November 7, 2019 - 10-Q: Quarterly report pursuant to Section 13 or 15(d)

Form: 10-Q

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-13467

Inhibitor Therapeutics, Inc.

(Exact name of registrant as specified in its charter)


Delaware		30-0793665
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4830 W. Kennedy Blvd., Suite 600 Tampa, FL		33609
(Address of principal executive offices)		(Zip Code)

Registrants telephone number (including area code): 813-509-2417

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None

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. Yes ☒ No ☐

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer or a smaller reporting company. See definition of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.

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 November 6, 2019, there were 370,446,185 shares of company common stock issued and outstanding.

Inhibitor Therapeutics, Inc.

Quarterly Report on Form 10-Q

TABLE OF CONTENTS


		Page

Part I. Financial Information

Item 1.	Condensed Financial Statements (unaudited)

	Condensed Balance Sheets as of September 30, 2019 and December 31, 2018		1

	Condensed Statements of Operations for the three months and nine months ended September 30, 2019 and 2018		2

	Condensed Statement of Stockholders Equity (Deficit) for the nine months ended September 30, 2019 and 2018		3

	Condensed Statements of Cash Flows for the nine months ended September 30, 2019 and 2018		4

	Notes to Condensed Financial Statements		5

Item 2.	Managements Discussion and Analysis of Financial Condition and Results of Operations		12

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		13

Item 4.	Controls and Procedures		13

Cautionary Note on Forward Looking Statements			14

Part II. Other Information

Item 1	Legal Proceedings		15

Item 1A.	Risk Factors		15

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		15

Item 3	Defaults upon Senior Securities		15

Item 4	Mine Safety Disclosures		15

Item 5	Other Information		15

Item 6.	Exhibits		16

Signatures			S-1

INHIBITOR THERAPEUTICS, INC.

CONDENSED BALANCE SHEETS

AS OF SEPTEMBER 30, 2019 AND DECEMBER 31, 2018

(Unaudited)


	September 30, 2019			December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	1,372,186		$	1,108,713
Prepaid expenses		50,660			41,296

Total current assets		1,422,846			1,150,009
Other long-term assets		61,023			82,992

Total assets	$	1,483,869		$	1,233,001

LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	285,982		$	384,829
Dividends payable		50,410			99,945
Other liabilities		22,533			215,876

Total current liabilities		358,925			700,650
Deferred revenue, related party		3,000,000			500,000

Total liabilities		3,358,925			1,200,650

Commitments and contingencies (note 5)
Stockholders (deficit) equity:
Series A Preferred Stock, $0.0001 par value; 500,000 shares authorized; no shares issued and outstanding
Series B Convertible, Redeemable, Preferred Stock, $0.0001 par value; 7,246,377 shares authorized; 5,797,102 shares issued and outstanding at September 30, 2019 and December 31, 2018		3,960,866			3,960,866
Undesignated Preferred Stock, $0.0001 par value; 2,253,623 shares authorized; no shares issued or outstanding
Common stock, $0.0001 par value; 500,000,000 shares authorized; 370,446,185 and 370,084,064 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively		37,045			37,008
Additional paid-in capital		49,354,791			49,015,120
Accumulated deficit		(55,227,758	)		(52,980,643	)

Total stockholders (deficit) equity		(1,875,056	)		32,351

Total liabilities and stockholders (deficit) equity	$	1,483,869		$	1,233,001

See notes to condensed financial statements

INHIBITOR THERAPEUTICS, INC.

CONDENSED STATEMENTS OF OPERATIONS

FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenues:	$			$			$			$

Expenses:
Research and development		364,442			775,449			864,812			1,978,294
General and administrative		318,479			400,076			1,245,209			1,256,453

Total Expenses:		682,921			1,175,525			2,110,021			3,234,747

Loss from operations		(682,921	)		(1,175,525	)		(2,110,021	)		(3,234,747	)
Interest income		4,373			3,995			12,494			10,707

Net loss	$	(678,548	)	$	(1,171,530	)		(2,097,527	)		(3,224,040	)
Preferred stock dividend		(50,410	)		(49,534	)		(149,588	)		(106,082	)

Net loss applicable to common stockholders	$	(728,958	)	$	(1,221,064	)	$	(2,247,115	)	$	(3,330,122	)

Basic and diluted net loss applicable to common stockholders per share	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)

Weighted average common stock shares outstanding basic and diluted		370,446,185			369,930,943			370,427,615			369,757,743

See notes to condensed financial statements

INHIBITOR THERAPEUTICS, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)


	Preferred Stock Series B				Common Stock				Additional Paid-In Capital		Accumulated Deficit			Total Stockholders Equity (Deficit)
	Shares		Amount		Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Total Stockholders Equity (Deficit)
Balances, January 1, 2019		5,797,102	$	3,960,866		370,084,064	$	37,008	$	49,015,120	$	(52,980,643	)	$	32,351
Issuance of common stock for payment of dividends on Preferred Stock						362,121		37		99,909					99,946
Stock based compensation										131,031					131,031
Preferred stock dividends												(49,315	)		(49,315	)
Net loss												(786,288	)		(786,288	)

Balances, March 31, 2019		5,797,102	$	3,960,866		370,446,185	$	37,045	$	49,246,060	$	(53,816,246	)	$	(572,275	)
Stock based compensation										81,614					81,614
Preferred stock dividends												(49,863	)		(49,863	)
Net loss												(632,691	)		(632,691	)

Balances, June 30, 2019		5,797,102	$	3,960,866		370,446,185	$	37,045	$	49,327,674	$	(54,498,800	)	$	(1,173,215	)
Stock based compensation										27,117					27,117
Preferred stock dividends												(50,410	)		(50,410	)
Net loss												(678,548	)		(678,548	)

