What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-03-16 compared with 2022-04-01 · 230 added, 214 removed, 217 unchanged (67% of the section changed)

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dollars, unless otherwise noted.

are a pre-clinical biotechnology company developing novel therapeutic candidates targeting ferroptosis, an emerging new anti-cancer mechanism

resulting in IMCD for treatment resistant cancers.

Our most advanced product candidate is HSB-1216, an IMCD modulator, targeting a variety

of solid tumors.

In a clinical pilot study conducted in Germany by the University of Heidelberg, the active drug in HSB-1216 was found

to reduce tumor burden in treatment resistant cancers, including TNBC and epithelial carcinomas.

Our goal is to submit an IND to the

FDA in 2023 and start a clinical study with HSB-1216 in 2023;

however, no assurance can be provided that our IND will be accepted by

the FDA in 2023, if at all.

If our IND is accepted by the FDA, our HSB-1216 clinical study will focus on expanding upon the clinical

pilot study conducted in Germany.

If we are able to start our clinical study with HSB-1216 in 2023, we anticipate that initial clinical

data from such trial will be released either the end of 2023 or early 2024.

We use Quatramer™, our proprietary tumor targeting

platform, to enhance the uptake of HSB-1216 in the TME with an extended duration of action and minimal off-target toxicity.

TridentAI, our artificial intelligence precision medicine platform, is used to identify biomarkers in our clinical programs to target

specific patient segments.

BioPharma is a pre-clinical biotechnology company developing novel therapeutic candidates targeting ferroptosis, an emerging new anti-cancer

mechanism resulting in IMCD, and targeted IO novel biologics, for the treatment drug resistant cancers.

Our most advanced product candidate,

HSB-1216, is an IMCD inducer, targeting a variety of solid tumors.

In a clinical pilot study conducted at the University of Heidelberg,

Germany, the active drug in HSB-1216 was found to reduce tumor burden in treatment resistant cancers, including TNBC and epithelial carcinomas.

We utilize Quatramer™, our proprietary tumor targeting platform, to enhance the uptake of HSB-1216 in the TME with an extended

duration of action and minimal off-target toxicity.

Our goal is to submit an IND to the FDA and initiate a clinical study with HSB-1216

in the second half of 2023;

however, no assurance can be provided that our IND will be accepted by the FDA in 2023, if at all.

IND is accepted by the FDA, our HSB-1216 clinical studies will focus on expanding upon the clinical pilot study conducted in Germany.

If we are able to initiate our clinical study with HSB-1216 in the second half of 2023, we anticipate that clinical data from such trial

will be released either late 2024 or early 2025.

discovery of regulated cell death processes, such as apoptosis and autophagy, has enabled novel target discovery for drug development.

Ferroptosis, a form of IMCD, is an emerging regulated cell death process which decreases intracellular iron or the LIP.

increase the LIP leading to unregulated cell growth and metabolism.

Decreasing the LIP induces iron-led ROS production and lipid peroxidation,

two key hallmarks of ferroptosis/IMCD.

HSB-1216 binds iron in the cytoplasm of cancer cells and decreases the LIP, thereby inducing ferroptosis/IMCD,

leading to regulated cell death.

Ferroptosis, a form of IMCD, is an emerging regulated cell death process which decreases intracellular iron or the LIP, a known factor

required for cell growth.

Cancer cells promote increase in the LIP leading to unregulated cell growth and metabolism.

Decreasing the

LIP, induces iron-led ROS production and lipid peroxidation, two key hallmarks of ferroptosis/IMCD, which lead to regulated cell death.

HSB-1216 sequesters iron in the cytoplasm of cancer cells and decreases the LIP, thereby inducing ferroptosis/IMCD, leading to regulated

Areas of interest for the development of HSB-1216 are as a treatment of solid tumors, including SCLC, TNBC, uveal melanoma,

glioblastoma multiforme, head and neck squamous cell carcinoma and other drug resistant cancers with high unmet need.

is a tumor targeting platform which allows us to leverage and exploit key tumor targets and novel emerging pathways such as IMCD to facilitate

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By efficiently extending the circulation half-life, as

well as targeting delivery to the tumor site, Quatramer traps drugs into the TME.

