue		253,892	253,892
Patagonia license agreement | TMB-001 License
Finite-Lived Intangible Assets [Line Items]
Upfront fee			50,000
Milestone payments entitled to receive		27,000,000.0	27,000,000.0
Initial milestone payments entitled to receive		4,000,000.0	4,000,000.0
Accrued milestone payments		0	0		$ 0
Patagonia license agreement | TMB-003 License
Finite-Lived Intangible Assets [Line Items]
Upfront fee			20,000
Milestone payments entitled to receive		10,250,000	10,250,000
Initial milestone payments entitled to receive		250,000	250,000
Accrued milestone payments		0	0		0
AFT license agreement
Finite-Lived Intangible Assets [Line Items]
Milestone payments entitled to receive		25,500,000	25,500,000
Accrued milestone payments		0	0		0
Upfront fee paid	$ 250,000				$ 750,000
AFT license agreement | Pascomer
Finite-Lived Intangible Assets [Line Items]
Milestone payments entitled to receive		$ 300,000	$ 300,000			€ 213,750

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Accrued Expenses (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Accrued Expenses
Research and development	$ 45,443	$ 158,911
Professional fees	181,234	142,599
Compensation	342,055	438,722
Other		28,429
Total	$ 568,732	$ 768,661

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Temporary Equity, and Members' and Stockholder's Equity (Deficit) - Common Stock (Details) $ / shares in Units, $ in Millions	May 18, 2020 USD ($) $ / shares shares
Private Placement
Common Stock
Aggregate consideration	$ 20.0
Aggregate net proceeds	$ 17.5
BioPharmX
Common Stock
Common stock issued on acquisition | shares	1,367,326
Fair value of common stock issued on acquisition	$ 8.4
Fair value per share of common stock issued on acquisition | $ / shares	$ 6.12
Merger Agreement | Private Placement
Common Stock
Common stock issued on acquisition | shares	4,185,981
Bridge warrants
Common Stock
Amount of loan	$ 5.0

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Temporary Equity, and Members' and Stockholder's Equity (Deficit) - Series A & B Warrants (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Series A warrants
Class of Stock [Line Items]
Outstanding as of December 31, 2020	20,178,214
Exercised	(3,476,390)
Outstanding and exercisable as of June 30, 2021	16,701,824	20,178,214
Weighted Average Exercise Price Rollforward
Weighted Average Exercise Price	$ 1.16	$ 1.16
Weighted Average Price, Exercised	$ 1.16
Weighted Average Remaining Contractual Term (Years) rollforward
Weighted average remaining contractual term ( in years)	3 years 10 months 24 days	4 years 4 months 24 days
Aggregate Intrinsic Value	$ 1,002,109
Exercise of warrants ( in shares)	2,059,613
Series B Warrants
Class of Stock [Line Items]
Outstanding as of December 31, 2020	7,474,033
Exercised	(7,474,033)
Outstanding and exercisable as of June 30, 2021		7,474,033
Weighted Average Exercise Price Rollforward
Weighted Average Exercise Price		$ 0.001
Weighted Average Price, Exercised	$ 0.001
Weighted Average Remaining Contractual Term (Years) rollforward
Aggregate Intrinsic Value		$ 7,474
Number of warrants outstanding		7,474,033
Exercise of warrants ( in shares)	7,467,652

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Temporary Equity, and Members' and Stockholder's Equity (Deficit) - Bridge Warrants (Details) - Bridge warrants - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Class of Stock [Line Items]
Shares underlying Warrants	413,751	413,751
Weighted Average Exercise Price	$ 2.24	$ 2.24
Weighted average remaining contractual term ( in years)	3 years 10 months 24 days	4 years 4 months 24 days

