UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended March 31, 2025

☐ 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 001-36856

HEPION PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware		46-2783806
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification Number)

55 Madison Ave, Suite 400- PMB# 4362, Morristown, New Jersey 07960

(Address of Principal Executive Offices)

(732) 902-4000

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		HEPA		OTC Markets

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, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☐

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 ☒

The number of shares of the registrant’s Common Stock outstanding as of May 15, 2025 was 10,976,276.

HEPION PHARMACEUTICALS, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited):	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25
Item 4.	Controls and Procedures	25

PART II—OTHER INFORMATION

Item 1A.	Risk Factors	26
Item 6.	Exhibits	26
SIGNATURES		27

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for Hepion Pharmaceuticals, Inc. may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are characterized by future or conditional verbs such as “may,” “will,” “expect,” “intend,” “anticipate,” believe,” “estimate” and “continue” or similar words. You should read statements that contain these words carefully because they discuss future expectations and plans, which contain projections of future results of operations or financial condition or state other forward-looking information. Such statements are only predictions and our actual results may differ materially from those anticipated in these forward-looking statements. We believe that it is important to communicate future expectations to investors. However, there may be events in the future that we are not able to accurately predict or control. Factors that may cause such differences include, but are not limited to, those discussed under Item 1A. Risk Factors and elsewhere in the audited consolidated financial statements as of and for the year ended December 31, 2024 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 8, 2025, as well as under Item 1A . Risk Factors within this Form 10-Q. These factors include the uncertainties associated with:

●	our ability to raise substantial additional capital to continue as a going concern and fund our planned operations in the near term;

●	estimates regarding our expenses, use of cash, timing of future cash needs and anticipated capital requirements;

●	success in retaining, or changes required in, our officers, key employees or directors;

●	our public securities’ potential liquidity and trading;

●	our ability to license additional intellectual property to support our strategic alternatives or out-license our intellectual property;

●	our expectation of developments and projections relating to competition from other pharmaceutical and biotechnology companies or our industry; and

●	our intellectual property position, including the strength and enforceability of our intellectual property rights.

We do not assume any obligation to update forward-looking statements as circumstances change and thus you should not unduly rely on these statements.

	March 31, 2025			December 31, 2024
Assets
Current assets:
Cash	$	4,586,389		$	406,408
Prepaid expenses		1,732,166			1,207,329
Total current assets		6,318,555			1,613,737
Total assets	$	6,318,555		$	1,613,737

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	243,259		$	220,202
Accrued expenses		166,487			23,684
Notes payable, current		526,178			2,900,000
Total current liabilities		935,924			3,143,886
Derivative financial instruments-warrants		1,486,568			333,189
Total liabilities		2,422,492			3,477,075
Commitments and contingencies (see Note 10)		-
Stockholders’ equity:
Series A convertible preferred stock, stated value $10 per share, 85,581 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively		855,808			855,808
Series C convertible preferred stock, stated value $1,000 per share, 1,688 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively		839,320			839,320
Convertible preferred stock		839,320			839,320
Common stock—$0.0001 par value per share; 120,000,000 shares authorized, 9,588,908 and 139,168 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively.		959			14
Additional paid-in capital		246,117,324			234,252,981
Accumulated other comprehensive income		8,345			8,345
Accumulated deficit		(243,925,693	)		(237,819,806	)
Total stockholders’ equity		3,896,063			(1,863,338	)
Total liabilities and stockholders’ equity	$	6,318,555		$	1,613,737

	2025			2024
	Three Months Ended March 31,
	2025			2024
Revenues	$	—		$	—
Cost and expenses:
Research and development		22,235			2,539,568
General and administrative		1,258,360			2,642,749
Total operating expenses		1,280,595			5,182,317
Loss from operations		(1,280,595	)		(5,182,317	)

Other income (expense):
Interest expense, net		(24,811	)		(4,349	)
Change in fair value of contingent consideration and derivative financial instruments		(4,800,481	)		1,930,652
Inducement expense		—			(2,567,044	)
Loss before income taxes		(6,105,887	)		(5,823,058	)
Income tax benefit		—			2,969,252
Net loss	$	(6,105,887	)	$	(2,853,806	)

