3……………….

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 September 30, 2023


☐	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 001-35963

NEUBASE THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)



Delaware		46-5622433
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

350 Technology Drive, Pittsburgh, PA 15219

(Address of principal executive offices and zip code)

(412) 763-3350

(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, $0.0001 par value per share	NBSE	The Nasdaq Stock Market LLC

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, a smaller reporting company, or an emerging growth 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 Act). Yes ☐ No ☒

As of November 06, 2023, 3,729,206 shares of the common stock, par value $0.0001, of the registrant were outstanding.

Table of Contents

PART I.

ITEM 1. FINANCIAL STATEMENTS

NeuBase Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)


	September 30,		December 31,
	2023		2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	12,570,359	$	17,386,326
Assets held for sale		429,140		—
Prepaid insurance		259,583		188,266
Other prepaid expenses and current assets		92,950		391,655
Total current assets		13,352,032		17,966,247

EQUIPMENT, net		79,665		1,934,100

OTHER ASSETS
Right-of-use asset, operating lease asset		5,064,184		5,409,574
Security deposit		125,391		273,215
Total other assets		5,189,575		5,682,789

TOTAL ASSETS	$	18,621,272	$	25,583,136

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	258,644	$	369,505
Accrued expenses and other current liabilities		462,186		1,227,656
Warrant liabilities		3,428,601		—
Operating lease liabilities		500,817		469,118
Finance lease liabilities		—		78,987
Total current liabilities		4,650,248		2,145,266

Long-term operating lease liability		4,834,348		5,214,074
TOTAL LIABILITIES		9,484,596		7,359,340

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of September 30, 2023 and December 31, 2022		—		—
Common stock, $0.0001 par value; 250,000,000 shares authorized; 3,729,206 and 1,657,768 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		373		166
Additional paid-in capital		125,610,714		125,337,022
Accumulated deficit		(116,474,411)		(107,113,392)
TOTAL STOCKHOLDERS’ EQUITY		9,136,676		18,223,796

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	18,621,272	$	25,583,136

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

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NeuBase Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
OPERATING EXPENSES
General and administrative	$	1,203,020	$	2,236,325	$	6,523,996	$	8,934,037
Research and development		387,564		5,487,056		2,912,094		17,079,335
Restructuring and impairment		1,222,592		—		1,229,319		—
TOTAL OPERATING EXPENSES		2,813,176		7,723,381		10,665,409		26,013,372

LOSS FROM OPERATIONS		(2,813,176)		(7,723,381)		(10,665,409)		(26,013,372)

OTHER INCOME (EXPENSE)
Interest expense		(122)		(2,693)		(3,206)		(8,828)
Interest income		162,924		106,710		457,349		147,302
Loss on issuance of common stock and warrants		(660)		—		(1,312,212)		—
Change in fair value of warrant liabilities		810,895		—		2,241,246		—
Other income (expense), net		19,027		(12,524)		(78,787)		(172,736)
Total other income (expense), net		992,064		91,493		1,304,390		(34,262)

NET LOSS	$	(1,821,112)	$	(7,631,888)	$	(9,361,019)	$	(26,047,634)

BASIC AND DILUTED LOSS PER SHARE	$	(0.66)	$	(4.73)	$	(4.57)	$	(16.08)

WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC AND DILUTED		2,757,576		1,614,156		2,046,477		1,620,344

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

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NeuBase Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2023 and 2022

(Unaudited)