Balances, September 30, 2019		5,797,102	$	3,960,866		370,446,185	$	37,045	$	49,354,791		(55,227,758	)		(1,875,056	)


	Mezzanine Equity Preferred StockSeries B			Common Stock				Additional Paid-In Capital		Accumulated Deficit			Total Stockholders Equity (Deficit)
	Shares		Amount	Shares		Amount		Additional Paid-In Capital		Accumulated Deficit			Total Stockholders Equity (Deficit)
Balances, January 1, 2018			$		369,599,266	$	36,960	$	48,403,523	$	(48,273,920	)	$	166,563
Sale of Preferred Stock and Common Stock warrants to related party, net (note 1)		3,478,261	2,360,866
Stock based compensation					75,000		7		208,236					208,243
Preferred stock dividends											(26,630	)		(26,630	)
Net loss											(1,170,594	)		(1,170,594	)

Balances, March 31, 2018		3,478,261	2,360,866		369,674,266	$	36,967	$	48,611,759	$	(49,471,144	)	$	(822,418	)
Issuance of common stock upon warrant exercise					100,000		10		11,990					12,000
Stock based compensation									83,953					83,953
Preferred stock dividends											(29,918	)		(29,918	)
Net loss											(881,916	)		(881,916	)

Balances, June 30, 2018		3,478,261	2,360,866		369,774,266		36,977		48,707,702		(50,382,978	)		(1,638,299	)
Sale of Preferred Stock and Common Stock warrants to related party, net (note 1)		2,318,841	1,600,000
Stock based compensation									125,451					125,451
Issuance of common stock for payment of dividends on Preferred Stock					184,798		19		56,529					56,548
Preferred stock dividends											(49,534	)		(49,534	)
Net loss											(1,171,530	)		(1,171,530	)

Balances, September 30, 2018		5,797,102	$3,960,866		369,959,064	$	36,996	$	48,889,682	$	(51,604,042	)	$	(2,677,364	)

See notes to condensed financial statements

INHIBITOR THERAPEUTICS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)


	Nine Months Ended September 30,
	2019			2018
Operating activities:
Net loss	$	(2,097,527	)	$	(3,224,040	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock based compensation		239,762			417,647
Changes in assets and liabilities:
Prepaid expense and other assets		12,605			32,183
Accounts payable and other current liabilities		(292,189	)		(101,943	)

Net cash used in operating activities		(2,137,349	)		(2,876,153	)

Financing activities:
Proceeds from the exercise of common stock warrants					12,000
Proceeds from the sale of preferred stock and common stock warrants, related party, net (note 1)					3,960,866
Proceeds from advances of royalties, related party		2,500,000
Payment of cash dividend		(99,178	)

Net cash provided by financing activities		2,400,822			3,972,866

Net change in cash and cash equivalents		263,473			1,096,713
Cash and cash equivalents at beginning of period		1,108,713			344,113

Cash and cash equivalents at end of period	$	1,372,186		$	1,440,826

Non-cash financing activities:
Issuance of common stock for payment of Preferred Stock dividend	$	99,946		$	56,548

Accrued, but unpaid dividends	$	50,410		$	49,534

See notes to condensed financial statements

INHIBITOR THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)

1. Corporate overview:

Overview

The accompanying unaudited condensed financial statements of Inhibitor Therapeutics, Inc. (formerly HedgePath Pharmaceuticals, Inc.), a Delaware corporation (the Company, INTI, we, us or similar terminology), have been prepared by the Company without audit. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of September 30, 2019, and for all periods presented, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to the Securities and Exchange Commission (SEC) rules and regulations. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2018, which are included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2018, which was filed with the SEC on March 7, 2019 (the 2018 Annual Report). The accompanying condensed balance sheet as of December 31, 2018 has been derived from the audited financial statements at that date, but does not include all information and footnotes required by GAAP for complete financial statements.

As used herein, the term Common Stock means the Companys common stock, $0.0001 par value per share.

The results of operations for the three and nine month periods ended September 30, 2019 are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year. Readers of this Quarterly Report are strongly encouraged to review the risk factors relating to the Company which are set forth in the 2018 Annual Report and our other filings with the SEC.

Nature of the Business and Background

The Company is a pharmaceutical development company that is focused on developing and ultimately commercializing innovative therapeutics for patients with certain cancers and certain non-cancerous proliferation disorders. The Company has also explored and expects to continue to explore acquiring or licensing other innovative preclinical and clinical stage therapeutics addressing unmet needs and orphan indications beyond cancer. The Companys current primary focus is on the development of therapies initially for prostate and also lung cancers in the U.S. market utilizing SUBA^®-Itraconazole, a patented, oral formulation of the currently marketed anti-fungal drug itraconazole to which the Company holds an exclusive U.S. license in the licensed field from its majority stockholder, Mayne Pharma Ventures Pty Ltd. (Mayne Pharma). SUBA-Itraconazole is currently licensed to the Company by Mayne Pharma on an exclusive basis in the United States in the field of certain cancers (including prostate and lung cancer) and certain non-cancerous proliferation disorders pursuant to the Third Amended and Restated Supply and License Agreement between the Company and Mayne Pharma, dated December 17, 2018 (the Third Amended SLA). Previously, the Company conducted a Phase 2b trial studying the use of SUBA-Itraconazole targeting basal cell carcinoma in patients with Basal Cell Carcinoma Nevus Syndrome (BCCNS). As described further below, Mayne Pharma assumed control of the Companys clinical and regulatory program for SUBA-Itraconazole for the treatment of BCCNS in December 2018 pursuant to the Third Amended SLA.

