NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Unaudited)
1.
Corporate overview:
Overview
The
accompanying unaudited condensed financial statements of Inhibitor Therapeutics, Inc., a Delaware corporation (the “Company”,
“INTI”, “we”, “us” or similar terminology), have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows as of March 31, 2023, and for all periods presented, have been made.
Certain
information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally
accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the Securities and Exchange
Commission (“SEC”) rules and regulations. These unaudited condensed financial statements should be read in conjunction with
the audited financial statements and notes thereto for the year ended December 31, 2022, which are included in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which was filed with the SEC on March 31, 2023 (the
“2022 Annual Report”). The accompanying condensed balance sheet as of December 31, 2022 has been derived from the audited
financial statements at that date, but does not include all information and footnotes required by GAAP for complete financial statements.
As
used herein, the term “Common Stock” means the Company’s common stock, $0.0001 par value per share.
The
results of operations for the three-month period ended March 31, 2023, are not necessarily indicative of results that may be expected
for any other interim period or for the full fiscal year. Readers of this Quarterly Report are strongly encouraged to review the risk
factors relating to the Company which are set forth in the 2022 Annual Report and the Company’s other filings with the SEC.
Nature
of the Business and Background
The
Company is a pharmaceutical development company that is focused on developing and ultimately commercializing innovative therapeutics
based on already approved active pharmaceuticals that have patent-protected methods of use and/or methods of delivery for patients with
certain cancers and certain non-cancerous proliferation disorders. The Company has explored and expects to continue to explore acquiring
or licensing other innovative therapeutics addressing unmet needs beyond cancer based on repurposing active ingredients of already approved
drugs. While the Company is not presently conducting clinical research activities as a result of recently settled litigation, the Company
expects to resume development of itraconazole for cancer indications and to continue to explore acquiring or licensing innovative clinical
stage repurposed therapeutics for non-cancerous indications.
The
Company’s current primary focus is on the development of therapies initially for basal cell carcinoma, prostate and lung cancer
in the U.S. market utilizing itraconazole, a drug currently approved by the U.S. Food and Drug Administration (“FDA”)
to
treat fungal infections, and which has an extensive history of safe and effective use in humans. The Company has developed intellectual
property and know-how related to the treatment of cancer patients using itraconazole.
INHIBITOR
THERAPEUTICS, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Unaudited)
2.
Summary of Significant Accounting Policies:
Estimates
The
preparation of condensed financial statements 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 the financial statements and the reported
amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Revenue
Recognition
The
Company currently has no ongoing source of revenues. Miscellaneous income, including interest, is recognized when earned by the Company.
Deferred revenue represents cash received for royalties in advance of being earned. Such payments are reflected as deferred revenue until
recognized under the Company’s revenue recognition policy. Deferred revenue would be classified as current if management believes
the Company will be able to recognize the deferred amount as revenue within twelve months of the balance sheet date. Deferred revenue
will be recognized when the product is sold and the royalty is earned. All deferred revenue is related to a basal cell carcinoma nevus
syndrome (BCCNS) product which is yet to be approved by FDA, and as a result the Company has determined that 100% of the advances of
the royalty received should be classified as non-current. At March 31, 2023 and December 31, 2022, deferred revenue consisted
of $3.0 million of royalties advanced by Mayne Pharma Ventures Pty Ltd. (“Mayne Pharma”).
Cash
and Cash Equivalents
Cash
and cash equivalents include cash in bank accounts as well as investments in highly-liquid money market funds and sweep accounts with
original maturities of three months or less. The Company considers all highly liquid investments with an original maturity of three months
or less to be cash equivalents. At times, the Company may maintain cash balances in excess of Federal Deposit Insurance Corporation insured
amounts. The Company continues to monitor the third-party depository institutions that hold the Company’s cash and limits its cash
deposits to financial institutions with high credit standing.
Research
and Development Expenses
Research
and development costs are expensed in the period in which they are incurred and include the expenses paid to third parties who conduct
research and development activities on behalf of the Company and purchased in-process research and development.
Stock-Based
Compensation
The
Company accounts for stock-based awards to employees and non-employees using Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 718 – Accounting for Share-Based Payments, which provides for the use
of the fair value based method to determine compensation for all arrangements where shares of stock or equity instruments are issued
for compensation. Fair values of restricted stock units issued are determined by the Company based predominantly on the trading price
of the common stock on the date of grant. Fair value of each common stock option is estimated on the date of grant using the Black-Scholes
valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected
volatility is based on historical volatility of a peer group’s common stock and other factors estimated over the expected term
of the options. The expected term of the options granted is derived using the “simplified method” which computes expected
term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield. No
stock-based awards were issued during the three months ended March 31, 2023 and 2022.
Income
Taxes
Deferred
tax assets and liabilities are recognized for future tax consequences attributed to differences between the consolidated financial statement
carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that are
expected to apply to the differences in the periods that they are expected to reverse.
Management
has evaluated the guidance relating to accounting for uncertainty in income taxes and has determined that the Company had no uncertain
income tax positions that could have a significant effect on the financial statements as of March 31, 2023.
INHIBITOR
THERAPEUTICS, INC.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
FOR
THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Unaudited)
2.
Summary of Significant Accounting Policies (continued):
Recent
accounting pronouncements:
Management
has considered all recent accounting pronouncements issued, but not effective, and does not believe that any will have a material impact
on the Company’s financial statements.
3.
Mayne Term Debt Facility
The
balance outstanding on the Mayne Term Debt Facility at December 31, 2022 was $411,000 and was repaid in February 2023.
4.
Stockholders’ Equity:
Employee
Stock Plans
There
was no stock-based compensation for the three months ended March 31, 2023 and March 31, 2022. As of March 31, 2023, there were
2,575,646 outstanding common stock options under the Company’s equity incentive plan of which 100% were vested. There was no unamortized
stock-based compensation at March 31, 2023. The weighted-average remaining contractual life, weighted-average exercise price per share and the aggregate intrinsic
value of the outstanding common stock options as of March 31, 2023 were 6.5 years, $0.09 and approximately $0.03 million, respectively.
5.
Legal Proceedings:
The
Company may from time to time become a party to various legal proceedings arising in the ordinary course of business. The Company is
not currently the subject of any pending legal proceedings.