[10-Q] Shuttle Pharmaceuticals Holdings, Inc. Quarterly Earnings Report
Shuttle Pharmaceuticals Holdings, Inc. (SHPH) reported third‑quarter results with no revenue and a net loss of $2.35 million. For the nine months ended September 30, 2025, the company recorded a net loss of $9.11 million. Operating expenses were $2.27 million in the quarter, led by research and development of $0.94 million and general and administrative of $0.89 million.
Cash and cash equivalents were $2.09 million at quarter‑end. Total assets were $3.54 million, liabilities $2.15 million, and stockholders’ equity $1.39 million. The company executed multiple financings in 2025, including $5.0 million net proceeds from a March public offering and $3.9 million net from a June private placement with pre‑funded warrants; a $2.0 million revolving note remained undrawn. On November 3, 2025, SHPH closed a private placement of a pre‑funded warrant for gross $2.5 million. Management disclosed substantial doubt about continuing as a going concern. The company also signed a binding term sheet on October 20, 2025 to acquire Molecule’s assets and liabilities for $10,000,000 in cash and stock, subject to definitive agreements and approvals.
- None.
- Going concern: Management disclosed substantial doubt about continuing as a going concern within one year.
Insights
Cash extended by equity raises, but going‑concern risk remains.
SHPH posted a nine‑month
The company subsequently raised gross
SHPH signed a binding term sheet on
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
| Quarterly Report PURSUANT TO Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For
the quarterly period ended
OR
| Transition Report PURSUANT TO Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from ______________ to ______________
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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
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The
number of shares outstanding of the registrant’s common stock on November 11, 2025 was
Shuttle Pharmaceuticals Holdings, Inc.
TABLE OF CONTENTS
Page | ||
| Part I. Financial Information | ||
| Item 1. | Unaudited Condensed Consolidated Financial Statements | |
| Unaudited Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 | 3 | |
| Unaudited Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025 and 2024 | 4 | |
| Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2025 and 2024 | 5 | |
| Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 | 6 | |
| Notes to Unaudited Condensed Consolidated Financial Statements | 7 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 26 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 34 |
| Item 4. | Controls and Procedures | 34 |
| Part II. Other Information | ||
| Item 1. | Legal Proceedings | 35 |
| Item 1A. | Risk Factors | 35 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 35 |
| Item 3. | Defaults Upon Senior Securities | 35 |
| Item 4. | Mine Safety Disclosures | 35 |
| Item 5. | Other Information | 35 |
| Item 6. | Exhibits | 35 |
| Signatures | 36 | |
| 2 |
Shuttle Pharmaceuticals Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Deferred financing costs | — | |||||||
| Operating lease right-of-use asset | ||||||||
| Total Assets | ||||||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Accrued interest payable - related parties | — | |||||||
| Notes payable to related parties | — | |||||||
| Convertible notes payable, net - fair value option, related parties | ||||||||
| Convertible notes payable, net - fair value option | ||||||||
| Operating lease liability | ||||||||
| Total current liabilities | ||||||||
| Derivative liability | ||||||||
| Operating lease liability non-current | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 8) | - | |||||||
| Stockholders’ Equity | ||||||||
| Series A Convertible Preferred Stock, $ | — | — | ||||||
| Common stock, $ | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 3 |
Shuttle Pharmaceuticals Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Revenue | $ | — | $ | — | $ | — | $ | — | ||||||||
| Operating expenses | ||||||||||||||||
| Research and development | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Legal and professional | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Net loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (Expense) income | ||||||||||||||||
| Interest expense - related parties | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Change in fair value of derivative liabilities | ||||||||||||||||
| Change in fair value of convertible notes | ( | ) | — | — | ||||||||||||
| Gain on sale of marketable securities | — | — | ||||||||||||||
| Change in fair value of marketable securities | — | ( | ) | — | ( | ) | ||||||||||
| Loss on settlement of convertible debt | — | ( | ) | — | ( | ) | ||||||||||
| Total other (expense) income | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average common shares outstanding - basic and diluted | ||||||||||||||||
| Net loss per shares - basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 4 |
Shuttle Pharmaceuticals Holdings, Inc.
Condensed Consolidated Statements of Changes in Stockholders’ Equity
(Unaudited)
For the Nine Months September 30, 2025
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | | |||||||||||||
| Common stock issued for restricted stock units | — | — | — | — | ||||||||||||||||
| Issuance of common stock and pre-funded warrants, net of issuance costs of $ | — | |||||||||||||||||||
| Partial conversion of convertible note at fair value | — | — | ||||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balance at March 31, 2025 | ( | ) | ||||||||||||||||||
| Common stock issued for restricted stock units | — | — | — | — | ||||||||||||||||
| Issuance of common stock and pre-funded warrants, net of issuance costs of $ | — | — | ||||||||||||||||||
| Issuance of common stock and pre-funded warrants, net of issuance costs | — | — | ||||||||||||||||||
| Partial conversion of convertible note at fair value | — | — | ||||||||||||||||||
| Exercise of pre-funded warrants | — | |||||||||||||||||||
| Common stock issued for reverse stock split fractional share round up | — | — | — | — | ||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balance at June 30, 2025 | ( | ) | ||||||||||||||||||
| Common stock issued for restricted stock units | — | — | — | — | ||||||||||||||||
| Exercise of pre-funded warrants | — | |||||||||||||||||||
| Reversal of accrued issuance costs related to June 2025 Offering | — | — | — | |||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
For the Nine Months September 30, 2024
| Additional | Total | |||||||||||||||||||
| Common Stock | Paid-In | Accumulated | Stockholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance at December 31, 2023 | $ | ( | ) | | ||||||||||||||||
| Common stock issued for conversion of accrued interest and principal | — | — | ||||||||||||||||||
| Common stock issued for restricted stock units | — | — | — | — | ||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balance at March 31, 2024 | ( | ) | ||||||||||||||||||
| Common stock issued for restricted stock units | — | — | — | — | ||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balance at June 30, 2024 | ( | ) | ||||||||||||||||||
| Balance | ( | ) | ||||||||||||||||||
| Common stock issued for conversion of convertible debt accrued interest and principal | — | — | ||||||||||||||||||
| Common stock issued for restricted stock units | — | — | — | — | ||||||||||||||||
| Common stock issued for reverse stock split fractional share round up | — | — | — | — | ||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| Balance at September 30, 2024 | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
| Balance | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 5 |
Shuttle Pharmaceuticals Holdings, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| 2025 | 2024 | |||||||
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ( | ) | ||||
| Amortization of debt discount and finance fees | ||||||||
| Gain on marketable securities | — | ( | ) | |||||
| Change in fair value of marketable securities | — | |||||||
| Accrued interest settled with common stock | — | |||||||
| Loss on settlement of convertible debt | — | |||||||
| Stock-based compensation | ||||||||
| Interest payments on convertible notes accounted for at fair value | ( | ) | — | |||||
| Change in fair value of convertible notes | ( | ) | — | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accrued interest income | — | |||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ||||||||
| Accounts payable and accrued expenses - related parties | — | ( | ) | |||||
| Accrued interest payable | — | ( | ) | |||||
| Accrued interest payable - related parties | ( | ) | ||||||
| Change in operating lease asset and liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Investment in marketable securities | — | ( | ) | |||||
| Proceeds from disposition of marketable securities | — | |||||||
| Net cash provided by investing activities | — | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repayment of note payable-related party | ( | ) | ||||||
| Proceeds from issuance of common stock and pre-funded warrants, net of placement agent costs of $ | — | |||||||
| Proceeds from issuance of common stock and pre-funded warrants, net of placement agent costs of $ | — | |||||||
| Payment of other issuance costs for issuance of common stock and equity-classified warrants | ( | ) | — | |||||
| Proceeds from exercise of pre-funded warrants | — | |||||||
| Payment for finance costs | ( | ) | ( | ) | ||||
| Payment of convertible note payable | — | ( | ) | |||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Cash paid for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | — | $ | — | ||||
| Supplemental non-cash financing activities: | ||||||||
| Conversion of convertible notes accounted for at fair value | $ | $ | — | |||||
| Common stock issued for settlement of debt | $ | — | $ | |||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
| 6 |
Note 1 – Organization and Liquidity
Organization and Line of Business
Shuttle
Pharmaceuticals Holdings, Inc. (“we,” “us,” “our,” or the “Company”) was originally formed
as Shuttle Pharmaceuticals, LLC in the State of Maryland on December 18, 2012. On August 12, 2016, the Company filed articles of conversion
with the State of Maryland to convert from an LLC to a C corporation, at which time the Company changed its name to Shuttle Pharmaceuticals,
Inc. (“Shuttle”). In connection with the conversion, the Company issued
The Company’s primary purpose is to develop and commercialize unique drugs for the sensitization of cancers and protection of normal tissues, with the goal of improving outcomes for cancer patients receiving radiation therapy. Shuttle has deployed its proprietary technology to develop novel cancer immunotherapies, producing a pipeline of selective HDAC inhibitors for cancer and immunotherapy applications. The Company’s HDAC platform is designed to target candidate molecules with potential roles in therapeutics beyond cancer, including autoimmune, inflammatory, metabolic, neurological and infectious diseases. The Company’s Ropidoxuridine product, which is used with radiation therapy to sensitize cancer cells, was initially funded by a Small Business Innovation Research (“SBIR”) contract provided by the National Cancer Institute (“NCI”), a unit of the National Institutes of Health (“NIH”). Ropidoxuridine has been further developed through the Company’s collaborations with scientists at the University of Virginia for use in combination with proton therapy to improve patient survival. Historically, and prior to the Company’s initial public offering in September 2022, the Company had obtained funding to develop products through NIH grants, including a product to predict late effects of radiation with metabolite biomarkers and develop prostate cancer cell lines in health disparities research.
