Overview of Vallon Pharmaceuticals

Vallon Pharmaceuticals is a clinical-stage biopharmaceutical company focused on developing innovative therapies to treat serious diseases associated with dysregulated immune responses. The company’s lead product candidate is GRI-0621, an oral inhibitor of iNKT cells that is being developed for the treatment of severe fibrotic lung diseases such as idiopathic pulmonary fibrosis (IPF). Vallon also has a second product candidate, GRI-0803, a novel oral agonist of dNKT cells that is being developed for autoimmune disorders like systemic lupus erythematosus (SLE).

Recent Developments

Over the past year, Vallon has undertaken several key financing and corporate transactions:

• Reverse stock splits: The company executed a series of reverse stock splits in 2024 and 2025 to reduce the number of outstanding shares.

• Warrant repricing: In October 2024, Vallon entered into agreements with certain warrant holders to reprice and extend the expiration of their warrants.

• Securities offerings: The company raised capital through public offerings of common stock, pre-funded warrants, and common warrants in June 2024 and February 2024.

• At-the-market (ATM) offering: Vallon initiated an ATM offering program in May 2024 and has raised $3.6 million in gross proceeds through this program as of December 2024.

• Asset sale: In August 2023, Vallon sold its ADAIR product candidate and related assets to Aardvark Therapeutics for an upfront payment of $0.3 million.

• Nasdaq compliance: The company regained compliance with Nasdaq’s minimum bid price requirement in March 2025 after previously receiving a deficiency notice.

Financial Performance

Vallon reported a net loss of $8.2 million for the year ended December 31, 2024, compared to a net loss of $13.0 million in the prior year. This improvement was primarily driven by a decrease in general and administrative expenses, partially offset by an increase in research and development expenses.

Research and development expenses increased by $0.6 million to $3.8 million, mainly due to higher costs related to the development program for GRI-0621. General and administrative expenses decreased by $3.7 million to $4.5 million, largely due to a reduction in accounting, legal, and other fees associated with being a public company.

The company also recognized $0.3 million in other income from the asset sale to Aardvark Therapeutics in 2023. Additionally, Vallon recorded a $0.2 million decrease in the fair value of its warrant liability in 2024.

As of December 31, 2024, Vallon had $5.0 million in cash and cash equivalents, compared to $1.8 million at the end of 2023. The increase in cash was primarily due to the net proceeds from the company’s financing activities, including the public offerings, warrant exercises, and ATM offering.

Table 1: Summary of Financial Results

Strengths and Weaknesses

Strengths:

• Promising lead product candidate, GRI-0621, in development for serious fibrotic lung diseases
• Second product candidate, GRI-0803, targeting autoimmune disorders with significant unmet need
• Successful execution of financing activities to support ongoing operations and development programs
• Reduction in general and administrative expenses, indicating improved operational efficiency

Weaknesses:

• Significant accumulated deficit of $39.7 million and ongoing losses, raising substantial doubt about the company’s ability to continue as a going concern
• Reliance on external financing to fund operations, with no guarantee of future funding availability
• Limited pipeline beyond the two lead product candidates, increasing risk profile
• Small size and early-stage nature of the company, with no approved products or revenue-generating operations

Outlook and Future Prospects

Vallon’s near-term focus will be on advancing its lead product candidate, GRI-0621, through a Phase 2a biomarker study for the treatment of IPF. The company expects to report topline results from this trial in the third quarter of 2025. Additionally, Vallon plans to initiate a Phase 1a and 1b trial of its second product candidate, GRI-0803, for the treatment of SLE, subject to IND clearance.

However, the company’s ability to continue its operations and development programs is heavily dependent on its ability to secure additional funding. As of December 31, 2024, Vallon had $5.0 million in cash, which it believes will be sufficient to fund its activities into the second quarter of 2025. The company will need to raise substantial additional capital through equity or debt financing, or other means, to support its ongoing and future development efforts.

Vallon’s success will ultimately hinge on the clinical and regulatory progress of its product candidates, as well as its ability to navigate the competitive landscape and secure the necessary funding to advance its pipeline. The company’s small size, early-stage nature, and lack of revenue-generating operations pose significant challenges, but the potential of its product candidates in addressing serious unmet medical needs could provide opportunities for growth and value creation if the development programs are successful.