				Additional				Total
	Common Stock			Paid-In				Stockholders’
	Shares	Amount		Capital		Accumulated Deficit		Equity
Balance as of December 31, 2022	1,657,768	$	166	$	125,337,022	$	(107,113,392)	$	18,223,796
Stock-based compensation expense	—		—		316,689		—		316,689
Exercise of stock options	32,750		3		718		—		721
Net loss	—		—		—		(4,093,113)		(4,093,113)
Balance as of March 31, 2023	1,690,518	$	169	$	125,654,429	$	(111,206,505)	$	14,448,093
Stock-based compensation expense	—		—		245,012		—		245,012
Issuance of common stock	187,700		19		—		—		19
Cash paid in lieu of fractional shares from reverse stock split	(72)		—		(9)		—		(9)
Net loss	—		—		—		(3,446,794)		(3,446,794)
Balance as of June 30, 2023	1,878,146	$	188	$	125,899,432	$	(114,653,299)	$	11,246,321
Stock-based compensation benefit	—		—		(292,343)		—		(292,343)
Exercise of stock options	93,234		9		2,042		—		2,051
Exercise of warrants	1,757,826		176		1,583		—		1,759
Net loss	—		—		—		(1,821,112)		(1,821,112)
Balance as of September 30, 2023	3,729,206	$	373	$	125,610,714	$	(116,474,411)	$	9,136,676


				Additional				Total
	Common Stock			Paid-In				Stockholders’
	Shares	Amount		Capital		Accumulated Deficit		Equity
Balance as of December 31, 2021	1,638,409	$	164	$	123,830,758	$	(76,696,719)	$	47,134,203
Stock-based compensation expense	—		—		952,828		—		952,828
Forfeiture of common stock	(25,476)		(3)		3		—		—
Net loss	—		—		—		(9,924,029)		(9,924,029)
Balance as of March 31, 2022	1,612,933	$	161	$	124,783,589	$	(86,620,748)	$	38,163,002
Stock-based compensation expense	—		—		641,046		—		641,046
Net loss	—		—		—		(8,491,717)		(8,491,717)
Balance as of June 30, 2022	1,612,933	$	161	$	125,424,635	$	(95,112,465)	$	30,312,331
Stock-based compensation expense	—		—		510,612		—		510,612
Exercise of stock options	37,500		4		821		—		825
Net loss	—		—		—		(7,631,888)		(7,631,888)
Balance as of September 30, 2022	1,650,433	$	165	$	125,936,068	$	(102,744,353)	$	23,191,880

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

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NeuBase Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities
Net loss	$	(9,361,019)	$	(26,047,634)
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation		269,358		2,104,485
Loss on issuance of common stock and warrants		1,312,212		—
Change in fair value of warrant liabilities		(2,241,246)		—
Depreciation and amortization		509,304		585,812
Loss on disposal of fixed assets		63,830		3,844
Impairment		857,109		—
Equity in losses on equity method investment		—		3
Amortization of right-of-use assets		345,390		391,611
Changes in operating assets and liabilities
Prepaid insurance, other prepaid expenses and current assets		227,388		(338,021)
Security deposit		147,824		(19,600)
Accounts payable		(110,861)		715,284
Accrued expenses and other current liabilities		(765,470)		(750,222)
Operating lease liability		(348,027)		(389,082)
Net cash used in operating activities		(9,094,208)		(23,743,520)

Cash flows from investing activities
Purchase of laboratory and office equipment		(13,447)		(347,835)
Proceeds received on sale of equipment		8,500		—
Net cash used in investing activities		(4,947)		(347,835)
Cash flows from financing activities
Proceeds from issuance of common stock and warrants, net of issuance costs paid		4,357,653		—
Proceeds from exercise of warrants		1,759
Principal payment of finance lease liability		(78,987)		(82,868)
Payment in lieu of fractional shares from reverse stock split		(9)		—
Proceeds from exercise of stock options		2,772		826
Net cash provided by (used in) financing activities		4,283,188		(82,042)
Net decrease in cash and cash equivalents		(4,815,967)		(24,173,397)
Cash and cash equivalents, beginning of period		17,386,326		47,326,060
Cash and cash equivalents, end of period	$	12,570,359	$	23,152,663

Supplemental disclosure of cash flow information:
Non-cash investing and financing activities:
Fair value of warrants issued	$	5,669,847	$	—
Held for sale assets	$	429,140	$	—
Right-of-use asset obtained in exchange for operating lease liabilities	$	—	$	164,613

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

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NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Organization, Description of Business and Liquidity

NeuBase Therapeutics, Inc. and its subsidiaries (the “Company” or “NeuBase”) has historically been a preclinical-stage biopharmaceutical company developing a modular peptide nucleic acid (“PNA”) antisense oligo (“PATrOL™”) platform to address genetic diseases with a single, cohesive approach. NeuBase planned to use its platform to address diseases which have a genetic source, with an initial focus on gene silencing in myotonic dystrophy type 1 (“DM1”), Huntington’s disease (“HD”), and oncology.

