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Item 1. Business

2022-03-18 compared with 2021-03-17 · 223 added, 233 removed, 274 unchanged (62% of the section changed)

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Enhancing Oxygen, Fueling Life

We are an innovative biopharmaceutical company developing novel therapies that enhance the body’s ability to deliver oxygen to the areas where it is needed most.

Our lead product candidate, TSC, is being developed to enhance the diffusion of oxygen to tissues with low oxygen levels, also known as hypoxia, a serious complication of many of medicine’s most intractable and difficult-to-treat conditions.

In addition to TSC, our product candidate DFN-529, a novel, allosteric PI3K/Akt/mTOR pathway inhibitor, is in early-stage development.

We previously completed two Phase 1 clinical trials evaluating DFN-529 in age-related macular degeneration.

DFN-529 was also previously in preclinical development in oncology, specifically GBM.

Highlights from 2020 and Early 2021

Board & Management Additions and Changes - During the second half of 2020, our leadership team changed significantly.

We appointed our new chief executive officer, Robert J.

Cobuzzi, Jr., Ph.D., and our new general counsel, William Elder, in September 2020, followed by our new chief medical officer, Christopher Galloway, M.D., in October 2020.

We also welcomed a new director, Jane Hollingsworth, to our Board in August 2020.

Cobuzzi joined the Board in January 2020.

Initiation and Completion of TSC COVID Trial - In September 2020, we announced the dosing of the first two patients in our TSC COVID Trial evaluating TSC in hospitalized COVID-19 patients at the NIID in Bucharest, Romania.

On February 9, 2021, we completed dosing of the twenty-fourth and final patient in the TSC COVID Trial.

No dose-limiting toxicities or serious adverse events were observed among any patients in the study, including those who received the highest dose of 1.5 mg/kg every 6 hours.

Evaluation of secondary endpoint data is ongoing and we anticipate this data will be available early in the second quarter of 2021.

February 2021 Equity Offering & Selected Unaudited Financial Information - During the first quarter of 2021, we completed the February 2021 Offering resulting in aggregate gross proceeds to the Company of approximately $34.5 million, before deducting underwriting discounts and commissions and offering expenses payable by us.

In addition, during the period from January 1, 2021 through March 15, 2021, certain holders of warrants to purchase common stock cash exercised those warrants resulting in aggregate gross proceeds to the Company of approximately $2.2 million.

As a result, combined with our cash and cash equivalents as of December 31, 2020 of $18.5 million, we expect that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditures (including our planned clinical trials) through 2023.

Our Strategic Priorities for 2021

Since the founding of Diffusion LLC, we have been principally focused on the development of TSC for the treatment of hypoxia and as a platform to enhance standard-of-care treatment for conditions complicated by hypoxia.

Prior to 2020, these efforts generated a substantial amount of data related to TSC, including data related to chemistry, manufacturing, and controls, preclinical safety and/or efficacy data in a wide array of experimental models, single dose safety, tolerability, and pharmacokinetic data, and clinical data and other information related to TSC's potential as a supplement to standard-of-care treatment in GBM, peripheral artery disease, and stroke.

In March 2020, the COVID-19 pandemic accelerated in the U.S.

resulting in numerous delays and other challenges for biopharmaceutical companies conducting clinical studies in indications not related to COVID-19, including our TSC Stroke Trial.

In early April 2020, we announced plans to initiate a clinical research program to evaluate TSC in patients with COVID-19 due to the anticipated persistence of the COVID-19 pandemic coupled with our belief in the potential of TSC to improve low tissue oxygen levels, a common symptom and complicating factor in the treatment of COVID-19.

We believe this decision was both opportunistic and a natural extension of the previous development work conducted with TSC, and in September 2020 we commenced the TSC COVID Trial.

In November 2020, we announced that, following changes to our management team in the prior two months, we had initiated a thorough review of our then-existing development program for TSC and commenced plans to modify the program with the intent of accomplishing two principal strategic objectives:

• To optimize the clinical dose and dosing frequency for TSC.

• To evaluate TSC in clinical models designed to establish proof of concept for improvement in oxygenation.

The completion of the TSC COVID Trial in February 2021 provided the first multiple daily dose safety and tolerability data for TSC.

We expect corresponding pharmacokinetic and other secondary endpoint data from this trial to be available early in the second quarter of 2021.

Obtaining these data represents the first, major step in our ongoing efforts to implement our modified development strategy, intended to strategically gap-fill, supplement, and expand on our past development work in TSC, with the ultimate goal of maximizing the probability of regulatory approval and, if TSC is approved, commercial success.

During the next twelve months, we intend to continue to execute our strategy and accomplish the following principal, strategic objectives, all of which we expect to be able to fund with cash-on-hand:

• Complete the TSC Oxygenation Trials – As described in more detail under the heading, — Our Lead Product Candidate:

Trans Sodium Crocetinate — Our Anticipated Next Steps in the TSC Development Program:

The TSC Oxygenation Trials , the next phase in our development plan is to evaluate TSC's effects in clinical models of oxygenation in an effort to establish a dose-response relationship.

We expect to commence the TSC TCOM Trial before the end of March 2021 with data expected in the second quarter of 2021, and we intend to commence both the TSC DLCO Trial and TSC Induced Hypoxia Trial in the third quarter of 2021 with data expected from each study expected within two months of their respective completion.

• Initiate Phase 2 Trial of TSC in Hypoxia-related Indication – We believe positive data from one or more of the three TSC Oxygenation Trials would provide definitive evidence of TSC's enhancement of oxygenation, whether through increased uptake in the lungs, enhanced delivery, increased utilization at the tissue level, or some combination thereof.

Positive data from any of these studies, if obtained, will guide the subsequent steps of our development strategy focused on demonstrating the clinical and therapeutic benefits of TSC in relevant patient populations on the hypoxia continuum.

In particular, if successful in one or more of the three TSC Oxygenation Trials, we intend to initiate a Phase 2, controlled, clinical outcome study evaluating TSC in one or more appropriate hypoxia-related indications, which we refer to as our Planned Phase 2 Hypoxia-related Indication Trial, in the first quarter of 2022.

• Continue to Improve Our Efficiency and Effectiveness – This will include evaluating, refining, and improving our policies, procedures, and processes related to chemistry, manufacturing, and controls, quality assurance, information technology, intellectual property, human capital, and other areas, including as described in more detail under the headings, — Products, Product Development, and Our Competition and — Our People and Human Capital Resources .

Representation of data supporting the potential use of TSC for the treatment of certain medical conditions complicated by hypoxia.

Incidence numbers represent annual incidence in U.S.

as reported by U.S.

Centers for Disease Control and Prevention and other publicly available sources.

We are a biopharmaceutical company developing novel therapies that enhance the body’s ability to deliver oxygen to the areas where it is needed most.

Our goal is to become a leading biopharmaceutical company focused on the development and commercialization of novel therapies that enhance the body’s ability to deliver oxygen to areas where it is needed most and improve treatment outcomes for patients suffering from conditions complicated by hypoxia.

To achieve this strategy, we are focused on the following key objectives:

Demonstrate the effects of TSC on the oxygenation pathway .

The results of our Oxygenation Trials – a series of three short-term, pharmacodynamic studies to evaluate the effects of TSC on different components of the oxygenation pathway that we expect to complete by the middle of 2022 – will be used to further inform the identification of potential indications appropriate for TSC and will guide the design of clinical trials aimed at supporting the commercialization of TSC as a treatment for conditions complicated by hypoxia.

For additional information, see " Business —

 Our Lead Product Candidate:

Trans Sodium Crocetinate -- The TSC Oxygenation Trials:

Demonstrating Proof of Concept, Dose Response Relationships, and Potential Indications for Future Development.

”  

Develop TSC as an adjunct treatment for hypoxic solid tumors .

The prevalence of hypoxic regions across numerous primary solid tumor types is believed to directly contribute to treatment resistance, whether it be radiotherapy, chemotherapy, or immunotherapy, increasing the metastatic potential of these tumors and the probability of unsuccessful treatment.

We believe TSC’s novel mechanism of action supports the objective of developing TSC as a treatment for hypoxic solid tumors because TSC’s ability to enhance the oxygenation of hypoxic tissues may increase the effectiveness of standard-of-care radiation therapy and chemotherapy.

Accordingly, in November 2021, we announced our Hypoxic Solid Tumor Program and our intent to commence our Planned Phase 2 Hypoxic Solid Tumor Trial in the second half of 2022.

The data obtained during 2021 and early 2022 from our Oxygenation Trials and COVID Trial regarding TSC’s effects on oxygenation, dose response characteristics, pharmacokinetics, and pharmacodynamics are being used to guide the design of this trial.

Through the combination of this new data, our past experiences, and further analyses and discussions of all available data with our Scientific Advisory Board and other external advisors, we believe we now have the necessary information to design the Hypoxic Solid Tumor Program to be more efficient and increase our likelihood of success compared to the Company’s past efforts to develop TSC as a cancer treatment, which were terminated in 2019 due to financial constraints.

For additional information, see " Business —

 Our Lead Product Candidate:

Trans Sodium Crocetinate –

 Our Hypoxic Solid Tumor Program .”

