10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2024

OR

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

For the transition period from         to       

PAXMEDICA, INC.

(Exact name of registrant as specified in its charter)

Delaware	001-41475	85-0870387
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(IRS Employer Identification No.)

101 Arch Street, 8th Floor Boston, MA	02110
(Address Of Principal Executive Offices)	(Zip Code)

(239) 216-1459

Registrant’s telephone number, including area code

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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	PXMD	None

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

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

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

As of September 20, 2024, the Registrant had 10,879,170 shares of common stock, par value $0.0001 per share, issued and outstanding.

PAXMEDICA, INC.

Form 10-Q

For the Quarter Ended June 30, 2024

Table of Contents

		Page
PART I. FINANCIAL INFORMATION		1
Item 1.	Financial Statements	1
	Condensed Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	1
	(Unaudited) Condensed Statements of Operations for the three- and six- months ended June 30, 2024 and June 30, 2023	2
	(Unaudited) Condensed Statements of Changes in Stockholders’ (Deficit) Equity for the three- and six- months ended June 30, 2024 and June 30, 2023	3
	(Unaudited) Condensed Statements of Cash Flows for the six months ended June 30, 2024 and June 30, 2023	4
	Notes to Unaudited Condensed Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23
PART II. OTHER INFORMATION		24
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25

PART I. FINANCIAL INFORMATION

Item 1.Financial Statements

PAXMEDICA, INC.

CONDENSED BALANCE SHEETS

	June 30,		December 31,
	2024		2023
ASSETS
Current assets
Cash	$	324,486	$	4,710,642
Prepaid and other current assets		475,125		969,763
Total current assets		799,611		5,680,405
Total assets	$	799,611	$	5,680,405
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	2,042,103	$	830,233
Accrued expenses		65,128		177,118
Accrued expenses - compensation		—		787,981
Total current liabilities		2,107,231		1,795,332
Deferred revenue		500,000		500,000
Total liabilities		2,607,231		2,295,332
Commitments and contingencies (Note 8)
Stockholders’ (Deficit) Equity
Preferred stock, par value $0.0001, 10,000,000 shares authorized:
Series X preferred shares, 500,000 shares authorized as of June 30, 2024 and December 31, 2023; 45,567 shares issued and outstanding at June 30, 2024 and December 31, 2023		5		5
Common stock, par value $0.0001; 200,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 7,779,860 and 7,401,242 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		778		740
Additional paid-in capital		56,912,302		55,414,069
Accumulated deficit		(58,720,705)		(52,029,741)
Total stockholders’ (deficit) equity		(1,807,620)		3,385,073
Total liabilities, and stockholders’ (deficit) equity	$	799,611	$	5,680,405

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

1

PAXMEDICA, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Operating expenses
General and administrative	$	1,489,027	$	2,768,910	$	4,786,377	$	6,583,094
Research and development		1,509,481		589,029		1,902,293		811,520
Total operating expenses		2,998,508		3,357,939		6,688,670		7,394,614
Loss from operations		(2,998,508)		(3,357,939)		(6,688,670)		(7,394,614)
Other income (expense)
Interest expense		—		(3,928)		—		(7,856)
Loss on extinguishment of debt		—		—		—		(36,850)
Change in fair value of notes		—		(124,087)		—		211,277
Other expense		729		(333)		(2,294)		(91,991)
Total other income (expense)		729		(128,348)		(2,294)		74,580
Net loss	$	(2,997,779)	$	(3,486,287)	$	(6,690,964)	$	(7,320,034)
Basic and diluted weighted average number of shares outstanding		7,655,549		860,715		7,536,915		802,368
Basic and diluted net loss per share	$	(0.39)	$	(4.05)	$	(0.89)	$	(9.12)

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

2

PAXMEDICA, INC.

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT) EQUITY

(Unaudited)

For the Three Months Ended June 30, 2024

							Additional				Total
	Series X Preferred Stock			Common Stock			Paid-in		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity (Deficit)
Balance at April 1, 2024	45,567	$	5	7,465,629	$	747	$	56,912,182	$	(55,722,926)	$	1,190,008
Issuance of common stock underlying restricted stock units, net of tax withholding	—		—	—		—		—		—		—
Issuance of common stock converted from prefunded warrants	—		—	314,231		31		(31)		—		—
Stock-based compensation	—		—	—		—		151		—		151
Net loss	—		—	—		—		—		(2,997,779)		(2,997,779)
Balance at June 30, 2024	45,567	$	5	7,779,860	$	778	$	56,912,302	$	(58,720,705)	$	(1,807,620)

For the Three Months Ended June 30, 2023

							Additional				Total
	Series X Preferred Stock			Common Stock			Paid-in		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity (Deficit)
Balance at April 1, 2023	45,567	$	5	818,846	$	82	$	40,106,443	$	(37,573,763)	$	2,532,767
Reclassification of shares settled liability to equity	—	$	—	422	$	—	$	34,499	$	—	$	34,499
Issuance of common stock in connection with equity purchase agreement	—	$	—	81,170	$	8	$	1,965,607	$	—	$	1,965,615
Issuance of common stock warrants in connection with notes payable, net of fees	—	$	—	—	$	—	$	—	$	—	$	—
Delivery of common stock underlying restricted stock units, net of tax withholding	—	$	—	3,649	$	—	$	(45,885)	$	—	$	(45,885)
Stock-based compensation	—	$	—	—	$	—	$	1,264,650	$	—	$	1,264,650
Net loss	—	$	—	—	$	—	$	—	$	(3,486,287)	$	(3,486,287)
Balance at June 30, 2023	45,567	$	5	904,087	$	90	$	43,325,314	$	(41,060,050)	$	2,265,359

For The Six Months Ended June 30, 2024

							Additional				Total
	Series X Preferred Stock			Common Stock			Paid-in		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity (Deficit)
Balance at January 1, 2024	45,567	$	5	7,401,242	$	740	$	55,414,069	$	(52,029,741)	$	3,385,073
Issuance of common stock underlying restricted stock units, net of tax withholding	—		—	64,387		7		(15,286)		—		(15,279)
Issuance of common stock converted from prefunded warrants	—		—	314,231		31		(31)		—		—
Stock-based compensation	—		—	—		—		1,513,550		—		1,513,550
Net loss	—		—	—		—		—		(6,690,964)		(6,690,964)
Balance at June 30, 2024	45,567	$	5	7,779,860	$	778	$	56,912,302	$	(58,720,705)	$	(1,807,620)

For The Six Months Ended June 30, 2023

							Additional				Total
	Series X Preferred Stock			Common Stock			Paid-in		Accumulated		Stockholders’
	Shares	Amount		Shares	Amount		Capital		Deficit		Equity (Deficit)
Balance at January 1, 2023	45,567	$	5	707,976	$	71	$	33,848,740	$	(33,740,016)	$	108,800
Reclassification of shares settled liability to equity	—	$	—	1,824	$	—	$	160,949	$	—	$	160,949
Issuance of common stock in connection with equity purchase agreement	—	$	—	151,765	$	15	$	4,770,600	$	—	$	4,770,615
Issuance of common stock warrants in connection with notes payable, net of fees	—	$	—	—	$	—	$	1,155,642	$	—	$	1,155,642
Delivery of common stock underlying restricted stock units, net of tax withholding	—		—	3,649		—		(45,885)		—		(45,885)
Stock-based compensation	—	$	—	38,873	$	4	$	3,435,268	$	—	$	3,435,272
Net loss	—	$	—	—	$	—	$	—	$	(7,320,034)	$	(7,320,034)
Balance at June 30, 2023	45,567	$	5	904,087	$	90	$	43,325,314	$	(41,060,050)	$	2,265,359

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

3

PAXMEDICA, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities
Net loss	$	(6,690,964)	$	(7,320,034)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation		1,513,550		3,435,272
Change in fair value of notes		—		(211,277)
Loss on extinguishment of debt		—		36,850
Deferred Revenue		—		500,000
Other Expense		—		91,991
Changes in assets and liabilities:
Prepaid and other current assets		494,638		(1,271,917)
Accounts receivable		—		(500,000)
Accounts payable		1,211,870		303,203
Accounts payable - related party		—		(20,000)
Accrued expenses		(899,971)		(863,518)
Net cash used in operating activities		(4,370,877)		(5,819,430)
Cash flows from financing activities
Proceeds from issuance of common stock and warrants, net of fees		—		3,200,000
Proceeds from issuance of convertible promissory notes and warrants		—		(503,696)
Proceeds from the issuance of common stock in connection with equity purchase agreement		—		4,770,615
Payment of costs in connection with equity purchase agreement		—		(195,997)
Repayment of convertible promissory notes		—		(237,600)
Settlement of shares withheld for payment of employee taxes		(15,279)		(45,885)
Net cash (used in) provided by financing activities		(15,279)		6,987,437
Net increase in cash		(4,386,156)		1,168,007
Cash, beginning of period		4,710,642		1,901,887
Cash, end of period	$	324,486	$	3,069,894
Non-cash financing activities:
Reclassification of shares settled liability	$	—	$	160,946
Unpaid deferred offering costs and financing fees	$	—	$	20,393

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

4

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 1. Organization and description of business operations

PaxMedica, Inc. (the “Company”) is a clinical stage biopharmaceutical company organized as a Delaware limited liability company on April 5, 2018 to focus on the development of drug candidates for the treatment of autism spectrum disorder (ASD), Fragile X syndrome tremor-ataxia (FXTAS) and Human African Trypanosomiasis (HAT). The Company converted into a Delaware corporation on April 15, 2020.

Going concern, liquidity and capital resources

The Company has no product revenues, has incurred operating losses since inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company had an accumulated deficit of approximately $58.7 million at June 30, 2024, a net loss of approximately $6.7 million, and approximately $4.4 million of net cash used in operating activities for the six months ended June 30, 2024.

Equity Purchase Agreement with Lincoln Park Capital

On November 17, 2022, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”), which provided that, upon the terms and subject to the conditions and limitations set forth therein, the Company could sell to LPC, at its discretion, up to $20.0 million of shares of its common stock over the 30-month term of the Purchase Agreement (See Note 7). During the six months ended June 30, 2024 there were no shares of common stock issued in connection with the Purchase Agreement. During the six months ended June 30, 2023, the Company received approximately $4.7 million from the issuance of 151,765 shares of common stock to LPC. Due to the recent suspension of the Company from trading on the Nasdaq Capital Market, it is no longer permitted to sell shares of the Company’s common stock under the Purchase Agreement.

Convertible Promissory Note

As of June 30, 2024, the Company has no outstanding convertible promissory notes. In February 2023, the Company issued a secured convertible promissory note with a principal balance of $3.7 million to Lind Global Fund II LP.

On November 29, 2023, the Company satisfied in full the obligations under note.

Vox Nova Exclusive Pharmacy Distribution Agreement

On June 30, 2023, the Company entered into an exclusive specialty benefit manager agreement with Vox Nova, LLC (“Vox Nova”) pursuant to which Vox Nova will act as the exclusive United States distributor for the Company’s lead pipeline asset, PAX-101 intravenous suramin. Vox Nova will provide certain distribution management, pharmacy benefit management, sales and supply monitoring services to the Company with respect to PAX-101, in the event PAX-101 receives FDA approval. The distribution agreement also provides for an exclusivity fee payable to the Company of up to $2.0 million, payable in installments based on various time and regulatory approval parameters. Vox Nova paid $0.5 million of the exclusivity fee upfront in connection with the signing of the distribution agreement when the distribution right was transferred to Vox Nova. The remaining $1.5 million is due in four equal installments over a one-year period after PAX-101 is approved by the FDA and made available for distribution.

Reverse Stock Split

On October 30, 2023, we filed a Certificate of Amendment to our Certificate of Incorporation (the “Reverse Split Amendment”) with the Secretary of State of the State of Delaware to affect a 1-for-17 reverse stock split of our outstanding common stock (the “Reverse Stock Split”). The Amendment became effective October 30, 2023 (the “Reverse Split Effective Time”). The Reverse Split Amendment was authorized by our stockholders at our special meeting of stockholders on September 26, 2023.