In October 2022, the Company announced plans to expand its focus to include the advancement of the differentiated gene editing capabilities of its platform.

In August 2023, the Company announced that its Board of Directors (the “Board”) had made the determination to halt further development of the Company’s programs and to conduct a comprehensive exploration of strategic alternatives focused on maximizing shareholder value. As part of this evaluation process, the Board will explore potential strategic alternatives for the Company that may include, but are not limited to, an acquisition, merger, business combination, or other transaction.

Liquidity and Going Concern

The Company has had no revenues from product sales and has incurred operating losses since inception. As of September 30, 2023, the Company had $12.6 million in cash and cash equivalents, and during the nine months ended September 30, 2023, incurred a loss from operations of $10.7 million and used $9.1 million of cash in operating activities.

The Company expects to continue to incur substantial operating losses and negative cash flows from operations for the foreseeable future and may never become profitable. Accordingly, there are material risks and uncertainties that raised substantial doubt about the Company’s ability to continue as a going concern. In August 2023, as further discussed below, the Board approved a plan to halt further development of the Company’s programs and to conduct a comprehensive exploration of strategic alternatives focused on maximizing shareholder value. This restructuring plan is expected to reduce operating expenses and extend the Company’s cash runway into the fourth quarter of calendar year 2025 based on current operating plans and estimates. Management believes it is probable that the restructuring plan will be effectively implemented within the next twelve months and that the restructuring plan, when implemented, will mitigate the conditions that gave rise to substantial doubt about the Company’s ability to continue as a going concern. Because the Company has sufficient resources on hand to fund operations through at least the next twelve months from the date these consolidated financial statements were available to be issued, the substantial doubt has been alleviated. There can be no assurance that the Company will be successful in acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years.

The Company’s future liquidity and capital funding requirements will depend on numerous factors, including:

●

its ability to raise additional funds to finance its operations;

●

its ability to negotiate and consummate any transaction arising from its exploration of strategic alternatives;

●

its ability to maintain compliance with the listing requirements of The Nasdaq Capital Market;

●

litigation expenses and the extent and amount of any indemnification claims;

●

its ability to maintain, expand and defend the scope of its intellectual property portfolio, including the amount and timing of any payments the Company may be required to make, or that it may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;

●

its ability to retain its current employees and the need and ability to hire additional management;

●

the trading price of its common stock; and

●

its ability to increase the number of authorized shares outstanding to facilitate future financing events.

The Company will likely need to raise substantial additional funds through issuance of equity or debt or completion of a licensing transaction for one or more of the Company’s pipeline assets. If the Company is unable to maintain sufficient financial resources, its business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. Failure to obtain additional equity or debt financing will have a material, adverse impact on the Company’s business operations. There can be no assurance that the Company will

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NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Net Loss Per Share

Basic net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted net loss per share includes the dilutive effect, if any, from the potential exercise or conversion of securities, such as convertible debt, warrants and stock options that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive.

The following potentially dilutive securities outstanding as of September 30, 2023 and 2022 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:


	As of September 30,
	2023	2022
Common stock purchase options	196,485	381,469
Restricted stock units	11,110	—
Common stock purchase warrants	4,030,989	9,000
	4,238,584	390,469

Common Stock Warrant Liabilities

The Company has issued freestanding warrants to purchase shares of its common stock in connection with its financing activities and accounts for them in accordance with applicable accounting guidance as either liabilities or as equity instruments depending on the specific terms of the warrant agreements. Warrants classified as liabilities are remeasured each period they are outstanding. Any resulting gain or loss related to the change in the fair value of the warrant liabilities is recognized in change in fair value of warrant liabilities, a component of other income (expense) in the Condensed Consolidated Statements of Operations.

