Citius Pharmaceuticals, Inc 10-Q for FY2022 Q1
Citius Pharmaceuticals, Inc. (CTXR)
About this 10-Q
Citius Pharmaceuticals, Inc filed this 10-Q on February 10, 2022, covering the quarter ended December 31, 2021 (FY2022 Q1).
Headline figures
Quarter ended December 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $9.23M
- compared with a net loss of $8.15M a year earlier
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended:
OR
For the transition period from ______________ to ______________
Commission
File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
(Address of principal executive offices and zip code)
(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 | ||
| Warrants to purchase common stock | CTXRW | 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.
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 (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was
required to submit such files).
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 | ☐ |
| ☒ | 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 Exchange Act). Yes ☐ No
As
of February 10, 2022, there were
Citius Pharmaceuticals, Inc.
FORM 10-Q
TABLE OF CONTENTS
December 31, 2021
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EXPLANATORY NOTE
In this Quarterly Report on Form 10-Q, and unless the context otherwise requires, the “Company,” “we,” “us,” and “our” refer to Citius Pharmaceuticals, Inc. and its wholly-owned subsidiaries Citius Pharmaceuticals, LLC, Leonard-Meron Biosciences, Inc., Citius Acquisition Corp., and its majority-owned subsidiary, NoveCite, Inc., taken as a whole.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors discussed from time to time in this report and in other documents which we file with the Securities and Exchange Commission. In addition, such statements could be affected by risks and uncertainties related to:
| ● | the cost, timing and results of our pre-clinical and clinical trials;
| |
| ● | our ability to raise funds for general corporate purposes and operations, including our pre-clinical and clinical trials; |
| ● | our ability to obtain and maintain required regulatory approvals for our product candidates; |
| ● | the commercial feasibility and success of our technology and product candidates; |
| ● | our ability to recruit and retain qualified management and scientific and technical personnel to carry out our operations; and |
| ● | the other factors discussed in the “Risk Factors” section of our most recent Annual Report on Form 10-K and elsewhere in this report. |
Any forward-looking statements speak only as of the date on which they are made, and except as may be required under applicable securities laws, we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the filing date of this report.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
| December 31, | September 30, | |||||||
| 2021 | 2021 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Operating lease right-of-use asset, net | ||||||||
| Other Assets: | ||||||||
| Deposits | ||||||||
| In-process research and development | ||||||||
| Goodwill | ||||||||
| Total Other Assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Accrued compensation | ||||||||
| Operating lease liability | ||||||||
| Total Current Liabilities | ||||||||
| Deferred tax liability | ||||||||
| Operating lease liability – non current | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Stockholders’ Equity: | ||||||||
| Preferred stock – $ | ||||||||
| Common stock – $ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Citius Pharmaceuticals, Inc. Stockholders’ Equity | ||||||||
| Non-controlling interest | ||||||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
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CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Unaudited)
| Three Months Ended | ||||||||
| December 31, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Revenues | $ | $ | ||||||
| Operating Expenses | ||||||||
| Research and development | ||||||||
| General and administrative | ||||||||
| Stock-based compensation – general and administrative | ||||||||
| Total Operating Expenses | ||||||||
| Operating Loss | ( | ) | ( | ) | ||||
| Other Income (Expense) | ||||||||
| Interest income | ||||||||
| Interest expense | — | ( | ) | |||||
| Total Other Income, Net | ||||||||
| Net Loss | ( | ) | $ | ( | ) | |||
| Net Loss Per Share Applicable to Common Stockholders - Basic and Diluted | $ | ( | ) | $ | ( | ) | ||
| Weighted Average Common Shares Outstanding | ||||||||
| Basic and diluted | ||||||||
See notes to unaudited condensed consolidated financial statements.
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CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Unaudited)
| Preferred | Common Stock | Additional Paid-In | Accumulated | Total Citius Pharmaceuticals, Inc. Shareholder’s | Non-Controlling | Total | ||||||||||||||||||||||||||
| Stock | Shares | Amount | Capital | Deficit | Equity | Interest | Equity | |||||||||||||||||||||||||
| Balance, October 1, 2021 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Issuance of common stock for services | ||||||||||||||||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, December 31, 2021 | $ | — | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||
| Balance, October 1, 2020 | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||||||||
| Issuance of NoveCite common stock | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock-based compensation expense | — | |||||||||||||||||||||||||||||||
| Net loss | — | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | — | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||
See notes to unaudited condensed consolidated financial statements.
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CITIUS PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Unaudited)
| 2021 | 2020 | |||||||
| Cash Flows From Operating Activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation expense | ||||||||
| Issuance of common stock for services | ||||||||
| Amortization of operating lease right-of-use asset | ||||||||
| Depreciation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses | ( | ) | ||||||
| Deposits | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses | ||||||||
| Accrued compensation | ||||||||
| Accrued interest | ||||||||
| Operating lease liability | ( | ) | ( | ) | ||||
| Net Cash Used In Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows From Financing Activities: | ||||||||
| Proceeds from sale of NoveCite, Inc. common stock | ||||||||
| Net Cash Provided By Financing Activities | ||||||||
| Net Change in Cash and Cash Equivalents | ( | ) | ( | ) | ||||
| Cash and Cash Equivalents - Beginning of Period | ||||||||
| Cash and Cash Equivalents - End of Period | $ | $ | ||||||
See notes to unaudited condensed consolidated financial statements.
