hepa-20220930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________

FORM 10-Q

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

For the Quarterly Period Ended September 30, 2022

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

For the transition period from to

Commission File Number 001-36856

HEPION PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)			46-2783806 (I.R.S. Employer Identification Number)

399 Thornall Street, First Floor

Edison, New Jersey 08837

(Address of Principal Executive Offices)

(732) 902-4000

Registrant’s telephone number, including area code

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

HEPA

The Nasdaq Capital Market

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

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

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

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☐

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

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

The number of shares of the registrant’s Common Stock outstanding as of November 9, 2022 was 76,229,617.

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HEPION PHARMACEUTICALS, INC.

FORM 10-Q

TABLE OF CONTENTS


		Page
PART I—FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited):	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II—OTHER INFORMATION

Item 1A.	Risk Factors	28
Item 6.	Exhibits	28
SIGNATURES		29

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for Hepion Pharmaceuticals, Inc. may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are characterized by future or conditional verbs such as “may,” “will,” “expect,” “intend,” “anticipate,” believe,” “estimate” and “continue” or similar words. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. Such statements are only predictions and our actual results may differ materially from those anticipated in these forward-looking statements. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Factors that may cause such differences include, but are not limited to, those discussed under Item 1A. Risk Factors and elsewhere in the audited consolidated financial statements as of and for the year ended December 31, 2021 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 8, 2022. These factors include the uncertainties associated with product development, the risk that products that appeared promising in early clinical trials do not demonstrate safety and efficacy in larger-scale clinical trials, the risk that we will not obtain approval to market our products, the risks associated with dependence upon key personnel and the need for additional financing. We do not assume any obligation to update forward-looking statements as circumstances change and thus you should not unduly rely on these statements. Cautionary Note Regarding Forward-Looking Statements.

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PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2022		December 31, 2021

Assets
Current assets:
Cash	$	59,145,193	$	91,348,967
Prepaid expenses	6,524,337		6,102,801
Total current assets	65,669,530		97,451,768
Property and equipment, net	82,986		152,772
Right-of-use assets	100,241		303,689
In-process research and development	3,190,000		3,190,000
Goodwill	—		1,870,924
Other assets	654,521		583,326
Total assets	$	69,697,278	$	103,552,479

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,626,577	$	2,445,837
Accrued expenses	4,757,159		2,505,625
Operating lease liabilities, current	105,578		266,650
Short-term portion of contingent consideration	—		2,988,284
Total current liabilities	7,489,314		8,206,396
Contingent consideration	2,540,000		1,891,716
Deferred tax liability	409,022		409,022
Operating lease liabilities, non-current	—		50,342
Total liabilities	10,438,336		10,557,476
Commitments and contingencies
Stockholders' equity:
Series A convertible preferred stock, stated value $10 per share, 85,581 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	855,808		855,808
Series C convertible preferred stock, stated value $1,000 per share, 1,801 and 1,806 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	840,320		845,320
Common stock—$0.0001 par value per share; 120,000,000 shares authorized, 76,229,617 and 76,225,254 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	7,623		7,623
Additional paid-in capital	226,535,396		224,787,547
Accumulated other comprehensive loss	(90,335)		—
Accumulated deficit	(168,889,870)		(133,501,295)
Total stockholders' equity	59,258,942		92,995,003
Total liabilities and stockholders' equity	$	69,697,278	$	103,552,479

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

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HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues	$	—	$	—	$	—	$	—
Cost and expenses:
Research and development	5,740,122		5,800,464		25,753,211		13,485,061
General and administrative	2,725,204		2,716,892		9,962,704		7,918,357
Total operating expenses	8,465,326		8,517,356		35,715,915		21,403,418
Loss from operations	(8,465,326)		(8,517,356)		(35,715,915)		(21,403,418)

Other income (expense):
Interest expense	(2,265)		(2,131)		(7,652)		(6,677)
Change in fair value of contingent consideration	(80,000)		(749,986)		334,992		(1,590,000)
Loss before income taxes	(8,547,591)		(9,269,473)		(35,388,575)		(23,000,095)
Income tax benefit (expense)	—		—		—		—
Net loss	$	(8,547,591)	$	(9,269,473)	$	(35,388,575)	$	(23,000,095)

Weighted-average common shares outstanding:
Basic and diluted	76,229,617		76,225,249		76,229,380		68,291,894

Net loss per common share: (see Note 10)
Basic and diluted	$	(0.11)	$	(0.12)	$	(0.46)	$	(0.34)

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

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HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net loss	$	(8,547,591)	$	(9,269,473)	$	(35,388,575)	$	(23,000,095)
Other comprehensive loss:
Foreign currency translation	(60,368)		—		(90,335)		—
Total other comprehensive loss	(60,368)		—		(90,335)		—
Comprehensive loss	$	(8,607,959)	$	(9,269,473)	$	(35,478,910)	$	(23,000,095)

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

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HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)


	Preferred Stock			Preferred Stock						Additional Paid in Capital		Accumulated other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders' Equity
	Series A			Series C			Common Stock
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at December 31, 2021	85,581	$	855,808	1,806	$	845,320	76,225,254	$	7,623	$	224,787,547	$	—	$	(133,501,295)	$	92,995,003
Net loss	—	—		—	—		—	—		—		—		(6,929,685)		(6,929,685)
Other comprehensive income (loss)	—	—		—	—		—	—		—		9,146		—		9,146
Stock-based compensation expense	—	—		—	—		—	—		556,610		—		—		556,610
Conversion of Series C to common	—	—		(5)	(5,000)		46	—		5,000		—		—		—
Issuance of common stock, net	—	—		—	—		4,317	—		5,008		—		—		5,008
Balance at March 31, 2022	85,581	855,808		1,801	840,320		76,229,617	7,623		225,354,165		9,146		(140,430,980)		86,636,082
Net loss	—	—		—	—		—	—		—		—		(19,911,299)		(19,911,299)
Other comprehensive income (loss)	—	—		—	—		—	—		—		(39,113)		—		(39,113)
Stock-based compensation expense	—	—		—	—		—	—		634,651		—		—		634,651

Balance at June 30, 2022	85,581	855,808		1,801	840,320		76,229,617	7,623		225,988,816		(29,967)		(160,342,279)		67,320,321
Net loss	—	—		—	—		—	—		—		—		(8,547,591)		(8,547,591)
Other comprehensive income (loss)	—	—		—	—		—	—		—		(60,368)		—		(60,368)
Stock-based compensation expense	—	—		—	—		—	—		546,580		—		—		546,580

Balance at September 30, 2022	85,581	$	855,808	1,801	$	840,320	76,229,617	$	7,623	$	226,535,396	$	(90,335)	$	(168,889,870)	$	59,258,942

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

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HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)


	Preferred Stock			Preferred Stock						Additional Paid in Capital		Accumulated other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Series A			Series C			Common Stock
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at December 31, 2020	85,581	$	855,808	1,817	$	856,320	32,025,153	$	3,203	$	142,910,523	$	—	$	(104,105,463)	$	40,520,391
Adoption of new accounting standard	—	—		—	—		—	—		(3,314,663)		—		3,326,335		11,672
Net loss	—	—		—	—		—	—		—		—		(6,063,517)		(6,063,517)
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		—		—
Stock-based compensation expense	—	—		—	—		—	—		957,871		—		—		957,871
Conversion of Series C to common	—	—		(10)	(10,000)		92	—		10,000		—		—		—
Issuance of common stock, net	—	—		—	—		44,200,000	4,420		82,149,180		—		—		82,153,600

Balance at March 31, 2021	85,581	855,808		1,807	846,320		76,225,245	7,623		222,712,911		$	—	(106,842,645)		117,580,017
Net loss	—	—		—	—		—	—		—		—		(7,667,105)		(7,667,105)
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		—		—
Stock-based compensation expense	—	—		—	—		—	—		811,952		—		—		811,952

Balance at June 30, 2021	85,581	855,808		1,807	846,320		76,225,245	7,623		223,524,863		—		(114,509,750)		110,724,864
Net loss	—	—		—	—		—	—		—		—		(9,269,473)		(9,269,473)
Other comprehensive income (loss)	—	—		—	—		—	—		—		—		—		—
Stock-based compensation expense	—	—		—	—		—	—		1,188,375		—		—		1,188,375
Conversion of Series C to common	—	—		(1)	(1,000)		9	—		1,000		—		—		—
Balance at September 30, 2021	85,581	$	855,808	1,806	$	845,320	76,225,254	$	7,623	$	224,714,238	$	—	$	(123,779,223)	$	102,643,766

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

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HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(35,388,575)	$	(23,000,095)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	2,320,793		3,821,295
Depreciation	58,985		62,658

Change in fair value of contingent consideration	(334,992)		1,590,000
Impairment of goodwill	1,870,924		—
Changes in operating assets and liabilities:
Accounts payable and accrued expenses	1,849,760		(1,240,567)
Right of use asset	203,448		187,327
Operating lease liability	(211,414)		(191,166)
Prepaid expenses and other assets	(532,599)		(5,071,666)
Net cash used in operating activities	(30,163,670)		(23,842,214)

Cash flows from investing activities:
Purchases of property and equipment	—		(130,406)
Proceeds from disposal of property and equipment	2,266		—
Net cash provided by (used in) investing activities	2,266		(130,406)

Cash flows from financing activities:
Proceeds from the issuance of common stock, net of issuance costs	—		82,153,600

Contingent consideration milestone payment	(2,000,000)		—
Repayment of debt financing	—		(176,585)

Net cash (used in) provided by financing activities	(2,000,000)		81,977,015
Effect of exchange rates on cash	(42,370)		—
Net (decrease) increase in cash	(32,203,774)		58,004,395
Cash at beginning of period	91,348,967		40,726,838
Cash at end of period	$	59,145,193	$	98,731,233

Supplementary disclosure of cash flow information:
Cash paid for interest	$	941	$	2,024
Supplementary disclosure of non-cash financing activities:
Conversion of Series C convertible preferred stock	$	5,000	$	11,000
Issuance of common stock in conjunction with milestone payment	5,008		—
Fair value of warrants issued to placement agent	—		2,013,055
Adoption of new accounting standard	—		11,672

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

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HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Business Overview

Hepion Pharmaceuticals, Inc. (we, our, or us) is a biopharmaceutical company headquartered in Edison, New Jersey, focused on the development of drug therapy for treatment of chronic liver diseases. This therapeutic approach targets fibrosis, inflammation, and shows potential for the treatment of hepatocellular carcinoma (“HCC”) associated with non-alcoholic steatohepatitis (“NASH”), viral hepatitis, and other liver diseases. Our cyclophilin inhibitor, Rencofilstat (formerly CRV431), is being developed to offer benefits to address multiple complex pathologies related to advanced liver disease. Rencofilstat is a cyclophilin inhibitor that targets multiple pathologic pathways involved in the progression of liver disease.

We are developing Rencofilstat as our lead molecule. Rencofilstat is a compound that binds and inhibits the function of a specific class of isomerase enzymes called cyclophilins that regulate protein folding. Many closely related isoforms of cyclophilins exist in humans. Cyclophilins A, B, and D are the best characterized cyclophilin isoforms. Inhibition of cyclophilins has been shown in the scientific literature to have therapeutic effects in a variety of experimental models, including liver disease models.

On May 10, 2018, we submitted an Investigational New Drug Application (“IND”) to the U.S. Food and Drug Administration (“FDA”) to support initiation of our Rencofilstat HBV clinical development program in the United States and received approval in June 2018. We completed the first segment of our Phase 1 clinical activities for Rencofilstat in October 2018 wherein we reached a major clinical milestone of positive data from a Phase I trial of Rencofilstat in humans. This achievement triggered the first milestone payment, as stated in the May 26, 2016 acquisition agreement between the Company and Ciclofilin Pharmaceuticals, Inc. (“Ciclofilin”) (the “Merger Agreement") for the acquisition of Ciclofilin and we paid a related milestone payment of approximately $0.3 million to Aurinia Pharmaceuticals, Inc. ("Aurinia") and $0.7 million to the former Ciclofilin shareholders along with the issuance of 1,439 shares of our common stock with a fair value of $0.1 million, representing 2.5% of our issued and outstanding common stock as of June, 2016, to the former Ciclofilin shareholders. Our CEO is a former Ciclofilin shareholder and received approximately $0.3 million and 603 shares of common stock and Petrus Wijngaard, a director of our company, received $2,805 and 6 shares of common stock.

The Merger Agreement was amended on January 14, 2022 for the following: (i) upon receipt of Phase II positive data from the first Phase II clinical trial of Rencofilstat in NASH patients which has been achieved: (1) such number of validly issued, fully paid and non-assessable shares of our common stock equal to 7.5% of the issued and outstanding of our common stock on the Closing Date as defined in the original agreement, which 4,317 was issued in March 2022, and (2) a payment of $2.0 million, made in January 2022 to Ciclofilin shareholders, including a payment to our CEO of $0.8 million and other Hepion employees of $0.2 million, (ii) a payment of $1.0 million upon the positive read out of the first planned interim futility analysis of a Phase IIb clinical trial of Rencofilstat in NASH patients, supporting the continuation of the Phase IIb trial. The original agreement required a $3.0 million payment upon receipt of Phase II positive data from a proof-of-concept clinical trial of CRV431, (iii) a payment of $5.0 million upon initiation of the first Phase III trial of Rencofilstat in patients, where initiation occurs with first patient in the study dosed with study medication, which remains unchanged from the original agreement, (iv) a payment of $5.0 million upon the filing and acceptance by the U.S. Food and Drug Administration of the first new drug application for Rencofilstat, which was $8.0 million in the original agreement; and (v) a payment of $8.0 million upon the regulatory approval by the U.S. Food and Drug Administration of the first new drug application for Rencofilstat.

