Adial Pharmaceuticals, Inc. reported significant financial developments in its 10-Q filing for the quarter ending September 30, 2024. The company’s cash and cash equivalents increased to $5.2 million, up from $2.8 million at the end of 2023. Total current assets also rose to $5.6 million from $3.2 million, contributing to a total asset increase to $6.7 million, compared to $4.7 million at the end of the previous fiscal year. Total stockholders’ equity improved to $5.9 million from $4.1 million, reflecting a rise in additional paid-in capital from $72.9 million to $85.8 million.

For the three months ended September 30, 2024, Adial reported total operating expenses of $2.2 million, an increase from $1.4 million in the same period of 2023. Research and development expenses surged to $1.0 million, up from $207,000, primarily due to increased clinical trial costs associated with the Phase 1b trial. The company recorded a net loss of $2.2 million for the quarter, compared to a net loss of $1.4 million in the prior year, indicating a worsening financial position.

For the nine months ended September 30, 2024, the net loss was approximately $11.1 million, significantly higher than the $3.2 million loss reported for the same period in 2023. This increase was driven by a 149% rise in research and development expenses, totaling $2.5 million, and a notable one-time inducement expense of $4.5 million related to warrant issuances.

Adial's financing activities showed a marked improvement, with net cash provided by financing activities reaching $7.8 million, compared to $748,000 in the previous year. The company raised approximately $4 million through an At the Market Offering Agreement and $3.8 million from warrant exercises, which are intended to support the development of its lead product candidate, AD04.

Strategically, Adial has been active in its acquisition efforts, including the completion of the asset sale of Purnovate, LLC, and a 19.9% equity stake acquisition in Adovate, LLC. The company is also preparing for a Phase III study of AD04, anticipated to begin in the second half of 2025, contingent on securing additional funding.

Despite these developments, Adial faces significant liquidity challenges, with management indicating that current cash reserves may not sustain operations beyond the second quarter of 2025 without further financing. The company has identified material weaknesses in its internal controls over financial reporting and is taking steps to address these issues with external consultants.