SEC Form 10-Q filed by Citius Pharmaceuticals Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For the quarterly period ended:
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As of February 11, 2025, there were
Citius Pharmaceuticals, Inc.
FORM 10-Q
TABLE OF CONTENTS
December 31, 2024
i
EXPLANATORY NOTE
In this Quarterly Report on Form 10-Q, and unless the context otherwise requires, the “Company,” “we,” “us,” and “our” refer to Citius Pharmaceuticals, Inc. (“Citius Pharma”) and its wholly-owned subsidiary Leonard-Meron Biosciences, Inc., and its majority-owned subsidiaries, Citius Oncology, Inc. (Nasdaq: CTOR) (“Citius Oncology”) and NoveCite, Inc., taken as a whole.
ii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in this Report and in other documents which we file with the Securities and Exchange Commission. In addition, such statements could be affected by risks and uncertainties related to:
| ● | the ability of the Company to recognize the anticipated benefits of the August 2024 reverse merger whereby Citius Oncology became a publicly traded company and majority-owned subsidiary (the “Merger”), which may not be realized fully, if at all, or may take longer to realize than expected; |
| ● | the Company’s need for substantial additional funds and its ability to raise those funds; |
| ● | our ongoing evaluation of strategic alternatives; |
| ● | the ability of Citius Oncology to commercialize LYMPHIR, including covering the costs of licensing payments, product manufacturing and other third-party goods and services; |
| ● | the ability of the Company to obtain regulatory approval for and successfully commercialize Mino-Lok; |
| ● | the cost, timing, and results of our pre-clinical and clinical trials for our other product candidates; |
| ● | our ability to apply for, obtain and maintain required regulatory approvals for our other product candidates; |
| ● | the ability of the Company to maintain compliance with the continued listing requirements of the Nasdaq Stock Market LLC (“Nasdaq”); |
| ● | the commercial feasibility and success of our technology and our product candidates; |
| ● | our ability to recruit and retain qualified management and technical personnel to carry out our operations; and |
| ● | the other factors discussed in the “Risk Factors” section of our most recent Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the Securities and Exchange Commission on December 27, 2024, as amended on January 27, 2025, and elsewhere in this Report. |
Any forward-looking statements speak only as of the date on which they are made, and except as may be required under applicable securities laws, we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the filing date of this Report.
iii
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| December 31, | September 30, | |||||||
| 2024 | 2024 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Deposits | ||||||||
| In-process research and development | ||||||||
| Goodwill | ||||||||
| Total Other Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| License payable | ||||||||
| Accrued expenses | ||||||||
| Accrued compensation | ||||||||
| Operating lease liability | ||||||||
| Total Current Liabilities | ||||||||
| Deferred tax liability | ||||||||
| Operating lease liability - noncurrent | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock - $ |
||||||||
| Common stock - $ |
||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Total Citius Pharmaceuticals, Inc. Stockholders’ Equity | ||||||||
| Non-controlling interest | ||||||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
Reflects a 1-for-25 reverse stock split effective November 25, 2024.
1
CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 AND 2023
(Unaudited)
| Three Months Ended | ||||||||
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Revenues | $ | $ | ||||||
| Operating Expenses | ||||||||
| Research and development | ||||||||
| General and administrative | ||||||||
| Stock-based compensation - general and administrative | ||||||||
| Total Operating Expenses | ||||||||
| Operating Loss | ( | ) | ( | ) | ||||
| Other Income | ||||||||
| Interest income | ||||||||
| Total Other Income | ||||||||
| Loss before Income Taxes | ( | ) | ( | ) | ||||
| Income tax expense | ||||||||
| Net Loss | ( | ) | ( | ) | ||||
| Net loss attributable to non-controlling interest | ||||||||
| Net Loss Applicable to Common Stockholders | $ | ( | ) | $ | ( | ) | ||
| Net Loss Per Share - Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted Average Common Shares Outstanding | ||||||||
| Basic and diluted | ||||||||
See notes to unaudited condensed consolidated financial statements.
Reflects a 1-for-25 reverse stock split effective November 25, 2024.
2
CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 AND 2023
(Unaudited)
| Preferred | Common Stock | Additional Paid-In | Accumulated | Total Citius Pharmaceuticals, Inc. Stockholders’ | Non-Controlling | Total | ||||||||||||||||||||||||||
| Stock | Shares | Amount | Capital | Deficit | Equity | Interest | Equity | |||||||||||||||||||||||||
| Balance, September 30, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Issuance of common stock, net of costs | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss attributable to non-controlling interest | - | ( | ) | |||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Issuance of common stock for services | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||||||||||||||
| Net loss | $ | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
See notes to unaudited condensed consolidated financial statements.
Reflects a 1-for-25 reverse stock split effective November 25, 2024.
3
CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 AND 2023
(Unaudited)
| 2024 | 2023 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation expense | ||||||||
| Issuance of common stock for services | ||||||||
| Amortization of operating lease right-of-use asset | ||||||||
| Depreciation | ||||||||
| Deferred income tax expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Inventory | ( | ) | ||||||
| Prepaid expenses | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ( | ) | ||||||
| Accrued compensation | ||||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Net proceeds from registered direct offering | ||||||||
| Net Cash Provided By Financing Activities | ||||||||
| Net Change in Cash and Cash Equivalents | ( | ) | ( | ) | ||||
| Cash and Cash Equivalents - Beginning of Period | ||||||||
| Cash and Cash Equivalents - End of Period | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
4
CITIUS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2024 AND 2023
(Unaudited)
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Citius Pharmaceuticals, Inc. (“Citius Pharma,” and together with its subsidiaries, the “Company”, “we” or “us”) is a late-stage biopharmaceutical company dedicated to the development and commercialization of first-in-class critical care products with a focus on oncology, anti-infectives in adjunct cancer care, unique prescription products and stem cell therapies.
