Gri Bio Inc.
01/30/2026 | Press release | Distributed by Public on 01/30/2026 06:34
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
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 should be read together with our financial statements and related notes beginning on page F-1 of this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled "Item 1A. Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" of this Annual Report, our actual results could differ materially from the results described in or implied by the forward-looking statements contained herein.
Overview
We are a clinical-stage biopharmaceutical company focused on discovering, developing, and commercializing innovative therapies that target serious diseases associated with dysregulated immune responses leading to inflammatory, fibrotic and autoimmune disorders. Our goal is to be an industry leader in developing therapies to treat these diseases and to improve the lives of patients suffering from such diseases.
Our product candidate, GRI-0621, is an oral inhibitor of type 1 iNKT cells. GRI-0621 is also an oral formulation of tazarotene, a synthetic retinoid acid receptor-beta and gamma selective agonist, that is approved in the United States for topical treatment of psoriasis and acne. While there are no approved oral formulations of tazarotene, as of December 31, 2025, it has been evaluated in over 1,700 patients as an oral product for up to 52-weeks. We are developing GRI-0621 for the treatment of severe fibrotic lung diseases such as IPF, a life-threatening progressive fibrotic disease of the lung that affects approximately 140,000 people in the United States, with up to 40,000 new cases per year in the United States. Some estimate that IPF affects 3 million globally. While there are currently two approved therapies for the treatment of lung fibrosis, neither has been associated with improvements in overall survival, and both therapies have been associated with significant side effects leading to poor therapeutic adherence. In preliminary and topline data from our trials to date with GRI-0621, and earlier trials with oral tazarotene, we have observed GRI-0621 to be well-tolerated and to inhibit iNKT cell activity in subjects. We and others have shown that activated iNKT are upregulated in IPF, primary sclerosing cholangitis, metabolic dysfunction-associated
steatohepatitis, alcoholic liver disease, SLE, MS, ulcerative colitis patients as well as other indications. In these patients activated iNKT cells are correlated with more severe disease.
We most recently evaluated GRI-0621 in a randomized, double-blind, multi-center, 2-arm Phase 2a clinical trial for the treatment of patients diagnosed with IPF. The primary endpoint for this Phase 2a trial was safety and tolerability of oral GRI-0621 as assessed by clinical labs, vital signs and adverse events after 12 weeks of treatment. Secondary endpoints were baseline changes in serum biomarkers, differentially expressed genes measured by ribonucleic acid sequencing (RNAseq), T cell receptor sequencing (TCRseq), and flow cytometry in PBMC samples collected at week six and week 12; an assessment of the PK of GRI-0621 at the week 12 visit of treatment (steady state); and a determination of the pharmacodynamic activity of oral GRI-0621 as measured by inhibition of immune cell activation in blood after six weeks and 12 weeks, and from BAL fluid after 12 weeks of treatment. Concurrently, a sub-study examined the number and activity of immune cells in BAL fluid in eight subjects (across various centers). Additional exploratory endpoints for the trial included assessment of the effect of GRI-0621 on pulmonary function at baseline and after six weeks and 12 weeks of treatment. 35 patients were enrolled in the trial and randomly assigned to a placebo arm and a GRI-0621 treatment arm, of which 19 patients completed treatment in the treatment arm and nine patients completed treatment in the placebo arm. Based on topline results available to date, the clinical trial met its primary endpoint and the secondary endpoints measured to date (as described below). Secondary and exploratory endpoints relating to additional flow cytometry data, TCRseq, and the pharmacodynamic activity of GRI-0621 are being evaluated as analyses become available.
No treatment related serious adverse events were reported for GRI-0621-treated subjects and adverse events were grade 2 (17%) or grade 3 (4%), with dry skin, dry lips, muscle and joint pain as the most common adverse events reported. There were no increases in cough (0% in the GRI-0621-treated arm compared to 25% in the placebo arm) or gastrointestinal disorders reported in the GRI-0621-treated arm compared to the placebo arm (diarrhea reported in 13% versus 33%, respectively). 80% of the subjects enrolled were taking background pirfenidone or nintedanib. No changes in liver enzymes, triglycerides or cholesterol were observed over 12 weeks in patients treated with GRI-0621 and standard of care.
