Exploring Dermata Therapeutics, Inc. (DRMA) Investor Profile: Who’s Buying and Why?

You're looking at Dermata Therapeutics, Inc. (DRMA) and asking the right question: who is actually buying this stock, and why are they stepping in after a massive over 72% price decline in the last year? Honestly, the investor profile is a fascinating, high-risk case study, reflecting the strategic pivot Dermata announced in late 2025. The company's market capitalization sits at a tiny $2.09 million, yet the balance sheet shows a Q3 2025 cash position of $4.7 million, meaning they are essentially trading below net cash per share, a classic deep-value signal for micro-caps. But here's the quick math: institutional ownership is incredibly low at just 7.46%, and the biggest holder, Armistice Capital, LLC, holds nearly 10% of the float, suggesting a highly concentrated bet on the company's shift from clinical-stage biotech to commercializing Over-the-Counter (OTC) dermatology products. Does this low institutional float mean the smart money has fled, or are you seeing a chance to ride a turnaround based on the positive Phase 3 data for their Spongilla technology? That's the core tension we need to unpack.

Who Invests in Dermata Therapeutics, Inc. (DRMA) and Why?

The investor profile for Dermata Therapeutics, Inc. (DRMA) is fundamentally different from a large-cap pharmaceutical stock; it is dominated by retail investors who are betting on a high-risk, high-reward strategic pivot. The institutional presence is negligible, meaning the stock's volatility is largely driven by individual sentiment and short-term trading dynamics, not long-term fund allocation.

As a seasoned financial analyst, I see this as a classic biotech-to-consumer speculative play. The company's recent shift away from the prescription drug path for its lead candidate, XYNGARI, and toward the Over-the-Counter (OTC) market has completely redefined the investor base. This is a stock where technical analysis and news flow matter far more than traditional value metrics.

Key Investor Types: Retail Dominance

The makeup of Dermata Therapeutics, Inc.'s ownership is heavily skewed toward individual, or retail, investors. This is the single most important factor to understand. Institutional ownership-the money managed by large asset managers, mutual funds, and pension funds-is remarkably low, sitting at approximately 1.55% of the shares outstanding as of late 2025. That's a tiny fraction in a sector that typically sees institutional ownership well over 50%. This structure means:

• Retail Investors: They hold the vast majority of the float, making the stock susceptible to rapid price swings based on news, social media, and momentum.
• Institutional Investors: There are only 5 institutional owners who have filed 13F forms, holding a total of 10,148 shares. These positions are small, indicating a 'toe-in-the-water' approach by firms like UBS Group AG and SBI Securities Co., Ltd., not a conviction buy.
• Hedge Funds and Short Sellers: The stock is a battleground for short-term traders. The short interest-the number of shares sold short-was 31,179 as of October 31, 2025, representing 5.61% of the public float. This high short percentage, combined with a low market capitalization of around $2.09 million, signals a high-volatility environment ripe for short-squeeze potential, which attracts a specific type of hedge fund and retail speculator.

Investment Motivations: The OTC Pivot and Growth

Investors are drawn to Dermata Therapeutics, Inc. for two primary, and conflicting, reasons: a deep-value play on the core technology and a high-growth bet on the new OTC strategy. No one is buying this stock for dividends; it's a pure growth speculation. The company's focus is now on commercializing an OTC once-weekly acne kit using its proprietary Spongilla technology, with a planned launch in mid-2026.

Here's the quick math on the risk/reward: The company had $4.7 million in cash and cash equivalents as of September 30, 2025, which they expect will fund operations into Q2 2026. They secured approximately $7.9 million of net financing proceeds year-to-date in 2025. This cash position is the lifeline for the new OTC strategy. If the mid-2026 product launch is successful, the potential revenue from the multi-billion dollar U.S. acne market could justify the current low market cap. The flip side is a high Return on Equity (ROE) of -203.36%, which shows how deeply unprofitable the company is right now. You're buying potential, defintely not profits.