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CITIUS PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(Unaudited)
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Citius Pharmaceuticals, Inc. (“Citius,” the “Company,” “we” or “us”) is a specialty pharmaceutical company dedicated to the development and commercialization of critical care products with a focus on anti-infective products in adjunct cancer care, unique prescription products and stem cell therapy.
On March 30, 2016, Citius acquired Leonard-Meron Biosciences, Inc. (“LMB”) as a wholly-owned subsidiary by issuing shares of its common stock.
On September 11, 2020, we formed NoveCite, Inc. (“NoveCite”),
a Delaware corporation, of which we own
On August 23, 2021, we formed Citius Acquisition Corp., as a wholly-owned subsidiary in conjunction with the acquisition of I/ONTAK (formerly E7777), but no activity has occurred to date.
In-process research and development (“IPR&D”)
consists of (i) the $
Goodwill of $
Citius is subject to a number of risks common to companies in the pharmaceutical industry including, but not limited to, risks related to the development by Citius or its competitors of research and development stage product candidates, market acceptance of its product candidates that might be approved, competition from larger companies, dependence on key personnel, dependence on key suppliers and strategic partners, the Company’s ability to obtain additional financing and the Company’s compliance with governmental and other regulations.
Basis of Presentation and Summary of Significant Accounting Policies
Basis of Preparation — The accompanying condensed consolidated financial statements include the operations of Citius Pharmaceuticals, Inc., and its wholly-owned subsidiaries, Citius Pharmaceuticals, LLC, LMB, and Citius Acquisition Corp., and its majority-owned subsidiary NoveCite. Citius Acquisition Corp. is currently inactive. All significant inter-company balances and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to fairly state the condensed consolidated financial position of the Company as of December 31, 2021, and the results of its operations and cash flows for the three months ended December 31, 2021 and 2020. The operating results for the three months ended December 31, 2021 are not necessarily indicative of the results that may be expected for the year ending September 30, 2022. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021 filed with the Securities and Exchange Commission.
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Use of Estimates — Our accounting principles require our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting period. Estimates having relatively higher significance include stock-based compensation, accounting for leases, valuation of warrants, and income taxes. Actual results could differ from those estimates and changes in estimates may occur.
Basic and Diluted Net Loss per Common Share — Basic and diluted net loss per common share applicable to common stockholders is computed by dividing net loss applicable to common stockholders in each period by the weighted average number of shares of common stock outstanding during such period. For the periods presented, common stock equivalents, consisting of stock options and warrants were not included in the calculation of the diluted loss per share because they were anti-dilutive.
Recently Issued Accounting Standards
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): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which, among other things, provides guidance on how to account for contracts on an entity’s own equity. This ASU eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, this ASU modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in this ASU are effective for public companies for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities. Under the new guidance (ASC 805-20-30-28), the acquirer should determine what contract assets and/or contract liabilities it would have recorded under Accounting Standards Codification (“ASC”) 606 (the revenue guidance) as of the acquisition date, as if the acquirer had entered into the original contract at the same date and on the same terms as the acquiree. The recognition and measurement of those contract assets and contract liabilities will likely be comparable to what the acquiree has recorded on its books under ASC 606 as of the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. ASU 2021-08 is effective for the Company in the first quarter of fiscal 2024. Early adoption is permitted, including in an interim period, for any period for which financial statements have not yet been issued. However, adoption in an interim period other than the first fiscal quarter requires an entity to apply the new guidance to all prior business combinations that have occurred since the beginning of the annual period in which the new guidance is adopted. The Company is currently evaluating the adoption date of ASU 2021-08 and the impact, if any, adoption will have on its financial position and results of operations.
2. LIQUIDITY AND MANAGEMENT’S PLAN
The accompanying consolidated financial statements
have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. The Company experienced negative cash flows from operations of $
The Company has generated no operating revenue to date and has principally raised capital through the issuance of debt and equity instruments to finance its operations. The Company’s continued operations beyond March 2023, including its development plans for Mino-Lok, Mino-Wrap, Halo-Lido, NoveCite and I/ONTAK, will depend on its ability to obtain regulatory approval to market Mino-Lok and/or I/ONTAK and generate substantial revenue from the sale of Mino-Lok and/or I/ONTAK and on its ability to raise additional capital through various potential sources, such as equity and/or debt financings, strategic relationships, or out-licensing of its product candidates. However, the Company can provide no assurances on regulatory approval, commercialization or future sales of Mino-Lok or I/ONTAK or that financing or strategic relationships will be available on acceptable terms, or at all. If the Company is unable to raise sufficient capital, find strategic partners or generate substantial revenue from the sale of Mino-Lok or I/ONTAK, there would be a material adverse effect on its business. Further, the Company expects to incur additional expenses as it continues to develop its product candidates, including seeking regulatory approval, and protecting its intellectual property.
