ck0001824293-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

____________________________________

FORM 10-Q

____________________________________

(Mark One)


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

For the quarterly period ended

March 31, 2022


☐			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: 001-40034

____________________________________

VALLON PHARMACEUTICALS, INC.

(Exact Name of Registrant as Specified in its Charter)

____________________________________


Delaware						82-4369909
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

100 N. 18th Street, Suite 300, Philadelphia, PA 19103
(Address of principal executive offices, including zip code)

(267)-207-3606

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001
per share

VLON

The Nasdaq Capital Market

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

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 x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
Emerging growth company	x


		Page

PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
	Balance Sheets as of March 31, 2022 (unaudited) and December 31, 2021	3
	Statements of Operations and Comprehensive Loss (unaudited) for the three months ended March 31, 2022 and 2021	4
	Statements of Changes in Stockholders’ Equity (Deficit) (unaudited) for the three months ended March 31, 2022 and 2021	5
	Statements of Cash Flows (unaudited) for the three months ended March 31, 2022 and 2021	6
	Notes to Unaudited Interim Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II.	OTHER INFORMATION	22
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22




Item 6.	Exhibits	28
	Signatures	29


	March 31, 2022		December 31, 2021
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	2,543	$	3,702
Marketable securities, available-for-sale	2,634		3,808
Prepaid expenses and other current assets	580		619
Total current assets	5,757		8,129
Other assets	187		206
Total assets	$	5,944	$	8,335

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	1,233	$	918
Accrued expenses	1,205		1,430
Other current liabilities	100		97
Total current liabilities	2,538		2,445
Other liabilities	46		72
Total liabilities	2,584		2,517

Commitments and contingencies (Note 10)

Stockholders' equity:
Common stock, $0.0001 par value; 250,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 6,812,836 shares issued and outstanding as of March 31, 2022 and December 31, 2021	—		—
Additional paid-in-capital	27,903		27,722
Accumulated other comprehensive loss	(6)		(2)
Accumulated deficit	(24,537)		(21,902)
Total stockholders’ equity	3,360		5,818
Total liabilities and stockholders' equity	$	5,944	$	8,335


	Three Months Ended March 31,
	2022		2021

License revenue-related party	$	—	$	—
Operating expenses:
Research and development	1,271		1,772
General and administrative	1,363		830
Total operating expenses	2,634		2,602
Loss from operations	(2,634)		(2,602)
Other income	—		61
Revaluation of derivative liability	—		(89)
Interest expense, net	(1)		(8)
Net loss	(2,635)		(2,638)
Other comprehensive loss:
Unrealized loss on investments	(4)		—
Total comprehensive loss	$	(2,639)	$	(2,638)

Net loss per share of common stock, basic and diluted	$	(0.39)	$	(0.46)
Weighted-average common shares outstanding, basic and diluted	6,812,836		5,710,270


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Stockholders’ Equity (Deficit)
	Shares	Amount
Balance, December 31, 2020	4,506,216	$	—	$	11,145	$	—	$	(12,599)	$	(1,454)
Issuance of common stock for convertible notes	54,906	—		439		—		—		439
Issuance of common stock for IPO, net of issuance expenses	2,250,000	—		15,104		—		—		15,104
Issuance of common stock for services	1,714	—		9		—		—		9
Issuance of Underwriters Warrants	—	—		399		—		—		399
Stock-based compensation	—	—		168		—		—		168
Net loss	—	—		—		—		(2,638)		(2,638)
Balance, March 31, 2021	6,812,836	$	—	$	27,264	$	—	$	(15,237)	$	12,027


	Three Months Ended March 31,
	2022		2021
Operating activities:
Net loss	$	(2,635)	$	(2,638)
Adjustments to reconcile net loss to cash used in operating activities:
Amortization of finance lease right-of-use asset	19		18
Amortization of marketable securities premiums	16		—
Stock-based compensation expense	181		168
Revaluation of derivative liability	—		89
Forgiveness of PPP note	—		(61)
Non-cash interest, depreciation and other expense	—		10
Change in operating assets and liabilities:
Prepaid expenses and other current assets	39		(793)
Accounts payable	315		121
Accrued expenses	(225)		138
Cash used in operating activities	(2,290)		(2,948)

Investing activities:
Sale of marketable securities	1,154		—
Cash provided by investing activities	1,154		—

Financing activities:
Proceeds from common stock, net of offering expenses	—		15,503
Proceeds from convertible notes	—		350
Payment of finance lease liability	(23)		(34)
Cash (used in) provided by financing activities	(23)		15,819

Net (decrease) increase in cash and cash equivalents	(1,159)		12,871
Cash and cash equivalents, at beginning of period	3,702		109
Cash and cash equivalents, at end of period	$	2,543	$	12,980
Supplemental disclosure of cash flows information:
Noncash financing activities:
Conversion of convertible notes to common stock	$	—	$	350


	As of March 31, 2022
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable Securities:
Debt securities:
Corporate bonds	$	349	$	—	$	—	$	349
Municipal bonds	2,291		—		(6)		2,285
Total	$	2,640	$	—	$	(6)	$	2,634


	As of December 31, 2021
	Adjusted Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable Securities:
Debt securities:
Corporate bonds	$	1,153	$	—	$	(1)	$	1,152
Municipal bonds	2,657		—		(1)		2,656
Total	$	3,810	$	—	$	(2)	$	3,808


	As of March 31, 2022
Due in 1 year	$	2,634
Due in 1-5 years	—
Due in 5-10 years	—
Due after 10 years	—
Total	$	2,634


Volatility			85.0 %
Expected term in years			2.5
Dividend rate			0.0 %
Risk-free interest rate			0.155 %


	For the Three Months Ended March 31,
	2022		2021
Research and development	$	18	$	20
General and administrative	163		148
Total	$	181	$	168


	Number of options	Weighted average exercise price		Weighted average remaining contractual term (years)
Outstanding at December 31, 2021	708,490	$	3.60	8.64
Granted	182,000	$	5.80
Exercised	—	—
Forfeited	—	—
Outstanding at March 31, 2022	890,490	$	4.05	8.70
Exercisable at March 31, 2022	253,388	$	3.22	7.89


	VALLON PHARMACEUTICALS, INC.


Date: May 9, 2022	By:	/s/ Leanne M. Kelly
		Name: Leanne M. Kelly
		Title: Chief Financial Officer
		(Principal Financial and Accounting Officer)


Exhibit Number						Description

3.1						Amended and Restated Certificate of Incorporation of Vallon Pharmaceuticals, Inc. (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K, filed with the SEC on February 16, 2021).

3.2						Amended and Restated Bylaws of Vallon Pharmaceuticals, Inc. (incorporated by reference to Exhibit 3.3 to the Current Report on Form 8-K, filed with the SEC on February 16, 2021).

3.3						Certificate of Amendment to Amended and Restated Certificate of Incorporation of Vallon Pharmaceuticals, Inc. (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K, filed with the SEC on February 16, 2021).

31.1						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2						Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*						Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*						Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS						iXBRL Instance Document

101.SCH						iXBRL Taxonomy Extension Schema Document

101.CAL						iXBRL Taxonomy Extension Calculation Linkbase Document

101.DEF						iXBRL Taxonomy Extension Definition Linkbase Document

101.LAB						iXBRL Taxonomy Extension Label Linkbase Document

101.PRE						iXBRL Taxonomy Extension Presentation Linkbase Document

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

SEC Form 10-Q filed by Vallon Pharmaceuticals Inc.