The production and marketing of the Company’s products and its ongoing research and development activities will be and are subject to extensive regulation by numerous governmental authorities in the United States. Prior to marketing in the United States, any products or combination of products developed by the Company must undergo rigorous preclinical (animal) and clinical (human) testing and an extensive regulatory approval process implemented by the Food and Drug Administration (“FDA”) under the Food, Drug and Cosmetic Act. There can be no assurance that the Company will not encounter problems in its clinical trials that will cause the Company or the FDA to delay or suspend the clinical trials.
The Company’s success will depend in part on its ability to obtain patents and product license rights, maintain trade secrets, and operate without infringing on the proprietary rights of others, both in the United States and in other countries. There can be no assurance that patents issued to or licensed by the Company will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide proprietary protection or competitive advantages to the Company now or in the future.
On
October 20, 2025, the Company entered into a binding term sheet with 1542770 BC Ltd. (“Molecule”). The term sheet sets forth
the material business terms of a transaction under which the Company or its affiliate will purchase from Molecule substantially all of
Molecule’s assets and liabilities for a purchase price of $
Liquidity and Going Concern
Our
unaudited condensed consolidated financial statements are prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred losses since inception
and has a net loss of approximately $
In
February 2025, the Company issued a revolving note in the principal amount of up to $
| 7 |
On November 3, 2025, the Company entered into a securities purchase agreement with the purchaser, pursuant to which the Company agreed
to issue and sell to the purchaser in a private placement transaction (the “November 2025 Offering”) a pre-funded warrant
to purchase up to
The ability of the Company to continue as a going concern is dependent upon its ability to continue to successfully raise additional equity or debt financing to allow it to fund ongoing operations, conduct clinical trials and bring a drug candidate to commercialization to generate revenues. These conditions raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued.
The accompanying unaudited condensed consolidated financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities if the Company is unable to continue as a going concern.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and notes required by GAAP for annual financial statements. A complete discussion of the Company’s significant accounting policies is included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all of the adjustments necessary to present the financial position of the Company as of September 30, 2025 and the results of operations and cash flows for the periods presented. The accompanying condensed consolidated financial statements of the Company have not been audited by the Company’s independent registered public accounting firm, except that the year-end consolidated balance sheet was derived from audited financial statements. The results of operations for the nine months ended September 30, 2025 are not necessarily indicative of the operating results for the full fiscal year or any future period.
Reverse Stock Split
On
August 13, 2024, in order to meet Nasdaq’s minimum bid price requirement of $
The
Reverse Stock Splits had no effect on the Company’s authorized shares of common stock or preferred stock and the par value remained
unchanged at $
Basis of Consolidation
The unaudited condensed consolidated financial statements have been prepared on a consolidated basis with those of the Company’s wholly-owned subsidiaries, Shuttle Pharmaceuticals, Inc. and Shuttle Diagnostics, Inc. All intercompany transactions and balances have been eliminated.
| 8 |
Use of Estimates
The preparation of unaudited condensed consolidated 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 unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes 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 accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. Significant estimates are contained in the accompanying unaudited condensed consolidated financial statements for the valuation of debt and warrants and valuation of bifurcated derivative liabilities and other financial instruments.
Cash and Cash Equivalents
Cash and cash equivalents include cash in bank accounts and money market funds with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. As of September 30, 2025 and December 31, 2024, cash and cash equivalents consisted of the following:
Schedule of Cash and Cash Equivalents
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Cash | $ | $ | ||||||
| Money market funds | ||||||||
| Total cash and cash equivalents | $ | $ | ||||||
Periodically,
the Company may carry cash balances at financial institutions in excess of the federally insured limit of $
Fair Value of Financial Instruments
The Company follows accounting guidelines on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments:
| ● | Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments. | |
| ● | Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace. | |
| ● | Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires a significant judgment or estimation. |
Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires the Company to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded, may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.
| 9 |
The carrying amounts of the Company’s financial instruments including cash and cash equivalents, prepaid expenses, accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments.
Set out below are the Company’s financial instruments that are required to be remeasured at fair value on a recurring basis and their fair value hierarchy as of September 30, 2025 and December 31, 2024:
Schedule of Fair Value Liabilities Measured on Recurring Basis
| September 30, 2025 | Level 1 | Level 2 | Level 3 | Carrying Value | ||||||||||||
| Liabilities | ||||||||||||||||
| Derivative Liability - Warrants | $ | — | $ | — | $ | $ | ||||||||||
| Convertible Notes Payable | — | — | ||||||||||||||
| Total Liabilities | $ | — | $ | — | $ | $ | ||||||||||
| December 31, 2024 | Level 1 | Level 2 | Level 3 | Carrying Value | ||||||||||||
| Liabilities | ||||||||||||||||
| Derivative Liability - Warrants | $ | — | $ | — | $ | $ | ||||||||||
| Convertible Notes Payable | — | — | ||||||||||||||
| Total Liabilities | $ | — | $ | — | $ | $ | ||||||||||
See Note 5 and Note 7 for additional disclosures related to the fair value of the Company’s convertible notes and derivative liabilities, respectively.
Derivative Financial Instruments
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the unaudited condensed consolidated statements of operations.
For its derivative financial instruments, the Company utilizes the most appropriate valuation model (such as Monte Carlo simulations or other sophisticated models, based on the nature of the terms of the instrument) to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the unaudited condensed consolidated balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within twelve (12) months of the balance sheet date.
Convertible Notes Payable
The Company accounts for its Convertible Bridge Notes (as defined in Note 5) under the fair value option in accordance with ASC 825. The fair value option may be elected on an instrument-by-instrument basis and is irrevocable unless a new election date occurs. Additional term or other notes may be issued in subsequent periods where the Company would be able to make a fair value option election upon issuance provided eligibility criteria are met. The Company records the portion of the Convertible Bridge Notes that are issued and outstanding for accounting purposes at fair value with changes in fair value recorded in other income (expense), net in the unaudited condensed consolidated statements of operations, except for the portion of the total change in fair value that results from a change in the instrument-specific credit risk of the Convertible Bridge Notes, which is recorded in other comprehensive income (loss), if applicable. No loss was attributed to changes in credit risk for the periods presented therefore net loss was equal to comprehensive loss. The fair value option election was made to align the accounting for the Convertible Bridge Notes with the Company’s financial reporting objectives and reduce operational effort to account for embedded features that otherwise would require bifurcation as a separate unit of account.
| 10 |
Pursuant to the fair value option election, direct and incremental debt issuance costs and consideration paid to the lender related to the Convertible Bridge Notes were expensed as incurred and recorded in other income (expense), net in the unaudited condensed consolidated statements of operations.
For convertible notes for which the fair value option is not elected, the Company evaluates the convertible notes for embedded features and bifurcates these features (such as conversion options and redemption options) from their host instruments and accounts for them as free standing derivative financial instruments if certain criteria are met. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. All of the Company’s Convertible Bridge Notes as of September 30, 2025 had elected the fair value option at the initial transaction date.
Warrants
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in FASB ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. Finally, the Company determines if the warrants meet the definition of a derivative based on their contractual terms. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and at each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the unaudited condensed consolidated statements of operations. The Company also evaluates if changes in contractual terms or other considerations would result in the reclassification of outstanding warrants from liabilities to stockholders’ equity (or vice versa).
Stock-Based Compensation
Compensation cost for stock awards, which include restricted stock units (“RSUs”), is measured at the fair value on the grant date and recognized as expense, over the related service period. The fair value of stock awards is based on the quoted price of our common stock on the grant date. Compensation expense related to the RSUs is reduced by the fair value of the units that are forfeited by employees that leave the Company prior to vesting as they occur. Compensation cost for RSUs is recognized using the straight-line method over the requisite service period.
| 11 |
Research and Development Expenses
Research and development expenses are charged to expense as incurred. Research and development expenses include, but are not limited to, product development, clinical and regulatory expenses, payroll and other personnel expenses, which may include portions of the Company’s executives to the extent they are active involved in the research and development activities, materials, supplies, related subcontract expenses, and consulting costs. Our research and development costs include activities conducted by third-party service providers, which we record based on the estimated amount of work completed and in accordance with agreements established with these third parties. The estimated accrued expenses are dependent, in part, upon the receipt of timely and accurate reporting from the clinical research organization and other third-party service providers. As such, actual expenses may vary from our accrued expense amounts. To date, there have been no material differences from our accrued expenses to actual expenses.
Regarding the accounting treatment for reimbursements, GAAP provides limited guidance on the accounting for government grants received by for-profit companies. In accordance with ASC Topic 832, Government Assistance, as adopted January 1, 2022, the Company discloses certain types of government assistance received in the notes to the unaudited condensed consolidated financial statements that includes: a) the nature of the transaction including the nature of the assistance being given, b) the accounting policies being used to account for the transaction and c) other provisions of relevance, where required. Depending on the type of grant or contract, the Company understands there is more than one acceptable alternative for the accounting treatment – a reduction of costs, a deferred credit to be amortized, revenue or other income. The Company has concluded that reimbursements received for R&D expenses incurred are more akin to a reduction of costs and applies reimbursements against incurred research costs.