Accelerate development of TSC as a treatment for non-cancer indications .

Beyond cancer, hypoxia is a complicating factor in many other intractable and difficult-to-treat conditions, including cardiovascular diseases, cerebrovascular diseases, respiratory diseases, skin and soft tissue diseases, and neurodegenerative diseases.

We have previously undertaken clinical studies of TSC in a variety of non-cancer indications, including interstitial lung disease, COVID-19, stroke, and peripheral artery disease, and have evaluated TSC in preclinical models in an even wider range of indications.

Data that we expect to obtain from our ongoing Altitude and ILD-DLCO Trials may identify additional, non-oncology development opportunities.

Although our primary near-term focus will be our Hypoxic Solid Tumor Program, we will continue to explore pathways to progress TSC’s development in non-oncology indications through our preclinical studies.

For additional information, see " Business —

 Our Lead Product Candidate:

Trans Sodium Crocetinate –

 TSC ’

s Potential to Treat Other Conditions Complicated by Hypoxia .”

Maximize the commercial value of our pipeline .

We have invested, and plan to continue to invest, significant time, effort, and resources into the development and maintenance of our intellectual property portfolio as we seek to retain worldwide development and commercial rights to our product candidates.

In parallel with advancing our development programs, we will evaluate the commercial landscape for TSC with the intent of improving patient access to maximize our chances of commercial success, should the product be approved.

Opportunistically acquire or in-license additional product candidates that complement TSC and our overall strategy .

We believe we can leverage what we have learned from the development of TSC and the significant skills and experience of our team to opportunistically identify and acquire or in-license novel product candidates that complement TSC and further our efforts to improve patient outcomes by enhancing standard-of-care therapy for conditions complicated by hypoxia.

We also believe diversifying our asset portfolio through an acquisition or in-licensing would reduce our Company’s overall risk profile as an investment.

Our Lead Product Candidate:

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Our lead product candidate, TSC, is being developed to enhance the diffusion of oxygen to tissues with low oxygen levels, also known as hypoxia.

Hypoxia is associated with the pathophysiology of many acute and chronic conditions including cancers, heart attack, stroke, ARDS, skin and soft tissue diseases, neurodegenerative diseases and other intractable and difficult-to-treat conditions, further complicating treatment of the underlying condition by medical providers.

A Key Driver of Unmet Medical Needs

Oxygen is fuel for life.

The constant uptake and delivery of oxygen within our body is necessary to sustain life whether at rest or under stress, in sickness and in health.

Normally, the body’s supply of oxygen sustains life by meeting the demand for oxygen at the cellular level.

This availability of sufficient oxygen enables efficient and sustainable generation of energy to support the metabolic demands of the cells.

Low oxygen content in the blood stream, also known as hypoxemia, often leads to hypoxia, a condition in which a region of the body's tissues is deprived of sufficient oxygen to produce the energy it needs to survive.

This state can only be sustained for very brief periods of time, sometimes just minutes, before the body tissue experiences ischemia, damage, and, eventually, cellular death.

Under normal conditions, when oxygen is inhaled through the lungs it diffuses from this area of high oxygen concentration in the air sacs of the lungs, or alveoli, into pulmonary circulation where the oxygen concentration is lower.

This diffusion process is passive.

Oxygen moves across cell layers and vessel walls into the blood stream in a manner that does not require energy and avoids over-oxygenating the body.

Once oxygen reaches the blood stream, it is rapidly taken up onto our red blood cells while a very small amount dissolves in the plasma.

The hemoglobin within the red blood cells act as mass transport carriers for oxygen.

Red blood cells are pumped throughout our circulatory system by the heart, reaching every cell in our body.

Upon reaching its cellular destination, the oxygen is released from the hemoglobin and again passively diffuses from the area of high concentration in the bloodstream to the lower concentration areas in the tissues.

Our body's ability to deliver sufficient oxygen in this manner is determined by several factors, including the amount of oxygen in the air we breathe, our cardiac output (i.e., how well the heart circulates the oxygen), our hemoglobin content (i.e., how many transporters there are to carry the oxygen), and the level of oxygen saturation of hemoglobin, which can carry up to four oxygen molecules.

A variety of medical interventions are available to augment or supplement these factors in the oxygen delivery process in order to increase mass oxygen delivery.

For example, there are medications and mechanical pumps designed to improve cardiac output, blood transfusions to increase hemoglobin content in the blood, and other passive and mechanical methods to increase the systemic availability of oxygen.

However, while these existing strategies can be very effective in certain circumstances, they do not specifically focus on enhancing the diffusion process by which oxygen moves from a high concentration area in the bloodstream to a lower concentration are in hypoxic tissue.

Accordingly, we believe there remains a significant unmet need in the treatment of hypoxia.

An additional, important factor in oxygen uptake and delivery is how efficiently the oxygen moves or diffuses across the many impediments that can slow the movement of oxygen through the body, such as the red blood cell walls, water molecules in plasma, cellular layers of the blood vessels, and other tissues.

Currently, there is no well-known or widely-used medical method to augment or supplement this factor in the oxygen delivery process.

A Novel Mechanism of Action and Demonstrated Safety Profile

We believe that TSC's novel mechanism of action would be the first therapy specifically designed to enhance the oxygen diffusion process, thereby supporting normal, physiologic levels of oxygen diffusion at the uptake and delivery points.

TSC's Novel Mechanism of Action

Blood plasma is approximately 90.0% water and these water molecules are constantly moving, bound together in a loosely organized matrix by hydrogen bonds.

Due to oxygen’s passive diffusion process through the plasma from areas of high oxygen concentration to areas of low oxygen concentration, a treatment that can reduce the factors that resist this movement should make oxygen more available to hypoxic tissues.

Representation of oxygen molecules moving from red blood cells, across the concentration gradient, to oxygen-consuming tissues.

TSC was designed to enhance the level of organization among water molecules by increasing the amount of hydrogen bonding.

Hypoxia is a condition in which there is an insufficient supply of oxygen to meet the energy demands of the cells in a tissue (e.g., skeletal muscle).

Hypoxia is associated with the pathophysiology of many of medicine’s most intractable and difficult-to-treat conditions, including cancers, cardiovascular diseases, cerebrovascular diseases, respiratory diseases, skin and soft tissue diseases, and neurodegenerative diseases. 

All currently approved treatments for hypoxia work by augmenting or supplementing the systemic availability of oxygen.

For example, respirators use pressure to push oxygen across the lungs into the blood to increase oxygen concentration, certain medications and devices such as external mechanical pumps are designed to improve cardiac output, and blood transfusions are used to increase the concentration of red blood cells and oxygen-carrying hemoglobin molecules.

While these treatments are effective in certain circumstances, there are significant associated risks such as lung damage resulting from the use of respirators, toxic side effects and drug-to-drug interactions of medications that increase cardiac output, infections related to blood transfusions, and the risk of creating excessive oxygen-related tissue toxicity, or hyperoxia, by providing a patient with excessive amounts of oxygen, among others.

In addition, in certain other indications, these currently approved therapies are ineffective in treating the associated hypoxia.

For example, in the treatment of cancer, re-oxygenating hypoxic, cancerous tissue cells cannot typically be accomplished simply by increasing the systemic availability of oxygen.

We believe TSC is the first therapy specifically designed to enhance the efficiency of the oxygen diffusion process.

Furthermore, in animal models, TSC’s diffusion-enhancing mechanism of action has been observed to affect hypoxic tissue preferentially while avoiding excessive oxygen-related tissue toxicity.

By supporting normal, physiologic levels of oxygen diffusion at the uptake and delivery points of the circulatory system, we believe TSC presents a significant opportunity to improve the current standard-of-care treatment for conditions complicated by hypoxia.

TSC's Mechanism of Action

Blood plasma is approximately 90% water.

The water molecules in the plasma are constantly moving, bound together in a loosely organized matrix by hydrogen bonds.

TSC was designed to enhance the level of organization among the water molecules by increasing the amount of hydrogen bonding.

This creates a less dense matrix of water molecules, reducing the resistance to oxygen diffusion across the concentration gradient.

In animal models, this diffusion-enhancing mechanism of action has been observed to affect hypoxic tissue preferentially while avoiding excessive oxygen-related tissue toxicity, also known as hyperoxia.

Representation of the indirect course of oxygen molecule movement through “ unorganized ” or randomly moving water molecules (left panel) versus the more direct path through “ organized ” molecules allowed by TSC (right panel).

TSC's Clinical Safety Profile

TSC has been observed to be safe and well-tolerated at most doses tested in over 180 subjects included to-date in clinical studies.

A maximum tolerated dose was identified in the initial clinical study of TSC conducted in normal healthy volunteers, and subsequent clinical studies have been conducted with lower doses.

These studies have included patients with variety of medical conditions often complicated by hypoxia, including our clinical studies conducted in patients afflicted with GBM, peripheral artery disease with intermittent claudication, stroke, and, most recently, COVID-19.

In each of these conditions and many others, hypoxia is a significant contributor to morbidity and mortality, and a considerable treatment obstacle for medical providers.

In the TSC COVID Trial, which we completed in February 2021, we evaluated the safety and tolerability of TSC administered on a more frequent dosing regimen than had been previously tested in a clinical trial setting.