On June 17, 2019, we submitted an IND to the FDA to support initiation of our Rencofilstat NASH clinical development program in the United States and received approval in July 2019. We completed dosing of Rencofilstat in our multiple ascending dose (“MAD") clinical trial in September 2020.

On July 13, 2021, we announced positive topline results from our Phase 2a "AMBITION" NASH clinical trial. All primary endpoints of the trial were met. This Phase 2a study confirmed Rencofilstat tolerability and successfully elucidated the drug dosing range for the upcoming Phase 2b trial.

On September 13, 2021, we announced additional positive data from the Phase 2a AMBITION trial and the initiation of the Phase 2b "ASCEND" NASH clinical trial.

On November 20, 2020, we submitted an IND to the FDA to support initiation of a Rencofilstat clinical development program in the United States for COVID-19. We received approval December 17, 2020, to conduct a COVID-19 clinical trial and are investigating potential sources of collaboration and/or funding for the trial. Effective June 15, 2022, the IND for the COVID-19 indication is in inactive status with the FDA.

On November 19, 2021, we submitted an IND to the FDA to support initiation of a Rencofilstat clinical development program in the United States for the treatment of HCC and received approval on December 17, 2021.

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HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On November 30, 2021, the FDA granted Fast Track designation for our lead drug candidate, Rencofilstat, for the treatment of NASH. The FDA Fast Track designation allows sponsors to gain access to expedited drug approval reviews for medical conditions that are serious and potentially life-threatening, and where there is an unmet medical need. The program is also designed to facilitate drug development by making provisions for more frequent meetings with the FDA to discuss drug development plans, and Fast Track designation can lead to Accelerated Approval and/or Priority Review eligibility if certain criteria are met.

On June 20, 2022, the FDA granted Orphan Drug Designation to Rencofilstat, a liver-targeting, orally administered, novel cyclophilin inhibitor, for the treatment of HCC. The FDA Orphan Drug Designation program provides orphan status to drugs or biologics intended for the prevention, diagnosis, or treatment of diseases that affect fewer than 200,000 people in the United States. Sponsors of medicines that are granted Orphan Drug Designation are entitled to certain incentives, including tax credits for qualified clinical trials, prescription drug user-fee exemptions, and potential seven-year marketing exclusivity upon FDA approval.

2. Basis of Presentation

Basis of Presentation

These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim reporting. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary to present fairly our interim financial information. The consolidated balance sheet as of December 31, 2021, was derived from the audited annual consolidated financial statements but does not include all disclosures required by U.S. GAAP. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2021, contained in our Annual Report on Form 10-K filed with the SEC on April 8, 2022.

Principles of Consolidation

The accompanying condensed consolidated financial statements include our accounts and the accounts of our subsidiaries, Contravir Research Inc. and Hepion Research Corp, which conduct their operations in Canada. All intercompany balances and transactions have been eliminated in consolidation.

Liquidity

As of September 30, 2022, we had $59.1 million in cash, an accumulated deficit of $168.9 million, and working capital of $58.2 million. For the nine months ended September 30, 2022, cash used in operating activities was $30.2 million and we had a net loss of $35.4 million. We have not generated revenue to date and have incurred substantial losses and negative cash flows from operations since our inception. We have historically funded our operations through issuances of convertible debt, common stock and preferred stock. We expect to continue to incur losses for the next several years as we expand our research, development and clinical trials of Rencofilstat. We are unable to predict the extent of any future losses or when we will become profitable, if at all. We believe that our cash and cash equivalents balances are sufficient to fund our anticipated operating cash requirements for more than one year from the date of issuance of these condensed consolidated financial statements. These condensed consolidated financial statements have been prepared under the assumption that we will continue as a going concern.

We will be required to raise additional capital in future years to continue the development and commercialization of our current product candidate and to continue to fund operations at the current cash expenditure levels. We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct business. If we are unable to raise additional capital when required or on acceptable terms, we may have to (i) significantly delay, scale back or discontinue the development and/or commercialization of one or more product candidates; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize on unfavorable terms.

COVID-19 Pandemic

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HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

and spread of the outbreak, and impact on our clinical trials, employees and vendors, all of which are uncertain and cannot be predicted. At this point, the extent to which COVID-19 may impact our future financial condition or results of operations is uncertain. While there has not been a material impact on our condensed consolidated financial statements for the three and nine months ended September 30, 2022, a continued outbreak could have a material adverse impact on our financial results and business operations, including the timing and our ability to complete certain clinical trials and other efforts required to advance the development of our product candidate and raise additional capital.

Although we have data to suggest Rencofilstat may be beneficial in the treatment of COVID-19 and other viral infections (e.g., HBV), the main focus of our company is currently on liver disease. We may, at some point, re-visit the antiviral indications should the opportunity arise (e.g., external funding/collaboration).

3. Summary of Significant Accounting Policies

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of expenses during the reporting period. Changes in estimates and assumptions are reflected in reported results in the period in which they become known. Actual results could differ from those estimates.

Our significant accounting policies are disclosed in the audited consolidated financial statements for the year ended December 31, 2021, included in our Annual Report on Form 10-K. Since the date of such consolidated financial statements, there have been no changes to our significant accounting policies.

Cash

As of September 30, 2022 and December 31, 2021, cash was $59.1 million and $91.3 million, respectively, consisting of checking accounts held at U.S. and Canadian commercial banks. At certain times, our cash balances with any one financial institution may exceed Federal Deposit Insurance Corporation insurance limits. We believe it mitigates our risk by depositing our cash balances with high credit, quality financial institutions. We have never experienced losses related to these balances.

Fair Value of Financial Instruments

Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and our own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of us. Unobservable inputs are inputs that reflect our assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC Topic 820 establishes a three-tier fair value hierarchy that distinguishes among the following:

•Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we can access.

•Level 2—Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

•Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by us in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Financial instruments consist of cash, accounts payable, and contingent consideration. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature, except for contingent consideration, which is recorded at fair value at the end of each reporting period. We recorded contingent

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consideration from the 2016 acquisition of Ciclofilin, which is required to be carried at fair value. See Note 5 for additional information on the fair value of the contingent consideration.

Property, equipment and depreciation

As of September 30, 2022 and December 31, 2021, we had $0.1 million and $0.2 million, respectively, of property and equipment, consisting primarily of lab equipment, computer equipment, and furniture and fixtures. Expenditures for additions, renewals and improvements will be capitalized at cost. Depreciation will generally be computed on a straight-line method based on the estimated useful lives of the related assets. The estimated useful lives of the depreciable assets are 3 to 7 years. Leasehold improvements are amortized using the straight-line method over their estimated useful lives, or the remaining term of the lease, whichever is shorter. Expenditures for repairs and maintenance are charged to operations as incurred. We will periodically evaluate whether current events or circumstances indicate that the carrying value of our depreciable assets may not be recoverable. There were no adjustments to the carrying value of property and equipment at September 30, 2022 or December 31, 2021.

Goodwill and In-Process Research & Development

In accordance with ASC Topic 350, Intangibles — Goodwill and Other (“ASC Topic 350”), goodwill and acquired IPR&D are determined to have indefinite lives and, therefore, are not amortized. Instead, they are tested for impairment annually, in our fourth quarter, and between annual tests if we become aware of an event or a change in circumstances that would indicate the carrying value may be impaired.

The annual, or interim (if events or changes in circumstances indicate that it is more likely than not that the asset is impaired), goodwill impairment test is performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. As part of the impairment test, we may elect to perform an assessment of qualitative factors. If this qualitative assessment indicates that it is more likely than not that the fair value of a reporting unit, including goodwill, is less than its carrying amount, or if we elect to bypass the qualitative assessment, we would then proceed with the quantitative impairment test. The impairment test involves comparing the fair values of the reporting units to their carrying amounts. If the carrying amount of a reporting unit exceeds its fair value, we recognize a goodwill loss in an amount equal to any excess.

Goodwill relates to amounts that arose in connection with the acquisition of Ciclofilin. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired when accounted for using the acquisition method of accounting for business combinations.

Interim Assessment of Goodwill

During the six months ended June 30, 2022, increases in interest rates, higher than expected inflation in the U.S., a reduction of value of associated companies developing drug therapy for NASH along with other macroeconomic factors impacted key assumptions used to value goodwill on our balance sheet. These facts and circumstances indicate that the fair value of our goodwill was less than its carrying amount at the reporting date, and therefore a quantitative fair value test was performed for the reporting unit.

We performed a trigger-based goodwill impairment test at June 30, 2022. We are a single reporting unit with an actively traded stock. As part of our impairment testing procedures for goodwill, we relied upon the observed equity premiums paid for a set of guideline merger and acquisition transactions. The application of a control premium to our closing stock price at June 30, 2022 led to an indication of fair value for our equity on a controlling, marketable basis that was less than its carrying value as of June 30, 2022. As a result, we recognized an impairment charge of $1.9 million during the three months ended June 30, 2022 as general and administrative costs in our condensed consolidated statement of operations.

In-Process Research and Development ("IPR&D") acquired in a business combination is capitalized as indefinite-lived assets on our consolidated balance sheets at the acquisition-date fair value. IPR&D relates to amounts that arose in connection with the acquisition of Ciclofilin. Once the project is completed, the carrying value of the IPR&D is reclassified to other intangible assets, net and is amortized over the estimated useful life of the asset. Post-acquisition research and development expenses related to the IPR&D projects are expensed as incurred. The projected discounted cash flow models used to estimate the fair values of our IPR&D assets, acquired in connection with the Ciclofilin acquisition, reflect significant assumptions regarding the estimates a market participant would make in order to evaluate a drug development asset, including: (i)

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probability of successfully completing clinical trials and obtaining regulatory approval; (ii) market size, market growth projections, and market share; (iii) estimates regarding the timing of and the expected costs to advance clinical programs to commercialization; (iv) estimates of future cash flows from potential product sales; and (v) a discount rate. These assumptions are based on significant inputs not observable in the market and thus represent Level 3 measurements within the fair value hierarchy. The use of different inputs and assumptions could increase or decrease our estimated discounted future cash flows, the resulting estimated fair values and the amounts of related impairments, if any.

The annual, or interim (if events or changes in circumstances indicate that it is more likely than not that the asset is impaired), IPR&D impairment test is performed by comparing the fair value of the asset to the asset’s carrying amount. When testing indefinite-lived intangibles for impairment, we may assess qualitative factors for its indefinite-lived intangibles to determine whether it is more likely than not that the asset is impaired. Alternatively, we may bypass this qualitative assessment for our indefinite-lived intangible asset and perform the quantitative impairment test that compares the fair value of the indefinite-lived intangible asset with the asset’s carrying amount. If IPR&D becomes impaired or is abandoned, the carrying value of the IPR&D is written down to the revised fair value with the related impairment charge recognized in the period in which the impairment occurs. If the carrying value of the asset becomes impaired as the result of unfavorable data from any ongoing or future clinical trial, changes in assumptions that negatively impact projected cash flows, or because of any other information regarding the prospects of successfully developing or commercializing our programs, we could incur significant charges in the period in which the impairment occurs.

We performed a quantitative assessment of IPR&D at September 30, 2022 and for fiscal year 2021 and determined that the asset was not impaired.

Income Taxes

We account for income taxes under the asset and liability method. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as for operating loss and tax credit carryforwards. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which we expect to recover or settle those temporary differences. We recognize the effect of a change in tax rates on deferred tax assets and liabilities in the results of operations in the period that includes the enactment date. We reduce the measurement of a deferred tax asset, if necessary, by a valuation allowance if it is more likely than not that we will not realize some or all of the deferred tax asset. We account for uncertain tax positions by recognizing the financial statement effects of a tax position only when, based upon technical merits, it is “more-likely-than-not” that the position will be sustained upon examination. Potential interest and penalties associated with unrecognized tax positions are recognized in income tax expense.

We continue to maintain a full valuation allowance for our U.S and foreign net deferred tax assets. Income tax expense for the three and nine months ended September 30, 2022 and 2021 is related to our foreign operations.

Under the provisions of the Internal Revenue Code, the NOL and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and state tax authorities. NOL and tax credit carryforwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986, respectively, as well as similar state tax provisions. This could limit the amount of tax attributes that we can utilize annually to offset future taxable income or tax liabilities. The amount of the annual limitation, if any, will be determined based on our value immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. The utilization of these NOLs is subject to limitations based on past and future changes in our ownership pursuant to Section 382. We completed a Section 382 study of transactions in our stock through December 31, 2021 and concluded that we have experienced ownership changes since inception that we believe under Section 382 and 383 of the Code will result in limitations on our ability to use certain pre-ownership change NOLs and credits. In addition, we may experience subsequent ownership changes as a result of future equity offerings or other changes in the ownership of our stock, some of which are beyond our control. As a result, the amount of the NOLs and tax credit carryforwards presented in our consolidated financial statements could be limited. Similar provisions of state tax law may also apply to limit the use of accumulated state tax attributes.