For
the three months ended September 30, 2025 and 2024, the Company recorded $
Segment Information
Operating
segments are defined as components of an enterprise about which separate and discrete information is available for evaluation by the
chief operating decision-maker (“CODM”) in deciding how to allocate resources and assess performance. The
Company’s CODM, its chief executive officer, evaluates the Company’s operations and manages its business as a single
operating segment. All of the Company’s long-lived assets are held in the United States. Refer to Note 9 for the
Company’s disclosure on its
Net Loss Per Common Stock
Net loss per share of common stock requires presentation of basic and diluted earnings per common share on the face of the unaudited condensed consolidated statements of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic earnings per share computation to diluted earnings per share.
In the accompanying unaudited condensed consolidated financial statements, basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the year. Certain warrants issued and outstanding include terms and conditions resulting in the treatment as participating securities. Such warrants do not include an obligation for the warrant holders to fund the losses of the Company. Therefore, these warrants are excluded from the calculation of earnings per common share in periods of net loss.
Diluted earnings per share is computed by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding and potentially dilutive shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through convertible securities, contingent share arrangements, stock options and warrants unless the result would be antidilutive.
The dilutive effect of restricted stock units and other stock-based payment awards subject to vesting and common stock warrants is calculated using the “treasury stock method,” which assumes that the “proceeds” from the exercise of these instruments are used to purchase common shares at the average market price for the period. The dilutive effect of convertible securities is calculated using the “if-converted method.” Under the if-converted method, securities are assumed to be converted at the beginning of the period, and the resulting shares of common stock are included in the denominator of the diluted calculation for the entire period being presented.
| 12 |
Given
the nominal exercise price of the Company’s issuance of Pre-Funded Warrants (as defined in Note 6), such Pre-Funded Warrants are
included in the calculation of basic and diluted net loss per share as the exercise price per warrant is deemed nonsubstantive when compared
to the fair value of the underlying common shares. The
For the nine months ended September 30, 2025 and 2024, the following common stock equivalents were excluded from the computation of diluted net loss per share as the result of the computation was anti-dilutive.
Schedule of Anti-dilutive Securities Excluded from Computation of Earnings Per Share
| September 30, | September 30, | |||||||
| 2025 | 2024 | |||||||
| Convertible notes (Note 5) | — | |||||||
| Warrants (Note 6) | ||||||||
| Restricted stock units (Note 6) | ||||||||
| Anti-dilutive securities | ||||||||
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The guidance is effective for the Company’s fiscal years beginning after December 15, 2024. The Company will reflect any impact of adoption in its SEC Form 10-K for the annual period ending December 31, 2025 and does not expect any material impact on its consolidated financial statements.
On November 4, 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses (“DISE”),” which requires disaggregated disclosure of income statement expenses for public business entities. The ASU does not change the expense captions an entity presents on the face of the income statement; rather, it requires disaggregation of certain expense captions into specified categories in disclosures within the notes to the financial statements. ASU 2024-03 is effective for all public business entities for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact that this standard may have on its condensed consolidated financial statements and related disclosures.
There have been no other recent accounting pronouncements, changes in accounting pronouncements or recently adopted accounting guidance that are of significance or potential significance to the Company.
Note 3 - Leases
Operating lease right-of-use (“ROU”) assets and liabilities are recognized at the present value of the future lease payments as of the lease commencement date. Operating lease expense is recognized on a straight-line basis over the lease term.
The
Company currently has a lease agreement which allows for the use of a laboratory facility, entered into on February 16, 2023, with base
rent of $
| 13 |
The following summarizes the right-of use asset and lease information for the Company’s operating leases:
Schedule of Right-of Use Asset and Lease Information about Operating Lease
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||
| Variable lease cost | ||||||||||||||||
| Sublease income | — | ( | ) | — | ( | ) | ||||||||||
| Total lease cost | $ | $ | $ | $ | ||||||||||||
| Other information: | ||||||||||||||||
| Cash paid for operating cash flows for operating leases | $ | $ | ||||||||||||||
| September 30, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Weighted-average remaining lease term - operating leases (year) | ||||||||
| Weighted-average discount rate - operating leases | % | % | ||||||
Future non-cancelable minimum lease payments under the operating lease liability as of September 30, 2025, are as follows:
Schedule of Future Non-cancelable Minimum Lease Payments Under Operating Lease Liability
| Years ended December 31, | ||||
| 2025 (excluding the nine months ended September 30, 2025) | $ | |||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 and thereafter | — | |||
| Total future minimum lease payments | ||||
| Less: imputed interest | ( | ) | ||
| Present value of payments | $ | |||
Note 4 – Notes Payable-Related Party
On
October 14, 2024, as part of the senior convertible note offering described in Note 5, the Company entered into a loan with an officer
of the Company in the amount of $
On
September 4, 2024, the Company issued a $
| 14 |
Note 5 - Convertible Notes and Loan Agreement
Revolving Note Agreement
On
February 27, 2025, the Company entered into a Revolving Loan Agreement with a lender. Pursuant to and under the terms of the Revolving
Loan Agreement, the Company issued a revolving note dated February 28, 2025 in the principal amount of up to $
The
Revolving Note bears interest at the rate of
The
Revolving Loan Agreement contains customary events of default. If an event of default occurs, the lender may accelerate the repayment
of amounts outstanding under the Revolving Loan Agreement, and an amount equal to
As
of September 30, 2025, the Company has not yet drawn on the Revolving Note and
2024 Convertible Bridge Notes
During October 2024, the Company completed a senior convertible note offering in two closings, as further described below.
On
October 14, 2024, the Company issued an aggregate of $
As
part of the same offering, on October 21, 2024, the Company issued an additional $
After
analyzing the terms of the senior convertible notes (“Convertible Bridge Notes”) and its embedded features, the Company elected
to account for the Convertible Bridge Notes at fair value under the allowable fair value option election. As such, the Company initially
recognized the Convertible Bridge Notes at their fair value and subsequently measures the notes at fair value with changes in fair value
recorded in current period earnings (or other comprehensive income, if specific to Company credit risk). The Company initially recorded
the Convertible Bridge Notes at their estimated issuance date fair value of $
| 15 |
As of December 31, 2024, the Company used a Monte Carlo simulation model to calculate the fair value of the Convertible Bridge Notes. The Convertible Bridge Notes were classified within Level 3 of the fair value hierarchy at the initial measurement date, due to the use of unobservable inputs. The key inputs into the model for the Convertible Bridge Note were as follows:
Schedule of Key Inputs of Convertible Bridge Note
| December 31, 2024 | ||||
| Risk-free interest rate | % | |||
| Expected term (years) | ||||
| Quoted VWAP | $ | |||
| Volatility | % | |||
| Discount rate | % | |||
| Probability assessment1 | % | |||
| Illiquidity discount | ( | )% | ||
| (1) |
Due
to the short duration between the reporting date and mandatory conversion of the Convertible Bridge Notes, as of September 30, 2025,
the Company calculated the fair value based on the number of shares into which the Convertible Bridge Notes will convert in mandatory
conversion and the fair value of the Company’s common stock as of the reporting date. Upon mandatory conversion of the current
outstanding principal, the Company expects to issue
| 16 |
The following table summarizes the changes in the carrying value of the Convertible Bridge Notes:
Schedule of Fair Value Measurement using Significant Unobservable Inputs
| Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||
| Balance - December 31, 2024 | $ | |||
| Conversion of Convertible Bridge Note (at fair value) | ( | ) | ||
| Payments of coupon interest | ( | ) | ||
| Gain on change in fair value | ( | ) | ||
| Balance - September 30, 2025 | $ | |||
Alto Opportunity Master Fund, SPC
On
January 11, 2023, the Company entered into a securities purchase agreement (the “SPA”) with Alto Opportunity Master Fund,
SPC – Segregated Master Portfolio B, a Cayman entity (the “Investor”), pursuant to which the Company sold to the Investor
a $
In
conjunction with entry into the SPA, the Company entered into a series of related agreements, including a security agreement (the “Security
Agreement”), an intellectual property security agreement (the “IP Security Agreement”) and a subsidiary guaranty (the
“Subsidiary Guaranty”). The security agreements and guaranty allow, among other things, for the Investor to have a security
interest in and place a lien on all of the Company’s assets and intellectual property until such time as the Alto Convertible Note
is paid off. In addition, the SPA called for the Company to enter into a springing deposit account control agreement (the “Springing
DACA”), which, in the event the Company defaulted on its repayment of the Alto Convertible Note, would allow the Investor to assume
control of the Company’s bank account only with regard to any funds remaining outstanding under the Alto Convertible Note. As such,
in conjunction with entry into the SPA, the Company established a separate bank account in which it deposited the Investment Amount and
pursuant to which the Company, the Investor and the bank holding the Investment Amount, First Republic Bank, entered into the Springing
DACA agreement. As the Investment Amount had been held at First Republic Bank, in light of certain banking crises then affecting smaller
banks, on March 12, 2023, the Company and the Investor moved the Investment Amount from First Republic Bank, after which time the Springing
DACA was no longer in effect. Further, pursuant to amendments to the SPA entered into in May and June of 2023, the Company and the Investor
agreed that all of the Investment Amount would be released to the Company and the relevant provision of the SPA which required the Springing
DACA would no longer be deemed applicable. In addition, the Company granted the Investor the option to purchase up to an additional $
Boustead
Securities, LLC (“Boustead”) served as a placement agent for the Alto Convertible Note and Warrant offering and received
$
The
Company allocated the finance costs related to the Boustead placement agent fee of $
| 17 |
The
Company allocated to the debt component of the note an original discount of $
On
August 6, 2024, the Company entered into an amendment to the SPA with Alto. Under the Amendment Agreement, the Company and Alto agreed
as follows: (i) that the Company would pay $
On February 26, 2025, the Company, entered into an amendment agreement (the “Amendment Agreement”) for purposes of amending the terms of the SPA originally dated January 11, 2023, and as amended May 10, 2023, June 5, 2023 and August 6, 2024, between the Company and Alto.