The Company estimates the fair value of common stock warrant liabilities using the Black-Scholes Model. The assumptions used in calculating the fair value represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:

Level 1 - defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

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NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following tables present the Company’s fair value hierarchy for its warrant liabilities measured at fair value on a recurring basis at September 30, 2023:


	Fair Value Measurements
	as of September 30, 2023
	(Level 1)			(Level 2)		(Level 3)	Total
Liabilities
Warrant liabilities	$	—	$	—	$	3,428,601	$	3,428,601

The following assumptions were used in determining the fair value of the warrant liabilities as of September 30, 2023:


		As of September 30, 2023
Remaining contractual term (years)		1.3 - 5.3
Common stock price volatility		343.8%
Risk-free interest rate		4.60% - 5.25%
Expected dividend yield		—

The change in fair value of the warrant liabilities for the three and nine months ended September 30, 2023 is as follows:


	Warrant
	Liabilities
Balance as of March 31, 2023	$	—
Fair value of warrants issued		5,669,847
Change in fair value		(1,430,351)
Balance as of June 30, 2023		4,239,496
Change in fair value		(810,895)
Balance as of September 30, 2023	$	3,428,601

Assets Held for Sale

The Company classifies its long-lived assets to be sold as held for sale in the period (i) the Company has approved and committed to a plan to sell the asset, (ii) the asset is available for immediate sale in its present condition, (iii) an active program to locate a buyer and other actions required to sell the asset have been initiated, (iv) the sale of the asset is probable, (v) the asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value, and (vi) it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. The Company initially measures a long-lived asset that is classified as held for sale at the lower of its carrying value or fair value, less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset until the date of sale. Upon designation as an asset held for sale, the Company stops recording depreciation and amortization expense on the long-lived asset. The Company assesses the fair value of a long-lived asset, less any costs to sell, at each reporting period and until the asset is no longer classified as held for sale.

Recent Accounting Pronouncements

In November 2021, the FASB issued ASU No. 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance,” which amends disclosures to increase transparency of government assistance, including (i) the types of assistance, (ii) accounting for the assistance and (iii) the effect of the assistance on an entity’s financial statements. The standard is effective for all business entities for annual periods beginning after December 15, 2021; therefore, it will be effective beginning with the Company’s financial statements issued for the fiscal year ending December 31, 2023. While the adoption of this guidance will not have an impact on the Company’s consolidated balance sheet or statement of operations, the adoption of this guidance may require additional annual disclosures in the Company’s financial statements for the fiscal year ending December 31, 2023, which the Company is currently in the process of assessing.

In June 2022, the FASB issued ASU 2022-03, “ASC Subtopic 820 Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2022-03”). ASU 2022-03 amends ASC 820 to clarify that a contractual sales restriction is not considered in

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NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

measuring an equity security at fair value and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. ASU 2022-03 applies to both holders and issuers of equity and equity-linked securities measured at fair value. The amendments in this ASU are effective for the Company in fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact of this pronouncement on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. ASU 2016-13 also provides updated guidance regarding the impairment of available-for-sale debt securities and includes additional disclosure requirements. The new guidance is effective for public business entities that meet the definition of a Smaller Reporting Company as defined by the Securities and Exchange Commission for interim and annual periods beginning after December 15, 2022. The Company adopted this guidance as of January 1, 2023, with minimal impact upon adoption.

In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40), to simplify the accounting for certain financial instruments with characteristics of liabilities and equity. The FASB reduced the number of accounting models for convertible debt and convertible preferred stock instruments and made certain disclosure amendments to improve the information provided to users. In addition, the FASB amended the derivative guidance for the “own stock” scope exception and certain aspects of the EPS guidance. The Company adopted this new accounting guidance on a prospective basis on January 1, 2023, and the adoption did not have a material effect on its consolidated financial statements.