No dose-limiting toxicities or serious adverse events were observed among any patients in the TSC COVID Trial, including those who received the highest tested dose of TSC, 1.5 mg/kg administered intravenously every six hours for a period of at least five and up to 15 days.

TSC's Potential to Treat Hypoxia-Related Conditions

Hypoxia is a critical, complicating factor in many intractable and difficult-to-treat conditions affecting people of all ages, including cancers, cardiovascular disease, stroke, respiratory disease including ARDS, skin and soft tissue diseases, and neurodegenerative diseases.

We have previously evaluated TSC in a variety of preclinical and clinical studies.

We believe that the data we have obtained through certain preclinical studies provide support for TSC’s ability to improve oxygenation, while data obtained through the clinical trials we have undertaken to date suggest TSC is safe and well-tolerated at the doses tested, including administration of TSC to more than 180 human subjects and patients with GBM, acute stroke, COVID-19, acute lung injury, and peripheral artery disease with intermittent claudication.

Clinical and Preclinical Development of TSC to Date

Selected Preclinical Experiences

TSC has been evaluated in a variety of preclinical models intended to mimic relevant human conditions known to be complicated by hypoxia.

In these studies, a number of positive effects have been observed in connection with TSC administration, including:

In these studies, a variety of positive effects have been observed in connection with TSC administration, including:

Reducing hypoxia in rat brain tumors without hyper-oxygenation of normal tissue;

Positron emission tomography scans showing reduction in hypoxia in a rat C6 glioma brain tumor model 45 min after TSC administration.

• Improving survival in a rat brain tumor model when added to radiotherapy, whether or not combined with chemotherapy.

Improving survival in a rat brain tumor model when added to radiotherapy, whether alone or in combination with chemotherapy;

Improving tissue oxygenation without hyper-oxygenation of normal tissue and reducing infarct size in a rat ischemic stroke model;

• Demonstrating a functional benefit in a rabbit ischemic stroke model, with or without tPA at one-hour post-clot infection and with tPA at three hours post-clot infection.

• Improving arterial PaO2 levels in a rat model of ARDS.

Glioblastoma Multiforme

We believe TSC may be able to benefit cancer patients by re-oxygenating hypoxic cancer tissue, making the cells more susceptible to the therapeutic effects of standard-of-care radiation therapy and chemotherapy.

In particular, GBM is an especially deadly form of brain cancer that each year affects approximately 12,000 patients in the U.S.

and approximately 35,000 patients worldwide, and for which TSC has received an Orphan Drug Designation from the FDA.

We previously completed a Phase 2 clinical trial that evaluated 59 patients with newly diagnosed GBM.

This open-label, historically controlled trial demonstrated a favorable safety and tolerability profile for TSC when combined with standard of care treatment for GBM.

Although not prospectively defined, a post hoc subgroup analysis of inoperable patients suggested a higher proportion of TSC-treated patients survived at two years compared to those in the historical control group.

Based upon data from the inoperable patient subgroup in the Phase 2 trial and guidance from the FDA received at our End-of-Phase-2 meeting, we initiated the TSC GBM Trial in the newly diagnosed inoperable GBM patient population in December 2017.

The TSC GBM Trial was designed to enroll 236 patients in total, with 118 in the treatment arm and 118 in the control arm.

The trial began with an FDA-mandated, open-label, dose-escalation safety run-in for which enrollment was completed and has closed.

A total of 19 patients were enrolled in an attempt to ensure that at least 8 patients completed the FDA-specified 42-month exposure period.

At a meeting in the third quarter of 2019, the data safety monitoring board for the trial concluded that no adverse safety signal was present and unanimously recommended the trial continue as planned, with TSC to be used in combination with temozolomide, an anti-cancer chemotherapy drug, during the adjuvant treatment chemotherapy period.

However, we determined we did not have adequate resources at the time to fully support the randomized portion of the TSC GBM Trial and commencement of enrollment in the randomization portion of the TSC GBM Trial was suspended.

Further consideration of if, when, and how to continue the development of TSC as a treatment for GBM — including any restart of the TSC GBM Trial — will take place following completion of the TSC Oxygenation Trials.

We believe TSC has potential applications in both ischemic and hemorrhagic stroke through mitigation of stroke-induced hypoxia and related damage to brain tissue.

A stroke occurs when blood flow to the brain is blocked, referred to as an ischemic stroke, or a blood vessel in the brain ruptures, referred to as a hemorrhagic stroke, causing damage to surrounding brain tissue.

According to the U.S.

Centers for Disease Control and Prevention, stroke is the fifth leading cause of death and a leading cause of adult disability in the U.S.

The hypoxic conditions in the brain of stroke patients may be a significant factor contributing to morbidity and mortality and, based upon certain preclinical safety and efficacy data and additional clinical safety data, we believe TSC could enhance the diffusion of oxygen into brain tissue to reduce stroke-induced hypoxia and neuronal death.

In October 2019, we began enrolling patients in our TSC Stroke Trial, a randomized Phase 2 trial designed to evaluate TSC in the treatment of acute ischemic or hemorrhagic stroke.

The TSC Stroke Trial was planned to enroll 160 total patients, evenly split between the TSC treatment arm and the control arm, with all patients to receive TSC or placebo treatment, as applicable, while in the ambulance to ensure treatment as soon as possible after the onset of clinical symptoms.

However, due to a variety of factors, including challenges related to the trial's on-ambulance treatment design and overall healthcare system capacity related to the onset of the COVID-19 pandemic during the first half of 2020, we voluntarily terminated the TSC Stroke Study in the second half of 2020 in order to prioritize resources to shorter duration studies, including the TSC COVID Trial and the TSC Oxygenation Trials.

Further consideration of if, when, and how to continue the development of TSC as a treatment for stroke will take place following completion of the TSC Oxygenation Trials.

We believe TSC’s oxygen-enhancing mechanism could potentially provide benefit to patients with low oxygen levels at risk of developing ARDS and multiple organ failure, such as patients with COVID-19.

On September 10, 2020, we announced the dosing of the first two patients in our TSC COVID Trial evaluating TSC in hospitalized COVID-19 patients at the NIID in Bucharest, Romania.

The primary endpoint of the TSC COVID Trial was to evaluate the safety and tolerability of TSC administered every six hours for at least five and up to 15 days, a more frequent dosing regimen than had been used in our previous clinical studies.

Secondary endpoints included pharmacokinetic measurement of TSC levels after dosing, relative improvements in blood oxygen levels, and certain other clinical parameters related to COVID-19.

On February 9, 2021, we completed dosing of the twenty-fourth and final patient in the TSC COVID Trial.

No dose-limiting toxicities or serious adverse events were observed among any patients in the study, including those who received the highest dose of 1.5 mg/kg every 6 hours.

Evaluation of secondary endpoint data is ongoing and we anticipate this data will be available early in the second quarter of 2021.

Further consideration of if, when, and how to continue the development of TSC as a treatment for COVID-19 — including any commencement of enrollment in the previously announced Phase 2b portion of the TSC COVID Trial — will take place following completion of the TSC Oxygenation Trials.

Our Anticipated Next Steps in the TSC Development Program:

Demonstrating a functional benefit in a rabbit ischemic stroke model, with or without tissue plasminogen activator at one-hour post-clot infection and with tissue plasminogen activator at three hours post-clot infection;

Improving levels of arterial partial pressure of blood oxygen in a rat model of acute respiratory distress syndrome.

Positron emission tomography scans showing reduction in hypoxia in a rat C6 glioma brain tumor model 45 min after TSC administration.

The TSC Oxygenation Trials:

Following completion of the TSC COVID Trial in February 2021, the next step we have planned in the development of TSC is the design and execution of a trilogy of clinical studies using short-term, experimental models to evaluate the clinical effects of TSC on oxygenation.

As of March 15, 2021, TSC has been administered to more than 180 subjects in our clinical trials.

Data from these clinical trials have contributed significantly to our understanding of the safety, tolerability, and pharmacokinetics of TSC.

In addition, post hoc analyses of two of our prior studies involving patients with peripheral artery disease with claudication and unresected GBM tumors have provided preliminary signals suggesting TSC's effect on oxygenation.

However, neither of these studies was statistically powered to formally evaluate efficacy, and we therefore believe that further, robust clinical development of TSC requires a prospective exploration of the relationship between the level of exposure (dose) and response (change in oxygenation).

To this end, we plan to execute three short-term clinical trials during 2021, each of which we expect to conduct in the U.S.

and fund with cash-on-hand.

We believe positive data from any one or more of the three TSC Oxygenation Trials would provide evidence of a definitive effect of TSC on oxygenation, whether through increased uptake in the lungs, enhanced delivery, increased utilization at the tissue level, or some combination thereof.

Positive data from any of these studies, if obtained, will also guide the subsequent steps of our development strategy focused on demonstrating the clinical and therapeutic benefits of TSC in relevant patient populations across the hypoxia continuum.

The TSC TCOM Trial:

Demonstrating Proof of Concept, Dose Response Relationships, and Potential Indications for Future Development

While our clinical trials evaluating TSC conducted prior to 2021 provided certain preliminary signals regarding TSC’s mechanism of action and dose response characteristics, none of those studies were designed to demonstrate proof of concept by directly measuring TSC’s effects on tissue oxygenation and a variety of questions remained regarding TSC’s dose response characteristics, pharmacokinetics, and pharmacodynamics.