Changes from baseline of serum biomarkers of type I, III and VI collagen in GRI-0621-treated subjects were suggestive of an anti-fibrotic effect, with decreases in biomarkers of fibrosis formation and increases in biomarkers of fibrosis resolution, including crosslinked type III collagen, observed after 12 weeks of treatment with GRI-0621. Changes from baseline in type IV collagen were suggestive of initiation of an alveolar basement membrane repair mechanism, an important step in repair of injured lung tissue. Reductions in neutrophil and macrophage activity (immune cell biomarkers upregulated in IPF and associated with disease progression) and downregulation of genes associated with fibrosis, disease progression and mortality were also observed in patients treated with GRI-0621 and standard of care.
Placebo-adjusted changes from baseline in FVC were observed to increase by 99 ml in the GRI-0621-treated arm and by 139 ml in the subset taking both GRI-0621 and standard of care compared to placebo plus standard of care. Breathing tests used to measure FVC are subject to large visit-to-visit variability and are dependent on the patient's effort, often resulting in data outliers. To minimize the impact of outliers in this FVC dataset, a post hocdata analysis was performed excluding the data points with the largest gain or loss in FVC over 12 weeks from both arms. The results of this analysis demonstrated an increase in placebo-adjusted change from baseline in FVC of 54 ml in the GRI-0621-treated arm and an increase of 81 ml in the subset taking both GRI-0621 and standard of care. Overall, 39% of GRI-0621 treated subjects experienced an increase in FVC at 12 weeks compared to 80% of subjects who experienced a decline in FVC at 12 weeks in the placebo-treated arm. GRI-0621-treated subjects also demonstrated increased TCR expression after 12 weeks of treatment compared with baseline or placebo-treated subjects receiving standard of care, suggestive of iNKT inactivation following GRI-0621 treatment. T cell subsets demonstrated increased type 1-associated cytokines (IFN-γ) and reduced type 2 (IL-4 and IL-13) and type 3-associated cytokines (IL-17A and IL-22) in both BAL and PBMC samples. Similarly, TGF-β was observed to be reduced after 12 weeks of GRI-0621 treatment in T cell subsets (e.g. Treg and Treg-like), B cells, monocytes, macrophages and neutrophils in BAL and PBMC samples compared to baseline or placebo-treated subjects receiving standard of care. GRI-0621 treatment also improved expression of genes associated with lung injury, fibroblast differentiation, extracellular matrix deposition, basement membrane repair, and type II alveolar epithelial cell-to-type I alveolar epithelial cell transition. The RNAseq data is supportive of and consistent with earlier reported serum biomarker and flow cytometry data.
Final results from this trial will be used to determine dose, safety sample size, clinically relevant endpoints and clinical trial duration in communication with the FDA in designing future trials. Based on these results and subject to FDA clearance and obtaining the requisite additional funding or resources we plan to initiate (either ourselves or with a strategic partner) a Phase 2b trial that could support an application for conditional approval of GRI-0621 in the European Union and could have the potential to be regarded as a registrational trial in the United States.
Our product candidate portfolio also includes GRI-0803 and a proprietary library of 500+ compounds. GRI-0803, the lead molecule selected from the library, is a novel oral agonist of type 2 diverse Natural Killer T cells and would be developed for the treatment of autoimmune disorders, with much of our preclinical work in SLE or lupus and MS. In lupus, the immune system mistakenly attacks its own healthy tissues, especially joints and skin, but can affect almost every organ and tissue of the body. The condition can be fatal and often causes debilitating bouts of fatigue and pain that prevent nearly half of adult patients from working. Lupus affects between 160,000 - 200,000 patients in the United States, with around 80,000 - 100,000 patients in the United States suffering from kidney nephritis, one of the most serious manifestations of SLE, typically within five years of diagnosis. There is no cure for lupus, but medical interventions and lifestyle changes can help control it. SLE treatment consists primarily of immunosuppressive drugs that inhibit the activity of the immune system. Only two drugs have been approved for lupus in the past 50 years, and new treatment options are sorely needed. In order to focus our resources on our GRI-0621 program, we previously limited our development of GRI-0803 pending additional funding. We intend to complete IND-enabling studies and file an IND application to evaluate GRI-0803 in a Phase 1a and 1b trial in healthy volunteers in 2026. We expect to continue to evaluate indications to select the best fit for further development of the program, but our initial focus would be on lupus.