3. Other Prepaid Expenses and Current Assets

The Company’s prepaid expenses and other current assets consisted of the following:


	As of September 30,		As of December 31,
	2023		2022
	Unaudited		Unaudited
Prepaid research and development expense	$	—	$	67,027
Accounts receivable		—		150,000
Other prepaid expenses and other current assets		92,950		174,628
Total	$	92,950	$	391,655

4. Equipment and Assets Held for Sale

The Company’s equipment and assets held for sale consisted of the following, after the effects of impairment charges and held-for-sale reclassifications:


	As of September 30,		As of December 31,
	2023		2022
	Unaudited		Unaudited
Laboratory equipment	$	—	$	3,048,579
Office equipment		259,979		259,978
Leasehold improvements		31,405		17,958
Total		291,384		3,326,515
Accumulated depreciation and amortization		(211,719)		(1,392,415)
Equipment, net	$	79,665	$	1,934,100

Assets held for sale	$	429,140		—

During the nine months ended September 30, 2023, the Company recorded impairment charges of $0.9 million in connection with its restructuring, see Note 8. Depreciation expense for the three months ended September 30, 2023 and 2022 was approximately $0.1 million and $0.2 million, respectively. Depreciation expense for the nine months ended September 30, 2023 and 2022 was approximately $0.5 million and $0.6 million, respectively.

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NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

5. Accrued Expenses and Other Current Liabilities

The Company’s accrued expenses and other current liabilities consisted of the following:


	As of September 30,		As of December 31,
	2023		2022
	Unaudited		Unaudited
Accrued compensation and benefits	$	87,359	$	171,572
Accrued consulting settlement		—		225,000
Accrued professional fees		120,845		241,808
Accrued research and development		—		20,684
Accrued franchise tax		29,680		217,440
Accrued restructuring		185,095		316,032
Other accrued expenses		39,207		35,120
Total	$	462,186	$	1,227,656

6. Stockholders’ Equity

Equity Purchase Agreement

On December 28, 2022, the Company entered into a purchase agreement (the “Equity Purchase Agreement”) with Alumni Capital LP, a Delaware limited partnership (“Alumni Capital”), pursuant to which the Company agreed to sell, and Alumni Capital agreed to purchase, upon request of the Company in one or more transactions, a number of shares of the Company’s common stock providing aggregate gross proceeds to the Company of up to $3,000,000 (subject to the right, but not the obligation, of the Company to increase such amount up to $10,000,000 pursuant to the terms of the Equity Purchase Agreement) (the “Maximum Investment Amount”). The Equity Purchase Agreement expires upon the earlier of the aggregate gross proceeds from the sale of shares of common stock meeting the Maximum Investment Amount or December 28, 2024.

Among other limitations, unless otherwise agreed upon by Alumni Capital, each individual sale of shares of common stock will be limited to a sale of shares of common stock of up to $500,000 (subject to the right of the Company and Alumni Capital to mutually agree to increase such figure to $1,000,000) and further limited to no more than the number of shares of common stock that would result in the direct or indirect beneficial ownership by Alumni Capital of more than 9.99% of the then-outstanding shares of common stock. Alumni Capital will purchase the shares of common stock under the Equity Purchase Agreement at the lowest traded price of the common stock during the three (3) business days immediately prior to the date of purchase of the shares of common stock multiplied by 95%.