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Temporary Equity, and Members' and Stockholder's Equity (Deficit) - Redeemable Series A Convertible Preferred Stock (Details) - USD ($)		6 Months Ended
	May 18, 2020	Jun. 30, 2021
Class of Stock [Line Items]
Beginning balance, Total temporary equity, Amount		$ 1,909,805
Beginning balance, Total temporary equity, Amount		$ 1,981,978
Series A preferred stock
Class of Stock [Line Items]
Preferred stock designated	2,500
Cumulative dividends percentage	8.00%
Minimum conversion price	$ 1,000
Conversion price	$ 18.054
Beginning balance, Total temporary equity, Shares		1,819
Ending balance, Total temporary equity, Shares		1,819
Timber Sub | Series A preferred stock
Class of Stock [Line Items]
Preferred units before merger	1,819,289
Common stock on conversion of units	1,819
Preferred Stock Redemption Amount		$ 2,000,000.0
Beginning balance, Total temporary equity, Shares		1,819
Ending balance, Total temporary equity, Shares		1,819
Beginning balance, Total temporary equity, Amount		$ 1,909,805
Cumulative dividends on Series A Preferred Stock, Amount		72,173
Beginning balance, Total temporary equity, Amount		$ 1,981,978

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Equity-based compensation (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense	$ 49,433	$ 43,445	$ 107,948	$ 61,662
Employee value appreciation right award | Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense	549	2,242	1,092	(3,220)
Employee value appreciation right award | General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense	12,247	21,430	25,468	45,109
Stock Options | General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation expense	$ 36,637	$ 19,773	$ 81,388	$ 19,773

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Equity-based compensation - Value Appreciation Rights (Details) - VARs - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Number of Units
Outstanding at the beginning (in shares)	367,670
Outstanding at the ending (in shares)	367,670	367,670
Value appreciation right awards vested and expected to vest (in shares)	0
Value appreciation right awards vested and exercisable (in shares)	113,953
Weighted Average Exercise Price
Outstanding at the beginning (in dollars per shares)	$ 0.01
Outstanding at the ending (in dollars per shares)	0.01	$ 0.01
Value appreciation right awards vested and exercisable (in dollars per shares)	$ 0.01
Total Intrinsic Value
Outstanding intrinsic value	$ 269,502
Outstanding intrinsic value	444,881	$ 269,502
Value appreciation right awards vested and exercisable	$ 137,883
Weighted Average Remaining Contractual Life (in years)
Outstanding (in years)	7 years 10 months 24 days	8 years 4 months 24 days
Value appreciation right awards vested and exercisable (in years)	7 years 9 months 18 days

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Equity-based compensation - Stock Options (Details) - Stock Options - $ / shares			6 Months Ended
	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2021
Shares Underlying Options
Outstanding at the beginning (in shares)			184,456
Granted (in shares)			0
Outstanding at the ending (in shares)	184,456	184,456	184,456
Exercisable at June 30, 2021 (in shares)	57,240		57,240
Weighted Average Exercise Price
Outstanding at the beginning (in dollars per share)			$ 2.87
Outstanding at the ending (in dollars per share)	$ 2.87	$ 2.87	2.87
Exercisable at June 30, 2021 (in dollars per share)	$ 2.87		$ 2.87
Weighted Average Remaining Contractual Term (Years)
Outstanding (in years)	8 years 10 months 24 days	9 years 4 months 24 days
Exercisable at June 30, 2021	8 years 10 months 24 days

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Equity-based compensation - Legacy Stock Options Warrants (Details) - Stock options and warrants - $ / shares			12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020	Dec. 31, 2020
Legacy BioPharmXOptions
Shares Underlying Options
Shares Underlying Options and Warrants	15,781	15,781	15,781
Weighted Average Exercise Price
Weighted Average Exercise Prices	$ 75.27	$ 75.27	$ 75.27
Weighted Average Remaining Contractual Term (Years)
Weighted Average Remaining Contractual Life (in Years)	1 year 10 months 24 days	2 years 3 months 18 days
Legacy BioPharmXWarrants
Shares Underlying Options
Shares Underlying Options and Warrants	214,046	219,928	219,928
Shares Underlying Options and Warrants, Expired			(5,882)
Weighted Average Exercise Price
Weighted Average Exercise Prices	$ 87.25	$ 164.09	$ 164.09
Weighted Average Exercise Prices, Expired			$ 360.00
Weighted Average Remaining Contractual Term (Years)
Weighted Average Remaining Contractual Life (in Years)	2 years 2 months 12 days	2 years 6 months