The Reverse Split Amendment provided that, at the Reverse Split Effective Time, every 17 shares of our issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in par value per share. The Reverse Stock Split affected all of our shares of common stock outstanding immediately prior to the Reverse Split Effective Time.

5

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

As a result of the Reserve Stock Split, proportionate adjustments have been made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all stock options and warrants issued and outstanding immediately prior to the Reverse Split Effective Time, which resulted in a proportionate decrease in the number of shares of our common stock reserved for issuance upon exercise or vesting of such stock options and warrants, and, in the case of stock options and warrants, a proportionate increase in the exercise price of all such stock options and warrants. In addition, the number of shares reserved for issuance under our Amended and Restated 2020 Equity Incentive Plan immediately prior to the Reverse Split Effective Time has been reduced proportionately.

No fractional shares were issued as a result of the Reverse Stock Split. Stockholders of record who would otherwise have been entitled to receive a fractional share received a number of shares rounded up to the next whole share in lieu thereof. The Reverse Stock Split affected all stockholders proportionately and did not affect any stockholder’s percentage ownership of our common stock (other than the nominal effect of the treatment of fractional shares).

Our common stock began trading on The Nasdaq Capital Market on a split-adjusted basis when the market opened on October 31, 2023.

All share and per share information referenced throughout this Form 10-Q has been retroactively adjusted to reflect the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split have been rounded up to the nearest whole share.

Delisting

As disclosed in a current report on Form 8-K filed on May 1, 2024, the Company’s common stock was suspended from trading on the Nasdaq Capital Market beginning on May 2, 2024.  Since May 2, 2024, the Company’s common stock has been trading on the OTC Pink Market. Once the Company is satisfied that it is in a position to consistently meet listing qualification requirements, it will seek to uplist its common stock to a national securities exchange.

Going Concern

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

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

● its ability to raise additional funds to finance its operations;

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

● the emergence and effect of competing or complementary products;

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

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

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

6

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

The Company will likely need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity, or the completion of a licensing transaction for one or more of the Company’s pipeline assets. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. Failure to obtain additional equity or debt financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or convertible debt financings will likely have a dilutive effect on the holdings of the Company’s existing stockholders. Accordingly, there are material risks and uncertainties that raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these condensed financial statements.

Note 2. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of presentation

The accompanying unaudited condensed financial statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole.

The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements for the year ended December 31, 2023 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2024 (the “2023 Annual Report”).

Use of estimates

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

Significant Accounting Policies:

For a detailed discussion about the Company’s significant accounting policies, see Note 3 of the Company’s audited financial statements included in its 2023 Annual Report.

Concentrations of cash, cash equivalents and short-term investments

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of June 30, 2024 and December 31, 2023, the Company had no cash equivalents or short-term investments.

Financial instruments that potentially subject the Company to the concentration of credit risk consist primarily of cash. The Company maintains its cash at high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash.

7

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Fair value of financial instruments

The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”). This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 - assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the period ended March 31, 2023, the Company issued a convertible promissory note and a common stock purchase warrant in connection with it. The note was classified as a liability and measured at fair value on the issuance date, with changes in fair value to be recognized as other expense on the statements of operations and disclosed in the condensed financial statements. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments.

Revenue Recognition

The Company follows the provisions of Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”). The guidance provides a five-step model to determine how revenue is recognized. In determining the appropriate amount of revenue to be recognized, the Company performs the following steps: (i) identification of the contracts with a customer; (ii) determination of the performance obligations in the contract; (iii) measurement of the transaction price, including potential constraints on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated stand-alone selling prices; and (v) recognition of revenue when (or as) the Company satisfies a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations are either completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance or contract-term using the cumulative catch-up method. The Company allocates the total transaction price to each performance obligation based on the relative standalone selling prices of the promised goods or service underlying each performance obligation.

Research and Development

Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

Accrued Outsourcing Costs

Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and

8

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives.

Stock-Based Compensation

The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations.

Loss Per Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic and diluted net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options and warrants in the calculation of diluted net loss per common shares would have been anti-dilutive

The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the three and six months ended June 30, 2024 and 2023, because including them would have been anti-dilutive:

	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Series X preferred stock	51,055	51,055	51,055	51,055
Unvested restricted stock units	1,471	112,689	1,471	112,689
Pre-funded common stock warrants	314,231	—	—	—
Common stock warrants	5,681,623	81,613	5,681,623	81,613
Convertible Notes	—	125,929	—	125,929
Shares Settled Liability	—	—	—	—
Total	6,048,380	371,286	5,734,149	371,286

Income taxes

Accounting Standards Codification 740, Income Taxes (“ASC 740”), also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s condensed financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position.

9

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with GAAP, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.

Recent accounting pronouncements

In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance in ASU 2023-09 improves the transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard becomes effective for the annual period beginning on January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements.  

Correction of Immaterial Classification Error

Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation. These reclassifications had no effect on the previously reported results of operations or loss per share.

Note 3. Fair Value Measurements

Convertible Notes

During the six months ended June 30, 2023, the Company issued a secured convertible promissory note with a principal balance of $3.7 million. The fair value of the note on June 30, 2023 was estimated using a Monte Carlo simulation to capture the path dependencies intrinsic to their terms. The significant unobservable inputs used in the fair value measurement of the Company’s convertible notes would be the common stock price, volatility, and risk-free interest rates. Significant changes in these inputs may result in significantly lower or higher fair value measurement. The Company elected the fair value option when recording the note it issued in 2023. The notes were classified as a liability and measured at fair value on the issuance date, with any changes in fair value to be recognized as other

10

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

income (expense) on the statements of operations and disclosed in the condensed financial statements. During the six months ended June 30, 2023, the Company paid down the remaining balance of this note and there are no other notes outstanding as of June 30, 2024.

As of June 30, 2024 and December 31, 2023, the Company did not have any outstanding liabilities measured at fair value on a recurring basis.

A summary of significant unobservable inputs (Level 3 inputs) used in measuring the note issued in February 2023 upon its issuance date is as follows:

	February 6, 2023		June 30, 2023
Dividend yield	—	%	—	%
Expected price volatility	30.0 - 53.7	%	30.0	%
Risk free interest rate	4.65 - 4.89	%	5.35	%
Expected term (in years)	0.5 - 1.4		0.1 - 1.0

The following table presents changes in Level 3 liabilities measured at fair value for the six months ended June 30, 2023. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

There were no liabilities measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2024.

	Convertible Notes
Balance at December 31, 2022	$	173,543
Issuance of convertible notes		1,903,531
Repayment of convertible notes		(237,600)
Loss on extinguishment of debt		36,850
Change in fair value		(211,277)
Balance at June 30, 2023	$	1,665,047

Note 4. Prepaid and other current assets

As of June 30, 2024, the Company recorded prepaid expenses and other current assets of approximately $0.5 million, primarily consisting of services to be performed for research and development activities of approximately $0.4 million, and legal and professional services of approximately $0.1 million.  As of December 31, 2023, prepaid and other current assets totaled approximately $1.0 million, primarily consisting of services to be performed for research and development activities.

Note 5. Convertible promissory notes

As of June 30, 2024, the Company has no outstanding convertible promissory notes. In February 2023, the Company issued a secured convertible promissory note with a principal balance of $3.7 million to Lind Global Fund II LP. On November 29, 2023, the Company satisfied in full the obligations under this note.

11

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

Note 6. Stock-based compensation

Stock-based Compensation

The following is a summary of stock-based compensation during the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Canceled stock options	$	151	$	44,768	$	5,434	$	110,671
Restricted stock units		—		1,219,882		1,508,116		3,324,601
Total	$	151	$	1,264,650	$	1,513,550	$	3,435,272

Restricted Stock Units

The following is a summary of the restricted stock units during the six months ended June 30, 2024:

		Weighted Average
		Grant-Date
	Number of Units	Fair Value
Unvested as of December 31, 2023	86,749	$	48.12
Granted	—		-
Vested	(85,278)		48.26
Unvested as of June 30, 2024	1,471	$	40.46

No restricted stock units (RSUs) were granted during the six months ended June 30, 2024. During the six months ended June 30, 2023, the Company granted 47,765 time-based RSUs with a fair value of $1.5 million to members of its board of directors and employees of the Company. On January 24, 2024, to reduce the administrative burden and expense associated with monthly vesting, the Company approved the acceleration of vesting of certain RSUs of the Company. The RSUs fully vested on the day following the filing with the SEC of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, in each case subject to the continued employment of the officer with the Company, through such date.

During the six-month period ended June 30, 2024, the Company recorded stock-based compensation expense related to the RSUs of approximately $1.5 million. Due to the accelerated vesting of the RSUs there is currently no unamortized stock based compensation remaining.

During the six-month period ended June 30, 2023, the Company recorded stock-based compensation expense related to the RSUs of approximately $3.3 million.

Performance-based Restricted Stock Units

As of June 30, 2024, and 2023, there were 1,471 performance-based RSUs with a fair value of approximately $60,000 outstanding. The RSUs are subject to a performance condition, and will vest upon the Company signing a definitive agreement with a strategic partner. No performance-based RSUs were issued during the six months ended June 30, 2024.

As of June 30, 2024, the Company determined that was not probable that the performance awards would vest, and the Company has not recognized any stock-based compensation expense associated with these awards to date.

Canceled Stock Options

The Company previously granted options to purchase shares of the Company’s common stock and during the year ended December 31, 2020 these options were canceled in exchange for RSUs. No stock options were outstanding as of June 30, 2024 and 2023.

During the three months ended June 30, 2024 and 2023, the Company recorded stock-based compensation expense related to the cancelled stock options of less than $0.1 million and less than $0.1 million, respectively. During the six months ended June 30, 2024

12

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

and 2023, the Company recorded stock-based compensation expense related to the canceled stock options of less than $0.1 million and approximately $0.1 million, respectively.  

Note 7. Preferred and common stock

Series X Preferred Stock

There were no shares of Series X preferred stock issued during the six months ended June 30, 2024 and 2023. As of June 30, 2024, there were 45,567 shares of Series X preferred stock outstanding.

Common Stock

On November 17, 2022, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with LPC which provided that, upon the terms and subject to the conditions and limitations set forth therein, the Company could sell to LPC, at its discretion, up to $20.0 million of shares of its common stock over the 30-month term of the Purchase Agreement.

During the three months ended June 30, 2024, there were no shares of common stock issued in connection with the Purchase Agreement. During the three months ended June 30, 2023, the Company issued 81,170 shares of common stock, receiving net proceeds of approximately $2.0 million. During the six months ended June 30, 2024, there were no shares of common stock issued in connection with the Purchase Agreement. During the six months ended June 30, 2023, the Company issued 151,765 shares of common stock, receiving net proceeds of approximately $4.6 million net of fees of approximately $0.2 million.

During the three and six months ended June 30, 2024, the Company issued 314,231 shares of common stock in to settle pre-funded warrants that were exercised. During the three and six months ended June 30, 2024 no pre-funded warrants existed.

During the three months ended June 30, 2024, the Company issued no shares of its common stock in connection with the vesting of RSUs. During the three months ended June 30, 2023, the Company issued 5,328 shares of its common stock in connection with the vesting of RSUs held by members of the Company’s board of directors and employees. The Company withheld 1,679 of these shares, at a fair value of less than $0.1 million, to cover the withholding taxes related to the settlement of these vested RSUs.

During the six months ended June 30, 2024, the Company issued 87,049 shares of its common stock in connection with the vesting of RSUs issued to members of the Company’s board of directors and employees. The Company withheld 22,662 of these shares, at a fair value of less than $0.1 million, to cover the withholding taxes related to the settlement of these vested RSUs. During the six months ended June 30, 2023, the Company issued 44,201 shares of its common stock in connection with the vesting of RSUs issued to members of the Company’s board of directors and employees. The Company withheld 1,679 of these shares at a fair value of less than $0.1 million, to cover the withholding taxes related to the settlement of these vested RSUs.