On March 30, 2016, Citius Pharma acquired Leonard-Meron
Biosciences, Inc. (“LMB”) as a wholly-owned subsidiary. We acquired all the outstanding stock of LMB by issuing shares of
our common stock. The net assets acquired included identifiable intangible assets of $
On September 11, 2020, we formed NoveCite, Inc.
(“NoveCite”), a Delaware corporation, of which we own
On August 23, 2021, we formed Citius Oncology,
Inc. (formerly named Citius Acquisition Corp.) (“Citius Oncology”), as a wholly-owned subsidiary in conjunction with the acquisition
of LYMPHIR, which began operations in April 2022. Pursuant to a merger agreement, dated October 23, 2023, with TenX Keane Acquisition,
and its wholly owned subsidiary, TenX Merger Sub Inc (“Merger Sub”), on August 12, 2024, Merger Sub merged with and into Citius
Oncology, with Citius Oncology surviving as a wholly owned subsidiary of TenX Keane Acquisition. After the merger and recapitalization
(the “Merger”), the newly combined publicly traded company is owned
Since our inception, we have devoted substantially all our efforts to business planning, research and development, recruiting management and technical staff, and raising capital. We are subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, risks related to the development by the Company or its competitors of research and development stage products, regulatory approval and market acceptance of its products, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners, the Company’s ability to obtain additional financing and the Company’s compliance with governmental and other regulations.
Basis of Presentation and Summary of Significant Accounting Policies
Basis of Preparation - The accompanying
unaudited condensed consolidated financial statements include the operations of Citius Pharmaceuticals, Inc., its wholly-owned subsidiary
LMB and its majority-owned subsidiaries NoveCite and Citius Oncology. On August 12, 2024, Citius Oncology, previously a wholly-owned subsidiary,
became a
The operations of NoveCite and Citius Oncology are included in the consolidated results. The portion of equity that is not attributable to the Company, is presented as a non-controlling interest within stockholders’ equity. Unless excluded by shareholder agreements, the portion of net loss attributable to non-controlling interests is included in the statement of operations. All significant inter-company balances and transactions have been eliminated in consolidation.
5
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state the condensed consolidated financial position of the Company as of December 31, 2024, and the results of its operations and cash flows for the three months ended December 31, 2024 and 2023. The operating results for the three months ended December 31, 2024 are not necessarily indicative of the results that may be expected for the year ending September 30, 2025. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024 filed with the Securities and Exchange Commission (“SEC”) on December 27, 2024, as amended on January 27. 2025.
Use of Estimates - The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America (“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 financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates having relatively higher significance include the accounting for in-process research and development, goodwill, stock-based compensation and income taxes. Actual results could differ from those estimates and changes in estimates may occur.
Basic and Diluted Net Loss per Common Share - Basic and diluted net loss per common share applicable to common stockholders is computed by dividing net loss applicable to common stockholders in each period by the weighted average number of shares of common stock outstanding during such period. For the periods presented, common stock equivalents, consisting of stock options and warrants, were not included in the calculation of the diluted loss per share because they were anti-dilutive.
Recently Issued Accounting Standards
Other than as disclosed in our Form 10-K, we are not aware of any other recently issued accounting standards not yet adopted that may have a material impact on our financial statements.
2. GOING CONCERN UNCERTAINTY AND MANAGEMENT’S PLAN
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. The Company experienced negative cash flows from operations
of $
The Company has generated no operating revenue to date and has principally raised capital through the issuance of debt and equity instruments to finance its operations. However, the Company’s continued operations beyond March 2025, including its development plans for Mino-Lok, Halo-Lido and NoveCite, will depend on its ability to obtain regulatory approval for Mino-Lok and generate substantial revenue from the sale of LYMPHIR and on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships, or out-licensing of its product candidates. However, the Company can provide no assurances on regulatory approval, commercialization, or future sales of LYMPHIR or that financing or strategic relationships will be available on acceptable terms, or at all. If the Company is unable to raise sufficient capital, find strategic partners or generate substantial revenue from the sale of LYMPHIR, there would be a material adverse effect on its business. Further, the Company expects in the future to incur additional expenses as it continues to develop its product candidates, including seeking regulatory approval, and protecting its intellectual property. The accompanying financial statements do not include any adjustments that might result from the outcome of the above uncertainty.
6
3. PATENT AND TECHNOLOGY LICENSE AGREEMENTS
Patent and Technology License Agreement – Mino-Lok
LMB has a patent and technology license agreement
with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok® on an exclusive, worldwide
sub-licensable basis, as amended. LMB pays an annual maintenance fee each June until commercial sales of a product subject to the license
commence. The Company recorded an annual maintenance fee expense of $
LMB will also pay annual royalties on net sales
of licensed products, with a low double digit royalty rate (within a range of
Unless earlier terminated by NAT, based on the failure to achieve certain development and commercial milestones, the license agreement remains in effect until the date that all patents licensed under the agreement have expired and all patent applications within the licensed patent rights have been cancelled, withdrawn, or expressly abandoned.
