FRESH TRACKS THERAPEUTICS, INC. All common stock share, per-share amounts, and other related balances and computations presented in Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and Part II, Item 1A, "Risk Factors" give effect to the 1-for-45 reverse stock split of the Company's outstanding shares of common stock that occurred onJuly 5, 2022 .
In addition, the Company's management has concluded that in light of the
presentation error described above, a material weakness exists in the Company's
internal control over financial reporting and that the Company's disclosure
controls and procedures were not effective as of
Items Amended in this Form 10-Q/A
This Form 10-Q/A sets forth the Original 10-Q, as modified and superseded where necessary to reflect the restatement and the related internal control considerations. Accordingly, the following items included in the Original 10-Q have been amended: •Part I, Item 1, Financial Statements •Part I, Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations •Part I, Item 4, Controls and Procedures •Part II, Item 1A, Risk Factors Additionally, in accordance with Rule 12b-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company is including with this Form 10-Q/A currently dated certifications from its principal executive officer and principal financial officer as Exhibits 31.1, 31.2 and 32.1. -------------------------------------------------------------------------------- Except as described above, this Form 10-Q/A does not amend, update, or change any other disclosures in the Original 10-Q. This Form 10-Q/A does not reflect events occurring after the filing of the Original 10-Q, and, except as expressly described above, does not modify or update any other disclosures in the Original 10-Q. --------------------------------------------------------------------------------
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FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q ("Quarterly Report") contains forward-looking
statements that involve substantial risks and uncertainties for purposes of the
safe harbor provided by the Private Securities Litigation Reform Act of 1995.
All statements contained in this Quarterly Report other than statements of
historical fact, including statements relating to future financial, business,
and/or research and clinical performance, conditions, plans, prospects, trends,
or strategies and other such matters, including without limitation, our
strategy; future operations; future financial position; future liquidity; future
revenue and payments of any type; territorial focus; projected expenses; results
of operations; the anticipated timing, scope, design, progress, results, and/or
reporting of data of ongoing and future nonclinical and clinical trials;
intellectual property rights, including the acquisition, validity, term, and
enforceability of such; the expected timing and/or results of regulatory
submissions and approvals; and prospects for commercializing any product
candidates of Brickell or third parties, or research and/or licensing
collaborations with, or actions of, its partners, including in the United States
("U.S."), Japan , South Korea , or any other country, or business development
activities with other potential partners. The words "may," "could," "should,"
"might," "anticipate," "reflects," "believe," "estimate," "expect," "intend,"
"plan," "predict," "potential," "will," evaluate," "advance," "excited," "aim,"
"strive," "help," "progress," "select," "initiate," "looking forward,"
"promise," "provide," "commit," "best-in-class," "first-in-class," and similar
expressions and their variants, are intended to identify forward-looking
statements. Such statements are based on management's current expectations and
involve risks and uncertainties. Actual results and performance could differ
materially from those projected in the forward-looking statements as a result of
many factors. Unless otherwise mentioned or unless the context requires
otherwise, all references in this Quarterly Report to "Brickell," "Brickell
Subsidiary," "Company," "we," "us," and "our," or similar references, refer to
Brickell Biotech, Inc. and its consolidated subsidiaries.
We based these forward-looking statements largely on our current expectations
and projections about future events and trends that we believe may affect our
financial condition, results of operations, business strategy and business
development activities, pipeline legal status, short-term and long-term business
operations and objectives, employees, and financial needs. These forward-looking
statements are subject to a number of risks, uncertainties, and assumptions,
including those described in Part II, Item 1A, "Risk Factors" in this Quarterly
Report, in Part I, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for
the year ended December 31, 2021 , and in Part II, Item 1A. "Risk Factors" in our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 , and under a
similar heading in any other periodic or current report we may file with the SEC
in the future. Moreover, we operate in a very competitive and rapidly changing
environment. New risks emerge quickly and from time to time. It is not possible
for our management to predict all risks, nor can we assess the impact of all
factors on our business and operations or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements we may make. In light of these
risks, uncertainties, and assumptions, the future events and trends discussed in
this Quarterly Report may not occur and actual results could differ materially
and adversely from those anticipated or implied in the forward-looking
statements. We undertake no obligation to revise or publicly release the results
of any revision to these forward-looking statements, except as required by law.