Note 8. Commitments and contingencies

Litigation

As of June 30, 2024 and December 31, 2023, there was no litigation against the Company. The Company may be involved in legal proceedings, claims and assessments arising from the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.

Note 9. Related party transactions

Expenses – During the three-month periods ended June 30, 2024 and 2023, the Company expensed $95,000 and $60,000, respectively, for aggregate fees owed to TardiMed Sciences, LLC (“TardiMed”), pursuant to rental and consulting agreements entered into between the Company and TardiMed. For more information about these agreements, please see “Certain Relationships and Related Party Transactions” in the Company’s definitive proxy statement on Schedule 14A filed with the SEC on April 15, 2024.  During the six-

13

PAXMEDICA, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

month periods ended June 30, 2024 and 2023, the Company expensed $210,000 and $120,000, respectively, for aggregate fees owed to TardiMed.

Note 10. Subsequent events

On September 3, 2024 the Company entered into definitive agreements (the “Agreements”) with the holders of warrants the Company issued as part of a registered offering on or around November 20, 2023 (the “Warrants”) to immediately exercise those Warrants at a reduced exercise price of $0.20 and purchase an aggregate of approximately 4.4 million shares of the Company’s common stock for approximately $0.8 million, net of fees. The issuance of the common stock underlying the Warrants was registered pursuant to that certain registration statement on Form S-1, File No. 333-275416, which was declared effective by the SEC on November 20, 2023. The Agreements also provided that the Company would issue new warrants to the same holders to purchase an aggregate of approximately 8.8 million shares of common stock at an exercise price of $0.20.

14

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

References to the “Company,” “PaxMedica, Inc.,” “our,” “us,” or “we” refer to PaxMedica, Inc. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”) and with our audited financial statements for the fiscal year ended December 31, 2023, as included in our annual report on Form 10-K, filed with the Securities & Exchange Commission (“SEC”) on March 11, 2024 (our “Annual Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report, as well as information included in oral statements or other written statements made or to be made by us, contain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, and other future conditions. Forward-looking statements can be identified by words such as “anticipate,” “believe,” “envision,” “estimate,” “expect,” “anticipate,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “ongoing,” “scheduled to,” “contemplate” and other similar expressions, although not all forward-looking statements contain these identifying words. Examples of forward-looking statements include, among others, statements we make regarding:

● our lack of operating history;

● the expectation that we will incur significant operating losses for the foreseeable future and will need significant additional capital, including through future sales and issuances of equity securities, which could also result in substantial dilution to our stockholders;

● our current and future capital requirements to support our development and commercialization efforts for our product candidates and our ability to satisfy our capital needs;

● our dependence on our product candidates, which are still in preclinical or early stages of clinical development;

● our, or our third-party manufacturers’, ability to manufacture cGMP batches of our product candidates as required for pre-clinical and clinical trials and, subsequently, our ability to manufacture commercial quantities of our product candidates;

● whether we will be successful in obtaining a priority review voucher, or PRV, for PAX-101 and the commercial value to be realized from any such PRV, if any;

● our relationship with TardiMed, an affiliated entity that provides office space and important administrative services to us, as well as our ability to attract and retain key executives and medical and scientific personnel;

● our ability to complete required clinical trials for our product candidates and obtain approval from the FDA or other regulatory agencies in different jurisdictions;

● our lack of a sales and marketing organization and our ability to commercialize our product candidates if we obtain regulatory approval;

● our dependence on third parties to manufacture our product candidates;

● our reliance on third-party CROs to conduct our clinical trials;

● our ability to obtain, maintain or protect the validity of our intellectual property, including our granted or potential future patents;

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

15

● interpretations of current laws and the passages of future laws;

● acceptance of our business model by investors;

● adverse developments affecting the financial services industry;

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

● our ability to adequately support organizational and business growth.

The following discussion should be read in conjunction with our financial statements and related notes and other financial information appearing elsewhere in this report. In addition to historical information, the following discussion and other parts of this report contain forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated by such forward-looking information due to the factors discussed under Item 1A— “Risk Factors” of our Annual Report and under Item 1A – “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” of this Item 2.

Overview

We are a clinical stage biopharmaceutical company focusing on the development of anti-purinergic drug therapies (“APT”) for the treatment of disorders with intractable neurologic symptoms, ranging from neurodevelopmental disorders, including autism spectrum disorder (“ASD”), to Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (“ME/CFS”), a debilitating physical and cognitive disorder believed to be viral in origin and now with rising incidence globally due to the long term effects of SARS-CoV-2 (“COVID-19”). APTs have been shown to block the effects of excess production and extracellular receptor activity of adenosine triphosphate (“ATP”), which acts as both the main energy molecule in all living cells and a peripheral and central nervous system neurotransmitter via receptors that are found throughout the nervous system. Excess purinergic signaling can offset homeostasis and trigger immune responses that result in localized and systemic increases in inflammatory chemokines and cytokines, ultimately stimulating ATP production. APTs may also impact immunologic and inflammatory mechanisms that may be causing or exacerbating symptoms in these seemingly unrelated disorders, which may be caused in part by similar mechanisms of ATP overproduction.

One of our primary points of focus is currently the development and testing of our lead program, PAX-101, an intravenous formulation of suramin, in the treatment of ASD and the advancement of the clinical understanding of using that agent against other disorders such as fragile X syndrome (FXS), fragile X-associated tremor/ataxia syndrome (FXTAS), ME/CFS and Long COVID-19 Syndrome (“LCS”), a clinical diagnosis in individuals who have been previously infected with COVID-19.

In February 2021, we announced positive topline data from our Phase 2 dose-ranging clinical trial evaluating PAX-101 (commonly known as intravenous suramin) for the treatment of the core symptoms of ASD, as described in more detail below. We also intend to submit data to support a New Drug Application (an “NDA”) for PAX-101 under the Tropical Disease Priority Voucher Program of the U.S. Food and Drug Administration (the “FDA”) for the treatment of Human African Trypanosomiasis, a fatal parasitic infection commonly known as African sleeping sickness (“HAT”), leveraging suramin’s historical use in treating HAT outside of the United States. We have exclusively licensed clinical data from certain academic or international government institutions to potentially accelerate PAX-101’s development plans in the United States through this regulatory program and intend to seek approval in the United States for the treatment of East African HAT (as defined below) as early as late 2024 or in the first half of 2025.

We are also pursuing the development of next generation APT product development candidates for neurodevelopmental indications. These candidates include PAX-102, our proprietary intranasal formulation of suramin, as well as other new chemical entities that are more targeted and selective antagonists of particular purine receptor subtypes. We believe our lead drug candidate (suramin), if approved by the FDA, may be a significant advancement in the treatment of ASD and a potentially useful treatment for FXS, FXTAS, ME/CFS and LCS.

In July 2023, we announced positive topline results from the PAX-101 (intravenous suramin) Phase 3 African Sleeping Sickness Study, PAX-HAT-301. The conclusions of the study confirmed that the retrospective, non-randomized, externally controlled, interventional efficacy and safety study of suramin for the treatment of Stage 1 TBR HAT demonstrated better health outcomes when compared with a natural history control group of patients evaluated and treated from 1900-1910, prior to the availability of suramin in Africa. The adverse event profile of suramin observed in the study was consistent with what has been widely reported in published medical and clinical literature.

16

On October 26, 2023, we completed a type-B meeting with the FDA, where we discussed the results of our recent data from our PAX-HAT-301 study of suramin in HAT. We received constructive feedback that will aid in the completion of the remaining work necessary to file a NDA for that indication, which is expected to take place in late 2024 or the first half of 2025.

On June 27^th, 2024, we completed a type-C meeting with the FDA, where we discussed our Chemistry, Manufacturing, and Controls (“CMC”) regulatory guidelines for our PAX-101 candidate. We received constructive feedback which will aid in the completion of our remaining work to file a NDA expected in the fourth of quarter 2024 or in the first half of 2025. Most of the work to achieve this important milestone will focus on completing the production of commercial lots of PAX-101 under CMC regulatory guidelines, underway now and scheduled to conclude in late 2024. Additionally, we discussed the implementation and completion of a registry for patients treated with PAX-101 for the indication of HAT to be submitted along with the NDA.

We have not generated any revenue to date and, through June 30, 2024, we had an accumulated deficit of approximately $58.7 million. To date, we have financed our operations through capital contributions from our prior members when we were a limited liability company, proceeds from our initial public offering, the issuance of convertible notes, our entry into a Simple Agreement for Future Equity (“SAFE”) with an investor, the issuance of Series X preferred stock, par value $0.0001 per share (“Series X preferred stock”), the sale of shares of common stock to LPC (as defined herein) pursuant to the LPC Purchase Agreement, our follow-on public offering in November 2023, and a warrant exchange in September 2024, which is described in Note 10 to the financial statements attached hereto. We expect our expenses to increase significantly in connection with our ongoing activities to develop, seek regulatory approval and commercialization of PAX-101 and our other product candidates. Furthermore, we expect to incur additional costs associated with operating as a public company. Accordingly, we will likely need substantial additional financing to support our continuing operations. We will seek to fund our operations through public or private equity or debt financings or other sources. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We will need to generate significant revenues to achieve profitability, and we may never do so. Accordingly, there are material risks and uncertainties that raise substantial doubt about our ability to continue as a going concern.

Financial Operations Overview

Revenue

To date, we have not generated any product revenue. Our ability to generate product revenue will depend on the successful development and eventual commercialization of our current, and any potential future, product candidates.

Research and Development Expenses

Research and development expenses consist of costs incurred for the development of PAX-101 and our other product candidates, which include:

● the cost of acquiring, developing and manufacturing pre-clinical trial materials;

● costs for consultants and contractors associated with developing our product candidates in accordance with  CMC guidelines, pre-clinical and clinical activities and regulatory operations;

● expenses incurred under agreements with contract research organizations, or CROs, that conduct our pre-clinical studies and clinical trials; and

● employee-related expenses, including salaries for those employees involved in the research and development process.

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

17

General and Administrative Expense

Our general and administrative expenses include costs associated with our executive, accounting, information technology and human resources functions. These expenses consist principally of payroll, employee benefits, travel, stock-based compensation and professional services fees such as consulting, audit, tax and legal fees, and general corporate costs. We expense all general and administrative expenses as incurred.

We expect our general and administrative expenses to increase primarily as a result of costs related to us operating as a public company, such as additional legal, accounting, corporate governance, and investor relations expenses, and directors’ and officers’ insurance premiums.

Results of Operations

Comparison of the Three Months Ended June 30, 2024 to the Three Months Ended June 30, 2023

	Three months ended June 30,
	2024		2023
Operating expenses
General and administrative	$	1,489,027	$	2,768,910
Research and development		1,509,481		589,029
Total operating expenses		2,998,508		3,357,939
Loss from operations		(2,998,508)		(3,357,939)
Other income (expense), net		729		(128,348)
Net loss	$	(2,997,779)	$	(3,486,287)

Operating expenses

General and administrative

General and administrative expenses were approximately $1.5 million and $2.8 million for the three months ended June 30, 2024 and 2023, respectively. The decrease in general and administrative expenses was primarily due to a decrease in stock compensation of approximately $1.3 million.

Research and Development

Research and development expenses were approximately $1.5 million for the three months ended June 30, 2024 and approximately $0.6 million for the three months ended June 30, 2023. The $0.9 million increase in research and development expenses was primarily attributable to additional costs incurred in connection with our development activities, including costs associated with CMC compliance with the manufacturer of registration lots.

Of the $1.5 million in research and development expenses incurred during the three months ended June 30, 2024, approximately $0.9 million was associated with activities related to the HAT indication, and approximately $0.6 million was associated with activities related to the ASD indication. These activities included, but were not limited to, payments in connection with the recently completed CMC processes and preclinical work.

Of the approximately $0.6 million in research and development expenses incurred during the three months ended June 30, 2023, approximately $0.4 million was associated with activities related to the HAT indication, and approximately $0.2 million was associated with activities related to the ASD indication. These activities included, but were not limited to, payments in connection with the recently completed CMC processes and preclinical work.

