Overview

Adial Pharmaceuticals is a clinical-stage biopharmaceutical company focused on the development of therapeutics for the treatment or prevention of addiction and related disorders. Their lead investigational new drug product, AD04, is a genetically targeted therapeutic agent being developed for the treatment of alcohol use disorder (AUD).

Key Points:

• Adial recently investigated AD04 in a Phase 3 clinical trial, the ONWARD trial, for the potential treatment of AUD in subjects with certain target genotypes. Based on the subgroup data from this trial, Adial is now focused on commercializing AD04 in the U.S. and Europe.

• Adial continues to explore opportunities to expand its portfolio in the field of addiction and related disorders, both through internal development and acquisitions. In 2021, the company acquired Purnovate, LLC, and in 2023 entered into an option agreement to sell the Purnovate assets to Adovate LLC.

• Adial has not generated any significant revenue since its inception and has incurred net losses each year. The company’s current cash and cash equivalents are not expected to be sufficient to fund operations for the next twelve months.

• To fund its operations, Adial plans to finance through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements, and other collaborations and strategic alliances.

Clinical Trials — Research and Development Schedule

AD04 — Clinical Development Strategy — Conduct two additional Phase 3 clinical trials in parallel

• Based on feedback from regulatory agencies, Adial plans to conduct two additional Phase 3 trials for AD04 in parallel, rather than a single additional trial.

• This strategy is expected to minimize risk, optimize timing and costs, and improve the probability of regulatory approval in the U.S. and Europe.

• The two additional Phase 3 trials are expected to cost a total of $21-$29 million, with each trial costing $8-12 million in direct expenses, plus up to $5 million in additional other development expenses.

2024 and 2023 Financing Developments

• In 2024, Adial entered into an At-the-Market (ATM) Offering Agreement and sold 2,348,520 shares of common stock for net proceeds of $4 million.

• Adial also entered into a warrant inducement agreement in 2024, receiving $3.5 million in gross proceeds from the exercise of existing warrants.

• In 2023, Adial raised $3.4 million in net proceeds from a private placement of pre-funded warrants and common stock warrants.

Clinical and Research Developments

• Adial received positive feedback from regulatory agencies on the clinical development plan for AD04, including confirmation of the primary U.S. endpoint and acknowledgment of the promising results from the post-hoc analysis of the Phase 2 and Phase 3 trials.

• Based on this feedback, Adial decided to focus its efforts on the U.S. market, as the U.S. standards should translate to acceptance in other international markets.

• Market research suggests AD04 could have significantly higher pricing than previously assumed, confirming it as an attractive commercial opportunity.

Results of Operations

• Research and development expenses increased by 155% in 2024 compared to 2023, driven by increased clinical trial and manufacturing costs.

• General and administrative expenses decreased by 9% in 2024 compared to 2023, due to lower legal and compensation costs.

• Adial recognized a one-time, non-cash inducement expense of $4.5 million in 2024 related to the issuance of new warrants.

• Adial incurred net losses of $13.2 million and $5.1 million in 2024 and 2023, respectively, and had accumulated deficits of $82.0 million and $68.8 million as of the end of those years.

Liquidity and Capital Resources

• Adial’s primary sources of funding in 2024 were the exercise of previously issued warrants and the use of its ATM Agreement.

• As of December 31, 2024, Adial had $3.8 million in cash and cash equivalents, which is not expected to be sufficient to fund operations for the next twelve months.

• Adial will require additional financing to complete the two additional Phase 3 trials for AD04, which are currently expected to cost a total of $21-$29 million.

• Without additional funding, Adial will be required to delay, scale back or eliminate some or all of its research and development programs, which would likely have a material adverse effect on the company.

In summary, Adial Pharmaceuticals is a clinical-stage biopharmaceutical company focused on developing a treatment for alcohol use disorder. The company is planning two additional Phase 3 trials for its lead candidate AD04 and will require significant additional financing to fund these efforts and its ongoing operations.