Hoth Therapeutics, Inc. (NASDAQ:HOTH) is a clinical-stage biopharmaceutical company dedicated to developing innovative, impactful, and ground-breaking treatments with the goal of improving patient quality of life. The company is a catalyst in early-stage pharmaceutical research and development, elevating drugs from the bench to pre-clinical and clinical testing. Utilizing a patient-centric approach, Hoth collaborates and partners with a team of scientists, clinicians, and key opinion leaders to seek out and investigate therapeutics that hold immense potential to create breakthroughs and diversify treatment options.

Business Overview

Hoth Therapeutics is focused on developing several promising therapeutic candidates, including: 1. HT-001: A topical formulation for treating side effects from drugs used for the treatment of cancer. 2. HT-KIT: A treatment for mast-cell derived cancers and anaphylaxis. 3. HT-TBI: A treatment for traumatic brain injury and ischemic stroke. 4. HT-ALZ: A treatment and/or prevention for Alzheimer's or other neuroinflammatory diseases. 5. BioLexa: A treatment for atopic dermatitis (also known as eczema). 6. HT-004: A treatment for asthma and allergies using inhalational administration. 7. HT-003: A treatment for acne as well as inflammatory bowel diseases.

The company also has interests in certain other assets being developed by third parties, including a treatment for patients with lupus that is being developed by Zylö Therapeutics, Inc. and potential product candidates being developed pursuant to Hoth's agreement with Voltron Therapeutics, Inc. for the prevention of COVID-19.

Financials

For the fiscal year ended December 31, 2023, Hoth reported an annual net loss of $7,845,390, with no revenue generated. The company's annual operating cash flow and free cash flow were both -$8,447,094.

In the first quarter of 2024, Hoth reported a net loss of $2,040,783, with no revenue generated. The company's quarterly operating cash flow and free cash flow were both -$1,723,956.

Hoth's financial performance reflects the company's focus on research and development activities, as it continues to advance its pipeline of promising therapeutic candidates. The company's cash and cash equivalents stood at $7,562,628 as of March 31, 2024, providing it with the necessary resources to fund its ongoing operations and development efforts.

Research and Development Highlights

During the first quarter of 2024, Hoth's research and development expenses were approximately $465,896, of which $3,000 was related to licenses acquired and $462,896 was related to other research and development activities.

Specifically, the company's research and development costs consisted primarily of the following for each of its key projects:

• HT-001: Approximately $281,000 related to manufacturing, preclinical, and clinical activities.
• HT-ALZ: Approximately $16,000 related to preclinical studies.
• HT-KIT: Approximately $77,000 related to manufacturing and preclinical activities.
• HT-004: Approximately $51,000 in sponsored research activities.

In addition, Hoth incurred fees of approximately $37,000 payable to members of its scientific advisory board for services.

The company's research and development activities are expected to increase as it continues to develop its existing product candidates and potentially acquire new ones, reflecting increasing costs associated with employee-related expenses, fees related to in-licensed products and technology, expenses incurred under agreements with contract research organizations, the cost of acquiring and manufacturing clinical trial materials, and costs associated with non-clinical activities and regulatory approvals.

Liquidity

As of March 31, 2024, Hoth had approximately $7.6 million in cash and cash equivalents, providing it with the necessary resources to fund its operations for at least the next 12 months. The company has funded its operations primarily through the sale of equity and debt securities.

On April 1, 2024, in connection with a March 27, 2024 inducement offer agreement with a holder of certain of its existing warrants, Hoth issued up to 2,500,000 shares of its common stock upon the exercise of those warrants for net proceeds of approximately $3.8 million, after deducting placement agent fees and other offering expenses. As an inducement to the warrant exercise, the company also issued new unregistered warrants to purchase up to 3,750,000 shares of its common stock.

Hoth's ability to successfully raise additional funding, through strategic relationships, public or private equity or debt financings, grants, or other arrangements, will be crucial in developing and seeking regulatory approvals for the company's current and future product candidates. If such funding is not available or not available on terms acceptable to the company, Hoth's current development plan and plans for expansion of its general and administrative infrastructure may be curtailed.

Risks and Challenges

Hoth operates in a highly competitive biopharmaceutical industry, where it faces competition from larger, more established pharmaceutical and biotechnology companies, as well as smaller or early-stage companies. The company's success will depend on its ability to differentiate its product candidates, obtain regulatory approvals, and successfully commercialize its therapies.

Key risks facing Hoth include:

• Uncertainty around the company's ability to obtain and maintain regulatory approvals for its product candidates.
• Potential delays or failures in its clinical trials, which could significantly impact the company's development timelines and costs.
• Reliance on third-party organizations, such as contract research organizations and contract manufacturing organizations, which could adversely affect the company's operations.
• Intellectual property risks, including the potential for infringement claims or the inability to adequately protect Hoth's proprietary technologies.
• The impact of health epidemics, such as the COVID-19 pandemic, on the company's business, clinical trials, research programs, and the global economy.

Outlook

Hoth Therapeutics is a promising biopharmaceutical company with a diverse pipeline of innovative therapeutic candidates targeting unmet medical needs. The company's focus on developing novel treatments for conditions such as cancer, mast-cell derived cancers, traumatic brain injury, Alzheimer's disease, and atopic dermatitis, among others, positions it well to potentially make significant contributions to the healthcare landscape.

Conclusion

While Hoth's financial performance reflects the company's ongoing investment in research and development, its strong cash position and recent successful warrant exercise provide it with the necessary resources to continue advancing its pipeline. As Hoth navigates the competitive biopharmaceutical industry and manages the risks inherent to its business, investors will closely monitor the company's progress in achieving key milestones and delivering on its promising therapeutic candidates.