The estimated remaining aggregate costs expected to be incurred for the research and development and regulatory filing activities relating to the filing of an NDA for HAT is approximately $2.1 million.

18

Other Income (expense)

The change in other income (expense) was immaterial for the three months ended June 30, 2024 compared with other income (expense) of $(0.1) million for the three months ended June 30, 2023. Other income (expense) of approximately $(0.1) million for the three months ended June 30, 2023 was primarily recognized for the change in fair value of our notes.

Comparison of the Six Months Ended June 30, 2024 to the Six Months Ended June 30, 2023

	Six months ended June 30,
	2024		2023
Operating expenses
General and administrative	$	4,786,377	$	6,583,094
Research and development		1,902,293		811,520
Total operating expenses		6,688,670		7,394,614
Loss from operations		(6,688,670)		(7,394,614)
Other income (expense), net		(2,294)		74,580
Net loss	$	(6,690,964)	$	(7,320,034)

Operating expenses

General and administrative

General and administrative expenses were approximately $4.8 million and $6.6 million for the six months ended June 30, 2024 and 2023, respectively. There was a decrease in general and administrative expenses was primarily due to a decrease in stock compensation of approximately $1.9 million and a decrease in legal and professional fees of approximately $0.2 million, offset by an increase in salaries and benefits of approximately $0.3 million.

Research and Development

Research and development expenses were approximately $1.9 million for the six months ended June 30, 2024 and approximately $0.8 million for the six months ended June 30, 2023. The $1.1 million increase in research and development expenses was primarily attributable to additional costs incurred in connection with our development activities, including costs associated with chemistry, manufacturing, and controls associated with the manufacturer of registration lots.

Of the $1.9 million in research and development expenses incurred during the six months ended June 30, 2024, approximately $1.2 million was associated with activities related to the HAT indication, and approximately $0.7 million was associated with activities related to the ASD indication. These activities included, but were not limited to, payments in connection with the recently completed CMC processes and preclinical work.

Of the approximately $0.8 million in research and development expenses incurred during the six months ended June 30, 2023, approximately $0.6 million was associated with activities related to the HAT indication, and approximately $0.2 million was associated with activities related to the ASD indication. These activities included, but were not limited to, payments in connection with the recently completed CMC processes and preclinical work.

The estimated remaining aggregate costs expected to be incurred for the research and development and regulatory filing activities relating to the filing of an NDA for HAT is approximately $2.1 million.

Other Income (expense)

The change in other income (expense) was immaterial for the six months ended June 30, 2024 compared with other income (expense) of $(0.1) million for the six months ended June 30, 2023. Other income (expense) of approximately $(0.1) million for the six months ended June 30, 2023 was primarily recognized for the change in fair value of our notes.

19

Liquidity and Capital Resources

We were formed as a Delaware limited liability company on April 5, 2018 and converted into a Delaware corporation on April 15, 2020. As of June 30, 2024, we had an accumulated deficit since inception of approximately $58.7 million. Since inception, we have not generated revenue from product sales and have incurred net losses and negative cash flows from our operations. From inception through June 30, 2024, we have funded our operations in large part through contributions from an affiliated company, TardiMed Sciences, LLC (“TardiMed”), the issuance of senior secured convertible promissory notes totaling approximately $7.0 million, proceeds from the initial public common stock offering, net of fees, of approximately $6.0 million, our SAFE for $5.0 million, the issuance of shares of our common stock in connection with our Purchase Agreement (as defined herein) of $5.6 million, the proceeds from our follow on public offering, net of fees, of approximately $6.1 million, and the proceeds from a warrant exchange we completed in September 2024, net of fees, of approximately $0.8 million.

Equity Purchase Agreement with Lincoln Park Capital

On November 17, 2022, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”) which provided that, upon the terms and subject to the conditions and limitations set forth therein, the Company could sell to LPC, at its discretion, up to $20.0 million of shares of its common stock over the 30-month term of the Purchase Agreement (see Note 7). During the six months ended June 30, 2024 there were no shares of common stock issued in connection with the Purchase Agreement. During the six months ended June 30, 2023, the Company received approximately $4.8 million from the issuance of 151,765 shares of common stock. As a result of our suspension from trading on the Nasdaq Capital Market, we are no longer permitted to sell shares of the Company’s common stock under the equity Purchase Agreement.

Convertible Notes

In February 2023, a convertible promissory note with a principal balance of $3.7 million was issued to Lind Global Fund II LP. In connection with the issuance, the Company received proceeds of approximately $3.2 million, net of a $0.5 million discount, incurred fees of approximately $0.5 million and used $0.2 million of proceeds to pay down the remaining balance of already outstanding secured convertible promissory notes.

On November 29, 2023, the Company satisfied in full its obligations under this note.

Vox Nova Exclusive Pharmacy Distribution Agreement

On June 30, 2023, the Company entered into an exclusive specialty benefit manager agreement with Vox Nova, LLC (“Vox Nova”) pursuant to which Vox Nova will act as the exclusive United States distributor for the Company’s lead pipeline asset, PAX-101 intravenous suramin. Vox Nova will provide certain distribution management, pharmacy benefit management, sales and supply monitoring services to the Company with respect to PAX-101, in the event PAX-101 receives FDA approval. The distribution agreement also provides for an exclusivity fee payable to the Company of up to $2.0 million, payable in installments based on various time and regulatory approval parameters. Vox Nova paid $0.5 million of the exclusivity fee upfront in connection with the signing of the distribution agreement when the distribution right was transferred to Vox Nova. The remaining $1.5 million is due in four equal installments over a one-year period after PAX-101 is approved by the FDA and made available for distribution.

Operating activities

During the six months ended June 30, 2024, net cash used in operating activities was $4.4 million, which primarily included our net loss of approximately $6.7 million, adjusted for non-cash stock-based compensation expense of approximately $1.5 million. The net change in operating assets and liabilities was approximately $0.8 million, and was primarily due to increases in prepaid expenses and other current assets of $0.5 million as well as decreases in accrued expenses of approximately $0.9 million, partially offset by increases of approximately $1.2 million of accounts payable.

20

During the six months ended June 30, 2023, net cash used in operating activities was $5.8 million, which primarily included our net loss of approximately $7.3 million, adjusted for non-cash expenses of approximately $3.9 million including stock-based compensation of approximately $3.4 million and $0.5 million in deferred revenue related to the Vox Nova agreement, offset by the change in fair value of our convertible notes of $0.2 million. The net change in operating assets and liabilities was approximately $2.3 million and was primarily due to decreases in accounts payable and accrued expenses of $0.6 million, increases in prepaid and other current assets of $1.2 million, and an increase in accounts receivables of $0.5 million.

Investing Activities

There were no investing activities during the six months ended June 30, 2024 and 2023.

Financing activities

During the six months ended June 30, 2024 net cash used by financing activities was less than $0.1 million for the settlement of shares withheld for payment of employee taxes on vested Restricted Stock Units.

During the six months ended June 30, 2023, net cash provided by financing activities was approximately $7.0 million, consisting of net proceeds of $2.7 million received in connection with the issuance of our convertible notes and warrants, net of fees paid of $0.5 million, and net proceeds of $4.6 million received from the issuance of shares of our common stock in connection with our equity purchase agreement with LPC, net of fees paid of $0.2 million, offset by the repayment of our 2022 Notes of $0.2 million.

Funding requirements

As of June 30, 2024, we had a cash balance of approximately $0.3 million. Our financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

We anticipate incurring additional losses for the foreseeable future and may never become profitable. We expect our expenses to increase in connection with our ongoing activities, particularly as we continue the research and development of product candidates. Furthermore, we expect to continue to incur additional costs as a public company. Accordingly, we will likely need to obtain substantial additional funding. If we are unable to raise capital or otherwise obtain funding when needed or on attractive terms, we could be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts. These factors raise substantial doubt about our ability to continue as a going concern.  The Company’s future liquidity and capital funding requirements will depend on numerous factors, including:

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

● the emergence and effect of competing or complementary products;

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

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

We will seek to obtain additional capital through the sale of debt or equity financings or other arrangements such as collaborations, strategic alliances and licensing arrangements to fund operations; however, there can be no assurance that we will be able to raise needed capital under acceptable terms, if at all. The sale of additional equity or equity-linked securities may dilute existing stockholders and may contain senior rights and preferences compared to currently outstanding shares of common and preferred stock. Debt securities issued or other debt financing incurred may contain covenants and limit our ability to pay dividends or make other distributions to stockholders. If we are unable to obtain such additional financing, future operations would need to be scaled back or discontinued.

21

Contractual obligations and commitments

During the next twelve months we have commitments to pay $2.1 million to settle our June 30, 2024 accounts payable, accrued expenses and other current liabilities.

After the next twelve months, we have a commitment of $0.5 million to provide Vox Nova with exclusive pharmacy distribution rights over PAX-101 for up to seven years once approved by the FDA.

Off-balance sheet arrangements

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

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with GAAP, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.

Recent accounting pronouncements

See Note 2 to our financial statements included in this Quarterly Report for a description of recent accounting pronouncements applicable to our financial statements.

Emerging Growth Company Status

We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and we may remain an emerging growth company for up to five years following the completion of our initial public offering. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved and an exemption from compliance with the requirements regarding the communication of critical audit matters in the auditor’s report on financial statements.

22

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. We have elected to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as public companies that are not emerging growth companies. As a result of this election, our financial statements may not be comparable to those of companies that are not emerging growth companies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and are not required to provide the information otherwise required under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

With the participation of our principal executive officer and principal financial officer, our management conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the fiscal quarter ended June 30, 2024. Based on this evaluation, our principal executive officer and principal financial officer concluded that during the period covered by this report, our disclosure controls and procedures were not effective as of June 30, 2024 because of a material weakness in our internal control over accounting for complex financial instruments. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected and corrected on a timely basis. Specifically, the Company’s management has concluded that our control around the interpretation and accounting for certain complex features of financial instruments was not effectively designed or maintained. As a result, our management performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. GAAP. Accordingly, management believes that the financial statements included in this Quarterly Report present fairly, in all material respects, our financial position, result of operations and cash flows of the periods presented. Management understands that the accounting standards applicable to our financial statements are complex and has since the inception of the Company benefited from the support of experienced third-party professionals with whom management has regularly consulted with respect to accounting issues. Management intends to continue to further consult with such professionals in connection with accounting matters.

Material Weaknesses in Internal Controls over Financial Reporting

In the course of preparing our financial statements for the year ended December 31, 2023, we identified material weaknesses in our internal control over financial reporting relating to the evaluation of complex financial instruments, including earnings per share. The material weaknesses have not been remediated as of June 30, 2024. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. Our management has concluded that we have not designed, let alone maintained, effective controls over information technology (IT) general controls for information systems that are relevant to the preparation of our financial statements, specifically, with respect to user provisioning and deprovisioning, user access review, passwords, privileged access, cybersecurity, system development lifecycle, and SOC report management review.  These IT deficiencies did not result in a misstatement to our financial statements, however, the deficiencies, when aggregated, could impact the effectiveness of IT-dependent controls that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected. Accordingly, management has determined that these deficiencies in the aggregate constitute a material deficiency. To remediate the above material weaknesses, we have developed a remediation plan with assistance from our IT advisors and have dedicated significant resources and efforts to the remediation and improvement of our internal control.

23

In addition, we do not have sufficient segregation of duties within our accounting functions, which is a basic internal control. Due to our size, segregation of all duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets, and the recording of transactions should be performed by separate individuals. Our management has weighed the impact of our failure to have a proper segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the resulting control deficiency represented a material weakness. While our management has implemented procedures to ensure that the financial statements balances included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented, we have not yet hired a sufficient number of additional accounting and finance staff to fully address this material weakness. Until such time as we have hired adequate staff, this material weakness will not be remediated.  

Changes in Internal Control over Financial Reporting

Other than with respect to the remediation efforts described for one of the material weaknesses identified above, there was no change in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2024 covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II-OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may become involved in lawsuits and other legal proceedings that arise in the course of business. Litigation is subject to inherent uncertainties, and it is not possible to predict the outcome of litigation with total confidence. The Company is currently not aware of any legal proceedings or potential claims against it whose outcome would be likely, individually or in the aggregate, to have a material adverse effect on the Company’s business, financial condition, operating results, or cash flows.

