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Item 1A. Risk Factors

2025-03-31 compared with 2024-03-28 · 248 added, 359 removed, 1034 unchanged (37% of the section changed)

should carefully consider the risks described below, as well as other information contained in this report, including the consolidated

financial statements and the notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of

Operations.” The occurrence of any of the events discussed below could significantly and adversely affect our business, prospects,

results of operations, financial condition, and cash flow.

should carefully consider the risks described below, as well as other information contained in this Annual Report on Form 10-K (this

“Report”), including the consolidated financial statements and the notes thereto and “Management’s Discussion

and Analysis of Financial Condition and Results of Operations.” The occurrence of any of the events discussed below could significantly

and adversely affect our business, prospects, results of operations, financial condition, and cash flow.

business is subject to numerous risks and uncertainties that you should consider before investing in our common stock.

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is a summary of the principal risk factors we face:

have incurred significant losses since our inception, expect to incur losses over the next several years and may never achieve or

maintain profitability.

have no history of commercializing products.

will need additional funding to pursue our business objectives, including to eventually commercialize our product candidates if we

complete research and development efforts and receive the required regulatory approvals for a product candidate in the future.

allocated a significant amount of time and resources into developing a treatment for COVID-19, and these efforts may ultimately be

unfruitful particularly given the increasing number of FDA approved competitor treatments with the passage of time.

regulatory approval processes of the FDA and other government authorities are lengthy, time consuming and inherently unpredictable.

we are unable to successfully develop, receive regulatory approval for and commercialize our product candidates, our business will

if we do commercialize one or more products, most pharmaceutical products that achieve commercialization still do not recoup their

cost of capital.

face uncertainties with respect to the potential for new United States healthcare legislation which may lead to reduced pricing,

among other things.

cost of our research and development programs may be higher than expected, and there is no assurance that such efforts will be successful

in a timely manner or at all.

of the recent terminations of our Collaboration Agreement with Merck and License Agreements with KSURF, we no longer have potential

revenue prospects or the other perceived benefits of those relationships, which may adversely affect our development and commercialization

in preclinical studies or earlier clinical trials may not be indicative of results in future clinical trials or an ability to ultimately

receive approval from the FDA.

may not be successful in our efforts to research, develop, or in-license or acquire product candidates.

face intense competition, which may limit or eliminate our commercial prospects with respect to product candidates.

rely on third parties to research, develop and commercialize certain product candidates, and such third parties may not perform satisfactorily

or act in our best interests.

we are unable to obtain or protect intellectual property rights related to any of our product candidates, we may not be able to compete

effectively in the market.

may become subject to expensive intellectual property litigation to enforce our intellectual property rights or defend against claims

asserted by others.

trading price and volume of our common stock may be volatile and could decline in which case investors could lose all or part of

their investment.

financial statements are qualified on a going concern basis;

have had a history of losses and may not generate sustained positive cash flow sufficient to fund our operations and research and

development programs;

need for, and ability to obtain, additional financing when needed on favorable terms, or at all;

or complications in conducting clinical trials, such as our Phase 2a study for oral CC-42344 for our Influenza program which in late

2024 we determined must be extended due to an insufficient infection rate;

challenges we face in furthering our research and development efforts, including advancing our product candidates in clinical studies

and effectively procuring and working with third party collaborators and regulators in the furtherance thereof;

related to our development efforts, including the risk that clinical studies may not yield favorable results, or that earlier clinical

results of effectiveness and safety may not be adequate, reproducible or indicative of future results;

risks inherent in developing, obtaining regulatory approvals for and commercializing new, commercially viable and competitive products

and treatments;

research and development activities may not result in commercially viable products;

ability to manage our growth and our expanded operations;

performance of our third-party distribution partners, licensees and manufacturers over which we have limited control, including the

ability of our CROs to recruit volunteers for clinical studies;

in regulation and policies in the U.S.

and other countries, including a reduction on government spending on healthcare in the wake

of the recent election in the U.S.

and potential delays within government agencies such as the FDA which may result from efforts

to reduce the size of the federal government and spending by the Trump Administration;

competition, including the possibility that competitors may develop effective and/or less costly treatments or vaccines, including

as part of the programs financed by the U.S.

success is dependent on the involvement and continued efforts of our Chairman and Co-Chief Executive Officers;

information technology systems that we rely on may be subject to unauthorized tampering, cyberattack or other data security or privacy

incidents that could impact our billing processes or disrupt our operations;

to maintain the security of patient-related information;

ability to obtain and maintain intellectual property protection for our products;

ability to defend our intellectual property rights with respect to our products;

ability to operate our business without infringing the intellectual property rights of others;

ability to attract and retain key scientific and management personnel;

to obtain and maintain regulatory approval for our products and services;

economic, political, regulatory, currency exchange, and other risks associated with international operations;

possibility of a recession or other adverse consequences in the U.S.

or other countries which could result from external factors

such as Federal Reserve interest rates, the imposition of tariffs and the possibility of trade wars, increases in unemployment rates,

geopolitical conflict and other ongoing or future events which could adversely impact our ability to access capital on favorable

terms or at all and further our research and development efforts;

to operations, including impact on employees, vendors, facilities or technology, or on the industry or economy, from uncontrollable

events such as geopolitical conflicts.

RELATED TO OUR FINANCIAL CONDITION

there is substantial doubt as to the Company’s ability to continue as a going concern, we may not be successful and our ability

to continue our operations is in doubt unless we can access sufficient working capital within the timeframe needed.

Company has limited capital and substantial accumulated deficit as of the date of this Report.