Recent Developments
Reverse Stock Splits
On January 15, 2026, our stockholders approved the January 2026 Reverse Stock Split within a range of not less than one-for-two and not more than one-for-30, and our Board subsequently approved the January 2026 Reverse Stock Split at the ratio of one-for-28. Following these approvals, we filed an amendment to our Charter with the Secretary of State of the State of Delaware to effect the January 2026 Reverse Stock Split as of 4:01 p.m. Eastern Time on January 23, 2026. Shares of our Common Stock began trading on a post-split basis on January 26, 2026. The January 2026 Reverse Stock Split had the effect of reducing the aggregate number of outstanding shares of Common Stock from 15,960,229 outstanding shares on a pre-reverse split basis as of January 23, 2026 to a total of 570,002 shares outstanding on a post-reverse split basis as of January 23, 2026.
Previously, on January 29, 2024, we effected a reverse stock split of our Common Stock at a ratio of one-for-seven, on June 17, 2024, we effected a reverse stock split of our Common Stock at a ratio of one-for-13 and on February 21, 2025 we effected a reverse stock split of our Common stock at a ratio of on-for seventeen.
Unless otherwise noted, all financial information, share numbers, option numbers, warrant numbers, other derivative security numbers and exercise prices appearing in this Annual Report have been adjusted to give effect to the reverse stock splits described herein.
December 2025 Securities Purchase Agreement
On December 11, 2025, we entered into a securities purchase agreement (the December 2025 Purchase Agreement), pursuant to which we issued and sold, in a public offering (the December 2025 Offering), (i) 92,976 shares (the December 2025 Shares) of Common Stock, (ii) 287,977 pre-funded warrants (the December 2025 Pre-Funded Warrants) exercisable for an aggregate of 287,977 shares of Common Stock and (iii) 380,962 Series F common warrants (the Series F Common Warrants) exercisable for an aggregate of 380,962 shares of Common Stock. The securities were offered in combinations of (a) one December 2025 Share or one December 2025 Pre-Funded Warrant, together with (b) one Series F Common Warrant, for a combined purchase price of $21.00 (less $0.0028 for each December 2025 Pre-Funded Warrant).
The December 2025 Pre-Funded Warrants were exercisable for one share of Common Stock at a price of $0.0028 per share, were exercisable immediately and expired when exercised in full. The Series F Common Warrants are exercisable into one share of Common Stock at a price per share of $21.00 and are immediately exercisable. The Series F Common Warrants will expire on December 12, 2030. As of December 31, 2025, all of the December 2025 Pre-Funded Warrants have been exercised.
H.C. Wainwright & Co., LLC (Wainwright) acted as the exclusive placement agent in the December2025 Offering. Pursuant to an engagement agreement, we issued to Wainwright, or its designees, warrants to purchase up to an aggregate of 26,667 shares of Common Stock (the December 2025 PA Warrants). The December 2025PA Warrants have an exercise price of $26.25per share, will expire on December12, 2030 and are currently exercisable.
April 2025 Securities Purchase Agreement
On April 1, 2025, we entered into a securities purchase agreement (the April 2025 Purchase Agreement), pursuant to which we issued and sold, in a public offering (the April 2025 Offering), (i) 7,214 shares (the April 2025 Shares) of Common Stock, (ii) 42,389 pre-funded warrants (the April 2025 Pre-Funded Warrants) exercisable for an aggregate of 42,389 shares of Common Stock, (iii) 49,605 Series E-1 common warrants (the Series E-1 Common Warrants) exercisable for an aggregate of 49,605 shares of Common Stock, and (iv) 49,605 Series E-2 common warrants (the Series E-2 Common Warrants) exercisable for an aggregate of 49,605 shares of Common Stock, and (v) 49,605 Series E-3 common warrants (the Series E Common Warrants, and together with the Series E-1 Common Warrants and the Series E-2 Common Warrants, the Series E Warrants) exercisable for an aggregate of 49,605 shares of Common Stock. The securities were offered in combinations of (a) one April 2025 Share or one April 2025 Pre-Funded Warrant, together with (b) one Series E-1 Common Warrant, one Series E-2 Common Warrant and one Series E-3 Common Warrant, for a combined purchase price of $100.80 (less $0.0028 for each April 2025 Pre-Funded Warrant).
The April 2025 Pre-Funded Warrants were exercisable for one share of Common Stock at a price of $0.0028 per share, were exercisable immediately and expired when exercised in full. Each Series E Common Warrant is exercisable into one share of Common Stock at a price per share of $89.60 and is immediately exercisable. The Series E-1 Common Warrants will expire on April 2, 2030. The Series E-2 Common Warrants will expire on October 2, 2026. The Series E-3 Common Warrants expired on January 2, 2026. As of December 31, 2025, all of the April 2025 Pre-Funded Warrants have been exercised.