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3. PATENT AND TECHNOLOGY LICENSE AGREEMENTS
Patent and Technology License Agreement – Mino-Lok
LMB has a patent and technology license agreement
with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok® on an exclusive, worldwide
sub licensable basis, as amended. LMB pays an annual maintenance fee each June until commercial sales of a product subject to the license
commence. The Company recorded an annual maintenance fee of $
LMB will also pay annual royalties on net sales of
licensed products, with royalties ranging from the mid-single digits to the low double digits. In limited circumstances in which the licensed
product is not subject to a valid patent claim and a competitor is selling a competing product, the royalty rate is in the low- to mid-single
digits. After a commercial sale is obtained, LMB must pay minimum aggregate annual royalties of $
Unless earlier terminated by NAT, based on the failure to achieve certain development and commercial milestones, the license agreement remains in effect until the date that all patents licensed under the agreement have expired and all patent applications within the licensed patent rights have been cancelled, withdrawn or expressly abandoned.
Patent and Technology License Agreement – Mino-Wrap
On January 2, 2019, we entered into a patent and technology license agreement with the Board of Regents of the University of Texas System on behalf of the University of Texas M. D. Anderson Cancer Center (“Licensor”), whereby we in-licensed exclusive worldwide rights to the patented technology for any and all uses relating to breast implants. We intend to develop a liquefying gel-based wrap containing minocycline and rifampin for the reduction of infections associated with breast implants following breast reconstructive surgeries (“Mino-Wrap”). We are required to use commercially reasonable efforts to commercialize Mino-Wrap under several regulatory scenarios and achieve milestones associated with these regulatory options leading to an approval from the U.S. Food and Drug Administration (“FDA”).
Under the license agreement, the Company paid an annual
maintenance fee of $
License Agreement with Novellus
On March 31, 2020, we entered into an option agreement with a subsidiary of Novellus, Inc. (“Novellus”) to in-license from Novellus on a worldwide basis, a novel cellular therapy for acute respiratory distress syndrome (“ARDS”).
7
Our Board Chairman Leonard Mazur, who is also our largest stockholder, was at the time a significant shareholder of Novellus and subsequent to the option agreement and the license agreement discussed below, became a director of Novellus. As required by our Code of Ethics, the Audit Committee of our Board of Directors approved the entry into the option agreement with Novellus, as did the disinterested members of our Board of Directors.
On October 6, 2020, our subsidiary, NoveCite, exercised
the option and signed an exclusive license agreement with Novellus. Upon execution of the agreement, we paid $
Citius is responsible for the operational activities of NoveCite, and bears all costs necessary to operate NoveCite. Citius’s officers are also the officers of NoveCite and oversee the business strategy and operations of NoveCite. As such, NoveCite is accounted for as a consolidated subsidiary with a noncontrolling interest.
Novellus has no contractual rights in the profits or obligations to share in the losses of NoveCite, and the Company has not allocated any losses to the noncontrolling interest.
NoveCite is obligated to pay Novellus up to an aggregate of $51,000,000 upon the achievement of various regulatory and developmental milestones. NoveCite also must pay a royalty equal to low double-digit percentages of net sales, commencing upon the sale of a licensed product. This royalty is subject to downward adjustment to an upper-single digit percentage of net sales in any country in the event of the expiration of the last valid patent claim or if no valid patent claim exists in that country. The royalty will end on the earlier of (i) the date on which a biosimilar product is first marketed, sold, or distributed in the applicable country or (ii) the 10-year anniversary of the date of expiration of the last-to-expire valid patent claim in that country. In the case of a country where no licensed patent ever exists, the royalty will end on the later of (i) the date of expiry of such licensed product’s regulatory exclusivity and (ii) the 10-year anniversary of the date of the first commercial sale of the licensed product in the applicable country. In addition, NoveCite will pay to Novellus an amount equal to a mid-twenties percentage of any sublicensee fees it receives.
Under the terms of the license agreement, in the event
that Novellus receives any revenue involving the original cell line included in the licensed technology, then Novellus shall remit to
NoveCite
The term of the license agreement will continue on a country-by-country and licensed product-by-licensed product basis until the expiration of the last-to-expire royalty term. Either party may terminate the license agreement upon written notice if the other party is in material default. NoveCite may terminate the license agreement at any time without cause upon 90 days prior written notice.
Novellus will be responsible for preparing, filing, prosecuting and maintaining all patent applications and patents included in the licensed patents in the territory, provided however, that if Novellus decides that it is not interested in maintaining a particular licensed patent or in preparing, filing, or prosecuting a licensed patent, NoveCite will have the right, but not the obligation, to assume such responsibilities in the territory at NoveCite’s sole cost and expense.