Upon execution of the Equity Purchase Agreement, the Company issued 7,335 shares of common stock to Alumni Capital. The Company will issue to Alumni Capital, on December 28, 2023, shares of common stock in an amount equal to one-half of one percent (0.5%) of the Investment Amount (as defined in the Equity Purchase Agreement) divided by the closing price of the common stock on the third business day prior to the date of issuance and delivery of such shares of common stock. In addition, the Company will issue to Alumni Capital, on the date of expiration of the Equity Purchase Agreement, shares of common stock in an amount equal to one-half of one percent (0.5%) of the Investment Amount divided by the closing price of the common stock on the third business day prior to the date of issuance and delivery of such shares of common stock. If the Company elects to increase the Maximum Investment Amount, it shall issue to Alumni Capital Increase Commitment Shares (as defined in the Equity Purchase Agreement) (based on each increase of Investment Amount) within five (5) business days of the Company’s written notice of such election. The Company recorded the commitment shares issued and future commitment share obligation as additional paid-in capital during the three months ended December 31, 2022.

As of September 30, 2023, the Company has not sold any shares of common stock under the Equity Purchase Agreement.

Concurrent Registered Direct Offering and Private Placements

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NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

On June 28, 2023, the Company entered into a securities purchase agreement (the “Registered Direct Purchase Agreement”) in connection with a registered direct offering (the “Registered Direct Offering”) and concurrent private placement with an institutional investor (the “Registered Direct Purchaser”). On June 28, 2023, the Company also entered into a securities purchase agreement (the “PIPE Purchase Agreement” and, together with the Registered Direct Purchase Agreement, the “Purchase Agreements”) and a registration rights agreement (the “Registration Rights Agreement”) in connection with a concurrent private placement (the “PIPE Private Placement”) with the same institutional investor (the “PIPE Purchaser” and, together with the Registered Direct Purchaser, the “Purchaser”).

Pursuant to the Registered Direct Purchase Agreement, the Company agreed to offer and sell in the Registered Direct Offering 187,700 shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), and pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 390,997 shares of Common Stock. The Pre-Funded Warrants have an exercise price of $0.001 per share, are immediately exercisable and can be exercised at any time after their original issuance until such Pre-Funded Warrants are exercised in full. Each share of Common Stock was sold at an offering price of $2.57 per share, and each Pre-Funded Warrant was sold at an offering price of $2.569, which is equal to the purchase price per share of Common Stock less $0.001.

Pursuant to the Registered Direct Purchase Agreement, in a concurrent private placement, the Company also agreed to issue to the Registered Direct Purchaser unregistered long-term warrants (the “RD Series A Warrants”) to purchase up to an aggregate of 578,697 shares of Common Stock and unregistered short-term warrants (the “RD Series B Warrants”) to purchase up to an aggregate of 578,697 shares of Common Stock. Each RD Series A Warrant has an exercise price of $2.32 per share, is exercisable immediately upon issuance, and will expire five and one-half years following the date of issuance. Each RD Series B Warrant has an exercise price of $2.32 per share, is exercisable immediately upon issuance, and will expire 18 months following the date of issuance.

Pursuant to the PIPE Purchase Agreement, the Company agreed to offer and sell in the PIPE Private Placement unregistered pre-funded warrants (the “PIPE Pre-Funded Warrants”) to purchase up to an aggregate of 1,366,829 shares of Common Stock, at an offering price of $2.569. The PIPE Pre-Funded Warrants have an exercise price of $0.001 per share, are immediately exercisable and can be exercised at any time after their original issuance until such PIPE Pre-Funded Warrants are exercised in full. Pursuant to the PIPE Purchase Agreement, the Company also agreed to issue to the PIPE Purchaser unregistered long-term warrants to purchase up to 1,366,829 shares of Common Stock (the “PIPE Series A Warrants”) and unregistered short-term warrants to purchase up to 1,366,829 shares of Common Stock (the “PIPE Series B Warrants”). Each PIPE Series A Warrant has an exercise price of $2.32 per share, is exercisable immediately upon issuance, and will expire five and one-half years following the date of issuance. Each PIPE Series B Warrant has an exercise price of $2.32 per share, is exercisable immediately upon issuance, and will expire 18 months following the date of issuance.

The Company received aggregate gross proceeds of approximately $5.0 million from the Registered Direct Offering and PIPE Private Placement (collectively, the “Offerings”), before deducting placement agent fees and other estimated offering expenses payable by the Company.

