Dermata Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Dermata is a clinical-stage biotechnology company developing treatments for skin conditions; it reported no product revenue and has not commercialized a product.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $1.60 million | $0.68 million |
| General and administrative expense | $1.19 million | $1.58 million |
| Total operating expenses | $2.79 million | $2.26 million |
| Net loss | $2.79 million | $2.30 million |
| Net loss per share | $0.33 | $1.21 |
| Cash used in operations | $2.61 million | $0.78 million |
At March 31, 2022, cash was $8.19 million, total assets were $9.04 million, total liabilities were $1.19 million, and accumulated deficit was $38.77 million. The company had no debt outstanding. No gross margin or operating margin is meaningful because it had no revenue.
Changes versus prior year
- R&D expense rose $0.92 million, mainly due to higher costs for the DMT310 rosacea study and increased employee and consulting costs; lower stock-based compensation partly offset the increase.
- G&A expense fell $0.39 million, primarily because of lower stock-based compensation and legal fees, partly offset by higher insurance, employee, and public-company costs.
- Net loss increased $0.48 million. Operating cash use increased $1.83 million; unlike Q1 2021, the company had no financing cash inflows in Q1 2022.
Outlook, risks, and unusual items
- Management expected March 31 cash to fund operations into Q4 2022. A subsequent April 25, 2022 private placement generated $5.0 million in gross proceeds; with that financing, management expected funding into Q2 2023. The company nevertheless stated that substantial doubt about its ability to continue as a going concern remained.
- Dermata expects continued losses and says it will need additional capital to support clinical development, including planned Phase 3 acne studies. Future financing may not be available on acceptable terms or at all.
- DMT310 is being developed for acne, rosacea, and psoriasis; DMT410 combines the Spongilla technology with botulinum toxin. The filing anticipates another $1.1 million of 2022 R&D expense for an ongoing clinical trial.
- The Spongilla raw-material supplier is a Russian entity. The company reported inventory sufficient to initiate and complete two Phase 3 acne studies and support an NDA filing if successful, but sanctions or export controls could restrict future supply.
- Other disclosed risks include clinical-trial success and timing, regulatory approval, reliance on third-party manufacturers and CROs, capital needs, and possible COVID-19-related disruptions. No material legal proceedings were reported.
- The April financing included common shares, pre-funded warrants, and warrants, creating potential dilution. The filing also reports 4.22 million potentially dilutive securities outstanding at March 31, 2022, excluded from diluted loss per share because they were anti-dilutive.
Investor facts to verify
- Whether the April financing and cash runway assumptions provide adequate funding for planned trials and other obligations.
- Progress, costs, and timing of DMT310 trials, particularly the planned Phase 3 acne program and ongoing rosacea study.
- Availability of Spongilla raw material beyond the inventory described, given the supplier’s location and sanctions risk.
- Potential dilution and financing needs, including the terms and exercise of warrants.
- Whether clinical, regulatory, manufacturing, or other delays alter management’s outlook or going-concern assessment.