In July 2021, Novellus was acquired by Brooklyn ImmunoTherapeutics, Inc. (“Brooklyn”). In connection with that transaction, the stock subscription agreement between Novellus and NoveCite was amended to assign to Brooklyn all of Novellus’s right, title, and interest in the stock subscription agreement and delete the anti-dilution protection and replace it with a right of first refusal whereby Brooklyn will have the right to purchase all or a portion of the securities that NoveCite intends to sell or in the alternative, at the option of NoveCite, Brooklyn may purchase that amount of the securities proposed to be sold by NoveCite to allow Brooklyn to maintain its then percentage ownership.
License Agreement with Eisai
In September 2021, the Company entered into a definitive agreement with Dr. Reddy's Laboratories SA, a subsidiary of Dr. Reddy's Laboratories, Ltd. (collectively, "Dr. Reddy's"), to acquire its exclusive license of I/ONTAK (denileukin diftitox), a late-stage oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma.
8
Under the terms of this agreement, Citius acquired
Dr. Reddy's exclusive license of I/ONTAK from Eisai Co., Ltd. ("Eisai") and other related assets owned by Dr. Reddy's. Citius's
exclusive license include rights to develop and commercialize I/ONTAK in all markets except for Japan and certain parts of Asia. Additionally,
Citius retained an option on the right to develop and market the product in India. Eisai retains exclusive development and marketing rights
for the agent in Japan and Asia.
Also under the agreement with Dr. Reddy’s, we are required to (i) use commercially reasonable efforts to make commercially available products in the CTCL indication, peripheral T-cell lymphoma indication and immuno-oncology indication, (ii) initiate two investigator initiated immuno-oncology trials, (iii) use commercially reasonable efforts to achieve each of the approval milestones, and (iv) to complete each specified immuno-oncology investigator trial on or before the four-year anniversary of the effective date of the definitive agreement. Additionally, we are required to commercially launch a product in a territory within six months of receiving regulatory approval for such product in each such jurisdiction.
4. NOTES PAYABLE
Notes Payable – Related Parties
Prior to June 31, 2021, we had outstanding notes payable
held by our Chairman, Leonard Mazur, in the amount of $
In June 2021, we repaid the $
Interest expense on notes payable – related
parties was $
9
Paycheck Protection Program
On April 12, 2020,
On July 28, 2021, the Small Business Administration
gave full forgiveness of the PPP loan and the Company recorded a gain from debt extinguishment of $
Interest expense was $
5. COMMON STOCK, STOCK OPTIONS AND WARRANTS
Authorized Common Stock
On June 21, 2021, our stockholders approved an amendment
to our Articles of Incorporation to increase the authorized number of shares of capital stock from
Common Stock Offerings
On January 27, 2021,
On February 19, 2021,
Common Stock Issued for Services
On November 2, 2021, the Company issued
Stock Option Plans
Pursuant to our 2014 Stock Incentive Plan, we reserved
On February 7, 2018, our stockholders approved the
2018 Omnibus Stock Incentive Plan and we reserved
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On February 10, 2020, our stockholders approved the
2020 Stock Plan and we reserved
On May 24, 2021, our stockholders approved the 2021
Stock Plan and we reserved
The fair value of each stock option award is estimated
on the date of grant using the Black-Scholes option pricing model. The risk-free interest rate is based on the U.S. Treasury yield curve
in effect at the time of grant commensurate with the expected term assumption. The expected term of stock options granted, all of which
qualify as “plain vanilla,” is based on the average of the contractual term (generally
A summary of option activity under our stock option plans (excluding the NoveCite Stock Plan) is presented below:
| Option Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term | Aggregate Intrinsic Value | |||||||||||
| Outstanding at October 1, 2021 | $ | $ | ||||||||||||
| Granted | ||||||||||||||
| Exercised | ||||||||||||||
| Forfeited or expired | ||||||||||||||
| Outstanding at December 31, 2021 | $ | $ | ||||||||||||
| Exercisable at December 31, 2021 | $ | $ | ||||||||||||
On October 11, 2021, the Board of Directors granted
options to purchase
On October 6, 2020, the Board of Directors granted
stock options to purchase a total of
Stock-based compensation expense for the three months ended December 31, 2021 and 2020 was $904,604 (including $33,333 for the NoveCite Stock Plan) and $276,582 (including $12,556 for the NoveCite Stock Plan), respectively.