This emerging orthogonal anti-cancer approach utilizes

a fundamental recognized mechanism of iron mediated tumor growth and metabolism.

We are building a portfolio of long-acting, potent anti-cancer

drug candidates using the Quatramer platform.

uses an artificial intelligence precision medicine platform to identify novel biomarkers.

TridentAI integrates diverse public datasets,

including TCGA to identify novel gene signatures to stratify patients prospectively in clinical trials.

Quatramer tumor targeting also

allows us to segment patients by exploiting TridentAI’s findings by (i) synthetic lethal sensitivities with novel combinations,

(ii) pursue undruggable targets such as c-myc and (iii) target tumors with a high degree of cell plasticity indicative of recurrent/drug

resistant phenotype.

well as targeting delivery to the tumor site, Quatramer preferentially traps drugs in the TME.

This emerging orthogonal anti-cancer approach

leverages a fundamental recognized mechanism of iron mediated tumor growth and metabolism.

We are building a portfolio of long-acting,

potent anti-cancer drug candidates using our Quatramer platform.

Quatrabody™ provides an entry into development of next generation IO biologics including, bispecific and trispecific antibodies,

ADCs, CAR-T, CAR-NKs among others.

Quatrabodies capitalize on the long half-life of tumor targeting Quatramers combined with Picobodies™,

bovine-derived antibody “knob” domains which have potential to access and bind more tightly to “undruggable”

epitopes better than full sized antibodies.

HSB-1940 is a combination of PD-1 targeting Picobodies bound to the surface of Quatramers.

Quatrabodies have the potential for delivering an increased drug payload to the tumor with a longer half-life while targeting novel “undruggable”

epitopes of well-established and validated IO targets such as PD-1.

critical components of our business strategy to achieve our goals include:

our drug candidate, HSB-1216, in solid tumors.

from a clinical pilot use study in Germany led us to progress HSB-1216 into IND-enabling studies with the ultimate goal of submitting

an IND to the FDA in 2023.

our combination drug candidate, HSB-888, for pediatric sarcomas.

is in IND-enabling trials with the ultimate goal of submitting an IND to the FDA in 2024.

our Trident Artificial Intelligence Platform.

is a computational intelligence platform that identifies synthetic lethal sensitivities associated with degree of cell plasticity.

and commercializing Quatramer in collaboration with leading pharmaceutical companies.

addition to our internal development programs, we actively seek opportunities to collaborate with recognized biopharmaceutical companies

to develop Quatramer incorporating therapeutic payloads from their proprietary product portfolios.

drug candidate, HSB-1216, in solid tumors.

from a clinical pilot study conducted at the University of Heidelberg, Germany, led us to progress HSB-1216 into IND-enabling studies

with the goal of submitting an IND to the FDA in 2023.

drug candidate, HSB-3215

ErbB family of cell surface proteins are some of the most well-known and validated oncology drug targets including ErbB2 or HER2 (human

epidermal growth factor receptor) and Erb3 or HER3.

drug candidate, HSB-1940

Quatrabody™ provides an entry into next generation of IO biologics including, bispecific and trispecific antibodies, ADCs, CAR-T,

CAR-NKs and others.

Quatrabodies capitalize on the long half-life of tumor targeting Quatramers, combined with Picobodies™, bovine-derived

antibody “knob” domains which have potential to access and bind more tightly to “undruggable” epitopes better

than full sized antibodies.

our novel platform to develop a pipeline of high value Quatramer leads.

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through various combinations of targeted DNA encoded for anti-tumor cytokines and therapeutic payloads, which enables us to move into

other areas of oncology, including immuno-oncology whereby we could increase the effectiveness of ICIs.

other areas of oncology, including IO whereby we could potentially increase the effectiveness of ICIs.

and commercializing Quatramer in collaboration with leading pharmaceutical companies.

addition to our internal development programs, we actively seek opportunities to collaborate with recognized biopharmaceutical companies

to develop Quatramer incorporating therapeutic payloads from their proprietary product portfolios.

We intend to establish collaborations

with industry leaders and strategic pharmaceutical organizations.