Contingencies

In the normal course of business, we are subject to loss contingencies, such as legal proceedings and claims arising out of our business that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, product and environmental liability, and tax matters. In accordance with ASC Topic 450, Accounting for Contingencies, (“ASC 450”), we record accruals for such loss contingencies when it is probable that a liability will be incurred, and the amount of loss

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can be reasonably estimated. In accordance with this guidance, we do not recognize gain contingencies until realized.

Research and Development

Research and development costs, which include expenditures in connection with an in-house research and development laboratory, salaries and staff costs, application and filing for regulatory approval of proposed products, purchased in-process research and development, license costs, regulatory and scientific consulting fees, as well as contract research, insurance and FDA consultants, are accounted for in accordance with ASC Topic 730, Research and Development, (“ASC 730”). Also, as prescribed by this guidance, patent filing and maintenance expenses are considered legal in nature and therefore classified as general and administrative expense, if any.

We do not currently have any commercial biopharmaceutical products and do not expect to have such for several years, if at all. Accordingly, our research and development costs are expensed as incurred. While certain of our research and development costs may have future benefits, our policy of expensing all research and development expenditures is predicated on the fact that we have no history of successful commercialization of product candidates to base any estimate of the number of future periods that would be benefited.

Also as prescribed by ASC 730, non-refundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred and capitalized. As the related goods are delivered or the services are performed, or when the goods or services are no longer expected to be provided, the deferred amounts would be recognized as an expense. At September 30, 2022 and December 31, 2021, we had prepaid research and development costs of $6.2 million and $5.9 million, respectively.

Share-based payments

ASC Topic 718, Compensation—Stock Compensation (“ASC 718”), requires companies to measure the cost of employee and non-employee services received in exchange for the award of equity instruments based on the estimated fair value of the award at the date of grant. The expense is to be recognized over the period during which an employee is required to provide services in exchange for the award. Generally, we issue stock options with only service-based vesting conditions and record the expense for awards using the straight-line method (see Note 9). We account for awards granted to employees that are in excess of what is available to grant as a liability recorded at fair value each reporting period in the consolidated financial statements.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The estimated expected stock volatility is based on the historical volatility of our own traded stock price. The expected term of stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future.

Foreign Exchange

For 2022, the functional currency of Hepion Pharmaceuticals, Inc. and ContraVir Research Inc. is the U.S. dollar. The functional currency of Hepion Research Corp. is the Canadian dollar. The change in the functional currency for Hepion Research Corp. was applied on a prospective basis starting January 1, 2022. Prior to 2022, the functional and reporting currency of Hepion Pharmaceuticals, Inc., Hepion Research Corp. and ContraVir Research Inc. was the U.S. dollar. For 2022, the assets and liabilities of Hepion Research Corp. are translated into U.S. dollars using period-end exchange rates; income and expenses are translated using the average exchange rates for the reporting period. Unrealized foreign currency translation adjustments are deferred in accumulated other comprehensive loss, a separate component of shareholders’ equity. The amount of currency translation adjustment was $90,335 at September 30, 2022. Transactions in foreign currencies are remeasured into the functional currency of the relevant subsidiaries at the exchange rate in effect at the date of the transaction. Any monetary assets and liabilities arising from these transactions are translated into the functional currency at exchange rates in effect at the balance sheet date or on settlement. Resulting gains and losses are recorded in general and administrative expense within the consolidated statements of operations. The impact of foreign exchange gains (losses) was $27,601 and $26,134 for the three months ended September 30, 2022 and 2021, respectively, and was $(4,917) and $115,500 for the nine months ended September 30, 2022 and 2021, respectively.

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Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Our chief operating decision maker views our operations and manages the business in one segment.

Net loss per share

Basic and diluted net loss per share is presented in conformity with ASC Topic 260, Earnings per Share, (“ASC 260”) for all periods presented. In accordance with this guidance, basic and diluted net loss per common share was determined by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding during the period.

Recent Accounting Pronouncements

In May 2021, the FASB issued ASU No. 2021-04 ("ASU 2021-04), Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force). The amendments in this update are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. We adopted this standard on January 1, 2022. The adoption of this standard did not have a material effect on our condensed consolidated financial statements and related disclosures.

4. Stockholders’ Equity and Derivative Liability — Warrants

Series A Convertible Preferred Stock

On October 14, 2014, our Board of Directors authorized the sale and issuance of up to 1,250,000 shares of Series A Convertible Preferred Stock (the “Series A”). All shares of the Series A were issued between October 2014 and February 2015. Each share of the Series A is convertible at the option of the holder into the number of shares of common stock determined by dividing the stated value of such share by the conversion price that is subject to adjustment. As of September 30, 2022, there were 85,581 shares outstanding. During the nine months ended September 30, 2022 and 2021, no shares of the Series A were converted. If we sell common stock or equivalents at an effective price per share that is lower than the conversion price, the conversion price may be reduced to the lower conversion price. The Series A will be automatically convertible into common stock in the event of a fundamental transaction as defined in the offering.

Series C Convertible Preferred Stock Issuance

On July 3, 2018, we completed a rights offering pursuant to our effective registration statement on Form S-1. We offered for sale units in the rights offering and each unit sold in connection with the rights offering consisted of 1 share of our Series C Convertible Preferred Stock, or Series C, and common stock warrants (the “Rights Offering”). Upon completion of the offering, pursuant to the rights offering, we sold an aggregate of 10,826 units at an offering price of $1,000 per unit comprised of 10,826 shares of Series C and 88,928 common stock warrants. As of September 30, 2022, there were 1,801 shares outstanding. During the nine months ended September 30, 2022, 5 shares of the Series C were converted into 46 shares of our common stock and during the nine months ended September 30, 2021, 11 shares of the Series C were converted into 101 shares of our common stock. Each share of Series C is convertible into common stock at any time at the option of the holder thereof at the conversion price then in effect. The conversion price for the Series C is determined by dividing the stated value of $1,000 per share by $1.55 per share (subject to adjustments upon the occurrence of certain dilutive events).

Common Stock and Warrant Offerings

In April 2017, and July 2018, we issued common stock and warrants in connection with public offerings. In April 2022, the remaining April 2017 warrants expired. Based on the terms of the July 2018 offering and warrant agreements, if we do not maintain an effective registration statement, which is outside of our control, we are obligated to deliver registered shares upon the exercise and settlement of the warrant. As a result of the aforementioned terms and in accordance with the guidance contained in ASC Topic 815-40, we determined that the April 2017 and July 2018 warrants issued in connection with these offerings were recorded as derivative liabilities upon issuance and marked to market on a quarterly basis in our consolidated statement of operations and comprehensive loss. In connection with the adoption of ASU 2020-06, we reclassified the July 2018 warrants to equity.

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The following table sets forth the components of changes in our derivative financial instruments liability balance for the nine months ended September 30, 2022:


Date	Description	Number of Warrants Outstanding	Derivative Instrument Liability
December 31, 2021	Balance of derivative financial instruments liability	10,714	$	—
	Expiration of warrants	(10,714)	—

September 30, 2022	Balance of derivative financial instruments liability	—	$	—

5. Fair Value Measurements

The following table presents our liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy at September 30, 2022 and December 31, 2021.


	Fair Value Measurement at Reporting Date Using
Description	Fair value		(Level 1)		(Level 2)		(Level 3)
As of September 30, 2022:
Contingent consideration	$	2,540,000	$	—	$	—	$	2,540,000


As of December 31, 2021:
Contingent consideration	$	4,880,000	$	—	$	—	$	4,880,000

Contingent consideration was recorded for the acquisition of Ciclofilin Pharmaceuticals, Inc. (Ciclofilin) on June 10, 2016. The contingent consideration represented the acquisition date fair value of potential future payments, to be paid in cash and our stock, upon the achievement of certain milestones and was estimated based on a probability-weighted discounted cash flow model utilizing a discount rate of 6.5% and a stock price of $19.60.

At September 30, 2022 and December 31, 2021, the assumptions we used to calculate the fair value were as follows:


	Assumptions
	September 30, 2022				December 31, 2021
Discount rate	7.0%				7.0%
Stock price	n/a				$1.14
Projected milestone achievement dates	December 2023		—	December 2028	December 2021		—	June 2026
Probability of success of milestone achievements	13	%	—	40%	18	%	—	100%

We completed the first segment of our Phase I clinical activities for Rencofilstat in October 2018 wherein we reached a major clinical milestone of positive data from a Phase I trial of Rencofilstat in humans. This achievement triggered the first milestone payment, as stated in the Merger Agreement for the acquisition of Ciclofilin and in the fourth quarter of 2018, we paid a related milestone payment of $1,000,000 and issued 1,439 shares of our common stock with a fair value of $55,398, representing 2.5% of our issued and outstanding common stock as of June 2016, to the Ciclofilin shareholders.

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As of September 30, 2022, $2,540,000 was classified as a non-current liability based upon management's best estimate using the latest available information. Management reviewed and updated the assumptions at September 30, 2022 for the amendment of the Merger Agreement.

The following table presents the change in fair value of the contingent consideration for the nine months ended September 30, 2022.


	Acquisition-related Contingent Consideration
Liabilities:
Balance at December 31, 2021	$	4,880,000
Contingent consideration payments (includes common shares with a fair value of $5,008)	(2,005,008)
Change in fair value recorded in earnings	(334,992)
Balance at September 30, 2022	$	2,540,000

6. Property and Equipment, net

Property and equipment are stated at cost and depreciated using the straight-line method, based on useful lives as follows:


	Estimated Useful Life (in years)	September 30, 2022		December 31, 2021
Equipment	3 years	$	307,844	$	330,830
Furniture and fixtures	7 years	62,183		62,183
Less: Accumulated depreciation		(287,041)		(240,241)
		$	82,986	$	152,772

Depreciation expense for the three months ended September 30, 2022 and 2021 was $17,726 and $23,106, respectively, and was $58,985 and $62,658 for the nine months ended September 30, 2022 and 2021, respectively.

7. Indefinite-lived Intangible Assets and Goodwill

IPR&D

Our IPR&D asset consisted of the following at:


	Indefinite-lived Intangible Asset
Rencofilstat balance at December 31, 2021	$	3,190,000
Change during the nine months ended September 30, 2022	—
Rencofilstat balance at September 30, 2022	$	3,190,000

No impairment losses were recorded on IPR&D during the nine months ended September 30, 2022 and 2021.

Goodwill

The table below provides a roll-forward of our goodwill balance:


	Amount
Goodwill balance at December 31, 2021	$	1,870,924
Impairment of goodwill (see Note 3) during the nine months ended September 30, 2022	(1,870,924)
Goodwill balance at September 30, 2022	$	—

No impairment loss was recorded to goodwill during the nine months ended September 30, 2021.

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8. Accrued Liabilities

Accrued liabilities consisted of the following:


	September 30, 2022		December 31, 2021
Payroll and related costs	$	852,000	$	—
Stock-based compensation - see Note 9	2,220,260		1,637,308
Research and development	1,287,588		536,965
Legal fees	119,153		57,345

Professional fees	60,518		167,346
Other	217,640		106,661
Total accrued expenses	$	4,757,159	$	2,505,625

9. Accounting for Share-Based Payments

On June 3, 2013, we adopted the 2013 Equity Incentive Plan (the “Plan”). Stock options granted under the Plan typically will vest after three years of continuous service from the grant date and will have a contractual term of ten years. We granted options during the three months ended June 30, 2022 and 2021, and at the time that these grants were made, we did not have any options available for grant under the Plan. We accounted for these option grants as liability-classified awards requiring us to measure the fair value of the awards each reporting period since there were not enough shares available at the time of the grant. As of September 30, 2022, the liability related to the awards was $2.2 million and is included in accrued expenses in our condensed consolidated balance sheets with the corresponding expense included in our condensed consolidated statements of operations and comprehensive loss. At our annual meeting of stockholders June, 2022, shareholders voted against our 2021 Omnibus Equity Incentive Plan. Therefore, we will continue to account for this option grant as liability-classified until we receive stockholder approval to increase the available options to grant.

We classify stock-based compensation expense in our condensed consolidated statement of operations in the same way the award recipient's payroll costs are classified or in which the award recipients' service payments are classified. We recorded stock-based compensation expense as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
General and administrative	$	350,990	$	1,032,119	$	1,561,574	$	2,737,732
Research and development	265,845		436,406		759,219		1,083,563
Total stock-based compensation expense	$	616,835	$	1,468,525	$	2,320,793	$	3,821,295

A summary of stock option activity under the Plan is presented as follows:


	Number of Options	Exercise Price Per Share					Weighted Average Exercise Price Per Share		Intrinsic Value		Weighted Average Remaining Contractual Team
Balance outstanding, December 31, 2021	8,774,974	$	1.63	-	$	2,016.00	$	2.33	$	—	9.10 years
Granted	120,000	$	0.69	-	$	0.69	$	0.69	$	—
Exercised	—	$	—	-	$	—	$	—	$	—
Forfeited	—	$	—	-	$	—	$	—	$	—
Cancelled	(1)	$	—	-	$	—	$	515.20	$	—
Balance outstanding, September 30, 2022	8,894,973	$	0.69	-	$	2,016.00	$	2.31	$	—	8.63 years
Awards outstanding, vested awards and those expected to vest at September 30, 2022	8,808,270	$	0.69	-	$	2,016.00	$	2.31	$	—	8.29 years
Vested and exercisable at September 30, 2022	5,345,352	$	0.69	-	$	2,016.00	$	2.64	$	—	8.38 years

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The following weighted-average assumptions were used in the Black-Scholes valuation model to estimate the fair value of stock option awards when granted to employees.