At December 31, 2021, unrecognized total compensation
cost related to unvested awards under the Citius stock plans of $
On November 5, 2020, the stockholders of NoveCite,
approved NoveCite’s Stock Plan and we reserved
As of December 31, 2021,
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Warrants
As of December 31, 2021, we have reserved shares of common stock for the exercise of outstanding warrants as follows:
| Exercise price | Number | Expiration Dates | ||||||||
| LMB Warrants | $ | |||||||||
| 2016 Offering Warrants | ||||||||||
| 2017 Public Offering Investors | ||||||||||
| 2017 Public Offering Underwriter | ||||||||||
| December 2017 Registered Direct/Private Placement Offering Investors | ||||||||||
| December 2017 Registered Direct/Private Placement Offering Placement Agent | ||||||||||
| March 2018 Registered Direct/Private Placement Offering Investors | ||||||||||
| March 2018 Registered Direct/Private Placement Offering Placement Agent | ||||||||||
| August 2018 Offering Investors | ||||||||||
| August 2018 Offering Agent | ||||||||||
| April 2019 Registered Direct/Private Placement Offering Investors | ||||||||||
| April 2019 Registered Direct/Private Placement Offering Placement Agent | ||||||||||
| September 2019 Offering Investors | ||||||||||
| September 2019 Offering Underwriter | ||||||||||
| February 2020 Exercise Agreement Placement Agent | ||||||||||
| May 2020 Registered Direct Offering Investors | ||||||||||
| May 2020 Registered Direct Offering Placement Agent | ||||||||||
| August 2020 Underwriter | ||||||||||
| January 2021 Private Placement Offering Investors | ||||||||||
| January 2021 Private Placement Offering Agent | ||||||||||
| February 2021 Registered Direct Offering Investors | ||||||||||
| February 2021 Registered Direct Offering Agent | ||||||||||
At December 31, 2021, the weighted average remaining
life of the outstanding warrants is
Common Stock Reserved
A summary of common stock reserved for future issuances as of December 31, 2021 is as follows:
| Stock plan options outstanding | |||
| Stock plan shares available for future grants | |||
| Warrants outstanding | |||
| Total |
6. RELATED PARTY TRANSACTIONS
The Company had outstanding debt due to Leonard Mazur (Chairman of the Board) and Myron Holubiak (Chief Executive Officer) (see Note 4).
Leonard Mazur was a director and significant shareholder of Novellus until July 2021. On October 6, 2020, the Company, through its subsidiary NoveCite, entered into an exclusive agreement with Novellus to develop cellular therapies (see Note 3).
In April 2021, we extended the term by
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7. OPERATING LEASE
Effective July 1, 2019, Citius entered into a 76-month lease for office space in Cranford, NJ. Citius will pay its proportionate share of real estate taxes and operating expenses in excess of the base year expenses. These costs are considered to be variable lease payments and are not included in the determination of the lease’s right-of-use asset or lease liability.
The Company identified and assessed the following significant assumptions in recognizing its right-of-use assets and corresponding lease liabilities:
| ● | As the Company’s current Cranford lease does not provide an implicit rate, the Company estimated the incremental borrowing rate in calculating the present value of the lease payments. The Company estimated its incremental borrowing rate based on the remaining lease term as of the adoption date. |
| ● | Since the Company elected to account for each lease component and its associated non-lease components as a single combined component, all contract consideration was allocated to the combined lease component. |
| ● | The expected lease terms include noncancelable lease periods. |
The elements of lease expense are as follows:
| Lease cost | Three Months Ended December 31, 2021 | Three Months Ended December 31, 2020 | ||||||
| Operating lease cost | $ | $ | ||||||
| Variable lease cost | — | |||||||
| Total lease cost | $ | |||||||
| Other information | ||||||||
| Weighted-average remaining lease term - operating leases | ||||||||
| Weighted-average discount rate - operating leases | % | % | ||||||
Maturities of lease liabilities due under the Company’s non-cancellable leases as of December 31, 2021 is as follows:
| Year Ending September 30, | December 31, 2021 | |||
| 2022 (excluding the 3 months ended December 31, 2021) | $ | |||
| 2023 | ||||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Total lease payments | ||||
| Less: interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
| Leases | Classification | December 31, 2021 | September 30, 2021 | |||||||
| Assets | ||||||||||
| Lease asset | Operating | $ | $ | |||||||
| Total lease assets | $ | $ | ||||||||
| Liabilities | ||||||||||
| Current | Operating | $ | $ | |||||||
| Non-current | Operating | |||||||||
| Total lease liabilities | $ | $ | ||||||||
Interest expense on the lease liability was $
13
Item 2. 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 for the three months ended December 31, 2021 should be read together with our unaudited consolidated financial statements and related notes included elsewhere in this report and in conjunction with the audited financial statements of Citius Pharmaceuticals, Inc. included in our Annual Report on Form 10-K for the year ended September 30, 2021. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs and expected performance. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors. We caution that assumptions, expectations, projections, intentions or beliefs about future events may, and often do, vary from actual results and the differences can be material. Please see “Cautionary Note Regarding Forward-Looking Statements” on page ii of this Report.
Historical Background
Citius Pharmaceuticals, Inc. (“Citius,” the “Company,” “we” or “us”) is a specialty pharmaceutical company dedicated to the development and commercialization of critical care products with a focus on anti-infective products in adjunct cancer care, unique prescription products and mesenchymal stem cell therapy. On September 12, 2014, we acquired Citius Pharmaceuticals, LLC as a wholly-owned subsidiary and on March 30, 2016, we acquired Leonard-Meron Biosciences, Inc. (“LMB”) as a wholly-owned subsidiary. On September 11, 2020, we formed NoveCite, Inc. (“NoveCite”), a Delaware corporation, of which we own 75% of the issued and outstanding capital stock. On August 23, 2021, we formed Citius Acquisition Corp., as a wholly-owned subsidiary, but no activity has occurred to date.