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Equity-based compensation - Additional information (Details) - USD ($) $ in Millions		6 Months Ended	12 Months Ended
	May 18, 2020	Jun. 30, 2021	Dec. 31, 2020	Jul. 01, 2021
Incentive Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive units outstanding		367,670	367,670
VARs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive units outstanding		367,670	367,670
Unrecognized compensation cost		$ 0.1
Estimated weighted-average amortization period		9 months 18 days
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost		$ 0.1
Estimated weighted-average amortization period		8 months 12 days
2020 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for future issuance	970,833	2,056,130	1,085,297
Vesting period	3 years
Expiration term	10 years
Percentage of common stock reserved for future issuance			4.00%
2020 Plan | Subsequent event
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for future issuance				4,668,319
2019 Plan | Incentive Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum aggregate Units that may be subject to awards and issued under the Plan		699,454

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Commitments and contingencies (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2021 USD ($)	Jun. 30, 2021 USD ($)	Mar. 10, 2021 ft²	Feb. 01, 2020
Operating leases:
Operating lease cost	$ 99,142	$ 185,273
Variable lease cost	26,760	52,151
Operating lease expense	125,902	237,424
Lease income - sub lease	(108,256)	(211,563)
Net rent expense	17,646	25,861
Operating cash flows - operating leases	$ 94,735	178,577
Right-of-use assets obtained in exchange for operating lease liabilities		$ 122,809
Weighted-average remaining lease term - operating leases	2 years 4 months 24 days	2 years 4 months 24 days
Weighted-average discount rate - operating leases	14.10%	14.10%
Office spare leased | ft²			3,127
Lease term			24 months	4 years
Security deposit	$ 13,000	$ 13,000
First 12 months
Operating leases:
Base rent per month		4,690.50
Remaining 12 months
Operating leases:
Base rent per month		$ 6,514.58

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Commitments and contingencies - Future minimum payments (Details)	Jun. 30, 2021 USD ($)
Future minimum payments
Remaining Months in Year Ended December 31, 2021	$ 189,471
Year Ended December 31, 2022	406,506
Year Ended December 31, 2023	357,599
Total	953,576
Less present value discount	(152,533)
Operating lease liabilities	$ 801,043

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Related party transactions (Details) - USD ($)		6 Months Ended	12 Months Ended
	Feb. 27, 2019	Jun. 30, 2021	Dec. 31, 2020	Dec. 31, 2019
Related party transactions
Number of founder common units issued	10
Patagonia
Related party transactions
Number of common shares on conversion of units			629,572
Percentage of total voting shares outstanding				10.00%
Founder common units contribution	$ 1,000		$ 1,000	$ 1,000
Number of founder common units issued		45	45
TardiMed
Related party transactions
Number of common shares on conversion of units		4,609,067
Percentage of total voting shares outstanding		12.50%
Founder common units contribution			$ 100,000
Number of founder common units issued			142,392
Number of common shares on conversion of preferred units and dividends			1,819
Management fees		$ 63,936	$ 63,936
Reimbursed expenses		$ 319,790	$ 319,790

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Subsequent Events (Details) - 2020 Plan - $ / shares	Jul. 01, 2021	May 18, 2020
SUBSEQUENT EVENTS
Vesting period		3 years
Expiration term		10 years
Subsequent event | Non-employee Directors
SUBSEQUENT EVENTS
Vesting period	1 year
Expiration term	10 years
Subsequent event | Alan Mendelsohn, M.D.
SUBSEQUENT EVENTS
Vesting percentage	25.00%
Expiration term	10 years
Subsequent event | Alan Mendelsohn, M.D. | Tranche One
SUBSEQUENT EVENTS
Vesting period	1 year
Subsequent event | Alan Mendelsohn, M.D. | Tranche Two
SUBSEQUENT EVENTS
Vesting period	36 months
Subsequent event | Employee and non employee directors
SUBSEQUENT EVENTS
Number of options granted	587,023
Number of options granted (in dollars per share)	$ 1.18