License Agreement with Eterna
On October 6, 2020, our subsidiary, NoveCite,
entered into a license agreement with Novellus Therapeutics Limited (“Novellus”), whereby
NoveCite acquired an exclusive, worldwide license, with the right to sublicense, develop and commercialize a stem cell therapy based on
the Novellus’s patented technology for the treatment of acute pneumonitis of any etiology in which inflammation is a major agent
in humans. Upon execution of the license agreement, we, through NoveCite, paid an upfront payment of $
In July 2021, Novellus was acquired by Brooklyn ImmunoTherapeutics, Inc. (“Brooklyn”). Pursuant to this transaction, the NoveCite license was assumed by Brooklyn with all original terms and conditions. In connection with that transaction, the stock subscription agreement was amended to assign to Brooklyn all of Novellus’s right, title, and interest in the stock subscription agreement and delete the anti-dilution protection and replace it with a right of first refusal whereby Brooklyn will have the right to purchase all or a portion of the securities that NoveCite intends to sell or in the alternative, at the option of NoveCite, Brooklyn may purchase that amount of the securities proposed to be sold by NoveCite to allow Brooklyn to maintain its then percentage ownership. In October 2022, Brooklyn changed its name to Eterna Therapeutics Inc. (“Eterna”).
Citius Pharma is responsible for the operational activities of NoveCite and bears all costs necessary to operate NoveCite. Citius Pharma’s officers are also the officers of NoveCite and oversee the business strategy and operations of NoveCite. As such, NoveCite is accounted for as a consolidated subsidiary with a noncontrolling interest.
Eterna has no contractual rights in the profits or obligations to share in the losses of NoveCite, and the Company has not allocated any losses to the noncontrolling interest.
Under the license agreement, NoveCite is obligated
to pay Eterna up to an aggregate of $
7
Under the terms of the license agreement, in the
event that Eterna receives any revenue involving the original cell line included in the licensed technology, then Eterna shall remit to
NoveCite
The term of the license agreement continues on a country-by-country and licensed product-by-licensed product basis until the expiration of the last-to-expire royalty term. Either party may terminate the license agreement upon written notice if the other party is in material default. NoveCite may terminate the license agreement at any time without cause upon 90 days prior written notice.
Eterna will be responsible for preparing, filing, prosecuting, and maintaining all patent applications and patents included in the licensed patents in the territory, provided however, that if Eterna decides that it is not interested in maintaining a particular licensed patent or in preparing, filing, or prosecuting a licensed patent, NoveCite will have the right, but not the obligation, to assume such responsibilities in the territory at NoveCite’s sole cost and expense.
License Agreement with Eisai
In September 2021, Citius Pharma entered into an asset purchase agreement with Dr. Reddy’s Laboratories SA, a subsidiary of Dr. Reddy’s Laboratories, Ltd. (collectively, “Dr. Reddy’s”) and a license agreement with Eisai Co., Ltd. (“Eisai”) to acquire an exclusive license of E7777 (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. We renamed E7777 as I/ONTAK and also obtained the trade name of LYMPHIR for the product. Citius Pharma assigned these agreements to Citius Oncology effective April 1, 2022. The Company received a BLA approval from the FDA for LYMPHIR in August 2024.
Under the terms of these agreements, Citius Pharma
acquired Dr. Reddy’s exclusive license for E7777 from Eisai and other related assets owned by Dr. Reddy’s (which are now owned
by Citius Oncology). The exclusive license rights, through Citius Oncology, include rights to develop and commercialize E7777 in all markets
except for Japan and certain parts of Asia. Additionally, we, through Citius Oncology, retained an option on the right to develop and
market the product in India. Eisai retains exclusive development and marketing rights for the agent in Japan, China, Korea, Taiwan, Hong
Kong, Macau, Indonesia, Thailand, Malaysia, Brunei, Singapore, India (subject to the India option prior to FDA approval), Pakistan, Sri
Lanka, Philippines, Vietnam, Myanmar, Cambodia, Laos, Afghanistan, Bangladesh, Bhutan, Nepal, Mongolia, and Papua New Guinea. Citius Pharma
paid Dr. Reddy’s a $
At the time of the FDA approval for LYMPHIR, a $27.5 million milestone payment became payable under the terms of the asset purchase agreement for which a balance of $22.5 million remains due as of December 31, 2024. Pending further discussions with Dr. Reddy’s, Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment.
Under the license agreement, Eisai was to receive
a $
8
The term of the license agreement will continue
until (i) March 30, 2026, if there has not been a commercial sale of a licensed product in the territory, or (ii) if there has been a
first commercial sale of a licensed product in the territory by March 30, 2026, the 10-year anniversary of the first commercial sale on
a country-by-country basis. The term of the license may be extended for additional 10-year periods for all countries in the territory
by notifying Eisai and paying an extension fee equal to $
Under the asset purchase agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials (both of which have been initiated), (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction.
As part of the definitive agreement with Dr. Reddy’s, Citius Pharmaceuticals acquired method of use patents in which LYMPHIR is administered in combination with the programmed cell death protein 1 (“PD-1”) pathway inhibitor drug class. PD-1 plays a vital role in inhibiting immune responses and promoting self-tolerance through modulating the activity of T-cells, activating apoptosis of antigen-specific T cells and inhibiting apoptosis of regulatory T cells.