Wainwright acted as the exclusive placement agent in the April 2025 Offering. Pursuant to an engagement agreement, we issued to Wainwright, or its designees, warrants to purchase up to an aggregate of 3,474 shares of Common Stock (the April 2025 PA Warrants). The April 2025PA Warrants have an exercise price of $126.00per share, will expire on April 1, 2030 and are currently exercisable.
October 2024 Repricing Letter Agreements
On October 21, 2024, we entered into letter agreements (the Repricing Letter Agreements) with certain holders (the Holders) of our issued and outstanding Series B-1 Common Warrants and Series B-2 Common Warrants to purchase an aggregate of 1,602 shares of our Common Stock, offering these Holders the opportunity to exercise all of their Series B Common Warrants for cash at an exercise price equal to $476.00 per share. In addition, these Holders received new unregistered Series D-1 Common Warrants exercisable for up to an aggregate of 1,604 shares of Common Stock and new unregistered Series D-2 Common Warrants exercisable for up to an aggregate of 1,604 shares of Common Stock. The Series D Common Warrants are immediately exercisable and have an exercise price of $476.00 per share. The Series D-1 Common Warrants expire on October 22, 2029, and the Series D-2 Common Warrants expire on April 22, 2026. We refer to this transaction as the "Warrant Repricing Transaction."
Wainwright acted as the exclusive placement agent for the Warrant Repricing Transaction pursuant to an engagement agreement between us and Wainwright, dated as of October 21, 2024. In addition to a cash fee, management fee, and reimbursement of certain accountable and non-accountable expenses, we also issued to Wainwright or its designees warrants to purchase up to an aggregate of 114 shares of Common Stock (the October 2024 PA Warrants) as compensation for its placement agent services. The October 2024 PA Warrants are immediately exercisable, expire on October 22, 2029 and have an exercise price of $595.00 per share.
June 2024 Securities Purchase Agreement
On June 26, 2024, we entered into a securities purchase agreement (the June 2024 Purchase Agreement), pursuant to which we issued and sold, in a public offering (the June 2024 Offering), (i) 126 shares (the June 2024 Shares) of Common Stock, (ii) 4,466 pre-funded warrants (the June 2024 Pre-Funded Warrants) exercisable for an aggregate of 4,466 shares of Common Stock, (iii) 4,593 Series C-1 common warrants (the Series C-1 Common Warrants) exercisable for an aggregate of 4,593 shares of Common Stock, and (iv) 4,593 Series C-2 common warrants (the Series C-2 Common Warrants, and together with the Series C-1 Common Warrants, the Series C Common Warrants) exercisable for an aggregate of 4,593 shares of Common Stock. The securities were offered in combinations of (a) one June 2024 Share or one June 2024 Pre-Funded Warrant, together with (b) one Series C-1 Common Warrant and one Series C-2 Common Warrant, for a combined purchase price of $871.08 (less $0.0476 for each June 2024 Pre-Funded Warrant).
The June 2024 Pre-Funded Warrants have been exercised in full. Each Series C-1 Common Warrant is exercisable into one share of Common Stock at a price per share of $871.08 and expires on September 6, 2029. Each Series C-2 Common Warrant is exercisable into one share of Common Stock at a price per share of $871.08 and expires on March 6, 2026.
Wainwright acted as the exclusive placement agent in the June 2024 Offering. Pursuant to an engagement agreement, we issued to Wainwright, or its designees, warrants to purchase up to an aggregate of 324 shares of Common Stock (the June 2024 PA
Warrants). The June 2024 PA Warrants have an exercise price of $1,088.92per share, will expire on June 26, 2029 and are currently exercisable.
May 2024 At The Market Offering
On May 20, 2024, we entered into an At The Market Offering Agreement (the Sales Agreement) with Wainwright, pursuant to which we may sell and issue, subject to the limitations in the Sales Agreement, shares up to $10.0 million of our Common Stock from time to time through Wainwright as our sales agent (the ATM Offering). Under the Sales Agreement, Wainwright is entitled to compensation of 3.0% of the gross offering proceeds of all shares of Common Stock sold through it pursuant to the Sales Agreement.