	Nine Months Ended September 30,
	2022			2021
Stock price	$	0.69		$	1.70
Risk-free interest rate	4.02		%	1.04		%
Dividend yield	—			—
Expected volatility	115.4		%	120.8		%
Expected term (in years)	6.0			5.9

The total fair value of awards vested during the nine months ended September 30, 2022 and 2021 was $4.3 million and $4.1 million, respectively.

As of September 30, 2022, the unrecognized compensation cost related to non-vested stock options outstanding, net of expected forfeitures, was $2.6 million to be recognized over a weighted-average remaining vesting period of approximately 1.1 years.

10. Loss per Share

Basic and diluted net loss per common share was determined by dividing net loss by the weighted-average common shares outstanding during the period. Prior to the adoption of ASU 2020-06 in 2021, basic and diluted net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period with net loss attributable to common stockholders’ being adjusted for the preferred stock deemed dividends related accretion of the beneficial conversion feature and other discount on this instrument for the periods in which the preferred stock is outstanding.

The following table sets forth the computation of basic and diluted net loss per share for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
Basic and diluted net loss per common share	2022		2021		2022		2021
Numerator:
Net loss	$	(8,547,591)	$	(9,269,473)	$	(35,388,575)	$	(23,000,095)


Denominator:
Weighted average common shares outstanding	76,229,617		76,225,249		76,229,380		68,291,894
Net loss per share of common stock—basic and diluted	$	(0.11)	$	(0.12)	$	(0.46)	$	(0.34)

The following outstanding securities at September 30, 2022 and 2021 have been excluded from the computation of basic and diluted weighted shares outstanding, as they would have been anti-dilutive:


	Nine Months Ended September 30,
	2022	2021
Common shares issuable upon conversion of Series A preferred stock	3,184	3,184
Common shares issuable upon conversion of Series C preferred stock	16,599	16,654
Stock options	8,894,973	8,774,974
Warrants – liability classified	—	98,328
Warrants – equity classified	4,311,182	4,223,568
Total	13,225,938	13,116,708

The liability and equity classified warrants disclosed above have been excluded from the computation of basic and diluted earnings per share because the exercise price of the warrants exceeds the average market price of our common stock for the period they were outstanding.

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11. Commitments and Contingencies

Contractual Obligations

In August 2014, we entered into a lease for corporate office space in Edison, New Jersey. In December 2017, we entered an amendment to the lease for corporate office space in Edison, New Jersey expanding the office footprint and extending the lease for an approximate 5-year period. This lease will expire in March 2023. In October 2019, we entered into a 3-year lease for office and research laboratory space in Edmonton, Canada, which expired on September 30, 2022 and will be subsequently on a month-to-month basis.

Legal Proceedings

We are involved in legal proceedings of various types from time to time. Significant judgment is required to determine both the likelihood and the estimated amount of a loss related to such matters. Additionally, while any litigation contains an element of uncertainty, we have at this time no reason to believe that the outcome of such proceedings or claims will have a material adverse effect on our condensed consolidated financial condition or results of operations.

Leases

We account for leases in accordance with ASC Topic 842, Leases, (“ASC 842”). We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys to the customer the right to control the use of identified property or equipment for a period in exchange for consideration. The definition of a lease embodies two conditions: (1) there is an identified asset in the contract that is land or a depreciable asset (i.e., property and equipment), and (2) the customer has the right to control the use of the identified asset.

Operating leases where we are the lessee are included under the caption “Right of Use Assets” on our condensed consolidated balance sheets. The lease liabilities are initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. Key estimates and judgments include how we determine (1) the discount rate used to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments.

The Right-Of-Use (“ROU”) asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of lease incentives received. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

As of September 30, 2022, the ROU assets were $0.1 million, the current lease liabilities were $0.1 million, and there were no non-current lease liabilities. The discount rate used to account for our operating leases under ASC 842 is our estimated incremental borrowing rate of 6.5%.

Rent expense for the three months ended September 30, 2022 and 2021 was $0.1 million and $0.1 million, respectively, and was $0.3 million and $0.2 million for the nine months ended September 30, 2022 and 2021, respectively. The weighted average remaining term of our noncancelable operating leases is 0.50 years.

Future minimum rental payments under our noncancelable operating leases at September 30, 2022 is as follows:


Remainder of 2022	$	53,097
2023	53,902
2024	—
2025	—
2026 and thereafter	—
Total	106,999
Present value adjustment	(1,421)
Lease liability at September 30, 2022	$	105,578

12. Subsequent Events

On November 4, 2022, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”), pursuant to which we agreed to issue and sell, in a private placement (the “Offering”), 1,900,000 shares of our Series F Convertible Redeemable Preferred Stock, par value $0.0001 per share (the “Series F Preferred

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HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Stock”), and 100,000 shares of our Series G Convertible Redeemable Preferred Stock, par value $0.0001 per share (the “Series G Preferred Stock,” and together with the Series F Preferred Stock, the “Preferred Stock”), at an offering price of $9.50 per share, representing a 5% original issue discount to the stated value of $10.00 per share, for gross proceeds of $20 million in the aggregate for the Offering, before the deduction of discounts, fees and offering expenses. The shares of Preferred Stock will be convertible, at a conversion price of $1.00 per share (subject in certain circumstances to adjustments), into shares of our common stock, par value $0.0001 per share, at the option of the holders and, in certain circumstances, by us. The Purchase Agreement contains customary representations, warranties and agreements by us and customary conditions to closing. The Offering closed on November 8, 2022.

We intend to call a special meeting of shareholders to consider an amendment (the “Amendment”) to our Certificate of Incorporation, as amended, to authorize a reverse split of the Common Stock (the “Reverse Split”). The Investors have agreed in the Purchase Agreement to not transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of the shares of the Preferred Stock until the Reverse Split. Pursuant to the certificate of designation of the Series F Preferred Stock, the shares of Series F Preferred Stock have the right to vote on such Amendment on an as-converted to Common Stock basis. In addition, pursuant to the certificate of designation of the Series G Preferred Stock, the shares of Series G Preferred Stock have the right to vote on such Amendment. Each Investor has separately agreed pursuant to a side letter (the “Side Letter”) entered into in conjunction with the Purchase Agreement to vote the shares of the Series F Preferred Stock in favor of the Amendment and that the shares of the Series G Preferred Stock shall automatically be voted in a manner that “mirrors” the proportions on which the shares of Common Stock (excluding any shares of Common Stock that are not voted) and Series F Preferred Stock are voted on the Amendment. The Amendment requires the approval of the majority of the votes associated with our outstanding stock entitled to vote on the proposal. Because the Series G Preferred Stock will automatically and without further action of the purchaser be voted in a manner that “mirrors” the proportions on which the shares of Common Stock (excluding any shares of Common Stock that are not voted) and Series F Preferred Stock are voted on the Reverse Split, abstentions by common stockholders will not have any effect on the votes cast by the holders of the Series G Preferred Stock.

The proceeds of the Offering will be held in an escrow account, along with the additional amount that would be necessary to fund the 105% redemption price until the expiration of the redemption period for the Preferred Stock, as applicable, subject to the earlier payment to redeeming holders. Upon expiration of the redemption period, any proceeds remaining in the escrow account will be disbursed to us.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our condensed consolidated financial statements and other financial information appearing elsewhere in this quarterly report. In addition to historical information, the following discussion and other parts of this quarterly report contain forward-looking statements. You can identify these statements by forward-looking words such as “plan,” “may,” “will,” “expect,” “intend,” “anticipate,” believe,” “estimate” and “continue” or similar words. Forward-looking statements include information concerning possible or assumed future business success or financial results. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Accordingly, we do not undertake any obligation to update any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

The forward-looking statements included herein are based on current expectations that involve a number of risks and uncertainties set forth under “Risk Factors” in our Annual Report on Form 10-K as of and for the year ended December 31, 2021 filed with the United States Securities and Exchange Commission (“SEC”) on April 8, 2022. Accordingly, to the extent that this Report contains forward-looking statements regarding the financial condition, operating results, business prospects or any other aspect of us, please be advised that our actual financial condition, operating results and business performance may differ materially from that projected or estimated by us in forward-looking statements, and you should not unduly rely on such statements.

Business Overview

We are a biopharmaceutical company headquartered in Edison, New Jersey, focused primarily on the development of drug therapy for treatment of chronic liver diseases. This therapeutic approach targets fibrosis, inflammation, and shows potential for the treatment of hepatocellular carcinoma (“HCC”) associated with non-alcoholic steatohepatitis (“NASH”), viral hepatitis, and other liver diseases. Our cyclophilin inhibitor, Rencofilstat (formerly CRV431), is being developed to offer benefits to address multiple complex pathologies relate to advanced liver disease. Rencofilstat is a pan cyclophilin inhibitor that targets multiple pathologic pathways involved in the progression of liver disease. Preclinical studies with Rencofilstat in NASH models demonstrated consistent reductions in liver fibrosis and additional reductions in inflammation and cancerous tumors in some studies. Rencofilstat additionally showed in vitro antiviral activity towards hepatitis B, C, and D viruses which also trigger liver disease. Preclinical studies also have shown potentially therapeutic activities of Rencofilstat in experimental models of acute lung injury, platelet activation, and SARS-CoV-2 replication.

NASH is a form of liver disease that is triggered by what has come to be known as the “Western diet”, characterized especially by high-fat, high-sugar, and processed foods. Among the effects of a prolonged Western diet is fat accumulation in liver cells (steatosis), which is described as non-alcoholic fatty liver disease ("NAFLD") and can predispose cells to injury. NAFLD may evolve into NASH when the fatty liver begins to progress through stages of cell injury, inflammation, fibrosis, and carcinogenesis. People who develop NASH often have additional predisposing conditions such as diabetes and hypertension, but the exact biochemical events that trigger and maintain the progression are not fully understood. Many people in the early stages of disease do not have significant clinical symptoms and therefore do not know that they have NASH. NASH becomes evident and a major concern when the liver becomes fibrotic and puts the individual at increased risk of developing cirrhosis and other complications. Individuals with advanced liver fibrosis have significantly higher risk of developing liver cancer, although cancer may also arise in some patients before significant hepatitis or fibrosis. NASH is increasing worldwide at an alarming rate due to the spread of the Western diet, obesity, and other related conditions. Approximately 4-5% of the global population is estimated to have NASH, including the USA. NASH is the leading reason for individuals requiring a liver transplant in the USA. Considering the serious outcomes linked to advancing NASH, the economic and social burdens of the disease are enormous. There are no simple blood tests to diagnose or track the progression of NASH, and no drugs are approved to specifically treat the disease.

HCC is a major type of liver cancer, accounting for approximately 85% - 90% of all cases. NASH, hepatitis viral infections, and alcohol consumption are all major causes of HCC. Globally, over 700,000 people die each year from liver cancer which is second only to lung cancer among all cancer-related deaths. The high mortality is due to the fact that only around half of all people who develop HCC (in developed countries) receive the diagnosis early enough to have an opportunity for therapeutic intervention. Additionally, recurrence rates are high, and current treatment options remain limited.

HCC is a type of cancer in which the tissue microenvironment plays a major role in its development. In most cases HCC is preceded by significant, long-term damage to liver cells, inflammation, and fibrosis. One-third of people with cirrhosis, a very advanced stage of liver disease, will eventually progress to HCC. The chronic injury to the liver leads to many genetic mutations that eventually lead to transformation of cells and formation of tumors. The noxious tissue microenvironment also promotes cancer by altering the function of immune cells and endothelial cells which form tumor-supporting blood vessels.

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These various events underscore the importance of halting liver injury and scarring as early and effectively as possible to prevent cancer development.

Artificial Intelligence (AI)

We have created a proprietary AI tool called, “AI-POWR™ to optimize the outcomes of our current clinical programs and to potentially identify novel indications for Rencofilstat and possibly identify new targets and new drug molecules to broaden our pipeline.

AI-POWR™ is our acronym for Artificial Intelligence - Precision Medicine; Omics that include genomics, proteomics, metabolomics, transcriptomics, and lipidomics; World database access; and Response and clinical outcomes. AI-POWR™ allows for the selection of novel drug targets, biomarkers, and appropriate patient populations. AI-POWR™ is used to identify responders from big data sources using our multi-omics approach, while modelling inputs and scenarios to increase response rates. The components of AI-POWR™ include access to publicly available databases, and in-house genomic and multi-omic big data, processed via machine learning algorithms. We believe AI outputs will allow for improved response outcomes through enhanced patient selection, biomarker selection and drug target selection. We believe AI outputs will help identify responders a priori and reduce the need for large sample sizes through study design enrichment.