Commercializing

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own HSB-1216 and our other proprietary pipeline and expect to maintain similar rights with respect to other proprietary Quatramer we

Following FDA approval in the United States, we may partner with a larger biopharmaceutical company as well as potentially build

a focused oncology sales organization to market Quatramer-based therapeutics.

Outside of the United States, we intend to rely on collaborators

to commercialize proprietary approved Quatramer.

to extend and protect our product technology and Quatramer through our intellectual property portfolio.

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and manufacturing of our technology.

January 14, 2022, we closed the initial public offering of our common stock pursuant to which we issued and sold an aggregate of 3,750,000

shares of our common stock for a purchase price of $4.00 per share.

We received net proceeds of approximately $13.0 million, after deducting

underwriting discounts and commissions and offering expenses borne by us.

We expect to continue to file patent applications as we apply our technology to new targets and

therapeutic payloads.

In addition, we believe the heightened regulatory requirements for generics of this technology may strengthen the

protection afforded by our intellectual property portfolio.

Minotaur Research and Collaboration Agreement and

Taurus License Agreement

Hillstream has entered into a research collaboration and product license

agreement with Minotaur and a commercial license agreement with Taurus for use of certain technology, including OmniAb antibodies, to

advance Picobodies against novel, unreachable and undruggable epitopes in high-value validated targets starting with PD-1.

and collaboration agreement and product license agreement is for the development of proprietary targeted biologics, Knob Quatrabodies™

(HSB-1940), against PD-1.

technologies of Hillstream and Minotaur will be combined under the license

from Taurus to discover, develop and advance biotherapeutics against high-value validated IO targets.

Picobodies are bovine-derived antibody

“knob” domains comprised of cysteine-rich ultralong CDR H3 sequences of 30-40 amino acids weighing ~3-4KDa, which have the

potential to access challenging epitopes better than full size antibodies can.

combining Quatramers with their long half-life coated with a PD-1 Picobody ™

to create HSB-1940, Hillstream believes it could more efficiently target novel epitopes with greater binding affinity than approved anti-PD-1

We further believe that the development of HSB-1940 is a step toward enabling us to enter the rapidly growing IO market with

additional targets thereafter.

Biomedical Research Institute Option Agreement

ABSI has developed technology to target unique functional epitopes of the

cancer targets HER2 and HER3.

Monoclonal antibodies being developed at ABSI are unique from the currently approved anti-HER2 antibodies.

ABSI has granted us an exclusive option to license technology to develop HER2 and HER3 antibodies, including multi-specific and Quatramer-based

therapeutics incorporating portions of the antibodies.

These antibodies could be incorporated into proprietary multi-format biologics

(bi- and tri-specific antibodies, ADCs (antibody drug conjugates), CAR-T and CAR-NKs, in Quatramers and Quatrabodies) against drug resistant

cancers including HER2-positive metastatic breast cancer, gastric cancer, lung cancer and ovarian cancer.

The ABSI option terminates on March 24, 2023, unless extended by the parties.

and Uncertainties-COVID-19

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We expect that our research and development expenses

will increase as we plan for and commence our clinical trials of HSB-1216 and HSB-888.

cannot determine with certainty the duration and costs of future clinical trials of our product candidates, HSB-1216 and HSB-888, or

any other product candidates we may develop or if, when or to what extent we will generate revenue from the commercialization and sale

of any of our product candidates for which we obtain marketing approval.

We may never succeed in obtaining marketing approval for any

of our product candidates.

will increase as we plan for and commence our clinical trials of HSB-1216, HSB-3215 and HSB-1940.

cannot determine with certainty the duration and costs of future clinical trials of our product candidates, HSB-1216, HSB-3215 and HSB-1940,

or any other product candidates we may develop or if, when or to what extent we will generate revenue from the commercialization and

sale of any of our product candidates for which we obtain marketing approval.

We may never succeed in obtaining marketing approval for

any of our product candidates.

The duration, costs and timing of clinical trials and development of our current and future product candidates

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corporate governance expenses, investor relations activities and other administrative and professional services.

In-process Research and Development Expense

and development costs incurred in obtaining technology licenses and asset purchases are charged to research and development expense if

the technology licensed has not reached technological feasibility which includes manufacturing, clinical, intellectual property and/or

regulatory success which has no alternative future use.