As of December 31, 2025, we have sold 60,003 shares of our Common Stock in the ATM Offering at a weighted-average price of $102.75 per share, raising $6.2 million of gross proceeds and net proceeds of $5.9 million, after deducting commissions to the sales agent and other ATM Offering related expenses. On January 9, 2026, we filed a prospectus supplement to our registration statement on Form S-3 (File No. 333-279348) to increase the amount of shares of Common Stock that we may offer and sell under the Sales Agreement and applicable registration statement to an aggregate offering price of up to $7.4 million, which amount does not include the shares of Common Stock having an aggregate gross sales price of approximately $6.2 million that were sold under the ATM Offering through January 8, 2026, in accordance with the limitations set forth in Instruction I.B.6 of Form S-3. Since December 31, 2025, the Company has sold 947,342 shares of Common Stock with an aggregate gross sales price of $6,474.
February 2024 Securities Purchase Agreement
On February 1, 2024, we entered into a securities purchase agreement (the February 2024 Purchase Agreement), pursuant to which we issued and sold, in a public offering, (i) 53 shares (the February 2024 Shares) of Common Stock, (ii) 755 pre-funded warrants (the February 2024 Pre-Funded Warrants) exercisable for an aggregate of 755 shares of Common Stock, (iii) 809 Series B-1 Common Warrants exercisable for an aggregate of 809 shares of Common Stock, and (iv) 809 Series B-2 Common Warrants exercisable for an aggregate of 809 shares of Common Stock. The Series B Common Warrants together with the February 2024 Pre-Funded Warrants are referred to in this Annual Report as the February 2024 Warrants. The securities were offered in combinations of (a) one February 2024 Share or one February 2024 Pre-Funded Warrant, together with (b) one Series B-1 Common Warrant and one Series B-2 Common Warrant, for a combined purchase price of $6,806.80 (less $0.6188 for each February 2024 Pre-Funded Warrant).
The February 2024 Pre-Funded Warrants have been exercised in full. Each Series B-1 Common Warrant is exercisable into one share of Common Stock at a price per share of $6,806.80 and expires on February 6, 2029. Each Series B-2 Common Warrant is exercisable into one share of Common Stock at a price per share of $6,806.80 and expires on August 6, 2026.
In connection with the issuance of the February 2024 Shares and the February 2024 Warrants pursuant to the February 2024 Purchase Agreement, the exercise price of the Series A-1 Warrants was reduced to par, or $0.0001 per share, pursuant to the terms of the Series A-1 Warrants. All of the Series A-1 Warrants have been exercised in full.
Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more detail in the notes to our financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.
Accrued Research and Development
We have entered into various agreements with CROs and other service providers. Our research and development accruals are estimated based on the level of services performed, progress of the studies, and contracted costs. The estimated costs of research and development provided, but not yet invoiced, are included in accrued expenses on the balance sheet. If the actual timing of the performance of services or the level of effort varies from the original estimates, we will adjust the accrual
accordingly. Payments made to third parties under these arrangements in advance of the performance of the related services are recorded as prepaid expenses and other current assets until the services are rendered.
Stock-Based Compensation
We recognize expense for employee and non-employee stock-based compensation in accordance with ASC Topic 718, Compensation-Stock Compensation(ASC Topic 718). ASC Topic 718 requires that such transactions be accounted for using a fair value-based method. The estimated fair value of the options is amortized over the vesting period, based on the fair value of the options on the date granted, and is calculated using the Black-Scholes option-pricing model. We account for forfeitures as incurred.
Estimating the fair value of option shares issued under the employee stock purchase plan requires the input of subjective assumptions, including the estimated fair value of our Common Stock, the expected life of the options, stock price volatility, the risk-free interest rate and expected dividends. The assumptions used in our Black-Scholes option-pricing model represent management's best estimates and involve a number of variables, uncertainties and assumptions and the application of management's judgment, as they are inherently subjective. If any assumptions change, our stock-based compensation expense could be materially different in the future.
These assumptions used in our Black-Scholes option-pricing model are estimated as follows:
•Expected Term. Due to the lack of sufficient company-specific historical data, the expected term of employee options is determined using the "simplified" method, as prescribed in SEC's Staff Accounting Bulletin (SAB) No. 107, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option. The expected term of nonemployee options is equal to the contractual term.
•Expected Volatility. The expected volatility is based on a weighted-average of our historical volatility and the historical volatilities of similar entities within our industry which were commensurate with the expected term assumption as described in SAB No. 107.
•Risk-Free Interest Rate. The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected term.
•Expected Dividends. The expected dividend yield is 0% because we have not historically paid, and do not expect for the foreseeable future to pay, a dividend on our Common Stock.