We do not have sufficient working capital

and cash flows for continued operations for at least the next 12 months, which raises a risk of our potential inability to continue as

a going concern.

Our continued existence is dependent upon our obtaining the necessary capital to meet our expenditures, and we can provide

no assurance that we will be able to raise adequate capital to meet our future working capital needs.

RELATED TO OUR BUSINESS

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stage, and we may continue to incur significant losses for the foreseeable future and never generate revenue from product sales.

are a preclinical and early stage clinical, biopharmaceutical discovery and development company.

We completed a Phase 2a clinical trial

for our Influenza A lead oral candidate CC-42344 in 2023.

We also completed a COVID-19 clinical trial in 2023 for our lead oral candidate

We expect to report findings from these studies in 2024.

Because of the need to complete clinical trials, establish safety and

efficacy and obtain regulatory approval, which is an expensive and time-consuming process, we do not anticipate generating revenue from

product sales for at least four years and will continue to sustain considerable losses.

We may develop a partnership that could generate

income sooner, but there is no guarantee that will be achievable.

are still in the process of researching and developing product candidates, and to-date have not completed development of, obtained regulatory

approval for or commercialized any products.

Because of the need to complete clinical trials, establish safety and efficacy and obtain

regulatory approval, which is an expensive and time-consuming process, we do not anticipate generating revenue from product sales for

at least four years and will continue to sustain considerable losses.

We may develop a partnership that could generate income sooner,

but there is no guarantee that will be achievable.

had an accumulated deficit of $333,418,000 from inception through December 31, 2024 and expect to continue losing money in the future.

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to continue, and have never generated revenue from product sales.

It is likely that we will need to raise additional capital in the future.

There can be no assurance that we will ever generate income from operations or have positive cash flow from operations.

We will need to raise additional capital in the near future to fund

our operations and research and development programs for the next 12 months.

There can be no assurance that we will ever generate income

from operations or have positive cash flow from operations.

we have yet to generate any revenue from product sales on which to evaluate our potential for future success and to determine if we will

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the sale of any approved pharmaceutical products, we may not become profitable and may need to obtain additional funding to continue

early-stage drug development requires major capital investment, as we continue to incur operating losses, we will need to raise additional

capital or form strategic partnerships to support our research and development activities in the future.

early-stage drug development requires major capital investment and is subject to various challenges, as we continue to incur operating

losses, we will need to raise additional capital or form strategic partnerships to support our research and development activities in

the future, which activities may not result in the results desired or further our business.

are still in the early stages of preclinical and clinical development of our product candidates and have no products approved for commercial

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timeframes remains subject to uncertainties, supply chain shortages, and potential difficulties in obtaining adequate participant enrollments,

Further, developing pharmaceutical products, including conducting preclinical studies and clinical trials, is capital-intensive.

rule, research and development expenses increase substantially as we advance our product candidates toward clinical programs.

able to advance our products through clinical trials, we may need to raise additional capital to support our operations and/or form partnerships,

in addition to our existing collaborative alliances, which may give substantial rights to a partner.

Such funding or partnerships may

not be available to us on acceptable terms, or at all.

infection rates or other study criteria.

For example, in December 2024, the Company announced plans to extend enrollment for the oral

CDI-42344 Phase 2a study due to unexpectedly low influenza infection among study participants.

Specifically, management determined that

the low infectivity obtained in this study hindered antiviral data analysis.

The Company is currently in continuing discussions with

the CRO to address this study and determine a course forward with respect thereto, including potentially by preparing a protocol amendment

for approval by the United Kingdom MHRA in order to seek to extend enrollment in this study and to ensure necessary infection rates among

enrolled study subjects in the study.

While we cannot predict the ultimate outcome of these developments, we expect that we will need

to incur additional expenses to proceed with trial and obtain data that can be used to continue our development of our CDI-42344 Influenza

candidate, which development will also be delayed as a result.

Further, our investments in the initial Phase 2s trial process could prove

to be all or partially lost as a result.

These and other challenges or events that may arise in the future with respect to our research

and development efforts could materially adversely effect our operations and financial position, cause reputational harm or damage our

relationships with key or prospective collaborators or have other adverse consequences on us and our business.

developing pharmaceutical products, including conducting preclinical studies and clinical trials, is capital-intensive.

As a rule, research

and development expenses increase substantially as we advance our product candidates toward clinical programs.

As we seek to advance

our products through clinical trials, we will need to raise additional capital to support our operations and/or form partnerships, in

addition to our existing collaborative alliances, which may give substantial rights to a partner.

Such funding or partnerships may not

be available to us on acceptable terms, or at all.

Moreover, any future financing may be very dilutive to our existing stockholders.

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RELATED TO THE DISCOVERY, DEVELOPMENT AND COMMERCIALIZATION OF PRODUCT CANDIDATES

COVID-19 programs are in the early clinical stage and we face significant competition from major companies who have developed vaccines

or COVID-19 treatments.

If we fail to gain market share because our competitors develop and successfully commercialize effective COVID-19

vaccines or therapies or if we fail to obtain or maintain FDA authorization or to otherwise account for uncertainties surrounding the

virus, our business and future prospects could be materially and adversely affected.

we completed a Phase 1 clinical study of our COVID-19 lead oral candidate CDI-988 in 2023, we may be unable to produce an effective therapy

in a timely manner or at all.

Additionally, we are committing substantial financial and other resources to our COVID-19 program, which

may negatively impact our other programs.