The Company demonstrated in its previous Phase 2b trial in BCCNS that the dosing of oral capsules of SUBA-Itraconazole affects the Hedgehog signaling pathway, a major regulator of many fundamental cellular processes, which, in turn, can impact the development and growth of cancers such as basal cell carcinoma. Itraconazole has been approved by the U.S. Food and Drug Administration (FDA) for, and has been extensively used to, treat fungal infections and has an extensive history of safe and effective use in humans. The Company has developed, optioned and licensed intellectual property and know-how related to the treatment of cancer patients using itraconazole and certain itraconazole analogues.

Manufacturing and Product Supply Relationship with Mayne Pharma

The Company does not have any production facilities or manufacturing personnel. The Third Amended SLA provides for the supply to the Company of specially formulated capsules of SUBA-Itraconazole, manufactured by Mayne Pharma under cGMP (current good manufacturing practice) standards, for use by the Company in its clinical trials and for the future commercial supply following FDA approvals, if obtained.

Pursuant to the Third Amended SLA, Mayne Pharma is obligated to supply the Company with its patented formulation of SUBA-Itraconazole in a particular oral dose formulation for the treatment of human patients with certain cancers and non-cancerous proliferation disorders for as long as the Third Amended SLA is in effect. The Company is required to perform specified development activities and to commercialize SUBA-Itraconazole for the treatment of cancer in the United States.

INHIBITOR THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)

1. Corporate overview (continued):

Overview of December 2018 Transactions with Mayne Pharma

On December 17, 2018 (the Effective Date), the Company entered into the following related agreements (collectively, the Transaction Documents):

An agreement (the Agreement), by and among the Company, and Mayne Pharma, and Mayne Pharma International Pty Ltd, an affiliate of Mayne Pharma (Mayne Pharma International);

The Third Amended SLA, which amended and restated the Companys Second Amended and Restated Supply and License Agreement with Mayne Pharma, dated as of May 15, 2015 (as amended immediately prior to the Effective Date, the Second Amended SLA); and

The Amended and Restated Sublicense Agreement, by and between the Company and Mayne Pharma International, which amends and restates that certain Sublicense Agreement, dated August 31, 2015, between the Company and Mayne Pharma International, as amended.

In addition, pursuant to the terms of the Agreement, the Company and Mayne Pharma agreed to vote in favor of the adoption of an Amended and Restated Certificate of Designation (the Amended and Restated COD) for the Companys Series B Convertible Preferred Stock (the Series B Preferred Stock), which amended and restated the terms of the Series B Preferred Stock (originally issued to Mayne Pharma on January 8, 2018) to remove the redemption rights of the Series B Preferred Stock as described below. At September 30, 2019, all 5,797,102 outstanding shares the Series B Preferred Stock are held by Mayne Pharma.

The Transaction Documents resulted from negotiations regarding the existing right of Mayne Pharma under the Second Amended SLA to elect to assume control of the regulatory and clinical development program for SUBA-Itraconazole for the treatment of BCCNS (such product candidate SUBA-Itraconazole BCCNS) in exchange for a royalty on any future net sales of SUBA-Itraconazole BCCNS by Mayne Pharma in the United States if an FDA New Drug Application (NDA) was not accepted for filing by FDA by December 31, 2018 (subject to limited extension if the NDA were filed in December 2018). Based on unforeseen requirements imposed by FDA in September 2018, the Company determined that it would be unable to responsibly file the SUBA-Itraconazole BCCNS NDA by this deadline, and thus the Company commenced negotiations with Mayne Pharma to transfer SUBA-Itraconazole BCCNS in advance of December 31, 2018 on negotiated terms deemed beneficial to the Company.

The Transaction Documents were negotiated and approved on behalf of the Company by a special committee of disinterested, independent members of the Companys Board of Directors (the Board) which was formed on October 26, 2018 for such purpose. The special Board committee consisted of three members of the Board who were each disinterested with respect to Mayne Pharma.

December 2018 Agreement with Mayne Pharma

Pursuant to the terms of the Agreement, on the Effective Date, Mayne Pharma (in its capacity as the holder of more than 50% of the outstanding voting securities of the Company) executed and delivered to the Company a stockholder consent which consented to the taking of the following actions: (a) the adoption of the Amended and Restated COD; (b) the election of each E. Brendan Magrab, W. Mark Watson, Dr. R. Dana Ono, Stefan J. Cross and Robert D. Martin (each a current member of the Board, except Brendan Magrab, who resigned effective June 30, 2019) to serve on the Board for a one-year term that expires at the next annual meeting of the Companys stockholders or until his earlier death, resignation or removal; and (c) the approval of an increase in the size of the Companys 2014 Equity Incentive Plan (as amended, the EIP) by 11,000,000 shares of common stock from 32,583,475 shares to 43,583,475 shares.

In addition, pursuant to the Agreement, for the period beginning on the Effective Date and ending three (3) years from the Effective Date, in the event that the Company asks its stockholders (whether at a meeting of stockholders or pursuant to a written consent of stockholders) to vote on or approve a proposal to effect a reverse split of the Company capital stock for the purpose of uplisting the common stock to a U.S. national securities exchange (a Reverse Stock Split Proposal), Mayne Pharma (on behalf of itself and its affiliates) agreed to vote or cause to be voted (in person, by proxy or by action by written consent, as applicable) all shares of the Companys voting capital stock that either Mayne Pharma then owns or over which Mayne Pharma has voting control in favor of the adoption and approval of any such Reverse Stock Split Proposal. No assurances are given that the Company will seek an uplisting to a U.S. national securities exchange or implement a reverse stock split of its Common Stock.

INHIBITOR THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)

1. Corporate overview (continued):

Also, pursuant to the Agreement, Mayne Pharma consented and agreed (under the terms of agreements previously executed with the Company) to an increase in the number of shares of common stock that the Company may issue under the EIP to 17,624,000 shares from the previous limit of 6,624,000 shares, with the agreement and understanding that such increase will be utilized by the Company during the period from the Effective Date through December 31, 2021.