Under
the Amendment Agreement, in exchange for the Company’s payment of $
During
the three and nine months ended September 30, 2024, the Company recorded interest expense of $
Note 6 - Stockholders’ Equity
Common Stock
During the nine months ended September 30, 2025, the Company issued:
| ● | ||
| ● | ||
| ● | ||
| ● | ||
| ● | ||
| ● |
| 18 |
During the nine months ended September 30, 2024, the Company issued:
| ● | ||
| ● | ||
| ● |
March 2025 Equity Financing
On
March 12, 2025, the Company entered into an Underwriting Agreement (the “Underwriting Agreement”) with WestPark Capital,
Inc. (“WestPark”) as the sole underwriter (the “Underwriter”), related to a public offering (the “Offering”)
of (i)
The
Offering resulted in gross proceeds of approximately $
The
March 2025 Pre-Funded Warrants were exercisable at any time after March 13, 2025, at an exercise price of $
The Company concluded that the March 2025 Pre-Funded Warrants met the requirements to be classified in stockholders’ equity, and have been recorded as additional paid in capital.
As
of September 30, 2025, all
June 2025 Private Placement
On
June 20, 2025, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) in a private
placement, and engaged WestPark Capital, Inc. (“WestPark”) as the sole placement agent (the “Placement Agent”),
pursuant to which the Company agreed to sell an aggregate of $
The
June 2025 Pre-Funded Warrants are exercisable at any time after issuance on June 24, 2025, at an exercise price of $
| 19 |
In connection with the Securities Purchase Agreement, the Company entered into a registration rights agreement with the investor. Pursuant to the registration rights agreement, the Company agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”) to register for resale the shares of common stock, and the shares issuable upon exercise of the pre-funded warrants issued under the purchase agreement, within 10 days of the closing date, and to have such registration statement declared effective within 90 days of the closing date (or 120 days if the registration statement is reviewed by the SEC). The registration rights agreement provided that the Company would be obligated to pay certain liquidated damages to the investor if the Company failed to file the resale registration statement, or to have such registration statement declared effective by such dates. The Company was prepared to file the registration statement within the deadline required under the registration rights agreement but due to requests by the investor, the Company did not file the registration statement until August 4, 2025, upon receiving the investor’s request to do so. The registration statement was declared effective on August 11, 2025.
The Company concluded that the shares and June 2025 Pre-Funded Warrants met the requirements to be classified in stockholders’ equity, and the proceeds from the issuance of the shares and June 2025 Pre-Funded Warrants have been recorded in additional paid-in capital.
As
of September 30, 2025,
Warrants
In
connection with the Convertible Bridge Notes in October 2024, the lenders were granted warrants to purchase
In
connection with the October 2024 Equity Financing, the Company issued pre-funded warrants to purchase
up to
During
the nine months ended September 30, 2025, holders of pre-funded warrants exercised their warrants resulting in the issuance of
A summary of activity regarding warrants to purchase common stock (excluding pre-funded warrants) for the nine months ended September 30, 2025 were as follows:
Schedule of Warrants Activity
| Number of | Weighted Average | Average | ||||||||||
| warrants | Exercise Price | Life (years) | ||||||||||
| Outstanding, December 31, 2024 | $ | |||||||||||
| Granted | — | — | — | |||||||||
| Forfeited | ( | ) | — | |||||||||
| Outstanding, September 30, 2025 | $ | |||||||||||
The
warrants had intrinsic value of $
| 20 |
Equity Incentive Plan
The
Company’s 2018 Equity Incentive Plan (the “2018 Plan”) provides for equity incentives to be granted to employees, executive
officers, directors and key advisers and consultants. Equity incentive grants may be made in the form of stock options with an exercise
price of not less than the fair market value of the underlying shares as determined pursuant to the 2018 Plan, restricted stock awards,
other stock-based awards, or any combination of the foregoing. The 2018 Plan is administered by the Company’s compensation committee.
In May 2025, the Company increased the shares authorized under the 2018 Plan by
Restricted Stock Units
The Company may grant restricted stock units (“RSU”) under our 2018 Plan. RSUs are bookkeeping entries representing an amount equal to the fair market value of one share of our common stock. Subject to the provisions of the 2018 Plan, the administrator determines the terms and conditions of RSUs, including the vesting criteria and the form and timing of payment. Notwithstanding the foregoing, the administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. RSUs granted typically vest annually in one third increments from the date of appointment.
During
the three and nine months ended September 30, 2025,
pursuant to agreements with directors, officers and consultants,
Stock-based compensation expense was classified as follows for the three and nine months ended September 30, 2025 and 2024:
Schedule of Compensation Expenses (RSUs)
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
On
February 27, 2025, the Company entered into a Revolving Loan Agreement with Bowery Consulting Group Inc. (“Bowery”) where
the Company may borrow from Bowery an aggregate principal amount of up to $
On
May 8, 2025, the Company and Dr. Anatoly Dritschilo (“Dr. Dritschilo”) executed a Settlement Agreement and General Release
pursuant to which Dr. Dritschilo agreed to resign from his position as the Company’s Chief Scientist Officer and Director of the
Company’s Board of Directors on May 9, 2025. Under the Agreement and as consideration for timely signing, not timely revoking,
and compliance with the promises made therein, the Company agreed to issue
| 21 |
On
August 31, 2025 and September 11, 2025, Steve Richards and Joseph Tung, respectively, resigned from their positions on the Board of Directors.
Upon the resignation of the two board members, vesting of
As
of September 30, 2025, there was $
The following is a summary of activity regarding Restricted Stock Units issued:
Schedule of Restricted Stock Units (RSUs)
| Number of RSU | Weighted Average Fair Value Per RSU | |||||||
| Outstanding, December 31, 2024 | $ | |||||||
| Granted | ||||||||
| Forfeited | ( | ) | ||||||
| Vested | ( | ) | ||||||
| Outstanding, September 30, 2025 | $ | |||||||
Note 7 – Derivative Liabilities
Fair Value Assumptions Used in Accounting for Derivative Liabilities
ASC 815 requires the Company to assess the fair market value of derivative liabilities at the end of each reporting period and recognize any change in the fair market value as other income or expense.
In
October 2024, in connection with the October 2024 Equity Financing, the Company issued warrants to purchase
In
January 2023, in connection with the Alto Convertible Note, the Company issued warrants to purchase
The
Company has determined the Acceleration Option in the Alto warrants is an embedded derivative within the host instrument and has bifurcated
it from the host instrument and recorded it as a derivative liability valued at $
| 22 |
The Company classifies these derivative liabilities as a Level 3 fair value measurement. As of December 31, 2024, the Company utilized a Monte Carlo simulation to calculate the fair value of the October 2024 Equity Financing warrants. The key inputs for the Monte Carlo simulation as of December 31, 2024, were as follows:
Schedule of Monte Carlo Simulation Assumption
| Net cash settlement and down round key valuation inputs - warrants* | ||||
| Annualized volatility | % | |||
| Risk-free interest rate | % | |||
| Quoted VWAP | $ | |||
| Exercise price | ||||
| Probability assessment1 | % | |||
| Illiquidity discount | ( | )% | ||
| Time period (years) | ||||
| 1 |
| * |
As
of September 30, 2025, the Company utilized a probability-weighted expected return method (“PWERM”), which assumed various
scenarios and the potential value of the October 2024 Equity Financing warrants at various stock prices of the Company’s common
stock. The scenarios included stock prices up to $
The following table summarizes the changes in the derivative liabilities:
Schedule of Derivative Liabilities
| Fair Value Measurements Using Significant Unobservable Inputs (Level 3) | ||||||||
| Warrants | Alto Acceleration Feature | |||||||
| Balance - December 31, 2024 | $ | $ | — | |||||
| Gain on change in fair value | ( | ) | — | |||||
| Balance - March 31, 2025 | $ | — | ||||||
| Gain on change in fair value | ( | ) | — | |||||
| Balance - June 30, 2025 | $ | $ | — | |||||
| Gain on change in fair value | ( | ) | — | |||||
| Balance - September 30, 2025 | $ | $ | — | |||||
Note 8 – Commitments and Contingencies
On
April 3, 2025, the Company, entered into a consulting agreement with the IR Agency LLC (the
“IR Agency”). Pursuant to the consulting agreement, IR Agency agreed
to provide certain marketing and advertising services to communicate information about the Company to the financial community,
including, but not limited to, creating personnel profiles, media distribution and building a digital community with respect to the
Company. As consideration for the performance of the services, the Company paid the IR Agency $
On
September 15, 2025, the Company, entered into another consulting agreement with the IR Agency to continue the services contracted
for in April 2025. As consideration for the performance of the services, the Company paid the IR Agency an additional $
| 23 |
On
December 16, 2024, the Company entered into a sponsored research agreement (the “Sponsored Research Agreement”) with the
Regents of the University of California, on behalf of its San Francisco campus (the “UCSF”), pursuant to which UCSF’s
employees will conduct research on a project entitled “Investigation of 18F-fluorodeboronation method for PSMA targeting ligand
radiolabeling and evaluation in prostate cancer models” (the “Research Program”). Under the terms of the Sponsored
Research Agreement, the Company will bear the total cost of $
In
January 2025, the Company entered into a change order to its existing agreement with Theradex Systems, Inc., the Company’s primary
third-party CRO, for purposes of supporting the Company’s clinical trials of Ropidoxuridine. Following the change order, the Company’s
total cost limit increased by $
In
March 2025, the Company entered into a consulting services agreement (the “Consulting Agreement”) with Bowery Consulting
Group Inc. (the “Consultant”). According to the Consulting Agreement, the Consultant will provide consulting services in
connection with the Company’s business, advising on viability of plans for scaling activities, growth and capital raising strategies,
and costs minimization associated with technological platform improvements and marketing spend. On September 8, 2025, the managing partner of the Consultant was appointed to the Company’s Board of Directors.