The licenses purchased by

us require substantial completion of research and development and regulatory and marketing approval efforts in order to reach technological

As such, for the years ended December 31, 2021 and 2020, the purchase price of licenses and assets acquired was classified

as acquired in-process research and development expenses in the consolidated statements of operations.

in Redemption Value

account for derivative instruments in accordance with Accounting Standards Codification (“ASC”) 815, Derivative and Hedging,

account for derivative instruments in accordance with Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging,

which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded

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over the term of the related debt using the straight-line method, which approximates the interest method.

If a loan is paid in full,

any unamortized financing costs will be removed from the related accounts and charged to operations.

Amortization of debt discount is

recorded as a component of interest expense.

In accordance with Accounting Standards Update (“ASU”) 2015-03, Interest

— Imputation of Interest , the unamortized debt discount is presented in the accompanying balance sheet as a direct deduction

from the carrying amount of the related debt.

Amortization of debt discount

is recorded as a component of interest expense.

If a loan is paid in full, any unamortized debt discounts will be removed from the related

accounts and charged to operations.

As the convertible debt was converted into common stock at the date of our initial public offering

(“IPO”), the unamortized debt discount was charged to interest expense.

In accordance with Accounting Standards Update (“ASU”)

2015-03, Interest — Imputation of Interest , the unamortized debt discount is presented in the accompanying consolidated

balance sheets as a direct deduction from the carrying amount of the related debt.

redemption liability includes a provision that provides the noteholder with certain conversion and put rights at various conversion or

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This PWERM was determined

to be the most appropriate method of estimating the value of possible redemption or conversion outcomes over time, since we have not

entered into a priced equity round through December 31, 2021.

The significant assumptions utilized in these calculations are the possible

exit scenarios (either a conversion of the principal and accrued interest of the Notes in the event of a Next Equity Financing, a repayment

of the Notes and accrued interest in the event of a Corporate Transaction (as defined in the Notes) or a repayment of the Notes and accrued

interest at maturity), the pre-money valuation of our common stock, the probabilities of such exit events occurring and discounts/premiums

available to the noteholders at such measurement dates.

At December 31, 2020, we assumed a 40% probability of a Next Equity

Financing event occurring at IPO pricing and a 5% probability of a Corporate Transaction.

to be the most appropriate method of estimating the value of possible redemption or conversion outcomes over time, since we did not enter

into a priced equity round through December 31, 2021.

The significant assumptions utilized in these calculations are the possible exit

scenarios (either a conversion of the principal and accrued interest of the Notes (as defined herein) in the event of a Next Equity Financing

(as defined herein), a repayment of the Notes and accrued interest in the event of a Corporate Transaction (as defined in the Notes)

or a repayment of the Notes and accrued interest at maturity), the pre-money valuation of our common stock, the probabilities of such

exit events occurring and discounts/premiums available to the noteholders at such measurement dates.

The calculation of the redemption

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Offering Costs

offering consisted of legal, accounting, printing, and filing fees that the Company capitalized which will be offset against the proceeds

from the our initial public offering.

offering costs consisted of legal, accounting, printing, and filing fees that the Company capitalized which were offset against the proceeds

from its initial public offering.

of Operations

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following table sets forth key components of our results of operations for the years ended December 31, 2022 and 2021.

Ended December 31,

Statements of Operations Data:

and development

in-process research and development

and administrative

operating expenses

(expenses) income:

income (expense)

in redemption value

other (expenses) income, net

(loss) income

other income (expense), net

$ (8,473,182 )

$ (2,206,643 )

$ (6,266,539 )

and Development Expenses

and development expenses increased by $995,531, or 117.5%, to $1,842,803 for the year ended December 31, 2021 from $847,272 for the year

ended December 31, 2020.

and development expenses increased by $435,621, or 23.6%, to $2,278,424 for the year ended December 31, 2022 from $1,842,803 for the

year ended December 31, 2021.

The increase was primarily the result of an increase in expenses for pre-clinical activities of $494,017

based compensation expense of $406,024 related to research and development team members;

and consulting expenses of $130,771.

increases were offset by decreases of $1,129 in various other expenses.