Through December 31, 2021, the Company has devoted substantially all of its efforts to business planning, acquiring our proprietary technology, research and development, recruiting management and technical staff, and raising capital.
Patent and Technology License Agreements
Our patent and technology license agreements are discussed in the footnotes to our unaudited consolidated financial statements included in this Report.
Mino-Lok® - LMB has a patent and technology license agreement with Novel Anti-Infective Therapeutics, Inc. (“NAT”) to develop and commercialize Mino-Lok® on an exclusive, worldwide sub-licensable basis. Since May 2014, LMB has paid an annual maintenance fee, which began at $30,000 and that increased over five years to $90,000, where it will remain until the commencement of commercial sales of a product subject to the license. LMB will also pay annual royalties on net sales of licensed products, with royalties ranging from the mid-single digits to the low double digits or, in the event the licensed product is not subject to a valid patent claim, the royalty is reduced to mid- to lower-single digits. In limited circumstances in which the licensed product is not subject to a valid patent claim and a competitor is selling a competing product, the royalty rate is in the low single digits. After a commercial sale is obtained, LMB must pay minimum aggregate annual royalties that increase in subsequent years. LMB must also pay NAT up to an aggregate of $1,100,000 upon achieving specified regulatory and sales milestones. Finally, LMB must pay NAT a specified percentage of payments received from any sub licensees.
Mino-Wrap - On January 2, 2019, we entered into a patent and technology license agreement with the Board of Regents of the University of Texas System on behalf of the University of Texas M. D. Anderson Cancer Center (“Licensor”), whereby we in-licensed exclusive worldwide rights to the patented technology for any and all uses relating to breast implants. We intend to develop a liquefying gel-based wrap containing minocycline and rifampin for the reduction of infections associated with breast implants following breast reconstructive surgeries (“Mino-Wrap”). We are required to use commercially reasonable efforts to commercialize Mino-Wrap under several regulatory scenarios and achieve milestones associated with these regulatory options leading to an approval from the Food and Drug Administration (“FDA”).
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Under the license agreement, we paid a nonrefundable upfront payment of $125,000. We paid annual maintenance fees of $45,000 and $30,000 in January 2021 and 2020, respectively. The annual maintenance fee increases annually by $15,000 per year up to a maximum of $90,000. Annual maintenance fees cease on the first sale of product. We also must pay up to an aggregate of $2.1 million in milestone payments, contingent on the achievement of various regulatory and commercial milestones. Under the terms of the license agreement, we also must pay a royalty of mid- to upper-single digit percentages of net sales, depending on the amount of annual sales, and subject to downward adjustment to lower- to mid-single digit percentages in the event there is no valid patent for the product in the United States at the time of sale. After the first sale of product, we will owe an annual minimum royalty payment of $100,000 that will increase annually by $25,000 for the duration of the term. We will be responsible for all patent expenses incurred by Licensor for the term of the agreement although Licensor is responsible for filing, prosecution and maintenance of all patents.
NoveCite – On October 6, 2020, our subsidiary NoveCite entered into a license agreement with Novellus Therapeutics Limited (“Licensor”), to develop and commercialize a stem cell therapy based on the Licensor’s patented technology for the treatment of acute pneumonitis of any etiology in which inflammation is a major agent in humans. NoveCite paid a $5,000,000 license fee and issued 25% of its outstanding equity to the Licensor. We own the other 75% of NoveCite’s currently outstanding equity. If NoveCite issues additional equity, subject to certain exceptions, NoveCite had to maintain Novellus’s ownership at 25% by issuing additional shares to Novellus. In July 2021, Novellus was acquired by Brooklyn ImmunoTherapeutics, Inc. (“Brooklyn”). In that transaction, the stock subscription agreement between Novellus and NoveCite was amended to delete the anti-dilution protection and replace it with a right of first refusal whereby Brooklyn will have the right to purchase all or a portion of the securities that NoveCite intends to sell or in the alternative, at the option of NoveCite, Brooklyn may purchase that amount of the securities proposed to be sold by NoveCite to allow Brooklyn to maintain its then percentage ownership.
Under the license agreement, NoveCite is obligated to pay Licensor up to an aggregate of $51,000,000 in regulatory and developmental milestone payments. NoveCite also must pay a royalty equal to low double-digit percentages of net sales, commencing upon the first commercial sale of a licensed product. This royalty is subject to downward adjustment on a product-by-product and country-by-country basis to an upper-single digit percentage of net sales in any country in the event of the expiration of the last valid patent claim or if no valid patent claim exists in that country. The royalty will end on the earlier of (i) the date on which a biosimilar product is first marketed, sold, or distributed by Licensor or any third party in the applicable country or (ii) the 10-year anniversary of the date of expiration of the last-to-expire valid patent claim in that country. In the case of a country where no licensed patent ever exists, the royalty will end on the later of (i) the date of expiry of such licensed product’s regulatory exclusivity and (ii) the 10-year anniversary of the date of the first commercial sale of the licensed product in the applicable country. In addition, NoveCite will pay to Licensor an amount equal to a mid-twenties percentage of any sublicensee fees it receives.