Further, in the wake of the global COVID-19 pandemic a number of third parties, including large

biotechnology and pharmaceutical companies and academic institutions have developed vaccines and treatments which have FDA approval or

emergency use authorization, as more particularly described above under “Business.” While the approval or authorization of

certain of these competitive offerings are limited to specified circumstances or patients, given the uncertainties in our ability to

fully develop a viable COVID-19 therapeutic product, the substantial amount of time and resources that would be necessary to complete

development and obtain regulatory approval, and the growing number of competitive offerings, we may ultimately be unable to produce a

product that is commercially viable or is able to generate material revenue.

programs are in the early clinical stage and we face significant competition from major companies who have developed vaccines or treatments.

If we fail to gain market share because our competitors develop and successfully commercialize effective vaccines or therapies or if

we fail to obtain or maintain FDA authorization or to otherwise account for uncertainties surrounding the virus, our business and future

prospects could be materially and adversely affected.

have committed substantial financial and other resources to our influenza A, norovirus and coronaviruses programs.

While the approval

or authorization of certain of these competitive offerings are limited to specified circumstances or patients, given the uncertainties

in our ability to fully develop a viable therapeutic product, the substantial amount of time and resources that would be necessary to

complete development and obtain regulatory approval, and the growing number of competitive offerings, we may ultimately be unable to

produce a product that is commercially viable or is able to generate material revenue.

if we do obtain FDA authorization for a therapeutic product, the FDA may subsequently rescind or limit such authorization as more information

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against new variants than ours, resulting in a diminished market for our products.

If we are unable to timely advance our COVID-19 program,

or if we fail to gain or maintain a market share as a result of our competitors developing and successfully commercializing vaccines

and effective COVID-19 therapies more quickly than we do, our business and future prospects could be materially and adversely affected.

Merck recently terminated our Collaboration Agreement and we recently terminated our License Agreements with KSURF, we no longer have

potential revenue prospects or the other perceived benefits of those relationships, which may adversely affect our development and commercialization

efforts particularly with respect to our influenza A/B, coronavirus and norovirus programs.

late 2023 Merck notified us that it was terminating our Collaboration Agreement, effective March

Pursuant to the terms of the Collaboration Agreement, Merck had agreed to, among other things, (i) fund the research

and development collaboration, including clinical development and commercialization;

(ii) make certain milestone payments up to a total

of $156 million, including payments associated with the successful product development and attainment of certain U.S.

and EU regulatory

approvals for the developed products and sales volume;

and (iii) pay royalties on net sales of the products.

Because of the termination,

we will not be receiving any further payments from Merck, and will no longer have the ability to realize the other potential benefits

of this former partnership.

We may also be unable to locate a new development and commercialization partner on favorable terms or at

all, or otherwise achieve our objectives with respect to our influenza A/B program.

The loss of our alliance with Merck and its name

recognition in the industry and in general could also have adverse consequences outside of this program in terms of our ability to attract

strategic alliances to further our development and commercialization efforts generally.

in early 2024 we terminated our License Agreements with KSURF, under which we previously licensed proprietary broad-spectrum antiviral

compounds for the potential treatment of norovirus and coronavirus infections.

As a result of the terminations, which were based on our

determination that proceeding with research and development efforts under the licenses would be futile, our prospects in our coronavirus

and norovirus programs are diminished because any perceived or anticipated benefits of the licenses and collaboration will not be realized.

Following the terminations the pool of prospective compounds from which we can potentially identify, develop and commercialize viable

therapeutic product candidates under these programs is reduced.

Any of the foregoing could materially adversely affect our research and

development efforts, business and prospects.

If we are unable to timely advance our programs, or

if we fail to gain or maintain a market share as a result of our competitors developing and successfully commercializing vaccines and

effective therapies more quickly than we do, our business and future prospects could be materially and adversely affected.

we form strategic alliances which are unsuccessful or are terminated, we may be unable to develop or commercialize certain product candidates

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sale or downsizing of its company or business unit;

partner may cease development in therapeutic areas which are the subject of our strategic alliances;

partner may cease development in therapeutic areas which are the subject of our strategic

partner may change the success criteria for a program or product candidate delaying or ceasing development of such program or candidate;

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or prosecute intellectual property rights possibly jeopardizing our rights in such property.

of a strategic alliance such as the recent terminations of the Merck Collaboration Agreement and KSURF License Agreements may require

us to seek out and establish alternative strategic alliances with third-party partners.

This may not be possible, including due to restrictions

under the terms of our existing collaborations, or we may not be able to do so on terms acceptable to us.

See also the risk factor entitled

“Because Merck recently terminated our Collaboration Agreement and we recently terminated our License Agreements with KSURF, we

no longer have potential revenue prospects or the other perceived benefits of those relationships, which will adversely affect our development

and commercialization efforts particularly with respect to our influenza A/B, coronavirus and norovirus programs.” If we fail to

establish alternative strategic alliances with third-party partners on terms acceptable to us, or at all, we may be required to limit

the size or scope of one or more of our programs or decrease our expenditures and seek additional funding by other means.

would likely have a material adverse effect on our results of operations and financial condition.

expect to rely on third parties to conduct some or all aspects of our compound formulation, research and preclinical testing, if those

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Our financial results and the commercial prospects for such products and any product candidates

we develop would be harmed, our costs could increase, and our ability to generate revenues could be delayed.

we develop would be harmed, our costs could increase, and our ability to further our development programs and generate revenues could

also expect to rely on other third parties to store and distribute drug products for any clinical trials we may conduct.

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using the Company’s technology, we may be required to change the scope and direction of our product development activities.

may not successfully identify and implement an alternative product development strategy and may as a result cease operations.

may not successfully identify and implement an alternative product development strategy and may as a result cease operation.

we do not succeed in our efforts to identify or discover additional potential product candidates, your investment may be lost.