In-Process Research and Development Expenses

in-process research and development expense was $0 for the year ended December 31, 2021 and $289,200 for the year ended December 31,

2020, a decrease of $289,200.

The in-process research and development expenses represent expenses incurred with the acquisition

of Farrington that closed during the year ended December 31, 2020.

These increases were offset by decreases of $189,167 in stock based compensation expense related

to research and development team members because of the limited number of stock options issued during the year.

and Administrative Expenses

and administrative expenses increased by $693,335, or 103.2%, to $1,365,214 for the year ended December 31, 2021 from $671,879

for the year ended December 31, 2020.

and administrative expenses increased by $3,238,300 or 237.2%, to $4,603,514 for the year ended December 31, 2022 from $1,365,214 for

the year ended December 31, 2021.

The increase in general and administrative expenses was primarily due to an increase of $1,219,401

in stock based compensation expense;

$164,862 in accounting expenses;

$8,665 in insurance expenses;

and $3,080 in legal

These increases were offset by a decreases of $34,786 in consulting expenses and $47,151 in various other expenses.

in insurance expenses, $693,632 in consulting expenses, $499,951 in payroll expenses, $236,265 in accounting expenses;

$224,864 in legal

$220,380 in remuneration paid to our directors;

$205,743 in investor relations expenses;

$67,578 in filing fees, and $119,892

in various other expenses.

The increases were offset by a decrease of $249,406 in stock-based compensation expense.

expense increased by $759,967, or 91.4%, to $1,591,244 for the year ended December 31, 2022 from $831,277 for the year ended December

The increase in interest expense was primarily related to the issuance of convertible promissory notes.

See Note 4 of

our consolidated financial statements.

The increase in interest expense was primarily related to the unamortized debt discount charged to interest expense on the

date of our IPO.

See Note 3 of our consolidated financial statements.

in Redemption Value

change in redemption value decreased by $2,195,137, or 605.6%, to $1,832,651 for the year ended December 31, 2021 from $362,486 for the

year ended December 31, 2020 as the redemption liability was re-evaluated in light of the actual fair value increment provided to the

debt holders upon completion of our initial public offering in January 2022.

change in redemption value decreased by $1,832,651, or 100.0%, to $0 for the year ended December 31, 2022 from $1,832,651 for the year

ended December 31, 2021 as the redemption liability was re-evaluated in light of the actual fair value increment provided to the debt

holders upon completion of our IPO in January 2022.

and Capital Resources

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For the year ended December

31, 2021, we incurred operating losses in the amount of approximately $3.2 million and have an accumulated deficit of approximately

$6.9 million at December 31, 2021.

We have financed our working capital requirements through December 31, 2021 primarily through

the issuance of convertible promissory notes payable issued to related parties.

January 14, 2022, we closed our initial public offering (“IPO”) of 3,750,000 shares of our common stock at a public

offering price of $4.00 per share.

The gross proceeds from the IPO were $15.0 million, prior to deducting underwriting discounts, commissions,

and other offering expenses.

The net proceeds from the IPO were approximately $13.0 million.

We granted the underwriters a 45-day

option to purchase up to an additional 562,500 shares of common stock at the public offering price less discounts and commissions, to

cover over-allotments;

however, this option expired unexercised.

Additionally, and as a result of the completion of the IPO, all

of our related party convertible debt and accrued interest was converted into an aggregate of 1,225,384 shares of our

common stock pursuant to the terms of the convertible note.

believe our cash on hand after the IPO is sufficient to meet our operating obligations and capital requirements for at least twelve

months from the issuance of the financial statements included in this Annual Report on Form 10-K.

Thereafter, we may need

to raise further capital through the sale of additional equity or debt securities or other debt instruments to support our future

31, 2022, we incurred operating losses in the amount of approximately $6.9 million, expended approximately $6.6 million in cash used

in operating activities, and had an accumulated deficit of approximately $15.4 million as of December 31, 2022.

We financed our working

capital requirements through December 31, 2022 primarily through the issuance of common stock through our IPO.

Net proceeds to us from

the IPO were approximately $13.0 million.

