Executive Summary / Key Takeaways

• Quoin Pharmaceuticals (NASDAQ:QNRX) is a late-stage clinical specialty pharmaceutical company focused on developing and commercializing treatments for rare and orphan diseases, with its lead asset, QRX003 for Netherton Syndrome (NS), advancing through pivotal registrational clinical studies.
• The company has demonstrated positive initial clinical data for QRX003 in NS and Peeling Skin Syndrome (PSS), leading to optimized clinical trial designs, including increased dosing frequency and expanded patient cohorts, with top-line data from the blinded NS study anticipated in early 2025.
• Quoin has established a unique global commercial network with nine partnerships spanning 61 countries, complementing its plans for self-commercialization in the U.S., Western Europe, and Japan, which is expected to drive significant future profitability.
• Recent financing activities, including a private placement in October 2025 raising approximately $16.6 million upfront, and an $8 million equity line of credit, have significantly strengthened the balance sheet, extending the cash runway into the second half of 2026 to support ongoing R&D and strategic M&A.
• The company maintains a first-mover advantage in Netherton Syndrome, being the only entity actively conducting clinical studies under an open IND, while strategically pursuing M&A opportunities in the rare and orphan disease space to broaden its portfolio, contingent on securing dedicated funding for new assets.

A Focused Pursuit in Orphan Diseases: Quoin's Strategic Foundation

Quoin Pharmaceuticals Ltd. is strategically positioned as a late-stage clinical specialty pharmaceutical company, dedicated to addressing the profound unmet medical needs of patients suffering from rare and orphan diseases. Its core mission revolves around the development and commercialization of therapeutic products where approved treatments are either severely limited or non-existent. This focused approach is exemplified by its lead product, QRX003, a topical lotion undergoing pivotal clinical development for Netherton Syndrome (NS), a debilitating hereditary genetic disease.

The company's journey began with Quoin Inc. in 2018, culminating in a significant business combination with Cellect Biotechnology Ltd. (APOP) in 2021, which rebranded the entity as Quoin Pharmaceuticals Ltd. This transformation solidified its strategic direction towards rare diseases. A foundational element of Quoin's strategy is its exclusive licensing agreement with Skinvisible Pharmaceuticals, Inc. (SKVI), secured in October 2019, which provides rights to the proprietary technology underpinning QRX003 and QRX004. This license includes a one-time $1 million fee, single-digit royalties on net sales, and a substantial $5 million payment upon the first U.S. or E.U. approval, underscoring the potential value of this intellectual property.

Quoin's technological differentiation for QRX003 lies in its formulation as a broad-spectrum serine protease inhibitor, delivered via the proprietary Invisicare technology. This approach targets the kallikreins in the skin, which are responsible for many of the issues Netherton patients face. The tangible benefit of this technology is its potential to safely and effectively treat the compromised skin and severe pruritus (itch) characteristic of NS. Initial clinical data has shown that for five of six evaluable subjects in the open-label study, pruritus was absent or negligible, and all six demonstrated improvement in skin appearance. This suggests a significant therapeutic impact on distressing symptoms. The company's contract manufacturer has also successfully developed and scaled up a new, fully GMP manufacturing process for QRX003's active ingredient, which was previously unavailable in GMP quality and is exclusively contractually available to Quoin. This operational achievement is critical for regulatory approval and commercialization, ensuring a reliable supply of high-quality drug substance.

Beyond QRX003, Quoin is advancing other promising programs. It holds an option for a global license to QRX008 for scleroderma through a research agreement with Queensland University of Technology (QUT). Additionally, a collaboration with University College Cork (UCC) is focused on developing novel topical formulations of rapamycin (sirolimus) for various rare and orphan diseases, including microcystic lymphatic malformations, venous malformations, and angiofibromas. Clinical testing for these rapamycin formulations is anticipated to commence in the first half of 2026. This diversified pipeline, while early-stage for some assets, leverages the company's expertise in rare dermatological conditions and topical drug delivery.

Clinical Momentum and Expanding Global Reach

The clinical development of QRX003 for Netherton Syndrome is at the forefront of Quoin's operational strategy. The company is actively conducting two pivotal registrational clinical studies under an open Investigational New Drug (IND) application with the FDA, with sites established across the U.S., Middle East, U.K., Spain, and Germany. A significant milestone was achieved in March 2024 when the FDA cleared an amendment to lower the eligibility age for recruitment to 14 years and older, marking the first time non-adult Netherton subjects are being tested under an open IND. This expansion is expected to significantly increase the eligible patient pool and potentially accelerate recruitment rates.

