10-Q: Skinvisible Q3 2025: Losses Persist Amid Biotech Progress

Skinvisible, Inc. reported continued net losses and a significant working capital deficit in Q3 2025, despite advancements in its Invisicare drug delivery technology and strategic partnerships.

Summary

• Net loss for the nine months ended September 30, 2025, was $805,677, an improvement from $880,425 in the prior year.
• Revenue remained flat at $15,000 for the nine months ended September 30, 2025, compared to the same period in 2024.
• The company faces substantial doubt about its ability to continue as a going concern, with cumulative net losses of $40,751,819 since inception.
• Cash on hand decreased significantly to $645 as of September 30, 2025, from $10,336 at December 31, 2024.
• Working capital deficit worsened to $4,737,175 from $3,615,238 at December 31, 2024.
• Disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting.
• Significant progress was reported by licensee Quoin Pharmaceuticals for QRX003 in Netherton Syndrome trials, including FDA Rare Pediatric Disease Designation and European Orphan Drug Designation.
• A new agreement with Ovation Science grants exclusive global rights to Invisicare with cannabinoids for topical/transdermal products, including new formulations targeting obesity.
• Skinvisible filed provisional patent applications in May and June 2024 for transdermal delivery of obesity drugs and glucose-controlling agents.

Sentiment

Score: 3

Explanation: While there are positive developments in product pipeline and strategic partnerships, the severe financial distress, including minimal cash, increasing liabilities, and explicit going concern doubt, overshadows these advancements. The ineffectiveness of internal controls further adds to the negative sentiment.

Positives

• Net loss for the nine months ended September 30, 2025, decreased to $805,677 from $880,425 in the prior year, indicating a reduction in losses.
• Basic loss per common share improved to $(0.15) for the nine months ended September 30, 2025, from $(0.19) in the prior year.
• Operating expenses decreased to $397,146 for the nine months ended September 30, 2025, from $405,846 in the prior year.
• Quoin Pharmaceuticals' QRX003, utilizing Invisicare technology, received FDA Rare Pediatric Disease (RPD) Designation and European Medicines Agency (EMA) Orphan Drug Designation for Netherton Syndrome, potentially leading to market exclusivity and a Priority Review Voucher.
• Quoin's clinical trials for QRX003 showed positive initial data, a clean safety profile, and significant clinical improvements, with no adverse events reported to date.
• FDA clearance was granted to include teen subjects in Quoin's Netherton Syndrome clinical studies, expected to expedite recruitment and strengthen data.
• Quoin expanded clinical trials internationally to Saudi Arabia and the United Kingdom, with the UK sites recognized as Centers of Excellence for Netherton Syndrome.
• A new agreement with Ovation Science grants exclusive global rights to Invisicare technology with cannabinoids for topical/transdermal products, including new formulations with THC-V targeting obesity and metabolic health.
• The company filed new provisional patent applications in May and June 2024 for transdermal delivery of obesity drugs and glucose-controlling agents, aiming to address a projected $150 billion market by 2035.

Negatives

• The company reported a net loss of $805,677 for the nine months ended September 30, 2025, and cumulative net losses of $40,751,819 since inception.
• Cash on hand significantly decreased to $645 as of September 30, 2025, from $10,336 at December 31, 2024.
• Total current liabilities increased to $4,765,644 as of September 30, 2025, from $3,657,266 at December 31, 2024.
• The working capital deficit worsened to $4,737,175 as of September 30, 2025, from $3,615,238 at December 31, 2024.
• Revenue remained flat at $15,000 for the nine months ended September 30, 2025, indicating no growth in core operations.
• The company's disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting, including inadequate segregation of duties and insufficient written policies.
• The company does not have sufficient cash to operate its business at the current level for the next twelve months.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern within one year from the date of filing due to cumulative net losses and ongoing capital requirements.
• The company's ability to generate necessary funding through licensing or raise additional capital through future issuances of common stock or debt is unknown.
• Remediation efforts for material weaknesses in internal control over financial reporting are dependent on securing additional financing, and failure to do so may adversely affect these efforts.
• Uncertainty of profitability based upon a history of losses.
• Legislative or regulatory changes concerning skincare research and therapies.
• Risks related to failure to obtain adequate financing on a timely basis and on acceptable terms.
• Risks related to operations and uncertainties related to the business plan and strategy.
• Changes in economic conditions.
• Uncertainty with respect to intellectual property rights, protecting those rights, and claims of infringement of others' intellectual property.
• Competition in the target markets.
• Cybersecurity concerns.

Future Outlook

Management plans to generate necessary funding through licensing of its core products and to seek additional debt and equity funding. The company hopes to generate more revenues from its licenses with Quoin and Ovation for the second half of 2025 and plans to enter into commercial arrangements with pharma and biotech companies to exploit its recently filed patent applications for transdermal obesity and glucose-controlling agents. Operating expenses are expected to increase as the company generates more licensing revenue.