Item 1A. Risk Factors

Under current SEC rules, as a smaller reporting company, we are not required to provide risk factor disclosure in this Quarterly Report or in any of our periodic reports until such time as we no longer qualify as a smaller reporting company. However, we included a comprehensive set of risk factors in our most recent Annual Report, which can be accessed here. These risk factors remain applicable to our business and operations.

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

None.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Insider Trading Arrangements

Prior to May 1, 2024 all of our officers, as defined in Rule 16a-1(f) under the Exchange Act, and our directors had engaged in a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K. When our common stock was suspended from trading on the Nasdaq Capital Market beginning on May 2, 2024, our transfer agent terminated each of these arrangements. Currently, our policy with regard to insider trading is, and will remain, that trading in our common stock by our officers and directors is strictly limited to non-blackout periods and any other time when no officer or director is aware of any material non-public information concerning the Company. At such time when it is practical to do so, we will encourage our officers, directors and any other insiders to enter into new Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.  

24

Item 6. Exhibits.

Exhibit Number	Description
31.1*	Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer (Principal 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 Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

* These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

25

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.

Dated: September 20, 2024	PAXMEDICA, INC.
	By:	/s/ Howard J. Weisman
	Name:	Howard J. Weisman
	Title:	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)

Dated: September 20, 2024
	By:	/s/ Stephen D. Sheldon
	Name:	Stephen D. Sheldon
	Title:	Chief Financial Officer and Chief Operating Officer (Principal Financial and Accounting Officer)

26

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Howard J. Weisman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 of PaxMedica, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: September 20, 2024	By:	/s/ Howard J. Weisman
		Howard J. Weisman
		Chairman of the Board and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen D. Sheldon, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 of PaxMedica, Inc.;

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

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

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

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

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

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

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

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

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

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

Date: September 20, 2024	By:	/s/ Stephen D. Sheldon
		Stephen D. Sheldon
		Chief Financial Officer and Chief Operating Officer
		(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PaxMedica, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Howard J. Weisman, Chairman of the Board and Chief Executive Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

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

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

Date: September 20, 2024	/s/ Howard J. Weisman
	Name:	Howard J. Weisman
	Title:	Chairman of the Board and Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of PaxMedica, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen D. Sheldon, Chief Financial Officer and Chief Operating Officer, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

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

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

Date: September 20, 2024	/s/ Stephen D. Sheldon
	Name:	Stephen D. Sheldon
	Title:	Chief Financial Officer and Chief Operating Officer
		(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2024	Sep. 20, 2024
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2024
Document Transition Report	false
Entity Registrant Name	PAXMEDICA, INC.
Entity Incorporation, State or Country Code	DE
Entity File Number	001-41475
Entity Tax Identification Number	85-0870387
Entity Address, Address Line One	101 Arch Street, 8th Floor
Entity Address, City or Town	Boston
Entity Address State Or Province	MA
Entity Address, Postal Zip Code	02110
City Area Code	239
Local Phone Number	216-1459
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	PXMD
Security Exchange Name	NONE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		10,879,170
Entity Central Index Key	0001811623
Amendment Flag	false
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31

XML

CONDENSED BALANCE SHEETS - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Current assets
Cash	$ 324,486	$ 4,710,642
Prepaid and other current assets	475,125	969,763
Total current assets	799,611	5,680,405
Total assets	799,611	5,680,405
Current liabilities
Accounts payable	2,042,103	830,233
Accrued expenses	65,128	177,118
Accrued expenses - compensation		787,981
Total current liabilities	2,107,231	1,795,332
Deferred revenue	500,000	500,000
Total liabilities	2,607,231	2,295,332
Commitments and contingencies (Note 8)
Stockholders' (Deficit) Equity
Common stock, par value $0.0001; 200,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 7,779,860 and 7,401,242 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	778	740
Additional paid-in capital	56,912,302	55,414,069
Accumulated deficit	(58,720,705)	(52,029,741)
Total stockholders' (deficit) equity	(1,807,620)	3,385,073
Total liabilities, and stockholders' (deficit) equity	799,611	5,680,405
Series X Preferred Stock
Stockholders' (Deficit) Equity
Preferred stock, par value $0.0001, 10,000,000 shares authorized: Series X preferred shares, 500,000 shares authorized as of June 30, 2024 and December 31, 2023; 45,567 shares issued and outstanding at June 30, 2024 and December 31, 2023	$ 5	$ 5

XML

CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2024	Dec. 31, 2023
Preferred shares, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred shares, shares authorized (in shares)	10,000,000	10,000,000
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	7,779,860	7,401,242
Common stock, shares outstanding (in shares)	7,779,860	7,401,242
Series X Preferred Stock
Preferred shares, shares authorized (in shares)	500,000	500,000
Preferred shares, shares issued (in shares)	45,567	45,567
Preferred shares, shares outstanding (in shares)	45,567	45,567

XML

CONDENSED STATEMENTS OF OPERATIONS - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Operating expenses
General and administrative	$ 1,489,027	$ 2,768,910	$ 4,786,377	$ 6,583,094
Research and development	1,509,481	589,029	1,902,293	811,520
Total operating expenses	2,998,508	3,357,939	6,688,670	7,394,614
Loss from operations	(2,998,508)	(3,357,939)	(6,688,670)	(7,394,614)
Other income (expense)
Interest expense		(3,928)		(7,856)
Loss on extinguishment of debt				(36,850)
Change in fair value of notes		(124,087)		211,277
Other expense	729	(333)	(2,294)	(91,991)
Total other income (expense)	729	(128,348)	(2,294)	74,580
Net loss	$ (2,997,779)	$ (3,486,287)	$ (6,690,964)	$ (7,320,034)
Basic weighted average number of shares outstanding	7,655,549	860,715	7,536,915	802,368
Diluted weighted average number of shares outstanding	7,655,549	860,715	7,536,915	802,368
Basic net loss per share	$ (0.39)	$ (4.05)	$ (0.89)	$ (9.12)
Diluted net loss per share	$ (0.39)	$ (4.05)	$ (0.89)	$ (9.12)

XML

CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' (DEFICIT) EQUITY - USD ($)	Preferred Stock Series X Preferred Stock	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Beginning balance at Dec. 31, 2022	$ 5	$ 71	$ 33,848,740	$ (33,740,016)	$ 108,800
Beginning balance (in shares) at Dec. 31, 2022	45,567	707,976
Increase (Decrease) in Stockholders' Equity (Deficit)
Reclassification of shares settled liability to equity			160,949		160,949
Reclassification of shares settled liability to equity (in shares)		1,824
Issuance of common stock in connection with equity purchase agreement		$ 15	4,770,600		4,770,615
Issuance of common stock in connection with equity purchase agreement (in shares)		151,765
Issuance of common stock warrants in connection with notes payable, net of fees			1,155,642		1,155,642
Issuance of common stock underlying restricted stock units, net of tax withholding			(45,885)		(45,885)
Issuance of common stock underlying restricted stock units, net of tax withholding (in shares)		3,649
Stock-based compensation		$ 4	3,435,268		3,435,272
Stock-based compensation (in shares)		38,873
Net loss				(7,320,034)	(7,320,034)
Ending balance at Jun. 30, 2023	$ 5	$ 90	43,325,314	(41,060,050)	2,265,359
Ending balance (in shares) at Jun. 30, 2023	45,567	904,087
Beginning balance at Mar. 31, 2023	$ 5	$ 82	40,106,443	(37,573,763)	2,532,767
Beginning balance (in shares) at Mar. 31, 2023	45,567	818,846
Increase (Decrease) in Stockholders' Equity (Deficit)
Reclassification of shares settled liability to equity			34,499		34,499
Reclassification of shares settled liability to equity (in shares)		422
Issuance of common stock in connection with equity purchase agreement		$ 8	1,965,607		1,965,615
Issuance of common stock in connection with equity purchase agreement (in shares)		81,170
Issuance of common stock underlying restricted stock units, net of tax withholding			(45,885)		(45,885)
Issuance of common stock underlying restricted stock units, net of tax withholding (in shares)		3,649
Stock-based compensation			1,264,650		1,264,650
Net loss				(3,486,287)	(3,486,287)
Ending balance at Jun. 30, 2023	$ 5	$ 90	43,325,314	(41,060,050)	2,265,359
Ending balance (in shares) at Jun. 30, 2023	45,567	904,087
Beginning balance at Dec. 31, 2023	$ 5	$ 740	55,414,069	(52,029,741)	3,385,073
Beginning balance (in shares) at Dec. 31, 2023	45,567	7,401,242
Increase (Decrease) in Stockholders' Equity (Deficit)
Issuance of common stock underlying restricted stock units, net of tax withholding		$ 7	(15,286)		(15,279)
Issuance of common stock underlying restricted stock units, net of tax withholding (in shares)		64,387
Issuance of common stock converted from prefunded warrants		$ 31	(31)
Issuance of common stock converted from prefunded warrants (in shares)		314,231
Stock-based compensation			1,513,550		1,513,550
Net loss				(6,690,964)	(6,690,964)
Ending balance at Jun. 30, 2024	$ 5	$ 778	56,912,302	(58,720,705)	(1,807,620)
Ending balance (in shares) at Jun. 30, 2024	45,567	7,779,860
Beginning balance at Mar. 31, 2024	$ 5	$ 747	56,912,182	(55,722,926)	1,190,008
Beginning balance (in shares) at Mar. 31, 2024	45,567	7,465,629
Increase (Decrease) in Stockholders' Equity (Deficit)
Issuance of common stock converted from prefunded warrants		$ 31	(31)
Issuance of common stock converted from prefunded warrants (in shares)		314,231
Stock-based compensation			151		151
Net loss				(2,997,779)	(2,997,779)
Ending balance at Jun. 30, 2024	$ 5	$ 778	$ 56,912,302	$ (58,720,705)	$ (1,807,620)
Ending balance (in shares) at Jun. 30, 2024	45,567	7,779,860

XML

CONDENSED STATEMENTS OF CASH FLOWS - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Cash flows from operating activities
Net loss	$ (6,690,964)	$ (7,320,034)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	1,513,550	3,435,272
Change in fair value of notes		(211,277)
Loss on extinguishment of debt		36,850
Deferred revenue		500,000
Other Expense		91,991
Changes in assets and liabilities:
Prepaid and other current assets	494,638	(1,271,917)
Accounts receivable		(500,000)
Accounts payable	1,211,870	303,203
Accounts payable - related party		(20,000)
Accrued expenses	(899,971)	(863,518)
Net cash used in operating activities	(4,370,877)	(5,819,430)
Cash flows from financing activities
Proceeds from issuance of common stock and warrants, net of fees		3,200,000
Proceeds from issuance of convertible promissory notes and warrants		(503,696)
Proceeds from the issuance of common stock in connection with equity purchase agreement		4,770,615
Payment of costs in connection with equity purchase agreement		(195,997)
Repayment of convertible promissory notes		(237,600)
Settlement of shares withheld for payment of employee taxes	(15,279)	(45,885)
Net cash (used in) provided by financing activities	(15,279)	6,987,437
Net increase in cash	(4,386,156)	1,168,007
Cash, beginning of period	4,710,642	1,901,887
Cash, end of period	$ 324,486	3,069,894
Non-cash financing activities:
Reclassification of shares settled liability		160,946
Unpaid deferred offering costs and financing fees		$ 20,393

XML

Organization and description of business operations

6 Months Ended

Jun. 30, 2024

Organization and description of business operations

Organization and description of business operations

Note 1. Organization and description of business operations

PaxMedica, Inc. (the “Company”) is a clinical stage biopharmaceutical company organized as a Delaware limited liability company on April 5, 2018 to focus on the development of drug candidates for the treatment of autism spectrum disorder (ASD), Fragile X syndrome tremor-ataxia (FXTAS) and Human African Trypanosomiasis (HAT). The Company converted into a Delaware corporation on April 15, 2020.

