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Citius Pharmaceuticals, Inc.
FORM 10-Q
TABLE OF CONTENTS
March 31, 2022
i
EXPLANATORY NOTE
In this Quarterly Report on Form 10-Q, and unless the context otherwise requires, the “Company,” “we,” “us,” and “our” refer to Citius Pharmaceuticals, Inc. and its wholly-owned subsidiaries Citius Pharmaceuticals, LLC, Leonard-Meron Biosciences, Inc., Citius Acquisition Corp., and its majority-owned subsidiary, NoveCite, Inc., taken as a whole.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in this report and in other documents which we file with the Securities and Exchange Commission. In addition, such statements could be affected by risks and uncertainties related to:
| ● |
the cost, timing and results of our pre-clinical and clinical trials; | |
| ● | our ability to raise funds for general corporate purposes and operations, including our pre-clinical and clinical trials; |
| ● | our ability to obtain and maintain required regulatory approvals for our product candidates; |
| ● | the commercial feasibility and success of our technology and product candidates; |
| ● | our ability to recruit and retain qualified management and scientific and technical personnel to carry out our operations; and |
| ● | the other factors discussed in the “Risk Factors” section of our most recent Annual Report on Form 10-K and elsewhere in this report. |
Any forward-looking statements speak only as of the date on which they are made, and except as may be required under applicable securities laws, we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the filing date of this report.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| March 31, | September 30, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Other Assets: | ||||||||
| Deposits | ||||||||
| In-process research and development | ||||||||
| Goodwill | ||||||||
| Total Other Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued compensation | ||||||||
| Operating lease liability | ||||||||
| Total Current Liabilities | ||||||||
| Deferred tax liability | ||||||||
| Operating lease liability – non current | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock – $ | ||||||||
| Common stock – $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Citius Pharmaceuticals, Inc. Stockholders’ Equity | ||||||||
| Non-controlling interest | ||||||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
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CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2022 AND 2021
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| March 31, | March 31, | March 31, | March 31, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | $ | $ | — | $ | — | ||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Stock-based compensation – general and administrative | ||||||||||||||||
| Total Operating Expenses | ||||||||||||||||
| Operating Loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest income | ||||||||||||||||
| Interest expense | — | ( | ) | — | ( | ) | ||||||||||
| Total Other Income, Net | ||||||||||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net Loss Per Share - Basic and Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted Average Common Shares Outstanding | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
See notes to unaudited condensed consolidated financial statements.
2
CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2022 AND 2021
(Unaudited)
| Preferred | Common Stock | Additional Paid-In | Accumulated | Total Citius Pharmaceuticals, Inc. Shareholder’s | Non-Controlling | Total | ||||||||||||||||||||||||||
| Stock | Shares | Amount | Capital | Deficit | Equity | Interest | Equity | |||||||||||||||||||||||||
| Balance, October 1, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Issuance of common stock for services | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, December 31, 2021 | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock for services | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Balance, October 1, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Issuance of NoveCite common stock | — | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, December 31, 2020 | ( | ) | ||||||||||||||||||||||||||||||
| Issuance of common stock in private placement offering, net of costs of $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock in registered direct offering, net of costs of $ | ||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | ||||||||||||||||||||||||||||||||
| Issuance of common stock for services | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
See notes to unaudited condensed consolidated financial statements.
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CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 2022 AND 2021
(Unaudited)
| 2022 | 2021 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation expense | ||||||||
| Issuance of common stock for services | ||||||||
| Amortization of operating lease right-of-use asset | ||||||||
| Depreciation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Deposits | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ||||||||
| Accrued compensation | ( | ) | ( | ) | ||||
| Accrued interest | ||||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from sale of NoveCite, Inc. common stock | ||||||||
| Net proceeds from private placement | ||||||||
| Net proceeds from registered direct offering | ||||||||
| Net proceeds from common stock warrant exercises | ||||||||
| Net Cash Provided By Financing Activities | ||||||||
| Net Change in Cash and Cash Equivalents | ( | ) | ||||||
| Cash and Cash Equivalents - Beginning of Period | ||||||||
| Cash and Cash Equivalents - End of Period | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
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CITIUS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED MARCH 31, 2022 AND 2021
(Unaudited)
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Citius Pharmaceuticals, Inc. (“Citius,” the “Company,” “we” or “us”) is a specialty pharmaceutical company dedicated to the development and commercialization of critical care products with a focus on anti-infective products in adjunct cancer care, unique prescription products and stem cell therapy.
On March 30, 2016, Citius acquired Leonard-Meron Biosciences, Inc. (“LMB”) as a wholly-owned subsidiary by issuing shares of its common stock.
On September 11, 2020, we formed NoveCite, Inc.
(“NoveCite”), a Delaware corporation, of which we own
On August 23, 2021, we formed Citius Acquisition Corp., as a wholly-owned subsidiary in conjunction with the acquisition of I/ONTAK (formerly E7777), but no activity has occurred to date.
In-process research and development (“IPR&D”)
consists of (i) the $
Goodwill of $
Citius is subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, risks related to the development by Citius or its competitors of research and development stage product candidates, market acceptance of its product candidates that might be approved, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners, the Company’s ability to obtain additional financing and the Company’s compliance with governmental and other regulations.
Basis of Presentation and Summary of Significant Accounting Policies
Basis of Preparation — The accompanying condensed consolidated financial statements include the operations of Citius Pharmaceuticals, Inc., and its wholly-owned subsidiaries, Citius Pharmaceuticals, LLC, LMB, and Citius Acquisition Corp., and its majority-owned subsidiary NoveCite. Citius Acquisition Corp. is currently inactive. All significant inter-company balances and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state the condensed consolidated financial position of the Company as of March 31, 2022, and the results of its operations and cash flows for the three and six month periods ended March 31, 2022 and 2021. The operating results for the three and six month periods ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending September 30, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021 filed with the Securities and Exchange Commission.
5
Use of Estimates — Our accounting principles require our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Estimates having relatively higher significance include stock-based compensation, accounting for leases, valuation of warrants, and income taxes. Actual results could differ from those estimates and changes in estimates may occur.
Basic and Diluted Net Loss per Common Share — Basic and diluted net loss per common share applicable to common stockholders is computed by dividing net loss applicable to common stockholders in each period by the weighted average number of shares of common stock outstanding during such period. For the periods presented, common stock equivalents, consisting of stock options and warrants were not included in the calculation of the diluted loss per share because they were anti-dilutive.
Recently Issued Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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, among other things, provides guidance on how to account for contracts on an entity’s own equity. This ASU eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, this ASU modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in this ASU are effective for public companies for fiscal years 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. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities. Under the new guidance (ASC 805-20-30-28), the acquirer should determine what contract assets and/or contract liabilities it would have recorded under Accounting Standards Codification (“ASC”) 606 (the revenue guidance) as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree. The recognition and measurement of those contract assets and contract liabilities will likely be comparable to what the acquiree has recorded on its books under ASC 606 as of the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2021-08 is effective for the Company in the first quarter of fiscal 2024. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued. However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance is adopted. The Company is currently evaluating the adoption date of ASU 2021-08 and the impact, if any, adoption will have on its financial position and results of operations.
2. LIQUIDITY AND MANAGEMENT’S PLAN
The accompanying consolidated financial statements
have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company experienced negative cash flows from operations of $
The Company has generated no operating revenue to date and has principally raised capital through the issuance of debt and equity instruments to finance its operations. The Company’s continued operations beyond March 2023, including its development plans for Mino-Lok, Mino-Wrap, Halo-Lido, NoveCite and I/ONTAK, will depend on its ability to obtain regulatory approval to market Mino-Lok and/or I/ONTAK and generate substantial revenue from the sale of Mino-Lok and/or I/ONTAK and on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships, or out-licensing of its product candidates. However, the Company can provide no assurances on regulatory approval, commercialization or future sales of Mino-Lok or I/ONTAK or that financing or strategic relationships will be available on acceptable terms, or at all. If the Company is unable to raise sufficient capital, find strategic partners or generate substantial revenue from the sale of Mino-Lok or I/ONTAK, there would be a material adverse effect on its business. Further, the Company expects to incur additional expenses as it continues to develop its product candidates, including seeking regulatory approval, and protecting its intellectual property.
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3. PATENT AND TECHNOLOGY LICENSE AGREEMENTS
Patent and Technology License Agreement – Mino-Lok
LMB has a patent and technology license agreement
with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok® on an exclusive, worldwide
sub licensable basis, as amended. LMB pays an annual maintenance fee each June until commercial sales of a product subject to the license
commence. The Company recorded an annual maintenance fee of $
LMB will also pay annual royalties on net sales
of licensed products, with royalties ranging from the mid-single digits to the low double digits. In limited circumstances in which the
licensed product is not subject to a valid patent claim and a competitor is selling a competing product, the royalty rate is in the low-
to mid-single digits. After a commercial sale is obtained, LMB must pay minimum aggregate annual royalties of $
Unless earlier terminated by NAT, based on the failure to achieve certain development and commercial milestones, the license agreement remains in effect until the date that all patents licensed under the agreement have expired and all patent applications within the licensed patent rights have been cancelled, withdrawn or expressly abandoned.
Patent and Technology License Agreement – Mino-Wrap
On January 2, 2019, we entered into a patent and technology license agreement with the Board of Regents of the University of Texas System on behalf of the University of Texas M. D. Anderson Cancer Center (“Licensor”), whereby we in-licensed exclusive worldwide rights to the patented technology for any and all uses relating to breast implants. We intend to develop a liquefying gel-based wrap containing minocycline and rifampin for the reduction of infections associated with breast implants following breast reconstructive surgeries (“Mino-Wrap”). We are required to use commercially reasonable efforts to commercialize Mino-Wrap under several regulatory scenarios and achieve milestones associated with these regulatory options leading to an approval from the U.S. Food and Drug Administration (“FDA”).
Under the license agreement, the Company paid
an annual maintenance fee of $
License Agreement with Novellus
On March 31, 2020, we entered into an option agreement with a subsidiary of Novellus, Inc. (“Novellus”) to in-license from Novellus on a worldwide basis, a novel cellular therapy for acute respiratory distress syndrome (“ARDS”).
7
Our Board Chairman Leonard Mazur, who is also our largest stockholder, was at the time a significant shareholder of Novellus and subsequent to the option agreement and the license agreement discussed below, became a director of Novellus. As required by our Code of Ethics, the Audit Committee of our Board of Directors approved the entry into the option agreement with Novellus, as did the disinterested members of our Board of Directors.
On October 6, 2020, our subsidiary, NoveCite,
exercised the option and signed an exclusive license agreement with Novellus. Upon execution of the agreement, we paid $
Citius is responsible for the operational activities of NoveCite, and bears all costs necessary to operate NoveCite. Citius’s officers are also the officers of NoveCite and oversee the business strategy and operations of NoveCite. As such, NoveCite is accounted for as a consolidated subsidiary with a noncontrolling interest.
Novellus has no contractual rights in the profits or obligations to share in the losses of NoveCite, and the Company has not allocated any losses to the noncontrolling interest.
NoveCite is obligated to pay Novellus up to an aggregate of $51,000,000 upon the achievement of various regulatory and developmental milestones. NoveCite also must pay a royalty equal to low double-digit percentages of net sales, commencing upon the sale of a licensed product. This royalty is subject to downward adjustment to an upper-single digit percentage of net sales in any country in the event of the expiration of the last valid patent claim or if no valid patent claim exists in that country. The royalty will end on the earlier of (i) the date on which a biosimilar product is first marketed, sold, or distributed in the applicable country or (ii) the 10-year anniversary of the date of expiration of the last-to-expire valid patent claim in that country. In the case of a country where no licensed patent ever exists, the royalty will end on the later of (i) the date of expiry of such licensed product’s regulatory exclusivity and (ii) the 10-year anniversary of the date of the first commercial sale of the licensed product in the applicable country. In addition, NoveCite will pay to Novellus an amount equal to a mid-twenties percentage of any sublicensee fees it receives.
Under the terms of the license agreement, in the
event that Novellus receives any revenue involving the original cell line included in the licensed technology, then Novellus shall remit
to NoveCite
The term of the license agreement will continue on a country-by-country and licensed product-by-licensed product basis until the expiration of the last-to-expire royalty term. Either party may terminate the license agreement upon written notice if the other party is in material default. NoveCite may terminate the license agreement at any time without cause upon 90 days prior written notice.
Novellus will be responsible for preparing, filing, prosecuting and maintaining all patent applications and patents included in the licensed patents in the territory, provided however, that if Novellus decides that it is not interested in maintaining a particular licensed patent or in preparing, filing, or prosecuting a licensed patent, NoveCite will have the right, but not the obligation, to assume such responsibilities in the territory at NoveCite’s sole cost and expense.
In July 2021, Novellus was acquired by Brooklyn ImmunoTherapeutics, Inc. (“Brooklyn”). In connection with that transaction, the stock subscription agreement between Novellus and NoveCite was amended to assign to Brooklyn all of Novellus’s right, title, and interest in the stock subscription agreement and delete the anti-dilution protection and replace it with a right of first refusal whereby Brooklyn will have the right to purchase all or a portion of the securities that NoveCite intends to sell or in the alternative, at the option of NoveCite, Brooklyn may purchase that amount of the securities proposed to be sold by NoveCite to allow Brooklyn to maintain its then percentage ownership.
License Agreement with Eisai
In September 2021, the Company entered into a definitive agreement with Dr. Reddy's Laboratories SA, a subsidiary of Dr. Reddy's Laboratories, Ltd. (collectively, "Dr. Reddy's"), to acquire its exclusive license of I/ONTAK (denileukin diftitox), a late-stage oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma.
8
Under the terms of this agreement, Citius acquired
Dr. Reddy's exclusive license of I/ONTAK from Eisai Co., Ltd. ("Eisai") and other related assets owned by Dr. Reddy's. Citius's
exclusive license includes rights to develop and commercialize I/ONTAK in all markets except for Japan and certain parts of Asia. Additionally,
Citius retained an option on the right to develop and market the product in India. Eisai retains exclusive development and marketing rights
for the agent in Japan and Asia.
Also under the agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials, (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction.
4. NOTES PAYABLE
Notes Payable – Related Parties
Prior to June 31, 2021, we had outstanding notes
payable held by our Chairman, Leonard Mazur, in the amount of $
9
In June 2021, we repaid the $
Interest expense on notes payable – related
parties was $
Paycheck Protection Program
On April 12, 2020,
On July 28, 2021, the Small Business Administration
gave full forgiveness of the PPP loan and the Company recorded a gain from debt extinguishment of $
Interest expense was $
5. COMMON STOCK, STOCK OPTIONS AND WARRANTS
Authorized Common Stock
On June 21, 2021, our stockholders approved an
amendment to our Articles of Incorporation to increase the authorized number of shares of capital stock from
Common Stock Offerings
On January 27, 2021,
On February 19, 2021,
Common Stock Issued for Services
On November 2, 2021, the Company issued
On March 21, 2022, the Company issued
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Stock Option Plans
Pursuant to our 2014 Stock Incentive Plan, we
reserved
On February 7, 2018, our stockholders approved
the 2018 Omnibus Stock Incentive Plan and we reserved
On February 10, 2020, our stockholders approved
the 2020 Stock Plan and we reserved
On May 24, 2021, our stockholders approved the
2021 Stock Plan and we reserved
The fair value of each stock option award is estimated
on the date of grant using the Black-Scholes option pricing model. The risk-free interest rate is based on the U.S. Treasury yield curve
in effect at the time of grant commensurate with the expected term assumption. The expected term of stock options granted, all of which
qualify as “plain vanilla,” is based on the average of the contractual term (generally
A summary of option activity under our stock option plans (excluding the NoveCite Stock Plan) is presented below:
| Option Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||
| Outstanding at October 1, 2021 | $ | $ | ||||||||||||
| Granted | ||||||||||||||
| Exercised | ||||||||||||||
| Forfeited or expired | ||||||||||||||
| Outstanding at March 31, 2022 | $ | $ | ||||||||||||
| Exercisable at March 31, 2022 | $ | $ | ||||||||||||
On October 11, 2021, the Board of Directors granted
options to purchase
On October 6, 2020, the Board of Directors granted
stock options to purchase a total of
Stock-based compensation expense for the three months ended March 31, 2022 and 2021 was $1,020,998 (including $33,333 for the NoveCite Stock Plan) and $342,962 (including $18,833 for the NoveCite Stock Plan), respectively. Stock-based compensation expense for the six months ended March 31, 2022 and 2021 was $1,925,602 (including $66,666 for the NoveCite Stock Plan) and $619,544 (including $31,389 for the NoveCite Stock Plan), respectively.