Pursuant to an engagement letter, dated as of June 12, 2023, as amended on June 28, 2023 (as amended, the “Engagement Letter”), between the Company and H.C. Wainwright & Co., LLC (the “Placement Agent”), the Company agreed to pay the Placement Agent a cash fee equal to 8.0% of the gross proceeds received from the Purchaser (including a 1.0% management fee) and also agreed to issue to the Placement Agent (or its designees) warrants (the “Placement Agent Warrants”) to purchase up to 136,187 shares of Common Stock (which represents 7.0% of the aggregate number of shares of Common Stock, Pre-Funded Warrants and PIPE Pre-Funded Warrants sold in the Offerings) on substantially the same terms as the PIPE Series A Warrants and the PIPE Series B Warrants except that the exercise price of the Placement Agent Warrants is $3.2125 (or 125% of the offering price per share of Common Stock in the Registered Direct Offering) and an expiration date of June 28, 2028, which is the five-year anniversary of the commencement of the sales pursuant to the Offerings. The Company also agreed to pay the Placement Agent in connection with the Offerings $75,000 for non-accountable expenses and $7,389 for clearing fees. Pursuant to the Engagement Letter, the Company also agreed that, upon exercise of any of the RD Series B Warrants or the PIPE Series B Warrants, the Company will pay the Placement Agent a cash fee equal to 8.0% of the gross proceeds received from the exercise of the RD Series B Warrants or the PIPE Series B Warrants (including a 1.0% management fee) and will also issue to the Placement Agent (or its designees) additional Placement Agent Warrants to purchase a number of shares of Common Stock equal to 7.0% of the aggregate number of shares of Common Stock issued upon such exercise of the RD Series B Warrants or the PIPE Series B Warrants.

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NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Warrants

Below is a summary of the Company’s issued and outstanding warrants as of September 30, 2023:


Expiration date		Exercise Price	Warrants Outstanding
September 20, 2024	$	130.00	3,750
December 30, 2024	$	2.32	1,945,526
June 28, 2028	$	3.21	136,187
January 2, 2029	$	2.32	1,945,526
			4,030,989


				Weighted-
				Average
		Weighted-		Remaining
		Average		Contractual
		Exercise		Life
	Warrants	Price		(in years)
Outstanding as of December 31, 2022	9,006	$	156.03
Issuances:
PIPE Series A Warrants	1,366,829		2.32
PIPE Series B Warrants	1,366,829		2.32
PIPE Pre-Funded Warrants	1,366,829		0.001
RD Series A Warrants	578,697		2.32
RD Series B Warrants	578,697		2.32
Pre-Funded Warrants	390,997		0.001
Placement Agent Warrants	136,187		3.21
Exercised:
PIPE Pre-Funded Warrants	(1,366,829)		0.001
Pre-Funded Warrants	(390,997)		0.001
Expired:	(5,256)		174.60
Outstanding as of September 30, 2023	4,030,989		2.47	3.3
Exercisable as of September 30, 2023	4,030,989	$	2.47	3.3

7. Stock-Based Compensation

As of September 30, 2023, an aggregate of 366,924 shares of common stock were authorized under the Company’s 2019 Stock Incentive Plan (the “2019 Plan”), subject to an “evergreen” provision that will automatically increase the maximum number of shares of common stock that may be issued under the term of the 2019 Plan. As of September 30, 2023, 155,994 shares of common stock were available for future grants under the 2019 Plan. As of September 30, 2023, an aggregate of 14,584 shares of common stock were authorized under the Company’s 2016 Consolidated Stock Incentive Plan (the “2016 Plan”) and 13,334 shares of common stock were available for future grants under the 2016 Plan.