Leases
We account for leases in accordance with Accounting Standards Update (ASU) 2016-02, Leases (Topic 842)and ASU 2018-10, Codification Improvements to Topic 842, Leases, and ASU 2018-11, Leases (Topic 842): Targeted Improvements, both of which clarify and enhance the certain amendments made in ASU 2016-02. The ASUs increase transparency and comparability among entities by recognizing lease assets and lease liabilities on the balance sheet for all leases and disclosing key information about lease arrangements. We entered into one lease for office space which we determined was an operating lease.
Financial Operations Overview
Research and Development Expenses
Research and development expenses include personnel costs associated with research and development activities, including third party contractors to perform research, conduct clinical trials and manufacture drug supplies and materials.
Our research and development expenses have consisted primarily of costs related to our development program for our product candidate, GRI-0621. These expenses include:
•employee-related expenses, such as salaries, bonuses and benefits, consultant-related expenses such as consultant fees and bonuses, stock-based compensation, overhead-related expenses and travel-related expenses for our research and development personnel; and
•expenses incurred under agreements with contract research organizations, contract manufacturing organizations and research laboratories in connection with our preclinical development, process development, manufacturing and clinical development activities as well as consultants that support the implementation of our clinical and non-clinical studies.
Although our direct research and development expenses are tracked by product candidate, we do not allocate employee costs and costs associated with our discovery efforts, laboratory supplies and facilities, including other indirect costs, to specific product candidates as these costs are deployed across multiple programs. We expect our research and development expenses to increase over the next several years as we conduct our planned clinical and preclinical activities for our product candidates.
General and Administrative Expenses
General and administrative expenses consist primarily of compensation and consulting related expenses for executives and other administrative personnel, professional fees and other corporate expenses, including legal and accounting fees, travel expenses, facilities-related expenses, and consulting services relating to corporate matters.
We expect our general and administrative expenses will continue to increase as we incur costs associated with being a public company, including expenses related to services associated with maintaining compliance with The Nasdaq Capital Market and SEC requirements, directors' and officers' insurance, legal and accounting costs and investor relations costs, as well as an increase in personnel expenses as we hire additional personnel.
Warrant Liability
In May 2022, Vallon issued warrants (the May 2022 Warrants) in connection with a securities purchase agreement. Vallon evaluated the May 2022 Warrants in accordance with ASC 815-40, Derivatives and Hedging - Contracts in Entity's Own Equity (ASC 815-40), and concluded that a provision in the May 2022 Warrants related to the reduction of the exercise price in certain circumstances precludes the May 2022 Warrants from being accounted for as components of equity. As a result, the May 2022 Warrants were measured at fair value upon issuance using a Black-Scholes valuation model and are recorded as a liability on the consolidated balance sheet. The fair value of the May 2022 Warrants is measured at each reporting date and changes in fair value are recognized in the consolidated statements of operations in the period of change.
Interest Income
Interest income consists of interest earned on our cash and cash equivalents held with institutional banks.
Recently Adopted Accounting Pronouncements
In December 2023, FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in ASU 2023-09 are intended to enhance the transparency and decision usefulness of income tax disclosures through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 for public entities, with early adoption permitted. We have adopted the provisions of ASU 2023-09 and have included the required disclosures in this Annual Report.
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280):Improvements to Reportable Segment Disclosures (ASU 2023-07). This amended guidance applies to all public entities and aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This guidance is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. We have adopted the provisions of ASU 2023-07 and have included the required disclosures in this Annual Report.
Recently Issued Accounting Pronouncements
We consider the applicability and impact of all ASUs. ASUs not discussed below were assessed and determined to be either not applicable or are expected to have minimal impact on the financial statements.
In November 2024, FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (ASU 2024-03). The amendments in ASU 2024-03 require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, for all public entities. Early adoption is permitted. We are currently evaluating the impact of this update on our consolidated financial statements.
In October 2023, FASB issued ASU 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative. The amendments in ASU 2023-06 represent changes to clarify or improve disclosure and presentation requirements of a variety of topics in the Codification and align those requirements with the SEC's regulation. For entities subject to the SEC's existing disclosure requirements, the effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. For all entities, if by June 30, 2027, the SEC has not removed the applicable requirement from
Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and will not become effective for any entity. We are currently evaluating the impact of this update and its effective dates but do not expect the update to have a material effect on our consolidated financial statements.
Smaller Reporting Company Status
We are a "smaller reporting company" as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of any fiscal year for so long as either (1) the market value of our shares of Common Stock held by non-affiliates does not equal or exceed $250.0 million as of the prior June 30th, or (2) our annual revenues did not equal or exceed $100.0 million during such completed prior fiscal year and the market value of our shares of Common Stock held by non-affiliates did not equal or exceed $700.0 million as of the prior June 30th. To the extent we take advantage of any reduced disclosure obligations, it may make comparison of our financial statements with other public companies difficult or impossible.