December 2018Third Amended and Restated Supply and License Agreement with Mayne Pharma

Pursuant to the Third Amended SLA, as of the Effective Date, Mayne Pharma assumed control of the regulatory and clinical development program for SUBA-Itraconazole BCCNS and immediately assumed responsibility for all expenses related to exploiting the SUBA-Itraconazole product in the BCCNS field, provided that the Company continues to be responsible for all liabilities related to the product in the United States prior to the Effective Date. The Third Amended SLA will continue in effect on an exclusive basis in the United States on substantially the same terms as were provided for under the Second Amended SLA, except as described below.

In consideration of the transfer to Mayne Pharma of the SUBA-Itraconazole BCCNS clinical data and regulatory rights, the Company will receive the following consideration:

(a)

a 9% quarterly cash royalty (the Royalty) on future net sales, if any, of SUBA-Itraconazole product in the BCCNS field in the United States, from which certain royalties owed by the Company to Mayne Pharma for access to certain patents would also be funded.

(b)

Mayne Pharmas agreement to advance funds to the Company in an aggregate amount of up to $5 million on the following terms and conditions:

(i)

As of the Effective Date, Mayne Pharma shall make an Advance to the Company of $500,000 (the Company received this first Advance on December 18, 2018);

(ii)

Within three (3) business days following the completion of the agreed upon activities associated with transferring the SUBA-Itraconazole BCCNS product to Mayne Pharma, Mayne Pharma must make an Advance to the Company of $1 million (the Company received this second Advance on January 22, 2019);

(iii)

If, and only if, the Companys Phase 2b clinical trial data have been provided to Mayne Pharma in all material respects so as to allow Mayne Pharma to assume control of SUBA-Itraconazole BCCNS in the United States, upon the earlier of June 30, 2019 or the acceptance for filing by FDA of an NDA for the SUBA-Itraconazole BCCNS, Mayne Pharma must make an Advance to the Company of $1,500,000 (the Company received this third Advance on June 26, 2019); and

(iv)

If the Company raises aggregate gross proceeds of more than $3 million from the sale of new common stock, preferred stock equity subordinate to the Series B Preferred Stock held by Mayne Pharma or warrants to third parties (New Securities) in one or more equity financings by June 30, 2021 (the Equity Funding Achievement), the Company may request additional Advances of up to an amount equal to $2 million less the amount of aggregate gross proceeds received by the Company from Mayne Pharma from the sale of New Securities if Mayne Pharma elects to participate in such equity financings pursuant to contractual pro rata participation rights contained in the Third Amended SLA.

(c)

The field covered by the Third Amended SLA was amended to specifically include only the following indications: (i) any prostate cancer, prostatic intraepithelial neoplasia and benign prostatic hyperplasia, (ii) any lung cancer and atypical adenomatous hyperplasia, and (iii) familial adenomatous polyposis, colorectal polyps and Baretts esophagus (the Field). The Companys work on these indications will no longer be tied to the achievement of clinical or commercial target dates as they were under the Second Amended SLA.

INHIBITOR THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)

1. Corporate overview (continued):

(d)

Mayne Pharma will continue to provide quantities of SUBA-Itraconazole drug and placebo oral capsules without charge up to a contractually set amount for the Companys SUBA-Itraconazole Prostate clinical studies and quantities for future indications as agreed to by the parties.

(e)

Pursuant to the Third Amended SLA, Mayne Pharma has licensed to the Company the right to use all pre-clinical or clinical trial or other data generated or owned by Mayne Pharma related to SUBA-Itraconazole anywhere in the world for its activities under the Third Amended SLA.

With respect to each Advance made by Mayne Pharma prior to the receipt of FDA approval of an NDA for SUBA-Itraconazole BCCNS, each $0.75 increment of each such Advance will be credited and set off against each $1.00 increment of Royalty owed to the Company, and with respect to each Advance made by Mayne Pharma following the receipt of FDA approval of an NDA for SUBA-Itraconazole BCCNS, each $0.85 increment of each such Advance will be credited and set off against each $1.00 increment of Royalty owed to the Company. In addition, if, prior to June 30, 2021, the Company has not fulfilled the Equity Funding Achievement, Mayne Pharma shall have the right to satisfy all of its remaining Royalty obligations by making a single lump sum payment to the Company in an amount equal to seventy percent (70%) of the fair market value of the remaining royalties payable to the Company as determined by an independent appraisal process. The Third Amended SLA also gives Mayne Pharma the right to convert the Companys rights licensed from Mayne Pharma under the Third Amended SLA to a non-exclusive license if the FDA has not approved an NDA filed by the Company for the Product in part of the Field within eight (8) years from the Effective Date.

December 2018 Amended and Restated Sublicense Agreement

The Amended and Restated Sublicense Agreement amends and replaces a similar agreement entered into between the Company and Mayne Pharma International, dated as of May 15, 2015, under which Mayne Pharma International sublicensed to the Company the exclusive U.S. rights to two certain third-party patents relating to the use of itraconazole as a treatment for cancer and age-related macular degeneration (the Patents). The Amended and Restated Sublicense Agreement amends the required payments to Mayne Pharma for certain development-related milestone payments related to SUBA-Itraconazole BCCNS and allows for the termination of the Amended and Restated Sublicense Agreement if the Third Amended SLA expires or is terminated. On August 21, 2019, the Company received written notice of termination of the Amended and Restated Sublicense Agreement due to the fact that the third party from whom Mayne Pharma International was itself sublicensing the Patents had terminated such sublicense agreement. Thereafter, on August 27, 2019, the Company and Mayne Pharma International entered into a new Sublicense Agreement, effective August 20, 2019 (the New Sublicense Agreement), under which the Company received from Mayne Pharma International a sublicense to the Patents on nearly identical terms as the Amended and Restated Sublicense Agreement (including with respect to licensed field, the licensed indications and the license fees, milestone payments and minimum annual and running royalties that may be owed by the Company to Mayne Pharma International, as well as the terms related to patent prosecution and infringement, reporting and indemnification). Mayne Pharma International was able to enter into the New Sublicense Agreement because, subsequent to the termination of the Amended and Restated Sublicense Agreement, Mayne Pharma International entered into a direct license agreement with respect to the Patents with The Johns Hopkins University, the owner of the Patents.