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At March 31, 2022, unrecognized total compensation
cost related to unvested awards under the Citius stock plans of $
On November 5, 2020, the stockholders of NoveCite,
approved NoveCite’s Stock Plan and we reserved
As of March 31, 2022,
Warrants
As of March 31, 2022, we have reserved shares of common stock for the exercise of outstanding warrants as follows:
| Exercise price | Number | Expiration Date | ||||||||
| LMB Warrants | $ | |||||||||
| 2017 Public Offering Investors | ||||||||||
| 2017 Public Offering Underwriter | ||||||||||
| December 2017 Registered Direct/Private Placement Offering Investors | ||||||||||
| December 2017 Registered Direct/Private Placement Offering Placement Agent | ||||||||||
| March 2018 Registered Direct/Private Placement Offering Investors | ||||||||||
| March 2018 Registered Direct/Private Placement Offering Placement Agent | ||||||||||
| August 2018 Offering Investors | ||||||||||
| August 2018 Offering Agent | ||||||||||
| April 2019 Registered Direct/Private Placement Offering Investors | ||||||||||
| April 2019 Registered Direct/Private Placement Offering Placement Agent | ||||||||||
| September 2019 Offering Investors | ||||||||||
| September 2019 Offering Underwriter | ||||||||||
| February 2020 Exercise Agreement Placement Agent | ||||||||||
| May 2020 Registered Direct Offering Investors | ||||||||||
| May 2020 Registered Direct Offering Placement Agent | ||||||||||
| August 2020 Underwriter | ||||||||||
| January 2021 Private Placement Offering Investors | ||||||||||
| January 2021 Private Placement Offering Agent | ||||||||||
| February 2021 Registered Direct Offering Investors | ||||||||||
| February 2021 Registered Direct Offering Agent | ||||||||||
At March 31, 2022, the weighted average remaining
life of the outstanding warrants is
12
Common Stock Reserved
A summary of common stock reserved for future issuances as of March 31, 2022 is as follows:
| Stock plan options outstanding | ||||
| Stock plan shares available for future grants | ||||
| Warrants outstanding | ||||
| Total |
6. RELATED PARTY TRANSACTIONS
The Company had outstanding debt due to Leonard Mazur (Chairman of the Board) and Myron Holubiak (then Chief Executive Officer) (see Note 4).
Leonard Mazur was a director and significant shareholder of Novellus until July 2021. On October 6, 2020, the Company, through its subsidiary NoveCite, entered into an exclusive agreement with Novellus to develop cellular therapies (see Note 3).
In
April 2021, we extended the term by
7. OPERATING LEASE
Effective July 1, 2019, Citius entered into a 76-month lease for office space in Cranford, NJ. Citius will pay its proportionate share of real estate taxes and operating expenses in excess of the base year expenses. These costs are considered to be variable lease payments and are not included in the determination of the lease’s right-of-use asset or lease liability.
The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:
| ● | As the Company’s lease does not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments based on the remaining lease term as of the adoption date. |
| ● | Since the Company elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the combined lease component. |
| ● | The expected lease terms include noncancelable lease periods. |
The elements of lease expense are as follows:
| Lease cost | Six Months
Ended March 31, 2022 | Six Months
Ended March 31, 2021 | ||||||
| Operating lease cost | $ | $ | ||||||
| Variable lease cost | ||||||||
| Total lease cost | $ | |||||||
| Other information | ||||||||
| Weighted-average remaining lease term - operating leases | ||||||||
| Weighted-average discount rate - operating leases | % | % | ||||||
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Maturities of lease liabilities due under the Company’s non-cancellable leases as of March 31, 2022 is as follows:
| Year Ending September 30, | March
31, 2022 | |||
| 2022 (excluding the 6 months ended March 31, 2022) | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Total lease payments | ||||
| Less: interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
| Leases | Classification | March
31, 2022 | September 30, 2021 | |||||||||
| Assets | ||||||||||||
| Lease asset | Operating | $ | $ | |||||||||
| Total lease assets | $ | $ | ||||||||||
| Liabilities | ||||||||||||
| Current | Operating | $ | $ | |||||||||
| Non-current | Operating | |||||||||||
| Total lease liabilities | $ | $ | ||||||||||
Interest
expense on the lease liability was $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations for the three and six months ended March 31, 2022 should be read together with our unaudited consolidated financial statements and related notes included elsewhere in this report and in conjunction with the audited financial statements of Citius Pharmaceuticals, Inc. included in our Annual Report on Form 10-K for the year ended September 30, 2021. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements” on page ii of this Report.
Historical Background
Citius Pharmaceuticals, Inc. (“Citius,” the “Company,” “we” or “us”) is a late-stage biopharmaceutical company developing and commercializing first-in-class critical care products. On September 12, 2014, we acquired Citius Pharmaceuticals, LLC as a wholly-owned subsidiary and on March 30, 2016, we acquired Leonard-Meron Biosciences, Inc. (“LMB”) as a wholly-owned subsidiary. On September 11, 2020, we formed NoveCite, Inc. (“NoveCite”), a Delaware corporation, of which we own 75% of the issued and outstanding capital stock. On August 23, 2021, we formed Citius Acquisition Corp., as a wholly-owned subsidiary, but no activity has occurred to date.
Through March 31, 2022, the Company has devoted substantially all of its efforts to business planning, acquiring our proprietary technology, research and development, recruiting management and technical staff, and raising capital.
Patent and Technology License Agreements
Our patent and technology license agreements are discussed in the footnotes to our unaudited consolidated financial statements included in this Report.
Mino-Lok® - LMB has a patent and technology license agreement with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok® on an exclusive, worldwide sub-licensable basis. Since May 2014, LMB has paid an annual maintenance fee, which began at $30,000 and that increased over five years to $90,000, where it will remain until the commencement of commercial sales of a product subject to the license. LMB will also pay annual royalties on net sales of licensed products, with royalties ranging from the mid-single digits to the low double digits or, in the event the licensed product is not subject to a valid patent claim, the royalty is reduced to mid- to lower-single digits. In limited circumstances in which the licensed product is not subject to a valid patent claim and a competitor is selling a competing product, the royalty rate is in the low single digits. After a commercial sale is obtained, LMB must pay minimum aggregate annual royalties that increase in subsequent years. LMB must also pay NAT up to an aggregate of $1,100,000 upon achieving specified regulatory and sales milestones. Finally, LMB must pay NAT a specified percentage of payments received from any sub licensees.
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Mino-Wrap - On January 2, 2019, we entered into a patent and technology license agreement with the Board of Regents of the University of Texas System on behalf of the University of Texas M. D. Anderson Cancer Center (“Licensor”), whereby we in-licensed exclusive worldwide rights to the patented technology for any and all uses relating to breast implants. We intend to develop a liquefying gel-based wrap containing minocycline and rifampin for the reduction of infections associated with breast implants following breast reconstructive surgeries (“Mino-Wrap”). We are required to use commercially reasonable efforts to commercialize Mino-Wrap under several regulatory scenarios and achieve milestones associated with these regulatory options leading to an approval from the Food and Drug Administration (“FDA”).
Under the license agreement, we paid a nonrefundable upfront payment of $125,000. We paid annual maintenance fees of $60,000 and $45,000 in January 2022 and 2021, respectively. The annual maintenance fee increases annually by $15,000 per year up to a maximum of $90,000. Annual maintenance fees cease on the first sale of product. We also must pay up to an aggregate of $2.1 million in milestone payments, contingent on the achievement of various regulatory and commercial milestones. Under the terms of the license agreement, we also must pay a royalty of mid- to upper-single digit percentages of net sales, depending on the amount of annual sales, and subject to downward adjustment to lower- to mid-single digit percentages in the event there is no valid patent for the product in the United States at the time of sale. After the first sale of product, we will owe an annual minimum royalty payment of $100,000 that will increase annually by $25,000 for the duration of the term. We will be responsible for all patent expenses incurred by Licensor for the term of the agreement although Licensor is responsible for filing, prosecution and maintenance of all patents.
NoveCite – On October 6, 2020, our subsidiary NoveCite entered into a license agreement with Novellus Therapeutics Limited (“Licensor”), to develop and commercialize a stem cell therapy based on the Licensor’s patented technology for the treatment of acute pneumonitis of any etiology in which inflammation is a major agent in humans. NoveCite paid a $5,000,000 license fee and issued 25% of its outstanding equity to the Licensor. We own the other 75% of NoveCite’s currently outstanding equity. If NoveCite issues additional equity, subject to certain exceptions, NoveCite had to maintain Novellus’s ownership at 25% by issuing additional shares to Novellus. In July 2021, Novellus was acquired by Brooklyn ImmunoTherapeutics, Inc. (“Brooklyn”). In that transaction, the stock subscription agreement between Novellus and NoveCite was amended to delete the anti-dilution protection and replace it with a right of first refusal whereby Brooklyn will have the right to purchase all or a portion of the securities that NoveCite intends to sell or in the alternative, at the option of NoveCite, Brooklyn may purchase that amount of the securities proposed to be sold by NoveCite to allow Brooklyn to maintain its then percentage ownership.
Under the license agreement, NoveCite is obligated to pay Licensor up to an aggregate of $51,000,000 in regulatory and developmental milestone payments. NoveCite also must pay a royalty equal to low double-digit percentages of net sales, commencing upon the first commercial sale of a licensed product. This royalty is subject to downward adjustment on a product-by-product and country-by-country basis to an upper-single digit percentage of net sales in any country in the event of the expiration of the last valid patent claim or if no valid patent claim exists in that country. The royalty will end on the earlier of (i) the date on which a biosimilar product is first marketed, sold, or distributed by Licensor or any third party in the applicable country or (ii) the 10-year anniversary of the date of expiration of the last-to-expire valid patent claim in that country. In the case of a country where no licensed patent ever exists, the royalty will end on the later of (i) the date of expiry of such licensed product’s regulatory exclusivity and (ii) the 10-year anniversary of the date of the first commercial sale of the licensed product in the applicable country. In addition, NoveCite will pay to Licensor an amount equal to a mid-twenties percentage of any sublicensee fees it receives.
Under the terms of the license agreement, in the event that Licensor receives any revenue involving the original cell line included in the licensed technology, then Licensor shall remit to NoveCite 50% of such revenue.
I/ONTAK - In September 2021 the Company announced that it had entered into a definitive agreement with Dr. Reddy’s Laboratories SA, a subsidiary of Dr. Reddy’s Laboratories, Ltd. (collectively, “Dr. Reddy's”) to acquire its exclusive license of I/ONTAK (formerly E7777) (denileukin diftitox), a late-stage oncology immunotherapy for the treatment of cutaneous T-cell lymphoma (“CTCL”), a rare form of non-Hodgkin lymphoma.
16
Under the terms of this agreement, Citius acquired Dr. Reddy's exclusive license of I/ONTAK from Eisai Co., Ltd. (“Eisai”) and other related assets owned by Dr. Reddy's. Citius's exclusive license rights include rights to develop and commercialize E7777 in all markets except for Japan and certain parts of Asia. Additionally, Citius has an option on the right to develop and market the product in India. Eisai retains exclusive development and marketing rights for the agent in Japan and Asia. Dr. Reddy's received a $40 million upfront payment and is entitled to up to an aggregate of $40 million in development milestone payments related to CTCL approvals in the U.S. and other markets, up to an aggregate of $70 million in development milestones for additional indications, as well as commercial milestone payments and low double-digit tiered royalties on net product sales. Eisai is to receive a $6 million development milestone payment upon initial approval and additional commercial milestone payments related to the achievement of net product sales thresholds. Eisai will be responsible for completing the current CTCL clinical trial, and chemistry, manufacturing and controls (CMC) activities through the filing of a biologics license application (“BLA”) for I/ONTAK with the FDA. Citius will be responsible for development costs associated with potential additional indications.
RESULTS OF OPERATIONS
Three months ended March 31, 2022 compared with the three months ended March 31, 2021
| Three
Months Ended March 31, 2022 | Three
Months Ended March 31, 2021 | |||||||
| Revenues | $ | — | $ | — | ||||
| Operating expenses: | ||||||||
| Research and development | 3,452,210 | 1,551,341 | ||||||
| General and administrative | 3,117,417 | 2,293,517 | ||||||
| Stock-based compensation expense | 1,020,998 | 342,962 | ||||||
| Total operating expenses | 7,590,625 | 4,187,820 | ||||||
| Operating loss | (7,590,625 | ) | (4,187,820 | ) | ||||
| Interest income | 29,571 | 69,327 | ||||||
| Interest expense | — | (3,939 | ) | |||||
| Net loss | $ | (7,561,054 | ) | $ | (4,122,432 | ) | ||
Revenues
We did not generate any revenues for the three months ended March 31, 2022 or 2021.
Research and Development Expenses
For the three months ended March 31, 2022, research and development expenses were $3,452,210 as compared to $1,551,341 during the three months ended March 31, 2021, an increase of $1,900,869.
Research and development costs for Mino-Lok® decreased by $203,699 to $906,632 for the three months ended March 31, 2022 as compared to $1,110,331 for the three months ended March 31, 2021 due primarily to increased costs related to catheter integrity testing incurred in the three months ended March 31, 2021.
Research and development costs for our Halo-Lido product candidate increased by $461,201 to $703,900 for the three months ended March 31, 2022 as compared to $242,699 for the three months ended March 31, 2021 due to start-up costs associated with the Phase 2b trial which is expected to begin in the quarter ending June 30, 2022. . On February 15, 2022, Citius announced that the FDA issued a Study May Proceed Letter for our Phase 2b Halo-Lido study.
Research and development costs for our I/ONTAK product candidate, which we in-licensed in September 2021, was $1,582,571 during the three months ended March 31, 2022. On April 6, 2022, Citius announced the topline results from the pivotal Phase 3 trial and based on this data, Citius anticipates filing a BLA with the FDA in the second half of 2022.
We expect that research and development expenses will continue to increase in fiscal 2022 as we continue to focus on our Phase 3 trials for Mino-Lok® and I/ONTAK, progress the Halo-Lido product candidate and continue our research and development efforts related to ARDS and Mino-Wrap.
17
General and Administrative Expenses
For the three months ended March 31, 2022, general and administrative expenses were $3,117,417 as compared to $2,293,517 during the three months ended March 31, 2021. General and administrative expenses increased by $823,900 in comparison with the prior period. The primary reasons for the increase were additional compensation costs for new employees, increased investor relations costs and additional insurance expense. General and administrative expenses consist primarily of compensation costs, professional fees for legal, regulatory, accounting, and corporate development services, and investor relations expenses.
Stock-based Compensation Expense
For the three months ended March 31, 2022, stock-based compensation expense was $1,020,998 as compared to $342,962 for the three months ended March 31, 2021. For the three months ended March 31, 2022, stock-based compensation includes $33,333 in expense for the NoveCite stock option plan that was adopted in November 2020 as compared to $18,833 for the three months ended March 31, 2021. Stock-based compensation expense for the most recently completed quarter increased by $678,036 in comparison to the prior period primarily due to new grants made to employees (including new hires), directors and consultants.
Other Income (Expense)
Interest income for the three months ended March 31, 2022 was $29,571 as compared to interest income of $69,327 for the prior period. We have invested the remaining proceeds of our early 2021 equity offerings and common stock warrant exercises in money market accounts.
There was no interest expense for the three months ended March 31, 2022 as compared to $3,939 in interest expense for the three months ended March 31, 2021. Interest expense was $3,533 for the three months ended March 31, 2021 on the notes payable – related parties that were repaid in full in June 2021. Interest expense was $406 for the three months ended March 31, 2021 on the Paycheck Protection Program loan that was forgiven in July 2021.