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sites dropping out of a trial to the detriment of enrollment;

or inconclusive results of clinical trials of our product candidates;

or inconclusive results of clinical trials of our product candidates, including due to issues with the administration of trials and

the results thereof that have arisen or may arise;

and expenses required to add new clinical sites;

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subject to additional post-marketing testing requirements;

FDA or foreign regulator will remove the product from the market after obtaining marketing approval.

subject to action by the FDA or a foreign regulator to remove the product from the market after obtaining marketing approval.

product development costs will also increase if we experience delays in testing or in obtaining marketing approvals.

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efforts to develop our product candidates are limited to a small number of product candidates aimed at treating a small number of viral

To date, we have only entered a limited number of compounds into human clinical trials, including in 2023 when we advanced

our Influenza A product candidate to a Phase 2a trial and our COVID-19 product candidate where we initiated a Phase 1 trial.

unable to progress our product candidates undergoing preclinical testing into clinical trials.

Success in preclinical testing and early

clinical trials does not ensure that later clinical trials will succeed, and favorable initial results from a clinical trial do not determine

outcomes in subsequent clinical trials.

The indications of use for which we are pursuing development may have clinical effectiveness

endpoints not previously reviewed or validated by the FDA or foreign regulatory authorities, which may complicate or delay our effort

to obtain marketing approval.

To date, we have only entered a limited number of compounds into human clinical trials, including our influenza A product candidate

to a Phase 2a trial and our norovirus / coronaviruses product candidate to a Phase 1 trial.

We may be unable to progress our product

candidates undergoing preclinical testing into clinical trials.

Success in preclinical testing and early clinical trials does not ensure

that later clinical trials will succeed, and favorable initial results from a clinical trial do not determine outcomes in subsequent

clinical trials.

The indications of use for which we are pursuing development may have clinical effectiveness endpoints not previously

reviewed or validated by the FDA or foreign regulatory authorities, which may complicate or delay our effort to obtain marketing approval.

We cannot guarantee that our clinical trials will succeed.

In fact, most compounds fail in clinical trials,

even at companies far larger and more experienced than us.

If any preclinical or clinical trials yield adverse results, it could delay

the development of the product candidate, force us to cease pursuing the product candidate, or render it impossible or impracticable

to proceed towards commercialization.

In fact, most compounds fail in clinical trials, even at companies far larger

and more experienced than us.

If any preclinical or clinical trials yield adverse results, it could delay the development of the product

candidate, force us to cease pursuing the product candidate, or render it impossible or impracticable to proceed towards commercialization.

have not obtained marketing approval or commercialized any of our product candidates.

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we may develop.

programs we are focusing on are in a preclinical d or early clinical development stage and are targeted toward indications for which

programs we are focusing on are in a preclinical or early clinical development stage and are targeted toward indications for which

there are approved products on the market or product candidates in clinical development.

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and commercialize.

For example, the widespread distribution of COVID-19 treatments and vaccines will reduce the demand for any therapeutic

product we develop to treat symptoms caused by the virus, particularly as new competing products are developed and approved by the FDA

and other regulators.

We will not achieve our business plan if the acceptance of our products is inhibited by price competition or the

reluctance of physicians to switch from existing drug products to our products, or if physicians switch to other new drug products or

reserve our products for use in limited circumstances.

Additionally, the biopharmaceutical industry is characterized by rapid technological

and scientific change, and we may not be able to adapt to these rapid changes to the extent necessary to keep up with competitors or

The inability to compete with existing or subsequently introduced drug products would have a material adverse impact on our business,

financial condition and prospects.

We will not achieve our business plan if the acceptance of our products is inhibited by price competition or the reluctance

of physicians to switch from existing drug products to our products, or if physicians switch to other new drug products or reserve our

products for use in limited circumstances.

Additionally, the biopharmaceutical industry is characterized by rapid technological and scientific

change, and we may not be able to adapt to these rapid changes to the extent necessary to keep up with competitors or at all.

The inability

to compete with existing or subsequently introduced drug products would have a material adverse impact on our business, financial condition

and prospects.

pharmaceutical companies may invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds

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information and information technology networks and related systems could:

the proper functioning of these networks and systems and therefore its operations and/or

those of third parties on which we rely;

in the unauthorized access to, and destruction, loss, theft, misappropriation or release

of, our proprietary, confidential, sensitive or otherwise valuable information, or that of

third parties with which we collaborate or otherwise depend, which others could use to compete

against us or for disruptive, destructive or otherwise harmful purposes and outcomes;

or compromise preclinical or clinical studies or the analysis and use of data collected in

our efforts to develop product candidates;

significant attention and resources of management and key personnel to remedy any damages

or other adverse consequences that result;

us to claims for breach of contract, damages, credits, penalties or termination with respect

to our relationships with third parties, or regulatory actions by governmental agencies;

our reputation with industry participants, existing or prospective strategic alliances, and

the public generally.

the proper functioning of these networks and systems and therefore its operations and/or those of third parties on which we rely;

in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, our proprietary, confidential, sensitive

or otherwise valuable information, or that of third parties with which we collaborate or otherwise depend, which others could use

to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes;

or compromise preclinical or clinical studies or the analysis and use of data collected in our efforts to develop product candidates;

significant attention and resources of management and key personnel to remedy any damages or other adverse consequences that result;

us to claims for breach of contract, damages, credits, penalties or termination with respect to our relationships with third parties,

or regulatory actions by governmental agencies;

our reputation with industry participants, existing or prospective strategic alliances, and the public generally.

or all of the foregoing could have a material negative impact on its business, financial condition and prospects.