See Note 5 to the consolidated financial statements for details regarding the IPO.

stock began trading on The Nasdaq Capital Market on January 12, 2022 under the ticker symbol “HILS.”

on our limited operating history, recurring negative cash flows from operations, current plans and available resources, we will need

substantial additional funding to support future operating activities.

We have concluded that the prevailing conditions and ongoing liquidity

risks faced by us raise substantial doubt about our ability to continue as a going concern for at least one year following the date

these financial statements are issued.

The accompanying consolidated financial statements do not include any adjustments that might be

necessary should we be unable to continue as a going concern.

may seek to raise additional funding through the sale of additional equity or debt securities, enter into strategic partnerships, grants

or other arrangements or a combination of the foregoing to support its future operations.

There can be no assurance that we will be able

to obtain additional capital on terms acceptable to us, on a timely basis or at all.

The failure to obtain sufficient additional funding

could adversely affect our ability to achieve its business objectives and product development timelines and could have a material adverse

effect on our results of operations.

Flow Activities for the Years Ended December 31, 2022 and 2021

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cash provided by financing activities

(decrease) increase in cash

increase (decrease) in cash

Flows from Operating Activities

Cash used in operating activities for the year ended December 31, 2022

was $6,557,950 which consisted of net loss of $8,473,182, partially offset by $2,484,344 in non-cash charges and other adjustments to

reconcile net loss to net cash used in operating activities and $569,112 in net decrease in operating accounts.

The non-cash charges consist

of amortization of debt discount of $1,569,003, stock compensation expenses of $800,696, stock issuance pursuant to service agreement

of $100,000 and interest and original issuance discount on promissory notes of $14,645.

The net decrease in operating activities was primarily

due to a decrease of $200,000 due to founder, a decrease in accounts payable of $141,170, a decrease in accrued expenses of $127,755,

a decrease of $107,424 in prepaid expenses and other current assets offset by an increase of $7,237 in accrued interest.

used in operating activities for the year ended December 31, 2021 was $1,086,244 which consisted of net loss of $2,206,643, partially

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The net increase in financing activities was from

net cash proceeds of $13,645,643 from the issuance of our common stock in connection with our IPO, $125,000 from the issuance of promissory notes and $24,389 from exercise of stock

options offset by deferred offering costs of $521,294, repayment of promissory notes of $139,645 and purchase of treasury stock, at cost of $69,965.

provided by financing activities for the year ended December 31, 2021 was $898,748.

The net increase in financing activities was from

net cash proceeds of $1,078,015 from the issuance of convertible promissory notes offset by deferred offering costs of $179,267.

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principal amount of such notes ranged from $1,000 to $300,000.

Interest on the unpaid principal balance accrued at a rate

of 5% per annum, computed on the basis of the actual number of days elapsed and a year of 365 days.

Unless earlier converted into shares

of our common stock or preferred stock (“Equity Securities”), the principal and accrued interest was due and payable

Interest on the unpaid principal balance accrued at a rate of 5% per annum,

computed on the basis of the actual number of days elapsed and a year of 365 days.

Unless earlier converted into shares of our common

stock or preferred stock (collectively, the “Equity Securities”), the principal and accrued interest was due and payable

by us on demand by the holders at any time after the earlier of (i) the maturity date of each Note and (ii) the closing of the Next Equity

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after November 2020 (including the aggregate amount of debt securities converted into Equity Securities upon conversion or cancellation

general, the maturity date was two years from the date of issuance, except for the Notes issued in December 2020 and thereafter, in the

aggregate principal amount of approximately $2,135,000, which had a maturity date of three years from the date of issuance.

Notes issued in 2017 through September 2018, the default interest rate of 20% was added to the Notes for the period after the

maturity date (“default period”).

discussed below, the Notes automatically converted

into the type of Equity Securities issued in the Next Equity Financing upon closing of the IPO.

The number of shares of such

Equity Securities to be issued was equal to the quotient obtained by dividing the outstanding principal and unpaid accrued interest

due on the Note on the date of conversion by the lesser of (i) 80% of the price paid per share of Equity Securities by the investors

in the Next Equity Financing, or (ii) an equity valuation of $25 million ($50 million for notes issued after December 2020).