We intend to use AI-POWR™ to help identify which NASH patients will best respond to Rencofilstat. It is anticipated that applying this proprietary platform to our drug development program will ultimately save time, resources, and money. In so doing, we believe that AI-POWR™ is a risk-mitigation strategy that should reap benefits all the way through from clinical trials to commercialization. The AI-POWR™ platform is continually updated with in-house and published data to further refine the accuracy of the neural network.

We believe that NASH is a heterogenous disease, and we need to have a better understanding of interactions among proteins, genes, lipids, metabolites, and other disease variables to help predict disease progression, regression, and responses to Rencofilstat. All of this is further complicated by variable drug concentrations, patient traits and temporal factors. AI-POWR™ is designed to address many of the typical challenges in drug development, as we believe we can use our proprietary platform to shorten development timelines and increase the delta between placebo and treatment groups. AI-POWR™ will be used to drive our Phase 2b Ascend-NASH program and identify additional potential indications for Rencofilstat to expand our footprint in the cyclophilin inhibition therapeutic space.

Impact of COVID-19

The COVID-19 outbreak in the United States has caused significant business disruption. The extent of the impact of COVID-19 on our future operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, and impact on our clinical trials, employees and vendors, all of which are uncertain and cannot be predicted. At this point, the extent to which COVID-19 may impact our future financial condition or results of operations is uncertain. While there has not been a material impact on our condensed consolidated financial statements for the three and nine months ended September 30, 2022, a continued outbreak could have a material adverse impact on our financial results and business operations, including the timing and our ability to complete certain clinical trials and other efforts required to advance the development of our product candidate and raise additional capital.

FINANCIAL OPERATIONS OVERVIEW

From our inception in May 2013 through September 30, 2022, we have an accumulated deficit of $168.9 million and we have not generated any revenue from operations. We expect to incur additional losses to perform further research and development activities and do not currently have any commercial biopharmaceutical products. We do not expect to have such for several years, if at all.

Our product development efforts are in their early stages and we cannot make estimates of the costs or the time they will take to complete. The risk of completion of any program is high because of the many uncertainties involved in bringing new drugs to market including the long duration of clinical testing, the specific performance of proposed products under stringent clinical trial protocols, the extended regulatory approval and review cycles, our ability to raise additional capital, the nature and timing of research and development expenses and competing technologies being developed by organizations with significantly greater resources.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The preparation of these condensed consolidated financial statements requires us to

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make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses, income taxes and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. Our actual results may differ from these estimates under different assumptions or conditions.

During the nine months ended September 30, 2022, there were no significant changes to our critical accounting policies and estimates as described in the financial statements contained in the Annual Report on Form 10-K for the year ended December 31, 2021.

RECENT ACCOUNTING PRONOUNCEMENTS

Please refer to Note 3 of Notes to Condensed Consolidated Financial Statements, Recent Accounting Pronouncements, in this Quarterly Report on Form 10-Q.

RESULTS OF OPERATIONS

Comparison of the three months ended September 30, 2022 and 2021:


	Three Months Ended September 30,
	2022		2021		Change
Revenues	$	—	$	—	$	—
Costs and Expenses:
Research and development	5,740,122		5,800,464		(60,342)
General and administrative	2,725,204		2,716,892		8,312
Loss from operations	(8,465,326)		(8,517,356)		52,030

Other income (expense):
Interest expense	(2,265)		(2,131)		(134)
Change in fair value of contingent consideration	(80,000)		(749,986)		669,986
Loss before income taxes	(8,547,591)		(9,269,473)		721,882
Income tax benefit (expense)	—		—		—
Net loss	$	(8,547,591)	$	(9,269,473)	$	721,882

We had no revenues during the three months ended September 30, 2022 and 2021, respectively, because we do not have any commercial biopharmaceutical products and we do not expect to have such products for several years, if at all.

Research and development expenses for the three months ended September 30, 2022 and 2021 was $5.7 million and $5.8 million, respectively. The decrease of $0.1 million was primarily due to a decrease of $0.5 million in chemistry, manufacturing, and controls (or CMC) costs primarily relating to a decrease in animal study costs, a decrease of $0.2 million for consulting fees and outside services, and a $0.2 million decrease in stock compensation expense. This was offset by an increase of $0.6 million in clinical trial costs relating to our current studies, and a $0.2 million increase in employee compensation costs due to an increase in headcount.

General and administrative expenses for the three months ended September 30, 2022 and 2021 was $2.7 million and $2.7 million, respectively. The slight increase was primarily due to an increase of $0.2 million for employee compensation due to an increase in headcount, a $0.1 million increase in travel costs, and a $0.5 million increase in professional, consulting, and outside services. This was offset by a $0.7 million decrease in stock comp expense and a $0.1 million decrease in miscellaneous taxes.

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Comparison of the nine months ended September 30, 2022 and 2021:


	Nine Months Ended September 30,
	2022		2021		Change
Revenues	$	—	$	—	$	—
Costs and Expenses:
Research and development	25,753,211		13,485,061		12,268,150
General and administrative	9,962,704		7,918,357		2,044,347
Loss from operations	(35,715,915)		(21,403,418)		(14,312,497)

Other income (expense):
Interest expense	(7,652)		(6,677)		(975)
Change in fair value of contingent consideration	334,992		(1,590,000)		1,924,992
Loss before income taxes	(35,388,575)		(23,000,095)		(12,388,480)
Income tax (expense) benefit	—		—		—
Net loss	$	(35,388,575)	$	(23,000,095)	$	(12,388,480)

We had no revenues during the nine months ended September 30, 2022 and 2021, respectively, because we do not have any commercial biopharmaceutical products and we do not expect to have such products for several years, if at all.

Research and development expenses for the nine months ended September 30, 2022 and 2021 was $25.8 million and $13.5 million, respectively. The increase of $12.3 million was primarily due to an increase of $0.8 million for employee compensation costs relating to an increase in headcount, a $3.3 million increase in clinical trial costs relating to our current studies, a $9.7 million increase in CMC costs primarily for drug manufacturing costs, and a $0.2 million increase in miscellaneous research costs. This was offset by a decrease of $0.3 million in stock compensation costs and a decrease of $1.3 million in consulting costs.

General and administrative expenses for the nine months ended September 30, 2022 and 2021 was $10.0 million and $7.9 million, respectively. The increase of $2.0 million was primarily related to an increase of $1.9 million for goodwill impairment (see Note 3 to the condensed consolidated financial statements), a $0.4 million increase in compensation costs related to an increase in headcount, a $0.1 million increase in insurance costs, a $0.2 million increase in travels costs, and a $0.8 million increase in professional and consulting fees. This was offset by a decrease of $1.2 million in stock compensation costs and a $0.2 million decrease in miscellaneous taxes.

Liquidity and Capital Resources

Sources of Liquidity

We have funded our operations through September 30, 2022 primarily through the issuance of convertible preferred stock, the issuance of convertible debt, and issuances of shares of our common stock through at-the market offerings.

On November 4, 2022, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors, pursuant to which we agreed to issue and sell, in a private placement (the “Offering”), 1,900,000 shares of our Series F Convertible Redeemable Preferred Stock, par value $0.0001 per share (the “Series F Preferred Stock”), and 100,000 shares of our Series G Convertible Redeemable Preferred Stock, par value $0.0001 per share (the “Series G Preferred Stock,” and together with the Series F Preferred Stock, the “Preferred Stock”), at an offering price of $9.50 per share, representing a 5% original issue discount to the stated value of $10.00 per share, for gross proceeds of $20 million in the aggregate for the Offering, before the deduction of discounts, fees and offering expenses. The shares of Preferred Stock will be convertible, at a conversion price of $1.00 per share (subject in certain circumstances to adjustments), into shares of our common stock, par value $0.0001 per share, at the option of the holders and, in certain circumstances, by us. The Purchase Agreement contains customary representations, warranties and agreements by us and customary conditions to closing. The Offering closed on November 8, 2022.

Future Funding Requirements

We have no products approved for commercial sale. To date, we have devoted substantially all of our resources to organizing and staffing our company, business planning, raising capital, undertaking preclinical studies and clinical trials of our product candidate. As a result, we are not profitable and have incurred losses in each period since our inception in 2013. As of

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September 30, 2022, we had an accumulated deficit of $168.9 million. We expect to continue to incur significant losses for the foreseeable future. We anticipate that our expenses will increase substantially as we:

•pursue the clinical and preclinical development of our current product candidate;

•leverage our technologies to advance product candidates into preclinical and clinical development;

•seek regulatory approvals for our product candidate that successfully complete clinical trials, if any;

•attract, hire and retain additional clinical, quality control and scientific personnel;

•establish our manufacturing capabilities through third parties and scale-up manufacturing to provide adequate supply for clinical trials and commercialization;

•expand our operational, financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a public company;

•expand and protect our intellectual property portfolio;

•establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any products for which we may obtain marketing approval and intend to commercialize on our own or jointly;

•acquire or in-license other product candidates and technologies; and

•incur additional legal, accounting and other expenses in operating our business, including ongoing costs associated with operating as a public company.

Even if we succeed in commercializing our product candidate, we will continue to incur substantial research and development and other expenditures to potentially develop and market additional product candidates. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.

We will require substantial additional financing and a failure to obtain this necessary capital could force us to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations.

Since our inception, we have invested a significant portion of our efforts and financial resources in research and development activities for our non-replicating and replicating technologies and our product candidates derived from these technologies. Preclinical studies and clinical trials and additional research and development activities will require substantial funds to complete. We believe that we will continue to expend substantial resources for the foreseeable future in connection with the development of our current product candidates and programs as well as any future product candidates we may choose to pursue, as well as the gradual gaining of control over our required manufacturing capabilities and other corporate uses. These expenditures will include costs associated with conducting preclinical studies and clinical trials, obtaining regulatory approvals, and manufacturing and supply, as well as marketing and selling any products approved for sale. In addition, other unanticipated costs may arise. Because the outcome of any preclinical study or clinical trial is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of our current or future product candidates.

Our future capital requirements depend on many factors, including:

•the scope, progress, results and costs of researching and developing our current and future product candidate and programs, and of conducting preclinical studies and clinical trials;

•the number and development requirements of other product candidates that we may pursue, and other indications for our current product candidate that we may pursue;

•the stability, scale and yields during the manufacturing process as we scale-up production and formulation of our product candidate for later stages of development and commercialization;

•the timing of, and the costs involved in, obtaining regulatory and marketing approvals and developing our ability to establish sales and marketing capabilities, if any, for our current and future product candidates we develop if clinical trials are successful;

•our ability to establish and maintain collaborations, strategic licensing or other arrangements and the financial terms of such agreements;

•the cost of commercialization activities for our current and future product candidates that we may develop, whether alone or with a collaborator;

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•the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;

•the timing, receipt and amount of sales of, or royalties on, our future products, if any; and

A change in the outcome of any of these or other variables with respect to the development of any of our current and future product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we will need additional funds to meet operational needs and capital requirements associated with such operating plans.

We believe we have enough cash on hand to fund our operations for the next twelve months after the date of this Quarterly Report on Form 10-Q for the nine months ended September 30, 2022. We will be required to raise additional capital to continue the development and commercialization of our current product candidate and to continue to fund operations at the current cash expenditure levels. We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct, delay, scale back or discontinue the development and/or commercialization of one or more product candidates; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize on unfavorable terms.

Cash Flows

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


	Nine Months Ended September 30,
	2022		2021
Net cash (used in) provided by:
Operating activities	$	(30,163,670)	$	(23,842,214)
Investing activities	2,266		(130,406)
Financing activities	(2,000,000)		81,977,015
Effect of exchange rates	(42,370)		—
Net (decrease) increase in cash	$	(32,203,774)	$	58,004,395

As of September 30, 2022, we had working capital of $58.2 million compared to working capital of $89.2 million as of December 31, 2021. The decrease of $31.0 million in working capital is primarily related to our cash spend for the nine months ended September 30, 2022.

Operating Activities:

As of September 30, 2022, we had $59.1 million in cash. Net cash used in operating activities was $30.2 million for the nine months ended September 30, 2022 consisting primarily of our net loss of $35.4 million. Changes in non-cash operating activities was $3.9 million, primarily for stock-based compensation, goodwill impairment and the change in fair value of the contingent consideration. Changes in working capital accounts had a positive impact of $1.3 million on cash primarily for an increase in accounts payable and accrued expenses of $1.8 million offset by an increase in prepaid expenses of $0.5 million.

Net cash used in operating activities was $23.8 million for the nine months ended September 30, 2021 consisting primarily of our net loss of $23.0 million. Changes in non-cash operating activities was $5.5 million, primarily for stock-based compensation and the change in fair value of the contingent consideration. Changes in working capital accounts had a negative impact of $6.3 million on cash primarily for an increase in prepaid expenses, and for a decrease in accounts payable and accrued expenses.

Investing Activities:

Net cash provided by investing activities was nominal during the nine months ended September 30, 2022.

Net cash used in investing activities for the nine months ended September 30, 2021 of $0.1 million was related to lab equipment purchases for research and development.

Financing Activities:

Net cash used in financing activities was $2.0 million for the nine months ended September 30, 2022 for the contingent consideration milestone payment per the Ciclofilin acquisition merger agreement.