Investment Strategies: Speculative Growth and Momentum

The dominant strategies are rooted in speculation, reflecting the company's binary nature: either the OTC pivot works, or the company faces severe financial distress. Dermata Therapeutics, Inc. does not pay a dividend, so income investing is not a factor.

• Speculative Growth: Investors here are focused on the long-term vision of the Spongilla platform technology, hoping to ride the stock from its current low price (around $2.44 as of November 2025) to the average analyst price target of $10.00. They are willing to overlook the negative fundamentals for the potential 309.84% upside.
• Short-Term Trading/Momentum: Given the stock's high volatility-it declined -75.04% over the last 52 weeks-it attracts day traders looking to capitalize on news-driven spikes. Announcements like the positive Phase 3 STAR-1 results or the strategic pivot in September 2025 create massive short-term momentum.
• Insider Confidence: Interestingly, insider sentiment is positive, with company officials buying approximately $6.53 million worth of shares over the last year. This insider accumulation suggests a belief in the long-term value of the new strategy, which provides a bullish signal for value-oriented retail investors.

For more context on the company's journey and why its ownership structure is so unique, you can check out Dermata Therapeutics, Inc. (DRMA): History, Ownership, Mission, How It Works & Makes Money.

Institutional Ownership and Major Shareholders of Dermata Therapeutics, Inc. (DRMA)

You're looking at Dermata Therapeutics, Inc. (DRMA) and trying to figure out who the big money players are and what they're doing. The direct takeaway is this: institutional ownership is low, which is typical for a micro-cap biotech, and the largest holder, a hedge fund, has been reducing its stake even as new, smaller institutions have moved in.

As of late 2025, institutional investors hold a relatively small portion of the company's stock, sitting around 7.46% of the total shares outstanding. This low percentage means the stock price is highly sensitive to retail investor sentiment and internal corporate actions, but it also means a single large institutional buy can create a massive price swing. The company's small market capitalization of about $2.09 million as of November 2025 makes it a high-risk, high-reward play for these specialized funds. It's a very small pond.

Top Institutional Investors and Their Positions

The institutional landscape for Dermata Therapeutics, Inc. is dominated by a few key players, primarily hedge funds and specialized asset managers who focus on the biotechnology sector. The top holder is an activist-style hedge fund, which is a signal that they see a catalyst for change or a deep-value opportunity. Here's the quick math on the top holders based on the latest filings from the second and third quarters of the 2025 fiscal year:

• Armistice Capital LLC holds the largest position, a significant stake for a company this size.
• UBS Asset Management AG and Hale BioPharma Ventures LLC are also key players, representing major global finance and specialized biotech investment, respectively.
• Total institutional shares held are approximately 62,816 as of the June 30, 2025, reporting date.

The table below details the largest institutional holders and their reported positions:

Recent Ownership Trends: Selling into a Strategic Pivot

The recent change in ownership tells a story of caution and new speculation. The overall institutional activity, which includes both buying and selling, shows that in the most recent reporting period, institutions increased a total of 20,046 shares in new or added positions, while decreasing a total of 9,082 shares in other positions. New money is coming in, but some established money is pulling back.

For example, Armistice Capital, Llc decreased its stake by over 21.6% in the second quarter of 2025, which is a significant move from the largest shareholder. Conversely, UBS Group AG increased its position by over 29.4% during the same period, suggesting a split view on the company's immediate prospects. This divergence is defintely tied to the company's major strategic shift announced in late 2025.

The Impact of Institutional Holdings on Strategy and Price

Institutional investors, even with a smaller percentage of ownership, play a critical role, especially in a company like Dermata Therapeutics, Inc. They are the primary source of liquidity and their moves validate or reject the company's direction. The recent strategic pivot to focus on Over-the-Counter (OTC) skin care treatments and the subsequent termination of the Villani license agreement-which had up to $40.5 million in potential development and sales milestone payments-is the single biggest factor driving their decisions right now. Breaking Down Dermata Therapeutics, Inc. (DRMA) Financial Health: Key Insights for Investors will give you more on the financial health implications of this shift.

