Overview

Lipella is a clinical-stage biotechnology company focused on developing new drugs by reformulating existing generic drugs and optimizing them for new applications. The company’s strategy combines the cost efficiencies and risk abatements of using existing generic drugs with potential patent protections for its proprietary formulations. Lipella is currently developing two product candidates - LP-10 for hemorrhagic cystitis (HC) and LP-310 for oral lichen planus (OLP).

LP-10 is a reformulation of the generic drug tacrolimus optimized for topical delivery to the bladder, while LP-310 is an oral, liposomal formulation of tacrolimus for local delivery to the oral mucosa. Lipella is also developing an oral, liposomal formulation of tacrolimus called LP-410 for the treatment of oral graft-versus-host disease (GVHD). Additionally, the company is working on an intravesical formulation of immunoglobulins including checkpoint inhibitors called LP-50 for the treatment of non-muscle invasive bladder cancer (NMIBC).

Lipella has two issued U.S. patents that provide intellectual property protection for its LP-10 and LP-310 formulations until 2035. The company has also received “orphan drug” designation from the FDA for LP-410 for the treatment of oral GVHD.

Recent Developments

In March 2025, Lipella completed a private placement offering of Series B preferred stock, raising net proceeds of $5.9 million. The company also entered into an agreement with Spartan Capital Securities to offer warrants to purchase additional Series B preferred stock.

Lipella has faced some regulatory challenges, receiving notifications from Nasdaq in 2024 regarding non-compliance with the minimum bid price and stockholders’ equity requirements. The company appealed the delisting determination and was granted continued listing on Nasdaq, subject to meeting certain interim milestones by April 2025.

Results of Operations

Lipella’s revenue for the fiscal year ended December 31, 2024 was $536,000, up from $450,000 in the prior year. This revenue was primarily from a grant awarded by the NIH.

Research and development (R&D) expenses increased by $574,000 to $3.6 million in 2024, driven by an increase in outside services related to the company’s ongoing clinical trial for LP-310. General and administrative (G&A) expenses decreased by $153,000 to $2.0 million, primarily due to a reduction in stock-based compensation expense.

Other income decreased by $63,000 to $64,000, mainly due to a decrease in interest income on the company’s investments.

Liquidity and Capital Resources

As of December 31, 2024, Lipella had $2.2 million in cash and cash equivalents. The company has funded its operations primarily through private equity financings, government grants, its IPO, and other equity offerings.

Lipella used $3.9 million in cash for operating activities in 2024, compared to $3.2 million in the prior year. This increase in cash burn was due to the higher R&D expenses related to the LP-310 clinical trial.

The company did not have any cash flows from investing activities in 2024, while in 2023 it used $14,000 for the purchase of laboratory equipment.

Financing activities provided $2.8 million in cash in 2024, primarily from the issuance of preferred stock, common stock, and pre-funded warrants. In 2023, financing activities provided $1.3 million, mainly from the issuance of warrants through a private placement.

Going Concern

Lipella has incurred operating losses and experienced negative operating cash flows since inception, and the company expects to continue incurring losses for the foreseeable future. Management believes that the company’s existing cash and cash equivalents will be sufficient to fund operations and capital expenses into 2024. However, there is substantial doubt about Lipella’s ability to continue as a going concern, and the company may need to raise additional funds through equity or debt financing to support its operations.

Critical Accounting Policies and Significant Judgments and Estimates

Lipella’s critical accounting policies and significant estimates include:

Accrued Expenses: The company is required to estimate its accrued third-party R&D expenses as of each balance sheet date, which involves reviewing contracts, communicating with personnel, and estimating the level of services performed and associated costs incurred. These estimates may differ from the actual amounts owed, but Lipella has not experienced material differences to date.

Stock-Based Compensation: Lipella measures stock-based compensation expense based on the grant date fair value of the awards. Prior to its IPO, the company determined the fair value of its common stock using various valuation methods, including the “back-solve” method and a hybrid of the probability-weighted expected return method and the option pricing method. After the IPO, the fair value is based on the market price of the company’s common stock.

Emerging Growth Company Status: Lipella qualifies as an emerging growth company under the JOBS Act, which allows the company to take advantage of certain exemptions and reduced disclosure requirements applicable to public companies.

Outlook

Lipella’s future success will depend on the continued development and potential commercialization of its product candidates, particularly LP-10 and LP-310. The company’s ability to generate revenue and achieve profitability will be contingent on obtaining regulatory approvals and successfully bringing its products to market.

Given the company’s current cash position and expected future cash needs, Lipella will likely need to raise additional capital through equity or debt financing to support its ongoing operations and clinical development activities. The company’s ability to continue as a going concern is dependent on its success in obtaining such financing.

Overall, Lipella’s financial performance in 2024 was mixed, with increased R&D expenses offset by a reduction in G&A costs. The company’s liquidity position remains a concern, and management will need to focus on securing additional funding to advance its pipeline and reach key milestones. Investors will be closely watching Lipella’s progress in meeting the Nasdaq compliance requirements and the outcomes of its ongoing clinical trials.