Under the terms of the license agreement, in the event that Licensor receives any revenue involving the original cell line included in the licensed technology, then Licensor shall remit to NoveCite 50% of such revenue.
I/ONTAK - In September 2021 the Company announced that it had entered into a definitive agreement with Dr. Reddy's to acquire its exclusive license of I/ONTAK (formerly E7777) (denileukin diftitox), a late-stage oncology immunotherapy for the treatment of CTCL, a rare form of non-Hodgkin lymphoma.
Under the terms of this agreement, Citius acquired Dr. Reddy's exclusive license of I/ONTAK from Eisai and other related assets owned by Dr. Reddy's. Citius's exclusive license rights include rights to develop and commercialize E7777 in all markets except for Japan and certain parts of Asia. Additionally, Citius has an option on the right to develop and market the product in India. Eisai retains exclusive development and marketing rights for the agent in Japan and Asia. Dr. Reddy's received a $40 million upfront payment and is entitled to up to an aggregate of $40 million in development milestone payments related to CTCL approvals in the U.S. and other markets, up to an aggregate of $70 million in development milestones for additional indications, as well as commercial milestone payments and low double-digit tiered royalties on net product sales. Eisai is to receive a $6 million development milestone payment upon initial approval and additional commercial milestone payments related to the achievement of net product sales thresholds. Eisai will be responsible for completing the current CTCL clinical trial, and chemistry, manufacturing and controls (CMC) activities through the filing of a BLA for I/ONTAK with the FDA. Citius will be responsible for development costs associated with potential additional indications.
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RESULTS OF OPERATIONS
Three months ended December 31, 2021 compared with the three months ended December 31, 2020
| Three Months Ended December 31, 2021 | Three Months Ended December 31, 2020 | |||||||
| Revenues | $ | — | $ | — | ||||
| Operating expenses: | ||||||||
| Research and development | 5,457,849 | 6,191,179 | ||||||
| General and administrative | 2,896,749 | 1,688,664 | ||||||
| Stock-based compensation expense | 904,604 | 276,582 | ||||||
| Total operating expenses | 9,259,202 | 8,156,425 | ||||||
| Operating loss | (9,259,202 | ) | (8,156,425 | ) | ||||
| Interest income | 33,982 | 13,484 | ||||||
| Interest expense | — | (3,968 | ) | |||||
| Net loss | $ | (9,225,220 | ) | $ | (8,146,909 | ) | ||
Revenues
We did not generate any revenues for the three months ended December 31, 2021 or 2020.
Research and Development Expenses
For the three months ended December 31, 2021, research and development expenses were $5,457,849 as compared to $6,191,179 during the three months ended December 31, 2020, a decrease of $733,330.
Research and development costs for Mino-Lok® increased by $256,000 to $975,653 for the three months ended December 31, 2021 as compared to $719,653 for the three months ended December 31, 2020 due to the initiation of post-mixing, in-solution stability studies.
Research and development costs for our Halo-Lido product candidate increased by $766,703 to $997,577 for the three months ended December 31, 2021 as compared to $230,874 for the three months ended December 31, 2020 due to an increase in the costs of our clinical trials.
Research and development costs for our Mino-Wrap product candidate were $68,273 for the three months ended December 31, 2021 as compared to $237 during the three months ended December 31, 2020, an increase of $68,036. The increase was due to measuring the stability of minocycline in the wrap.
During the three months ended December 31, 2021, research and development costs for our proposed novel cellular therapy for ARDS decreased by $4,761,864 to $478,551 as compared to $5,240,415 for the three months ended December 31, 2020. We expensed the $5,000,000 license fee paid to Novellus during the three months ended December 31, 2020.
Research and development costs for our recently licensed I/ONTAK product candidate was $2,937,795 during the three months ended December 31, 2021.
We expect that research and development expenses will continue to increase in fiscal 2022 as we continue to focus on our Phase 3 trials for Mino-Lok® and I/ONTAK, progress the Halo-Lido product candidate and continue our research and development efforts related to ARDS and Mino-Wrap.
16
General and Administrative Expenses
For the three months ended December 31, 2021, general and administrative expenses were $2,896,749 as compared to $1,688,664 during the three months ended December 31, 2020. General and administrative expenses increased by $1,208,085 in comparison with the prior period. The primary reason for the increase was additional compensation costs for new employees and performance bonuses. General and administrative expenses consist primarily of compensation costs, consulting fees incurred for financing activities and corporate development services, and investor relations expenses.