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Net cash provided by financing activities was $82.0 million for the nine months ended September 30, 2021 due primarily to the issuance of common stock, net of issuance costs.

OFF-BALANCE SHEET ARRANGEMENTS

We had no off-balance sheet arrangements as of September 30, 2022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We have performed an evaluation under the supervision and with the participation of our management, including our principal executive officer (CEO) and principal financial officer (CFO), of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2022 to provide reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected.

Changes in Internal Control over Financial Reporting

There was no change in our internal controls over financial reporting during the three months ended September 30, 2022 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in our Form 10-K for the year ended December 31, 2021.

ITEM 6. EXHIBITS


3.1						Certificate of Designation of Series F Convertible Redeemable Preferred Stock (incorporated by reference to Exhibit 3.1 to Form 8-K filed with the SEC on November 9, 2022)
3.2						Certificate of Designation of Series G Convertible Redeemable Preferred Stock (incorporated by reference to Exhibit 3.2 to Form 8-K filed with the SEC on November 9, 2022)
3.3						Certificate of Amendment to Designation of Series F Convertible Redeemable Preferred Stock (incorporated by reference to Exhibit 3.3 to Form 8-K filed with the SEC on November 9, 2022)
3.4						Certificate of Designation of Series G Convertible Redeemable Preferred Stock (incorporated by reference to Exhibit 3.4 to Form 8-K filed with the SEC on November 9, 2022)
10.1						Form of Securities Purchase Agreement between Hepion Pharmaceuticals, Inc. and the investors thereto, dated November 4, 2022 (incorporated by reference to Exhibit 10.1 to Form 8-K filed with the SEC on November 9, 2022)
10.2						Form of Registration Rights Agreement between Hepion Pharmaceuticals, Inc. and the investors thereto, dated November 4, 2022 (incorporated by reference to Exhibit 10.2 to Form 8-K filed with the SEC on November 9, 2022)
10.3						Form of Side Letter between Hepion Pharmaceuticals, Inc. and each investor, dated November 4, 2022 (incorporated by reference to Exhibit 10.3 to Form 8-K filed with the SEC on November 9, 2022)
31.1						Certification of Chief Executive Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act.
31.2						Certification of Principal Financial Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act.
32.1						Certification of Chief Executive Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of Principal Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema
101.CAL						XBRL Taxonomy Extension Calculation Linkbase
101.DEF						XBRL Taxonomy Extension Definition Linkbase
101.LAB						XBRL Taxonomy Label Linkbase
101.PRE						XBRL Taxonomy Extension Presentation Linkbase
104						Cover Page Interactive Data File (formatted as Inline XBRL in Exhibit 101)

Table of Contents

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.


	HEPION PHARMACEUTICALS, INC. (Registrant)

Date: 11/14/2022	By:	/s/ ROBERT FOSTER
		Robert Foster
		Chief Executive Officer
		(Principal Executive Officer)

Date: 11/14/2022	By:	/s/ JOHN CAVAN
		John Cavan
		Chief Financial Officer
		(Principal Financial and Accounting Officer)


Date: November 14, 2022			/s/ Robert Foster
			Robert Foster
			Chief Executive Officer and Director
			(Principal Executive Officer)


Date: November 14, 2022			/s/ Robert Foster
			Robert Foster
			Chief Executive Officer and Director
			(Principal Executive Officer)

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2022	Nov. 09, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	001-36856
Entity Registrant Name	HEPION PHARMACEUTICALS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	46-2783806
Entity Address, Address Line One	399 Thornall Street
Entity Address, Address Line Two	First Floor
Entity Address, City or Town	Edison
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08837
City Area Code	732
Local Phone Number	902-4000
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	HEPA
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		76,229,617
Entity Central Index Key	0001583771
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Amendment Flag	false

Business Overview	9 Months Ended
Business Overview	Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Business Overview	Business Overview Hepion Pharmaceuticals, Inc. (we, our, or us) is a biopharmaceutical company headquartered in Edison, New Jersey, focused on the development of drug therapy for treatment of chronic liver diseases. This therapeutic approach targets fibrosis, inflammation, and shows potential for the treatment of hepatocellular carcinoma (“HCC”) associated with non-alcoholic steatohepatitis (“NASH”), viral hepatitis, and other liver diseases. Our cyclophilin inhibitor, Rencofilstat (formerly CRV431), is being developed to offer benefits to address multiple complex pathologies related to advanced liver disease. Rencofilstat is a cyclophilin inhibitor that targets multiple pathologic pathways involved in the progression of liver disease. We are developing Rencofilstat as our lead molecule. Rencofilstat is a compound that binds and inhibits the function of a specific class of isomerase enzymes called cyclophilins that regulate protein folding. Many closely related isoforms of cyclophilins exist in humans. Cyclophilins A, B, and D are the best characterized cyclophilin isoforms. Inhibition of cyclophilins has been shown in the scientific literature to have therapeutic effects in a variety of experimental models, including liver disease models. On May 10, 2018, we submitted an Investigational New Drug Application (“IND”) to the U.S. Food and Drug Administration (“FDA”) to support initiation of our Rencofilstat HBV clinical development program in the United States and received approval in June 2018. We completed the first segment of our Phase 1 clinical activities for Rencofilstat in October 2018 wherein we reached a major clinical milestone of positive data from a Phase I trial of Rencofilstat in humans. This achievement triggered the first milestone payment, as stated in the May 26, 2016 acquisition agreement between the Company and Ciclofilin Pharmaceuticals, Inc. (“Ciclofilin”) (the “Merger Agreement") for the acquisition of Ciclofilin and we paid a related milestone payment of approximately $0.3 million to Aurinia Pharmaceuticals, Inc. ("Aurinia") and $0.7 million to the former Ciclofilin shareholders along with the issuance of 1,439 shares of our common stock with a fair value of $0.1 million, representing 2.5% of our issued and outstanding common stock as of June, 2016, to the former Ciclofilin shareholders. Our CEO is a former Ciclofilin shareholder and received approximately $0.3 million and 603 shares of common stock and Petrus Wijngaard, a director of our company, received $2,805 and 6 shares of common stock. The Merger Agreement was amended on January 14, 2022 for the following: (i) upon receipt of Phase II positive data from the first Phase II clinical trial of Rencofilstat in NASH patients which has been achieved: (1) such number of validly issued, fully paid and non-assessable shares of our common stock equal to 7.5% of the issued and outstanding of our common stock on the Closing Date as defined in the original agreement, which 4,317 was issued in March 2022, and (2) a payment of $2.0 million, made in January 2022 to Ciclofilin shareholders, including a payment to our CEO of $0.8 million and other Hepion employees of $0.2 million, (ii) a payment of $1.0 million upon the positive read out of the first planned interim futility analysis of a Phase IIb clinical trial of Rencofilstat in NASH patients, supporting the continuation of the Phase IIb trial. The original agreement required a $3.0 million payment upon receipt of Phase II positive data from a proof-of-concept clinical trial of CRV431, (iii) a payment of $5.0 million upon initiation of the first Phase III trial of Rencofilstat in patients, where initiation occurs with first patient in the study dosed with study medication, which remains unchanged from the original agreement, (iv) a payment of $5.0 million upon the filing and acceptance by the U.S. Food and Drug Administration of the first new drug application for Rencofilstat, which was $8.0 million in the original agreement; and (v) a payment of $8.0 million upon the regulatory approval by the U.S. Food and Drug Administration of the first new drug application for Rencofilstat. On June 17, 2019, we submitted an IND to the FDA to support initiation of our Rencofilstat NASH clinical development program in the United States and received approval in July 2019. We completed dosing of Rencofilstat in our multiple ascending dose (“MAD") clinical trial in September 2020. On July 13, 2021, we announced positive topline results from our Phase 2a "AMBITION" NASH clinical trial. All primary endpoints of the trial were met. This Phase 2a study confirmed Rencofilstat tolerability and successfully elucidated the drug dosing range for the upcoming Phase 2b trial. On September 13, 2021, we announced additional positive data from the Phase 2a AMBITION trial and the initiation of the Phase 2b "ASCEND" NASH clinical trial. On November 20, 2020, we submitted an IND to the FDA to support initiation of a Rencofilstat clinical development program in the United States for COVID-19. We received approval December 17, 2020, to conduct a COVID-19 clinical trial and are investigating potential sources of collaboration and/or funding for the trial. Effective June 15, 2022, the IND for the COVID-19 indication is in inactive status with the FDA. On November 19, 2021, we submitted an IND to the FDA to support initiation of a Rencofilstat clinical development program in the United States for the treatment of HCC and received approval on December 17, 2021. On November 30, 2021, the FDA granted Fast Track designation for our lead drug candidate, Rencofilstat, for the treatment of NASH. The FDA Fast Track designation allows sponsors to gain access to expedited drug approval reviews for medical conditions that are serious and potentially life-threatening, and where there is an unmet medical need. The program is also designed to facilitate drug development by making provisions for more frequent meetings with the FDA to discuss drug development plans, and Fast Track designation can lead to Accelerated Approval and/or Priority Review eligibility if certain criteria are met. On June 20, 2022, the FDA granted Orphan Drug Designation to Rencofilstat, a liver-targeting, orally administered, novel cyclophilin inhibitor, for the treatment of HCC. The FDA Orphan Drug Designation program provides orphan status to drugs or biologics intended for the prevention, diagnosis, or treatment of diseases that affect fewer than 200,000 people in the United States. Sponsors of medicines that are granted Orphan Drug Designation are entitled to certain incentives, including tax credits for qualified clinical trials, prescription drug user-fee exemptions, and potential seven-year marketing exclusivity upon FDA approval.

Basis of Presentation	9 Months Ended
Basis of Presentation	Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	Basis of Presentation Basis of Presentation These unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim reporting. In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, which include only normal recurring adjustments, necessary to present fairly our interim financial information. The consolidated balance sheet as of December 31, 2021, was derived from the audited annual consolidated financial statements but does not include all disclosures required by U.S. GAAP. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2021, contained in our Annual Report on Form 10-K filed with the SEC on April 8, 2022. Principles of Consolidation The accompanying condensed consolidated financial statements include our accounts and the accounts of our subsidiaries, Contravir Research Inc. and Hepion Research Corp, which conduct their operations in Canada. All intercompany balances and transactions have been eliminated in consolidation. Liquidity As of September 30, 2022, we had $59.1 million in cash, an accumulated deficit of $168.9 million, and working capital of $58.2 million. For the nine months ended September 30, 2022, cash used in operating activities was $30.2 million and we had a net loss of $35.4 million. We have not generated revenue to date and have incurred substantial losses and negative cash flows from operations since our inception. We have historically funded our operations through issuances of convertible debt, common stock and preferred stock. We expect to continue to incur losses for the next several years as we expand our research, development and clinical trials of Rencofilstat. We are unable to predict the extent of any future losses or when we will become profitable, if at all. We believe that our cash and cash equivalents balances are sufficient to fund our anticipated operating cash requirements for more than one year from the date of issuance of these condensed consolidated financial statements. These condensed consolidated financial statements have been prepared under the assumption that we will continue as a going concern. We will be required to raise additional capital in future years to continue the development and commercialization of our current product candidate and to continue to fund operations at the current cash expenditure levels. We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct business. If we are unable to raise additional capital when required or on acceptable terms, we may have to (i) significantly delay, scale back or discontinue the development and/or commercialization of one or more product candidates; (ii) seek collaborators for product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available; or (iii) relinquish or otherwise dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize on unfavorable terms. COVID-19 Pandemic The COVID-19 outbreak in the United States has caused significant business disruption. The extent of the impact of COVID-19 on our future operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, and impact on our clinical trials, employees and vendors, all of which are uncertain and cannot be predicted. At this point, the extent to which COVID-19 may impact our future financial condition or results of operations is uncertain. While there has not been a material impact on our condensed consolidated financial statements for the three and nine months ended September 30, 2022, a continued outbreak could have a material adverse impact on our financial results and business operations, including the timing and our ability to complete certain clinical trials and other efforts required to advance the development of our product candidate and raise additional capital. Although we have data to suggest Rencofilstat may be beneficial in the treatment of COVID-19 and other viral infections (e.g., HBV), the main focus of our company is currently on liver disease. We may, at some point, re-visit the antiviral indications should the opportunity arise (e.g., external funding/collaboration).