Emerging Growth Company Status
We are an "emerging growth company," as defined in the JOBS Act and may remain an emerging growth company for up to five years. For so long as we remain an emerging growth company, we are permitted and intend to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not applicable to emerging growth companies. These exemptions include:
•reduced disclosure about our executive compensation arrangements;
•no non-binding stockholder advisory votes on executive compensation or golden parachute arrangements; and
•exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.
We have taken advantage of reduced reporting requirements in this report and may continue to do so until such time that we are no longer an emerging growth company. We will remain an "emerging growth company" until the earliest of (a) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (b) December 31, 2026, the last day of the fiscal year following the fifth anniversary of the completion of Vallon's initial public offering, (c) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years or (d) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period for complying with new or revised accounting standards.
Results of Operations
Comparison of the Years Ended December 31, 2025 and 2024
The following table sets forth our results of operations for the year ended December 31, 2025 compared to the year ended December 31, 2024 (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating expenses: | |||||||||||
| Research and development | $ | 6,819 | $ | 3,768 | |||||||
| General and administrative | 5,158 | 4,467 | |||||||||
| Total operating expenses | 11,977 | 8,235 | |||||||||
| Loss from operations | (11,977) | (8,235) | |||||||||
| Change in fair value of warrant liability | - | 3 | |||||||||
| Interest income | 21 | 25 | |||||||||
| Net loss | $ | (11,956) | $ | (8,207) | |||||||
Research and Development Expenses
Research and development expenses were $6.8 million and $3.8 million for the years ended December 31, 2025 and 2024, respectively. The $3.0 million increase in research and development expenses was primarily due to increases of $2.9 million in expenses related to the registration development program of GRI-0621, $0.1 million in personnel expense, including stock-based compensation and a $0.1 million increase in consulting fees.
General and Administrative Expenses
General and administrative expenses were $5.2 million and $4.5 million for the years ended December 31, 2025 and 2024, respectively. The $0.7 million increase was primarily due to an increase of $0.7 million in personnel costs, including stock-based compensation expense.
Change in Fair Value of Warrant Liability
The change in fair value of $3,000 represents a decrease in the fair value of the warrants outstanding during the year ended December 31, 2025.
Interest Income
Interest income was $21,000 and $25,000 for the years ended December 31, 2025 and 2024, respectively.
Liquidity and Capital Resources
Since inception, we have incurred losses and expect to continue to incur losses for the foreseeable future. We incurred net losses of $12.0 million and $8.2 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had an accumulated deficit of $51.7 million.
We have financed our working capital requirements to date through the issuance of Common Stock, warrants, convertible notes and promissory notes. As of December 31, 2025, we had $8.2 million in cash and cash equivalents.
The following table summarizes our cash flows for the periods indicated (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | $ | (10,186) | $ | (8,611) | |||||||
| Investing activities | (3) | - | |||||||||
| Financing activities | 13,390 | 11,831 | |||||||||
| Net increase in cash and cash equivalents | $ | 3,201 | $ | 3,220 | |||||||
Cash Flows from Operating Activities
For the years ended December 31, 2025 and 2024, $10.2 million and $8.6 million were used in operating activities, respectively. The $1.6 million decrease was primarily due to a $3.8 million increase in our net loss and decrease of $0.2 million in cash used for prepaid and other expenses and operating lease liabilities, offset by a $0.8 million increase in non-cash adjustments, including stock based compensation expense, and a $1.6 million decrease in cash used for the payment of accounts payable and accrued liabilities.
Cash Flows from Investing Activities
Net cash provided by investing activities was $3,000 for the year ended December 31, 2025, which was related to the purchase of computer equipment.
Cash Flows from Financing Activities
Net cash provided by financing activities was $13.4 million during the year ended December 31, 2025 and was primarily related to $13.0 million of proceeds from the April 2025 Purchase Agreement and the December 2025 Purchase Agreement and $2.6 million of proceeds from the ATM Offering. These proceeds were offset by $2.2 million in stock issuance costs.
Net cash provided by financing activities was $11.8 million for the year ended December 31, 2024 and was primarily due to of $9.5 million from the February 2024 Purchase Agreement and the June 2024 Purchase Agreement, $3.6 million of proceeds from the ATM Offering and $0.8 million of proceeds from the exercise of certain Series B Common Warrants. These proceeds were offset by $2.0 million in stock issuance costs.