Net Loss
For the three months ended March 31, 2022, we incurred a net loss of $7,561,054 compared to a net loss for the three months ended March 31, 2021 of $4,122,432. The $3,438,622 increase in the net loss was primarily due to the increase of $1,900,869 increase in research and development expenses and the $823,900 increase in general and administrative expenses.
Six months ended March 31, 2022 compared with the six months ended March 31, 2021
| Six
Months Ended March 31, 2022 | Six
Months Ended March 31, 2021 | |||||||
| Revenues | $ | — | $ | — | ||||
| Operating expenses: | ||||||||
| Research and development | 8,910,059 | 7,742,520 | ||||||
| General and administrative | 6,014,166 | 3.982,181 | ||||||
| Stock-based compensation expense | 1,925,602 | 619,544 | ||||||
| Total operating expenses | 16,849,827 | 12,344,245 | ||||||
| Operating loss | (16,849,827 | ) | (12,344,245 | ) | ||||
| Interest income | 63,553 | 82,811 | ||||||
| Interest expense | — | (7,907 | ) | |||||
| Net loss | $ | (16,786,274 | ) | $ | (12,269,341 | ) | ||
Revenues
We did not generate any revenues for the six months ended March 31, 2022 or 2021.
Research and Development Expenses
For the six months ended March 31, 2022, research and development expenses were $8,910,059 as compared to $7,742,520 during the six months ended March 31, 2021, an increase of $1,167,539.
Research and development costs for our Halo-Lido product candidate increased by $1,227,904 to $1,701,477 for the six months ended March 31, 2022 as compared to $473,573 for the six months ended March 31, 2021 due to start-up costs associated with the Phase 2b trial which is expected to begin in the quarter ending June 30, 2022. On February 15, 2022, Citius announced that the FDA issued a Study May Proceed Letter for our Phase 2b Halo-Lido study.
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During the six months ended March 31, 2022, research and development costs for our proposed novel cellular therapy for ARDS decreased by $4,731,973 to $651,753 as compared to $5,383,726 for the six months ended March 31, 2021. We expensed the $5,000,000 license fee paid to Novellus during the six months ended March 31, 2021.
Research and development costs for our I/ONTAK product candidate, which we in-licensed in September 2021, was $4,520,366 during the six months ended March 31, 2022. On April 6, 2022, Citius announced the topline results from the pivotal Phase 3 trial and based on this data, Citius anticipates filing a BLA with the FDA in the second half of 2022.
We expect that research and development expenses will continue to increase in fiscal 2022 as we continue to focus on our Phase 3 trials for Mino-Lok® and I/ONTAK, progress the Halo-Lido product candidate and continue our research and development efforts related to ARDS and Mino-Wrap.
General and Administrative Expenses
For the six months ended March 31, 2022, general and administrative expenses were $6,014,166 as compared to $3,982,181 during the six months ended March 31, 2021. General and administrative expenses increased by $2,031,985 in comparison with the prior period. The primary reasons for the increase were additional compensation costs for new employees, increased investor relations costs and additional insurance expense. General and administrative expenses consist primarily of compensation costs, professional fees for legal, regulatory, accounting, and corporate development services, and investor relations expenses.
Stock-based Compensation Expense
For the six months ended March 31, 2022, stock-based compensation expense was $1,925,602 as compared to $619,544 for the six months ended March 31, 2021. For the six months ended March 31, 2022, stock-based compensation includes $66,666 in expense for the NoveCite stock option plan that was adopted in November 2020 as compared to $31,389 for the six months ended March 31, 2021. Stock-based compensation expense for the most recently completed quarter increased by $1,306,058 in comparison to the prior period primarily due to new grants made to employees (including new hires), directors and consultants.
Other Income (Expense)
Interest income for the six months ended March 31, 2022 was $63,553 as compared to interest income of $82,811 for the prior period. We have invested the remaining proceeds of our early 2021 equity offerings and common stock warrant exercises in money market accounts.
There was no interest expense for the six months ended March 31, 2022 as compared to $7,907 in interest expense for the six months ended March 31, 2021. Interest expense was $7,096 for the six months ended March 31, 2021 on the notes payable – related parties that were repaid in full in June 2021. Interest expense was $811 for the six months ended March 31, 2021 on the Paycheck Protection Program loan that was forgiven in July 2021.
Net Loss
For the six months ended March 31, 2022, we incurred a net loss of $16,786,274 compared to a net loss for the six months ended March 31, 2021 of $12,269,341. The $4,516,933 increase in the net loss was primarily due to the increase of $1,167,539 in research and development expenses and the increase of $2,031,985 in general and administrative expenses.
19
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Working Capital
Citius has incurred operating losses since inception and incurred a net loss of $16,786,274 for the six months ended March 31, 2022. At March 31, 2022, Citius had an accumulated deficit of $112,834,095. Citius’ net cash used in operations during the six months ended March 31, 2022 was $14,316,714.
As a result of the Company’s common stock offerings and common stock warrant exercises during the year ended September 30, 2021, the Company had working capital of approximately $54,200,000 at March 31, 2022. At March 31, 2022, Citius had cash and cash equivalents of $55,756,232 available to fund its operations. The Company’s primary sources of cash flow since inception have been from financing activities. Our primary uses of operating cash were for in-licensing of intellectual property, product development and commercialization activities, employee compensation, consulting fees, legal and accounting fees, insurance and investor relations expenses.
Based on our cash and cash equivalents at March 31, 2022, we expect that we will have sufficient funds to continue our operations through March 2023. We expect to need to raise additional capital in the future to support our operations beyond March 2023. There is no assurance, however, that we will be successful in raising the needed capital or that the proceeds will be received in an amount or in a timely manner to support our operations.
Inflation
Our management believes that inflation has not had a material effect on our results of operations.
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of our financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the amounts of revenues and expenses recorded during the reporting periods. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.
Our critical accounting policies and use of estimates are discussed in, and should be read in conjunction with, the annual consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021 as filed with the SEC.
20
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.
Our Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial officer and principal accounting officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of March 31, 2022. In designing and evaluating disclosure controls and procedures, we recognize that any disclosure controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objective. As of March 31, 2022, based on the evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes In Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
There has been no change in the Company’s risk factors since the Company’s Form 10-K filed with the SEC on December 15, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On March 21, 2022, we issued 100,000 shares of our common stock to a consultant for investor relations services pursuant to the agreed upon compensation terms in the consulting agreement with the entity. The issuance of the shares was exempt from registration under Section 4(a)(2) of the Securities Act.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
22
Item 6. Exhibits
| 10.1 | Amended and Restated Employment Agreement between Myron Holubiak and Citius Pharmaceuticals, Inc., dated April 12, 2022 and effective May 1, 2022. * | |
| 31.1 | Certification of the Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a).* | |
| 31.2 | Certification of the Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a).* | |
| 32.1 | Certification of the Principal Executive and Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.* | |
| EX-101.INS | Inline XBRL Instance Document* | |
| EX-101.SCH | Inline XBRL Taxonomy Extension Schema Document* | |
| EX-101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document* | |
| EX-101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document* | |
| EX-101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document* | |
| EX-101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document* | |
| EX-104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| * | Filed herewith. |
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CITIUS PHARMACEUTICALS, INC. | ||
| Date: May 12, 2022 | By: | /s/ Leonard Mazur |
| Leonard Mazur | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: May 12, 2022 | By: | /s/ Jaime Bartushak |
| Jaime Bartushak | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
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Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is entered into this 12 day of April, 2022, to be effective as of May 1, 2022 (the “Effective Date”), by and between Citius Pharmaceuticals, Inc., a Nevada corporation with principal executive offices at 11 Commerce Drive, 1st Floor, Cranford, NJ 07016 (the “Company”), and Myron Holubiak, residing at 1544 Edly Cove Court, North Brunswick, New Jersey 08902 (the “Executive”).
W I T N E S S E T H:
WHEREAS, Executive and the Company are parties to that certain Employment Agreement dated as of March 30, 2016 (the “Prior Agreement”) pursuant to which Executive serves as the Company’s Chief Executive Officer;
WHEREAS, Executive and the Company have agreed that Executive will assume the role of Executive Vice Chairman effective as of the Effective Date;
WHEREAS, Executive and the Company wish to confirm their understandings of the terms and conditions of Executive’s employment with the Company in writing and to amend and restate the Prior Agreement in its entirety; and
WHEREAS, Executive acknowledges and agrees that his entry into this Agreement and acceptance of the position of Executive Vice Chairman is voluntary and does not constitute “Good Reason” within the meaning of the Prior Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:
1. Employment.
(a) Title and Duties. The Executive will be employed by the Company as Executive Vice Chairman reporting to the Chair of the Company’s Board of Directors (the “Chair”). Executive will perform such duties for the Company as may reasonably be requested by the Chair. In particular, it is expected that Executive will have involvement with, the major business initiatives in which the Company is engaged. The Company will use its best efforts to cause Executive to be elected as a voting member of its Board throughout the Term and shall include him in the management slate for election as a director at every stockholders meeting during the Term at which his term as a director would otherwise expire. Executive agrees to accept election, and to serve during the Term, as a member of the Board without any compensation therefore other than as specified in this Agreement.
(b) Performance. Executive agrees to perform his duties faithfully, to devote substantially all of his working time, attention and energies to the business of the Company, and to use his best efforts to advance the best interests of the Company. While he remains employed by the Company, Executive will not be actively engaged in any other business activity, whether or not such business activity is pursued for gain, profit or other pecuniary advantage, that will interfere or be in conflict with the performance by the Executive of his duties hereunder or the Executive’s availability to perform such duties or that will adversely affect, or negatively reflect upon, the Company.
(c) Acceptance. Executive hereby accepts such employment and agrees to perform his duties to the Company as described herein.
2. Term. The Executive’s employment under this Agreement will begin on the Effective Date and will continue for a period of 18 months (the “Initial Term”), unless sooner terminated pursuant to Section 7 of this Agreement. This Agreement will automatically be extended for one additional 12-month period (the “Additional Term” and, together with the Initial Term, the “Term”) unless either party notifies the other in writing that it intends to not extend this Agreement at least 60 days prior to the expiration of the Initial Term; provided, however, that the Company’s failure to provide the Executive with such notice shall not constitute termination by the Executive for Good Reason (as defined in Section 7(d) hereof).
3. Compensation. As full compensation for the performance by the Executive of his duties under this Agreement, the Company shall pay the Executive as follows:
(a) Base Salary. The Company shall pay Executive an annual salary (the “Base Salary”) equal to Four Hundred and Fifty Thousand Dollars ($450,000) per year. Payment shall be made in accordance with the Company’s normal payroll practices. The Base Salary will be reviewed by the Company’s Board of Directors (the “Board”) no less frequently than annually.
(b) Annual Bonus. At the sole discretion of the Board, Executive may receive a discretionary bonus for each year during the Term (the “Annual Bonus”) in an amount up to 50% of his then current Base Salary based on the performance of the Company and/or the Executive as determined by the Board (or a committee thereof), after consultation with the Executive. The Annual Bonus shall be payable either as a lump-sum payment or in installments as determined by the Board in its sole discretion, provided, however, if the Board determines to pay the Executive in installments, such installments shall be no less frequently than monthly, and shall be over a time period not to exceed four months, unless otherwise agreed by the Executive in writing. Notwithstanding the foregoing, the Annual Bonus, if any, for a given year will be paid in full no later than March 15 of the calendar year immediately following the calendar year for which the Annual Bonus, if any, is earned.
(c) Withholding. The Company shall withhold all applicable federal, state and local taxes and social security and such other amounts as may be required by law from all amounts payable to the Executive under this Section 3.
(d) Expenses. The Company shall reimburse the Executive for all normal, usual and necessary expenses incurred by the Executive in furtherance of the business and affairs of the Company, including reasonable travel and entertainment, upon timely receipt by the Company of appropriate vouchers or other proof of the Executive’s expenditures and otherwise in accordance with any expense reimbursement policy as may from time to time be adopted by the Company.
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(e) Legal Fees. All costs and expenses incurred in connection with the parties’ negotiation and entry into this Agreement shall be paid by the party incurring such costs and expenses; provided, however, that the Company shall reimburse the Executive for the reasonable fees and expenses of counsel to the Executive up to a maximum amount of $15,000.
(f) Other Benefits. The Executive shall be entitled to all rights and benefits for which he shall be eligible under any benefit or other plans (including, without limitation, dental, medical, medical reimbursement and hospital plans, pension plans, employee stock purchase plans, profit sharing plans, bonus plans and other so-called “fringe benefits”) as the Company shall make available to its senior executives from time to time. The Company shall also name Executive as a covered person under any Directors & Officers insurance policies.
(g) Vacation. The Executive shall, during the Term, be entitled to a vacation of four nonconsecutive weeks per year, in addition to holidays observed by the Company. Unless otherwise provided by the Company’s vacation policy, the Executive shall not be entitled to carry any unused, accrued vacation forward from one year of employment to the next, and any such vacation days will be forfeited without payment. In addition, the Executive will forfeit payment for any unused, accrued vacation upon termination of employment, subject to applicable law.
4. Confidential Information and Inventions.
(a) The Executive recognizes and acknowledges that in the course of his duties he has received and will receive confidential or proprietary information owned by the Company or third parties with whom the Company has an obligation of confidentiality, relating to and used in the Company’s business (collectively, “Confidential and Proprietary Information”). Confidential and Proprietary Information shall include, but shall not be limited to, confidential or proprietary scientific or technical information, data, formulas and related concepts, business plans (both current and under development), client lists, promotion and marketing programs, trade secrets, or any other confidential or proprietary business information relating to development programs, costs, revenues, marketing, investments, sales activities, promotions, credit and financial data, manufacturing processes, financing methods, plans or the business and affairs of the Company or of any affiliate or client of the Company, and any and all information relating to the operation of the Company’s business which the Company may from time to time designate as confidential or proprietary or that Executive reasonably knows should be, or has been, treated by the Company as confidential or proprietary. The Executive expressly acknowledges that the Confidential and Proprietary Information constitutes a protectable business interest of the Company. The Executive further agrees that if any information that the Company deems to be a trade secret is found by a court of competent jurisdiction not to be a trade secret, such information will, nevertheless, be considered Confidential and Proprietary Information for purposes of this Agreement. Confidential and Proprietary Information does not include any information that: (i) at the time of disclosure is generally known to, or readily ascertainable by, the public; (ii) becomes known to the public through no fault of Executive or other violation of this Agreement; or (iii) is disclosed to Executive by a third party under no obligation to maintain the confidentiality of the information.
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(b) The Executive agrees, during and after the Term, except as reasonably necessary for the fulfillment of his duties under this Agreement (including working from home or otherwise remotely): (i) not to use any such Confidential and Proprietary Information for himself or others; (ii) to keep confidential and not disclose or make accessible to any other person or entity any Confidential and Proprietary Information; and (iii) not to take any Company Confidential and Proprietary Information (including but not limited to writings, correspondence, notes, drafts, records, invoices, technical and business policies, computer programs or disks) from the Company’s offices at any time. The Executive agrees to return immediately all Company material and reproductions (including but not limited, to writings, correspondence, notes, drafts, records, invoices, technical and business policies, computer programs or disks) thereof in his possession to the Company upon termination of employment, or at any time upon the Company’s request.
(c) Except with prior written authorization by the Company, the Executive agrees not to disclose or publish any of the Confidential and Proprietary Information, or any confidential, scientific, technical or business information of any other party to whom the Company owes an obligation of confidence, at any time during or after his employment with the Company. The restrictions in this Section 4(c) and in Section 4(b) above will not apply to any information that Executive is required to disclose by law, provided that Executive (i) notifies the Company of the existence and terms of such obligation, (ii) gives the Company a reasonable opportunity to seek a protective or similar order to prevent or limit such disclosure, and (iii) only discloses that information actually required to be disclosed.