Condensed Consolidated Balance Sheets - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash	$ 59,145,193	$ 91,348,967
Prepaid expenses	6,524,337	6,102,801
Total current assets	65,669,530	97,451,768
Property and equipment, net	82,986	152,772
Right-of-use assets	100,241	303,689
In-process research and development	3,190,000	3,190,000
Goodwill	0	1,870,924
Other assets	654,521	583,326
Total assets	69,697,278	103,552,479
Current liabilities:
Accounts payable	2,626,577	2,445,837
Accrued expenses	4,757,159	2,505,625
Operating lease liabilities, current	105,578	266,650
Short-term portion of contingent consideration	0	2,988,284
Total current liabilities	7,489,314	8,206,396
Contingent consideration	2,540,000	1,891,716
Deferred tax liability	409,022	409,022
Operating lease liabilities, non-current	0	50,342
Total liabilities	10,438,336	10,557,476
Commitments and contingencies
Stockholders' equity:
Common stock—$0.0001 par value per share; 120,000,000 shares authorized, 76,229,617 and 76,225,254 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	7,623	7,623
Additional paid-in capital	226,535,396	224,787,547
Accumulated other comprehensive loss	(90,335)	0
Accumulated deficit	(168,889,870)	(133,501,295)
Total stockholders' equity	59,258,942	92,995,003
Total liabilities and stockholders' equity	69,697,278	103,552,479
Series A
Stockholders' equity:
Convertible preferred stock	855,808	855,808
Series C
Stockholders' equity:
Convertible preferred stock	$ 840,320	$ 845,320

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	120,000,000	120,000,000
Common stock, shares issued (in shares)	76,229,617	76,225,254
Common stock, shares outstanding (in shares)	76,229,617	76,225,254
Series A
Convertible preferred stock, par value (in dollars per share)	$ 10	$ 10
Convertible preferred stock, shares issued (in shares)	85,581	85,581
Convertible preferred stock, shares outstanding (in shares)	85,581	85,581
Series C
Convertible preferred stock, par value (in dollars per share)	$ 1,000	$ 1,000
Convertible preferred stock, shares issued (in shares)	1,801	1,806
Convertible preferred stock, shares outstanding (in shares)	1,801	1,806

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Statement [Abstract]
Revenues	$ 0	$ 0	$ 0	$ 0
Cost and expenses:
Research and development	5,740,122	5,800,464	25,753,211	13,485,061
General and administrative	2,725,204	2,716,892	9,962,704	7,918,357
Total operating expenses	8,465,326	8,517,356	35,715,915	21,403,418
Loss from operations	(8,465,326)	(8,517,356)	(35,715,915)	(21,403,418)
Other income (expense):
Interest expense	(2,265)	(2,131)	(7,652)	(6,677)
Change in fair value of contingent consideration	(80,000)	(749,986)	334,992	(1,590,000)
Loss before income taxes	(8,547,591)	(9,269,473)	(35,388,575)	(23,000,095)
Income tax benefit (expense)	0	0	0	0
Net loss	$ (8,547,591)	$ (9,269,473)	$ (35,388,575)	$ (23,000,095)
Weighted-average common shares outstanding:
Basic (in shares)	76,229,617	76,225,249	76,229,380	68,291,894
Diluted (in shares)	76,229,617	76,225,249	76,229,380	68,291,894
Net loss per common share: (see Note 10)
Basic (in dollars per share)	$ (0.11)	$ (0.12)	$ (0.46)	$ (0.34)
Diluted (in dollars per share)	$ (0.11)	$ (0.12)	$ (0.46)	$ (0.34)

Condensed Consolidated Statements of Changes in Stockholders’ Equity - USD ($)	Total	Cumulative Effect, Period of Adoption, Adjustment	Preferred Stock Series A	Preferred Stock Series C	Common Stock	Additional Paid in Capital	Additional Paid in Capital Cumulative Effect, Period of Adoption, Adjustment	Accumulated other Comprehensive Income (Loss)	Accumulated Deficit	Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment
Beginning balance (in shares) at Dec. 31, 2020			85,581	1,817	32,025,153
Beginning balance at Dec. 31, 2020	$ 40,520,391	$ 11,672	$ 855,808	$ 856,320	$ 3,203	$ 142,910,523	$ (3,314,663)	$ 0	$ (104,105,463)	$ 3,326,335
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(6,063,517)								(6,063,517)
Stock-based compensation expense	957,871					957,871
Conversion of preferred stock to common (in shares)				(10)	92
Conversion of Series C to common	0			$ (10,000)		10,000
Issuance of common stock, net (in shares)					44,200,000
Issuance of common stock, net	82,153,600				$ 4,420	82,149,180
Ending balance (in shares) at Mar. 31, 2021			85,581	1,807	76,225,245
Ending balance at Mar. 31, 2021	117,580,017		$ 855,808	$ 846,320	$ 7,623	222,712,911		0	(106,842,645)
Beginning balance (in shares) at Dec. 31, 2020			85,581	1,817	32,025,153
Beginning balance at Dec. 31, 2020	40,520,391	$ 11,672	$ 855,808	$ 856,320	$ 3,203	142,910,523	$ (3,314,663)	0	(104,105,463)	$ 3,326,335
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(23,000,095)
Other comprehensive income (loss)	0
Ending balance (in shares) at Sep. 30, 2021			85,581	1,806	76,225,254
Ending balance at Sep. 30, 2021	102,643,766		$ 855,808	$ 845,320	$ 7,623	224,714,238			(123,779,223)
Beginning balance (in shares) at Mar. 31, 2021			85,581	1,807	76,225,245
Beginning balance at Mar. 31, 2021	117,580,017		$ 855,808	$ 846,320	$ 7,623	222,712,911		0	(106,842,645)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(7,667,105)								(7,667,105)
Stock-based compensation expense	811,952					811,952
Ending balance (in shares) at Jun. 30, 2021			85,581	1,807	76,225,245
Ending balance at Jun. 30, 2021	110,724,864		$ 855,808	$ 846,320	$ 7,623	223,524,863		0	(114,509,750)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(9,269,473)								(9,269,473)
Other comprehensive income (loss)	0
Stock-based compensation expense	1,188,375					1,188,375
Conversion of preferred stock to common (in shares)				(1)	9
Conversion of Series C to common	0			$ (1,000)		1,000
Ending balance (in shares) at Sep. 30, 2021			85,581	1,806	76,225,254
Ending balance at Sep. 30, 2021	102,643,766		$ 855,808	$ 845,320	$ 7,623	224,714,238			(123,779,223)
Beginning balance (in shares) at Dec. 31, 2021			85,581	1,806	76,225,254
Beginning balance at Dec. 31, 2021	92,995,003		$ 855,808	$ 845,320	$ 7,623	224,787,547		0	(133,501,295)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(6,929,685)								(6,929,685)
Other comprehensive income (loss)	9,146							9,146
Stock-based compensation expense	556,610					556,610
Conversion of preferred stock to common (in shares)				(5)	46
Conversion of Series C to common	0			$ (5,000)		5,000
Issuance of common stock, net (in shares)					4,317
Issuance of common stock, net	5,008					5,008
Ending balance (in shares) at Mar. 31, 2022			85,581	1,801	76,229,617
Ending balance at Mar. 31, 2022	86,636,082		$ 855,808	$ 840,320	$ 7,623	225,354,165		9,146	(140,430,980)
Beginning balance (in shares) at Dec. 31, 2021			85,581	1,806	76,225,254
Beginning balance at Dec. 31, 2021	92,995,003		$ 855,808	$ 845,320	$ 7,623	224,787,547		0	(133,501,295)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(35,388,575)
Other comprehensive income (loss)	(90,335)
Ending balance (in shares) at Sep. 30, 2022			85,581	1,801	76,229,617
Ending balance at Sep. 30, 2022	59,258,942		$ 855,808	$ 840,320	$ 7,623	226,535,396		(90,335)	(168,889,870)
Beginning balance (in shares) at Mar. 31, 2022			85,581	1,801	76,229,617
Beginning balance at Mar. 31, 2022	86,636,082		$ 855,808	$ 840,320	$ 7,623	225,354,165		9,146	(140,430,980)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(19,911,299)								(19,911,299)
Other comprehensive income (loss)	(39,113)							(39,113)
Stock-based compensation expense	634,651					634,651
Ending balance (in shares) at Jun. 30, 2022			85,581	1,801	76,229,617
Ending balance at Jun. 30, 2022	67,320,321		$ 855,808	$ 840,320	$ 7,623	225,988,816		(29,967)	(160,342,279)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(8,547,591)								(8,547,591)
Other comprehensive income (loss)	(60,368)							(60,368)
Stock-based compensation expense	546,580					546,580
Ending balance (in shares) at Sep. 30, 2022			85,581	1,801	76,229,617
Ending balance at Sep. 30, 2022	$ 59,258,942		$ 855,808	$ 840,320	$ 7,623	$ 226,535,396		$ (90,335)	$ (168,889,870)

Condensed Consolidated Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net loss	$ (35,388,575)	$ (23,000,095)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	2,320,793	3,821,295
Depreciation	58,985	62,658
Change in fair value of contingent consideration	(334,992)	1,590,000
Impairment of goodwill	1,870,924	0
Changes in operating assets and liabilities:
Accounts payable and accrued expenses	1,849,760	(1,240,567)
Right of use asset	203,448	187,327
Operating lease liability	(211,414)	(191,166)
Prepaid expenses and other assets	(532,599)	(5,071,666)
Net cash used in operating activities	(30,163,670)	(23,842,214)
Cash flows from investing activities:
Purchases of property and equipment	0	(130,406)
Proceeds from disposal of property and equipment	2,266	0
Net cash provided by (used in) investing activities	2,266	(130,406)
Cash flows from financing activities:
Proceeds from the issuance of common stock, net of issuance costs	0	82,153,600
Contingent consideration milestone payment	(2,000,000)	0
Repayment of debt financing	0	(176,585)
Net cash (used in) provided by financing activities	(2,000,000)	81,977,015
Effect of exchange rates on cash	(42,370)	0
Net (decrease) increase in cash	(32,203,774)	58,004,395
Cash at beginning of period	91,348,967	40,726,838
Cash at end of period	59,145,193	98,731,233
Supplementary disclosure of cash flow information:
Cash paid for interest	941	2,024
Supplementary disclosure of non-cash financing activities:
Conversion of Series C convertible preferred stock	5,000	11,000
Issuance of common stock in conjunction with milestone payment	5,008	0
Fair value of warrants issued to placement agent	0	2,013,055
Adoption of new accounting standard	$ 0	$ 11,672

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2022
Subsequent Events [Abstract]
Subsequent Events	Subsequent Events On November 4, 2022, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”), pursuant to which we agreed to issue and sell, in a private placement (the “Offering”), 1,900,000 shares of our Series F Convertible Redeemable Preferred Stock, par value $0.0001 per share (the “Series F Preferred Stock”), and 100,000 shares of our Series G Convertible Redeemable Preferred Stock, par value $0.0001 per share (the “Series G Preferred Stock,” and together with the Series F Preferred Stock, the “Preferred Stock”), at an offering price of $9.50 per share, representing a 5% original issue discount to the stated value of $10.00 per share, for gross proceeds of $20 million in the aggregate for the Offering, before the deduction of discounts, fees and offering expenses. The shares of Preferred Stock will be convertible, at a conversion price of $1.00 per share (subject in certain circumstances to adjustments), into shares of our common stock, par value $0.0001 per share, at the option of the holders and, in certain circumstances, by us. The Purchase Agreement contains customary representations, warranties and agreements by us and customary conditions to closing. The Offering closed on November 8, 2022. We intend to call a special meeting of shareholders to consider an amendment (the “Amendment”) to our Certificate of Incorporation, as amended, to authorize a reverse split of the Common Stock (the “Reverse Split”). The Investors have agreed in the Purchase Agreement to not transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of the shares of the Preferred Stock until the Reverse Split. Pursuant to the certificate of designation of the Series F Preferred Stock, the shares of Series F Preferred Stock have the right to vote on such Amendment on an as-converted to Common Stock basis. In addition, pursuant to the certificate of designation of the Series G Preferred Stock, the shares of Series G Preferred Stock have the right to vote on such Amendment. Each Investor has separately agreed pursuant to a side letter (the “Side Letter”) entered into in conjunction with the Purchase Agreement to vote the shares of the Series F Preferred Stock in favor of the Amendment and that the shares of the Series G Preferred Stock shall automatically be voted in a manner that “mirrors” the proportions on which the shares of Common Stock (excluding any shares of Common Stock that are not voted) and Series F Preferred Stock are voted on the Amendment. The Amendment requires the approval of the majority of the votes associated with our outstanding stock entitled to vote on the proposal. Because the Series G Preferred Stock will automatically and without further action of the purchaser be voted in a manner that “mirrors” the proportions on which the shares of Common Stock (excluding any shares of Common Stock that are not voted) and Series F Preferred Stock are voted on the Reverse Split, abstentions by common stockholders will not have any effect on the votes cast by the holders of the Series G Preferred Stock. The proceeds of the Offering will be held in an escrow account, along with the additional amount that would be necessary to fund the 105% redemption price until the expiration of the redemption period for the Preferred Stock, as applicable, subject to the earlier payment to redeeming holders. Upon expiration of the redemption period, any proceeds remaining in the escrow account will be disbursed to us.