Positive initial clinical data from the open-label study, reported in August and October 2023, demonstrated encouraging efficacy and a favorable safety profile. For five of six evaluable subjects, pruritus was absent or negligible after treatment with QRX003, and all six subjects showed improvement in skin appearance. Importantly, no significant adverse events have been reported across all subjects tested to date. These results prompted strategic protocol amendments, including eliminating the lower 2% dose from the double-blinded study, increasing the dosing frequency to twice daily across both studies, and expanding the number of subjects in both the open-label (to 20) and blinded (to 30) studies. Management believes these changes will lead to a more robust data set, potentially accelerating regulatory approval and supporting a broader label.

Beyond Netherton Syndrome, QRX003 is also being developed for Peeling Skin Syndrome (PSS). Positive initial data from an investigator-led study in New Zealand, announced in July 2025, showed a clinically meaningful two-grade improvement in Investigator’s Global Assessment (IGA) from severe to mild, and substantial improvements in the Modified Ichthyosis Area Severity Index and Children’s Dermatology Life Quality Index. The company plans to expand this PSS study to include an additional 4 to 6 pediatric subjects.

On the commercial front, Quoin is building an "unprecedented" global commercial network for a company of its size. While planning to self-commercialize QRX003 in the U.S., Western Europe, and Japan, it has also secured nine commercial partnerships covering 61 additional countries. This "thoughtful, diligent and systematic approach" aims to ensure broad global access to QRX003 upon approval, with the potential for "incremental revenue-generating opportunity" that could "ultimately have a material positive impact on our future profitability."

Financial Performance and Liquidity

Quoin Pharmaceuticals, as a development-stage biopharmaceutical company, has consistently incurred net losses since its inception, accumulating a deficit of approximately $66.60 million as of September 30, 2025. The company has not yet commercialized any products and, consequently, has not generated revenue from product sales. Management anticipates this trend will continue until successful development and marketing approval of its product candidates, which is expected to take several years.

Liquidity and capital resources have been a key focus for Quoin. As of September 30, 2025, the company held cash and cash equivalents of $1.83 million and investments of $3.58 million. However, significant financing activities have since bolstered its financial position. On October 10, 2025, Quoin closed a private placement, securing upfront gross proceeds of approximately $16.60 million. An additional $3.30 million was received on October 14, 2025, from the exercise of warrants. These proceeds, combined with an $8 million equity line of credit (ELOC) accessible in the second half of 2024, are expected to extend the company's cash runway into the second half of 2026. Management has affirmed that these resources provide sufficient liquidity to continue as a going concern for at least one year from the issuance date of the financial statements (November 6, 2025). The private placement proceeds are earmarked for general corporate purposes, including R&D for QRX003, working capital, and future acquisitions. The company could also receive up to an additional $88 million if the Ordinary Warrants from the private placement are fully exercised.

For the nine months ended September 30, 2025, the company reported a net loss of approximately $11.46 million, an increase from $6.65 million in the same period of 2024. This was largely driven by a significant increase in research and development (R&D) expenses, which surged by approximately 163% to $6.71 million for the nine months ended September 30, 2025, compared to $2.55 million in the prior year. This increase primarily reflects $4.04 million in higher external expenditures on development programs, particularly for QRX003 clinical studies. General and administrative expenses also increased by approximately 11% to $5.06 million for the nine months ended September 30, 2025, due to higher payroll, consulting, legal, and public company costs.

Competitive Landscape and Strategic Positioning

Quoin Pharmaceuticals operates in a highly specialized segment of the biotechnology industry, focusing on rare and orphan diseases. In the Netherton Syndrome space, Quoin currently holds a significant first-mover advantage. The company remains the only pharmaceutical entity actively conducting clinical studies under an open Investigational New Drug (IND) application with the FDA. While another company has filed an IND and received a "Study May Proceed" letter, its study had not been initiated as of late 2023, and other potential competitors have seen their timelines pushed out or abandoned. This leadership position is crucial in a market where the total addressable patient population for Netherton Syndrome is estimated to be between 7,000 to 8,000 patients in the U.S. and Europe, with an additional 10,000 to 15,000 in partnered countries, representing a commercial opportunity "substantially in excess of $500 million."

