Dermata Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. The unaudited filing was signed November 9, 2023. Dermata is a clinical-stage biotechnology company developing topical treatments for skin conditions; it has no approved products and has generated no product revenue.
Financial performance and position
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $0.90 million | $1.55 million | $2.93 million | $4.76 million |
| General and administrative | $0.91 million | $0.89 million | $2.89 million | $3.20 million |
| Total operating expenses | $1.81 million | $2.45 million | $5.82 million | $7.96 million |
| Net loss | $1.72 million | $2.42 million | $5.66 million | $7.94 million |
| Net loss per share, basic and diluted | $0.54 | $3.16 | $2.46 | $11.96 |
| Net cash used in operating activities | Not separately provided | Not separately provided | $5.26 million | $7.01 million |
At September 30, 2023, cash and cash equivalents were $6.63 million, total assets were $7.32 million, total liabilities were $0.92 million, and stockholders’ equity was $6.41 million. The balance sheet reports no debt. No meaningful operating margin is available because the company had no revenue.
Changes and financing
- For the first nine months, net loss narrowed by $2.28 million year over year, primarily as R&D expenses fell $1.83 million and G&A fell $0.31 million; interest income increased by $0.14 million.
- Q3 R&D decreased $0.65 million year over year, mainly because the DMT310 rosacea study had been completed in late 2022 and nonclinical costs declined. CMC spending increased in preparation for the DMT310 Phase 3 program.
- Financing activities provided $5.65 million in the first nine months, including approximately $4.2 million net proceeds from a March public offering and $1.5 million from a May private placement. Cash increased $0.39 million over the period.
- Common shares outstanding were 3,189,034 at September 30, versus 770,115 at December 31, 2022. The filing reports 4,643,555 warrants outstanding; potential exercise and future financing could dilute shareholders.
Outlook, risks and contingencies
- Management estimated existing cash would fund operations into the second quarter of 2024, but stated substantial doubt exists about the company’s ability to continue as a going concern for the one-year period following issuance of the financial statements. Additional capital is needed; financing or collaboration may not be available on acceptable terms or at all.
- Management expected continued losses and planned to focus near term on DMT310 for acne, including Phase 3 development. The company said it had amended trial protocols following FDA feedback and planned to initiate the Phase 3 program in the second half of 2023, subject to final FDA approval. The filing provides no later confirmation of initiation.
- DMT310’s development and supply depend on Spongilla raw material from a Russian supplier. The company said existing inventory was sufficient to initiate and complete two Phase 3 acne studies and support a potential NDA, but sanctions or export controls could restrict additional supply.
- DMT410 development depends on identifying a botulinum-toxin partner for potential Phase 2 studies. The company also described continued development of DMT310 for psoriasis.
- Potential future milestone payments under the Villani license agreement total up to $40.5 million upon specified development and sales milestones, plus single-digit royalties on net sales. No material legal proceedings were reported. Management reported effective disclosure controls and no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether Dermata raised additional capital after the filing and whether its stated cash runway and going-concern position changed.
- Whether the FDA granted final approval for the amended DMT310 Phase 3 protocols and whether the studies began, including timelines and funding needs.
- Current cash burn, clinical and CMC spending, and any changes to the company’s cash runway assumptions.
- Whether supply from the Russian counterparty remains available and whether alternative sourcing has been established.
- Current share count, warrant terms and exercises, and the potential dilution from outstanding securities.