Business Overview (Details) - USD ($)		1 Months Ended		9 Months Ended
Business Overview (Details) - USD ($)	Jan. 14, 2022	Mar. 31, 2022	Oct. 31, 2018	Sep. 30, 2022	Sep. 30, 2021
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
First milestone payment			$ 1,000,000	$ 2,000,000	$ 0
Merger Agreement, Upon Receipt of Phase II Positive Data
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Additional milestone payments payable	$ 3,000,000
Merger Agreement, Upon Initiation of Phase III Trial
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Additional milestone payments payable	5,000,000
CEO
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
First milestone payment	800,000		$ 300,000
Number of shares issued (in shares)			603
Petrus Wijngaard, Director of Company
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
First milestone payment			$ 2,805
Number of shares issued (in shares)			6
Hepion Employees
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
First milestone payment	200,000
Aurinia
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
First milestone payment			$ 300,000
Ciclofilin
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
First milestone payment	$ 2,000,000		$ 700,000
Number of shares issued (in shares)		4,317	1,439
Issuance of common stock in conjunction with milestone payment			$ 55,398
Percentage of issued and outstanding common stock	7.50%		2.50%
Ciclofilin \| Merger Agreement, Upon Positive Analysis of Phase IIb Trial
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Additional milestone payments payable	$ 1,000,000
Ciclofilin \| Merger Agreement, Upon Acceptance By FDA of New Drug
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Additional milestone payments payable	5,000,000
Ciclofilin \| Merger Agreement Upon Approval by FDA Of New Drug
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Additional milestone payments payable	$ 8,000,000

Basis of Presentation - Additional Information (Details) - USD ($)	3 Months Ended						9 Months Ended
	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2021	Jun. 30, 2021	Mar. 31, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash	$ 59,145,193						$ 59,145,193		$ 91,348,967
Accumulated deficit	168,889,870						168,889,870		$ 133,501,295
Working capital	58,200,000						58,200,000
Net cash used in operating activities							30,163,670	$ 23,842,214
Net loss	$ 8,547,591	$ 19,911,299	$ 6,929,685	$ 9,269,473	$ 7,667,105	$ 6,063,517	$ 35,388,575	$ 23,000,095

Summary of Significant Accounting Policies - Cash (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Cash	$ 59,145,193	$ 91,348,967

Summary of Significant Accounting Policies - Property, Equipment and Depreciation (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property and equipment, net	$ 82,986	$ 152,772
Carrying value adjustments	$ 0	$ 0
Minimum
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	3 years
Maximum
Property, Plant and Equipment [Line Items]
Estimated useful life (in years)	7 years

Summary of Significant Accounting Policies - Research and Development (Details) - USD ($) $ in Millions	Sep. 30, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Prepaid research and development costs	$ 6.2	$ 5.9

Summary of Significant Accounting Policies - Segment Information (Details)	9 Months Ended
	Sep. 30, 2022 segment
Accounting Policies [Abstract]
Number of operating segments	1

Stockholders' Equity and Derivative Liability - Warrants - Series A Convertible Preferred Stock (Details) - Series A - shares	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Oct. 14, 2014
Class of Stock [Line Items]
Convertible preferred stock, shares authorized (in shares)				1,250,000
Convertible preferred stock, shares outstanding (in shares)	85,581	85,581
Stock issued as a result of conversion (in shares)	0		0

Stockholders' Equity and Derivative Liability - Warrants - Series C Preferred Stock Issuances (Details)		9 Months Ended
	Jul. 03, 2018 $ / shares shares	Sep. 30, 2022 $ / shares shares	Sep. 30, 2021 shares	Dec. 31, 2021 $ / shares shares
Class of Stock [Line Items]
Preferred shares converted into common stock (in shares)		46	101
Series C
Class of Stock [Line Items]
Convertible preferred stock, shares issued (in shares)		1,801		1,806
Issuance of common stock, net (in shares)	10,826
Convertible preferred stock, par value (in dollars per share) \| $ / shares	$ 1,000	$ 1,000		$ 1,000
Convertible preferred stock, shares outstanding (in shares)		1,801		1,806
Stock issued as a result of conversion (in shares)		5	11
Conversion ratio	1.55
Preferred Stock \| Series C
Class of Stock [Line Items]
Convertible preferred stock, shares issued (in shares)	1
Warrants
Class of Stock [Line Items]
Warrants issued (in shares)	88,928

Stockholders' Equity and Derivative Liability - Warrants - Components of Changes (Details)	9 Months Ended
	Sep. 30, 2022 USD ($) shares
Number of Warrants Outstanding
Expiration of warrants (in shares) \| shares	(10,714)
Warrants
Number of Warrants Outstanding
Balance at the beginning of the period (in shares) \| shares	10,714
Balance at end of period (in shares) \| shares	0
Warrants \| (Level 3)
Derivative Instrument Liability
Balance at the beginning of the period \| $	$ 0
Expiration of warrants \| $	0
Balance at end of period \| $	$ 0

Fair Value Measurements - Schedule of Liabilities Measured on Recurring Basis (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 2,540,000	$ 1,891,716
Recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	2,540,000	4,880,000
Recurring basis \| (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0	0
Recurring basis \| (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	0	0
Recurring basis \| (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 2,540,000	$ 4,880,000

Fair Value Measurements - Additional Information (Details)		1 Months Ended		9 Months Ended
	Jan. 14, 2022 USD ($)	Mar. 31, 2022 shares	Oct. 31, 2018 USD ($) shares	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($) $ / shares	Jun. 10, 2016 shares
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Proceeds from the issuance of common stock, net of issuance costs			$ 1,000,000	$ 2,000,000	$ 0
Non-current portion of contingent consideration				$ 2,540,000		$ 1,891,716
Merger Agreement, Upon Receipt of Phase II Positive Data
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Additional milestone payments payable	$ 3,000,000
Merger Agreement, Upon Initiation of Phase III Trial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Additional milestone payments payable	5,000,000
CEO
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Proceeds from the issuance of common stock, net of issuance costs	800,000		$ 300,000
Number of shares issued (in shares) \| shares			603
Hepion Employees
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Proceeds from the issuance of common stock, net of issuance costs	200,000
Discount rate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration, fair value measurement input				0.070		0.070	0.065
Stock price
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration, fair value measurement input						1.14	19.60
Ciclofilin
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Proceeds from the issuance of common stock, net of issuance costs	$ 2,000,000		$ 700,000
Number of shares issued (in shares) \| shares		4,317	1,439
Issuance of common stock in conjunction with milestone payment			$ 55,398
Percentage of issued and outstanding common stock	7.50%		2.50%
Ciclofilin \| Merger Agreement, Upon Positive Analysis of Phase IIb Trial
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Additional milestone payments payable	$ 1,000,000
Ciclofilin \| Merger Agreement, Upon Acceptance By FDA of New Drug
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Additional milestone payments payable	5,000,000
Ciclofilin \| Merger Agreement Upon Approval by FDA Of New Drug
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Additional milestone payments payable	$ 8,000,000

Fair Value Measurements - Assumptions Used to Calculate Fair Value (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021 $ / shares	Jun. 10, 2016 shares
Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Probability of success of milestone achievements	13.00%	18.00%
Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Probability of success of milestone achievements	40.00%	100.00%
Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent consideration, fair value measurement input	0.070	0.070	0.065
Stock price
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent consideration, fair value measurement input		1.14	19.60

Fair Value Measurements - Activity for Fair Value of Contingent Consideration (Details) - (Level 3) - Recurring basis	9 Months Ended
	Sep. 30, 2022 USD ($)
Acquisition-related Contingent Consideration
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at beginning of the period	$ 4,880,000
Contingent consideration payments (includes common shares with a fair value of $5,008)	(2,005,008)
Change in fair value recorded in earnings	(334,992)
Balance at end of the period	2,540,000
Contingent Consideration, Common Shares
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Contingent consideration payments (includes common shares with a fair value of $5,008)	$ 5,008

Property and Equipment, net - PPE (Details) - USD ($)	3 Months Ended		9 Months Ended
Property and Equipment, net - PPE (Details) - USD ($)	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Less: Accumulated depreciation	$ (287,041)		$ (287,041)		$ (240,241)
Property and equipment, net	82,986		82,986		152,772
Depreciation	17,726	$ 23,106	58,985	$ 62,658
Equipment
Property, Plant and Equipment [Line Items]
Property and equipment	307,844		$ 307,844		330,830
Estimated useful life (in years)			3 years
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment	$ 62,183		$ 62,183		$ 62,183
Estimated useful life (in years)			7 years

Indefinite-lived Intangible Assets and Goodwill - IPR&D (Details) - USD ($)	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Indefinite-lived Intangible Assets [Roll Forward]
In-process research and development, beginning balance	$ 3,190,000
Change during period	0
In-process research and development, ending balance	3,190,000
Impairment of IPR&D	$ 0	$ 0

Accrued Liabilities (Details) - USD ($)	Sep. 30, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Payroll and related costs	$ 852,000	$ 0
Stock-based compensation - see Note 9	2,220,260	1,637,308
Research and development	1,287,588	536,965
Legal fees	119,153	57,345
Professional fees	60,518	167,346
Other	217,640	106,661
Accrued expenses	$ 4,757,159	$ 2,505,625

Accounting for Share-Based Payments - Additional Information (Details) - USD ($) $ in Millions		9 Months Ended
	Jun. 03, 2013	Sep. 30, 2022	Sep. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)	3 years
Contractual term (in years)	10 years
Liability related to awards granted		$ 2.2
Total fair value of awards vested		4.3	$ 4.1
Unrecognized compensation cost related to non-vested stock		$ 2.6
Weighted average remaining vesting period over which unrecognized compensation is expected to be recognized (in years)		1 year 1 month 6 days

Accounting for Share-Based Payments - Stock Option Activity (Details) - Stock options - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Number of Options
Balance outstanding at the beginning of the period (in shares)	8,774,974
Granted (in shares)	120,000
Exercised (in shares)	0
Forfeited (in shares)	0
Cancelled (in shares)	(1)
Balance outstanding at the end of the period (in shares)	8,894,973	8,774,974
Awards outstanding, vested awards and those expected to vest at the end of the period (in shares)	8,808,270
Vested and exercisable at the end of the period (in shares)	5,345,352
Weighted Average Exercise Price Per Share
Balance outstanding at the beginning of the period (in dollars per share)	$ 2.33
Granted (in dollars per share)	0.69
Exercised (in dollars per share)	0
Forfeited (in dollars per share)	0
Cancelled (in dollars per share)	515.20
Balance outstanding at the end of the period (in dollars per share)	2.31	$ 2.33
Awards outstanding, vested awards and those expected to vest at the end of the period (in dollars per share)	2.31
Vested and exercisable at the end of the period (in dollars per share)	$ 2.64
Intrinsic Value
Balance outstanding at the beginning of the period	$ 0
Granted	0
Exercised	0
Forfeited	0
Cancelled	0
Balance outstanding at the end of the period	0	$ 0
Awards outstanding, vested awards and those expected to vest at the end of the period	0
Vested and exercisable at the end of the period	$ 0
Weighted Average Remaining Contractual Team
Balance outstanding term (in years)	8 years 7 months 17 days	9 years 1 month 6 days
Awards outstanding, vested awards and those expected to vest at the end of the period (in years)	8 years 3 months 14 days
Vested and exercisable at the end of the period (in years)	8 years 4 months 17 days
Exercise price range one
Exercise Price Per Share
Exercise price, low end of the range (in dollars per share)	$ 0.69	$ 1.63
Exercise price, high end of the range (in dollars per share)	2,016	$ 2,016
Exercise price range two
Exercise Price Per Share
Exercise price, low end of the range (in dollars per share)	0.69
Exercise price, high end of the range (in dollars per share)	0.69
Exercise price range three
Exercise Price Per Share
Exercise price, low end of the range (in dollars per share)	0
Exercise price, high end of the range (in dollars per share)	0
Exercise price range four
Exercise Price Per Share
Exercise price, low end of the range (in dollars per share)	0.69
Exercise price, high end of the range (in dollars per share)	$ 2,016

Accounting for Share-Based Payments - Weighted-Average Assumptions Used Black Scholes Model (Details) - Stock options - $ / shares	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock price (in dollars per share)	$ 0.69	$ 1.70
Risk-free interest rate	4.02%	1.04%
Dividend yield	0.00%	0.00%
Expected volatility	115.40%	120.80%
Expected term (in years)	6 years	5 years 10 months 24 days

Commitments and Contingencies - Future Minimum Rental Payments Under the Company's Noncancelable Operating Leases (Details)	Sep. 30, 2022 USD ($)
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
Remainder of 2022	$ 53,097
2023	53,902
2024	0
2025	0
2026 and thereafter	0
Total	106,999
Present value adjustment	(1,421)
Lease liability at end of period	$ 105,578

Subsequent Events (Details) $ / shares in Units, $ in Millions	Nov. 04, 2022 USD ($) $ / shares shares	Sep. 30, 2022 $ / shares	Dec. 31, 2021 $ / shares
Subsequent Event [Line Items]
Common stock, par value (in dollars per share)		$ 0.0001	$ 0.0001
Private placement \| Subsequent Event
Subsequent Event [Line Items]
Common stock, par value (in dollars per share)	$ 0.0001
Offering price (in dollars per share)	$ 9.50
Discount on stated value (as a percent)	0.05
Stated value of shares (in dollars per share)	$ 10.00
Gross proceeds for the offering \| $	$ 20
Conversion price (in dollars per share)	$ 1.00
Series F Preferred Stock \| Private placement \| Subsequent Event
Subsequent Event [Line Items]
Number of shares issued (in shares) \| shares	1,900,000
Common stock, par value (in dollars per share)	$ 0.0001
Series G Preferred Stock \| Private placement \| Subsequent Event
Subsequent Event [Line Items]
Number of shares issued (in shares) \| shares	100,000
Common stock, par value (in dollars per share)	$ 0.0001
Redemption price percentage	1.05