The following patents were acquired and subsequently transferred to Citius Oncology, Inc.:
| ● | US Provisional Application No. 63/070,645, which was filed on August 26, 2020, and subsequently published as US 2022/0062390 A1 on March 3, 2022, entitled Methods of Treating Cancer. |
| ● | International Patent Application Number: PCT/IB2021/0576733, which was filed with the World Intellectual Property Organization on August 23, 2021, and subsequently published as WO 2022/043863 A1 on March 3, 2022, entitled, Combination for Use in Methods of Treating Cancer. |
Upon FDA approval of LYMPHIR in August 2024, Citius Oncology was subject to approval milestone fees totaling $33.7 million. Citius Oncology
paid $5.0 million prior to year end and the remaining balance is reflected as a License Payable on the balance sheet. The $
4. INVENTORY
Inventory is stated at
the lower of actual accumulated costs or net realizable value. Inventory consists of finished goods of $
5. PREPAID EXPENSES
Prepaid expenses at December 31, 2024 consists
of $
9
6. COMMON STOCK, STOCK OPTIONS AND WARRANTS
Authorized Common Stock
The Company
filed a Certificate of Change with the Secretary of State of the State of Nevada to (i) effect a 1-for-25 reverse stock split of the Company’s
issued and outstanding shares of common stock, and (ii) decrease the number of total authorized shares of common stock from
Common Stock Issued for Services
On October 10, 2023, the Company issued
Common Stock Offering
On November 15, 2024, the Company entered
into an agreement with certain institutional investors for the issuance and sale, in a registered direct offering of
The Company paid the placement agent
Stock Option Plans
Pursuant to our 2014 Stock Incentive Plan, we
reserved
Pursuant to our 2018 Omnibus Stock Incentive Plan,
we reserved
Pursuant to our 2020 Plan, we reserved
Pursuant to our 2021 Stock Plan, we reserved
10
In November 2022, our Board approved the 2023
Stock Plan, subject to stockholder approval, which was received on February 7, 2023. The 2023 Stock Plan reserved
The fair value of each stock option award is estimated
on the date of grant using the Black-Scholes option pricing model. Volatility is estimated using the trading activity of our common stock.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term
assumption. The expected term of stock options granted, all of which qualify as “plain vanilla,” is based on the average of
the contractual term (generally
A summary of option activity under our stock option plans (excluding the NoveCite and Citius Oncology Stock Plans) is presented below:
| Option Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||
| Outstanding at September 30, 2024 | $ | $ | ||||||||||||
| Granted | ||||||||||||||
| Exercised | ||||||||||||||
| Forfeited or expired | ||||||||||||||
| Outstanding at December 31, 2024 | $ | $ | ||||||||||||
| Exercisable at December 31, 2024 | $ | $ | ||||||||||||
On November 7, 2024, the Board of Directors granted
options to purchase
At December 31, 2024, unrecognized total compensation
cost related to unvested awards under the Citius Pharma stock plans of $
NoveCite Stock Plan - Under the
NoveCite Stock Plan, adopted November 5, 2020, we reserved
As of December 31, 2024, NoveCite has options
outstanding to purchase
Citius Oncology Stock Plan - Under
the Citius Oncology Stock Plan, adopted on April 29, 2023, we reserved
11
Volatility is estimated using the trading activity
of Citius Pharmaceuticals common stock. until such time as Citius Oncology has sufficient history. The risk-free interest rate is based
on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption. The expected term of stock
options granted to employees and directors, all of which qualify as “plain vanilla,” is based on the average of the contractual
term (generally
A summary of option activity under the Citius Oncology plan is presented below:
| Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||
| Outstanding at September 30, 2024 | $ | $ | ||||||||||||
| Granted | ||||||||||||||
| Forfeited | ||||||||||||||
| Outstanding at December 31, 2024 | $ | $ | ||||||||||||
| Exercisable at December 31, 2024 | $ | $ | ||||||||||||
The weighted average grant date fair value of
the Citius Oncology options granted during the three months ended December 31, 2024 was estimated at $
Stock-based compensation expense for the three
months ended December 31, 2024 and 2023 was $
Warrants
The Company has reserved
| Exercise price | Number | Expiration Dates | ||||||||
| August 2018 Offering Investors | ||||||||||
| August 2018 Offering Agent | ||||||||||
| April 2019 Registered Direct/Private Placement Investors | ||||||||||
| April 2019 Registered Direct/Private Placement Agent | ||||||||||
| September 2019 Offering Investors | ||||||||||
| September 2019 Offering Underwriter | ||||||||||
| February 2020 Exercise Agreement Placement Agent | ||||||||||
| May 2020 Registered Direct Offering Investors | ||||||||||
| May 2020 Registered Direct Offering Placement Agent | ||||||||||
| August 2020 Underwriter | ||||||||||
| January 2021 Registered Direct Offering Investors | ||||||||||
| January 2021 Registered Direct Offering Agent | ||||||||||
| February 2021 Offering Investors | ||||||||||
| February 2021 Offering Agent | ||||||||||
| May 2023 Registered Direct Offering Investors | ||||||||||
| May 2023 Registered Direct Offering Agent | ||||||||||
| April 2024 Registered Direct Offering Investors | ||||||||||
| April 2024 Registered Direct Offering Agent | ||||||||||
| November 2024 Offering Investors | ||||||||||
| November 2024 Offering Agent | ||||||||||
At December 31, 2024, the weighted average remaining
life of the outstanding warrants is
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Common Stock Reserved
A summary of common stock reserved for future issuances by the Company excluding all subsidiaries as of December 31, 2024 is as follows:
| Stock plan options outstanding | ||||
| Stock plan shares available for future grants | ||||
| Warrants outstanding | ||||
| Total |
7. COMMITMENTS AND CONTINGENCIES
Operating Lease
Effective July 1, 2019, Citius Pharma entered into a 76-month lease for office space in Cranford, NJ. We pay our proportionate share of real estate taxes and operating expenses in excess of the base year expenses. These costs are variable lease payments and are not included in the determination of the lease’s right-of-use asset or lease liability.