As a result, the Consultant became a related party effective as of that date. The Company agreed to pay the Consultant
$
On November 10, 2021, the Company entered into an engagement agreement (“EA”) with Boustead designating Boustead as its exclusive financial advisor for corporate finance activities and subsequently, on August 29, 2022, the Company entered into an underwriting agreement with Boustead in conjunction with the Company’s IPO. The EA contained an up to three-year right of first refusal (“ROFR’) and the Underwriting Agreement, which overrode conflicting terms in the EA, contained a two-year ROFR following the September 2, 2022 closing of the Company’s IPO. Further, Boustead also had a ROFR in conjunction with the Company’s terminated rights offering, which provided Boustead with a ROFR through February 7, 2025. Following the Company’s engagement agreement and underwriting agreement with WestPark Capital dated February 10, 2025 and March 13, 2025, respectively, Boustead asserted it has ROFR rights, demanding termination of WestPark’s engagement and claiming entitlement to compensation under the Boustead EA. As of the reporting date, there are no conditions indicating a loss has been incurred, nor does the Company believe a loss is probable and reasonably estimable, therefore no accrual for a potential loss has been recorded.
The Company is, from time to time, involved in various legal proceedings relating to claims arising in the ordinary course of its business. Neither the Company nor any of its subsidiaries is a party to any such legal proceeding the outcome of which, individually or in the aggregate, is expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.
Note 9 – Business Segment Information
The Company operates as one operating segment with a focus on products designed to address limitations of the current cancer therapies and extend new applications of radiation therapy. The CEO, as our chief operating decision maker (CODM), manages and allocates resources to the operations of the Company on a consolidated basis, considering primarily research and development expenditures, cash burn and net loss. This enables the CEO to assess our overall level of available resources and determine how best to deploy these resources across products and research and development projects in line with the longer-term Company-wide strategic goals. In March 2025, the Company appointed an Interim CEO, who assumed the role of CODM. Our former CEO continued to chair the Company’s Board of Directors and serve in a corporate role as Chief Scientific Officer until his retirement on May 9, 2025. This appointment did not result in any immediate changes to the reporting metrics that the CODM uses to manage and allocate resources to the operations of the Company.
| 24 |
The
accounting policies of our reportable segment are the same as those described in the “Summary of Significant Accounting Policies”
for the Company. All costs, research and development expenses, general and administrative expenses, other operating expenses, interest
expense, depreciation, corporate overhead assets (workforce, intellectual property, etc.) are fully allocated to the Company’s
one segment. Significant segment expenses include payroll and costs incurred for the Company’s primary third-party contract research
organization (“CRO”). During the three and nine months ended September 30, 2025 and 2024, the Company incurred payroll expenses
classified in our unaudited condensed consolidated statements of operations as research and development of $
Note 10 – Subsequent Events
In
October and November 2025, the Company issued a total of
In
October 2025, the October 2024 Convertible Bridge Notes converted into
On
October 15, 2025, the Company received a letter from Theradex Systems, Inc. (“Theradex”), the Company’s primary
third-party contract research organization, providing written notice of termination of the master agreement, dated November 1, 2018,
between the Company and Theradex, and all work orders thereunder, and demanding immediate payment of all outstanding amounts owed
thereunder in the aggregate amount of $
On
October 20, 2025, the Company entered into a binding term sheet with 1542770 BC Ltd. (“Molecule”). The term sheet sets forth
the material business terms of a transaction under which the Company or its affiliate will purchase from Molecule substantially all of
Molecule’s assets and liabilities for a purchase price of $
On
November 3, 2025, the Company entered into a securities purchase agreement with the purchaser, pursuant to which the Company agreed
to issue and sell to the purchaser in a private placement transaction (the “November 2025 Offering”) a pre-funded
warrant to purchase up to
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Result of Operations (the “MD&A”) should be read in conjunction with our unaudited financial statements and the related notes thereto included elsewhere in this Quarterly Report and our financial statement and related notes contained in our annual report on From 10-K for the fiscal year ended December 31, 2024. The MD&A contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this report. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors including, but not limited to, those noted under “Risk Factors” in this report and in our annual report on Form 10-K for the fiscal year ended December 31, 2024.
We do not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this report, except as required by U.S. federal securities laws.
Overview
Founded by Georgetown University Medical School faculty members, Shuttle Pharmaceuticals Holdings, Inc. is a discovery and development stage pharmaceutical company leveraging our proprietary technology to develop novel therapies that are designed to cure cancer. Originally formed as Shuttle Pharmaceuticals, LLC in 2012, our goal is to extend the benefits of cancer treatments by leveraging insights into cancer therapy with surgery, radiation therapy, chemotherapy and immunotherapy. While there are several therapies being developed with the goal of curing cancer, one of the most effective and proven approaches to this is radiation therapy (“RT”). We are developing a pipeline of products designed to address the limitations of the current standard of cancer therapies. We believe that our product candidates will enable us to deliver cancer treatments that are safer, more reliable and at a greater scale than that of the current standard of care.
Operations to date have focused on continuing our research and development efforts to advance Ropidoxuridine clinical testing and improved drug formulation, to advance HDAC6 inhibitor (SP-2-225) preclinical development and explore the application of the PC-RAD Test, predictive biomarkers of radiation response. The clinical development of Ropidoxuridine has included completion of a Phase I clinical trial to establish drug bioavailability and a maximum tolerated dose for use in Phase II clinical trials. TCG GreenChem, with whom we have contracted for process research, development and cGMP compliant manufacture of IPdR, has manufactured the API of Ropidoxuridine and the University of Iowa Pharmaceuticals has formulated the drug product for use in our upcoming Phase II clinical trial in brain cancer patients undergoing radiation therapy. The drug product (capsules) were shipped to CRO Theradex Oncology and distributed to clinical trial sites that are fully approved to enroll patients in the trial. Shuttle received approval from the FDA to begin the clinical trial. The FDA thereafter made recommendations to expand the clinical trial to include a randomized dose “optimization” step and we agreed with the recommendation. Meetings with engaged clinical sites to review the protocol documents have occurred and FDA required IRB approvals have been received. With FDA recommended changes incorporated into the revised protocol and the completion of site initiation visits, we commenced our Phase II clinical study in October 2024. The Company’s radiation biomarker project and the health disparities project have been completed and we are proceeding with plans for clinical validation and potential for commercialization of Ropidoxuridine as a radiation sensitizer.
On October 15, 2025, the Company received a letter from Theradex Systems, Inc., providing written notice of termination of the master agreement, dated November 1, 2018 (the “Master Agreement”), between us and Theradex, and all work orders thereunder, and demanding immediate payment of all outstanding amounts owed thereunder in the aggregate amount of $1.1 million. The Company has accrued for the outstanding amount and it is included in accounts payable and accrued expenses on the condensed consolidated balance sheet as of September 30, 2025.
The potential termination of the Theradex Master Agreement and execution of a letter of intent with Molecule.ai disclosed elsewhere in this filing introduces uncertainty regarding the continuity and timing of our clinical trials and strategic business direction. We are currently evaluating options and alternatives and assessing potential business impacts, all of which could materially affect our plans and financial position. This evaluation is ongoing and management has made no specific decisions or commitments other than disclosed herein.
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Nasdaq Listing Compliance
On December 31, 2024, we received a letter from the Nasdaq Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) stating that for the 30 consecutive business day period between November 15, 2024 to December 30, 2024 our common stock had failed to maintain a minimum closing bid price of $1.00 per share, as required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), we have a period of 180 calendar days, or until June 30, 2025 (the “Compliance Period”), to regain compliance with the Minimum Bid Price Requirement. To regain compliance, the closing bid price of our common stock must meet or exceed $1.00 per share for a minimum of 10 consecutive business days.
Following the March 2025 $5.75 million equity financing, on March 14, 2025, Nasdaq acknowledged that we had regained compliance with the Listing Rule 5550(b)(1) but indicated that if we fail to evidence compliance upon filing the March 31, 2025 Form 10-Q, we may be subject to delisting. We have evidenced compliance through maintaining a minimum closing bid price of our common stock of $1.00 per share or greater from June 16, 2025 to July 1, 2025. Accordingly, we have regained compliance with Listing Rule 5550(a)(2).
On June 16, 2025, in order to maintain the Minimum Bid Price Requirement again, we effectuated a 1-for-25 reverse stock split of our issued and outstanding common stock, rounding up to account for any fractional shares. The reverse stock split had no effect on our authorized shares of common stock or preferred stock and the par value will remain unchanged at $0.00001, respectively. All common stock share, option, warrant and per share amounts (except our authorized but unissued shares and previously reserved shares) have been retroactively adjusted in these unaudited condensed consolidated financial statements and related disclosures.