December 2025 Securities Purchase Agreement
For a description of the transactions contemplated by the December 2025 Securities Purchase Agreement, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview - December 2025 Securities Purchase
Agreement." The net proceeds from the offering were $6.3 million, after deducting placement agent fees and offering expenses of $1.7 million.
April 2025 Securities Purchase Agreement
For a description of the transactions contemplated by the April 2025 Securities Purchase Agreement, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview - April 2025 Securities Purchase Agreement." The net proceeds from the offering were $4.0 million, after deducting placement agent fees and offering expenses of $1.0 million.
October 2024 Repricing Letter Agreements
For a description of the transactions contemplated by the October 2024 Repricing Letter Agreements, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview - October 2024 Repricing Letter Agreements." The net proceeds from the exercise of certain Series B Common Warrants were $0.6 million after deducting placement agent fees and offering expenses of $0.2 million.
June 2024 Securities Purchase Agreement
For a description of the transactions contemplated by the June 2024 Securities Purchase Agreement, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview - June 2024 Securities Purchase Agreement." The net proceeds from the offering were $3.2 million, after deducting placement agent fees and offering expenses of $1.1 million.
May 2024 At The Market Offering
For a description of the May 2024 At The Market Offering, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview - May 2024 At The Market Offering." As of December 31, 2025, we have sold 60,003 shares of our Common Stock in the ATM Offering at a weighted-average price of $102.75 per share, raising $6.2 million of gross proceeds and net proceeds of $5.9 million, after deducting commissions to the sales agent and other ATM Offering related expenses.
February 2024 Securities Purchase Agreement
For a description of the transactions contemplated by the February 2024 Securities Purchase Agreement, see "Management's Discussion and Analysis of Financial Condition and Results of Operations - Overview - February 2024 Securities Purchase Agreement." The net proceeds from the offering were $4.4 million, after deducting placement agent fees and offering expenses of $1.1 million.
Future Funding Requirements
Our net losses were $12.0 million and $8.2 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had $8.2 million in cash and an accumulated deficit of $51.7 million. We expect to devote substantial financial resources to our planned activities, particularly as we prepare for, initiate, and conduct our planned development of GRI-0803 (and, subject to obtaining additional capital and resources, GRI-0621), advance our discovery programs and continue our product development efforts. In addition, we expect to incur additional costs associated with operating as a public company.
Based on our current operating plan, we believe that our existing cash and cash equivalents will be sufficient to fund our currently planned operating expenses and capital expenditure requirements into the first quarter of 2027. In particular, these estimates assume only the commencement of preliminary work towards the initiation of a Phase 2b trial of GRI-0621; we would require substantial additional capital or resources in order to complete a Phase 2b clinical trial of GRI-0621.
We intend to raise capital through additional issuances of equity securities and/or short-term or long-term debt arrangements, and potentially through strategic partner and collaboration agreements, but there can be no assurances any such financing, collaborations or partnering opportunities will be available when needed on acceptable terms, or at all, even if our research and development efforts are successful. If we are unable to secure adequate additional funding when needed or on acceptable terms, we will need to reevaluate our operating plans and may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, delay, scale back or eliminate some or all of our development programs, or relinquish rights to our technology on less favorable terms than we would otherwise choose or cease operations entirely. These actions could materially impact our business, results of operations and future prospects and the value of shares of our Common Stock. In addition, attempting to secure additional financing may divert the time and attention of management from day-to-day activities and distract from our discovery and product development efforts. As a result, there is substantial doubt about our ability to continue as a going concern. We expect to continue to incur significant and increasing operating losses at least for the
foreseeable future. We do not expect to generate product revenue unless and until we successfully complete development, obtain regulatory approval for and successfully commercialize our current, or any future, product candidates.
See Item 1A. "Risk Factors" of this Annual Report for additional risks associated with our substantial capital requirements.
Contractual Obligations and Other Commitments
We enter into contracts in the normal course of business with third-party contract organizations for clinical trials, preclinical studies, manufacturing and other services and products for operating purposes. These contracts generally provide for termination following a certain period after notice and therefore we believe that our non-cancelable obligations under these agreements are not material.
Off-Balance Sheet Arrangements
We are not party to any off-balance sheet transactions. We have no guarantees or obligations other than those which arise out of normal business operations.
Gri Bio Inc. published this content on January 30, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on January 30, 2026 at 12:35 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]