The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:
| ● | As the Cranford lease does not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments based on the remaining lease term as of the adoption date. |
| ● | Since the Company elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the combined lease component. |
| ● | The expected lease terms include noncancelable lease periods. |
The elements of lease expense are as follows:
| Lease cost | Three Months Ended December 31, 2024 | Three Months Ended December 31, 2023 | ||||||
| Operating lease cost | $ | $ | ||||||
| Variable lease cost | ||||||||
| Total lease cost | $ | $ | ||||||
| Other information | ||||||||
| Weighted-average remaining lease term - operating leases | ||||||||
| Weighted-average discount rate - operating leases | % | % | ||||||
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Maturities of lease liabilities due under the Company’s non-cancellable leases are as follows:
| Year Ending September 30, | December 31, 2024 | |||
| 2025 (excluding the 3 months ended December 31, 2024) | $ | |||
| 2026 | ||||
| Total lease payments | ||||
| Less: interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
| Leases | Classification | December 31, 2024 | September 30, 2024 | |||||||
| Assets | ||||||||||
| Lease asset | Operating | $ | $ | |||||||
| Total lease assets | $ | $ | ||||||||
| Liabilities | ||||||||||
| Current | Operating | $ | $ | |||||||
| Non-current | Operating | |||||||||
| Total lease liabilities | $ | $ | ||||||||
Interest expense on the lease liability was $
Commercial Manufacturing Contracts
The Company has entered into an agreement with
a Contract Manufacturing Organization for the manufacture and supply of drug substance. The agreement runs through calendar 2026, with
an automatic renewal for a subsequent 4-year term. Under this agreement, the Company is obligated to purchase minimum annual quantities
of batches at a set price per batch, subject to annual increases. Additionally, the Company is required to pay an annual service fee of
$
As of December 31, 2024, the Company also has
commercial supply agreements with two other vendors for the completion and packaging of finished drug products. Minimum purchase commitments
under these two agreements amount to approximately $
8. MERGER AGREEMENT
On October 23, 2023, the Company and its then wholly owned subsidiary Citius Oncology entered into an agreement and plan of merger and reorganization (the “Merger Agreement”) with TenX Keane Acquisition, a Cayman Islands exempted company (“TenX”), and TenX Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of TenX (“Merger Sub”).
On August 12, 2024, pursuant to the terms and conditions of the Merger Agreement, Merger Sub merged with and into Citius Oncology, with Citius Oncology surviving as a wholly owned subsidiary of TenX (the “Merger”) which was subsequently renamed Citius Oncology Sub. Prior to closing of the Merger, TenX migrated to and domesticated as a Delaware corporation in accordance with Section 388 of the General Corporation Law of the State of Delaware and the Cayman Islands Companies Act (As Revised) (the “Domestication”). As part of the Domestication, TenX changed its name to “Citius Oncology, Inc.” (Nasdaq: CTOR).
The Merger recapitalization resulted in a
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9. NASDAQ LISTING
On December 18, 2024, the Company received notification
that it had regained compliance with the $
10. SUBSEQUENT EVENTS
At the Market Offering Agreement
On August 12, 2024, the Company entered into an agreement with HC Wainwright, (the “Manager’) to issue and sell through or
to the Manager, as sales agent and/or principal, from time to time during the term of this Agreement the Company’s common shares.
| Gross | Net | |||||||||||||||
| Date | Shares | Price | Proceeds | Proceeds 1 | ||||||||||||
| 01/02/2025 | $ | $ | $ | |||||||||||||
| 01/03/2025 | $ | |||||||||||||||
| 01/06/2025 | $ | |||||||||||||||
| 01/07/2025 | $ | |||||||||||||||
| 01/08/2025 | $ | |||||||||||||||
| Total | $ | $ | ||||||||||||||
| 1) |
Registered Direct Offering
On January 7, 2025, the Company entered into a
securities purchase agreement (the “Purchase Agreement”) with certain institutional investors for the issuance and sale, in
a registered direct offering by the Company (the “Offering”), of
The Warrants have an exercise price equal to $
The Company also paid the placement agent
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations for the three months ended December 31, 2024 and 2023 should be read together with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Report and in conjunction with the audited financial statements of Citius Pharmaceuticals, Inc. included in our Annual Report on Form 10-K for the year ended September 30, 2024, filed with the Securities and Exchange Commission (“SEC”) on December 27, 2024, as amended on January 27, 2025. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions, or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements” on page iii of this Report.
Historical Background
We are a biopharmaceutical company dedicated to the development and commercialization of first-in-class critical care products. On September 12, 2014, we acquired Citius Pharmaceuticals, LLC as a wholly-owned subsidiary. Citius Pharmaceuticals, LLC, was dissolved on December 29, 2023.
On March 30, 2016, we acquired all of the outstanding stock of Leonard-Meron Biosciences, Inc. by issuing shares of our common stock. We acquired identifiable intangible assets of $19,400,000 related to in-process research and development and recorded goodwill of $9,346,796 for the excess of the purchase consideration over the net assets acquired.