Going concern, liquidity and capital resources

The Company has no product revenues, has incurred operating losses since inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable. The Company had an accumulated deficit of approximately $58.7 million at June 30, 2024, a net loss of approximately $6.7 million, and approximately $4.4 million of net cash used in operating activities for the six months ended June 30, 2024.

Equity Purchase Agreement with Lincoln Park Capital

On November 17, 2022, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with Lincoln Park Capital Fund, LLC (“LPC”), which provided that, upon the terms and subject to the conditions and limitations set forth therein, the Company could sell to LPC, at its discretion, up to $20.0 million of shares of its common stock over the 30-month term of the Purchase Agreement (See Note 7). During the six months ended June 30, 2024 there were no shares of common stock issued in connection with the Purchase Agreement. During the six months ended June 30, 2023, the Company received approximately $4.7 million from the issuance of 151,765 shares of common stock to LPC. Due to the recent suspension of the Company from trading on the Nasdaq Capital Market, it is no longer permitted to sell shares of the Company’s common stock under the Purchase Agreement.

Convertible Promissory Note

As of June 30, 2024, the Company has no outstanding convertible promissory notes. In February 2023, the Company issued a secured convertible promissory note with a principal balance of $3.7 million to Lind Global Fund II LP.

On November 29, 2023, the Company satisfied in full the obligations under note.

Vox Nova Exclusive Pharmacy Distribution Agreement

On June 30, 2023, the Company entered into an exclusive specialty benefit manager agreement with Vox Nova, LLC (“Vox Nova”) pursuant to which Vox Nova will act as the exclusive United States distributor for the Company’s lead pipeline asset, PAX-101 intravenous suramin. Vox Nova will provide certain distribution management, pharmacy benefit management, sales and supply monitoring services to the Company with respect to PAX-101, in the event PAX-101 receives FDA approval. The distribution agreement also provides for an exclusivity fee payable to the Company of up to $2.0 million, payable in installments based on various time and regulatory approval parameters. Vox Nova paid $0.5 million of the exclusivity fee upfront in connection with the signing of the distribution agreement when the distribution right was transferred to Vox Nova. The remaining $1.5 million is due in four equal installments over a one-year period after PAX-101 is approved by the FDA and made available for distribution.

Reverse Stock Split

On October 30, 2023, we filed a Certificate of Amendment to our Certificate of Incorporation (the “Reverse Split Amendment”) with the Secretary of State of the State of Delaware to affect a 1-for-17 reverse stock split of our outstanding common stock (the “Reverse Stock Split”). The Amendment became effective October 30, 2023 (the “Reverse Split Effective Time”). The Reverse Split Amendment was authorized by our stockholders at our special meeting of stockholders on September 26, 2023.

The Reverse Split Amendment provided that, at the Reverse Split Effective Time, every 17 shares of our issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock, without any change in par value per share. The Reverse Stock Split affected all of our shares of common stock outstanding immediately prior to the Reverse Split Effective Time.

As a result of the Reserve Stock Split, proportionate adjustments have been made to the per share exercise price and/or the number of shares issuable upon the exercise or vesting of all stock options and warrants issued and outstanding immediately prior to the Reverse Split Effective Time, which resulted in a proportionate decrease in the number of shares of our common stock reserved for issuance upon exercise or vesting of such stock options and warrants, and, in the case of stock options and warrants, a proportionate increase in the exercise price of all such stock options and warrants. In addition, the number of shares reserved for issuance under our Amended and Restated 2020 Equity Incentive Plan immediately prior to the Reverse Split Effective Time has been reduced proportionately.

No fractional shares were issued as a result of the Reverse Stock Split. Stockholders of record who would otherwise have been entitled to receive a fractional share received a number of shares rounded up to the next whole share in lieu thereof. The Reverse Stock Split affected all stockholders proportionately and did not affect any stockholder’s percentage ownership of our common stock (other than the nominal effect of the treatment of fractional shares).

Our common stock began trading on The Nasdaq Capital Market on a split-adjusted basis when the market opened on October 31, 2023.

All share and per share information referenced throughout this Form 10-Q has been retroactively adjusted to reflect the Reverse Stock Split. Any fractional shares resulting from the Reverse Stock Split have been rounded up to the nearest whole share.

Delisting

As disclosed in a current report on Form 8-K filed on May 1, 2024, the Company’s common stock was suspended from trading on the Nasdaq Capital Market beginning on May 2, 2024.  Since May 2, 2024, the Company’s common stock has been trading on the OTC Pink Market. Once the Company is satisfied that it is in a position to consistently meet listing qualification requirements, it will seek to uplist its common stock to a national securities exchange.

Going Concern

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

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

● its ability to raise additional funds to finance its operations;

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

● the emergence and effect of competing or complementary products;

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

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

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

The Company will likely need to raise substantial additional funds through one or more of the following: issuance of additional debt or equity, or the completion of a licensing transaction for one or more of the Company’s pipeline assets. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. Failure to obtain additional equity or debt financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will be able to obtain the needed financing on acceptable terms or at all. Additionally, equity or convertible debt financings will likely have a dilutive effect on the holdings of the Company’s existing stockholders. Accordingly, there are material risks and uncertainties that raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these condensed financial statements.

XML

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2024

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Note 2. Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of presentation

The accompanying unaudited condensed financial statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole.

The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements for the year ended December 31, 2023 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2024 (the “2023 Annual Report”).

Use of estimates

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

Significant Accounting Policies:

For a detailed discussion about the Company’s significant accounting policies, see Note 3 of the Company’s audited financial statements included in its 2023 Annual Report.

Concentrations of cash, cash equivalents and short-term investments

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of June 30, 2024 and December 31, 2023, the Company had no cash equivalents or short-term investments.

Financial instruments that potentially subject the Company to the concentration of credit risk consist primarily of cash. The Company maintains its cash at high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash.

Fair value of financial instruments

The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”). This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 - assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the period ended March 31, 2023, the Company issued a convertible promissory note and a common stock purchase warrant in connection with it. The note was classified as a liability and measured at fair value on the issuance date, with changes in fair value to be recognized as other expense on the statements of operations and disclosed in the condensed financial statements. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments.

Revenue Recognition

The Company follows the provisions of Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”). The guidance provides a five-step model to determine how revenue is recognized. In determining the appropriate amount of revenue to be recognized, the Company performs the following steps: (i) identification of the contracts with a customer; (ii) determination of the performance obligations in the contract; (iii) measurement of the transaction price, including potential constraints on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated stand-alone selling prices; and (v) recognition of revenue when (or as) the Company satisfies a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations are either completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance or contract-term using the cumulative catch-up method. The Company allocates the total transaction price to each performance obligation based on the relative standalone selling prices of the promised goods or service underlying each performance obligation.

Research and Development

Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

Accrued Outsourcing Costs

Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and

development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives.

Stock-Based Compensation

The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations.

Loss Per Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic and diluted net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options and warrants in the calculation of diluted net loss per common shares would have been anti-dilutive

The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the three and six months ended June 30, 2024 and 2023, because including them would have been anti-dilutive:

	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Series X preferred stock	51,055	51,055	51,055	51,055
Unvested restricted stock units	1,471	112,689	1,471	112,689
Pre-funded common stock warrants	314,231	—	—	—
Common stock warrants	5,681,623	81,613	5,681,623	81,613
Convertible Notes	—	125,929	—	125,929
Shares Settled Liability	—	—	—	—
Total	6,048,380	371,286	5,734,149	371,286

Income taxes

Accounting Standards Codification 740, Income Taxes (“ASC 740”), also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s condensed financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position.

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with GAAP, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.

Recent accounting pronouncements

In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance in ASU 2023-09 improves the transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard becomes effective for the annual period beginning on January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements.  

Correction of Immaterial Classification Error

Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation. These reclassifications had no effect on the previously reported results of operations or loss per share.

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2024

Fair Value Measurements

Fair Value Measurements

Note 3. Fair Value Measurements

Convertible Notes

During the six months ended June 30, 2023, the Company issued a secured convertible promissory note with a principal balance of $3.7 million. The fair value of the note on June 30, 2023 was estimated using a Monte Carlo simulation to capture the path dependencies intrinsic to their terms. The significant unobservable inputs used in the fair value measurement of the Company’s convertible notes would be the common stock price, volatility, and risk-free interest rates. Significant changes in these inputs may result in significantly lower or higher fair value measurement. The Company elected the fair value option when recording the note it issued in 2023. The notes were classified as a liability and measured at fair value on the issuance date, with any changes in fair value to be recognized as other

income (expense) on the statements of operations and disclosed in the condensed financial statements. During the six months ended June 30, 2023, the Company paid down the remaining balance of this note and there are no other notes outstanding as of June 30, 2024.

As of June 30, 2024 and December 31, 2023, the Company did not have any outstanding liabilities measured at fair value on a recurring basis.

A summary of significant unobservable inputs (Level 3 inputs) used in measuring the note issued in February 2023 upon its issuance date is as follows:

	February 6, 2023		June 30, 2023
Dividend yield	—	%	—	%
Expected price volatility	30.0 - 53.7	%	30.0	%
Risk free interest rate	4.65 - 4.89	%	5.35	%
Expected term (in years)	0.5 - 1.4		0.1 - 1.0

The following table presents changes in Level 3 liabilities measured at fair value for the six months ended June 30, 2023. Unobservable inputs were used to determine the fair value of positions that the Company has classified within the Level 3 category. Unrealized gains and losses associated with liabilities within the Level 3 category include changes in fair value that were attributable to unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

There were no liabilities measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2024.

	Convertible Notes
Balance at December 31, 2022	$	173,543
Issuance of convertible notes		1,903,531
Repayment of convertible notes		(237,600)
Loss on extinguishment of debt		36,850
Change in fair value		(211,277)
Balance at June 30, 2023	$	1,665,047

XML

Prepaid and other current assets

6 Months Ended

Jun. 30, 2024

Prepaid and other current assets

Prepaid and other current assets

Note 4. Prepaid and other current assets

As of June 30, 2024, the Company recorded prepaid expenses and other current assets of approximately $0.5 million, primarily consisting of services to be performed for research and development activities of approximately $0.4 million, and legal and professional services of approximately $0.1 million.  As of December 31, 2023, prepaid and other current assets totaled approximately $1.0 million, primarily consisting of services to be performed for research and development activities.

XML

Convertible promissory notes

6 Months Ended

Jun. 30, 2024

Convertible promissory notes

Convertible promissory notes

Note 5. Convertible promissory notes

As of June 30, 2024, the Company has no outstanding convertible promissory notes. In February 2023, the Company issued a secured convertible promissory note with a principal balance of $3.7 million to Lind Global Fund II LP. On November 29, 2023, the Company satisfied in full the obligations under this note.

XML

Stock-based compensation

6 Months Ended

Jun. 30, 2024

Stock-based compensation

Stock-based compensation

Note 6. Stock-based compensation

Stock-based Compensation

The following is a summary of stock-based compensation during the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Canceled stock options	$	151	$	44,768	$	5,434	$	110,671
Restricted stock units		—		1,219,882		1,508,116		3,324,601
Total	$	151	$	1,264,650	$	1,513,550	$	3,435,272

Restricted Stock Units

The following is a summary of the restricted stock units during the six months ended June 30, 2024:

		Weighted Average
		Grant-Date
	Number of Units	Fair Value
Unvested as of December 31, 2023	86,749	$	48.12
Granted	—		-
Vested	(85,278)		48.26
Unvested as of June 30, 2024	1,471	$	40.46

No restricted stock units (RSUs) were granted during the six months ended June 30, 2024. During the six months ended June 30, 2023, the Company granted 47,765 time-based RSUs with a fair value of $1.5 million to members of its board of directors and employees of the Company. On January 24, 2024, to reduce the administrative burden and expense associated with monthly vesting, the Company approved the acceleration of vesting of certain RSUs of the Company. The RSUs fully vested on the day following the filing with the SEC of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, in each case subject to the continued employment of the officer with the Company, through such date.