On July 2, 2025, we received notification from Nasdaq acknowledging that we maintained the requisite minimum closing bid price of our common stock of $1.00 per share or greater. Accordingly, we regained compliance with Listing Rule 5550(a)(2), and the matter was closed.
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Results of Operations
Comparison of the three months ended September 30, 2025 and 2024
The following table summarizes the results of our operations:
| Three Months Ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Revenue | $ | — | $ | — | $ | — | — | |||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 943,478 | 1,400,564 | (457,086 | ) | (33 | )% | ||||||||||
| General and administrative | 886,055 | 328,995 | 557,060 | 169 | % | |||||||||||
| Legal and professional | 437,409 | 1,322,002 | (884,593 | ) | (67 | )% | ||||||||||
| Total operating expenses and loss of operations | 2,266,942 | 3,051,561 | (784,619 | ) | (26 | )% | ||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense - related parties | (721 | ) | (2,137 | ) | 1,416 | (66 | )% | |||||||||
| Interest expense | (18,183 | ) | (270,538 | ) | 252,355 | (93 | )% | |||||||||
| Interest income | 486 | 2,524 | (2,038 | ) | (81 | )% | ||||||||||
| Change in fair value of derivative liabilities | 2,427 | 286,316 | (283,889 | ) | (99 | )% | ||||||||||
| Change in fair value of convertible notes | (64,369 | ) | — | (64,369 | ) | 100 | % | |||||||||
| Gain on sale of marketable securities | — | 56,398 | (56,398 | ) | (100 | )% | ||||||||||
| Change in fair value of marketable securities | — | (42,898 | ) | 42,898 | (100 | )% | ||||||||||
| Loss on settlement of convertible debt | — | (762,186 | ) | 762,186 | (100 | )% | ||||||||||
| Total other expense | (80,360 | ) | (732,521 | ) | 652,161 | (89 | )% | |||||||||
| Net loss | $ | (2,347,302 | ) | $ | (3,784,082 | ) | $ | 1,436,780 | (38 | )% | ||||||
Research and Development. Total research and development (“R&D”) expense was $0.9 million for the three months ended September 30, 2025, as compared to $1.4 million to the three months ended September 30, 2024. The decrease in total R&D expense of $0.5 million, or 33%, is primarily related to a $0.5 million decrease in subcontractor expenses and $0.2 million decrease in R&D compensation related expenses in the three months ended September 30, 2025 compared to the three months ended September 30, 2024. Subcontractor expense made up 78% of total R&D expenses in the three months ended September 30, 2025 and 73% of total R&D expenses during the three months ended September 30, 2024. R&D compensation related expenses were $0.2 million in the three months ended September 30, 2025 as compared to $0.3 million in the three months ended September 30, 2024. For the three months ended September 30, 2025, R&D compensation related expenses were 16% as a percent of total R&D expense, representing a decrease from the 22% of total R&D incurred in the three months ended September 30, 2024. The decrease is largely attributable to the lower employee headcount year over year and retirement of our CSO.
General and Administrative Expenses. General and administrative expenses in the three months ended September 30, 2025 increased by $0.6 million, or 169%, from $0.3 million in the three months ended September 30, 2024 to $0.8 million in the three months ended September 30, 2025. The increase in general and administrative expenses was primarily due to costs associated with advertising for investor relations of $0.5 million for the three months ended September 30, 2025.
Legal and Professional Expenses. During the three months ended September 30, 2025, legal and professional expenses decreased by $0.9 million or 67% compared to the same period in 2024. The decrease in legal and professional fees was primarily due to higher accounting expenses in the three months ended September 30, 2024 compared to the three months ended September 30, 2025 related to the restatement and reaudit of the Company’s financial statements, which occurred and concluded in 2024.
Other Expense. During the three months ended September 30, 2025, other expense decreased by $0.7 million or 89% compared to the same period in 2024. The decrease was primarily driven by a $0.3 million decrease in interest expense, $0.8 million decrease in loss on settlement of convertible debt, partially offset by a $0.3 million decrease in change in fair value of derivative liabilities, $0.1 million decrease in loss on change in fair value of convertible notes, and $0.1 million decrease in gain on sale of marketable securities.
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Comparison of the nine months ended September 30, 2025 and 2024
The following table summarizes the results of our operations:
| Nine Months Ended | ||||||||||||||||
| September 30, | ||||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Revenue | $ | — | $ | — | $ | — | — | |||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | 3,542,953 | 2,632,387 | 910,566 | 35 | % | |||||||||||
| General and administrative | 3,829,264 | 963,642 | 2,865,622 | 297 | % | |||||||||||
| Legal and professional | 1,756,372 | 2,323,013 | (566,641 | ) | (24 | )% | ||||||||||
| Total operating expenses and loss of operations | 9,128,589 | 5,919,042 | 3,209,547 | 54 | % | |||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense - related parties | (8,730 | ) | (2,137 | ) | (6,593 | ) | 309 | % | ||||||||
| Interest expense | (43,847 | ) | (1,198,738 | ) | 1,154,891 | (96 | )% | |||||||||
| Interest income | 567 | 38,135 | (37,568 | ) | (99 | )% | ||||||||||
| Change in fair value of derivative liabilities | 16,743 | 340,405 | (323,662 | ) | (95 | )% | ||||||||||
| Change in fair value of convertible notes | 57,082 | — | 57,082 | 100 | % | |||||||||||
| Gain on sale of marketable securities | — | 100,118 | (100,118 | ) | (100 | )% | ||||||||||
| Change in fair value of marketable securities | — | (71,568 | ) | 71,568 | (100 | )% | ||||||||||
| Loss on settlement of convertible debt | — | (833,501 | ) | 833,501 | (100 | )% | ||||||||||
| Total other (expense) income | 21,815 | (1,627,286 | ) | 1,649,101 | (101 | )% | ||||||||||
| Net loss | $ | (9,106,774 | ) | $ | (7,546,328 | ) | $ | (1,560,446 | ) | 21 | % | |||||
Research and Development. Research and development (“R&D”) expense was $3.5 million for the nine months ended September 30, 2025, as compared to $2.6 million for nine months ended September 30, 2024. The increase of $0.9 million, or 35%, is primarily related to the Company having completed production of the drug product and the start of work related to the initiation of trials including contract research organization (“CRO”) expenses, clinical trial sites, other regulatory activities.
R&D compensation related expenses were $1.0 million in the nine months ended September 30, 2025 as compared to $0.9 million in the nine months ended September 30, 2024. For the nine months ended September 30, 2025, R&D compensation related expenses were 29% as a percent of total R&D expense, representing a decrease from the 36% of total R&D incurred in the nine months ended September 30, 2024. The decrease in R&D compensation related expenses is largely attributable to the retirement of our former CEO and Chief Scientific Officer in early May 2025. Subcontractor expense made up 67% of total R&D expenses in the nine months ended September 30, 2025 and 38% of total R&D expenses during the nine months ended September 30, 2024.
General and Administrative Expenses. General and Administrative expenses in the nine months ended September 30, 2025 increased by $2.9 million, or 297% from $1.0 million in the nine months ended September 30, 2024 to $3.8 million in the nine months ended September 30, 2025. The increase in general and administrative expenses was primarily due to costs associated with advertising for investor relations and filing expenses of $2.5 million, $0.3 million increase in general and administrative stock-based compensation expense, and other administrative costs.
Legal and Professional Expenses. During the nine months ended September 30, 2025, legal and professional expenses decreased by $0.6 million or 24%. The decrease in legal and professional fees was primarily due to higher expenses related to our public filing requirements including the restatement and reaudit of the Company’s financial statements, contracts and financing related work that occurred in the nine months ended September 30, 2024 than compared to the nine months ended September 30, 2025.
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Other Income (expense). During the nine months ended September 30, 2025, other income (expense) decreased by $1.6 million or 101% compared to the same period in 2024. The decrease was primarily driven by a $1.2 million decrease in interest expense, $0.1 million increase in the change in fair value of convertible notes, $0.1 million increase in the change in fair value of marketable securities, $0.8 million decrease in the loss on settlement of convertible debt, partially offset by $0.3 million decrease in the change in fair value of derivative liabilities, and a $0.1 million decrease in the gain on sale of marketable securities.
The potential termination of the Theradex Master Agreement and execution of a letter of intent with Molecule.ai disclosed elsewhere in this filing introduces uncertainty regarding the continuity and timing of our clinical trials and strategic business direction. We are currently evaluating options and alternatives and assessing potential business impacts, all of which could materially affect our plans and financial position. This evaluation is ongoing and management has made no specific decisions or commitments other than disclosed herein.
Liquidity and Capital Resources
Our unaudited condensed consolidated financial statements are prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. We have incurred losses since inception and had a net loss of $9.1 million and no revenues generated during the nine months ended September 30, 2025 and working capital of approximately $1.3 million as of September 30, 2025. We do not expect to generate positive cash flows from operating activities in the near future.