(d) Nothing in this Agreement is intended to or will prohibit Executive from communicating with any governmental authority, or making a report in good faith and with a reasonable belief of any violations of law or regulation to a governmental authority, or from filing, testifying or participating in a legal proceeding relating to such violations, including making disclosures protected or required by any whistleblower law or regulation to the Securities and Exchange Commission, the Department of Labor, or any other appropriate government authority charged with the enforcement of any applicable laws. In addition, nothing in this Agreement is intended to or will limit any employee’s right to discuss the terms, wages, and working conditions of their employment, as protected by applicable law. Pursuant to the Defend Trade Secrets Act of 2016, Executive is hereby notified that an individual will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that (i) is made (A) in confidence to a federal, state or local government official, either directly or indirectly, or to an attorney; and (B) solely for the purpose of reporting or investigating a suspected violation of law; or (ii) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. An individual who files a lawsuit for retaliation by an employer for reporting a suspected violation of law may disclose the trade secret to his or her attorney and use the trade secret information in the court proceeding, if the individual files any document containing the trade secret under seal, and does not disclose the trade secret, except pursuant to court order.
(e) The Executive agrees that all inventions, discoveries, improvements and patentable or copyrightable works (“Inventions”) initiated, conceived or made by him, either alone or in conjunction with others, during the course of his employment by the Company or that result from work performed by Executive for the Company, shall be the sole property of the Company to the maximum extent permitted by applicable law and, to the extent permitted by law, shall be “works made for hire” as that term is defined in the United States Copyright Act (17 U.S.C.A., Section 101). The Company shall be the sole owner of all patents, copyrights, trade secret rights, and other intellectual property or other rights in connection therewith. The Executive hereby assigns to the Company all right, title and interest he may have or acquire in all such Inventions; provided, however, that the Board may in its sole discretion agree to waive the Company’s rights pursuant to this Section 4(e) with respect to any Invention that is not directly or indirectly related to the Company’s business. The Executive further agrees to assist the Company in every proper way (but at the Company’s expense) to obtain and from time to time enforce patents, copyrights or other rights on such Inventions in any and all countries, and to that end the Executive will execute all documents necessary:
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(i) to apply for, obtain and vest in the name of the Company alone (unless the Company otherwise directs) letters patent, copyrights or other analogous protection in any country throughout the world and when so obtained or vested to renew and restore the same; and
(ii) to defend any opposition proceedings in respect of such applications and any opposition proceedings or petitions or applications for revocation of such letters patent, copyright or other analogous protection.
(f) The Executive acknowledges that, while performing the services under this Agreement the Executive may locate, identify and/or evaluate patented or patentable inventions having commercial potential in the fields of pharmacy, pharmaceutical, biotechnology, healthcare, technology and other fields which may be of potential interest to the Company (the “Third-Party Inventions”). The Executive understands, acknowledges and agrees that all rights to, interests in or opportunities regarding, all Third-Party Inventions identified by the Company or either of the foregoing persons’ officers, directors, employees (including the Executive), agents or consultants during the Term shall be and remain the sole and exclusive property of the Company or such affiliate and the Executive shall have no rights whatsoever to such Third-Party Inventions and will not pursue for himself or for others any transaction relating to the Third-Party Inventions which is not on behalf of the Company.
(g) The provisions of this Section 4 shall survive any termination or expiration of this Agreement.
5. Non-Competition and Non-Solicitation. The Executive understands and recognizes that his services to the Company are special and unique and that in the course of performing such services the Executive will have access to and knowledge of Confidential and Proprietary Information (as defined in Section 4) and will become knowledgeable of and familiar with the Company’s customers as well as the Company’s business. The Executive acknowledges that, due to the unique nature of the Company’s business, the loss of any of its clients or business flow or the improper use of its Confidential and Proprietary Information could create significant instability and cause substantial damage to the Company and therefore the Company has a strong legitimate business interest in protecting the continuity of its business interests and the restriction herein agreed to by the Executive narrowly and fairly serves such an important and critical business interest of the Company. Therefore, Executive covenants and agrees as follow:
(a) Definitions. As used in this Agreement, the following terms have the meanings given to such terms below:
(i) “Business” means (A) acquiring, developing and commercializing drug products focused on adjunctive cancer therapies; (B) acquiring, developing and commercializing drug products for the treatment of hemorrhoids; and (C) any other business that the Company is actively engaged in at the time of the date of termination, provided that this clause (C) shall only apply if Executive is involved with that other business.
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(ii) “Customer” means (A) any person or entity who is or was a customer of the Company at the time of, or during the six-month period prior to, the date of Executive’s termination and with whom Executive had dealings on behalf of the Company in the course of his employment with the Company, or about whom Executive received Confidential and Proprietary Information in the course of his employment with the Company, and (B) any prospective customer to whom, within the six-month period prior to the Executive’s date of termination, the Company had submitted proposals to for services of which Executive has knowledge, whether or not such proposals have yet to be executed into contracts, provided that, the Company has a legitimate expectation of doing business with such prospective customer, and provided further that the Executive has had material business contacts with such prospective customer on behalf of the Company, whether such contact was initiated by the prospective customer or by Executive.
(iii) “Company Employee” means (A) any person who is an employee of the Company at the time of the date of Executive’s termination of employment, and (B) any person who was an employee of the Company during the six-month period prior to, the termination of Executive’s employment.
(iv) “Person” means any person, firm, partnership, joint venture, corporation or other business entity.
(v) “Restricted Period” means the period commencing on the date of Executive’s termination of employment and ending 12 months thereafter, provided, however, that this period will be tolled and will not run during any time Executive is in violation of this Section 5, it being the intent of the parties that the Restricted Period will be extended for any period of time in which Executive is in violation of this Section.
(vi) “Restricted Territory” means any country in which the Company does business as of the Executive’s date of termination, including without limitation each country to which the Executive directed or in which Executive performed employment-related activities on behalf of the Company at the time of, or during the six-month period prior to, the Executive’s date of termination and each country in which the Company is actively preparing to conduct business within the six-month period immediately following the Executive’s date of termination, provided that Executive is materially involved in such preparations; or if that geographic territory is deemed by a court of competent jurisdiction to be overly broad, the United States of America; or if that geographic territory is deemed by a court of competent jurisdiction to be overly broad, any state, province or similar geographic subdivision in which the Company does business as of the Executive’s date of termination, including without limitation each state, province or similar geographic subdivision to which the Executive directed or in which Executive performed employment-related activities on behalf of the Company at the time of, or during the six-month period prior to, the date of termination.
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(b) Non-Competition. During his employment with the Company, Executive will not, on his own behalf or on behalf of any other Person, engage in any business competitive with or adverse to that of the Company. In addition, during his employment with the Company and during the Restricted Period, Executive will not (i) engage in the Business in the Restricted Territory, or (ii) hold a position based in or with responsibility for all or part of the Restricted Territory, with any Person engaging in the Business, whether as employee, consultant, or otherwise, (A) in which Executive will have duties, or will perform or be expected to perform services for such Person, that is or are the same as or substantially similar to the position held by Executive or those duties or services actually performed by Executive for the Company within the 12-month period immediately preceding the Executive’s date of termination, or (B) in which Executive will use or disclose or be reasonably expected to use or disclose any Confidential and Proprietary Information of the Company for the purpose of providing, or attempting to provide, such Person with a competitive advantage with respect to the Business. For purposes of clarification, nothing contained in this Section 5(b) shall be deemed to prohibit the Executive from acquiring or holding, solely for investment, publicly traded securities of any corporation, some or all of the activities of which are competitive with the business of the Company so long as such securities do not, in the aggregate, constitute more than five percent of any class or series of outstanding securities of such corporation.
(c) Non-Solicitation. During his employment with the Company and during the Restricted Period, Executive will not, directly or indirectly, on Executive’s own behalf or on behalf of any other Person:
(i) Call upon, solicit, divert, encourage or attempt to call upon, solicit, divert or encourage any Customer for purposes of marketing, selling or providing products or services to such Customer that are similar to or competitive with those offered by the Company;
(ii) Induce, encourage or attempt to induce or encourage any Customer to reduce, limit or cancel its business with the Company;
(iii) Induce, encourage or attempt to induce or encourage any Customer to purchase or accept products or services competitive with those offered by the Company from any Person (other than the Company) engaging in the Business;
(iv) Otherwise interfere or engage in any conduct that would have the effect of interfering, in any manner, with the business relationship between the Company and any of the Company’s Customers; or
(v) Solicit, induce, or attempt to solicit or induce any Company Employee or any independent contractor (who is then engaged by the Company or was engaged by the Company in the prior six months) to terminate his or her employment or engagement with the Company or to accept employment or engagement with any Person engaging in the Business within the Restricted Territory.
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(d) Direct Employment or Engagement by Customer. During his employment with the Company and during the Restricted Period, Executive will not be employed or engaged (as an employee, contractor, consultant or otherwise) directly by, or solicit employment or engagement by, any Person who, during the Term of this Agreement, was an agent or Customer of the Company with whom Executive worked during his employment with the Company in a position or capacity in which Executive will be performing services for such Customer that are the same as, or substantially similar to, those services provided by Executive for the Customer during Executive’s employment with the Company. For the avoidance of doubt, the terms “agent” and “Customer” will not include any investment bank, investor, lender or other financial intermediary which may represent, invest in or otherwise deal with the Company.
(e) Enforcement. In the event that the Executive breaches or threatens to breach any provisions of Section 4 or this Section 5, then the Company will suffer irreparable harm and monetary damages would be inadequate to compensate the Company. Accordingly, in addition to any other rights which the Company may have, the Company shall (i) be entitled, without the posting of bond or other security, to seek injunctive relief to enforce the restrictions contained in such Sections and (ii) have the right to require the Executive to account for and pay over to the Company all compensation, profits, monies, accruals, increments and other benefits derived or received by the Executive as a result of any transaction constituting a breach of any of the provisions of Sections 4 or 5, to the maximum extent permitted by law.
(f) Reasonableness and Severability. Each of the rights and remedies enumerated in Section 5(e) shall be independent of the others and shall be in addition to and not in lieu of any other rights and remedies available to the Company at law or in equity. The Executive hereby acknowledges and agrees that the covenants provided for pursuant to Section 5 are essential elements of Executive’s employment by the Company and are reasonable with respect to their duration, geographic area and scope and in all other respects. If, at the time of enforcement of this Section 5, a court holds that the restrictions stated herein are unreasonable under the circumstances then existing, the parties hereto agree that the maximum duration, scope or geographic area legally permissible under such circumstances will be substituted for the duration, scope or area stated herein. If any of the covenants contained in this Section 5, or any part of any of them, is hereafter construed or adjudicated to be invalid or unenforceable, the same shall not affect the remainder of the covenant or covenants or rights or remedies which shall be given full effect without regard to the invalid portions. No such holding of invalidity or unenforceability in one jurisdiction shall bar or in any way affect the Company’s right to the relief provided in this Section 5 or otherwise in the courts of any other state or jurisdiction within the geographical scope of such covenants as to breaches of such covenants in such other respective states or jurisdictions, such covenants being, for this purpose, severable into diverse and independent covenants.
(g) Remedies. In the event that an actual proceeding is brought in equity to enforce the provisions of Section 4 or this Section 5, the Executive shall not urge as a defense that there is an adequate remedy at law nor shall the Company be prevented from seeking any other remedies which may be available. The Executive agrees that he shall not raise in any proceeding brought to enforce the provisions of Section 4 or this Section 5 that the covenants contained in such Sections limit his ability to earn a living.
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(h) Survival. The provisions of this Section 5 shall survive any termination of this Agreement.
6. Representations and Warranties.
(a) The Executive hereby represents and warrants to the Company as follows:
(i) Neither the execution or delivery of this Agreement nor the performance by the Executive of his duties and other obligations hereunder violate or will violate any statute, law, determination or award, or conflict with or constitute a default or breach of any covenant or obligation under (whether immediately, upon the giving of notice or lapse of time or both) any prior employment agreement, contract, or other instrument to which the Executive is a party or by which he is bound.
(ii) The Executive has the full right, power and legal capacity to enter and deliver this Agreement and to perform his duties and other obligations hereunder. This Agreement constitutes the legal, valid and binding obligation of the Executive enforceable against him in accordance with its terms. No approvals or consents of any persons or entities are required for the Executive to execute and deliver this Agreement or perform his duties and other obligations hereunder.
(b) The Company hereby represents and warrants to the Executive that this Agreement and the employment of the Executive hereunder have been duly authorized by and on behalf of the Company, including, without limitation, by all required action by the Board.
7. Termination. The Executive’s employment hereunder shall be terminated immediately upon the Executive’s death and may be otherwise terminated as follows:
(a) The Executive’s employment hereunder may be terminated by the Board for Cause. Any of the following actions by the Executive shall constitute “Cause”:
(i) The willful failure, disregard or continuing refusal by the Executive to perform his duties hereunder;
(ii) Any act of willful or intentional misconduct, or a grossly negligent act by the Executive having the effect of injuring, in a material way (as determined in good-faith by a majority of the Board), the business or reputation of the Company, including but not limited to, any officer, director, or executive of the Company;
(iii) Willful misconduct by the Executive in carrying out his duties or obligations under this Agreement, including, without limitation, insubordination with respect to lawful directions received by the Executive from the Chair;
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(iv) The Executive’s indictment of any felony or a misdemeanor involving moral turpitude (including entry of a nolo contendere plea);
(v) The determination by the Board, based upon clear and convincing evidence, after a reasonable and good-faith investigation by the Company following a written allegation by another employee of the Company, that the Executive engaged in some form of harassment prohibited by law (including, without limitation, age, sex or race discrimination), unless the Executive’s actions were specifically directed by the Board;
(vi) Any intentional misappropriation of the property of the Company, or embezzlement of its funds or assets (whether or not a misdemeanor or felony);
(vii) Material breach by the Executive of any of the provisions of Sections 4, 5 or 6 of this Agreement; and
(viii) Material breach by the Executive of any provision of this Agreement other than those contained in Sections 4, 5 or 6 which is not cured by the Executive within 30 business days after notice thereof is given to the Executive by the Company.
(b) The Executive’s employment hereunder may be terminated by the Board due to the Executive’s Disability. For purposes of this Agreement, a termination for “Disability” shall occur (i) when the Board has provided a written termination notice to the Executive supported by a written statement from a reputable independent physician mutually selected by the Company and the Executive, or the Executive’s legal representatives in the event he is unable to make such selection due to physical or mental incapacity, to the effect that the Executive shall have become so physically or mentally incapacitated as to be unable to resume, even with reasonable accommodation as may be required under the Americans With Disabilities Act, within the ensuing 12 months, his employment hereunder by reason of physical or mental illness or injury, or (ii) upon rendering of a written termination notice by the Board after the Executive has been unable to substantially perform his duties hereunder, even with reasonable accommodation as may be required under the Americans With Disabilities Act, for 120 or more consecutive days, or more than 180 days in any consecutive twelve month period, by reason of any physical or mental illness or injury. For purposes of this Section 7(b), the Executive agrees to make himself available and to cooperate in any reasonable examination by a reputable independent physician mutually selected by the Company and the Executive, and paid for by the Company. Notwithstanding the foregoing, nothing herein shall give the Company the right to terminate Executive prior to discharging its obligations to Executive, if any, under the Family and Medical Leave Act, the Americans With Disabilities Act, or any other applicable law. The Company shall reimburse Executive for his actual cost of maintaining a supplementary long-term disability insurance policy during the Term up to a maximum reimbursement of $10,000 per year.
(c) The Executive’s employment hereunder may be terminated by the Board (or its successor) by written notice to the Executive upon the occurrence of a Change of Control. For purposes of this Agreement, “Change of Control” means (i) the acquisition, directly or indirectly, following the date hereof by any person (as such term is defined in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as amended), in one transaction or a series of related transactions, of securities of the Company representing in excess of 50% or more of the combined voting power of the Company’s then outstanding securities if such person or his or its affiliate(s) do not own in excess of 50% of such voting power on the Effective Date of this Agreement, or (ii) the future disposition by the Company (whether direct or indirect, by sale of assets or stock, merger, consolidation or otherwise) of all or substantially all of its business and/or assets in one transaction or series of related transactions other than a merger (1) effected exclusively for the purpose of changing the domicile of the Company or (2) effected for the purpose of obtaining a public listing and/or publicly traded securities.