On September 11, 2020, we formed NoveCite, Inc., a Delaware corporation, of which we own 75% of the issued and outstanding capital stock.
On August 23, 2021, we formed Citius Acquisition Corp., or SpinCo, as a wholly-owned subsidiary in conjunction with the acquisition of LYMPHIR, but Citius Acquisition did not begin operations until April 2022, when Citius Pharma transferred to it the assets related to LYMPHIR, including the related license agreement with Eisai and the related asset purchase agreement with Dr. Reddy’s Laboratories SA, a subsidiary of Dr. Reddy’s. At this time, Citius Acquisition changed its name to Citius Oncology, Inc. In August 2024, as part of the Merger, the new publicly-traded company and majority-owned subsidiary of Citius Pharma was named Citius Oncology, Inc.
In-process research and development of $19,400,000 represents the value of LMB’s leading drug candidate (Mino-Lok), which is an antibiotic solution used to treat catheter-related bloodstream infections and is expected to be amortized on a straight-line basis over a period of eight years commencing upon revenue generation. Goodwill of $9,346,796 represents the value of LMB’s industry relationships and its assembled workforce. Goodwill will not be amortized but will be tested at least annually for impairment. In-process research and development of $73,400,000 represents the value of our exclusive license for LYMPHIR (denileukin diftitox), a late-stage oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma and is expected to be amortized on a straight-line basis over a period of twelve years commencing upon revenue generation within the first half of 2025.
Through December 31, 2024, we have devoted substantially all our efforts to product development, raising capital, building infrastructure through strategic alliances and coordinating activities relating to our proprietary products. We have not yet realized any revenues from our operations.
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Reverse Stock Split
Effective November 25, 2024, the Company executed a reverse stock split of its common stock, par value $0.001 per share, at a ratio of 1-for-25 (“Reverse Stock Split”). All share amounts have been retroactively adjusted to reflect the split.
Patent and Technology License Agreements
Mino-Lok® – LMB has a patent and technology license agreement with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok on an exclusive, worldwide sub-licensable basis, as amended. Since May 2014, LMB has paid an annual maintenance fee, which began at $30,000 and has increased over five years to $90,000, where it will remain until the commencement of commercial sales of a product subject to the license. LMB will also pay annual royalties on net sales of licensed products, with a low double digit royalty rate (within a range of 10% to 15%). In limited circumstances in which the licensed product is not subject to a valid patent claim and a competitor is selling a competing product, the royalty rate is in the low- to mid-single digits (within a range of 2% to 7%). After a commercial sale is obtained, LMB must pay minimum aggregate annual royalties of $100,000 in the first commercial year which is prorated for a less than 12-month period, increasing $25,000 per year to a maximum of $150,000 annually. LMB must also pay NAT up to $1,100,000 upon achieving specified regulatory and sales milestones. Finally, LMB must pay NAT a specified percentage of payments received from any sub-licensees.
NoveCite – On October 6, 2020, our subsidiary NoveCite entered into a license agreement with Novellus Therapeutics Limited, whereby NoveCite acquired an exclusive, worldwide license, with the right to sublicense, to develop and commercialize a stem cell therapy based on Novellus’s patented technology for the treatment of acute pneumonitis of any etiology in which inflammation is a major agent in humans. Upon execution of the license agreement, NoveCite paid an upfront payment of $5,000,000 to Novellus and issued to Novellus shares of Novecite’s common stock representing 25% of NoveCite’s currently outstanding equity. We own the other 75% of NoveCite’s currently outstanding equity.
In July 2021, Novellus was acquired by Brooklyn ImmunoTherapeutics. Pursuant to this transaction, the NoveCite license was assumed by Brooklyn with all original terms and conditions. In October 2021, Brooklyn changed its name to Eterna Therapeutics Inc.
As part of the Novellus and Brooklyn merger transaction, the 25% non-dilutive position per the subscription agreement between Novellus and NoveCite was removed.
Under the license agreement, NoveCite is obligated to pay Eterna up to an aggregate of $51,000,000 in regulatory and developmental milestone payments. NoveCite also must pay a royalty equal to a mid-teens percentage of net sales, commencing upon the first commercial sale of a licensed product. This royalty is subject to downward adjustment on a product-by-product and country-by-country basis to a mid-single digit percentage (within a range of 4% to 8%) of net sales in any country in the event of the expiration of the last valid patent claim or if no valid patent claim exists in that country. The royalty will end on the earlier of (i) date on which a biosimilar product is first marketed, sold, or distributed by Eterna or any third party in the applicable country or (ii) the 10-year anniversary of the date of expiration of the last-to-expire valid patent claim in that country. In the case of a country where no licensed patent ever exists, the royalty will end on the later of (i) the date of expiry of such licensed product’s regulatory exclusivity and (ii) the 10-year anniversary of the date of the first commercial sale of the licensed product in the applicable country. In addition, NoveCite will pay to Eterna an amount equal to a mid-twenties percentage of any sublicensee fees it receives.
Under the terms of the license agreement, in the event that Eterna receives any revenue involving the original cell line included in the licensed technology, then Eterna shall remit to NoveCite 50% of such revenue.
LYMPHIR - In September 2021, Citius Pharma entered into an asset purchase agreement with Dr. Reddy’s and a license agreement with Eisai to acquire an exclusive license of E7777 (denileukin diftitox), an oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma. Citius Pharma renamed E7777 as I/ONTAK and also obtained the trade name of LYMPHIR for the product. Citius Pharma assigned these agreements to SpinCo effective April 1, 2022.