In January 2025, we entered into a change order to the existing agreement with Theradex Systems, Inc., our primary third-party CRO, for purposes of supporting our clinical trials of Ropidoxuridine. Following the change order, our total cost limit increased by $3.0 million, for an aggregate of $5.3 million, of which $0.6 million had not yet been incurred as of September 30, 2025. On October 15, 2025, the Company received a letter from Theradex Systems, Inc., providing written notice of termination of the master agreement, dated November 1, 2018 (the “Master Agreement”), between us and Theradex, and all work orders thereunder, and demanding immediate payment of all outstanding amounts owed thereunder in the aggregate amount of $1.1 million. The Company has accrued for the outstanding amount and it is included in accounts payable and accrued expenses on the condensed consolidated balance sheet as of September 30, 2025. The termination of the Master Agreement with Theradex introduces uncertainty regarding the continuity and timing of our Ropidoxuridine clinical trials, as Theradex was our primary CRO. We are currently evaluating options and alternatives and assessing the potential impact on business, which could materially affect our development plans and financial position.
In March 2025, we entered into a consulting services agreement (the “Bowery Consulting Agreement”) with Bowery Consulting Group Inc. (the “Consultant”). According to the Bowery Consulting Agreement, the Consultant will provide consulting services in connection with our business, advising on viability of plans for scaling activities, growth and capital raising strategies and cost minimization associated with technological platform improvements and marketing spend. On September 8, 2025, the managing partner of the Consultant was appointed to the Company’s Board of Directors. As a result, the Consultant became a related party effective as of that date. We agreed to pay the Consultant $260,000 for their services, which we are not obligated to pay until we regain full Nasdaq listing requirement. We received notice from Nasdaq on July 2, 2025 that we had regained compliance with the listing requirement and have since paid the fee.
On April 3, 2025, the Company entered into a consulting agreement with the IR Agency LLC (the “IR Agency”). Pursuant to the consulting agreement, IR Agency agreed to provide certain marketing and advertising services to communicate information about the Company to the financial community, including, but not limited to, creating company profiles, media distribution and building a digital community with respect to the Company. As consideration for the performance of the Services, the Company paid the IR Agency $2.0 million on April 5, 2025. The term of the consulting agreement was three months starting on April 3, 2025. For the nine months ended September 30, 2025, the Company incurred $2.0 million of costs under the consulting agreement.
On September 15, 2025, the Company entered into another consulting agreement with the IR Agency. Pursuant to the consulting agreement, IR Agency agreed to provide marketing and advertising services to communicate information about the Company to the financial community, including, but not limited to, creating company profiles, media distribution and building a digital community with respect to the Company. As consideration for the performance of the Services, the Company paid the IR Agency $1,450,000. The term of the consulting agreement will be two months. For the three months ended September 30, 2025, the Company incurred $0.5 million of costs under the consulting agreement.
On October 2025, the Company converted the October 2024 Convertible Bridge Notes into 117,612 shares of common stock due to reaching maturity. The Convertible Bridge Notes converted at a share price of $6.38, which is the conversion price with a 15% discount per the Convertible Bridge Notes’ terms. See Note 5 for more information.
Our ability to continue as a going concern is dependent upon our ability to continue to successfully raise additional equity or debt financing to allow us to fund ongoing operations, conduct clinical trials and bring a drug candidate to commercialization to generate revenues. These conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements contained in the report are issued.
Recent Financings
On February 27, 2025, we entered into a Revolving Loan Agreement (the “Revolving Loan Agreement”) with a single lender. Pursuant to and under the terms of the Revolving Loan Agreement, we issued a revolving note dated February 28, 2025 in the principal amount of up to $2.0 million (the “Revolving Note”), which we may draw upon at our discretion from time to time through its maturity on February 28, 2026. The Revolving Note bears interest at the rate of 18% per annum calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue interest daily commencing from the date of any draw down until paid in full.
On March 12, 2025, we consummated a public offering of an aggregate of (i) 53,637 shares of common stock, of the Company, at a public offering price of $7.50 per share and (ii) pre-funded warrants to purchase 713,030 shares of common stock at an exercise price of $0.025 per share, at a public offering price of $7.48 per pre-funded warrant (the “Offering”). The Offering closed on March 13, 2025. We received gross proceeds of approximately $5.7 million and net proceeds of approximately $5.0 million, reflecting approximately $0.7 million of legal costs and other expenses connected with the Offering.
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On June 20, 2025, we consummated a private placement of an aggregate of (i) 21,924 shares of common stock, of the Company, at a purchase price of $3.60 per share and (ii) pre-funded warrants to purchase 1,158,953 shares of common stock at an exercise price of $0.001 per share, at a purchase price of $3.599 per pre-funded warrant. The private placement closed on June 24, 2025. We received gross proceeds of approximately $4.3 million and net proceeds of approximately $3.9 million, reflecting approximately $0.4 million of legal costs and other expenses connected with the private placement.
On November 3, 2025, the Company entered into a securities purchase agreement with the purchaser, pursuant to which the Company agreed to issue and sell to the purchaser in a private placement transaction (the “November 2025 Offering”) a pre-funded warrant to purchase up to 625,156 shares of common stock of the Company, par value $0.00001 per share for aggregate gross proceeds of approximately $2.5 million, before deducting placement agent fees to WestPark Capital, Inc. and offering expenses payable by the Company. The November 2025 Offering closed on November 4, 2025. The Company intends to use the net proceeds from the November 2025 Offering for marketing, general corporate purposes and working capital purposes.
Balance Sheet Data:
| September 30, | December 31, | |||||||||||||||
| 2025 | 2024 | Change | % | |||||||||||||
| Current assets | $ | 3,265,913 | $ | 2,210,917 | $ | 1,054,996 | 48 | % | ||||||||
| Current liabilities | 1,964,910 | 1,533,769 | 431,141 | 28 | % | |||||||||||
| Working capital | $ | 1,301,003 | $ | 677,148 | $ | 623,855 | 92 | % | ||||||||
As of September 30, 2025, total current assets were $3.3 million and total current liabilities were $2.0 million, resulting in working capital of $1.3 million. As of December 31, 2024, total current assets were $2.2 million and total current liabilities were $1.5 million, resulting in a working capital of $0.7 million. The Company’s current assets as of September 30, 2025 are comprised of $2.1 million of cash and cash equivalents and $1.2 million of prepaid expenses and other current assets, with the increase from December 31, 2024 being primarily due to the March 2025 equity raise that provided $5.0 million in net cash and the June 2025 private placement that provided $3.9 million in net cash.
In addition, we continued progress on our R&D programs during the nine months ended September 30, 2025 that resulted in increased cash expenditures. The Company’s current liabilities as of September 30, 2025 are primarily comprised of $1.5 million of accounts payable and accrued expenses and $0.4 million of convertible notes payable carried at fair value. The increase in current liabilities is primarily due to an increase in accounts payable and accrued expenses of $0.9 million, partially offset by a $0.1 million decrease in convertible notes payable and a $0.2 million decrease in notes payable to related parties. This is primarily attributable to our efforts to preserve cash while we strive to raise funds to finance ongoing business and operations.
Cash Flows
| Nine Months Ended | ||||||||||||||||
| September 30, | Change | % | ||||||||||||||
| 2025 | 2024 | |||||||||||||||
| Cash used in operating activities | $ | (8,508,633 | ) | $ | (4,637,068 | ) | $ | (3,871,565 | ) | 83 | % | |||||
| Cash provided by investing activities | $ | — | $ | 2,915,765 | $ | (2,915,765 | ) | 100 | % | |||||||
| Cash provided by (used in) financing activities | $ | 8,683,132 | $ | (698,457 | ) | $ | 9,381,589 | (1343 | )% | |||||||
| Cash and cash equivalents on hand | $ | 2,094,643 | $ | 156,656 | $ | 1,937,987 | 1237 | % | ||||||||
Cash Flows from Operating Activities
Our cash flows from operating activities are greatly influenced by our use of cash for operating expenses and working capital requirements to support the business. We have historically experienced negative cash flows from operating activities as we invested in research and development activities. The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges, which are generally attributable to stock-based compensation, changes in fair value of our derivative liabilities, changes in fair value of our convertible notes, and amortization of debt discounts and finance fees, as well as changes in components of operating assets and liabilities, which are generally attributable to increased expenses and timing of vendor payments.
During the nine months ended September 30, 2025, net cash used in operating activities of $8.5 million was primarily due to our net loss of $9.1 million, change in fair value of convertible notes of $0.1 million, and interest payments on convertible notes accounted for at fair value of $0.1 million, partially offset by stock-based compensation of $0.7 million.
During the nine months ended September 30, 2024, net cash flows used in operating activities was $4.6 million, consisting of a net loss of $7.5 million and change in fair value of derivative liabilities of $0.3 million, partially offset by loss on settlement of convertible debt of $0.8 million, amortization of debt discount and finance fees of $1.1 million, accrued interest settled with common stock of $0.1 million, stock-based compensation of $0.2 million, and the net change in operating assets and liabilities of $1.1 million.
Cash Flows from Investing Activities
For the nine months ended September 30, 2025, we did not have cash flows from investing activities. For the nine months ended September 30, 2024, cash provided by investing activities was primarily attributable to $3.0 million in proceeds from the disposition of marketable securities.
Cash Flows from Financing Activities
For the nine months ended September 30, 2025, cash flows from financing activities was primarily comprised of proceeds of $5.4 million from the sale of common stock and pre-funded warrants as part of the March 2025 equity financing, net of placement agent costs of $0.3 million, and proceeds of $4.1 million, from the sale of common stock and pre-funded warrants as part of the June 2025 equity financing, net of placement agent costs of $0.2 million, partially offset by $0.6 million of payments of other issuance costs for issuance of common stock and equity-classified warrants in the March 2025 and June 2025 equity financings, $0.1 million for finance costs, and $0.2 million of repayment of note payable-related party used to finance our ongoing operations. For the nine months ended September 30, 2024, we paid $0.8 million related to payments on a convertible note and $0.1 million for finance costs.
