Filing summary
Entity note: The supplied filing is Vallon Pharmaceuticals, Inc.’s Form 10-Q, not a filing for GRI Bio, Inc. It reports the quarter and nine months ended September 30, 2021.
Business context
Vallon is a clinical-stage biopharmaceutical company developing abuse-deterrent CNS medications. Its lead candidate, ADAIR, is an abuse-deterrent formulation of immediate-release dextroamphetamine for ADHD and narcolepsy; ADMIR is a planned abuse-deterrent methylphenidate candidate. The company had no product sales and stated it did not expect significant revenue in the foreseeable future.
Financial performance and position
Amounts below are in millions of dollars unless noted.
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | None | None | None | $0.1 |
| Research and development expense | $0.2 | $0.7 | $3.2 | $2.4 |
| General and administrative expense | $1.0 | $0.3 | $3.0 | $1.0 |
| Net loss | $1.3 | $1.0 | $6.2 | $3.4 |
| Operating cash used | Not presented | Not presented | $6.7 | $2.9 |
At September 30, 2021, cash and cash equivalents were $5.9 million and available-for-sale marketable securities were $3.3 million, totaling approximately $9.1 million in cash, cash equivalents and marketable securities. Total assets were $10.1 million, total liabilities $1.4 million, and stockholders’ equity $8.7 million. The balance sheet reported no note payable at quarter-end. The filing does not provide a meaningful operating margin given the absence of product revenue.
For the first nine months, investing activities used $3.3 million, primarily to purchase marketable securities; financing activities provided $15.8 million, mainly from the February IPO. The IPO generated approximately $15.5 million in net proceeds. The company reported an accumulated deficit of $18.8 million.
Material changes and outlook
- Q3 R&D expense fell by $0.5 million year over year, primarily because ADAIR registration-development costs decreased. Nine-month R&D rose by $0.8 million, mainly due to ADAIR development.
- Q3 G&A expense increased by $0.7 million year over year; the filing attributes the increase chiefly to directors’ and officers’ insurance, personnel and public-company costs. Nine-month G&A increased by $2.0 million.
- Management expected existing cash and securities to fund activities into the third quarter of 2022, but said substantial additional financing would be required. The filing states there is substantial doubt about the company’s ability to continue as a going concern.
- The pivotal SEAL intranasal abuse study of ADAIR was underway; management expected the final patient visit and treatment completion in Q1 2022. The filing gives no revenue or earnings guidance.
- Vallon’s European licensee, Medice, has exclusive ADAIR rights in Europe and may owe regulatory and sales milestones and tiered royalties. No license revenue was recognized in the first nine months of 2021.
Risks, contingencies and unusual items
- The company remains dependent on raising capital; failure to obtain financing on acceptable terms could force it to reduce or discontinue operations.
- COVID-19-related uncertainty may disrupt clinical enrollment, trial sites, regulators, contract manufacturers and supply chains, and may affect access to capital.
- The $0.35 million convertible notes issued in January converted into 54,906 common shares upon the IPO. The PPP loan was forgiven, resulting in $0.06 million of other income; remeasurement of the notes’ embedded derivative produced an $0.09 million expense.
- A putative California class action filed November 1, 2021 alleges the company’s website is inaccessible to vision-impaired users. Plaintiffs seek injunctive relief and damages, with total recovery capped at $74,999; the company says the claim is without merit.
- Management reported disclosure controls and procedures were effective as of September 30, 2021 and said it was taking steps to remediate previously disclosed material weaknesses in internal control over financial reporting.
Important facts for investors to verify
- Confirm the issuer identity: this is Vallon Pharmaceuticals, Inc., despite the request metadata naming GRI Bio, Inc.
- Track cash burn, financing availability and the stated cash runway into Q3 2022, including whether further capital raises occur.
- Verify ADAIR SEAL study timing, results and subsequent regulatory plans, as well as any delays or changes to ADMIR development.
- Review the financial impact and resolution of the website-accessibility lawsuit and progress on internal-control remediation.