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Under the terms of these agreements, Citius Pharma acquired Dr. Reddy’s exclusive license for E7777 from Eisai and other related assets owned by Dr. Reddy’s (which are now owned by Citius Oncology). The exclusive license rights, through Citius Oncology, include rights to develop and commercialize E7777 in all markets except for Japan and certain parts of Asia. Additionally, we, through Citius Oncology, retained an option on the right to develop and market the product in India. Eisai retains exclusive development and marketing rights for the agent in Japan, China, Korea, Taiwan, Hong Kong, Macau, Indonesia, Thailand, Malaysia, Brunei, Singapore, India (subject to the India option prior to FDA approval), Pakistan, Sri Lanka, Philippines, Vietnam, Myanmar, Cambodia, Laos, Afghanistan, Bangladesh, Bhutan, Nepal, Mongolia, and Papua New Guinea. Citius Pharma paid Dr. Reddy’s a $40 million upfront payment, which represents the acquisition date fair value of the in-process research and development acquired from Dr. Reddy’s. Dr. Reddy’s is entitled to up to $40 million in development milestone payments related to CTCL approvals in the U.S. and other markets, up to $70 million in development milestones for additional indications, as well as commercial milestone payments and low double-digit tiered royalties on net product sales (within a range of 10% to 15%), and up to $300 million for commercial sales milestones. Citius Oncology also must pay on a fiscal quarter basis tiered royalties equal to low double-digit percentages of net product sales (within a range of 10% to 15%). The royalties will end on the earlier of (i) the 15-year anniversary of the first commercial sale of the latest indication that received regulatory approval in the applicable country and (ii) the date on which a biosimilar product results in the reduction of net sales in the applicable product by 50% in two consecutive quarters, as compared to the four quarters prior to the first commercial sale of the biosimilar product. Citius Oncology will also pay to Dr. Reddy’s an amount equal to a low-thirties percentage of any sublicense upfront consideration or milestone payments (or the like) received by us and the greater of (i) a low-thirties percentage of any sublicensee sales-based royalties or (ii) a mid-single digit percentage of such licensee’s net sales. Citius Pharma is a guarantor of Citius Oncology’s payment obligations under these agreements.
At the time of the FDA approval for LYMPHIR, a $27.5 million milestone payment became payable under the terms of the asset purchase agreement for which a balance of $22.5 million remains due as of September 30, 2024. Pending further discussions with Dr. Reddy’s, Dr. Reddy’s agreed to a partial deferral without penalty of this milestone payment.
Under the license agreement, Eisai is to receive a $5.9 million milestone payment, upon FDA approval which is included in license payable at September 30, 2024, and additional commercial milestone payments related to the achievement of net product sales thresholds and an aggregate of up to $22 million related to the achievement of net product sales thresholds. The Company, through Citius Oncology, was also required to reimburse Eisai for up to $2.65 million of its costs to complete the Phase 3 pivotal clinical trial for LYMPHIR for the CTCL indication and reimburse Eisai for all reasonable costs associated with the preparation of the BLA for LYMPHIR. Eisai was responsible for completing the CTCL clinical trial, and CMC activities through the filing of a BLA for LYMPHIR with the FDA. The BLA was filed with the FDA on September 27, 2022, refiled on February 13, 2024, and accepted by the FDA on March 18, 2024 and we received a BLA approval on August 8, 2024. We, through Citius Oncology, will be responsible for development costs associated with potential additional indications.
The term of the license agreement will continue until (i) if there has not been a commercial sale of a licensed product in the territory, the 10-year anniversary of the original license effective date, March 30, 2016, or (ii) if there has been a first commercial sale of a licensed product in the territory within the 10-year anniversary of the original license effective date, the 10-year anniversary of the first commercial sale on a country-by-country basis. The term of the license may be extended for additional 10-year periods for all countries in the territory by notifying Eisai and paying an extension fee equal to $10 million. Either party may terminate the license agreement upon written notice if the other party is in material breach of the agreement, subject to cure within the designated time periods. Either party also may terminate the license agreement immediately upon written notice if the other party files for bankruptcy or takes related actions or is unable to pay its debts as they become due. Additionally, either party will have the right to terminate the agreement if the other party directly or indirectly challenges the patentability, enforceability or validity of any licensed patent.
Also under the purchase agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials (both of which have been initiated), (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction.
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RESULTS OF OPERATIONS
Three months ended December 31, 2024 compared with the three months ended December 31, 2023
| Three Months Ended December 31, 2024 | Three Months Ended December 31, 2023 | |||||||
| Revenues | $ | - | $ | - | ||||
| Operating expenses: | ||||||||
| Research and development | 2,127,038 | 2,621,910 | ||||||
| General and administrative | 5,387,752 | 3,660,728 | ||||||
| Stock-based compensation expense | 2,524,824 | 3,058,185 | ||||||
| Total operating expenses | 10,039,614 | 9,340,823 | ||||||
| Operating loss | (10,039,614 | ) | (9,340,823 | ) | ||||
| Interest income | 22,608 | 253,638 | ||||||
| Loss before income taxes | (10,017,006 | ) | (9,087,185 | ) | ||||
| Income tax expense | 264,240 | 144,000 | ||||||
| Net loss | $ | (10,281,246 | ) | $ | (9,231,185 | ) | ||
Revenues
We did not generate any revenuer 31, 2024 or 2023.