Stock-based Compensation Expense
For the three months ended December 31, 2021, stock-based compensation expense was $904,604 as compared to $276,582 for the three months ended December 31, 2020. For the three months ended December 31, 2021, stock-based compensation includes $33,833 in expense for the NoveCite stock option plan that was adopted in November 2020 as compared to $12,556 for the three months ended December 31, 2020. Stock-based compensation expense for the most recently completed quarter increased by $628,022 in comparison to the prior period primarily due to new grants made to employees, directors and consultants.
Other Income (Expense)
Interest income for the three months ended December 31, 2021 was $33,982 as compared to interest income of $13,484 for the prior period. We have invested the remaining proceeds of our early 2021 equity offerings and common stock warrant exercises in money market accounts.
There was no interest expense for the three months ended December 31, 2021 as compared to $3,968 in interest expense for the three months ended December 31, 2020. Interest expense was $4,563 for the three months ended December 31, 2020 on the notes payable – related parties that were repaid in June 2021. Interest expense was $405 for the three months ended December 31, 2020 on the Paycheck Protection Program loan that was forgiven in July 2021.
Net Loss
For the three months ended December 31, 2021, we incurred a net loss of $9,225,220 compared to a net loss for the three months ended December 31, 2020 of $8,146,909. The $1,078,311 increase in the net loss was primarily due to the increase of $1,208,085 in general and administrative expenses.
17
LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Working Capital
Citius has incurred operating losses since inception and incurred a net loss of $9,225,220 for the three months ended December 31, 2021. At December 31, 2021, Citius had an accumulated deficit of $105,273,041. Citius’ net cash used in operations during the three months ended December 31, 2021 was $4,651,522.
As a result of the Company’s common stock offerings and common stock warrant exercises during the year ended September 30, 2021, the Company had working capital of approximately $60,600,000 at December 31, 2021. At December 31, 2021, Citius had cash and cash equivalents of $65,421,424 available to fund its operations. The Company’s primary sources of cash flow since inception have been from financing activities. Our primary uses of operating cash were for in-licensing of intellectual property, product development and commercialization activities, employee compensation, consulting fees, legal and accounting fees, insurance and investor relations expenses.
Based on our cash and cash equivalents at December 31, 2021, we expect that we will have sufficient funds to continue our operations through March 2023. We expect to need to raise additional capital in the future to support our operations beyond March 2023. There is no assurance, however, that we will be successful in raising the needed capital or that the proceeds will be received in an amount or in a timely manner to support our operations.
Inflation
Our management believes that inflation has not had a material effect on our results of operations.
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of our financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and the amounts of revenues and expenses recorded during the reporting periods. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.
Our critical accounting policies and use of estimates are discussed in, and should be read in conjunction with, the annual consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021 as filed with the SEC.
18
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time periods and accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.
Our Chief Executive Officer (who is our principal executive officer) and Chief Financial Officer (who is our principal financial officer and principal accounting officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) as of December 31, 2021. In designing and evaluating disclosure controls and procedures, we recognize that any disclosure controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objective. As of December 31, 2021, based on the evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes In Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
There has been no change in the Company’s risk factors since the Company’s Form 10-K filed with the SEC on December 15, 2021.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On November 2, 2021, we issued 50,201 shares of our common stock to a consultant for media relations, public relations and investor relations services pursuant to the agreed upon compensation terms in the consulting agreement with the entity. The issuance of the shares was exempt from registration under Section 4(a)(2) of the Securities Act.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
| 31.1 | Certification of the Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a).* | |
| 31.2 | Certification of the Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a).* | |
| 32.1 | Certification of the Principal Executive and Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.* | |
| EX-101.INS | Inline XBRL Instance Document* | |
| EX-101.SCH | Inline XBRL Taxonomy Extension Schema Document* | |
| EX-101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document* | |
| EX-101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document* | |
| EX-101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document* | |
| EX-101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document* | |
| EX-104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)* |
| * | Filed herewith. |
21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CITIUS PHARMACEUTICALS, INC. | ||
| Date: February 10, 2022 | By: | /s/ Myron Holubiak |
| Myron Holubiak | ||
| Chief Executive Officer (Principal Executive Officer) | ||
| Date: February 10, 2022 | By: | /s/ Jaime Bartushak |
| Jaime Bartushak | ||
| Chief Financial Officer (Principal Financial and Accounting Officer) | ||
22
EXHIBIT 31.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Myron Holubiak, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Citius Pharmaceuticals, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| February 10, 2022 | By: | /s/ Myron Holubiak |
| Myron Holubiak | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Jaime Bartushak, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Citius Pharmaceuticals, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
| a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
| a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| February 10, 2022 | By: | /s/ Jaime Bartushak |
| Jaime Bartushak | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER AND THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Citius Pharmaceuticals, Inc. (the “Company”) on Form 10-Q for the quarter ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Myron Holubiak, President and Chief Executive Officer of the Company, and Jaime Bartushak, Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: February 10, 2022 | By: | /s/ Myron Holubiak |
| Myron Holubiak | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| By: | /s/ Jaime Bartushak | |
| Jaime Bartushak | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) |