In connection

with the closing of our IPO, in January 2022, notes in the aggregate amount of approximately $3,920,640, including interest

accrued thereon, were converted into an aggregate of 1,225,384 shares of our common stock.

September 27, 2020, we issued a related party note holder notes (“Exchange Notes”) in exchange for seven Notes which were

in default (“Original Notes”) at such time by more than 90 days.

The Original Notes had a principal of approximately $265,000

and accrued interest of $37,000 at December 31, 2019.

As of September 27, 2020, the aggregate outstanding principal of the Original Notes

was approximately $265,000 and accrued interest (which included the default interest rate of 20% as described above) was approximately

The Exchange Notes took the then principal and accrued interest of the Original Notes and added an original issue discount of

37.5% to determine the new principal, which amounted to an aggregate of $537,968.

The Company accounted for this transaction as a debt

extinguishment, and the incremental amount of the principal of the notes payable of $201,737 was recorded to accumulated deficit (analogous

to a “deemed dividend”), since the notes were with related parties, and included in the calculation of loss per share.

September 27, 2020, we issued certain related party note holders Exchange Notes in exchange for five Notes payable which were in default.

As of such date, the aggregate outstanding principal and interest was approximately $26,000, which included the 20% default interest

The new Exchange Notes in the aggregate principal amount of approximately $26,000 had substantially the same terms as the

original Notes.

There were no accounting entries required upon the re-issuance of such Exchange Notes.

general, the stated maturity date was two years from the date of issuance, except for the Notes issued in December 2020 and thereafter

(in the aggregate principal amount of approximately $2.1 million) which had a stated maturity date of three years.

For Notes issued in

2017 and through September 2018, the default interest rate of 20% was added to the Notes for the period after the stated maturity date.

Notes were to automatically convert into the type of Equity Securities issued in the Next Equity Financing upon closing.

The number of

shares of such Equity Securities to be issued was equal to the quotient obtained by dividing the outstanding principal and unpaid accrued

interest due on the Note on the date of conversion by the lesser of (i) 80% of the price paid per Equity Security by the investors in

the Next Equity Financing, or (ii) an equity valuation of $25 million ($50 million for Notes issued after December 2020).

14, 2022, all outstanding Notes and accrued interest were converted into an aggregate of 1,225,384 shares of the Company’s common

stock as the Company’s initial public offering qualified as a Next Equity Financing.

October 1, 2020, all Notes which matured, and were not repaid or converted, were rolled over on substantially the same terms as the Original

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Accounting Policies and Use of Estimates

preparation of financial statements in conformity with generally accepted accounting principles in the United States of America (“U.S.

GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and

related disclosures in the financial statements and accompanying notes.

Management bases its estimates on historical experience and on

assumptions believed to be reasonable under the circumstances.

The estimation process often may yield a range of potentially reasonable

estimates of the ultimate future outcomes, and management must select an amount that falls within that range of reasonable estimates.

The preparation of financial statements in conformity with generally accepted

accounting principles in the United States of America (“U.S.

GAAP”) requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities and related disclosures in the financial statements and accompanying notes.

Management bases its estimates on historical experience and on assumptions believed to be reasonable under the circumstances.

The estimation

process often may yield a range of potentially reasonable estimates of the ultimate future outcomes, and management must select an amount

that falls within that range of reasonable estimates.

Estimates are used in the following areas, among others:

research and development expense recognition, valuation of common shares and

stock options, allowances of deferred tax assets, valuation of debt related instruments, accrued expenses and liabilities, and cash flow

assumptions regarding going concern considerations.

valuation of common shares

and stock options prior to the IPO, allowances of deferred tax assets, valuation of debt related instruments, and cash flow assumptions

regarding going concern considerations.

Concentration

of Credit Risk

maintain cash balances with various financial institutions.

Account balances at these institutions are insured by the Federal Deposit

Insurance Corporation up to $250,000 per depositor.

At various times during the year, bank account balances may have been in excess of

federally insured limits.

We have not experienced losses in such accounts.

We believe that we are not subject to unusual credit risk

beyond the normal credit risk associated with commercial banking relationships.

Accounting Policies

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based on our estimates of service performed and costs incurred.