Weighted-average common shares outstanding:
Basic and diluted		2,836,700			101,450

Net loss per common share: (see Note 10)
Basic and diluted	$	(2.15	)	$	(28.13	)

	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Income (Loss)			Deficit			Equity
	Preferred Stock				Preferred Stock								Additional		Accumulated other						Total
	Series A				Series C				Common Stock				Paid in		Comprehensive			Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Capital		Income (Loss)			Deficit			Equity
Balance at December 31, 2023		85,581	$	855,808		1,688	$	839,320		96,375	$	10	$	230,291,834	$	(78,779	)	$	(224,627,386	)	$	7,280,807
Net loss		—		—		—		—		—		—		—		—			(2,853,806	)		(2,853,806	)
Other comprehensive income (loss)		—		—		—		—		—		—		—		87,979			—			87,979
Stock-based compensation expense		—		—		—		—		—		—		705,770		—			—			705,770
Warrant exercises, net		—		—		—		—		13,088		1		2,300,688		—			—			2,300,689

Balance at March 31, 2024		85,581		855,808		1,688		839,320		109,463		11		233,298,292		9,200			(227,481,192	)		7,521,439

	●	Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that we can access.

	●	Level 2—Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly.

	●	Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

	Series A Warrants
	March 31,			December 31,
	2025			2024
Stock price	$	0.43		$	23.50
Expected warrant term (years)		3.89 years			4.5 years
Risk-free interest rate		3.93	%		4.3	%
Expected volatility		47.89	%		90.1	%
Dividend yield		—			—

	Series B-1 Warrants						Series B-2 Warrants
	March 31			December 31,			March 31,			December 31,
	2025			2024			2025			2024
Stock price	$	0.43		$	23.50		$	0.43		$	23.50
Expected warrant term (years)		3.89 years			4.1 years			0.39 years			0.6 year
Risk-free interest rate		3.93	%		4.3	%		4.27	%		4.2	%
Expected volatility		47.89	%		90.1	%		36.39	%		92.6	%
Dividend yield		—			—			—			—

	2025 Series A Warrants
	March 31,			January 23,
	2025			2025
Stock price	$	0.43		$	10.00
Expected warrant term (years)		4.94 years			5.17 years
Risk-free interest rate		3.96	%		4.12	%
Expected volatility		119.0	%		114.0	%
Dividend yield		—			—

Date	Number of Warrants Outstanding			Derivative Instrument Liability
Balance of derivative liability at December 31, 2024		49,020			333,189
Issuance of 2025 Series A warrants		3,443,461			1,348,441
Issuance of 2025 Series B warrants		10,221,402			5,360,673
Exercise of 2025 Series B warrants		(8,834,034	)		(9,757,913	)
Change in fair value of warrants¹		—			4,202,178
Balance of derivative liability at March 31, 2025		4,879,849			1,486,568

Description	Fair value		(Level 1)		(Level 2)		(Level 3)
	Fair Value Measurement at Reporting Date Using
Description	Fair value		(Level 1)		(Level 2)		(Level 3)
As of March 31, 2025:
Derivative liabilities related to warrants	$	1,486,568	$	—	$	1,486,568	$	—

As of December 31, 2024:
Derivative liabilities related to warrants	$	333,189	$	—	$	333,189	$	—

	March 31, 2025		December 31, 2024
Professional Fees	117,992		—
Other		48,495		23,684
Total accrued expenses	$	166,487	$	23,684

	Number of Options		Weighted Average Exercise Price Per Share		Intrinsic Value		Weighted Average Remaining Contractual Term
Balance outstanding, December 31, 2024		7,813	$	382.00	$	—		8.75 years
Granted		—	$	—	$	—
Forfeited		—	$	—	$	—
Balance outstanding, March 31, 2025		7,813	$	382.00	$	—		8.50 years
Awards outstanding, vested awards and those expected to vest at March 31, 2025		7,813	$	382.00	$	—		8.50 years
Vested and exercisable at March 31, 2025		7,793	$	381.00	$	—		8.51 years