When a major shareholder like Armistice Capital reduces its stake, it often signals a lack of confidence in the near-term execution of the new strategy or the valuation at the time of sale. Still, the entry of new funds like Boothbay Fund Management, Llc and Xtx Topco Ltd. suggests a group of investors sees value in the new OTC focus, perhaps betting on a quicker path to revenue versus the long, expensive road of prescription drug development. The stock price, trading at $3.14 per share as of November 13, 2025, reflects the high uncertainty and risk associated with this transition.

The key action here is to watch the next round of 13F filings closely to see if the new OTC strategy has attracted more institutional buyers or if the larger, existing holders continue to liquidate their positions. That will be your clearest signal.

Key Investors and Their Impact on Dermata Therapeutics, Inc. (DRMA)

You're looking at Dermata Therapeutics, Inc. (DRMA) and wondering who's actually holding the stock and why, especially after the big shift to over-the-counter (OTC) products. The short answer is that institutional money is thin, but the few major players who are in have taken a deeply concentrated, high-conviction position, which makes their moves matter a lot more than their small number suggests.

As of late 2025, the ownership structure is typical for a small-cap biotech in transition: high insider control and low institutional float. Insiders, including management and board members, hold a substantial 18.50% of the stock. Meanwhile, institutional ownership sits at a low 8.67%, which is a tiny slice of the pie. This means the stock is highly sensitive to the few institutional buyers and sellers, plus any moves by the insiders.

One quick glance tells you this is a low-float, high-volatility stock.

The Largest Institutional Bet: Armistice Capital

The most notable institutional investor is Armistice Capital, Llc, a New York-based hedge fund known for its focus on the biotechnology and healthcare sectors. Their position is anything but passive for a company this size. As of their last major filing in May 2025, Armistice Capital, Llc held a 9.99% beneficial ownership stake, amounting to 1,065,076 shares.

Here's the quick math: Armistice Capital, Llc's stake alone represents a significant chunk of the total institutional ownership. Their holding value was approximately $110 thousand as of June 30, 2025, just before the stock split adjustment. This isn't a massive dollar amount for a fund of their size, but it's a huge commitment relative to Dermata Therapeutics, Inc.'s small market capitalization, which was around $2.14 million in November 2025.

The firm's recent moves are what you should really watch. In a May 2025 Schedule 13G/A filing, Armistice Capital, Llc reported a massive increase in their share count-a jump of 285.31% from their previous reported position. This kind of aggressive accumulation, even with a passive 13G filing, signals a strong conviction in the company's long-term potential, likely tied to the positive Phase 3 data for their lead product, DMT310, announced in March 2025, and the subsequent strategic pivot to OTC skin care.

Other institutional holders are much smaller, serving primarily as passive index trackers or small-scale bets:

• Boothbay Fund Management, Llc: A new position of 12,000 shares as of June 30, 2025.
• UBS Group AG: Held 9,096 shares as of June 30, 2025, showing a slight increase.

Insider Control and Influence on Strategic Direction

The high insider ownership, hovering around 18.50%, gives management and the board significant control, especially in a company with a low public float (the number of shares available for trading). The strategic pivot announced in September 2025-moving from prescription drug development to a direct-to-consumer OTC model-is a major, board-driven decision that directly reflects this internal control.

When you have a small, concentrated shareholder base, the influence of a major investor like Armistice Capital, Llc rises dramatically. They may not have a board seat (which would require a 13D filing), but their large stake means they are a critical voice in any future financing, merger, or asset sale decision. This is defintely a case where a few large fish move the whole pond.

The CEO, Gerald T. Proehl, also filed a Schedule 13D/A in April 2025, which updated his beneficial ownership. This is a sign that the company's key decision-makers are actively managing their stakes around major corporate events like the positive Phase 3 trial results and the capital raise of $8.8 million in the first half of 2025.

For more on the company's long-term plan that these investors are betting on, you can read the Mission Statement, Vision, & Core Values of Dermata Therapeutics, Inc. (DRMA).

Here is a snapshot of the top institutional positions as of the latest quarterly filings:

What this table hides is the impact of the August 2025 1-for-10 reverse stock split. The shares listed above are the post-split numbers reported in the Q2 2025 13F filings, but the percentage ownership figures are the key metric to watch for influence. The total institutional shares held were 62,816 as of the Q2 2025 reporting period.