Given these identified gaps in our knowledge, in November 2020, we communicated our plan to design and execute our Oxygenation Trials, a series of short-term clinical studies using experimental models to evaluate the clinical effects of TSC on oxygenation, each designed to look at the effects of TSC on a different component of the oxygenation pathway.

By quantifying the magnitude of effects of TSC on tissue oxygen levels and other direct clinical parameters assessing oxygen levels, and thereby demonstrating proof of concept of TSC’s effects on tissue oxygenation, as well as supplementing our knowledge of TSC’s dose response characteristics, pharmacokinetics and pharmacodynamics, we believe the data obtained from the Oxygenation Trials will allow us to significantly increase our clinical development strategy’s likelihood of success.

TSC's Effects on Peripheral Tissue Oxygenation

The first of the three Oxygenation Trials is the TSC TCOM Trial, which we expect to initiate before the end of March 2021.

The TSC TCOM Trial is designed as a double-blind, randomized, placebo-controlled study in healthy volunteers breathing 100.0% oxygen.

The study is designed to evaluate the effects of TSC on peripheral tissue oxygenation using a TCOM device.

The TCOM device directly measures the release of oxygen from the blood vessels through the skin and is commonly used to predict the likelihood of wound healing, the potential for success with hyperbaric therapy, and to map the appropriate location for limb amputation.

The TSC TCOM Trial will test single, ascending doses of TSC in an attempt to establish the exposure-response relationship between TSC and enhanced oxygen delivery and will be statistically powered to evaluate the difference in tissue oxygenation levels versus placebo.

We anticipate this study will be completed in the second quarter of 2021, with topline results available within two months following study completion.

The TSC Induced Hypoxia Trial:

In March 2021, we initiated and completed enrollment in the first of the Oxygenation Trials, our TCOM Trial.

In June 2021, we reported a positive trend in peripheral tissue oxygenation as compared to placebo among participants receiving TSC that persisted through the duration of the one-hour, post-dosing measurement period.

Although the magnitude of this effect was not statistically significant due to limitations in the study design, the trends in the primary endpoint data indicated an improvement in peripheral oxygenation with TSC with no evidence of hyperoxygenation.

The figure below was created during a supplemental analysis of the TCOM Trial results by subtracting the median response observed in the TCOM Trial’s placebo group from the median response observed in each TSC dosage group at each of the measurement times during the one-hour period following dosing.

These data highlight the persistent increase in peripheral tissue oxygenation relative to the placebo group through the duration of the one-hour measurement period following TSC administration, particularly at the two highest doses tested.

Effects of TSC on transcutaneous oxygen pressure.

We believe the TCOM Trial provides clinical evidence to support the hypothesis that TSC enhances the passive diffusion of oxygen from areas of high concentration to areas of low concentration without causing hyperoxygenation and that the data obtained from the study represent a positive and meaningful step towards the accomplishing of the Oxygenation Trials’

strategic objectives originally set forth in November 2020.

These data have and will continue to guide the next steps of our development strategy, including the design of our Hypoxic Solid Tumor Program.

Altitude Trial:

TSC's Effects Under Induced Hypoxic Conditions

The second TSC Oxygenation Trial is our planned TSC Induced Hypoxia Trial, which we expect to initiate in the third quarter of 2021.

The TSC Induced Hypoxia Trial is expected to be a double-blind, randomized, placebo-controlled study which will evaluate the effects of TSC on maximal oxygen consumption, or VO2, and partial pressure of blood oxygen, or PaO2, in normal healthy volunteers exposed to simulated altitude conditions that induce hypoxia.

Subjects in the TSC Induced Hypoxia Trial will be subjected to incremental levels of physical exertion while exposed to hypoxic and hypobaric conditions.

The primary endpoints in the TSC Induced Hypoxia Trial will be change from baseline in VO2 and PaO2 after receiving a single intravenous dose of TSC.

The study will be statistically powered to evaluate the difference in effect of escalating doses of TSC versus placebo in an attempt to establish a dose-response relationship on oxygen consumption and availability.

We anticipate this study will be completed in the second half of 2021, with topline results available within two months of study completion.

The TSC DLCO Trial:

On November 22, 2021, we announced dosing of the first participants in our second Oxygenation Trial, the Altitude Trial. This study is a double-blind, randomized, placebo-controlled crossover study designed to evaluate the effects of TSC on maximal oxygen consumption and partial pressure of blood oxygen in normal healthy volunteers subjected to incremental levels of physical exertion while exposed to “simulated altitude.”

The study will enroll 30 healthy volunteers and give each volunteer a single dose of TSC at one of three different doses.

Due to enrollment delays experienced during early 2022 related to the omicron variant wave of the COVID-19 pandemic, we now anticipate completing dosing in the Altitude Trial in the second quarter of 2022, with topline results reported within two months of study completion.

ILD-DLCO Trial:

TSC's Effects on Oxygen Transfer Efficiency

The third TSC Oxygenation Trial is our planned TSC DLCO Trial, which we expect to initiate in the third quarter of 2021.

The TSC DLCO Trial is expected to be a double-blind, randomized, placebo-controlled study which will evaluate the effects of TSC on the diffusion of carbon monoxide through the lungs, also known as DLCO, in patients with previously diagnosed interstitial lung disease who have a baseline DLCO test result that is abnormal.

DLCO testing is commonly performed as part of standard pulmonary function testing and aids in the diagnosis or dyspnea, also known as shortness of breath, as well as to track improvement or progression over time on prescribed treatments.

In the TSC DLCO Trial, DLCO will act as a surrogate measure of oxygen transfer efficiency, or uptake, from the alveoli of the lungs, through the plasma, and onto hemoglobin within red blood cells.

The TSC DLCO Trial TSC will test single, ascending doses of TSC in an attempt to establish the exposure-response relationship between TSC and oxygen transfer efficiency.

The study will be statistically powered to evaluate the difference in effect of TSC on improvement in DLCO versus placebo.

We anticipate this study will be completed in the second half of 2021, with topline results available within two months of study completion.

Anticipated Next Steps Following Completion of the TSC Oxygenation Trials

Assuming success in one or more of the three TSC Oxygenation Trials, we expect to identify and announce the specific, hypoxia-related indications we will target in advancing TSC's development in the fourth quarter of 2021 and intend to initiate our Planned Phase 2 Hypoxia-related Indication Trial in the first quarter of 2022.

On December 16, 2021, we announced dosing of the first patients in our third and final Oxygenation Trial, the ILD-DLCO Trial.

This study is a double-blind, randomized, placebo-controlled, crossover study designed to evaluate the effects of TSC on the diffusion of carbon monoxide through the lungs, or DLCO, in patients with previously diagnosed ILD who have a baseline DLCO test result that is abnormal.

DLCO is used in the study as a surrogate measure of oxygen transfer efficiency, or uptake, from the alveoli of the lungs through the plasma, and onto hemoglobin within red blood cells.

The study will enroll 27 patients with confirmed ILD who will be randomized in a 2:1 ratio to a single dose of TSC or placebo via IV bolus.

The study is statistically powered to evaluate the difference in effect of TSC versus placebo on improvement in DLCO measurements.

In addition, patients will undergo a standard six-minute walk test intended to assess functional improvement in exercise capacity.

Due to enrollment delays experienced during early 2022 related to the omicron variant wave of the COVID-19 pandemic, the effect of the omicron variant on patients with pulmonary diseases such as ILD, and staffing issues at the facilities where the ILD-DLCO Trial is being conducted, we now anticipate completing dosing in the ILD-DLCO Trial by the middle of 2022, with topline results reported within two months of study completion.

TSC's Demonstrated Clinical Safety Profile

TSC has been observed to be safe and well-tolerated at most doses tested in over 220 subjects included to-date in clinical studies at a variety of doses administered via intravenous infusion.

Our clinical studies have included patients with a variety of medical conditions often complicated by hypoxia, including patients afflicted with GBM, peripheral artery disease with intermittent claudication, stroke, COVID-19, and interstitial lung disease.

In each of these conditions and many others, hypoxia is a significant contributor to morbidity and mortality, and a considerable treatment obstacle for medical providers.

During 2021, we obtained additional data further demonstrating TSC's safety at higher doses and increased dosing frequencies from our COVID Trial and Oxygenation Trials.

In the COVID Trial, completed in February 2021, TSC was administered on a different dosing regimen than any of our prior trials, with patients receiving an infusion multiple times per day for up to 15 days.

In the TCOM Trial, based in part on a recommendation from the COVID Trial’s safety monitoring committee, arms evaluating even higher doses of TSC were included.

No dose-limiting toxicities or serious adverse events were observed among any patients or participants in the either trial, including those who received the highest tested doses of TSC.

Our Hypoxic Solid Tumor Program

Solid tumors comprise approximately 90% of all adult cancers and, according to the American Cancer Society, it was expected that roughly 1.9 million new cancer cases would be diagnosed in the U.S.