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(d) The Executive’s employment hereunder may be terminated by the Executive for Good Reason. For purposes of this Agreement, “Good Reason” shall mean any of the following: (i) any material reduction by the Company of the Executive's compensation or benefits payable hereunder (it being understood that a reduction of benefits applicable to all employees of the Company, including the Executive, shall not be deemed a reduction of the Executive's compensation package for purposes of this definition); (ii) any requirement by the Company that the Executive locate Company headquarters, or Executive’s residence or primary place of employment, to a location outside a 30-mile radius of Cranford, New Jersey, (iii) a material breach by the Company of Sections 8(b) or (c) of this Agreement which is not cured by the Company within 30 days after written notice thereof is given to the Company by the Executive, or (iv) a change in the lines of reporting such that the Executive no longer reports directly to the Chair. However, notwithstanding the above, Good Reason shall not exist unless: (x) the Executive notifies the Company within 90 days of the initial existence of one of the adverse events described above, and (y) the Company fails to correct the adverse event within 30 days of such notice, and (z) the Executive terminates his employment because of the existence of one or more of the adverse events described above within 180 days of the initial existence of the event.
(e) The Executive’s employment may be terminated by the Company without Cause by delivery of written notice to the Executive effective 15 days after the date of delivery of such notice.
(f) The Executive’s employment may be terminated by the Executive in the absence of Good Reason by delivery of written notice to the Company effective 15 days after the date of delivery of such notice.
(g) To the extent not previously terminated, Executive’s employment will end automatically at conclusion of the Initial Term if either party has given notice that the Agreement will not be extended for the Additional Term as described in Section 2 above. To the extent not previously terminated, Executive’s employment will end automatically at the conclusion of the Additional Term.
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8. Compensation upon Termination.
(a) Accrued Benefits. Upon termination of Executive’s employment by either party regardless of the cause or reason (including, for the avoidance of doubt, a termination upon expiration of the Initial Term or the Additional Term as described in Section 7(g) above), Executive shall be entitled to the following, referred to herein as the “Accrued Benefits”: (i) payment for any accrued, unpaid Base Salary through the termination date; (ii) reimbursement for any approved business expenses that Executive has timely submitted for reimbursement in accordance with the Company’s business expense reimbursement policy or practice; and (iii) unless Executive’s employment has been terminated by the Company for Cause (pursuant to Section 7(a)) or by Executive in the absence of Good Reason (pursuant to Section 7(f)), a pro-rata portion of the Annual Bonus for the year in which the termination occurred, such amount to be determined by the Board in its good faith discretion based on the performance of the Company and/or the Executive during the year and paid at the same time and in the same manner as annual bonuses are paid to other senior executives (notwithstanding that Executive is no longer employed by the Company at the time of payment), provided that this clause (iii) will not apply if Executive is entitled to benefits under Section 8(c) below. Except as otherwise expressly provided by this Agreement, the Company shall have no further payment obligations to Executive upon the termination of his employment.
(b) Severance Benefits. If the Executive’s employment is terminated during the Term as a result of Executive’s Disability pursuant to Section 7(b), by the Company without Cause pursuant to Section 7(e), or by Executive for Good Reason pursuant to Section 7(d), provided that Executive signs and does not revoke a general release of claims against the Company within the time period specified therein, in form and substance satisfactory to the Company (the “Release”), then the Company shall provide the following benefits to Executive, referred to herein as the “Separation Benefits”: (i) the continued payment in installments of Executive’s then-current Base Salary (less applicable taxes and withholdings) for the remaining period of the then-current Term or for six months, whichever is longer (the “Separation Pay”); and (ii) provided that Executive properly and timely elects to continue his health insurance benefits under COBRA or applicable state continuation coverage law after the date of termination, reimbursement for Executive’s applicable health continuation coverage premiums for the remaining period of the then-current Term or until Executive becomes eligible for insurance benefits from another employer, whichever is earlier (the “COBRA Reimbursement”). The first installment of the Separation Pay will be paid on the Company’s first regular payday occurring 60 days after the termination date in an amount equal to the sum of payments of Base Salary that would have been paid if he had remained in employment for the period from the termination date through the payment date. The remaining installments will be paid until the end of the applicable period at the same rate as the Base Salary in accordance with the Company’s normal payroll practices for its employees. The COBRA Reimbursement shall continue for the specified period provided that the Company has the right to discontinue the reimbursement payment and pay to the Executive a lump sum amount equal to the current COBRA premium times the number of months remaining in the specified period if the Company determines that continued payment of the COBRA reimbursement is discriminatory under Section 105(h) of the Internal Revenue Code. Notwithstanding the foregoing, if Executive is entitled to receive the Separation Benefits but violates any provisions of this Agreement after termination of employment, the Company will be entitled to immediately stop paying any further installments of the Separation Benefits. If the Executive’s employment is terminated during the Term as a result of Executive’s death, then the Company shall provide to Executive’s estate the continued payment of Executive’s then-current Base Salary for the remaining period of the then-current Term, beginning on the Company’s first regular payday following the date of such termination.
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(c) Change of Control Severance. If the Executive’s employment is terminated by the Company other than for Cause in connection with or within six months following the occurrence of a Change of Control, provided that Executive signs and does not revoke the Release within the time period specified therein, then the Company shall provide the following benefits to Executive, referred to herein as the “Change of Control Separation Benefits”: (i) a lump sum payment equal to the Base Salary due for the remainder of the then-current Term; (ii) the full Annual Bonus for the year in which the termination occurred (items (i) and (ii) being the “Change of Control Separation Pay”); and (iii) provided that Executive properly and timely elects to continue his health insurance benefits under COBRA or applicable state continuation coverage law after the date of termination, reimbursement for Executive’s applicable health continuation coverage premiums for the remaining period of the then-current Term or until Executive becomes eligible for insurance benefits from another employer, whichever is earlier (the “Change of Control COBRA Reimbursement”). The Change of Control Separation Pay will be paid on the Company’s first regular payday occurring 60 days after the termination date. The Change of Control COBRA Reimbursement shall continue for the specified period provided that the Company has the right to discontinue the reimbursement payment and pay to the Executive a lump sum amount equal to the current COBRA premium times the number of months remaining in the specified period if the Company determines that continued payment of the COBRA reimbursement is discriminatory under Section 105(h) of the Internal Revenue Code.
(d) This Section 8 sets forth the only obligations of the Company with respect to the termination of the Executive’s employment with the Company, except as otherwise required by law, and the Executive acknowledges that, upon the termination of his employment, he shall not be entitled to any payments or benefits which are not explicitly provided in Section 8. For the avoidance of doubt, in no circumstance will Executive be entitled to benefits under both Section 8(b) and Section 8(c); if Executive is entitled to the Change of Control Separation Benefits under Section 8(c), then such the Change of Control Separation Benefits shall be in lieu of and not in addition to any other severance benefits otherwise provided for herein, including the Separation Benefits described in Section 8(b) of this Agreement. For purposes of clarification, if Executive’s employment with the Company terminates upon expiration of the Initial Term or the Additional Term as described in Section 7(g), Executive shall only be entitled to receive the Accrued Benefits described in Section 8(a).
(e) Immediately upon the termination of Executive’s employment with the Company for any reason, Executive will be deemed to have resigned from all positions as an officer of the Company and member of the Board, along with any other positions he may hold with or for the benefit of the Company and/or its affiliates. In furtherance of the preceding sentence, Executive will execute and return to the Company all letters and documents that the Company may reasonably require in order to evidence such resignation(s), but Executive’s failure to execute and return such documents will not have the effect of delaying or in any way invalidating the resignation(s) provided for by the preceding sentence.
(f) The provisions of this Section 8 shall survive any termination of this Agreement.
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9. Section 409A Matters. The intent of the parties to the Agreement is that the payments, compensation and benefits under this Agreement be exempt from or comply with Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, in this connection, the following shall be applicable:
(a) To the greatest extent possible, this Agreement shall be interpreted to be exempt from or in compliance with Section 409A.
(b) If any severance, compensation, or benefit required by the Agreement is to be paid in a series of installment payments, each individual payment in the series shall be considered a separate payment for purposes of Section 409A.
(c) For the avoidance of doubt, the parties intend that the Separation Benefits and Change of Control Separation Benefits satisfy, to the greatest extent possible, the exemptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4) and 1.409A-1(b)(9). Notwithstanding anything to the contrary set forth herein, to the extent that the Separation Benefits or Change of Control Separation Benefits constitute “deferred compensation” within the meaning of Section 409A, such Separation Benefits or Change of Control Separation Benefits (as applicable), will not commence in connection with Executive’s termination of employment unless and until Executive has also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h)).
(d) If any severance, compensation, or benefit required by the Agreement that constitutes “nonqualified deferred compensation” within the meaning of Section 409A is considered to be paid on account of “separation from service” within the meaning of Section 409A, and Executive is a “specified employee” within the meaning of Section 409A, no payments of any of such severance, compensation, or benefit shall be made for six months plus one day after such separation from service (the “New Payment Date”). The aggregate of any such payments that would have otherwise been paid during the period between the date of separation from service and the New Payment Date shall be paid to the Executive in a lump sum on the New Payment Date. Thereafter, any severance, compensation, or benefit required by the Agreement that remains outstanding as of the day immediately following the New Payment Date shall be paid without delay over the time period originally scheduled, in accordance with the terms of this Agreement.
(e) The provisions of this Section 9 shall survive any termination of this Agreement.
10. Miscellaneous.
(a) This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the State of New Jersey, without giving effect to its principles of conflicts of laws.
(b) The parties agree that any litigation arising out of or related to this Agreement or Executive’s employment by the Company will be brought exclusively in any state or federal court in Union County, New Jersey. Each party (i) consents to the personal jurisdiction of said courts, (ii) waives any venue or inconvenient forum defense to any proceeding maintained in such courts, and (iii) agrees not to bring any proceeding arising out of or relating to this Agreement or Executive’s employment by Company in any other court.
14
(c) This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective heirs, legal representatives, successors and permitted assigns.
(d) This Agreement, and the Executive’s rights and obligations hereunder, may not be assigned by the Executive. The rights and obligations of the Company under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company, including any successors or assigns in connection with any sale, transfer or other disposition of all or substantially all of its business or assets.
(e) This Agreement cannot be amended orally, or by any course of conduct or dealing, but only by a written agreement signed by the parties hereto.
(f) The failure of either party to insist upon the strict performance of any of the terms, conditions and provisions of this Agreement shall not be construed as a waiver or relinquishment of future compliance therewith, and such terms, conditions and provisions shall remain in full force and effect. No waiver of any term or condition of this Agreement on the part of either party shall be effective for any purpose whatsoever unless such waiver is in writing and signed by such party.
(g) All notices, requests, consents and other communications, required or permitted to be given hereunder, shall be in writing and shall be delivered personally or by an overnight courier service or sent by registered or certified mail, postage prepaid, return receipt requested, to the parties at the addresses set forth on the first page of this Agreement, and shall be deemed given when so delivered personally or by overnight courier, or, if mailed, five days after the date of deposit in the United States mails. Either party may designate another address, for receipt of notices hereunder by giving notice to the other party in accordance with this Section 10(g).
(h) This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter hereof, and supersedes all prior agreements, arrangements and understandings, written or oral, relating to the subject matter hereof, including, as of the Effective Date, the Prior Agreement. No representation, promise or inducement has been made by either party that is not embodied in this Agreement, and neither party shall be bound by or liable for any alleged representation, promise or inducement not so set forth.
(i) As used in this Agreement, “affiliate” of a specified person or entity shall mean and include any person or entity controlling, controlled by or under common control with the specified person or entity.
(j) The section headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.
(k) This Agreement may be executed in one or more counterparts, each of which will be deemed an original but all of which together will constitute one instrument reflecting the terms of the Agreement. Counterparts may be delivered via facsimile, electronic mail (including pdf or any electronic signature complying with the U.S. ESIGN Act of 2000, e.g., www.docusign.com) or other transmission method and any counterpart so delivered will be deemed to have been duly and validly delivered and be valid and effective for all purposes.
[Remainder of Page Intentionally Left Blank – Signature Page Follows]
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and intend it to be effective as of the Effective Date by proper person thereunto duly authorized.
| CITIUS PHARMACEUTICALS, INC. | ||
| By: | /s/ Leonard Mazur | |
| Name: | Leonard Mazur | |
| Title: | Chairman of the Board | |
| EXECUTIVE | ||
| /s/ Myron Holubiak | ||
| Myron Holubiak | ||
[Signature Page to Amended and Restated Employment Agreement]
Exhibit 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Leonard Mazur, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Citius 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| May 12, 2022 | By: | /s/ Leonard Mazur |
| Leonard Mazur | ||
| Chief Executive Officer and Chairman | ||
| (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Jaime Bartushak, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Citius 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(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| May 12, 2022 | By: | /s/ Jaime Bartushak |
| Jaime Bartushak | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) |
Exhibit 32.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER AND THE PRINCIPAL
FINANCIAL OFFICER
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Citius Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Leonard Mazur, Chief Executive Officer and Chairman Company, and Jaime Bartushak, Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: May 12, 2022 | By: | /s/ Leonard Mazur |
| Leonard Mazur | ||
| Chief Executive Officer and Chairman | ||
| (Principal Executive Officer) |
| By: | /s/ Jaime Bartushak | |
| Jaime Bartushak | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) |
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares |
Mar. 31, 2022 |
Sep. 30, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
| Preferred stock, shares issued | ||
| Preferred stock, shares outstanding | ||
| Common stock, par value (in Dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 400,000,000 | 400,000,000 |
| Common stock, shares issued | 146,129,630 | 145,979,429 |
| Common stock, shares outstanding | 146,129,630 | 145,979,429 |
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Income Statement [Abstract] | ||||
| Revenues | ||||
| Operating Expenses | ||||
| Research and development | 3,452,210 | 1,551,341 | $ 8,910,059 | $ 7,742,520 |
| General and administrative | 3,117,417 | 2,293,517 | 6,014,166 | 3,982,181 |
| Stock-based compensation – general and administrative | 1,020,998 | 342,962 | 1,925,602 | 619,544 |
| Total Operating Expenses | 7,590,625 | 4,187,820 | 16,849,827 | 12,344,245 |
| Operating Loss | (7,590,625) | (4,187,820) | (16,849,827) | (12,344,245) |
| Other Income (Expense) | ||||
| Interest income | 29,571 | 69,327 | 63,553 | 82,811 |
| Interest expense | (3,939) | (7,907) | ||
| Total Other Income, Net | 29,571 | 65,388 | 63,553 | 74,904 |
| Net Loss | $ (7,561,054) | $ (4,122,432) | $ (16,786,274) | $ (12,269,341) |
| Net Loss Per Share - Basic and Diluted (in Dollars per share) | $ (0.05) | $ (0.04) | $ (0.11) | $ (0.16) |
| Weighted Average Common Shares Outstanding (in Shares) | ||||
| Basic and diluted (in Shares) | 146,041,852 | 95,997,427 | 146,026,847 | 75,565,121 |
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) |
Preferred Stock |
Common Stock |
Additional Paid-In Capital |
Accumulated Deficit |
Total Citius Pharmaceuticals, Inc. Shareholder’s Equity |
Non-Controlling Interest |
Total |
|---|---|---|---|---|---|---|---|
| Balance at Sep. 30, 2020 | $ 55,577 | $ 104,208,958 | $ (70,593,867) | $ 33,670,668 | $ 33,670,668 | ||
| Balance (in Shares) at Sep. 30, 2020 | 55,576,996 | ||||||
| Issuance of NoveCite common stock | 1,799,640 | (2,399,520) | (599,880) | 600,380 | 500 | ||
| Stock-based compensation expense | 276,582 | 276,582 | 276,582 | ||||
| Net loss | (8,146,909) | (8,146,909) | (8,146,909) | ||||
| Balance at Dec. 31, 2020 | $ 55,577 | 106,285,180 | (81,140,296) | 25,200,461 | 600,380 | 25,800,841 | |
| Balance (in Shares) at Dec. 31, 2020 | 55,576,996 | ||||||
| Issuance of common stock in private placement offering, net of costs of $1,549,602 | $ 15,456 | 18,434,954 | 18,450,410 | 18,450,410 | |||
| Issuance of common stock in private placement offering, net of costs of $1,549,602 (in Shares) | 15,455,960 | ||||||
| Issuance of common stock in registered direct offering, net of costs of $5,520,160 | $ 50,830 | 70,929,012 | 70,979,842 | 70,979,842 | |||
| Issuance of common stock in registered direct offering, net of costs of $5,520,160 (in Shares) | 50,830,566 | ||||||
| Issuance of common stock upon exercise of warrants | $ 12,788 | 14,229,755 | 14,242,543 | 14,242,543 | |||
| Issuance of common stock upon exercise of warrants (in Shares) | 12,787,697 | ||||||
| Issuance of common stock for services | $ 50 | 67,950 | 68,000 | 68,000 | |||
| Issuance of common stock for services (in Shares) | 50,000 | ||||||
| Stock-based compensation expense | 342,962 | 342,962 | 342,962 | ||||
| Net loss | (4,122,432) | (4,122,432) | (4,122,432) | ||||
| Balance at Mar. 31, 2021 | $ 134,701 | 210,289,813 | (85,262,728) | 125,161,786 | 600,380 | 125,762,166 | |
| Balance (in Shares) at Mar. 31, 2021 | 134,701,219 | ||||||
| Balance at Sep. 30, 2021 | $ 145,979 | 228,084,195 | (96,047,821) | 132,182,353 | 600,380 | 132,782,733 | |
| Balance (in Shares) at Sep. 30, 2021 | 145,979,429 | ||||||
| Issuance of common stock for services | $ 50 | 95,834 | 95,884 | 95,884 | |||
| Issuance of common stock for services (in Shares) | 50,201 | ||||||
| Stock-based compensation expense | 904,604 | 904,604 | 904,604 | ||||
| Net loss | (9,225,220) | (9,225,220) | (9,225,220) | ||||
| Balance at Dec. 31, 2021 | $ 146,029 | 229,084,633 | (105,273,041) | 123,957,621 | 600,380 | 124,558,001 | |
| Balance (in Shares) at Dec. 31, 2021 | 146,029,630 | ||||||
| Issuance of common stock for services | $ 100 | 177,900 | 178,000 | 178,000 | |||
| Issuance of common stock for services (in Shares) | 100,000 | ||||||
| Stock-based compensation expense | 1,020,998 | 1,020,998 | 1,020,998 | ||||
| Net loss | (7,561,054) | (7,561,054) | (7,561,054) | ||||
| Balance at Mar. 31, 2022 | $ 146,129 | $ 230,283,531 | $ (112,834,095) | $ 117,595,565 | $ 600,380 | $ 118,195,945 | |
| Balance (in Shares) at Mar. 31, 2022 | 146,129,630 |
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) (Parentheticals) |
3 Months Ended |
|---|---|
|
Mar. 31, 2021
USD ($)
| |
| Statement of Stockholders' Equity [Abstract] | |
| Issuance of common stock in private placement offering, net of costs | $ 1,549,602 |
| Issuance of common stock in registered direct offering, net of costs | $ 5,520,160 |
Nature of Operations, Basis of Presentation and Summary of Significant Accounting Policies |
6 Months Ended |
|---|---|
Mar. 31, 2022 | |
| Accounting Policies [Abstract] | |
| NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Citius Pharmaceuticals, Inc. (“Citius,” the “Company,” “we” or “us”) is a specialty pharmaceutical company dedicated to the development and commercialization of critical care products with a focus on anti-infective products in adjunct cancer care, unique prescription products and stem cell therapy.