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Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While the significant accounting policies are described in more detail in the notes to the unaudited condensed consolidated financial statements included elsewhere in this report, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.
Our most critical accounting policies and estimates relate to the following:
| ● | Research and Development Expenses | |
| ● | Fair Value of Convertible Notes | |
| ● | Fair Value of Warrant to Purchase Common Stock | |
| ● | Fair Value of Derivative Financial Instruments |
Research and Development Expense
Research and development expenses are charged to expense as incurred. Research and development expenses include, but are not limited to, product development, clinical and regulatory expenses, payroll and other personnel expenses, which may include portions of the Company’s executives to the extent they are actively involved in the research and development activities, materials, supplies, related subcontract expenses, and consulting costs. The periods presented include a portion of the Company’s former chief executive officer (prior to his transition to chief scientific officer), former chief operating officer, former vice president regulatory (formerly the chief financial officer) and directors’ compensation, prior to the individuals’ departures from the Company.
Fair Value of Convertible Notes
As permitted under ASC 825, Financial Instruments (“ASC 825”), we elected the fair value option to account for the October 2024 Convertible Bridge Notes. In prior periods, the valuation of the October 2024 Convertible Bridge Notes utilized a Monte Carlo simulation model. Monte Carlo simulation models require the use of simulations that are weighted based on projected future stock prices, the volatility of a set of guideline companies and significant unobservable inputs including probabilities assigned to not achieving a successful capital raise and a registration of related securities. Each simulation is based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average.
The significant inputs and assumptions used to estimate the fair value also include: (i) the expected timing of conversion, (ii) the amount subject to equity conversion, (iii) the sum of the notes’ principal and unpaid accrued interest, (iv) expected volatility, (v) risk-free interest rate, (vi) the discount rate, (vii) volume-weighted average price (“VWAP”), (viii) illiquidity discounts, and (ix) probabilities assigned.
In the current reporting period, the Company calculated the fair value of the October 2024 Convertible Bridge Notes assuming a mandatory conversion due to the relatively short duration between the balance sheet date and the maturities in October 2025. The fair value was determined by calculating the number of shares into which the October 2024 Convertible Bridge Notes will convert in a mandatory conversion scenario, multiplied by the fair value per share of the Company’s common stock at the balance sheet date.
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The October 2024 Convertible Bridge Notes are subject to revaluation at the end of each reporting period, with changes in fair value recognized in the accompanying unaudited condensed consolidated statements of operations, or for changes due to our credit worthiness, if any, as a component of other comprehensive income.
Fair Value of Warrants to Purchase Common Stock
We have issued warrants to investors in our debt and equity offerings. We have also issued warrants to service providers in relation to our financing offerings.
We evaluate all warrants issued to determine the appropriate classification under ASC 480 and ASC 815 (as well as under ASC 718 for warrants issued as share-based payments). In addition to determining classification, we evaluate these instruments to determine if such instruments meet the definition of a derivative.
For warrants that are determined to be equity-classified, we estimate the fair value at issuance and record the amounts to additional paid in capital (potentially on a relative fair value basis if issued in a basket transaction with other financial instruments). Warrants that are equity-classified are not subsequently remeasured unless modified or required to be reclassified as liabilities. For warrants that are determined to be liability-classified, we estimate the fair value at issuance and each subsequent reporting date, with changes in the fair value reported in the unaudited condensed consolidated statements of operations. The classification of all outstanding warrants, including whether such instruments should be recorded as equity, is evaluated at the end of each reporting period.
For warrants with uncertain or more complex terms (such as variability in the warrant shares or exercise price), we may utilize more complex models to address such provisions, including Monte Carlo simulations or Probability-Weighted Expected Return Methods (“PWERM”). Monte Carlo simulation models require the use of simulations that are weighted based on projected future stock prices, the volatility of a set of guideline companies and significant unobservable inputs including probabilities assigned. Each simulation is based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average. PWERM models require the estimate of an entity’s per share value of its common stock at various future outcomes and assigns a probability to each scenario. The value per share is then weighted based on the respective probabilities to determine a weighted-average expected return.
The use of these valuation models requires the input of highly subjective assumptions. Any change to these inputs could produce significantly higher or lower fair value measurements.
Fair Value of Financial Instruments
We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, such as the Acceleration Option in the Alto warrants (as defined in Note 5). For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the unaudited condensed consolidated statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities are evaluated at the end of each reporting period.
For our derivative financial instruments classified as a liability, we use a Monte Carlo valuation model to value the derivative instruments at inception and on subsequent valuation dates. The model requires the use of simulations that are weighted based the volatility of a set of guideline companies and significant unobservable inputs including probabilities assigned. Each simulation is based on the range of inputs in a scenario with the mean of the output on each simulation calculated as an average. The Monte Carlo simulation uses an implied VWAP for valuation. The implied VWAP was back solved by setting the summation of the parts (e.g., derivatives and debt without derivatives) equal to the cash proceeds and is updated each period.
The use of Monte Carlo valuation models require key inputs, some of which are based on estimates and judgments by management. Any change to these key inputs could produce significantly higher or lower fair value measurements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company,” we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures (as defined in Securities Exchange Act of 1934, as amended, or the Exchange Act Rule 15d-15(e)) are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As of September 30, 2025, our management carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Such evaluation was carried out under the supervision of our Chief Executive Officer and our Chief Financial Officer, and our third-party financial service provider. Based on this evaluation, management concluded that our disclosure controls and procedures were, and continue to be, ineffective as of September 30, 2025. Based on the foregoing, our management concluded that our internal controls over the following financial reporting areas to be material weaknesses:
| ● | Our written policies and procedures over accounting transaction processing and period end financial close and reporting are limited, which has resulted in ineffective oversight in the establishment of proper monitoring controls over accounting and financial reporting; in addition, we lacked sufficient review and segregation of duties for certain financial transactions, manual journal entries, and critical financial spreadsheets, such that a proper review had not been performed by someone other than preparer, and that process documentation is lacking for review and monitoring controls over accounting and financial reporting. These were contributing factors which led to untimely filings for certain periods in fiscal year 2024. |
| ● | We identified findings related to overall information technology general controls (“ITGCs”) including issues with super-user access and segregation of duties for systems supporting the Company’s internal control processes and controls. |
| ● | We identified deficiencies in our entity level controls specifically related to timely communication of material contracts and other communications for consideration in the Company’s accounting and financial reporting processes. |
Management’s Remediation Measures
While the Company has improved its organizational capabilities, the Company’s remediation efforts will continue to take place. Management is committed to maintaining a strong internal control environment. In response to the identified material weaknesses in the overall control environment, management is currently implementing additional measures which include:
| ● | Hired a new Chief Financial Officer during the second quarter of 2024 to bolster the Company’s internal technical accounting and financial reporting experience and provide bandwidth for the prior Chief Financial Officer to focus on the Company’s expanding clinical trial. |
| ● | Engaged a third-party consulting firm to assist with the preparation of SEC reporting and other technical accounting matters. |
| ● | Redesigned and implemented certain management review controls around the proper classification of operating expenses as research and development and general and administrative. |
| ● | Redesigned and implemented formal communication by the Compensation Committee to and review of approved grants by executive management. |
| ● | Committed to more formal and disciplined approach to significant actions and decisions made by the Board with the inclusion of the Company’s Chief Financial Officer. |
The Company will continue to review and improve its internal controls over financial reporting to address the underlying causes of the material weaknesses and control deficiencies. Such material weaknesses and control deficiencies will not be fully remediated until the Company has concluded that its internal controls are operating effectively for a sufficient period of time.
Changes in Internal Control over Financial Reporting
Except for the remediation efforts described above, there has been no change in the Company’s internal control over financial reporting during the three months ended September 30, 2025 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Management will continue to monitor and evaluate the effectiveness of our internal controls and procedures over financial reporting on an ongoing basis and is committed to taking further action and implementing additional improvements as necessary.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We are not party to, and our property is not the subject of, any material legal proceedings.
Item 1A. Risk Factors.
As a smaller reporting company, we are not required to provide the information required by this item.
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.
During
the quarter ended September 30, 2025, none of our directors or executive officers
Item 6. Exhibits.
The following exhibits are filed or furnished with this report:
| Exhibit No. | Description of Exhibit | |
| 10.1 | The Consulting Agreement, dated September 15, 2025, between Shuttle Pharmaceuticals Holdings, Inc. and IR Agency LLC (incorporated by reference to the Current Report on Form 8-K filed on September 22, 2025). | |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | |
| 32.1 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ** | |
| 32.2 | Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ** | |
| 101 | Inline XBRL Document Set for the financial statements and accompanying notes in Part I, Item 1, of this Quarterly Report on Form 10-Q. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith.
**Furnished herewith.
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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.
| SHUTTLE PHARMACEUTICALS HOLDINGS, INC. | ||
| November 13, 2025 | By: | /s/ Christopher Cooper |
| Christopher Cooper | ||
| Interim Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| November 13, 2025 | By: | /s/ Timothy J. Lorber |
Timothy J. Lorber Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
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FAQ
What were SHPH’s Q3 2025 results?
What is SHPH’s cash position as of September 30, 2025?
What financings did SHPH complete in 2025?
What happened after quarter end regarding financing?
Did SHPH disclose a going concern risk?
How many shares were outstanding?
What strategic transaction was announced?