It is also well-documented in the scientific literature that the prevalence of hypoxic regions across numerous primary solid tumor types directly contributes to treatment resistance, whether it be radiotherapy, chemotherapy, or immunotherapy, increasing the metastatic potential of these tumors and the probability of unsuccessful treatment.

Many of the challenges faced by practitioners in treating some of the most fatal and difficult-to-treat tumor types, including GBM, pancreatic cancer, and other solid tumors, are a product of those tumors’

highly hypoxic nature.

Cancerous tumors are specifically susceptible to developing hypoxia due to a combination of rapid growth, structural abnormalities of the tumor microvessels, and disturbed circulation within the tumor.

Hypoxic conditions within the tumor microenvironment have numerous negative consequences for patient outcomes and treatment, including:

•    increased resistance to ionizing radiation, chemotherapy, immunotherapy and other treatment methods;

•    a more clinically aggressive phenotype;

•    increased potential for invasive growth and tumor progression;

•    increased regional and distal tumor metastasis.

We have previously obtained and published evidence supporting TSC’s ability to enhance oxygenation of C6 glioma tumors in animals, as well as clinical evidence of TSC’s effects in unresectable GBM tumors from our previously completed Phase 2 clinical trial evaluating 59 patients with newly diagnosed GBM.

This open-label, historically controlled trial demonstrated a favorable safety and tolerability profile for TSC when combined with standard of care treatment for GBM.

In November 2021, based on the available preclinical and clinical data and the significant unmet medical need, we announced our intention to focus near-term efforts on developing TSC as an adjunct to standard of care therapy for hypoxic solid tumors.

Through the combination of our past experiences, new knowledge gained from our Oxygenation Trials and COVID Trial regarding TSC’s effects on oxygenation, dose response characteristics, pharmacokinetics, and pharmacodynamics, and further analyses and discussions of all available data with our Scientific Advisory Board and other external advisors, we believe we now have the necessary information to design the Hypoxic Solid Tumor Program to be more efficient and increase our likelihood of success compared to the Company’s past efforts to develop TSC as a cancer treatment, which were terminated in 2019 due to financial constraints.

As part of the ongoing design of our Planned Phase 2 Hypoxic Tumor Trial –

the first trial in our Hypoxic Solid Tumor Program which we currently expect to commence in the second half of 2022, subject to FDA feedback and the availability of clinical drug supply –

we are currently drafting a trial protocol which we intend to file with the FDA.

In parallel, we will continue our work to optimize the TSC manufacturing process and support the continued availability of high-quality drug product and undertake preclinical studies and other opportunities to continue developing data designed to demonstrate TSC’s potential uses in a broad spectrum of non-cancer indications.

TSC's Potential to Treat Other Conditions Complicated by Hypoxia

Beyond cancer, hypoxia is a complicating factor in many other intractable and difficult-to-treat conditions as well, including cardiovascular diseases, cerebrovascular diseases, respiratory diseases, skin and soft tissue diseases, and neurodegenerative diseases.

In addition to our oncology programs past and present, we have previously conducted a variety of preclinical and clinical studies evaluating the effects of TSC in several of these other indications complicated by hypoxia, including COVID-19, stroke, and peripheral artery disease with intermittent claudication, and we intend to continue to pursue potential partnering opportunities in non-oncology indications.

Certain medical conditions complicated by hypoxia.

Our Second Product Candidate:

Our product candidate DFN-529 is a novel PI3K/Akt/mTOR pathway inhibitor which has completed two Phase 1 clinical trials for age-related macular degeneration and was previously in preclinical development in oncology, specifically for GBM.

DFN-529 has shown activity in both in vitro and in vivo GBM animal models and has been demonstrated to be orally bioavailable and capable of crossing the blood brain barrier.

We are currently in discussions with multiple third-party research scientists regarding the potential initiation of further studies to evaluate the effects of DFN-529 in preclinical cancer models.

We believe these additional data may help guide us in choosing an appropriate clinical development pathway for DFN-529.

We also continue to explore business options for DFN-529, including out-licensing opportunities and other strategic partnerships.

Products, Product Development, and Our Competition

Our Phase 2 COVID-19 Trial

We believe TSC’s oxygen-enhancing mechanism of action could potentially provide benefit patients suffering from respiratory indications, such as COVID-19.

In September 2020, we announced the dosing of the first patients in our COVID Trial evaluating TSC in hospitalized COVID-19 patients at the National Institute of Infectious Diseases in Bucharest, Romania.

The trial enrolled 24 patients divided into four sequential cohorts of six patients, with each patient in a cohort receiving the same intravenous doses of 0.25 mg/kg, 0.5 mg/kg, 1.0 mg/kg, or 1.5 mg/kg.

All patients were administered intravenous doses of TSC every six hours for a minimum of five days and up to 15 days.

On February 9, 2021, we completed dosing of the twenty-fourth and final patient in the trial.

The primary endpoint of the COVID Trial was to evaluate the safety and tolerability of TSC administered every six hours for at least five and up to 15 days, a more frequent dosing regimen than had been used in our previous clinical studies.

Secondary endpoints included pharmacokinetic measurement of TSC levels after dosing, relative improvements in blood oxygen levels, and certain other clinical parameters related to COVID-19, such as improvement in WHO ordinal scale by day 7 and through day 29, time on oxygen supplementation, and hospital length of stay.

Data from the trial, evaluated by the study’s independent safety monitoring committee, indicated TSC was safe and well-tolerated and that no dose-limiting toxicities or serious adverse events were observed among any patients in the study, including those who received the highest dose administered in the trial.

Additionally, while the COVID Trial was not designed or powered to evaluate efficacy, the safety monitoring committee also observed that patients receiving the highest dose administered had improved outcomes in the trial’s secondary and exploratory endpoints compared to those receiving lower doses.

Further, no patients that received TSC required dialysis or developed acute kidney injury, nor were there any reports of pulmonary embolism or deep vein thrombosis.

Based on their observations, the safety monitoring committee also recommended the Company consider testing of higher TSC doses and a continuous intravenous infusion in future studies.

Product Development

Research and Development

In recent years, the majority of our research and development expenditures have been directed to the development of TSC.

For example, during the year ended December 31, 2020, we incurred approximately $9.4 million in costs related to research and development of our products, an increase of approximately $2.8 million compared to the year ended December 31, 2019.

The majority of these costs were related to the development of TSC and related personnel, including costs associated with the TSC COVID Trial, which commenced in September 2020 and was completed in February 2021, as well as the wind down of the TSC Stroke Trial, which commenced in October 2019 and was terminated in the second half of 2020.

We expect this trend to continue for the foreseeable future, including planned expenditures related to the TSC Oxygenation Trials and other costs associated with the conduct of additional, supportive preclinical studies and general research and development activities related to TSC.

We intend to focus the remainder of our foreseeable research and development expenditures will on the development of DFN-529, including additional preclinical studies evaluating DFN-529 in cancer models that we are in the early stages of planning.

For example, during the year ended December 31, 2021, we incurred approximately $8.5 million in costs related to research and development of our products, a decrease of approximately $0.9 million compared to the year ended December 31, 2020.

The majority of these costs were related to the development of TSC and related personnel, including costs associated with the Oxygenation Trials and the COVID Trial, which was completed in February 2021.

We expect this trend to continue for the foreseeable future, including planned expenditures related to completion of the remaining Oxygenation Trials, the initiation of the Hypoxic Solid Tumor Program, and other costs associated with the conduct of additional, supportive preclinical studies and general research and development activities related to TSC and any other product candidates we may acquire or in-license in the future.

As a development-stage company, we continuously evaluate opportunities to improve the value of our development pipeline, including potential acquisition and in-licensing opportunities.

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These activities have, and we expect they will continue to be for the foreseeable future, focused on opportunities that are synergistic with our overall corporate strategy to develop novel treatments for the treatment of hypoxia and conditions complicated by hypoxia.

Our Intellectual Property

Intellectual Property

We believe that a strong intellectual property portfolio is critical to our success.

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We continue to invest significant time, effort, and resources into the development and maintenance of our patent portfolio.

As of December 31, 2020, we owned 16 issued U.S.

patents and 36 issued non-U.S.

As of December 31, 2021, we owned 17 issued U.S.

patents and more than 35 issued non-U.S.

patents, and had numerous patent applications pending worldwide including issued patents and applications in major markets such as the U.S., E.U., China, Japan, and India.

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with no adjustments or extensions) of our key issued patents related to the composition of matter of TSC extends to 2026, with potential patent term extensions to 2031, and the normal life of our patents related to an oral formulation of TSC extends to 2031, with potential patent term extensions to 2036.

Additional information regarding patent term extensions can be found under the heading, see — Government Regulation — The Hatch-Waxman Amendments — Patent Term Restoration and Marketing Exclusivity .

In addition, TSC has been granted Orphan Drug designation by the FDA for the treatment of both GBM and metastatic brain cancer, which may provide us with certain rights of exclusivity under certain FDA regulations.

Additional information regarding orphan and ultra-orphan can be found under the heading, see — Government Regulation — Certain Other FDA Regulations — The Orphan Drug Act of 1983 .

Materials and Manufacturing

The normal life of our key issued patents related to methods of use of TSC extends to 2037, not including potential patent term extensions.