The New Sublicense Agreement has a term commencing on August 20, 2019 and continuing until the earlier of: (a) the date of expiration of the last to expire Patent; or (b) notice by Mayne Pharma International with immediate effect promptly after termination or expiry of its rights to license the Patents. Mayne Pharma International and the Company have the right to terminate the New Sublicense Agreement upon the occurrence of certain events, including the bankruptcy of a party or breach of a partys obligations under the New Sublicense Agreement (subject to a notice and cure period). Mayne Pharma International may also terminate the New Sublicense Agreement upon the expiration or termination of that certain Third Amended SLA.

INHIBITOR THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)

2. Liquidity and managements plans:

The Company had cash and cash equivalents of approximately $1.4 million as of September 30, 2019. Based on the Companys current operational plan and budget, the Company expects that it has sufficient cash to manage its business into the third quarter of 2020, although this estimation assumes the Company does not begin any clinical trials, acquire options or rights to additional drug development opportunities or otherwise face unexpected events, costs or contingencies, any of which could affect the Companys cash requirements. Available resources may be consumed more rapidly than anticipated, potentially resulting in the need for additional funding. Although named as only a nominal defendant in the civil action discussed in Note 5, the Company will have a role due to its technical connection with the matter in dispute. Extended legal proceedings could drain valuable time and resources away from the Companys clinical and pre-clinical programs and may also impede any future efforts to raise additional capital.

The Company intends to finance additional research and development, commercialization and distribution efforts and its working capital needs primarily through:

proceeds from public and private financings (including, most recently, financing from our majority shareholder, Mayne Pharma) and, potentially, from other strategic transactions;

royalty revenue from Mayne Pharma from sales in the U.S. (if any) of SUBA-Itraconazole BCCNS upon and assuming approval by FDA (after earned royalties have been applied to any advances due under Third Amended SLA);

proceeds from the exercise of outstanding warrants previously issued in private financings to investors (including, potentially, warrants held by our majority shareholder, Mayne Pharma);

potential partnerships with other pharmaceutical companies to assist in the supply, manufacturing and distribution of our products for which we would expect to receive upfront milestone and royalty payments;

potential licensing and joint venture arrangements with third parties, including other pharmaceutical companies where we would receive funding based on out-licensing our product; and

government or private foundation grants or loans which would be awarded to us to further develop our current and future anti-cancer therapies.

However, there is a risk that none of these plans will be implemented in a manner necessary to sustain the Company for an extended period of time and that the Company will be unable to obtain additional financing when needed on commercially reasonable terms, if at all. If adequate funds are not available when needed, the Company may be required to significantly reduce or refocus operations or to obtain funds through arrangements that may require the Company to relinquish rights to technologies or potential markets, any of which could have a material adverse effect on the Company, its viability, its financial condition and its results of operations beyond the third quarter of 2020. In addition, a lack of adequate funds may force the Company to cease operations.

As a result of the foregoing circumstances, there is substantial doubt about our ability to continue as a going concern. The consolidated financial statements included herein do not include any adjustments relating to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.

3. Summary of Significant Accounting Policies:

Estimates

The preparation of condensed financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

INHIBITOR THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)

3. Summary of Significant Accounting Policies (continued):

Revenue Recognition

The Company currently has no ongoing source of revenues. Miscellaneous income, including interest, is recognized when earned by the Company. Deferred revenue represents cash received for royalties in advance of being earned. Such payments are reflected as deferred revenue until recognized under the Companys revenue recognition policy. Deferred revenue would be classified as current if management believes the Company will be able to recognize the deferred amount as revenue within twelve months of the balance sheet date. Deferred revenue will be recognized when the product is sold and the related royalty is earned. Currently, all deferred revenue is related to the SUBA-Itraconazole BCCNS product, which is yet to be approved by FDA. As such, the Company has determined that 100% of the advances of the royalty received by Mayne Pharma should be classified as a non-current liability. At September 30, 2019, deferred revenue consisted of $3.0 million of royalties advanced by Mayne Pharma under the Third Amended SLA. There was $0.5 million in deferred revenue at December 31, 2018.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. At times, the Company may maintain cash balances in excess of Federal Deposit Insurance Corporation insured amounts which is $250,000 for substantially all depository accounts. As of September 30, 2019, the Company had approximately $1.0 million in excess of the amount covered by Federal Deposit Insurance Corporation with one financial institution.

Research and Development Expenses

Research and development costs are expensed in the period in which they are incurred and include the expenses paid to third parties who conduct research and development activities on behalf of the Company and purchased in-process research and development.

Stock-Based Compensation

The Company accounts for stock-based awards to employees and non-employees using Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 Accounting for Share-Based Payments, which provides for the use of the fair value based method to determine compensation for all arrangements where shares of stock or equity instruments are issued for compensation. Fair values of restricted stock units issued are determined by the Company based predominantly on the trading price of the common stock on the date of grant. Fair value of each common stock option is estimated on the date of grant using the Black-Scholes valuation model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. Expected volatility is based on historical volatility of a peer groups common stock and other factors estimated over the expected term of the options. The expected term of the options granted is derived using the simplified method which computes expected term as the average of the sum of the vesting term plus the contract term. The risk-free rate is based on the U.S. Treasury yield.