Given these risks and uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements. All forward-looking statements are
qualified in their entirety by this cautionary statement.
You should read carefully the factors described in Part II, Item 1A, "Risk Factors" in this Quarterly Report to better understand the risks and uncertainties inherent in our business and underlying any forward-looking statements. You are advised to consult any further disclosures we make on related subjects in our future public filings and on our website.
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BRICKELL BIOTECH, INC.
FORM 10-Q/A
INDEX
FORWARD-LOOKING STATEMENTS 4
RISK FACTORS SUMMARY 6
PART I. FINANCIAL INFORMATION 7
ITEM 1. Financial Statements (Restated) 7
ITEM 2. Management's Discussion and Analysis ofFinancial Condition and 27
Results of Operations
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 43
ITEM 4. Controls and Procedures 43
PART II. OTHER INFORMATION 45
ITEM 1. Legal Proceedings 45
ITEM 1A. Risk Factors 45
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 75
ITEM 3. Defaults Upon Senior Securities 75
ITEM 4. Mine Safety Disclosures 75
ITEM 5. Other Information 75
ITEM 6. Exhibits 76
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RISK FACTORS SUMMARY
Our business, financial condition, and operating results may be affected by a
number of factors, whether currently known or unknown. Any one or more of such
factors could directly or indirectly cause our actual results of operations and
financial condition to vary materially from past or anticipated future results
of operations and financial condition. Any of these factors, in whole or in
part, let alone combined with any of the others, could materially and adversely
affect our business, financial condition, results of operations, and stock
price. We have provided a summary of some of these risks below, with a more
detailed explanation of those and other risks applicable to the Company in Part
II, Item 1A. "Risk Factors" in this Quarterly Report.
•Our business depends on the successful continued financing, nonclinical and
clinical development, regulatory approval, and commercialization of our pipeline
assets.
•Clinical drug development for our pipeline assets is expensive, time-consuming, and uncertain. Any data resulting from our trials may not be favorable for further development.
•Our inability to maintain compliance with continued listing requirements ofThe Nasdaq Stock Market LLC ("Nasdaq"), including if we are unable to maintain the required minimum closing bid price of our common stock, could result in the delisting of our common stock. •Major public health issues, and specifically the pandemic and related impacts caused by the ongoing spread of COVID-19 and COVID-19 variants, including in terms of constraints on supply chains and human resource availability, could have an adverse impact on our financial condition and results of operations and other aspects of our business and that of our suppliers, contractors, and business partners. •We have sponsored or supported and in the future expect to sponsor or support clinical trials for our product candidates outside theU.S. , and theU.S. Food and Drug Administration ("FDA") and applicable foreign regulatory authorities may not accept data from such trials; in addition, we may not be allowed alone or with local country business partners to obtain regulatory approval for our product candidates without first conducting clinical trials in each of these other countries. •We rely and expect to continue to rely on third-party contractors for supply, manufacture, and distribution of preclinical, clinical, and commercial supplies, and possibly sales and promotion, of any future product candidates.
•We may not be able to obtain, afford, maintain, enforce, or protect our intellectual property rights covering our product candidates, including our autoimmune and inflammatory portfolio, and related technologies, that are of sufficient type, breadth, and term throughout the world.
•If we fail to comply with our obligations under our intellectual property and related license agreements, we could lose license rights that are important to our business. Additionally, these agreements may be subject to disagreement over contract interpretation, which could narrow the scope of our rights to the relevant intellectual property or technology, or other key aspects of product development and/or commercialization, or increase our financial or other obligations to our licensors. •Our receipt of future payments fromBotanix SB Inc. ("Botanix") is contingent on various factors outside of our control, including the successful development, regulatory approval, and commercialization of sofpironium bromide gel, 15%, by Botanix outside ofJapan , the successful continued commercialization of sofpironium bromide gel, 5% ("ECCLOCK®") by Kaken Pharmaceutical Co., Ltd. ("Kaken") inJapan , and the sufficiency of funds to pay us andBodor Laboratories, Inc. ("Bodor"), the licensor of this product. 6 --------------------------------------------------------------------------------
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