For additional information regarding patent term extensions, see " Business —

Government Regulation —

The Hatch-Waxman Amendments —

Patent Term Restoration and Marketing Exclusivity .

In addition, TSC has been granted Orphan Drug designation by the FDA for the treatment of both GBM and metastatic brain cancer, which may provide us with a right of exclusivity under certain FDA regulations.

For additional information regarding orphan and ultra-orphan designations, see " Business —

Government Regulation —

Certain Other FDA Regulations —

The Orphan Drug Act of 1983 .”

Chemistry, Manufacturing, and Controls

TSC is currently formulated as a freeze-dried, injectable product, requiring a sophisticated manufacturing process.

We do not currently own or operate any facilities suitable for manufacturing TSC or any of our other product candidates on a scale required to support either clinical development or commercialization.

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However, we do not have any formal agreements at this time with any CMO to cover commercial production of TSC or any other product candidate.

Although the use of third party CMOs to manufacture pharmaceutical products is common within the industry, this dependence on third-party CMOs exposes our business to certain risks, including those described in Part I – Item 1A.

Risk Factors – Risks Related to the Development, Regulatory Approval, and Commercialization of TSC and Our Other Product Candidates .

Our Competition

Risks Related to Our Dependence on Third Parties.”

Supply Chain Matters

Recently, many companies across a variety of sectors have reported disruptions, shortages, and other supply chain-related issues.

In the biopharmaceutical sector, delays and interruptions in the supply chain were particularly pronounced as CMOs redirected resources under the Defense Production Act and to otherwise support the COVID-19 vaccine roll-out across the globe.

During 2021, we were able to effectively manage our supply of TSC and its component materials in a manner that avoided any significant interruptions to our clinical programs.

We also took actions designed to increase the robustness of our drug supply and overall supply chain to mitigate risks related to the availability of our drug supply in the future.

However, as constraints on the supply chain continue to impact the cost and general availability of manufacturing materials, related delays and shortages could affect the cost and timing of our available clinical study drug supply of TSC.

Currently, medical options to improve oxygenation without risk of hyper-oxygenation are limited and we believe that TSC's diffusion enhancing mechanism of action make it a first-in-class, novel, small molecule.

However, there are several companies currently developing or marketing products, therapeutics, or devices that may nevertheless be competitive with TSC, if approved, including NuvOx Pharma LLC, Hemoglobin Oxygen Therapeutics LLC, and Cardax, Inc.

However, there are several companies currently developing or marketing oxygen enhancing products, therapeutics, or devices that may nevertheless be competitive with TSC, if approved, including Hemoglobin Oxygen Therapeutics LLC, Hemotek Medical Inc., NuvOx Pharma LLC, Omniox, Inc., and VirTech Bio Inc.

In addition, in the first quarter of 2021, we became aware of a third party affiliated with a former outside consultant of the Company which claims to be in early-stage development of a product candidate that purportedly may operate through a similar mechanism of action to TSC.

It is unclear if this particular product candidate would, if developed and approved, actually be competitive with TSC.

It is unclear if this Company’s product candidate would, if developed and approved, actually be competitive with TSC.

Our industry is highly competitive and subject to rapid and significant change.

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Government Regulation

Pharmaceuticals like TSC, DFN-529, and other product candidates we may develop are highly regulated by governmental authorities in the U.S.

Pharmaceuticals like TSC and other product candidates we may develop are highly regulated by governmental authorities in the U.S.

and other countries at the federal, state, and local levels.

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Generally, before a new pharmaceutical product can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific for each applicable regulatory authority, submitted for review, and approved by the competent regulatory authority.

In the United States, the competent regulatory authority is the FDA, which, pursuant to the FDC Act, is responsible for the review and approval of all data required to support a license to commercially market pharmaceuticals such as TSC and DFN-529.

The process of obtaining regulatory approvals and the subsequent compliance with FDA regulations requires the expenditure of substantial time and financial resources and failure to comply with the applicable requirements at any time during the product development process, approval process, or, if approved, following approval may subject an applicant to administrative or judicial sanctions.

These sanctions could include, among other actions, the FDA’s refusal to approve pending applications, withdrawal of an approval, license revocation, a clinical hold, untitled or warning letters, voluntary or mandatory product recalls, market withdrawals, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement and civil or criminal penalties, any of which could have a material adverse effect on our business, financial position, or results of operations.

Process Overview

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a determination by the FDA within 60 days of its receipt of an NDA as to whether it will accept the filing for review;

• satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the drug will be produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

satisfactory completion of one or more FDA pre-approval inspections of the manufacturing facility or facilities where the drug will be produced to assess compliance with cGMP requirements and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity;

a potential FDA audit of the clinical trial sites that generated the data in support of the NDA;

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The preclinical and clinical testing and approval process requires substantial time, effort, and financial resources and satisfaction of FDA pre-market approval requirements typically takes many years, though the actual time required may vary substantially based upon the type, complexity, and novelty of the applicable product or indication to be treated.

We cannot be certain that any approvals for TSC, DFN-529, or any product candidates we attempt to develop in the future will be granted on a timely basis or at all.

We cannot be certain that any approvals for TSC or any product candidates we attempt to develop in the future will be granted on a timely basis or at all.

Preclinical Studies

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Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap, especially in certain indications such as cancer.

• Phase 1 - In Phase 1 trials, an investigational new drug is introduced into healthy human subjects and is evaluated to assess pharmacological actions, side effects associated with increasing doses and, in certain cases, early evidence on efficacy.

• Phase 2 - In Phase 2 trials, the drug is introduced to a limited patient population in a particular indication to determine metabolism, pharmacokinetics, the effectiveness of the drug for the indication, dosage tolerance and optimum dosage, and to identify potential adverse effects and safety risks.

• Phase 3 - In Phase 3 trials, if a drug has demonstrated evidence of effectiveness and an acceptable safety profile in prior Phase 2 trials, the drug is introduced to a larger patient population in the relevant indication to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug, and to provide adequate information for the labeling of the drug, if approved.

Phase 1  - In Phase 1 trials, an investigational new drug is introduced into healthy human subjects and is evaluated to assess pharmacological actions, side effects associated with increasing doses and, in certain cases, early evidence on efficacy.

Phase 2  - In Phase 2 trials, the drug is introduced to a limited patient population in a particular indication to determine metabolism, pharmacokinetics, the effectiveness of the drug for the indication, dosage tolerance and optimum dosage, and to identify potential adverse effects and safety risks.

Phase 3  - In Phase 3 trials, if a drug has demonstrated evidence of effectiveness and an acceptable safety profile in prior Phase 2 trials, the drug is introduced to a larger patient population in the relevant indication to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug, and to provide adequate information for the labeling of the drug, if approved.

Not all drug development programs are required to follow the order and content of all three phases.

For example, in August 2018, the FDA released a draft guidance entitled, “Expansion Cohorts:

Use in First-In-Human Clinical Trials to Expedite Development of Oncology Drugs and Biologics,” which outlines how drug developers can utilize an adaptive trial design commonly referred to as a seamless trial design in early stages of oncology drug development, i.e., the first-in-human clinical trial, to compress the traditional three phases of trials into one continuous trial called an expansion cohort trial.

For example, in August 2018, the FDA released a draft guidance entitled “Expansion Cohorts:

Use in First-In-Human Clinical Trials to Expedite Development of Oncology Drugs and Biologics,”

which outlines how drug developers can utilize an adaptive trial design commonly referred to as a seamless trial design in early stages of oncology drug development, i.e., the first-in-human clinical trial, to compress the traditional three phases of trials into one continuous trial called an expansion cohort trial.

Information to support the design of individual expansion cohorts is included in IND applications and assessed by FDA.

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Progress reports detailing the results of the clinical trials, among other information, must be submitted at least annually to the FDA and written IND safety reports must be submitted to the FDA and the investigators 15 calendar days after the trial sponsor determines the information qualifies for reporting for serious and unexpected suspected adverse events, findings from other studies or animal or in vitro testing that suggest a significant risk for human subjects and any clinically important increase in the rate of a serious suspected adverse reaction over that listed in the protocol or investigator brochure.

The sponsor also must notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction as soon as possible but in no case later than seven calendar days after the sponsor’s initial receipt of the information.

Phase 1, Phase 2, Phase 3, and other types of clinical trials may not be completed successfully within any specified period, if at all.

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After completion of the required clinical testing, an NDA is prepared and submitted to the FDA containing data intended to provide substantial evidence that the drug is safe and effective in the relevant indication, and FDA approval of the NDA is required before commercial marketing of the product may begin in the United States.

The NDA must include the results of all preclinical, clinical, and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacturing, and controls.

The cost of preparing and submitting an NDA is substantial, and the submission of most NDAs is also subject to substantial initial and ongoing fees.

The FDA has 60 days from its receipt of an NDA to determine whether the NDA will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review.

Once the submission is accepted for filing, the FDA begins an in-depth review subject to certain performance goals agreed upon by the FDA.

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An FDA approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy including, in certain cases, REMS as described in more detail under the heading, — Certain Other FDA Regulations – Risk Evaluation and Mitigation Strategies and Other Post-Approval Requirements .

Certain Other FDA Regulations –

Risk Evaluation and Mitigation Strategies .”

Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

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Orange Book Listing and Abbreviated New Drug Applications

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent whose claims cover the applicant’s product.

Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book.

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent whose claims cover the applicant’s product.

Drugs listed in the Orange Book can, in turn, be cited by potential generic competitors in support of approval of an ANDA.

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Other than the requirement for bioequivalence testing, ANDA applicants are not required to conduct, or submit results of, preclinical or clinical tests to prove the safety or effectiveness of their drug product.

Drugs approved in this way are commonly referred to as “generic equivalents” to the listed drug and can often be substituted by pharmacists under prescriptions written for the original listed drug.

Drugs approved in this way are commonly referred to as “generic equivalents”

to the listed drug and can often be substituted by pharmacists under prescriptions written for the original listed drug.

An ANDA applicant is required to make certain certifications to the FDA concerning any such patents listed in the Orange Book for the approved reference drug intended to confirm that the proposed generic equivalent will not infringe on any intellectual property related to the reference drug, commonly referred to as a Paragraph IV certification.

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The Hatch-Waxman Amendments permit restoration of the patent term of up to five years as compensation for patent term lost during product development and the FDA regulatory review process.

Patent term restoration, however, cannot extend the remaining term of a patent beyond a total of 14 years from the product’s approval date.

The patent term restoration period is generally 50% of the amount of time between the effective date of an IND and the submission date of an NDA, plus the time between the submission date of an NDA and the approval of that application, except that the review period is reduced by any time during which the applicant failed to exercise due diligence.

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Under the Orphan Drug Act, the FDA may grant orphan designation to a drug product intended to treat a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that the cost of developing and making the product available in the United States for this type of disease or condition will be recovered from sales of the product.

Our lead product candidate, TSC, has been granted Orphan Drug designations by the FDA with respect to the t

Our lead product candidate, TSC, has been granted Orphan Drug designations by the FDA for the treatment of both GBM and metastatic brain cancer.

Orphan drug designation must be requested before submitting an NDA.

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Competitors, however, may receive approval of either a different product for the same indication or the same product for a different indication.

In the latter case, because health care professionals are free to prescribe products for off-label uses, the competitor’s product could be used for the orphan indication despite our orphan exclusivity.

Orphan drug exclusivity could also block the approval of one of our products for seven years if a competitor obtains approval before we do for the same drug and same indication, as defined by the FDA, for which we are seeking approval, or if our product is determined to be contained within the scope of the competitor’s product for the same indication or disease.

If we pursue marketing approval for an indication broader than the orphan drug designation we have received, we may not be entitled to orphan drug exclusivity.

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This program is designed to encourage development of new drug and biological products for prevention and treatment of certain rare pediatric diseases.

Specifically, under this program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease” may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product.

Specifically, under this program, a sponsor who receives an approval for a drug or biologic for a “rare pediatric disease”

may qualify for a voucher that can be redeemed to receive a priority review of a subsequent marketing application for a different product.

The sponsor of a rare pediatric disease drug product receiving a priority review voucher may transfer (including by sale) the voucher to another sponsor.

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within one year following the date of approval.

For purposes of this program, a “rare pediatric disease” is a (a) serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years, including age groups often called neonates, infants, children, and adolescents;

and (b) rare diseases or conditions within the meaning of the Orphan Drug Act.

For purposes of this program, a “rare pediatric disease”

is a (a) serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years, including age groups often called neonates, infants, children, and adolescents;

and (b) a rare disease or condition within the meaning of the Orphan Drug Act.

On December 27, 2020, the Rare Pediatric Disease Priority Review Voucher Program was extended.

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Risk Evaluation and Mitigation Strategies and Other Post-Approval Requirements

As a condition of NDA approval, the FDA may require a REMS to help ensure that the benefits of the drug’s continued approval outweigh the potential risks.

In determining whether a REMS is necessary, the FDA must consider the size of the population likely to use the drug, the seriousness of the disease or condition to be treated, the expected benefit of the drug, the duration of treatment, the seriousness of known or potential adverse events, and whether the drug is a new molecular entity.

If the FDA determines a REMS is necessary, the drug sponsor must agree to the REMS plan at the time of approval.

REMS can include medication guides, communication plans for healthcare professionals, and ETASU, or elements to assure safe use.

ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring requirements, and the use of patient registries.

REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use.

Elements to assure safe use can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring requirements, and the use of patient registries.

The requirement for a REMS can materially affect the potential market and profitability of a drug product.

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Whether or not we obtain FDA approval for conduct of a clinical trial or distribution of a product, we must obtain approval from the competent regulatory authority of any country or economic area in which we would seek to commence a clinical trial or market products.

For example, conduct of the TSC COVID Trial at the NIID in Bucharest, Romania, required certain approvals from regulatory authorities in Romania and the E.U.

Certain countries outside of the United States have a process similar to the FDA’s IND process which requires the submission of a CTA prior to the commencement of human clinical trials.

In the E.U., for example, a CTA must be submitted to each country’s national health authority and an independent ethics committee, which operates similar to an IRB under U.S.

Once the CTA is approved in accordance with a country’s requirements, the clinical trial may proceed in the applicable country.

For example, conduct of the COVID Trial in Bucharest, Romania, required certain approvals from regulatory authorities in Romania and the E.U.

Certain countries outside of the United States have a process similar to the FDA’s IND process which requires the submission of a CTA prior to the commencement of human clinical trials.

In the E.U., for example, a CTA must be submitted to each country’s national health authority and an independent ethics committee, which operates similar to an IRB under U.S.

Once the CTA is approved in accordance with a country’s requirements, the clinical trial may proceed in the applicable country.

The approval process and requirements governing the conduct of clinical trials, product licensing, pricing, and reimbursement vary greatly from place to place, and the time may be longer or shorter than that required for FDA approval.

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These laws include, without limitation, state and federal anti-kickback, false claims, physician transparency, and patient data privacy and security laws and regulations, and other federal, state, and local regulations and legislation impacting the pharmaceutical and biopharmaceutical industries, including but not limited to those described below.

Health Insurance Portability and Accountability Act - HIPAA imposes criminal and civil liability for, among other things, knowingly and willfully executing a scheme, or attempting to execute a scheme, to defraud any healthcare benefit program, including private payors, or falsifying, concealing, or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services.

Health Insurance Portability and Accountability Act  - HIPAA imposes criminal and civil liability for, among other things, knowingly and willfully executing a scheme, or attempting to execute a scheme, to defraud any healthcare benefit program, including private payors, or falsifying, concealing, or covering up a material fact or making any materially false statements in connection with the delivery of or payment for healthcare benefits, items or services.

Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.

HIPAA, as amended by HITECH and their respective implementing regulations, imposes, among other things, specified requirements on covered entities and their business associates relating to the privacy and security of individually identifiable health information, including mandatory contractual terms and required implementation of technical safeguards of such information.

HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state Attorneys General new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.

Affordable Care Act - The Affordable Care Act was enacted in March 2010 and included measures intended to significantly change the way healthcare is financed in the U.S.

by both governmental and private insurers which have and may continue to impact the pharmaceutical and biopharmaceutical industries, including expanded Medicare and Medicaid benefits, expansion of healthcare fraud and abuse laws, establishment of the Centers for Medicare & Medicaid Services, annual reporting requirements for manufacturers and distributors.

Since its enactment, there have been numerous judicial, administrative, executive, and legislative challenges to certain aspects of the Affordable Care Act, and we expect there will be additional challenges and amendments to the Affordable Care Act in the future.

HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state Attorneys General new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.

Affordable Care Act  - The ACA was enacted in March 2010 and included measures intended to significantly change the way healthcare is financed in the U.S.

by both governmental and private insurers which have and may continue to impact the pharmaceutical and biopharmaceutical industries, including expanded Medicare and Medicaid benefits, expansion of healthcare fraud and abuse laws, establishment of the CMS, annual reporting requirements for manufacturers and distributors.

In addition, subsequent legislation, including the Budget Control Act of 2011, American Taxpayer Relief Act of 2012, and Coronavirus Aid, Relief, and Economic Security Act of 2020, has limited and supplemented various provisions of the Affordable Care Act.

While we cannot predict what effect further changes to the Affordable Care Act would have on our business, the Affordable Care Act is likely to continue to impact the regulatory regime to which we are subject for the foreseeable future, and we cannot predict the ultimate content, timing, or effect of any healthcare reform legislation or the impact of potential legislation on us.

21st Century Cures Act - The 21st Century Cures Act, which the U.S.

21st Century Cures Act  - The 21st Century Cures Act, which the U.S.

House of Representatives passed in July 2015 and President Obama signed into law in December 2016, provides for a wide range of reforms that may impact our business, such as broadening the types of data required to support drug approval, extending protections from genetic competition, accelerating approval of breakthrough therapies, expanding the orphan drug product and compassionate use programs, and clarifying how manufacturers communicate about their products.

Anti-Kickback Laws - The federal Anti-Kickback Statute makes it illegal for any person, including a prescription drug manufacturer (or a party acting on its behalf), to knowingly and willfully solicit, receive, offer, or pay any remuneration, directly or indirectly, in cash or in kind, that is intended to induce or reward referrals, including the purchase, recommendation, order or prescription of a particular drug or any other good or service, for which payment may be made under a federal healthcare program, such as Medicare or Medicaid.