In applying the Black-Scholes option pricing model for options issued in February 2019 and June 2019 that vest in February 2020, the assumptions were as follows: expected price volatility of 85.4% and 85.33%, respectively; risk-free interest rate of 2.51% and 1.83%, respectively; weighted average expected life in years of 6 and 5 years, respectively; and no dividend yield. The value of these awards is based upon their grant-date fair value. That cost is recognized over the period during which the employee is required to provide service in exchange for the award. Forfeitures are recorded as incurred.

INHIBITOR THERAPEUTICS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(Unaudited)

3. Summary of Significant Accounting Policies (continued):

Income Taxes

Deferred tax assets and liabilities are recognized for future tax consequences attributed to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that are expected to apply to the differences in the periods that they are expected to reverse. These differences occur primarily in share-based compensation.

Recent accounting pronouncements:

In February 2016, the FASB issued ASU 2016-02, Leases, which created a new Topic, ASC Topic 842 and established the core principle that a lessee should recognize the assets, representing rights-of-use, and liabilities to make lease payments, that arise from leases. For leases with a term of 12 months or less, a lessee is permitted to make an election under which such assets and liabilities would not be recognized, and lease expense would be recognized generally on a straight-line basis over the lease term. This standard was effective for the Company beginning in 2019 and was adopted by the Company for the year beginning January 1, 2019. The Company has evaluated the impact of this guidance on its financial statements and has determined that it had no material impact, as the Company has no leasing arrangements with terms greater than 12 months.

Management has considered all recent accounting pronouncements issued, but not effective, and does not believe that they will have a significant impact on the Companys financial statements.

4. Stockholders Equity:

Employee Stock Plans

On February 3, 2019, Board members were awarded approximately 3.0 million stock options pursuant to the EIP with an exercise price of $0.076 and grant date fair value of $0.054 that vest on the first anniversary of the grant date. The grant date fair value of common stock options was determined using the Black-Scholes model on the date of issuance and the number of shares expected to vest. The total grant date fair value of the February 3, 2019 stock option grants was approximately $0.2 million. On June 3, 2019, the Company issued 25,000 stock options to its newly appointed Chairman of the Board pursuant to the EIP with an exercise price of $0.073 and grant date fair value of $0.05 that vest on February 3, 2020. The grant date fair value of common stock options was determined using the Black-Scholes model on the date of issuance and the number of shares expected to vest. The total grant date fair value of the June 3, 2019 stock option grants was approximately $1,250.

Total stock-based compensation for the nine months ended September 30, 2019 was approximately $0.2 million and is related to common stock options issued pursuant to the EIP in 2018 and 2019. The expense is classified as general and administrative expense in the accompanying condensed statements of operations. As of September 30, 2019, there were 4,792,685 outstanding common stock options under the EIP of which 2,794,000 were vested. There was approximately $0.04 million in unamortized stock-based compensation at September 30, 2019.

5. Legal Proceedings:

The Company may from time to time become a party to various legal proceedings arising in the ordinary course of business. Except as discussed below, the Company is not the subject of any pending legal proceedings.

On July 9, 2019, Hedgepath, LLC (HPLLC), a stockholder of the Company, filed a civil action captioned Hedgepath, LLC v. Magrab, et al., Civil Action Number 2019-0529-JTL, in the Delaware Court of Chancery (the Action). In the complaint in the Action, purportedly brought directly and derivatively on behalf of the Company, HPLLC alleges claims for breach of fiduciary duty, declaratory judgement, and dilution of stockholder equity, against the Companys directors and President and Chief Executive Officer, a former director of the Company, (collectively the Individual Defendants) and Mayne Pharma in connection with (i) the issuance of certain Company equity securities to Mayne Pharma on or about January 8, 2018, (ii) Mayne Pharmas alleged influence over the timing and conduct of the Companys clinical trials of SUBA-Itraconazole for the treatment of BCCNS, and (iii) previously announced amendments to the Supply and License Agreement, as amended (presently memorialized at the Third Amended SLA), between the Company and Mayne Pharma and certain transactions contemplated thereby. The complaint also alleges claims for breach of fiduciary duty and fraudulent misrepresentation in connection with allegedly false and misleading statements included in Company press releases and filings with the SEC. The complaint seeks unspecified damages, equitable and other relief from the defendants. The Companys director and officer insurance has reimbursed all of the Companys legal costs to date from HPLLCs initial inquiry related to this matter. Legal costs associated directly with the Company as a nominal defendant will be payable by the Company until certain retention amounts are reached. Such costs have been immaterial through September 30, 2019 and are included in general and administrative expenses for the current period. The Company believes the Action is legally and factually baseless, and the named director and officer defendants intend to defend themselves vigorously. On September 27, 2019, the Individual Defendants and Mayne Pharma each filed a Motion to Dismiss the Action, and such motion is pending as of the date of this filing.

Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the Condensed Financial Statements and Notes thereto included elsewhere in this Quarterly Report. This discussion contains certain forward-looking statements that involve risks and uncertainties. The Companys actual results and the timing of certain events could differ materially from those discussed in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth herein and elsewhere in this Quarterly Report and in the Companys other filings with the SEC. See Cautionary Note Regarding Forward Looking Statements below.

As used in this Managements Discussion and Analysis of Financial Condition and Results of Operations, unless otherwise indicated, the terms the Company, we, us, our and similar terminology refer to Inhibitor Therapeutics, Inc.

Critical Accounting Policies

See Note 3 of the Notes to Condensed Financial Statements included in Item 1 of this Quarterly Report for a summary of significant accounting policies and information on recently issued accounting pronouncements.