Research and Development Expenses
For the three months ended December 31, 2024, research and development expenses were $2,127,038 as compared to $2,621,910 during the three months ended December 31, 2023, a decrease of $494,872.
Research and development costs for Mino-Lok decreased by $506,608 to $385,016 for the three months ended December 31, 2024 as compared to $891,624 for the three months ended December 31, 2023, due primarily to decreased costs associated with the completion of the Phase 3 trial.
Research and development costs for Halo-Lido decreased by $235,876 to $10,696 for the three months ended December 31, 2024 as compared to $246,572 for the three months ended December 31, 2023 due to lower costs since the completion of the Phase 2 study in April 2023. Citius subsequently met with the FDA for an end of Phase 2 meeting to discuss next steps in the clinical development program.
Research and development costs for LYMPHIR were $1,727,540 during the three months ended December 31, 2024 as compared to $1,472,464 for the three months ended December 31, 2023. The $255,076 increase in expenses was primarily due to additional costs associated with headcount as well as the investigator trials which are in progress.
We expect that research and development expenses will continue to decrease in fiscal 2025 as we continue to focus on the commercialization of LYMPHIR and because we have completed the Phase 3 trial for Mino-Lok.
General and Administrative Expenses
For the three months ended December 31, 2024, general and administrative expenses were $5,387,752 as compared to $3,660,728 during the three months ended December 31, 2023. General and administrative expenses increased by $1,727,024 in comparison with the prior period. The primary reasons for the increase were higher costs for pre-launch sales and market activities associated with LYMPHIR. General and administrative expenses consist primarily of compensation costs, professional fees for legal, regulatory, accounting, and corporate development services, and investor relations expenses.
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Stock-based Compensation Expense
For the three months ended December 31, 2024 and 2023 stock-based compensation expense was $2,524,824 as compared to $3,058,185 for the three months ended December 31, 2023. Stock-based compensation expense includes $1,808,479 for the Citius Oncology Plan for the three months ended December 31, 2024 and for the three months ended December 31, 2023, stock-based compensation expense includes 19,858 for the NoveCite Stock Plan and $1,917,000 for the Citius Oncology Plan. Stock-based compensation expense for the most recently completed quarter decreased by $533,361 in comparison to the prior period primarily due to lower costs for the Citius Pharma stock plans.
Other Income
Interest income for the three months ended December 31, 2024 was $22,608 as compared to interest income of $253,638 for the prior period. The decrease is due to lower average investable balances of the remaining proceeds of our equity offerings in money market accounts.
Income Taxes
The Company recorded deferred income tax expense of $264,240 and $144,000 for the three months ended December 31, 3024 and 2023, respectively. Deferred income tax expense is related to the amortization for taxable purposes of our in-process research and development asset.
Net Loss
For the three months ended December 31, 2024, we incurred a net loss of $10,281,246, compared to a net loss for the three months ended December 31, 2023 of $9,231,185. The $1,050,061 increase in the net loss was due to the increase of $1,727,024 in general and administrative expenses partially offset by lower research and development expense of $494,872.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Working Capital
Citius Pharma has incurred operating losses since inception and incurred a net loss of $10,281,246 for the three months ended December 31, 2024. At December 31, 2024, Citius Pharma had an accumulated deficit of $211,138,464. Citius Pharma’s net cash used in operations during the three months ended December 31, 2024 was $4,725,852.
The Company had a negative working capital of approximately $26.5 million at December 31, 2024. At December 31, 2024, Citius Pharma had cash and cash equivalents of $1,100,079 available to fund its operations. The Company’s only source of cash flow since inception has been from financing activities. During the three months ended December 31, 2024, the Company received net proceeds of $2,574,051 from the issuance of equity. In January 2025, the Company received gross proceeds of approximately $3,000,000 from the issuance of equity and net proceeds were approximately $2,700,000 after deducting for fees and expenses. Our primary uses of operating cash were for in-licensing of intellectual property, product development and commercialization activities, employee compensation, consulting fees, legal and accounting fees, insurance, and investor relations expenses.
We expect that we will have sufficient funds to continue our operations through March 2025. We will need to raise additional capital in the future to support our operations beyond March 2025. There is no assurance, however, that we will be successful in raising the needed capital or that the proceeds will be received in an amount or in a timely manner to support our operations.
Inflation
Our management believes that inflation has not had a material effect on our results of operations.
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Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of our financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the amounts of revenues and expenses recorded during the reporting periods. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.
Our critical accounting policies and use of estimates are discussed in, and should be read in conjunction with, the annual consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2024, filed with the SEC on December 27, 2024, as amended on January 27, 2025.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.
Our Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial officer and principal accounting officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of December 31, 2024. In designing and evaluating disclosure controls and procedures, we recognize that any disclosure controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objective. As of December 31, 2024, based on the evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms.
Changes In Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 1A. Risk Factors.
There have been no material changes to the Company’s risk factors as disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024, filed with the SEC on December 27, 2024, as amended on January 27, 2025.
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 December 31, 2024,
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Item 6. Exhibits.
| * | Filed 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.
| CITIUS PHARMACEUTICALS, INC. | ||
| Date: February 14, 2025 | By: | /s/ Leonard Mazur |
| Leonard Mazur | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: February 14, 2025 | By: | /s/ Jaime Bartushak |
| Jaime Bartushak | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
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