Anti-Kickback Laws  - The federal Anti-Kickback Statute makes it illegal for any person, including a prescription drug manufacturer (or a party acting on its behalf), to knowingly and willfully solicit, receive, offer, or pay any remuneration, directly or indirectly, in cash or in kind, that is intended to induce or reward referrals, including the purchase, recommendation, order or prescription of a particular drug or any other good or service, for which payment may be made under a federal healthcare program, such as Medicare or Medicaid.

Violations of this law are punishable by up to five years in prison, criminal fines, administrative civil money penalties, and exclusion from participation in federal healthcare programs.

In addition, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it.

False Claims Laws - The federal False Claims Act imposes civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities (including manufacturers) for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing, or concealing an obligation to pay money to the federal government.

The government may deem manufacturers to have “caused” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label.

Medicare Prescription Drug, Improvement, and Modernization Act - The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 imposes requirements on the distribution and pricing of prescription drugs for Medicare beneficiaries.

False Claims Laws  - The federal False Claims Act imposes civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities (including manufacturers) for, among other things, knowingly presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program or making a false statement or record material to payment of a false claim or avoiding, decreasing, or concealing an obligation to pay money to the federal government.

The government may deem manufacturers to have “caused” the submission of false or fraudulent claims by, for example, providing inaccurate billing or coding information to customers or promoting a product off-label.

Medicare Prescription Drug, Improvement, and Modernization Act  - The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 imposes requirements on the distribution and pricing of prescription drugs for Medicare beneficiaries.

Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities which will provide coverage of outpatient prescription drugs.

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However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs, though not necessarily all the drugs in each category or class.

Any reduction in payment that results from this or any similar legislation in the future may result in a similar reduction in payments from non-governmental payors.

The Physician Payments Sunshine Act - The Physician Payments Sunshine Act, enacted as part of the Affordable Care Act,, imposed new annual reporting requirements for certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, for certain payments and “transfers of value” provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

Any reduction in payment that results from the these or similar regulations may result in a similar reduction in payments from non-governmental payors.

The Physician Payments Sunshine Act  - The Sunshine Act, enacted as part of the Affordable Care Act,, imposed new annual reporting requirements for certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, for certain payments and “transfers of value” provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members.

Effective January 1, 2022, these reporting obligations will extend to include transfers of value made to certain non-physician providers such as physician assistants and nurse practitioners.

State, Local, and Non-U.S.

Legislation and Regulations - In addition, to the legislation summarized above, we may also be subject now or in the future to analogous state, local, and non-U.S.

Legislation and Regulations  - In addition, to the legislation summarized above, we may also be subject now or in the future to analogous state, local, and non-U.S.

laws and regulations, such as state anti-kickback and false claims laws, which may be broader in scope and apply regardless of payor.

Such laws are enforced by various state agencies and through private actions.

For example, some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant federal government compliance guidance, require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, and restrict marketing practices or require disclosure of marketing expenditures.

Certain state and foreign laws also govern the privacy and security of health information in some circumstances and these data privacy and security laws may differ from both HIPAA and each other in significant ways, which would potentially increase our compliance burden.

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Our People and Human Capital Resources

As of December 31, 2020, we had 12 full-time employees and one part-time employee, up from 12 employees as of December 31, 2019, and as of March 15, 2021, we have added one additional full-time employee in 2021.

As of December 31, 2021, we had 16 full-time employees, up from 12 employees as of December 31, 2020.

We also regularly work with several independent consultants and other contract organizations to support our business and we regularly evaluate additional talent to help support our product manufacturing, development, financial, and other capabilities.

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We operate in a highly competitive environment for human capital, particularly as we seek to attract and retain talent with relevant experience in the biotechnology and pharmaceutical sectors.

Therefore, we strive to provide a total rewards package to our employees that is competitive with our peer companies, including competitive pay, a comprehensive healthcare benefits package (including an 80.0% employer contribution to family medical coverage), health savings accounts with a company contribution, 25 days of paid leave, the 401(k) plan, flexible work schedules, and other benefits.

Therefore, we strive to provide a total rewards package to our employees that is competitive with our peer companies, including competitive pay, a comprehensive healthcare benefits package (including an 80% employer contribution to family medical coverage), 25 days of paid leave, a company-sponsored 401(k) savings plan, short-term and long-term disability, and other benefits, as well as remote working and flexible work schedules.

We also offer every full-time employee the benefit of equity ownership in Diffusion through stock option grants.

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We do not have any employees that are represented by a labor union or that have entered into a collective bargaining agreement with the Company.

Safety, Wellness, and Our Response to COVID-19

Safety and Wellness

At Diffusion, we believe that health matters to everyone, and the safety health, and wellness of our employees is one of our top priorities.

We are committed to developing and fostering a work environment that is safe, professional, and promotes teamwork, diversity, and trust in order to afford all of our employees the opportunity to contribute to the best of their abilities.

During 2020, in response to the COVID-19 pandemic, we took certain measures and responded to changes in our operational needs, including actions designed to provide a safe work environment for our employees.

Over the past two years, in response to the COVID-19 pandemic, we have taken certain measures and responded to changes in our operational needs, including actions designed to provide a safe work environment for our employees.

These actions included investing in technology solutions to support increased work-from-home capabilities, shifting work schedules to reduce the number of people present in our offices, requiring mask wearing and social distancing, making hand sanitizer readily available, and other measures intended to comply with health and safety protocols as required by federal, state, and local governmental agencies, as well as guidance from the U.S.

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Directors and Executive Officers

The information set forth in Part III — Item 10 — Directors, Officers, and Corporate Governance of this Annual Report is incorporated herein by reference.

The information set forth in " Part III —

Item 10 —

Directors, Officers, and Corporate Governance ," of this Annual Report is incorporated herein by reference.

Other Information About Our Company

Corporate Information and History

We were originally incorporated under the laws of the State of Nevada on January 10, 1995 and reincorporated under the laws of the State of Delaware on June 18, 2015 under the name, “RestorGenex Corporation.” On January 8, 2016, we completed the merger of our wholly owned subsidiary with and into Diffusion LLC, which was treated as a "reverse acquisition" under GAAP pursuant to which Diffusion LLC's historical results of operations replaced the Company's for all periods prior to the merger.

Immediately following the closing of the merger, we changed our name from "RestorGenex Corporation" to "Diffusion Pharmaceuticals Inc." Our principal corporate office is located at 1317 Carlton Avenue, Suite 200, Charlottesville, Virginia 22902, and our telephone number is (434) 220-0718.

Our website, www.diffusionpharma.com, including the Investor Relations section, investors.diffusionpharma.com, and our social media channels – Facebook (www.facebook.com/diffusionpharmaceuticalsinc/), Twitter (www.twitter.com/diffusionpharma) and LinkedIn (https://www.linkedin.com/company/diffusion-pharmaceuticals/) -- contain a significant amount of information about the Company.

On January 8, 2016, we completed the merger of our wholly owned subsidiary with and into Diffusion LLC, which was treated as a "reverse acquisition" under GAAP pursuant to which Diffusion LLC's historical results of operations replaced the Company's for all periods prior to the merger.

Immediately following the closing of the merger, we changed our name from "RestorGenex Corporation" to "Diffusion Pharmaceuticals Inc."

On May 6, 2021, we received a written notice from the Nasdaq Staff indicating that we were not in compliance with the Bid Price Rule because the bid price for our common stock had closed below $1.00 per share for the previous 30 consecutive business days.

On November 3, 2021, after failing to regain compliance with the Bid Price Rule within 180 days of our receipt of the first notice, we received an additional notice from the Staff providing that, although the Company had not regained compliance with the Bid Price Rule by the previously stated deadline, in accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company would be granted an additional 180 calendar days, or until May 2, 2022, to regain compliance with the Bid Price Rule.

As part of our efforts to regain compliance with the Bid Price Rule, on February 28, 2022, we filed a definitive proxy statement related to a special meeting of our stockholders scheduled for Thursday, April 14, 2022 at which our stockholders will vote upon proposal, approved and recommended for stockholder approval by the Board, to amend our Certificate of Incorporation to effect a reverse stock split of our outstanding shares of common stock by a ratio of any whole number between 1-for-2 and 1-for-50 at any time prior to December 31, 2022, the timing and implementation of which will be subject to the discretion of the Board.

To regain compliance, the bid price for the Company’s common stock must close at $1.00 per share or more for a minimum of 10 consecutive business days.

Our principal corporate office is located at 300 East Main Street, Suite 201, Charlottesville, Virginia 22902, and our telephone number is (434) 220-0718.

Our website, www.diffusionpharma.com, including the Investor Relations section, investors.diffusionpharma.com, and our social media channels –

Facebook (www.facebook.com/diffusionpharmaceuticalsinc/), Twitter (www.twitter.com/diffusionpharma) and LinkedIn (https://www.linkedin.com/company/diffusion-pharmaceuticals/) -- contain a significant amount of information about the Company.

We encourage investors to visit these websites and social media channels as information is frequently updated and new information is shared.

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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 1. Business