Timber Pharmaceuticals, a clinical-stage biopharmaceutical company focused on the development and commercialization of treatments for rare and orphan dermatologic diseases, and its affiliated debtors and debtor-in-possession, announced that all “first day” motions related to the company’s voluntary Chapter 11 petitions for reorganization filed on Nov. 17 were approved on an interim basis by the U.S. Bankruptcy Court for the District of Delaware.

At the hearing, among other things, the court approved an initial $3 million in interim funding pursuant to a debtor-in-possession (DIP) financing facility. The DIP financing is being provided by LEO US Holding, as lender and consists of an aggregate principal commitment of $13.9 million, consisting of a $7.4 million multiple draw new money term loan and a roll-up of $6.5 million of prepetition loans provided by LEO, plus outstanding interest.

The company has received $3 million of new money DIP funding and will use such funds to support the company’s operations during the Chapter 11 process and in particular, the company’s ongoing Phase 3 ASCEND study for TMB-001, the company’s most valuable asset.  Continuation of the Phase 3 ASCEND study will progress at the same time that the company pursues, subject to court approval, a section 363 court-supervised process for the sale of substantially all of the company’s assets to a “stalking horse” bidder affiliated with LEO, subject to higher and better offers through a post-petition marketing, sale and auction process.

In addition, the company received authorization to, among other things:

• continue to pay vendors in the ordinary course for goods and services provided on a post-petition basis.
• Continue to pay employee wages, provide healthcare and other benefits.
• Implement procedures regarding the trading of Timber’s stock in order to protect any potential value of the company’s federal net operating loss carryforwards and other tax attributes for use in connection with the reorganization.

“The approval of these bankruptcy “first day” motions, allow the company to continue operating in the ordinary course without interruption, thereby providing certainty to our vendors and partners that remain critical to the success of the ongoing Phase 3 Trial for our key TMB-001 program.,” John Koconis, CEO of Timber, said. “We look forward to court approval of the company’s proposed section 363 post-petition sale process.”

In connection with the announcement of the Chapter 11 petitions, the NYSE Regulation notified Timber on Nov. 21, 2023 that it will commence delisting proceedings of Timber’s common stock from the NYSE American, pursuant to Section 1003(c)(iii) of the NYSE American Company Guide.

Additionally, on Nov. 21, the NYSE Regulation notified Timber that it is not in compliance with the Exchange’s continued listing standards because it failed to timely file its Form 10-Q for the period ended September 30, 2023 by the filing due date of Nov. 20 and is therefore subject to the procedures and requirements set forth in Section 1007 of the NYSE American Company Guide.

The company did not have the funds or personnel necessary to prepare and file the Delinquent Report on or before Nov. 14, 2023. Subsequently, due to the considerable time and resources the company’s management is devoting to the Chapter 11 case, the company did not have the funds or personnel necessary to prepare and file the delinquent report on or before Nov. 20, 2023, the extended due date.

The company may appeal the determination pursuant to Part 12 of the NYSE American company guide within seven calendar days of the delisting notice. However, the company does not intend to appeal this determination, and, therefore, it is expected that the securities will be delisted. As a result, the company’s common stock is expected to begin trading on the over-the-counter market following such suspension of trading on the NYSE American.