These estimates include the level of services performed by third

parties, patient enrollment in clinical trials, administrative costs incurred by third parties, and other indicators of the services

in-process research and development

have acquired, and may in the future acquire, rights to develop and commercialize new product candidates and/or other in-process research

and development assets.

In accordance with Financial Accounting Standards Board’s ASC 730-10-25-1, Research and Development, the

up-front acquisition or licensing payments are expensed as acquired in-process research and development provided that the drug has not

achieved regulatory approval for marketing, and, absent obtaining such approval, have no alternative future use.

These estimates include the level of services performed by third parties,

patient enrollment in clinical trials, administrative costs incurred by third parties, and other indicators of the services completed.

based compensation

based compensation represents the cost related to stock based awards granted to our employees, directors and consultants and our

We measure stock based compensation costs at the grant date, based on the estimated fair value of the award and recognize

the cost over the requisite service period.

based compensation represents the cost related to stock based awards granted to our employees, directors and consultants and our affiliates.

We measure stock based compensation costs at the grant date, based on the estimated fair value of the award and recognize the cost over

the requisite service period.

recognize compensation costs resulting from the issuance of stock-based awards to employees, non-employees and directors as an expense

in our consolidated statements of operations over the requisite service period based on a measurement of fair value for each stock

The fair value of each option grant is estimated as of the date of grant using the Black-Scholes option-pricing model.

fair value is amortized as compensation cost on a straight-line basis over the requisite service period of the awards, which is generally

the vesting period.

in the consolidated statements of operations over the requisite service period based on a measurement of fair value for each stock-based

The fair value of each option grant to employees, non-employees and directors is estimated as of the date of grant using the Black-Scholes

option-pricing model, net of actual forfeitures.

The fair value is amortized as compensation cost on a straight-line basis over the requisite

service period of the awards, which is generally the vesting period.

fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model.

As of December

31, 2021, we were a private company and lacked company-specific historical and implied volatility information.

we estimated our expected stock volatility based on the historical data regarding the volatility of a publicly traded set of peer

The expected term of stock options granted to non-employees was between five and seven years.

The risk-free interest

rate was determined by reference to the U.S.

Treasury yield curve in effect at the time of grant of the award for time periods

approximately equal to the expected term of the award.

The fair value of common stock was determined with the assistance of an

independent third-party valuation expert when issuing stock options and computing its estimated stock based compensation expense and

value of shares issued in acquiring product candidates.

The assumptions underlying these valuations represented management’s best

estimates, which involved inherent uncertainties and the application of significant levels of management judgment.

In order to determine

the fair value, we considered, among other things, contemporaneous valuations of our common stock, our business, financial condition

and results of operations, including related industry trends affecting our operations;

the likelihood of achieving various liquidity

the lack of marketability of our common stock;

the market performance of comparable publicly traded companies;

economic and capital market conditions.

Prior to January

12, 2022, we were a private company and our common stock has only been publicly traded since that date.

As a result, we lacked company-specific

historical and implied volatility information.

Therefore, we have estimated our expected stock volatility based on the historical data

regarding the volatility of a publicly traded set of peer companies.

The expected term of stock options granted was between five and

The risk-free interest rate was determined by reference to the U.S.

Treasury yield curve in effect at the time of grant

of the award for time periods approximately equal to the expected term of the award.

value measurements

6 unchanged sentences

inputs and minimize the use of unobservable inputs when measuring fair value.

The calculation of the redemption liability at

December 31, 2021 is based upon the actual incremental value derived by the noteholders at the IPO date.

The calculation of the redemption liability at December

31, 2021 is based upon the actual incremental value derived by the noteholders at the IPO date.

discount and derivative instruments

5 unchanged sentences

of interest expense.

In accordance with ASU 2015-03, Interest — Imputation of Interest , the unamortized debt discount is

presented in the accompanying balance sheet as a direct deduction from the carrying amount of the related debt.

In accordance with ASU 2015-03, Interest - Imputation of Interest , the unamortized debt discount is presented

in the accompanying consolidated balance sheet as a direct deduction from the carrying amount of the related debt.

account for derivative instruments in accordance with ASC 815, Derivative and Hedging, which establishes accounting and reporting standards

32 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis