UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended June 30, 2024

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

For the transition period from to

Commission File Number 001-36856

HEPION PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware

46-2783806

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification Number)

399 Thornall Street, First Floor

Edison, New Jersey 08837

(Address of Principal Executive Offices)

(732) 902-4000

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		HEPA		The Nasdaq Capital Market

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

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

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

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☐

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

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

The number of shares of the registrant’s Common Stock outstanding as of August 12, 2024 was 5,799,126.

HEPION PHARMACEUTICALS, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited):	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26

PART II—OTHER INFORMATION

Item 1A.	Risk Factors	27
Item 6.	Exhibits	29
SIGNATURES		30

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for Hepion Pharmaceuticals, Inc. may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are characterized by future or conditional verbs such as “may,” “will,” “expect,” “intend,” “anticipate,” believe,” “estimate” and “continue” or similar words. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. Such statements are only predictions and our actual results may differ materially from those anticipated in these forward-looking statements. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Factors that may cause such differences include, but are not limited to, those discussed under Item 1A. Risk Factors and elsewhere in the audited consolidated financial statements as of and for the year ended December 31, 2023 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 16, 2024, as well as under Item 1A . Risk Factors within this Form 10-Q. These factors include the uncertainties associated with:

	●	our ability to successfully consummate the proposed merger, or the Merger with Pharma Two B Ltd., or Pharma Two B, or any strategic transaction that we may consummate in the future;

	●	our anticipated net cash balance and expectations regarding relative ownership percentages in the combined company following consummation of the Merger;

	●	our ability to realize the anticipated benefits of the Merger and our ability to manage the risks of the proposed Merger;

	●	the effects that the pendency of the Merger may have on our business prior to the closing of the Merger, or if the Merger does not close;

	●	our ability to raise substantial additional capital to continue as a going concern and fund our planned operations in the near term;

	●	estimates regarding our expenses, use of cash, timing of future cash needs and anticipated capital requirements;

	●	success in retaining, or changes required in, our officers, key employees or directors;

	●	our public securities’potential liquidity and trading;

	●	our ability to license additional intellectual property to support our strategic alternatives or out-license our intellectual property;

	●	our expectation of developments and projections relating to competition from other pharmaceutical and biotechnology companies or our industry;

	●	our ability to remain listed on the Nasdaq Capital Market; and

	●	our intellectual property position, including the strength and enforceability of our intellectual property rights.

We do not assume any obligation to update forward-looking statements as circumstances change and thus you should not unduly rely on these statements.

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30, 2024			December 31, 2023
Assets
Current assets:
Cash	$	2,115,047		$	14,785,880
Prepaid expenses		3,367,362			2,701,960
Total current assets		5,482,409			17,487,840
Property and equipment, net		—			29,487
Right-of-use assets		150,733			212,878
Other assets		377,022			364,192
Total assets	$	6,010,164		$	18,094,397

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	446,544		$	2,348,829
Accrued expenses		375,000			2,439,351
Operating lease liabilities, current		154,090			115,916
Short-term portion of contingent consideration		—			386,000
Total current liabilities		975,634			5,290,096
Contingent consideration, non-current		—			1,634,000
Operating lease liabilities, non-current		—			93,104
Derivative financial instruments-warrants		1,472,700			3,796,390
Total liabilities		2,448,334			10,813,590
Commitments and contingencies (see Note 10)		-			-
Stockholders’ equity:
Series A convertible preferred stock, stated value $10 per share, 85,581 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		855,808			855,808
Series C convertible preferred stock, stated value $1,000 per share, 1,688 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		839,320			839,320
Convertible preferred stock		839,320			839,320
Common stock—$0.0001 par value per share; 120,000,000 shares authorized, 5,799,126 and 4,818,733 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		547			482
Additional paid-in capital		233,326,381			230,291,362
Accumulated other comprehensive loss		(53,822	)		(78,779	)
Accumulated deficit		(231,406,404	)		(224,627,386	)
Total stockholders’ equity		3,561,830			7,280,807
Total liabilities and stockholders’ equity	$	6,010,164		$	18,094,397

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

Table of Contents

HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(Unaudited)

	2024		2023		2024		2023
	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues	$	—	$	—	$	—	$	—
Cost and expenses:
Research and development		7,136,679		11,880,669		9,676,247		21,678,328
General and administrative		1,367,169		2,284,961		4,009,918

SEC Form 10-Q filed by Hepion Pharmaceuticals Inc.