On March 30, 2016, Citius acquired Leonard-Meron Biosciences, Inc. (“LMB”) as a wholly-owned subsidiary by issuing shares of its common stock.
On September 11, 2020, we formed NoveCite, Inc. (“NoveCite”), a Delaware corporation, of which we own 75% (7,500,000 shares) of the issued and outstanding capital stock (see Note 3).
On August 23, 2021, we formed Citius Acquisition Corp., as a wholly-owned subsidiary in conjunction with the acquisition of I/ONTAK (formerly E7777), but no activity has occurred to date.
In-process research and development (“IPR&D”) consists of (i) the $19,400,000 acquisition value of LMB’s leading drug candidate (Mino-Lok), which is an antibiotic solution used to treat catheter-related bloodstream infections and is expected to be amortized on a straight-line basis over a period of eight years commencing upon revenue generation, and (ii) the $40,000,000 acquisition value of the exclusive license for I/ONTAK (denileukin diftitox), which is a late-stage oncology immunotherapy for the treatment of cutaneous T-cell lymphoma (“CTCL”), a rare form of non-Hodgkin lymphoma, and is expected to be amortized on a straight-line basis over a period of twelve years commencing upon revenue generation.
Goodwill of $9,346,796 represents the value of LMB’s industry relationships and its assembled workforce. Goodwill will not be amortized but will be tested at least annually for impairment.
Citius is subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, risks related to the development by Citius or its competitors of research and development stage product candidates, market acceptance of its product candidates that might be approved, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners, the Company’s ability to obtain additional financing and the Company’s compliance with governmental and other regulations.
Basis of Presentation and Summary of Significant Accounting Policies
Basis of Preparation — The accompanying condensed consolidated financial statements include the operations of Citius Pharmaceuticals, Inc., and its wholly-owned subsidiaries, Citius Pharmaceuticals, LLC, LMB, and Citius Acquisition Corp., and its majority-owned subsidiary NoveCite. Citius Acquisition Corp. is currently inactive. All significant inter-company balances and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state the condensed consolidated financial position of the Company as of March 31, 2022, and the results of its operations and cash flows for the three and six month periods ended March 31, 2022 and 2021. The operating results for the three and six month periods ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending September 30, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021 filed with the Securities and Exchange Commission.
Use of Estimates — Our accounting principles require our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Estimates having relatively higher significance include stock-based compensation, accounting for leases, valuation of warrants, and income taxes. Actual results could differ from those estimates and changes in estimates may occur.
Basic and Diluted Net Loss per Common Share — Basic and diluted net loss per common share applicable to common stockholders is computed by dividing net loss applicable to common stockholders in each period by the weighted average number of shares of common stock outstanding during such period. For the periods presented, common stock equivalents, consisting of stock options and warrants were not included in the calculation of the diluted loss per share because they were anti-dilutive.
Recently Issued Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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, among other things, provides guidance on how to account for contracts on an entity’s own equity. This ASU eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, this ASU modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in this ASU are effective for public companies for fiscal years 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. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities. Under the new guidance (ASC 805-20-30-28), the acquirer should determine what contract assets and/or contract liabilities it would have recorded under Accounting Standards Codification (“ASC”) 606 (the revenue guidance) as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree. The recognition and measurement of those contract assets and contract liabilities will likely be comparable to what the acquiree has recorded on its books under ASC 606 as of the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2021-08 is effective for the Company in the first quarter of fiscal 2024. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued. However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance is adopted. The Company is currently evaluating the adoption date of ASU 2021-08 and the impact, if any, adoption will have on its financial position and results of operations. |
Liquidity and Management’s Plan |
6 Months Ended |
|---|---|
Mar. 31, 2022 | |
| Liquidity and Managements Plan [Abstract] | |
| LIQUIDITY AND MANAGEMENT’S PLAN | 2. LIQUIDITY AND MANAGEMENT’S PLAN
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company experienced negative cash flows from operations of $14,316,714 for the six months ended March 31, 2022. As a result of the Company’s common stock offerings and common stock warrant exercises during the year ended September 30, 2021, the Company had working capital of approximately $54,200,000 at March 31, 2022. The Company estimates that its available cash resources will be sufficient to fund its operations through March 2023.
The Company has generated no operating revenue to date and has principally raised capital through the issuance of debt and equity instruments to finance its operations. The Company’s continued operations beyond March 2023, including its development plans for Mino-Lok, Mino-Wrap, Halo-Lido, NoveCite and I/ONTAK, will depend on its ability to obtain regulatory approval to market Mino-Lok and/or I/ONTAK and generate substantial revenue from the sale of Mino-Lok and/or I/ONTAK and on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships, or out-licensing of its product candidates. However, the Company can provide no assurances on regulatory approval, commercialization or future sales of Mino-Lok or I/ONTAK or that financing or strategic relationships will be available on acceptable terms, or at all. If the Company is unable to raise sufficient capital, find strategic partners or generate substantial revenue from the sale of Mino-Lok or I/ONTAK, there would be a material adverse effect on its business. Further, the Company expects to incur additional expenses as it continues to develop its product candidates, including seeking regulatory approval, and protecting its intellectual property. |
Patent and Technology License Agreements |
6 Months Ended |
|---|---|
Mar. 31, 2022 | |
| Patent and Technology License Agreement [Abstract] | |
| PATENT AND TECHNOLOGY LICENSE AGREEMENTS | 3. PATENT AND TECHNOLOGY LICENSE AGREEMENTS
Patent and Technology License Agreement – Mino-Lok
LMB has a patent and technology license agreement with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok® on an exclusive, worldwide sub licensable basis, as amended. LMB pays an annual maintenance fee each June until commercial sales of a product subject to the license commence. The Company recorded an annual maintenance fee of $90,000 in June 2021 and 2020.
LMB will also pay annual royalties on net sales of licensed products, with royalties ranging from the mid-single digits to the low double digits. In limited circumstances in which the licensed product is not subject to a valid patent claim and a competitor is selling a competing product, the royalty rate is in the low- to mid-single digits. After a commercial sale is obtained, LMB must pay minimum aggregate annual royalties of $100,000 in the first commercial year which is prorated for a less than 12-month period, increasing $25,000 per year to a maximum of $150,000 annually. LMB must also pay NAT up to an aggregate of $1,100,000 upon achieving specified regulatory and sales milestones. Finally, LMB must pay NAT a specified percentage of payments received from any sub-licensees.
Unless earlier terminated by NAT, based on the failure to achieve certain development and commercial milestones, the license agreement remains in effect until the date that all patents licensed under the agreement have expired and all patent applications within the licensed patent rights have been cancelled, withdrawn or expressly abandoned.
Patent and Technology License Agreement – Mino-Wrap
On January 2, 2019, we entered into a patent and technology license agreement with the Board of Regents of the University of Texas System on behalf of the University of Texas M. D. Anderson Cancer Center (“Licensor”), whereby we in-licensed exclusive worldwide rights to the patented technology for any and all uses relating to breast implants. We intend to develop a liquefying gel-based wrap containing minocycline and rifampin for the reduction of infections associated with breast implants following breast reconstructive surgeries (“Mino-Wrap”). We are required to use commercially reasonable efforts to commercialize Mino-Wrap under several regulatory scenarios and achieve milestones associated with these regulatory options leading to an approval from the U.S. Food and Drug Administration (“FDA”).
Under the license agreement, the Company paid an annual maintenance fee of $60,000 and $45,000 in January 2022 and 2021, respectively. The annual maintenance fee increases by $15,000 per year up to a maximum of $90,000. Annual maintenance fees cease on the first sale of product. We also must pay up to an aggregate of $2.1 million in milestone payments, contingent on the achievement of various regulatory and commercial milestones. Under the terms of the license agreement, we also must pay a royalty of mid- to upper-single digit percentages of net sales, depending on the amount of annual sales, and subject to downward adjustment to lower- to mid-single digit percentages in the event there is no valid patent for the product in the United States at the time of sale. After the first sale of product, we will owe an annual minimum royalty payment of $100,000 that will increase annually by $25,000 for the duration of the term. We will be responsible for all patent expenses incurred by Licensor for the term of the agreement although Licensor is responsible for filing, prosecution and maintenance of all patents. Unless earlier terminated by Licensor, based upon the failure by us to achieve certain development and commercial milestones or for various breaches by us, the agreement expires on the later of the expiration of the patents or January 2, 2034.
License Agreement with Novellus
On March 31, 2020, we entered into an option agreement with a subsidiary of Novellus, Inc. (“Novellus”) to in-license from Novellus on a worldwide basis, a novel cellular therapy for acute respiratory distress syndrome (“ARDS”).
Our Board Chairman Leonard Mazur, who is also our largest stockholder, was at the time a significant shareholder of Novellus and subsequent to the option agreement and the license agreement discussed below, became a director of Novellus. As required by our Code of Ethics, the Audit Committee of our Board of Directors approved the entry into the option agreement with Novellus, as did the disinterested members of our Board of Directors.
On October 6, 2020, our subsidiary, NoveCite, exercised the option and signed an exclusive license agreement with Novellus. Upon execution of the agreement, we paid $5,000,000 to Novellus, which was charged to research and development expense in the three-month period ended December 31, 2020, and issued Novellus shares of NoveCite’s common stock representing 25% of the outstanding equity. We own the other 75% of NoveCite’s outstanding equity. Pursuant to the terms of the stock subscription agreement between Novellus and NoveCite, if NoveCite issued additional equity, subject to certain exceptions, NoveCite had to maintain Novellus’s ownership at 25% by issuing additional shares to Novellus.
Citius is responsible for the operational activities of NoveCite, and bears all costs necessary to operate NoveCite. Citius’s officers are also the officers of NoveCite and oversee the business strategy and operations of NoveCite. As such, NoveCite is accounted for as a consolidated subsidiary with a noncontrolling interest.
Novellus has no contractual rights in the profits or obligations to share in the losses of NoveCite, and the Company has not allocated any losses to the noncontrolling interest.
NoveCite is obligated to pay Novellus up to an aggregate of $51,000,000 upon the achievement of various regulatory and developmental milestones. NoveCite also must pay a royalty equal to low double-digit percentages of net sales, commencing upon the sale of a licensed product. This royalty is subject to downward adjustment to an upper-single digit percentage of net sales in any country in the event of the expiration of the last valid patent claim or if no valid patent claim exists in that country. The royalty will end on the earlier of (i) the date on which a biosimilar product is first marketed, sold, or distributed in the applicable country or (ii) the 10-year anniversary of the date of expiration of the last-to-expire valid patent claim in that country. In the case of a country where no licensed patent ever exists, the royalty will end on the later of (i) the date of expiry of such licensed product’s regulatory exclusivity and (ii) the 10-year anniversary of the date of the first commercial sale of the licensed product in the applicable country. In addition, NoveCite will pay to Novellus an amount equal to a mid-twenties percentage of any sublicensee fees it receives.
Under the terms of the license agreement, in the event that Novellus receives any revenue involving the original cell line included in the licensed technology, then Novellus shall remit to NoveCite 50% of such revenue.
The term of the license agreement will continue on a country-by-country and licensed product-by-licensed product basis until the expiration of the last-to-expire royalty term. Either party may terminate the license agreement upon written notice if the other party is in material default. NoveCite may terminate the license agreement at any time without cause upon 90 days prior written notice.
Novellus will be responsible for preparing, filing, prosecuting and maintaining all patent applications and patents included in the licensed patents in the territory, provided however, that if Novellus decides that it is not interested in maintaining a particular licensed patent or in preparing, filing, or prosecuting a licensed patent, NoveCite will have the right, but not the obligation, to assume such responsibilities in the territory at NoveCite’s sole cost and expense.
In July 2021, Novellus was acquired by Brooklyn ImmunoTherapeutics, Inc. (“Brooklyn”). In connection with that transaction, the stock subscription agreement between Novellus and NoveCite was amended to assign to Brooklyn all of Novellus’s right, title, and interest in the stock subscription agreement and delete the anti-dilution protection and replace it with a right of first refusal whereby Brooklyn will have the right to purchase all or a portion of the securities that NoveCite intends to sell or in the alternative, at the option of NoveCite, Brooklyn may purchase that amount of the securities proposed to be sold by NoveCite to allow Brooklyn to maintain its then percentage ownership.
License Agreement with Eisai
In September 2021, the Company entered into a definitive agreement with Dr. Reddy's Laboratories SA, a subsidiary of Dr. Reddy's Laboratories, Ltd. (collectively, "Dr. Reddy's"), to acquire its exclusive license of I/ONTAK (denileukin diftitox), a late-stage oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma.