During the six-month period ended June 30, 2024, the Company recorded stock-based compensation expense related to the RSUs of approximately $1.5 million. Due to the accelerated vesting of the RSUs there is currently no unamortized stock based compensation remaining.

During the six-month period ended June 30, 2023, the Company recorded stock-based compensation expense related to the RSUs of approximately $3.3 million.

Performance-based Restricted Stock Units

As of June 30, 2024, and 2023, there were 1,471 performance-based RSUs with a fair value of approximately $60,000 outstanding. The RSUs are subject to a performance condition, and will vest upon the Company signing a definitive agreement with a strategic partner. No performance-based RSUs were issued during the six months ended June 30, 2024.

As of June 30, 2024, the Company determined that was not probable that the performance awards would vest, and the Company has not recognized any stock-based compensation expense associated with these awards to date.

Canceled Stock Options

The Company previously granted options to purchase shares of the Company’s common stock and during the year ended December 31, 2020 these options were canceled in exchange for RSUs. No stock options were outstanding as of June 30, 2024 and 2023.

During the three months ended June 30, 2024 and 2023, the Company recorded stock-based compensation expense related to the cancelled stock options of less than $0.1 million and less than $0.1 million, respectively. During the six months ended June 30, 2024

and 2023, the Company recorded stock-based compensation expense related to the canceled stock options of less than $0.1 million and approximately $0.1 million, respectively.  

XML

Preferred and common stock

6 Months Ended

Jun. 30, 2024

Preferred and common stock

Preferred and common stock

Note 7. Preferred and common stock

Series X Preferred Stock

There were no shares of Series X preferred stock issued during the six months ended June 30, 2024 and 2023. As of June 30, 2024, there were 45,567 shares of Series X preferred stock outstanding.

Common Stock

On November 17, 2022, the Company entered into an equity purchase agreement (the “Purchase Agreement”) with LPC which provided that, upon the terms and subject to the conditions and limitations set forth therein, the Company could sell to LPC, at its discretion, up to $20.0 million of shares of its common stock over the 30-month term of the Purchase Agreement.

During the three months ended June 30, 2024, there were no shares of common stock issued in connection with the Purchase Agreement. During the three months ended June 30, 2023, the Company issued 81,170 shares of common stock, receiving net proceeds of approximately $2.0 million. During the six months ended June 30, 2024, there were no shares of common stock issued in connection with the Purchase Agreement. During the six months ended June 30, 2023, the Company issued 151,765 shares of common stock, receiving net proceeds of approximately $4.6 million net of fees of approximately $0.2 million.

During the three and six months ended June 30, 2024, the Company issued 314,231 shares of common stock in to settle pre-funded warrants that were exercised. During the three and six months ended June 30, 2024 no pre-funded warrants existed.

During the three months ended June 30, 2024, the Company issued no shares of its common stock in connection with the vesting of RSUs. During the three months ended June 30, 2023, the Company issued 5,328 shares of its common stock in connection with the vesting of RSUs held by members of the Company’s board of directors and employees. The Company withheld 1,679 of these shares, at a fair value of less than $0.1 million, to cover the withholding taxes related to the settlement of these vested RSUs.

During the six months ended June 30, 2024, the Company issued 87,049 shares of its common stock in connection with the vesting of RSUs issued to members of the Company’s board of directors and employees. The Company withheld 22,662 of these shares, at a fair value of less than $0.1 million, to cover the withholding taxes related to the settlement of these vested RSUs. During the six months ended June 30, 2023, the Company issued 44,201 shares of its common stock in connection with the vesting of RSUs issued to members of the Company’s board of directors and employees. The Company withheld 1,679 of these shares at a fair value of less than $0.1 million, to cover the withholding taxes related to the settlement of these vested RSUs.

XML

Commitments and contingencies

6 Months Ended

Jun. 30, 2024

Commitments and contingencies

Commitments and contingencies

Note 8. Commitments and contingencies

Litigation

As of June 30, 2024 and December 31, 2023, there was no litigation against the Company. The Company may be involved in legal proceedings, claims and assessments arising from the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.

XML

Related party transactions

6 Months Ended

Jun. 30, 2024

Related party transactions

Related party transactions

Note 9. Related party transactions

Expenses – During the three-month periods ended June 30, 2024 and 2023, the Company expensed $95,000 and $60,000, respectively, for aggregate fees owed to TardiMed Sciences, LLC (“TardiMed”), pursuant to rental and consulting agreements entered into between the Company and TardiMed. For more information about these agreements, please see “Certain Relationships and Related Party Transactions” in the Company’s definitive proxy statement on Schedule 14A filed with the SEC on April 15, 2024.  During the six-

month periods ended June 30, 2024 and 2023, the Company expensed $210,000 and $120,000, respectively, for aggregate fees owed to TardiMed.

XML

Subsequent events

6 Months Ended

Jun. 30, 2024

Subsequent events

Subsequent events

Note 10. Subsequent events

On September 3, 2024 the Company entered into definitive agreements (the “Agreements”) with the holders of warrants the Company issued as part of a registered offering on or around November 20, 2023 (the “Warrants”) to immediately exercise those Warrants at a reduced exercise price of $0.20 and purchase an aggregate of approximately 4.4 million shares of the Company’s common stock for approximately $0.8 million, net of fees. The issuance of the common stock underlying the Warrants was registered pursuant to that certain registration statement on Form S-1, File No. 333-275416, which was declared effective by the SEC on November 20, 2023. The Agreements also provided that the Company would issue new warrants to the same holders to purchase an aggregate of approximately 8.8 million shares of common stock at an exercise price of $0.20.

XML

Pay vs Performance Disclosure - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (2,997,779)	$ (3,486,287)	$ (6,690,964)	$ (7,320,034)

XML

Insider Trading Arrangements

3 Months Ended

Jun. 30, 2024

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

Item 5. Other Information.

Insider Trading Arrangements

Prior to May 1, 2024 all of our officers, as defined in Rule 16a-1(f) under the Exchange Act, and our directors had engaged in a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Item 408 of Regulation S-K. When our common stock was suspended from trading on the Nasdaq Capital Market beginning on May 2, 2024, our transfer agent terminated each of these arrangements. Currently, our policy with regard to insider trading is, and will remain, that trading in our common stock by our officers and directors is strictly limited to non-blackout periods and any other time when no officer or director is aware of any material non-public information concerning the Company. At such time when it is practical to do so, we will encourage our officers, directors and any other insiders to enter into new Rule 10b5-1 trading arrangements or non-Rule 10b5-1 trading arrangements.  

All directors and officers

Trading Arrangements, by Individual

Rule 10b5-1 Arrangement Terminated

true

Non-Rule 10b5-1 Arrangement Terminated

true

Termination Date

May 1, 2024

XML

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2024

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Basis of presentation

Basis of presentation

The accompanying unaudited condensed financial statements are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole.

The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements for the year ended December 31, 2023 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2024 (the “2023 Annual Report”).

Use of estimates

Use of estimates

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

Concentrations of cash, cash equivalents and short-term investments

Concentrations of cash, cash equivalents and short-term investments

The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. As of June 30, 2024 and December 31, 2023, the Company had no cash equivalents or short-term investments.

Financial instruments that potentially subject the Company to the concentration of credit risk consist primarily of cash. The Company maintains its cash at high credit quality financial institutions, which may at times, be in excess of federal insured limits. The Company believes it is not exposed to any significant losses due to credit risk on cash.

Fair value of financial instruments

Fair value of financial instruments

The Company accounts for financial instruments under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 820, Fair Value Measurements (“ASC 820”). This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

Level 3 - assets and liabilities whose significant value drivers are unobservable.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. During the period ended March 31, 2023, the Company issued a convertible promissory note and a common stock purchase warrant in connection with it. The note was classified as a liability and measured at fair value on the issuance date, with changes in fair value to be recognized as other expense on the statements of operations and disclosed in the condensed financial statements. The carrying amounts of the Company’s financial assets and liabilities, such as accounts payable, approximate fair value due to the short-term nature of these instruments.

Revenue Recognition

Revenue Recognition

The Company follows the provisions of Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC 606”). The guidance provides a five-step model to determine how revenue is recognized. In determining the appropriate amount of revenue to be recognized, the Company performs the following steps: (i) identification of the contracts with a customer; (ii) determination of the performance obligations in the contract; (iii) measurement of the transaction price, including potential constraints on variable consideration; (iv) allocation of the transaction price to the performance obligations based on estimated stand-alone selling prices; and (v) recognition of revenue when (or as) the Company satisfies a performance obligation. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in ASC 606. Significant management judgment is required to determine the level of effort required under an arrangement and the period over which the Company expects to complete its performance obligations under the arrangement. If the Company cannot reasonably estimate when its performance obligations are either completed or become inconsequential, then revenue recognition is deferred until the Company can reasonably make such estimates. Revenue is then recognized over the remaining estimated period of performance or contract-term using the cumulative catch-up method. The Company allocates the total transaction price to each performance obligation based on the relative standalone selling prices of the promised goods or service underlying each performance obligation.

Research and Development

Research and Development

Research and development costs are expensed as incurred. Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

Accrued Outsourcing Costs

Accrued Outsourcing Costs

Substantial portions of the Company’s preclinical studies and clinical trials are performed by third-party laboratories, medical centers, contract research organizations and other vendors (collectively “CROs”). These CROs generally bill monthly or quarterly for services performed, or bill based upon milestone achievement. For preclinical studies, the Company accrues expenses based upon estimated percentage of work completed and the contract milestones remaining. Clinical trial costs are a significant component of research and

development expenses and include costs associated with third-party contractors. The Company outsources a substantial portion of its clinical trial activities, utilizing external entities such as CROs, independent clinical investigators, and other third-party service providers to assist the Company with the execution of its clinical studies. For each clinical trial that the Company conducts, certain clinical trial costs are expensed immediately, while others are expensed over time based on the number of patients in the trial, the attrition rate at which patients leave the trial, and/or the period over which clinical investigators or CROs are expected to provide services. The Company’s estimates depend on the timeliness and accuracy of the data provided by the CROs regarding the status of each program and total program spending. The Company periodically evaluates the estimates to determine if adjustments are necessary or appropriate based on information it receives.

Stock-Based Compensation

Stock-Based Compensation

The Company expenses stock-based compensation to employees, non-employees and board members over the requisite service period based on the estimated grant-date fair value of the awards and actual forfeitures. The Company accounts for forfeitures as they occur. Stock-based awards with graded vesting schedules are recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award. The Company estimates the fair value of stock option grants using the Black-Scholes option pricing model, and the assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. All stock-based compensation costs are recorded in general and administrative costs in the statements of operations.

Loss Per Share

Loss Per Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Basic and diluted net loss per common share were the same since the inclusion of common shares issuable pursuant to the exercise of options and warrants in the calculation of diluted net loss per common shares would have been anti-dilutive

The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the three and six months ended June 30, 2024 and 2023, because including them would have been anti-dilutive:

	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Series X preferred stock	51,055	51,055	51,055	51,055
Unvested restricted stock units	1,471	112,689	1,471	112,689
Pre-funded common stock warrants	314,231	—	—	—
Common stock warrants	5,681,623	81,613	5,681,623	81,613
Convertible Notes	—	125,929	—	125,929
Shares Settled Liability	—	—	—	—
Total	6,048,380	371,286	5,734,149	371,286

Income taxes

Income taxes

Accounting Standards Codification 740, Income Taxes (“ASC 740”), also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s condensed financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in material changes to its financial position.

Critical Accounting Estimates, Policy

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with GAAP, which require our management to make estimates that affect the reported amounts of assets, liabilities and disclosures of contingent assets and liabilities at the balance sheet dates, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.

We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are items within our financial statements that require estimation but are not deemed critical, as defined above.

Recent accounting pronouncements

Recent accounting pronouncements

In December 2023, the FASB issued Accounting Standards Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance in ASU 2023-09 improves the transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard becomes effective for the annual period beginning on January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements.  

Correction of Immaterial Classification Error

Correction of Immaterial Classification Error

Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation. These reclassifications had no effect on the previously reported results of operations or loss per share.