Your next step is to monitor the Q4 2025 13F filings (due in early 2026) for Armistice Capital, Llc to see if they maintained or increased their stake following the September 2025 pivot to OTC products.

Market Impact and Investor Sentiment

You need to know who is betting on Dermata Therapeutics, Inc. (DRMA) and why, especially after the strategic pivot to Over-the-Counter (OTC) products. The short answer is: institutional confidence is extremely low right now, but the few analysts covering the stock see a huge potential upside if the new strategy works. That's a classic biotech risk/reward profile.

The market has defintely reacted negatively to the company's trajectory over the past year. The stock price, trading at around $3.14 per share as of mid-November 2025, represents a massive 72.96% decline from its price a year prior. This dramatic drop reflects the market's caution following the necessary 1-for-10 reverse stock split in August 2025, which was done to maintain Nasdaq compliance, and the subsequent strategic shift away from the prescription drug pipeline (like withdrawing the FDA application for Xyngari™) to focus on OTC skin care.

Investor Sentiment: A Cautious 'Hold'

Current sentiment among major shareholders is best described as cautious-to-negative, heavily influenced by the biotech-to-consumer pivot. While the company's third-quarter 2025 financial results showed a net loss narrowing to $1.69 million from $3.17 million a year ago, the overall capital structure remains tight.

• Institutional Footprint is Tiny: Only 5 institutional owners have filed 13F forms, holding a total of just 10,148 shares.
• Retail Dominance: Retail and public investors hold the lion's share, accounting for 76.36% of the total shares outstanding.
• Key Holders are Passive: The largest institutional holder, Armistice Capital Master Fund Ltd., holds approximately 9.86% of the outstanding shares. This is generally a passive investment (Schedule 13G), meaning they are not actively trying to force a change in management or strategy.

The low institutional ownership of approximately 7.46% suggests that large, sophisticated funds have largely stayed away or pared back their positions, preferring to let the consumer pivot play out before committing significant capital.

Recent Market Reactions and Capital Moves

The most significant recent market reaction was the fallout from the strategic pivot announced in September 2025. This move, which involved withdrawing the New Drug Application (NDA) for their lead product candidate, was a clear signal of a cash runway issue and a shift in business model risk. Dermata Therapeutics, Inc. ended Q3 2025 with only $4.7 million in cash, which is expected to fund operations into the first quarter of 2026.

Here's the quick math: The company's current market capitalization is a mere $2.14 million, which is a micro-cap valuation that makes the stock highly volatile and sensitive to any news, especially capital raises. In November 2025, the company filed an 8-K to increase the maximum aggregate offering amount under its At-The-Market (ATM) agreement by an additional $1,792,315. This continuous equity dilution is a necessary evil for a development-stage company, but it puts downward pressure on the stock price.

For a deeper dive into the financials that forced this pivot, you should read Breaking Down Dermata Therapeutics, Inc. (DRMA) Financial Health: Key Insights for Investors.

Analyst Perspectives: High Risk, High Reward

While the market is wary, the few analysts who cover Dermata Therapeutics, Inc. are surprisingly bullish on the long-term potential of the new OTC strategy. The consensus rating is a 'Hold,' but this is based on a split decision: one Buy rating and one Sell rating.

The most compelling number to focus on is the average 12-month price target. Analysts have set an average target of $10.00 per share, which implies a staggering forecasted upside of nearly 309.84% from the stock's recent price of $2.44. This kind of disparity-a low current price and a high target-shows the high-risk, high-reward nature of this investment.

What this estimate hides is the execution risk. The bullish view is predicated on the successful launch of their once-weekly acne kit in mid-2026, leveraging positive Phase 3 clinical data for the active ingredient, but under a new, consumer-focused business model.

Here is a summary of the key investor data points as of late 2025:

The key action for you is to monitor the company's progress on branding and manufacturing for the OTC launch, as commercial execution is now the single largest driver of future returns.