Under the terms of this agreement, Citius acquired Dr. Reddy's exclusive license of I/ONTAK from Eisai Co., Ltd. ("Eisai") and other related assets owned by Dr. Reddy's. Citius's exclusive license includes rights to develop and commercialize I/ONTAK in all markets except for Japan and certain parts of Asia. Additionally, Citius retained an option on the right to develop and market the product in India. Eisai retains exclusive development and marketing rights for the agent in Japan and Asia. Citius paid a $40 million upfront payment which represents the acquisition date fair value of the in-process research and development acquired from Dr. Reddy’s. Dr. Reddy’s is entitled to up to an aggregate of $40 million in development milestone payments related to CTCL approvals in the U.S. and other markets, up to an aggregate of $70 million in development milestones for additional indications, as well as commercial milestone payments and low double-digit tiered royalties on net product sales, and up to an aggregate of $300 million for commercial sales milestones. We also must pay on a fiscal quarter basis tiered royalties equal to low double-digit percentages of net product sales. The royalties will end on the earlier of (i) the 15-year anniversary of the first commercial sale of the latest indication that received regulatory approval in the applicable country and (ii) the date on which a biosimilar product results in the reduction of net sales in the applicable product by 50% in two consecutive quarters, as compared to the four quarters prior to the first commercial sale of the biosimilar product. We will also pay to Dr. Reddy’s an amount equal to a low-thirties percentage of any sublicense upfront consideration or milestone payments (or the like) received by us and the greater of (i) a low-thirties percentage of any sublicensee sales-based royalties or (ii) a mid-single digit percentage of such licensee’s net sales.
Under the license agreement, Eisai is to receive a $6.0 million development milestone payment upon initial approval and additional commercial milestone payments related to the achievement of net product sales thresholds (which increases to $7 million in the event we have exercised our option to add India to the licensed territory prior to FDA approval) and up to an aggregate of $22 million related to the achievement of net product sales thresholds. We also are required to reimburse Eisai for up to $2.65 million of its costs to complete the ongoing Phase 3 pivotal clinical trial for I/ONTAK for the CTCL indication and reimburse Eisai for all reasonable costs associated with the preparation of a BLA for I/ONTAK. Eisai will be responsible for completing the current CTCL clinical trial, and chemistry, manufacturing and controls (CMC) activities through the filing of a BLA for I/ONTAK with the FDA. Citius will be responsible for development costs associated with potential additional indications.
The term of the license agreement will continue until (i) if there has not been a commercial sale of a licensed product in the territory, until the 10-year anniversary of the original license effective date, March 30, 2016, or (ii) if there has been a first commercial sale of a licensed product in the territory within the 10-year anniversary of the original license effective date, the 10-year anniversary of the first commercial sale on a country-by-country basis. The term of the license may be extended for additional 10-year periods for all countries in the territory by notifying Eisai and paying an extension fee equal to $10 million. Either party may terminate the license agreement upon written notice if the other party is in material breach of the agreement, subject to cure within the designated time periods. Either party also may terminate the license agreement immediately upon written notice if the other party files for bankruptcy or takes related actions or is unable to pay its debts as they become due. Additionally, either party will have the right to terminate the agreement if the other party directly or indirectly challenges the patentability, enforceability or validity of any licensed patent.
Also under the agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials, (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction. |
Notes Payable |
6 Months Ended |
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Mar. 31, 2022 | |
| Debt Disclosure [Abstract] | |
| NOTES PAYABLE | 4. NOTES PAYABLE
Notes Payable – Related Parties
Prior to June 31, 2021, we had outstanding notes payable held by our Chairman, Leonard Mazur, in the amount of $160,470 and notes payable held by our then Chief Executive Officer, Myron Holubiak, in the amount of $12,500. Notes with a principal balance of $104,000 accrued interest at the prime rate plus 1.0% per annum and notes with a principal balance of $68,970 accrued interest at 12% per annum.
In June 2021, we repaid the $172,970 principal balance of these notes and paid accrued interest of $38,917. Accrued interest of $59,917 was forgiven and was recorded as other income in the year ended September 30, 2021.
Interest expense on notes payable – related parties was $3,533 and $7,096 for the three and six months ended March 31, 2021, respectively.
Paycheck Protection Program
On April 12, 2020, the Company applied for a forgivable loan through the Small Business Association’s Paycheck Protection Program (the “PPP”). The loan accrued interest at a rate of 1% and was forgivable if it was used to pay qualifying costs such as payroll, rent and utilities. On April 15, 2020, the Company received $164,583 from the PPP.
On July 28, 2021, the Small Business Administration gave full forgiveness of the PPP loan and the Company recorded a gain from debt extinguishment of $166,557 consisting of the principal balance and related accrued interest expense.
Interest expense was $406 and $811 for the three and six months ended March 31, 2021, respectively. |
Common Stock, Stock Options and Warrants |
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| COMMON STOCK, STOCK OPTIONS AND WARRANTS | 5. COMMON STOCK, STOCK OPTIONS AND WARRANTS
Authorized Common Stock
On June 21, 2021, our stockholders approved an amendment to our Articles of Incorporation to increase the authorized number of shares of capital stock from 210,000,000 to 410,000,000 and the authorized number of common shares from 200,000,000 to 400,000,000.
Common Stock Offerings
On January 27, 2021, the Company closed a private placement for 15,455,960 common shares and warrants to purchase 7,727,980 common shares, at a purchase price of $1.294 per common share and accompanying warrant, for gross proceeds of $20,000,012. The 7,727,980 warrants are immediately exercisable at $1.231 per common share for a term of five and one-half years. The Company paid the placement agent a fee of 7% of the gross proceeds totaling $1,400,001 and issued the placement agent 1,081,917 immediately exercisable warrants at $1.6175 per common share for a term of five and one-half years. The Company also reimbursed the placement agent for $85,000 in expenses and incurred $64,601 in other expenses. Net proceeds from the offering were $18,450,410. The estimated fair value of the 7,727,980 warrants issued to the investors was approximately $7,582,000 and the estimated fair value of the 1,081,917 warrants issued to the placement agent was approximately $1,025,000.
On February 19, 2021, the Company closed a registered direct offering for 50,830,566 common shares and warrants to purchase up to 25,415,283 common shares, at a purchase price of $1.505 per share of common stock and accompanying warrant, for gross proceeds of $76,500,002. The 25,415,283 warrants are immediately exercisable at $1.70 per common share for a term of five years. The Company paid the placement agent a fee of 7% of the gross proceeds totaling $5,355,000 and issued the placement agent 3,558,140 immediately exercisable warrants at $1.881 per common share for a term of five years. The Company also reimbursed the placement agent for $85,000 in expenses and incurred $80,160 in other expenses. Net proceeds from the offering were $70,979,842. The estimated fair value of the 25,415,283 warrants issued to the investors was approximately $42,322,000 and the estimated fair value of the 3,558,140 warrants issued to the placement agent was approximately $5,850,000.
Common Stock Issued for Services
On November 2, 2021, the Company issued 50,201 shares of common stock for investor relations services and expensed the $95,884 fair value of the common stock issued.
On March 21, 2022, the Company issued 100,000 shares of common stock for media, public and investor relations services and expensed the $178,000 fair value of the common stock issued.
Stock Option Plans
Pursuant to our 2014 Stock Incentive Plan, we reserved 866,667 common shares for issuance to employees, directors and consultants. As of March 31, 2022, options to purchase 855,171 shares were outstanding and no shares remain available for future grants.
On February 7, 2018, our stockholders approved the 2018 Omnibus Stock Incentive Plan and we reserved 2,000,000 common shares for issuance to employees, directors and consultants. As of March 31, 2022, options to purchase 1,820,000 shares were outstanding.
On February 10, 2020, our stockholders approved the 2020 Stock Plan and we reserved 3,110,000 common shares for issuance to employees, directors, and consultants. As of March 31, 2022, options to purchase 1,870,000 shares were outstanding and the remaining 1,240,000 shares were transferred to the 2021 Omnibus Stock Incentive Plan (“2021 Stock Plan”).
On May 24, 2021, our stockholders approved the 2021 Stock Plan and we reserved 8,740,000 shares for issuance to employees, directors, and consultants through options, SARs, dividend equivalent rights, restricted stock, restricted stock units, or other rights. As of March 31, 2022, options to purchase 4,775,000 shares were outstanding and there were 3,965,000 shares available for future grants.
The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption. The expected term of stock options granted, all of which qualify as “plain vanilla,” is based on the average of the contractual term (generally 10 years) and the vesting period. For non-employee options, the expected term is the contractual term.
A summary of option activity under our stock option plans (excluding the NoveCite Stock Plan) is presented below:
On October 11, 2021, the Board of Directors granted options to purchase 2,515,000 shares to employees, 375,000 shares to directors and 175,000 shares to consultants at $2.04 per share. On November 1, 2021, the Board of Directors granted options to purchase 200,000 shares to an employee at $1.87 per share. During January and February 2022, options to purchase 300,000 shares were granted to three new employees at exercise prices ranging from $1.44 to $1.49 per share. The weighted average grant date fair value of the options granted during the six months ended March 31, 2022 was estimated at $1.69 per share. All of these options vest over terms of 12 to 36 months and have a term of 10 years.
On October 6, 2020, the Board of Directors granted stock options to purchase a total of 800,000 shares to employees, 175,000 shares to directors and 125,000 shares to consultants at $1.01 per share. On February 16, 2021, the Board of Directors granted stock options to purchase a total of 125,000 shares to directors at $1.69 per share. The weighted average grant date fair value of the options granted during the six months ended March 31, 2021 was estimated at $0.93 per share. All of these options vest over terms of 12 to 36 months and have a term of 10 years.
Stock-based compensation expense for the three months ended March 31, 2022 and 2021 was $1,020,998 (including $33,333 for the NoveCite Stock Plan) and $342,962 (including $18,833 for the NoveCite Stock Plan), respectively. Stock-based compensation expense for the six months ended March 31, 2022 and 2021 was $1,925,602 (including $66,666 for the NoveCite Stock Plan) and $619,544 (including $31,389 for the NoveCite Stock Plan), respectively.
At March 31, 2022, unrecognized total compensation cost related to unvested awards under the Citius stock plans of $7,151,673 is expected to be recognized over a weighted average period of 2.3 years.
On November 5, 2020, the stockholders of NoveCite, approved NoveCite’s Stock Plan and we reserved 2,000,000 common shares of NoveCite for issuance. The NoveCite Stock Plan provides incentives to employees, directors, and consultants through grants of options, SARs, dividend equivalent rights, restricted stock, restricted stock units, or other rights. As of March 31, 2022, there were options outstanding to purchase 2,000,000 common shares of NoveCite and no shares available for future grants.
As of March 31, 2022, NoveCite has options outstanding to purchase 2,000,000 common shares at a weighted average exercise price of $0.24 per share, of which 376,665 are exercisable. All of these options vest over 36 months and have a term of 10 years. The weighted average remaining contractual term of options outstanding under the NoveCite Stock Plan is 8.9 years. At March 31, 2022, unrecognized total compensation cost related to unvested awards under the NoveCite Stock Plan of $249,778 is expected to be recognized over a weighted average period of 1.9 years.
Warrants
As of March 31, 2022, we have reserved shares of common stock for the exercise of outstanding warrants as follows:
At March 31, 2022, the weighted average remaining life of the outstanding warrants is 3.3 years, all warrants are exercisable, and the aggregate intrinsic value of the warrants outstanding was $11,206,022.
Common Stock Reserved
A summary of common stock reserved for future issuances as of March 31, 2022 is as follows:
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Related Party Transactions |
6 Months Ended |
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Mar. 31, 2022 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | 6. RELATED PARTY TRANSACTIONS
The Company had outstanding debt due to Leonard Mazur (Chairman of the Board) and Myron Holubiak (then Chief Executive Officer) (see Note 4).
Leonard Mazur was a director and significant shareholder of Novellus until July 2021. On October 6, 2020, the Company, through its subsidiary NoveCite, entered into an exclusive agreement with Novellus to develop cellular therapies (see Note 3).
In April 2021, we extended the term by three years for 1,294,498 warrants held by our Chairman and our Chief Executive Officer (see Note 5). |
Operating Lease |
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| OPERATING LEASE | 7. OPERATING LEASE
Effective July 1, 2019, Citius entered into a 76-month lease for office space in Cranford, NJ. Citius will pay its proportionate share of real estate taxes and operating expenses in excess of the base year expenses. These costs are considered to be variable lease payments and are not included in the determination of the lease’s right-of-use asset or lease liability.
The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:
The elements of lease expense are as follows:
Maturities of lease liabilities due under the Company’s non-cancellable leases as of March 31, 2022 is as follows:
Interest expense on the lease liability was $32,792 and $39,300 for the six months ended March 31, 2022 and 2021, respectively. |
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Accounting Policies, by Policy (Policies) |
6 Months Ended |
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Mar. 31, 2022 | |
| Accounting Policies [Abstract] | |
| Basis of Preparation | Basis of Preparation — The accompanying condensed consolidated financial statements include the operations of Citius Pharmaceuticals, Inc., and its wholly-owned subsidiaries, Citius Pharmaceuticals, LLC, LMB, and Citius Acquisition Corp., and its majority-owned subsidiary NoveCite. Citius Acquisition Corp. is currently inactive. All significant inter-company balances and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state the condensed consolidated financial position of the Company as of March 31, 2022, and the results of its operations and cash flows for the three and six month periods ended March 31, 2022 and 2021. The operating results for the three and six month periods ended March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending September 30, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021 filed with the Securities and Exchange Commission.
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| Use of Estimates | Use of Estimates — Our accounting principles require our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Estimates having relatively higher significance include stock-based compensation, accounting for leases, valuation of warrants, and income taxes. Actual results could differ from those estimates and changes in estimates may occur.
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| Basic and Diluted Net Loss per Common Share | Basic and Diluted Net Loss per Common Share — Basic and diluted net loss per common share applicable to common stockholders is computed by dividing net loss applicable to common stockholders in each period by the weighted average number of shares of common stock outstanding during such period. For the periods presented, common stock equivalents, consisting of stock options and warrants were not included in the calculation of the diluted loss per share because they were anti-dilutive.