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new product acceptance.

As the Trump Administration continues to pursue various means of de-regulation and reduced government spending,

funding for these types of programs may become less available to market participants and consumers, which would reduce a prospective

market for the products we are seeking to develop.

coverage and reimbursement approval of a product from a government or other third-party payor is a time-consuming and costly process,

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or is available at limited levels, we may not be able to successfully commercialize product candidates we develop.

to the change in the United States presidency and upcoming election, we and our industry face uncertainty including the potential for

increased regulation, which may adversely affect our business.

Biden has expressed a desire to make healthcare more affordable, including adopting new laws and working with federal agencies in a manner

which may adversely affect our business through an increase in regulatory efforts.

At the senior administrative level, new regulators

with a regulatory zeal may tighten existing regulations and that approach may also be taken in the routine interactions between staff

and our scientists and others.

For example, in December 2023, the Biden Administration announced its intention to lower prescription

drug costs and address certain features of the current healthcare sector, such as the focus on insurance and consolidation.

or other regulatory developments which may occur in the future could have an adverse impact, directly or indirectly, on our operations

or on the operations of our collaborators.

These trends and potential future government action, particularly at the federal level, are

highly uncertain and we expect will be dependent to some extent on the outcome of the next presidential election later this year.

President Biden is elected for another four-year term, he could take further action on the issues his administration has previously addressed.

Contrarily, if former President Trump (or another Republican candidate) were elected, there will be a de-emphasis on regulation.

regulation and enforcement may lead to increased costs and further delays in getting approvals, which may adversely affect our business.

pressures on our drug candidates, including as the result of proposed legislative changes, may negatively impact our future results of

have been numerous legislative and regulatory proposals to change the healthcare system in the United States and in some foreign jurisdictions

that could affect our ability to sell products profitably.

President Biden has expressed support for implementing a new health plan that

would rely on a “Medicare-like” public option for individuals who are not on Medicare and transition to a Medicare-for-All

single payor system in the future.

Among other things, such a system may seek to:

prescription prices by permitting Medicare to negotiate prices;

price increases and pricing control by private sector industry participants;

prices for drugs which do not have competition;

consumers to buy prescriptions from other countries.

Additionally,

beginning in 2022 the Biden administration proposed legislation and policy changes to implement a number of regulatory changes to make

affordable healthcare available for a larger number of Americans, including by lowering the costs of prescription drugs.

A 2022 legislative

proposal included measures that would allow the government to negotiate prices of certain prescription drugs under Medicare and would

redesign the Medicare Part D benefit to limit patient out-of-pocket drug costs and shift liabilities among stakeholders, including manufacturers.

Following the proposal, the Inflation Reduction Act was enacted later in 2022 which provides for lower cost prescription drugs and vaccines

in Medicare and other federal programs, including by establishing a $2,000 annual cap on out-of-pocket drug costs for Medicare participants

beginning in 2025.

In a similar vein, in October 2022, President Biden issued an executive order to address concerns about the high costs

of prescription drugs in the U.S., wherein the Secretary of the Department of Health and Human Services (“HHS”) was tasked

with evaluating potential new health care payment and delivery models designed to lower drug costs and promote access to innovative drug

therapies for beneficiaries enrolled in the Medicare and Medicaid programs, including models that may lead to lower cost-sharing for

commonly used drugs and support value-based payment that promotes high-quality care.

In its responsive report, the HHS indicated that

it was “full steam ahead in delivering cost savings” and identified three potential price-reducing models for further consideration,

as well as other areas for further research.

A similar initiative covering a broader scope of activities and intended actions (including

addressing drug prices and industry consolidation and control) was again released by the White House in December 2023.

Like the Inflation

Reduction Act, certain of the recent or newly proposed regulatory changes will be subject to Congressional approval, and we cannot predict

what, if any, of these broad proposals or other legislation or regulation will pass or otherwise be implemented, particularly with a

divided Congress.

the state level, individual states are increasingly aggressive in passing legislation and implementing regulations designed to control

drug pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost

disclosure and transparency measures.

In addition, regional healthcare authorities and individual hospitals are increasingly using bidding

procedures to determine which pharmaceutical products and suppliers will be included in their prescription drug and other healthcare

These measures could reduce the ultimate demand for our products, or put pressure on our product pricing.

The availability

of generic treatments may also substantially increase pricing pressures on, and reduce reimbursement for, our future products.

The potential

application of user fees to generic drug products may expedite approval of additional generic drug treatments.

We expect to experience

additional pricing pressures in connection with the sale of any of our products, due to the trend toward managed healthcare, the increasing

influence of health maintenance organizations and additional legislative changes.

some non-U.S.

jurisdictions, the proposed pricing for a drug must be approved before it may be lawfully marketed.

The requirements governing

drug pricing vary widely from country to country.

The European Union, or EU, provides options for its member states to restrict the range

of medicinal products for which their national health insurance systems provide reimbursement and to control the prices of medicinal

products for human use.

A member state may approve a specific price for the medicinal product or it may instead adopt a system of direct

or indirect controls on the profitability of the company placing the medicinal product on the market.

There can be no assurance that

any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing

arrangements for our products, if any are approved.

Historically, products launched in the EU do not follow price structures of the U.S.

and tend to be priced significantly lower.

to the recent change in presidential administration in the U.S., we and our industry face uncertainty including the potential for reduced

government funding of research programs and staff and resource reductions at the FDA and other government agencies, which may adversely

affect our business.

taking office in January 2025, President Trump and his cabinet have expressed an intention of and undertaken efforts to reduce the size

and spending of the federal government.