Basic and diluted net loss per common share	2025			2024
	Three Months Ended March 31,
Basic and diluted net loss per common share	2025			2024
Numerator:
Net loss	$	(6,105,887	)	$	(2,853,806	)
Denominator:
Weighted average common shares outstanding		2,836,700			101,450
Net loss per share of common stock—basic and diluted	$	(2.15	)	$	(28.13	)

	●	the scope, progress, results and costs of researching and developing our current and future product candidate and programs, and of conducting preclinical studies and clinical trials;

	●	the number and development requirements of other product candidates that we may pursue, and other indications for our current product candidate that we may pursue;

	●	the stability, scale and yields during the manufacturing process as we scale-up production and formulation of our product candidate for later stages of development and commercialization;

	●	the timing of, and the costs involved in, obtaining regulatory and marketing approvals and developing our ability to establish sales and marketing capabilities, if any, for our current and future product candidates we develop if clinical trials are successful;

	●	our ability to establish and maintain collaborations, strategic licensing or other arrangements and the financial terms of such agreements;

	●	the cost of commercialization activities for our current and future product candidates that we may develop, whether alone or with a collaborator;

	●	the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;

	●	the timing, receipt and amount of sales of, or royalties on, our future products, if any; and

	Three Months Ended March 31,
	2025		2024
Net cash provided by (used in):
Operating activities	$	(1,117,422)	$	(3,616,793	)
Investing activities		—		—
Financing activities		5,297,403		1,849,707

	●	Our control environment was ineffective because we did not maintain a sufficient complement of personnel to execute controls as designed including the absence of proper segregation of duties. Such impacted controls include indirect controls affecting the risk assessment and monitoring components of COSO along with certain control activities.
	●	We identified a material weakness in our internal controls related to the proper design and implementation of controls over formal review, approval, and evaluation of non-core, complex accounting transactions.
	●	We identified a material weakness in internal control related to the proper design and implementation of certain controls over our income tax provision and management’s review of the income tax provision. We utilize a third-party to assist in the preparation of our tax provision. Specifically, we did not sufficiently design and implement controls related to the completeness and accuracy of certain aspects of the tax provision and the completeness and accuracy income tax disclosures.

	●	We will need to increase personnel in the future in order to have proper segregation of duties.
	●	We are utilizing the services of external consultants for non-routine and\or technical accounting issues as they arise.
	●	Expanding and improving our review process for complex accounting transactions. We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.
	●	Management, with the assistance of a third party, will perform an evaluation of the processes and procedures around our tax provision processes, internal control design gaps, and recommend process enhancements.
	●	Implementing enhancements and process improvements, including the design and implementation of well-defined controls and related control attributes regarding income tax provision and income tax disclosures.
	●	Developing a detailed timeline of the tax provision calculation, to ensure that sufficient time is allocated to complete the process as designed.

10.1*		License Agreement dated May 9, 2025 by and between Hepion Pharmaceuticals, Inc. and New Day Diagnostics LLC
31.1		Certification of Interim Chief Executive Officer and Interim Chief Financial Officer required under Rule 13a-14(a)/15d-14(a) under the Exchange Act.
32.1		Certification of Interim Chief Executive Officer and Interim Chief Financial Officer pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document-the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase
104		Cover Page Interactive Data File (formatted as Inline XBRL in Exhibit 101)

	HEPION PHARMACEUTICALS, INC. (Registrant)

Date: 5/19/2025	By:	/s/ JOHN BRANCACCIO
		John Brancaccio
		Interim Chief Executive Officer
		(Principal Executive Officer)

Date: 5/19/2025	By:	/s/ JOHN BRANCACCIO
		John Brancaccio
		Interim Chief Financial Officer
		(Principal Financial and Accounting Officer)

SEC Form 10-Q filed by Hepion Pharmaceuticals Inc.