Management Comments

• Managements plans for the Company are to generate the necessary funding through licensing of its core products and to seek additional debt and equity funding.
• We hope to generate more revenues from our licenses with Quoin and Ovation for the second half of 2025.
• We also plan to enter into commercial arrangements with pharma and biotech companies to exploit our patent applications that were recently filed, and we hope to generate revenue from these efforts in the future.
• We expect our operating expenses will increase in the future as the Company begins to generate more licensing revenue.
• We intend to fund operations through increased sales and debt and/or equity financing arrangements, which may be insufficient to fund expenditures or other cash requirements.
• We plan to seek additional financing in a private equity offering to secure funding for operations.

Industry Context

Skinvisible operates in the pharmaceutical R&D and skincare markets, leveraging its Invisicare polymer delivery system. The company's strategy to out-license its patented products aligns with a broader industry trend where pharmaceutical companies increasingly rely on external R&D to access new products, especially given internal R&D downsizing. The focus on Netherton Syndrome with Quoin Pharmaceuticals addresses a rare disease market, which benefits from orphan drug designations and incentives. The new partnership with Ovation Science and patent applications for transdermal delivery of obesity and glucose-controlling agents position Skinvisible to tap into the rapidly growing obesity and metabolic health markets, projected to reach $150 billion by 2035, offering alternatives to traditional oral or injectable therapies.

Comparison to Industry Standards

• The company's continued net losses and significant working capital deficit are below industry standards for a healthy, growing pharmaceutical company.
• The flat revenue of $15,000 for nine months is extremely low for a company with patented technologies and global licensing aspirations, indicating a significant lag in commercialization compared to successful biotech firms.
• The progress of QRX003 for Netherton Syndrome, including FDA RPD and EMA Orphan Drug designations, is a positive development, aligning with industry efforts to address unmet medical needs in rare diseases, similar to how companies like Sanofi (with Dupixent for atopic dermatitis) or Amgen (with Otezla for psoriasis) target specific dermatological conditions, though QRX003 is still in trials.
• The pursuit of transdermal delivery for obesity and glucose-controlling agents positions Skinvisible in a competitive landscape with major pharmaceutical players developing GLP-1 agonists (e.g., Novo Nordisk's Wegovy/Ozempic, Eli Lilly's Zepbound/Mounjaro), aiming to offer a differentiated delivery method. However, Skinvisible's technology is still in the patent application phase, far from market entry or direct comparison to these established products.
• The material weaknesses in internal controls are a significant governance concern, falling short of best practices for publicly traded companies, especially compared to larger, more mature pharmaceutical or biotech firms.

Corporate Governance

Related Party Transactions

• Loans from related party increased to $33,944 as of September 30, 2025, from $13,364 at December 31, 2024.
• Convertible notes payable to related parties totaled $5,372,403 as of September 30, 2025, stemming from the conversion of accrued salaries, vacation, and outstanding notes for two officers on January 31, 2023.

Stakeholder Impact

• Shareholders face significant dilution risk from potential future equity raises and substantial risk of loss due to the company's going concern doubt and accumulated deficit. The stock price is highly likely to be negatively impacted by the financial instability.
• Employees may experience uncertainty regarding job security given the company's financial condition and reliance on future funding.
• Creditors face high risk due to the company's substantial liabilities, limited cash, and going concern doubt, which may impair the ability to repay debt.
• Customers/Licensees (Quoin, Ovation) may face long-term risks to the stability of their licensing agreements due to Skinvisible's financial instability, though current product development progress appears unaffected.

Next Steps

• Generate necessary funding through licensing of core products.
• Seek additional debt and equity funding, including a private equity offering.
• Enter into commercial arrangements with pharma and biotech companies to exploit new patent applications.
• Appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management.
• Adopt sufficient written policies and procedures for accounting and financial reporting.
• Quoin Pharmaceuticals to continue clinical trials for QRX003 for Netherton Syndrome, aiming for regulatory approvals.
• Ovation Science to develop new formulations with THC-V targeting obesity and metabolic health using Invisicare technology.

Key Dates

Recommendation

The company faces severe financial distress, explicitly stating 'substantial doubt about the Company's ability to continue as a going concern.' Cash reserves are critically low ($645), current liabilities are escalating, and the working capital deficit is worsening. While there are promising developments in product pipeline and strategic partnerships (Quoin, Ovation, new patents), these are long-term prospects that do not address the immediate and critical liquidity issues. The identified material weaknesses in internal controls further erode investor confidence. The high risk of significant dilution from future capital raises, coupled with the fundamental uncertainty of continued operations, makes the stock a strong sell for any investor seeking capital preservation or growth.

Keywords

Skinvisible, Invisicare, Netherton Syndrome, QRX003, Orphan Drug, Rare Pediatric Disease, Transdermal Delivery, Obesity Drugs, Glucose-Controlling Agents, Biotechnology, Pharmaceuticals, Drug Delivery System, SEC 10-Q, Going Concern, Licensing, Cannabinoids, THC-V