As part of this initiative, President Trump established the Department of Government Efficiency

(“DOGE”), which is tasked with reducing government spending and increasing efficiency of the federal government and its component

Since its establishment, DOGE has taken action aimed at reducing the workforce of the federal government and eliminating other

expenditures, such as facility leases, used by the federal government and its component agencies.

While these and other actions taken

by the Trump Administration could be viewed as a part of a larger goal of de-regulation, a consequence of these developments and other

actions taken by DOGE or the Trump Administration generally could be reduced resources, employees and contractors at the FDA and other

federal agencies on which our operations depend or through which regulatory approvals are or will be required for us and our product

candidates and programs.

For example, less staff and resources at the FDA could result in the approval process for clinical trials or

product candidates having a longer duration or being more costly to expedite.

Additionally, government funding for research and development

programs such as those we are pursuing could be significantly reduced, which could have the effect of limiting or eliminating our ability

to access the capital needed to fund our programs.

Any of these or other outcomes of President Trump’s term and government action

generally, which remain uncertain, could materially adversely affect us.

we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product

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Co-Chief Executive Officer, James Martin.

We may be unable to locate a new Chief Executive Officer capable of running our company effectively,

and any such individual will require high compensation in a competitive market for experienced and qualified personnel within our industry.

We do not carry “key-man” life insurance on any of our employees or advisors.

Furthermore, our future success will also depend

in part on the continued service of our key scientific and management personnel and our ability to identify, hire, and retain additional

We may not be able to attract and retain personnel on acceptable terms, as there is significant competition among numerous

pharmaceutical companies for individuals with similar skill sets.

Lee also actively manages our research and development and clinical trial programs.

may be unable to locate a new Chief Executive Officer capable of running our company effectively, and any such individual will require

high compensation in a competitive market for experienced and qualified personnel within our industry.

We do not carry “key-man”

life insurance on any of our employees or advisors.

Furthermore, our future success will also depend in part on the continued service

of our key scientific and management personnel and our ability to identify, hire, and retain additional personnel.

We may not be able

to attract and retain personnel on acceptable terms, as there is significant competition among numerous pharmaceutical companies for

individuals with similar skill sets.

Because of this competition, our compensation costs may increase significantly.

If we lose key employees, our business may suffer.

If we lose key employees,

our business may suffer.

we expand our organization, we may experience difficulties in managing growth, which could disrupt our operations.

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office in Miami, Florida and an administrative office in Australia.

In addition, our Influenza A Phase 1 program has been dependent on

one or more CROs and their facilities located in Australia for Phase 1 and will depend on one or more CROs in the United Kingdom for

Phase 2a for the furtherance of our research and development efforts as to that product.

We also rely on Australian CROs for our coronaviruses

and norovirus programs.

We and third parties on which we rely are vulnerable to natural disasters such as earthquakes, tornados, severe

storms, hurricanes, tsunamis, and fires, as well as other events that could disrupt our operations and cause delays in research and development

of our product candidates.

We do not carry insurance for natural disasters or similar events, and we may not carry sufficient business

interruption insurance to compensate us for losses that may occur.

Any losses or damages we incur could have a material adverse effect

on our operations.

In addition, we rely on Australian CROs for our coronaviruses and

norovirus programs, and our Influenza A program will continue to depend on one or more CROs in the United Kingdom for its Phase 2a study

for the furtherance of our research and development efforts as to that product.

We and third parties on which we rely are vulnerable

to natural disasters such as earthquakes, tornados, severe storms, hurricanes, tsunamis, and fires, as well as other events that could

disrupt our operations and cause delays in research and development of our product candidates.

We do not carry insurance for natural

disasters or similar events, and we may not carry sufficient business interruption insurance to compensate us for losses that may occur.

Any losses or damages we incur could have a material adverse effect on our operations.

our information technology systems are compromised, the information we store and process, including our intellectual property, could

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with these laws and regulations also may cause substantial fines, penalties or other sanctions.

we fail to comply with Nasdaq’s minimum bid price requirement in the future, it could result in delisting of our common stock,

negatively affect the price of our common stock and limit investors’ ability to trade in our common stock.

common stock is listed on The Nasdaq Capital Market (“Nasdaq”).

Nasdaq rules impose certain continued listing requirements,

including the minimum $1 bid price, corporate governance standards and number of public stockholders.

In November 2021 we were notified

by Nasdaq that we are not compliant with its closing bid price requirement because the closing bid price of our common stock was below

$1.00 per share for 30 consecutive trading days.

Because our common stock failed to trade at higher levels so that we could regain compliance

with the Nasdaq minimum closing bid price, our Board recommended and our stockholders approved a reverse stock split subject to further

Board approval.

In order to regain compliance with the Nasdaq minimum bid provision, we effected a 1-for-12 reverse stock split by amending

our Certificate of Incorporation on October 11, 2022.

in December 2019 and again in November 2020, we failed to comply with the Nasdaq minimum bid price but were able to regain compliance

without effecting a reverse stock split at those times.

Additionally,

a reverse stock split typically has the effect of reducing the number of holders of shares in “round lots,” meaning those

holding 100 or more shares.

Another requirement for being listed on Nasdaq is that the Company have a minimum of 300 round lot holders.

While the bid price of our common stock was $[XX] on March [XX], 2024.