Results of Operations

For the three months ended September 30, 2019 compared to the three months ended September 30, 2018

Research and Development Expenses. We recognized approximately $0.4 million in research and development expenses during the three months ended September 30, 2019 compared to approximately $0.8 million for the three months ended September 30, 2018. Research and development expenses for the three months ended September 30, 2019 primarily included salary expenses and expenses related to preparation for the filing of an Investigational New Drug application for use of SUBA-Itraconazole for prostate cancer. The expenses for the three months ended September 30, 2018 primarily included salary expenses, stock-based compensation, and expenses related to our clinical trial for BCCNS which concluded in 2018. Other expenses in both periods included legal expenses relating to patents and clinical trial insurance. The decrease of $0.4 million is due primarily to a reduction in clinical trial related expenses as a result of Mayne Pharma assuming control of the regulatory and clinical development program for SUBA-Itraconazole BCCNS in December 2018 and immediately assuming responsibility for all expenses related to exploiting the SUBA-Itraconazole BCCNS product in the BCCNS field in exchange for a 9% quarterly cash royalty and other considerations as discussed in Note 1.

General and Administrative Expenses. We recognized approximately $0.3 million in general and administrative expenses during the three months ended September 30, 2019 compared to $0.4 million for the three months ended September 30, 2018. General and administrative expenses consisted primarily of compensation and related costs for corporate administrative staff and Board members, facility expenditures, professional fees, consulting and taxes. The decrease is due primarily to a decrease in stock compensation expense during the quarter ended September 30, 2019 primarily due to a majority of outstanding stock options vesting prior to the beginning of the current period as well as the expiration of certain unvested stock options upon the 2019 retirement of our former Chairman of the Board.

Interest Income. We recognized interest income of $4,373 during the three months ended September 30, 2019 compared to $3,995 for the three months ended September 30, 2018 for interest earned on cash balances in our money market account.

For the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018

Research and Development Expenses. We recognized approximately $0.9 million in research and development expenses during the nine months ended September 30, 2019 compared to approximately $2.0 million for the nine months ended September 30, 2018. Research and development expenses for the nine months ended September 30, 2019 primarily included salary expenses and expenses related to preparation for the filing of an Investigational New Drug application for use of SUBA-Itraconazole for prostate cancer. The expenses for the nine months ended September 30, 2018 primarily included salary expenses, stock-based compensation, and expenses related to our clinical trial for BCCNS which concluded in 2018. Other expenses in both periods included legal expenses relating to patents and clinical trial insurance. The decrease of $1.1 million is due primarily to a reduction in clinical trial related expenses as a result of Mayne Pharma assuming control of the regulatory and clinical development program for SUBA-Itraconazole BCCNS in December 2018 and immediately assuming responsibility for all expenses related to exploiting the SUBA-Itraconazole BCCNS product in the BCCNS field in exchange for a 9% quarterly cash royalty and other considerations as discussed in Note 1.

General and Administrative Expenses. We recognized approximately $1.2 million in general and administrative expenses during the nine months ended September 30, 2019 compared to approximately $1.3 million for the nine months ended September 30, 2018. General and administrative expenses in both periods consisted primarily of compensation and related costs for corporate administrative staff and Board members, facility expenditures, professional fees, consulting and taxes. The decrease of approximately $0.1 million was due primarily to a decrease in stock compensation expense primarily due to a majority of outstanding stock options vesting prior to the beginning of the current period as well as the expiration of certain unvested stock options upon the 2019 retirement of our former Chairman of the Board.

Interest Income. We recognized interest income of $12,494 during the nine months ended September 30, 2019 compared to $10,707 for the nine months ended September 30, 2018 for interest earned on cash balances in our money market account.

Liquidity and Capital Resources

We had cash and cash equivalents of approximately $1.4 million as of September 30, 2019. Based on our current operational plan and budget, we expect that we will have sufficient cash to manage our business into the third quarter of 2020, although this estimation assumes we do not begin any clinical trials, acquire options or rights to additional drug development opportunities or otherwise face unexpected events, costs or contingencies, any of which could affect the Companys cash requirements. Available resources may be consumed more rapidly than anticipated, potentially resulting in the need for additional funding. Additionally, and although named as only a nominal defendant in the civil action discussed in Note 5 in the accompanying financial statement, the Company will have a role due to its technical connection with the matter in dispute. Extended legal proceedings could drain valuable time and resources away from the Companys operations (including clinical and pre-clinical programs) and may also impede any future efforts to raise additional capital.

We intend to seek additional financing for our research and development, commercialization and distribution efforts and our working capital needs primarily through:

proceeds from public and private financings (including, most recently, financing from our majority shareholder, Mayne Pharma);

royalty revenue from Mayne Pharma from sales in the U.S. (if any) of SUBA-Itraconazole BCCNS upon and assuming approval by FDA (after earned royalties have been applied to any royalties advanced under the Third Amended SLA)

proceeds from the exercise of outstanding warrants previously issued in private financings to investors (including, potentially, warrants held by our majority shareholder, Mayne Pharma);

potential licensing and joint venture arrangements with third parties, including other pharmaceutical companies where we would receive funding based on out-licensing our product; and

government or private foundation grants or loans which would be awarded to us to further develop our current and future anti-cancer therapies.

However, there is a risk that none of these plans will be implemented and that we will be unable to obtain additional financing on commercially reasonable terms, if at all. If adequate funds are not available, we may be required to significantly reduce or refocus operations or to obtain funds through arrangements that may require us to relinquish rights to technologies or potential markets, any of which could have a material adverse effect on our company, our viability, our financial condition and our results of operations beyond the third quarter of 2020. In addition, a lack of adequate funds may force us to cease operations.

As a result of the foregoing circumstances, there is substantial doubt about our ability to continue as a going concern beyond the third quarter of 2020. The consolidated financial statements included herein do not include any adjustments relating to the recoverability or classification of asset carrying amounts or the amounts and classification of liabilities that may result should we be unable to continue as a going concern.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report, the Companys management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer (the Certifying Officers), conducted evaluations of our disclosure controls and procedures. As defined under Sections 13a15(e) and 15d15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act), the term disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuers management, including the Certifying Officers, to allow timely decisions regarding required disclosures.

Based on this evaluation, the Certifying Officers have concluded that our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during our third fiscal quarter of 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Internal Controls

Readers are cautioned that our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our control have been detected. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any control design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS

Certain information set forth in this Quarterly Report on Form 10-Q, including in Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations (and the Liquidity and Capital Resources section thereof) and elsewhere may address or relate to future events and expectations and as such constitutes forward-looking statements within the meaning of the Private Securities Litigation Act of 1995. Such forward-looking statements involve significant risks and uncertainties. Such statements may include, without limitation, statements with respect to our plans, objectives, projections, expectations and intentions and other statements identified by words such as projects, may, could, would, should, believes, expects, anticipates, estimates, intends, plans or similar expressions. These statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties, including those detailed in our filings with the SEC. Actual results, including, without limitation: (i) our ability to develop and ultimately commercialize therapeutics, (ii) the application and availability of corporate funds and our need for future funds, or (iii) the timing for beginning, completion, and results of, clinical trials and the FDAs review and/or approval and potential commercial launch of our products and product candidates and regulatory filings related to the same, may differ significantly from those set forth in the forward-looking statements. Such forward-looking statements also involve other factors which may cause our actual results, performance or achievements to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements and to vary significantly from reporting period to reporting period. Such factors include, among others,

acceptance of our business model (namely the repurposing of a specialty formulation of the drug itraconazole for the treatment of cancer, and the potential acquisition or license of other pharmaceutical technologies) by investors and potential commercial collaborators;

our future capital requirements and our ability to satisfy our capital needs;

our ability to commence and complete required clinical trials of our product candidate and obtain approval from the FDA or other regulatory agencies in different jurisdictions;

matters associated with the fact that Mayne Pharma is our majority stockholder, key licensor and commercial partner;

our ability to secure and maintain key development and commercialization partners for our product candidate;

our ability to obtain, maintain or protect the validity of our owned or licensed patents and other intellectual property;

our ability to internally develop, acquire or license new inventions and intellectual property;

our ability to retain key executive members;

interpretations of current laws and the passages of future laws, rules and regulations applicable to our business; and

those risk factors listed under Item 1A of our 2018 Annual Report and other factors detailed from time to time in our other filings with the SEC.

Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual future results will not be different from the expectations expressed in this Report. We undertake no obligation to publically update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

On July 9, 2019, Hedgepath, LLC (HPPLC), a stockholder of ours, filed a civil action captioned Hedgepath, LLC v. Magrab, et al., Civil Action Number 2019-0529-JTL, in the Delaware Court of Chancery (the Action). In the complaint in the Action, purportedly brought directly and derivatively on behalf of us, HPLLC alleges claims for breach of fiduciary duty, declaratory judgement, and dilution of stockholder equity, against our directors and President and Chief Executive Officer, a former director of ours, (collectively the Individual Defendants) and Mayne Pharma in connection with (i) the issuance of certain equity securities to Mayne Pharma on or about January 8, 2018, (ii) Mayne Pharmas alleged influence over the timing and conduct of our clinical trials of SUBA-Itraconazole for the treatment of BCCNS, and (iii) previously announced amendments to the Supply and License Agreement, as amended, between us and Mayne Pharma and certain transactions contemplated thereby. The complaint also alleges claims for breach of fiduciary duty and fraudulent misrepresentation in connection with allegedly false and misleading statements included in our press releases and filings with the SEC. The complaint seeks unspecified damages, equitable and other relief from the defendants. Our director and officer insurance has reimbursed all of our legal costs to date from HPLLCs initial inquiry related to this matter. Legal costs associated directly with us as a nominal defendant will be payable by us until certain retention amounts are reached. Such costs were immaterial through September 30, 2019 and are included in general and administrative expenses for the current period. We believe the Action is legally and factually baseless, and the named director and officer defendants intend to defend themselves vigorously. On September 27, 2109, the Individual Defendants and Mayne Pharma each filed a Motion to Dismiss the Action, and such motion is pending as of the date of this filing.

Item 1A.

Risk Factors.

Not required for smaller reporting companies.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.

Defaults upon Senior Securities.

None.

Item 4.

Mine Safety Disclosures.

Not applicable.

Item 5.

Other Information.

Not applicable.

Item 6. Exhibits.


Number		Description

10.1		Sublicense Agreement, dated August 27, 2019, by and between Mayne Pharma International Pty Ltd and the Company (Certain information has been redacted in the marked portions of the exhibit).

31.1		Certification of Chief Executive Officer Pursuant To Sarbanes-Oxley Section 302

31.2		Certification of Chief Financial Officer Pursuant To Sarbanes-Oxley Section 302

32.1		Certification Pursuant To 18 U.S.C. Section 1350 (*)

32.2		Certification Pursuant To 18 U.S.C. Section 1350 (*)

101.ins		XBRL Instance Document

101.sch		XBRL Taxonomy Extension Schema Document

101.cal		XBRL Taxonomy Calculation Linkbase Document

101.def		XBRL Taxonomy Definition Linkbase Document

101.lab		XBRL Taxonomy Label Linkbase Document

101.pre		XBRL Taxonomy Presentation Linkbase Document

*	A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	INHIBITOR THERAPEUTICS, INC.

Date: November 7, 2019	By:	/s/ Nicholas J. Virca
	Nicholas J. Virca President and Chief Executive Officer (Principal Executive Officer)

Date: November 7, 2019	By:	/s/ Garrison J. Hasara
	Garrison J. Hasara, CPA Chief Financial Officer and Treasurer (Principal Financial Officer)

S-1

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company