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| Recently Issued Accounting Standards | Recently Issued Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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, among other things, provides guidance on how to account for contracts on an entity’s own equity. This ASU eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, this ASU modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in this ASU are effective for public companies for fiscal years 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. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities. Under the new guidance (ASC 805-20-30-28), the acquirer should determine what contract assets and/or contract liabilities it would have recorded under Accounting Standards Codification (“ASC”) 606 (the revenue guidance) as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree. The recognition and measurement of those contract assets and contract liabilities will likely be comparable to what the acquiree has recorded on its books under ASC 606 as of the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2021-08 is effective for the Company in the first quarter of fiscal 2024. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued. However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance is adopted. The Company is currently evaluating the adoption date of ASU 2021-08 and the impact, if any, adoption will have on its financial position and results of operations. |
Common Stock, Stock Options and Warrants (Tables) |
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| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of option activity under the plans |
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| Schedule of warrants outstanding |
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| Schedule of common stock reserved for future issuances |
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Operating Lease (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule operating lease expense |
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| Schedule of lease liabilities due under the company’s non-cancellable leases |
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| Schedule operating leases assets and liabilities |
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Nature of Operations, Basis of Presentation and Summary of Significant Accounting Policies (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Sep. 11, 2020 |
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| Nature of Operations, Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
| Shares owned (in Shares) | 7,500,000 | |
| Research and development | $ 19,400,000 | |
| Revenue generation | 40,000,000 | |
| Goodwill | $ 9,346,796 | |
| Delaware Corporation [Member] | ||
| Nature of Operations, Basis of Presentation and Summary of Significant Accounting Policies (Details) [Line Items] | ||
| Ownership, percentage | 75.00% |
Liquidity and Management’s Plan (Details) |
6 Months Ended |
|---|---|
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Mar. 31, 2022
USD ($)
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| Liquidity And Managements Plan [Abstract] | |
| Negative cash flow operations | $ 14,316,714 |
| Working capital | $ 54,200,000 |
Patent and Technology License Agreements (Details) - USD ($) |
1 Months Ended | 6 Months Ended | |||||
|---|---|---|---|---|---|---|---|
Oct. 06, 2020 |
Jan. 31, 2022 |
Jun. 30, 2021 |
Jan. 31, 2021 |
Jun. 30, 2020 |
Mar. 31, 2022 |
Dec. 31, 2020 |
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| Patent and Technology License Agreements (Details) [Line Items] | |||||||
| Annual maintenance fee expense | $ 90,000 | $ 90,000 | |||||
| Annual minimum royalty payment | $ 100,000 | ||||||
| Increasing annual royalties | 25,000 | ||||||
| Maximum aggregate annual royalties | 150,000 | ||||||
| Payable amount to NAT | $ 1,100,000 | ||||||
| Annual maintenance fee | $ 60,000 | $ 45,000 | |||||
| Agreement expiration date | Jan. 02, 2034 | ||||||
| Research and development expense | $ 19,400,000 | ||||||
| Developmental milestone, description | NoveCite is obligated to pay Novellus up to an aggregate of $51,000,000 upon the achievement of various regulatory and developmental milestones. NoveCite also must pay a royalty equal to low double-digit percentages of net sales, commencing upon the sale of a licensed product. This royalty is subject to downward adjustment to an upper-single digit percentage of net sales in any country in the event of the expiration of the last valid patent claim or if no valid patent claim exists in that country. The royalty will end on the earlier of (i) the date on which a biosimilar product is first marketed, sold, or distributed in the applicable country or (ii) the 10-year anniversary of the date of expiration of the last-to-expire valid patent claim in that country. In the case of a country where no licensed patent ever exists, the royalty will end on the later of (i) the date of expiry of such licensed product’s regulatory exclusivity and (ii) the 10-year anniversary of the date of the first commercial sale of the licensed product in the applicable country. In addition, NoveCite will pay to Novellus an amount equal to a mid-twenties percentage of any sublicensee fees it receives. | ||||||
| Revenue percentage | 50.00% | ||||||
| Description of license agreement | The term of the license agreement will continue until (i) if there has not been a commercial sale of a licensed product in the territory, until the 10-year anniversary of the original license effective date, March 30, 2016, or (ii) if there has been a first commercial sale of a licensed product in the territory within the 10-year anniversary of the original license effective date, the 10-year anniversary of the first commercial sale on a country-by-country basis. The term of the license may be extended for additional 10-year periods for all countries in the territory by notifying Eisai and paying an extension fee equal to $10 million. | ||||||
| License agreement development, description | Under the license agreement, Eisai is to receive a $6.0 million development milestone payment upon initial approval and additional commercial milestone payments related to the achievement of net product sales thresholds (which increases to $7 million in the event we have exercised our option to add India to the licensed territory prior to FDA approval) and up to an aggregate of $22 million related to the achievement of net product sales thresholds. We also are required to reimburse Eisai for up to $2.65 million of its costs to complete the ongoing Phase 3 pivotal clinical trial for I/ONTAK for the CTCL indication and reimburse Eisai for all reasonable costs associated with the preparation of a BLA for I/ONTAK. | ||||||
| Patent and Technology [Member] | |||||||
| Patent and Technology License Agreements (Details) [Line Items] | |||||||
| Description of annual maintenance fee | The annual maintenance fee increases by $15,000 per year up to a maximum of $90,000. Annual maintenance fees cease on the first sale of product. We also must pay up to an aggregate of $2.1 million in milestone payments, contingent on the achievement of various regulatory and commercial milestones. Under the terms of the license agreement, we also must pay a royalty of mid- to upper-single digit percentages of net sales, depending on the amount of annual sales, and subject to downward adjustment to lower- to mid-single digit percentages in the event there is no valid patent for the product in the United States at the time of sale. After the first sale of product, we will owe an annual minimum royalty payment of $100,000 that will increase annually by $25,000 for the duration of the term. | ||||||
| NoveCite [Member] | |||||||
| Patent and Technology License Agreements (Details) [Line Items] | |||||||
| Research and development expense | $ 5,000,000 | ||||||
| Outstanding equity | 25.00% | ||||||
| Percentage of outstanding equity | 75.00% | ||||||
| Percentage of ownership additional shares | 25.00% | ||||||
| Eisai [Member] | |||||||
| Patent and Technology License Agreements (Details) [Line Items] | |||||||
| Description of license agreement | Citius paid a $40 million upfront payment which represents the acquisition date fair value of the in-process research and development acquired from Dr. Reddy’s. Dr. Reddy’s is entitled to up to an aggregate of $40 million in development milestone payments related to CTCL approvals in the U.S. and other markets, up to an aggregate of $70 million in development milestones for additional indications, as well as commercial milestone payments and low double-digit tiered royalties on net product sales, and up to an aggregate of $300 million for commercial sales milestones. We also must pay on a fiscal quarter basis tiered royalties equal to low double-digit percentages of net product sales. The royalties will end on the earlier of (i) the 15-year anniversary of the first commercial sale of the latest indication that received regulatory approval in the applicable country and (ii) the date on which a biosimilar product results in the reduction of net sales in the applicable product by 50% in two consecutive quarters, as compared to the four quarters prior to the first commercial sale of the biosimilar product. | ||||||
Notes Payable (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|---|
Apr. 12, 2020 |
Jul. 28, 2021 |
Jun. 30, 2021 |
Mar. 31, 2021 |
Mar. 31, 2021 |
Sep. 30, 2021 |
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| Notes Payable (Details) [Line Items] | ||||||
| Note payable, description | Notes with a principal balance of $104,000 accrued interest at the prime rate plus 1.0% per annum and notes with a principal balance of $68,970 accrued interest at 12% per annum. | |||||
| Principal amount | $ 172,970 | |||||
| Accrued interest | 38,917 | $ 59,917 | ||||
| Interest expense on notes payable - related parties | $ 3,533 | $ 7,096 | ||||
| Paycheck protection program, description | the Company applied for a forgivable loan through the Small Business Association’s Paycheck Protection Program (the “PPP”). The loan accrued interest at a rate of 1% and was forgivable if it was used to pay qualifying costs such as payroll, rent and utilities. On April 15, 2020, the Company received $164,583 from the PPP. | |||||
| Gain from debt extinguishment | $ 166,557 | |||||
| Interest expense | $ 406 | $ 811 | ||||
| Chairman [Member] | Leonard Mazur [Member] | ||||||
| Notes Payable (Details) [Line Items] | ||||||
| Notes payable | 160,470 | |||||
| Chief Executive Officer [Member] | Myron Holubiak [Member] | ||||||
| Notes Payable (Details) [Line Items] | ||||||
| Notes payable | $ 12,500 | |||||
Common Stock, Stock Options and Warrants (Details) - USD ($) |
1 Months Ended | 6 Months Ended | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Nov. 02, 2021 |
Nov. 01, 2021 |
Oct. 11, 2021 |
Oct. 06, 2020 |
Mar. 21, 2022 |
Feb. 28, 2022 |
Jan. 31, 2022 |
May 24, 2021 |
Feb. 19, 2021 |
Feb. 16, 2021 |
Jan. 27, 2021 |
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
Sep. 30, 2021 |
Jun. 21, 2021 |
Dec. 31, 2020 |
Nov. 05, 2020 |
Sep. 30, 2020 |
Sep. 11, 2020 |
Feb. 10, 2020 |
Feb. 07, 2018 |
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| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Common shares authorized | 400,000,000 | 400,000,000 | ||||||||||||||||||||
| Common stock offerings, description | the Company closed a private placement for 15,455,960 common shares and warrants to purchase 7,727,980 common shares, at a purchase price of $1.294 per common share and accompanying warrant, for gross proceeds of $20,000,012. The 7,727,980 warrants are immediately exercisable at $1.231 per common share for a term of five and one-half years. The Company paid the placement agent a fee of 7% of the gross proceeds totaling $1,400,001 and issued the placement agent 1,081,917 immediately exercisable warrants at $1.6175 per common share for a term of five and one-half years. The Company also reimbursed the placement agent for $85,000 in expenses and incurred $64,601 in other expenses. Net proceeds from the offering were $18,450,410. The estimated fair value of the 7,727,980 warrants issued to the investors was approximately $7,582,000 and the estimated fair value of the 1,081,917 warrants issued to the placement agent was approximately $1,025,000. | |||||||||||||||||||||
| Issued shares | 100,000 | |||||||||||||||||||||
| Fair value of common stock (in Dollars) | $ 178,000 | |||||||||||||||||||||
| Common shares reserved | 2,000,000 | |||||||||||||||||||||
| Option to purchase share outstanding | 4,775,000 | |||||||||||||||||||||
| Remaining shares | 7,500,000 | |||||||||||||||||||||
| Shares available for future grants | 3,965,000 | |||||||||||||||||||||
| Issued shares of purchase | 200,000 | 175,000 | 125,000 | 300,000 | 300,000 | |||||||||||||||||
| Share price (in Dollars per share) | $ 1.87 | $ 2.04 | $ 1.01 | $ 1.69 | ||||||||||||||||||
| Options vest over terms | 10 years | 10 years | ||||||||||||||||||||
| Share issued price per share | 0.93 | |||||||||||||||||||||
| Stock-based compensation expense description | Stock-based compensation expense for the three months ended March 31, 2022 and 2021 was $1,020,998 (including $33,333 for the NoveCite Stock Plan) and $342,962 (including $18,833 for the NoveCite Stock Plan), respectively. Stock-based compensation expense for the six months ended March 31, 2022 and 2021 was $1,925,602 (including $66,666 for the NoveCite Stock Plan) and $619,544 (including $31,389 for the NoveCite Stock Plan), respectively. | |||||||||||||||||||||
| Citius stock plans (in Dollars) | $ 7,151,673 | |||||||||||||||||||||
| Weighted average period term | 2 years 3 months 18 days | |||||||||||||||||||||
| Common shares outstanding | 2,000,000 | |||||||||||||||||||||
| Stock option plan , description | NoveCite has options outstanding to purchase 2,000,000 common shares at a weighted average exercise price of $0.24 per share, of which 376,665 are exercisable. All of these options vest over 36 months and have a term of 10 years. The weighted average remaining contractual term of options outstanding under the NoveCite Stock Plan is 8.9 years. At March 31, 2022, unrecognized total compensation cost related to unvested awards under the NoveCite Stock Plan of $249,778 is expected to be recognized over a weighted average period of 1.9 years. | |||||||||||||||||||||
| Common Stock [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Issued shares | 50,201 | |||||||||||||||||||||
| Fair value of common stock (in Dollars) | $ 95,884 | |||||||||||||||||||||
| Shares outstanding | 146,129,630 | 134,701,219 | 146,029,630 | 145,979,429 | 55,576,996 | 55,576,996 | ||||||||||||||||
| Issued shares of purchase | 375,000 | 175,000 | ||||||||||||||||||||
| Warrants [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Weighted average remaining life of the outstanding warrants | 3 years 3 months 18 days | |||||||||||||||||||||
| Aggregate intrinsic value for the warrants outstanding (in Dollars) | $ 11,206,022 | |||||||||||||||||||||
| Minimum [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Shares of capital stock authorized | 210,000,000 | |||||||||||||||||||||
| Common shares authorized | 200,000,000 | |||||||||||||||||||||
| Exercise price (in Dollars per share) | $ 1.44 | $ 1.44 | ||||||||||||||||||||
| Maximum [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Shares of capital stock authorized | 410,000,000 | |||||||||||||||||||||
| Common shares authorized | 400,000,000 | |||||||||||||||||||||
| Exercise price (in Dollars per share) | $ 1.49 | $ 1.49 | ||||||||||||||||||||
| Board of Directors [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Issued shares of purchase | 2,515,000 | 800,000 | ||||||||||||||||||||
| Board of Directors Chairman [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Issued shares of purchase | 125,000 | |||||||||||||||||||||
| Share price (in Dollars per share) | $ 1.69 | |||||||||||||||||||||
| Registered Direct Offering [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Common stock offerings, description | the Company closed a registered direct offering for 50,830,566 common shares and warrants to purchase up to 25,415,283 common shares, at a purchase price of $1.505 per share of common stock and accompanying warrant, for gross proceeds of $76,500,002. The 25,415,283 warrants are immediately exercisable at $1.70 per common share for a term of five years. The Company paid the placement agent a fee of 7% of the gross proceeds totaling $5,355,000 and issued the placement agent 3,558,140 immediately exercisable warrants at $1.881 per common share for a term of five years. The Company also reimbursed the placement agent for $85,000 in expenses and incurred $80,160 in other expenses. Net proceeds from the offering were $70,979,842. The estimated fair value of the 25,415,283 warrants issued to the investors was approximately $42,322,000 and the estimated fair value of the 3,558,140 warrants issued to the placement agent was approximately $5,850,000. | |||||||||||||||||||||
| 2014 Stock Incentive Plan [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Common stock for issuance | 866,667 | |||||||||||||||||||||
| Shares outstanding | 855,171 | |||||||||||||||||||||
| 2018 Omnibus Stock Incentive Plan [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Common stock for issuance | 2,000,000 | |||||||||||||||||||||
| Number of shares outstanding | 1,820,000 | |||||||||||||||||||||
| 2020 Stock Plan [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Common shares reserved | 3,110,000 | |||||||||||||||||||||
| 2021 Omnibus Stock Incentive Plan [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Option to purchase share outstanding | 1,870,000 | |||||||||||||||||||||
| Remaining shares | 1,240,000 | |||||||||||||||||||||
| 2021 Stock Plan [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Issued shares | 8,740,000 | |||||||||||||||||||||
| Shares available for future grants | 3,965,000 | |||||||||||||||||||||
| Stock Options [Member] | ||||||||||||||||||||||
| Common Stock, Stock Options and Warrants (Details) [Line Items] | ||||||||||||||||||||||
| Contractual term | 10 years | |||||||||||||||||||||
Common Stock, Stock Options and Warrants (Details) - Schedule of common stock reserved for future issuances |
6 Months Ended |
|---|---|
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Mar. 31, 2022
shares
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| Schedule of common stock reserved for future issuances [Abstract] | |
| Stock plan options outstanding | 9,320,171 |
| Stock plan shares available for future grants | 3,965,000 |
| Warrants outstanding | 40,020,213 |
| Total | 53,305,384 |
Related Party Transactions (Details) - Chief Executive Officer [Member] |
Apr. 30, 2021
shares
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|---|---|
| Related Party Transactions (Details) [Line Items] | |
| Term of warrants | 3 years |
| Warrants | 1,294,498 |
Operating Lease (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
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| Operating Lease [Abstract] | ||
| Lease liability interest expenses | $ 32,792 | $ 39,300 |
Operating Lease (Details) - Schedule operating lease expense - USD ($) |
6 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Lease cost | ||
| Operating lease cost | $ 119,411 | $ 119,412 |
| Variable lease cost | 194 | |
| Total lease cost | $ 119,411 | $ 119,606 |
| Other information | ||
| Weighted-average remaining lease term - operating leases | 3 years 7 months 6 days | 4 years 7 months 6 days |
| Weighted-average discount rate - operating leases | 8.00% | 8.00% |
Operating Lease (Details) - Schedule of lease liabilities due under the company’s non-cancellable leases |
Mar. 31, 2022
USD ($)
|
|---|---|
| Schedule of lease liabilities due under the company’s non-cancellable leases [Abstract] | |
| 2022 (excluding the 6 months ended March 31, 2022) | $ 120,260 |
| 2023 | 244,165 |
| 2024 | 249,024 |
| 2025 | 253,883 |
| 2026 | 21,460 |
| Total lease payments | 888,792 |
| Less: interest | (119,574) |
| Present value of lease liabilities | $ 769,218 |
Operating Lease (Details) - Schedule operating leases assets and liabilities - USD ($) |
Mar. 31, 2022 |
Sep. 30, 2021 |
|---|---|---|
| Assets | ||
| Lease asset | $ 736,209 | $ 822,828 |
| Total lease assets | 736,209 | 822,828 |
| Liabilities | ||
| Current | 186,916 | 177,237 |
| Non-current | 582,302 | 678,234 |
| Total lease liabilities | $ 769,218 | $ 855,471 |