If we again fail to comply with Nasdaq’s minimum bid price,

it is possible in the future that we will again have to seek stockholder approval, which we may not obtain particularly since retail

investors often oppose reverse splits or do not vote and a reverse split requires the approval of the holders of the majority of the

outstanding shares of our common stock.

RELATED TO OUR COMMON STOCK

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in the future, permanently or at all.

For example, in order to increase our stock price above the $1.00 Nasdaq bid price minimum requirement,

we effected a 1-for-12 reverse stock split on October 22, 2022.

In the months leading up to the reverse split, the closing prices for

our common stock (as retroactively adjusted for the reverse split) declined from $5.03 in late August 2022 down to $2.75 on October 10,

2022, and declined further following the reverse split taking effect to below $2.00 on certain dates in December 2022 and February 2023.

More recently, our common stock fell from as high as $3.14 in August 2023 to $1.46 in November 2023, and it has hovered around that range

Our common stock may continue to be volatile and could materially fall for a number of reasons including:

Our common stock may continue to be volatile and could materially fall for a number of reasons

Announcements

by the FDA of final approval of vaccines and treatments for COVID-19 and other diseases we target;

by the FDA of final approval of vaccines and treatments for diseases we target;

Announcements

relating to the spread of new variants of COVID-19 and other diseases we target;

relating to the spread of new variants of diseases we target;

Announcements

by competitors that they are initiating human trials of drugs to treat the diseases we target;

which demonstrate that the spread or intensity of COVID-19 or other diseases has receded;

which demonstrate that the spread or intensity of diseases has receded;

disclosure that the use of our technology and the patents we licensed do not appear promising for the treatment of this virus;

results of our clinical trials;

results of or developments with respect to our clinical trials;

announcement concerning the initiation of or delay in our planned clinical trials;

Announcements

of entering into or terminating strategic alliances such as the termination of the Merck Collaboration Agreement which we disclosed

in December 2023 and the terminations of the KSURF License Agreements which we disclosed in March 2024;

occurrence of any other events or factors which may have created the unusual volatility and spike in volume.

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and volume fluctuations in the overall stock market from time-to-time;

to external factors such as geopolitical turmoil, inflation or other events, including the conflicts in Ukraine and Israel or other

unknown hostilities, investors may sell our common stock to meet margin calls on other stocks or as the result of economic disruptions;

to external factors such as geopolitical turmoil, a possible recession, inflation or other events, including the conflicts in Ukraine

and Israel or other unknown hostilities, investors may sell our common stock to meet margin calls on other stocks or as the result

of economic disruptions;

in the market prices and trading volumes of biotechnology stocks generally, or those in our peer group in particular;

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significant change in our management.

economic conditions and slow or negative growth in any of our significant markets.

addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities,

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result in substantial costs and a diversion of our management’s attention and resources.

of geopolitical conflicts, central bank actions to combat inflation and other major events, the effect on the capital markets and the

economy is uncertain, and we may have to deal with a recessionary economy and economic uncertainty including possible material adverse

effects upon our business.

with the Russian invasion of Ukraine, certain events began to affect the global and United States economy including increased inflation,

increases in the prices of commodities such as oil and gas, large Western companies ceasing to do business in Russia and uncertain capital

markets with declines in leading market indexes.

In 2023 another conflict arose in Israel which has also added to the uncertainty.

duration of these events and their impact are at best uncertain and continuation may result in negative consequence on the U.S.

Further, in March 2023 two major U.S.

banks collapsed, while certain other banks faced extreme financial difficulty and had

to seek immediate sources of liquidity to remain open.

These developments were widely considered a product of the increase in interest

rates that began in 2022 as the Federal Reserve in U.S.

of central bank actions to combat inflation, the imposition and threat of tariffs and geopolitical conflicts, and other major events,

the effect on the capital markets and the economy is uncertain, and we may have to deal with a recessionary economy and economic uncertainty

including possible material adverse effects upon our business.

President Trump’s inauguration in January 2025, certain trends and events have begun to unfold which appear to be affecting the

global and United States capital markets and economies, including the continued high central bank interest rates, the imposition and

threat of tariffs, trade wars among nations and ongoing geopolitical conflicts, and uncertain capital markets with significant declines

in leading market indexes in March 2025.

The duration of these events and their impact are at best uncertain, and their continuation

may result in negative consequences on the U.S.

or global economies.

President Trump recently began imposing tariffs on certain foreign

countries with which the U.S.

engages in trades with frequently, including Canada, Mexico and China, and in response certain countries

and jurisdictions have responded by imposing or threatening to impose tariffs on U.S.

These developments follow the increase in

interest rates that began in 2022 as the Federal Reserve in U.S.

and central banks in other jurisdictions have sought to combat inflation.

inflation has since declined, uncertainty remains as to the timing of the Federal Reserve reducing interest rates, and if

inflation does not fall low enough and/or the Federal Reserve declines to reduce interest rates in the near term, the result could be

tipping the U.S.

While in the U.S.

inflation has since declined, many economists view additional increases in inflation as a likely consequence of tariffs

and a trade war, and in addition central banks including the U.S.

Federal Reserve have been reluctant to reduce interest rates until

further evidence appears that inflation is under control.

Rising prices from tariffs could cause an increase in inflation.

In the meantime,

uncertainty in the markets and concerning the state and prospects for the U.S.

and global economies and capital markets in the near term

remains and has amplified due to the factors described above.

If inflation does not fall low enough and/or the Federal Reserve declines

to reduce interest rates in the near term, or tariffs imposed or threatened by President Trump are counteracted by retaliatory tariffs

imposed by other countries or otherwise adversely impact the economy, the result could be tipping the U.S.

economy into a recession.