The Company recorded stock-based compensation expense (benefit) in the following expense categories of its unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
General and administrative	$	(178,915)	$	428,571	$	302,817	$	1,490,667
Research and development		(113,428)		82,041		(33,459)		613,818
Total	$	(292,343)	$	510,612	$	269,358	$	2,104,485

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NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Stock-based compensation expense for the three and nine months ended September 30, 2023 includes the reversal of expense previously recognized of $0.4 million for unvested stock options that were forfeited during the period in connection with the Company’s restructuring, see Note 8.

Stock Options

Below is a table summarizing the options issued and outstanding as of and for the nine months ended September 30, 2023:


			Weighted-	Weighted-
			Average	Average	Total
			Exercise	Remaining	Aggregate
			Price Per	Contractual	Intrinsic
	Stock Options		Share	Life (in years)	Value
Outstanding at December 31, 2022	365,287	$	53.27
Granted	1,875		4.34
Exercised	(125,984)		0.02
Forfeited	(44,693)		66.51
Outstanding at September 30, 2023	196,485		83.93	4.81	$	—
Exercisable as of September 30, 2023	151,137	$	93.71	3.82	$	—

As of September 30, 2023, unrecognized compensation costs associated with the stock options of $0.6 million will be recognized over an estimated weighted average amortization period of 3.62 years.

The intrinsic value of options exercised during the nine months ended September 30, 2023 and 2022 was $0.3 million and $0.3 million, respectively.

The weighted average grant date fair value of options granted during the nine months ended September 30, 2023 and 2022 was $3.21 and $23.31, respectively.

Key assumptions used to estimate the fair value of the stock options granted during the nine months ended September 30, 2023 and 2022 included:


	Nine Months Ended September 30,
	2023	2022
Expected term of options (years)	5.4 - 6.1	5.3 - 6.1
Expected common stock price volatility	82.3% - 85.2%	73.7% - 78.5%
Risk-free interest rate	3.5% - 4.0%	1.4% - 3.4%
Expected dividend yield	—	—

Restricted Stock Units

Below is a table summarizing the restricted stock units granted and outstanding as of and for the nine months ended September 30, 2023:


			Weighted-
			Average Grant
	Restricted Stock		Date Fair Value
	Units		Price
Unvested as of December 31, 2022		—	$	—
Granted		19,823		4.00
Forfeited		(8,713)		—
Unvested as of September 30, 2023		11,110		4.00
Total unrecognized expense remaining	$	30,208
Weighted-average years expected to be recognized over		3.4

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NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

8. Restructuring and Impairment

Restructuring and impairment charges consist of the following:


	Three Months Ended		Nine Months Ended
	September 30, 2023		September 30, 2023
Restructuring	$	365,483	$	372,210
Impairment		857,109		857,109
Total restructuring and impairment	$	1,222,592	$	1,229,319

Restructuring

Restructuring charges relate primarily to the Company’s strategic restructurings announced in October 2022 to expand its focus to include the advancement of the differentiated gene editing capabilities of its platform and the announcement in August 2023 to halt further development of the Company’s programs and to conduct a comprehensive exploration of strategic alternatives focused on maximizing shareholder value.

The following table summarizes activity in the Company’s restructuring-related liability during the nine months ended September 30, 2023:


			Restructuring		Payments/
			Charges		Utilization
	Liability at		(Nine Months Ended		(Nine Months Ended		Liability at
	December 31, 2022		September 30, 2023)		September 30, 2023)		September 30, 2023
Research and development contract termination costs	$	311,110	$	2,490	$	(313,600)	$	—
Employee termination benefits		—		369,630		(184,535)		185,095
Other


PART I.		3

ITEM 1.	FINANCIAL STATEMENTS	3

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	18

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	24

ITEM 4.	CONTROLS AND PROCEDURES	24

PART II.		25

ITEM 1.	LEGAL PROCEEDINGS	25

ITEM 1A.	RISK FACTORS	25

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	26

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	26

ITEM 4.	MINE SAFETY DISCLOSURES	26

ITEM 5.	OTHER INFORMATION	27

ITEM 6.	EXHIBITS	28

SIGNATURES		30