XML

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements (Tables)

6 Months Ended

Jun. 30, 2024

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements

Schedule of securities excluded from the computation of diluted net loss per share attributable to common shareholders

The following securities were excluded from the computation of diluted net loss per share attributable to common shareholders for the three and six months ended June 30, 2024 and 2023, because including them would have been anti-dilutive:

	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Series X preferred stock	51,055	51,055	51,055	51,055
Unvested restricted stock units	1,471	112,689	1,471	112,689
Pre-funded common stock warrants	314,231	—	—	—
Common stock warrants	5,681,623	81,613	5,681,623	81,613
Convertible Notes	—	125,929	—	125,929
Shares Settled Liability	—	—	—	—
Total	6,048,380	371,286	5,734,149	371,286

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2024

Convertible notes

Fair Value Measurements

Summary of significant unobservable inputs (Level 3 inputs) used in measurement upon issuance dates

A summary of significant unobservable inputs (Level 3 inputs) used in measuring the note issued in February 2023 upon its issuance date is as follows:

	February 6, 2023		June 30, 2023
Dividend yield	—	%	—	%
Expected price volatility	30.0 - 53.7	%	30.0	%
Risk free interest rate	4.65 - 4.89	%	5.35	%
Expected term (in years)	0.5 - 1.4		0.1 - 1.0

Warrants

Fair Value Measurements

Summary of changes in Level 3 liabilities measured at fair value

There were no liabilities measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2024.

	Convertible Notes
Balance at December 31, 2022	$	173,543
Issuance of convertible notes		1,903,531
Repayment of convertible notes		(237,600)
Loss on extinguishment of debt		36,850
Change in fair value		(211,277)
Balance at June 30, 2023	$	1,665,047

XML

Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2024

Stock-based compensation

Schedule of share-based compensation

The following is a summary of stock-based compensation during the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Canceled stock options	$	151	$	44,768	$	5,434	$	110,671
Restricted stock units		—		1,219,882		1,508,116		3,324,601
Total	$	151	$	1,264,650	$	1,513,550	$	3,435,272

Summary of changes in restricted stock units

The following is a summary of the restricted stock units during the six months ended June 30, 2024:

		Weighted Average
		Grant-Date
	Number of Units	Fair Value
Unvested as of December 31, 2023	86,749	$	48.12
Granted	—		-
Vested	(85,278)		48.26
Unvested as of June 30, 2024	1,471	$	40.46

XML

Organization and description of business operations - Going concern, liquidity and capital resources (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Organization and description of business operations
Accumulated deficit	$ 58,720,705		$ 58,720,705		$ 52,029,741
Net loss	$ 2,997,779	$ 3,486,287	6,690,964	$ 7,320,034
Net cash used in operating activities			4,370,877	$ 5,819,430
Product revenue
Organization and description of business operations
Revenue			$ 0

XML

Organization and description of business operations - Equity Purchase Agreement with Lincoln Park Capital (Details) - Equity purchase agreement with Lincoln Park Capital Fund, LLC - USD ($) $ in Millions		6 Months Ended
	Nov. 17, 2022	Jun. 30, 2024	Jun. 30, 2023
Organization and description of business operations
Value of shares authorized for issuance	$ 20.0
Term of agreement	30 months
Proceeds from issuance of shares, net of fees			$ 4.7
Number of shares issued		0	151,765

XML

Organization and description of business operations - Convertible Promissory Note (Details) - USD ($) $ in Millions	Jun. 30, 2024	Jun. 30, 2023	Feb. 28, 2023
Organization and description of business operations
Amount of outstanding convertible promissory notes	$ 0.0
Convertible Promissory Note ("2023 Note")
Organization and description of business operations
Face amount of debt		$ 3.7	$ 3.7

XML

Organization and description of business operations - Vox Nova Exclusive Pharmacy Distribution Agreement (Details) - Vox Nova Exclusive Pharmacy Distribution Agreement $ in Millions	Jun. 30, 2023 USD ($) installment
Organization and description of business operations
Maximum exclusivity fee payable to the Company	$ 2.0
Exclusivity fee due up front in connection with signing	0.5
Portion of exclusivity fees to be paid in installments	$ 1.5
Number of installments | installment	4
Term of agreement	1 year

XML

Organization and description of business operations - Reverse Stock Split (Details)	Oct. 30, 2023
Common Stock
Organization and description of business operations
Reverse stock split ratio	0.0588

XML

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Cash, cash equivalents and short-term investments (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Cash equivalents	$ 0	$ 0
Short-term investments	$ 0	$ 0

XML

Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements - Anti-dilutive securities (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders	6,048,380	371,286	5,734,149	371,286
Series X preferred stock
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders	51,055	51,055	51,055	51,055
Unvested restricted stock units
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders	1,471	112,689	1,471	112,689
Pre-funded common stock warrants
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders	314,231
Common stock warrants
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders	5,681,623	81,613	5,681,623	81,613
Convertible Notes
Basis of Presentation, Summary of Significant Accounting Policies and Recent Accounting Pronouncements
Anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders		125,929		125,929

XML

Fair Value Measurements - Convertible Notes (Details) $ in Millions	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Feb. 28, 2023 USD ($)	Feb. 06, 2023
Fair Value Measurements
Amount of outstanding convertible promissory notes	$ 0.0
Convertible Promissory Note ("2023 Note")
Fair Value Measurements
Principal		$ 3.7	$ 3.7
Convertible Promissory Note ("2023 Note") | Dividend yield
Fair Value Measurements
Debt instrument, measurement input		0		0
Convertible Promissory Note ("2023 Note") | Expected price volatility
Fair Value Measurements
Debt instrument, measurement input		0.300
Convertible Promissory Note ("2023 Note") | Expected price volatility | Minimum
Fair Value Measurements
Debt instrument, measurement input				0.300
Convertible Promissory Note ("2023 Note") | Expected price volatility | Maximum
Fair Value Measurements
Debt instrument, measurement input				0.537
Convertible Promissory Note ("2023 Note") | Risk free interest rate
Fair Value Measurements
Debt instrument, measurement input		0.0535
Convertible Promissory Note ("2023 Note") | Risk free interest rate | Minimum
Fair Value Measurements
Debt instrument, measurement input				0.0465
Convertible Promissory Note ("2023 Note") | Risk free interest rate | Maximum
Fair Value Measurements
Debt instrument, measurement input				0.0489
Convertible Promissory Note ("2023 Note") | Expected term (in years) | Minimum
Fair Value Measurements
Debt instrument, measurement input		0.1		0.5
Convertible Promissory Note ("2023 Note") | Expected term (in years) | Maximum
Fair Value Measurements
Debt instrument, measurement input		1.0		1.4

XML

Fair Value Measurements - Changes in Level 3 Liabilities (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2023
Fair Value Measurements
Beginning Balance		$ 173,543
Issuance of convertible notes		1,903,531
Repayment of convertible notes		(237,600)
Loss on extinguishment of debt		36,850
Change in fair value	$ 124,087	(211,277)
Ending Balance	$ 1,665,047	$ 1,665,047

XML

Prepaid and other current assets (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Prepaid and other current assets
Prepaid and other current assets	$ 475,125	$ 969,763
Prepaid research and development activities	400,000
Professional services	$ 100,000

XML

Convertible promissory notes (Details) - USD ($) $ in Millions	Jun. 30, 2024	Jun. 30, 2023	Feb. 28, 2023
Convertible promissory notes
Amount of outstanding convertible promissory notes	$ 0.0
Convertible Promissory Note ("2023 Note")
Convertible promissory notes
Face amount of debt		$ 3.7	$ 3.7

XML

Stock-based compensation - Compensation expense (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Share based compensation
Stock-based compensation	$ 151	$ 1,264,650	$ 1,513,550	$ 3,435,272
Canceled stock options
Share based compensation
Stock-based compensation	$ 151	44,768	5,434	110,671
Restricted stock units
Share based compensation
Stock-based compensation		$ 1,219,882	$ 1,508,116	$ 3,324,601

XML

Stock-based compensation - Restricted Stock Units (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Additional disclosures
Stock-based compensation	$ 151	$ 1,264,650	$ 1,513,550	$ 3,435,272
Restricted stock units
Number of Units
Beginning balance			86,749
Granted			0
Vested			(85,278)
Ending balance	1,471		1,471
Weighted Average Grant-Date Fair Value
Beginning balance (in dollars per share)			$ 48.12
Vested (in dollars per share)			48.26
Ending balance (in dollars per share)	$ 40.46		$ 40.46
Additional disclosures
Stock-based compensation		1,219,882	$ 1,508,116	$ 3,324,601
Unamortized stock-based compensation expense, RSUs	$ 0		$ 0
Time-based Restricted Stock Units
Number of Units
Granted				47,765
Additional disclosures
Aggregate fair value of shares granted		$ 1,500,000		$ 1,500,000

XML

Stock-based compensation - Performance-based Restricted Stock Units (Details) - Performance-based Restricted Stock Units - USD ($)	6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023
Stock-based compensation
Restricted stock units outstanding	1,471	1,471
Fair value of restricted stock units outstanding	$ 60,000	$ 60,000
Number of units granted	0

XML

Stock-based compensation - Canceled Stock Options (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Stock-based compensation
Stock-based compensation	$ 151	$ 1,264,650	$ 1,513,550	$ 3,435,272
Canceled stock options
Stock-based compensation
Stock options outstanding	0	0	0	0
Stock-based compensation	$ 151	$ 44,768	$ 5,434	$ 110,671
Canceled stock options | Maximum
Stock-based compensation
Stock-based compensation	$ 100,000	$ 100,000	$ 100,000

XML

Preferred and common stock (Details) - USD ($)		3 Months Ended		6 Months Ended
	Nov. 17, 2022	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023	Dec. 31, 2023
Equity Purchase Agreement with Lincoln Park Capital Fund, LLC
Preferred and common stock
Number of shares issued				0	151,765
Term of agreement	30 months
Pre-funded common stock warrants
Preferred and common stock
Warrants outstanding		$ 0		$ 0
Series X Preferred Stock
Preferred and common stock
Number of shares issued				0	0
Preferred stock outstanding		45,567		45,567		45,567
Common Stock
Preferred and common stock
Number of common stock shares issued in connection with an equity purchase agreement			81,170		151,765
Issuance of common stock converted from prefunded warrants		314,231		314,231
Shares issued upon vesting of RSUs		0	5,328	87,049	44,201
Restricted shares withheld for tax obligation			1,679	22,662	1,679
Restricted stock, value of shares withheld for tax withholdings			$ 100,000	$ 100,000	$ 100,000
Common Stock | Equity Purchase Agreement with Lincoln Park Capital Fund, LLC
Preferred and common stock
Value of shares authorized for issuance under the terms of an equity purchase agreement	$ 20,000,000.0
Term of agreement	30 months
Number of common stock shares issued in connection with an equity purchase agreement		0	81,170	0	151,765
Net proceeds from the issuance of common stock in connection with an equity purchase agreement			$ 2,000,000.0		$ 4,600,000
Stock issuance costs					$ 200,000

XML

Commitments and contingencies (Details) - USD ($)	Jun. 30, 2024	Dec. 31, 2023
Commitments and contingencies
Litigation reserve	$ 0	$ 0

XML

Related party transactions (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2024	Jun. 30, 2023	Jun. 30, 2024	Jun. 30, 2023
Related party transactions
Allocated expenses	$ 1,489,027	$ 2,768,910	$ 4,786,377	$ 6,583,094
Consulting services | Affiliated Entity | Tardimed
Related party transactions
Allocated expenses	$ 95,000	$ 60,000	$ 210,000	$ 120,000

XML

Subsequent events (Details) - Subsequent events - Warrant exchange agreement $ / shares in Units, shares in Millions, $ in Millions	Sep. 03, 2024 USD ($) $ / shares shares
Subsequent events
Exercise price of warrants | $ / shares	$ 0.20
Number of shares which may be issued upon exercise of warrants	4.4
Value of shares to be issued in a warrant exchange | $	$ 0.8
Number of new warrants to be issued	8.8