Note 8 - Subsequent Events

Management has evaluated subsequent events to determine if events or transactions occurring through the date on which the condensed financial statements were issued require adjustment or disclosure in the Company’s condensed financial statements.

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis is based upon our financial statements as of the dates and for the periods presented in this section. You should read this discussion and analysis in conjunction with the financial statements and notes thereto found in Part I, Item 1 of this Form 10-Q and our financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”). All references to the first quarter and first three months of 2017 and 2016 mean the three-month periods ended March 31, 2017 and 2016, respectively. Unless the context otherwise requires, “CohBar,” “we,” “us” and “our” refer to CohBar, Inc.

Special Note Regarding Forward-Looking Statements

This report, including the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements regarding future events and our future results that are based on our current expectations, estimates, forecasts, and projections about our business, our potential drug candidates, our capital resources and ability to fund our operations, our results of operations, the industry in which we operate and the beliefs and assumptions of our management. Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “would,” “could,” “intend,” “plan,” “believe,” “seek” and “estimate,” variations of these words, and similar expressions are intended to identify those forward-looking statements. These forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed in any forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in this report under the section entitled “Risk Factors” in Item 1A of Part I of the 2016 Form 10-K, as supplemented or modified in our quarterly reports on Form 10-Q. We undertake no obligation to revise or update publicly any forward-looking statements for any reason, whether as a result of new information, future events or otherwise, except as may be required by law.

Overview

We are an innovative biotechnology company and a leader in the research and development of mitochondria based therapeutics (MBTs), an emerging class of drugs with the potential to treat a wide range of diseases associated with aging and metabolic dysfunction, including obesity, fatty liver disease (NAFLD) and non-alcoholic steatohepatitis (NASH), type 2 diabetes mellitus (T2D), cancer, atherosclerosis, cardiovascular disease, and neurodegenerative diseases such as Alzheimer’s.

MBTs originate from almost two decades of research by our founders, resulting in their discovery of a novel group of peptides called mitochondrial-derived peptides (MDPs) encoded within the genome of mitochondria, the powerhouses of the cell. These naturally occurring MDPs and related analogs have demonstrated a range of biological activity and therapeutic potential in pre-clinical models across multiple diseases associated with aging.

We believe CohBar is a first mover in exploring the mitochondrial genome for therapeutically relevant peptides, and have developed a proprietary MBT technology platform which uses cell based assays and animal models of disease to rapidly identify mitochondrial peptides with promising biological activity. Once identified, we deploy optimization techniques to improve the drug-like properties of our MBT candidates, enabling us to match the most biologically promising peptides to disease indications that have substantial unmet medical needs.

In September 2016, we advanced two novel, optimized analogs of our MOTS-c MDP, CB4209 and CB4211, into IND-enabling studies as our lead MBT drug candidates with potential for treatment of fatty liver disease (NAFLD), Nonalcoholic steatohepatitis (NASH), obesity, and type 2 diabetes (T2D). To date, our founders and scientific team have discovered a large number of MDPs that have demonstrated a range of biological activities and therapeutic potential. Our ongoing research and development of our pipeline MDPs is focused on identifying and advancing novel improved analogs of those MDPs that have the greatest therapeutic and commercial potential for development into drugs.

We have financed our operations primarily through proceeds from our IPO and concurrent private offering, private placements of our preferred stock, the exercise of outstanding warrants and stock options and, to a lesser extent, from a grant from a research foundation. Since our inception through December 31, 2016, our operations have been funded with an aggregate of approximately $25.8 million, of which approximately $0.2 million was from a grant-funding organization and approximately $25.6 million was from the issuance of equity instruments.

Since inception, we have incurred significant operating losses. Our net losses were $2,232,110 and $1,216,300 for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, we had an accumulated deficit of $16,641,646. Our net losses may fluctuate significantly from quarter to quarter and from year to year. We expect to continue to incur significant expenses and operating losses as we continue research, discovery and pre-clinical development efforts on our current MBT candidates and any other MDPs, expand and protect our intellectual property portfolio, and hire additional development and scientific personnel. Our MBT drug target candidates are in early stages of investigational research. Candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect research and development costs to increase significantly for the foreseeable future as our product candidate development programs progress.