Compared to broader rare disease players like Krystal Biotech , Amicus Therapeutics , and BioMarin Pharmaceutical , Quoin's competitive standing is characterized by its niche focus on topical therapies for rare skin conditions. While Krystal Biotech excels in gene therapies for genetic skin disorders and Amicus Therapeutics and BioMarin Pharmaceutical have diversified portfolios in metabolic and genetic disorders, Quoin's QRX003 offers a potentially more patient-friendly, topical administration. This could lead to higher patient compliance and a differentiated market position for everyday use, potentially exploiting weaknesses in the accessibility of more complex gene therapies.

However, Quoin's smaller scale and limited resources present vulnerabilities. Larger competitors often exhibit stronger revenue growth, more robust cash flow generation, and greater R&D investment efficiency. For instance, Krystal Biotech (KRYS) has shown positive revenue growth and improving profitability, while Amicus Therapeutics (FOLD) and BioMarin Pharmaceutical (BMRN) have consistent revenue growth and stable profitability. Quoin's financial performance, marked by consistent net losses and negative operating cash flow, reflects its development-stage status and reliance on external financing. The company's current ratio of 1.95, while indicating short-term liquidity, is lower than some established peers.

Barriers to entry in the rare disease sector, such as high R&D costs and stringent regulatory requirements, help protect Quoin's niche. However, these same barriers also necessitate significant capital investment, which Quoin actively addresses through strategic financings. The company's disciplined M&A strategy, prioritizing late-stage orphan assets with strong clinical data and favorable commercial opportunities, aims to broaden its portfolio while ensuring adequate funding for new assets. This approach mitigates the risk of overextending its resources.

Industry trends, including the increasing role of AI in drug discovery, could accelerate competitor innovations. While Quoin's current focus is on its existing pipeline and M&A, the broader technological landscape could influence future competitive dynamics. The company's reliance on single-source third-party suppliers for clinical studies, API, and drug product manufacturing also presents an operational risk, as any disruption could impact its development timelines.

Outlook and Risks

Quoin Pharmaceuticals is actively transitioning into a pre-commercialization mode, targeting an NDA filing for QRX003 in the second half of 2026, with potential regulatory approval and launch anticipated within the next 18 to 24 months. The company expects further readouts from the open-label Netherton Syndrome study throughout 2024, with a first readout from twice-daily dosed patients expected this summer. Top-line results from the blinded study are projected for early 2025. These milestones are critical for validating the investment thesis and driving future value.

The company's outlook is bolstered by the FDA's Orphan Drug Designation for QRX003 in Netherton Syndrome, granted in October 2025, following a similar designation from the European Medicines Agency in May 2025. This designation provides significant benefits, including tax credits, fee waivers, and seven years of market exclusivity if approved, enhancing the commercial potential of QRX003.

However, several risks warrant investor attention. The company's history of net losses and reliance on external financing means that additional capital will be required to achieve commercial profitability. While recent financings have extended the cash runway, the availability of future funding on acceptable terms is not guaranteed. Restrictions on future equity financings under the October 2025 Purchase Agreement, such as limitations on variable rate financings and equity issuances below a certain price, could impact the company's flexibility in raising capital.

Furthermore, maintaining compliance with Nasdaq's listing requirements remains a concern. As of September 30, 2025, the company's stockholders' equity was below the minimum $2.50 million requirement, although the subsequent private placement is expected to address this. A delisting from Nasdaq could severely impact liquidity, stock price, and the ability to raise future capital. The company also faces inherent risks common to development-stage biopharmaceutical companies, including the uncertainties of clinical trial outcomes, regulatory approvals, and market acceptance. Dependence on third-party suppliers and potential disruptions from government agency funding issues, such as government shutdowns, could also delay development and regulatory processes.

Conclusion

Quoin Pharmaceuticals stands at a pivotal juncture, poised to potentially deliver the first approved treatment for Netherton Syndrome with its lead asset, QRX003. The company's disciplined strategic execution, marked by positive clinical data, optimized trial designs, and a robust global commercial partnership network, underpins a compelling investment narrative focused on unlocking value in underserved rare disease markets. The recent substantial capital raises have provided a critical financial runway, enabling the advancement of its pipeline and the pursuit of strategic M&A opportunities to broaden its therapeutic reach.

While the path to commercial profitability is long and fraught with the inherent risks of biopharmaceutical development, Quoin's first-mover advantage in Netherton Syndrome, coupled with its proprietary technology and strategic focus on patient-friendly topical solutions, positions it uniquely against larger competitors. Investors should closely monitor the upcoming clinical data readouts, progress on regulatory filings, and the successful integration of new assets through its M&A strategy. The company's ability to prudently manage its capital and navigate the complex regulatory and competitive landscape will be paramount in realizing the significant commercial potential of its rare disease portfolio.