In the wake of these events, the U.S.

and global capital markets have demonstrated volatility,

as many investors consider economic outlooks to be uncertain .

While the capital markets have since recovered, ultimately the economy

may turn into a recession with uncertain and potentially severe impacts upon public the capital markets and us.

We cannot predict how

this will affect our business, but the impact may be material and adverse.

and global capital markets have demonstrated substantial volatility in the first quarter of 2025,

as many investors consider economic outlooks to be uncertain and consider the risk of a recession and a decline in the marketplace to

be increasingly probable or imminent.

Ultimately the economy may turn into a recession with uncertain and potentially severe impacts

upon the public capital markets and us.

Among the potential consequences could be a substantial decline in stock prices including ours,

a reduction in demand for securities of public companies (which may be more prevalent for smaller companies such as us) and more difficulty

for us to raise capital we need and accessing capital on favorable terms or at all as a result.

These and related consequences could

also impact our vendors which could have negative impacts on us and our research programs.

We cannot predict how this will affect our

business, but the impact may be material and adverse.

issuances of our common stock or rights to purchase our common stock could cause additional dilution of the percentage ownership of our

stockholders and could cause our stock price to fall.

the year ended December 31, 2023 we conducted a private sale of a total of 2,030,458 shares of our common stock for gross proceeds of

$4,000,000, and did not conduct any public offerings.

We expect that our current cash position will be sufficient to fund our operations

over the next 12 months subject to the many uncertainties and risks that may rise such as those described herein, significant additional

capital may be needed in the future to continue our planned operations.

To the extent we have raised and continue to raise additional

capital by issuing equity securities, our stockholders may experience substantial dilution.

We may sell common stock, convertible securities

or other equity securities in one or more transactions at prices and in a manner, we determine from time to time.

If we sell common stock,

convertible securities or other equity securities in more than one transaction, investors may be materially diluted by subsequent sales.

These sales may also result in material dilution to our existing stockholders, and new investors could gain rights superior to our existing

stockholders.

expect that our current cash position will not be sufficient to fund our operations over the next 12 months subject to the many uncertainties

and risks that may rise such as those described herein, significant additional capital may be needed in the future to continue our planned

To the extent we continue to raise additional capital by issuing equity securities, our stockholders may experience substantial

We may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a

manner, we determine from time to time.

If we sell common stock, convertible securities or other equity securities in more than one transaction,

investors may be materially diluted by subsequent sales.

These sales may also result in material dilution to our existing stockholders,

and new investors could gain rights superior to our existing stockholders.

sales of large amounts of our common stock in the public market or a perception that such sales might occur could cause a decrease in

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Additionally,

as of December 31, 2023, we had approximately 558,000 options and 11,000 warrants outstanding that, if fully exercised, would result

in the issuance of 569,000 shares of common stock and approximately 275,000 shares of common stock remain available for future grants

under the Cocrystal Pharma, Inc.

as of December 31, 2024, we had approximately 550,000 options and 256,000 RSUs outstanding that, if fully exercised, would result in

the issuance of 806,000 shares of common stock and approximately 27,000 shares of common stock remain available for future grants under

the Cocrystal Pharma, Inc.

2015 Equity Incentive Plan.

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cause the market price of our common stock to decline significantly, even if our business is performing well.

pressures and requirements which may arise related to, environmental, social and governance (“ESG”) matters, and any undertakings

or disclosure by us which may result, would expose us to numerous risks, including risks to our reputation and stock price.

recent years, institutional and individual investors focused on ESG screening criteria to determine whether certain equity securities

such as our common stock should be included in their investment portfolios, although certain states are resisting using ESG criteria.

A growing number of investors, regulators, self-regulatory organizations and other stakeholders have expressed an interest in setting

often-ambitious ESG goals and to require the provision of new and more robust disclosure and implementation of such goals, including

progress toward the goals and other matters of interest to ESG stakeholders.

However, in January 2024, two large financial firms, JP

Morgan Asset Management and State Street Global Advisors, retreated from the Climate Action 100+ investor compact, which launched in

2017 as a collaborative investor group working to influence large corporate emitters of greenhouse gasses to commit to net zero targets

and introduce climate-related governance and disclosure processes.

Further, it is reported investors pulled a total of $13 billion out

of ESG-focused investment funds during the 2023 fiscal year.

In December 2023, House Republicans subpoenaed BlackRock and State Street

Global Advisors, requesting documents and communications relating to their respective advancement of ESG policies in connection with

an ongoing investigation into current antitrust laws.

the large financial firms’ exit from ESG initiatives may spark a larger trend of stepping away from ESG-related investment decisions,

it is uncertain how the market at large will respond.

If we decide to report any of the Company’s ESG-related efforts, goals, or

objectives, we could be presented with numerous material operational, reputational, financial, legal and other risks, any or all of which

could have a material negative impact, including on our reputation and stock price.

For example, any ESG objectives or policies we implement,

be it in response to new laws, regulations or rules (including any that may in the future be implemented by the SEC or Nasdaq), actions

taken by self-regulatory organizations, investors or other stakeholders, or otherwise, could cause us to expend significant capital and

human resources and/or divert management’s attention from central operational matters.

Further, any failure by us to accurately

disclose and effectively carry out ESG undertakings, which may include forward-looking proposals based on assumptions and subject to

factors beyond our control, could expose us to reputational harm, government enforcement or private litigation, and stock price and volume

ability to use our net operating loss carry forwards and certain other tax attributes may be limited.

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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 1A. Risk Factors