Based on current budget assumptions and with the cash and investments on hand as of March 31, 2017, we believe that we have sufficient capital to meet our operating expenses and obligations for the next twelve months from the date of this filing. However, if unanticipated difficulties or circumstances arise we may require additional capital sooner to support our operations. If we are unable to raise additional capital whenever necessary we may be forced to decelerate or curtail our research and development activities and delay planned FDA filings and clinical activities until such time as additional capital becomes available. Such limitation of our activities would allow us to slow our rate of spending and extend our use of cash until additional capital is raised. There can be no assurance that such a plan will be successful. There is no assurance that additional financing will be available when needed or that we will be able to obtain such financing on reasonable terms.

Financial Operations Review

Revenue

To date, we have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the near future. In the future, we will seek to generate revenue from product sales, either directly or under any future licensing, development or similar relationship with a strategic partner.

Research and development expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include:

We expense all research and development expenses as incurred. We expect our research and development expenses to increase in the year ending December 31, 2017, as we continue our efforts to advance our lead MBT candidate program and to discover, evaluate and optimize other MDPs as potential MBT drug candidates.

General and administrative expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance and administrative functions. Other significant costs include legal fees relating to patent and corporate matters and fees for accounting and consulting services. We anticipate that our general and administrative expenses will increase in the future to support continued research and development activities and the potential commercialization of our product candidates. These increases will likely include increased costs related to the hiring of additional personnel, and fees to outside consultants, lawyers and accountants, among other expenses.

Comparison of Three Months Ended March 31, 2017 and 2016

Research and development expenses were $1,292,780 in the three months ended March 31, 2017 compared to $737,100 in the prior year period, a $555,680 increase. The increase in research and development expenses was primarily due to the $423,524 incurred which related to our IND-enabling activities, $46,328 increase in laboratory supplies related to our efforts to develop additional optimized MBT candidates, a $44,697 increase in expense primarily associated with our Scientific Advisory Board meeting held in January 2017 and a $20,819 increase in rent associated with the expanded laboratory facility in Menlo Park. We expect research and development expenses to increase in the coming quarters as we continue to advance our lead MBT candidate program and evaluate and optimize other MDPs as potential MBT drug candidates.

General and administrative expenses were $940,089 in the three months ended March 31, 2017 compared to $479,932 in the prior year period, a $460,157 increase. The increase was primarily due to a $412,410 increase in wages and stock based compensation due to the increase in head count with a full quarter’s expense associated with our CEO and Director of Investor Relations and the expensing of the additional stock options grants during the current year quarter.

Liquidity and Capital Resources

As of March 31, 2017 we had a cash balance of $2,867,054. We maintain our cash in a checking and savings account on deposit with a banking institution in the United States. We also maintain a portfolio of short-term highly liquid securities investing in U.S. Treasury Bills and Certificate of Deposits. As of March 31, 2017, we had an investments balance of $6,323,323.

Cash Flows from Operating Activities

Net cash used in operating activities for the three months ended March 31, 2017 and 2016 was $1,818,231 and $1,191,935, respectively. The cash used in operations for the three months ended March 31, 2017 was primarily due to our reported net loss of $2,232,110 offset by $430,561 in stock based compensation, depreciation and amortization expense in the current year quarter. The cash used in operations  for the three months ended March 31, 2016 was primarily due to our reported net loss of $1,216,300 and a $94,072 decrease in accrued payroll as bonuses recognized at the end of the previous year were paid in the current year quarter, offset by $123,646 in stock based compensation.

Cash Flows from Investing Activities

Net cash used in investing activities in the three months ended March 31, 2017 was $894,361 which was due to the purchases of our investments in certificates of deposit and treasury bills as compared to the timing of maturities of those investments. The cash used provided by investing activities of $722,908 in the three months ended March 31, 2016 was primarily due to the timing of maturities of our investments when compared to the purchases of those investments.

Cash Flows from Financing Activities

Net cash provided by financing activities in the three months ended March 31, 2017 and 2016 was $2,322,188 and $9,250, respectively. Cash provided by financing activities in the three months ended March 31, 2017 was due to the exercise of warrants and employee stock options, partially offset by payment to the Alzheimer’s Drug Development Foundation of $102,630, representing the first installment of a note obligation associated with a grant from that organization. Cash provided by financing activities of $9,250 in the three months ended March 31, 2016 was due to the exercise of employee and Compensation Options.

Contractual Obligations

The Company is a party to a lease agreement for a shared laboratory facility leased on a month-to-month basis in Menlo Park, California.

Rent expense was $55,215 and $34,396 for the three months ended March 31, 2017 and 2016, respectively.