What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-11 compared with 2022-05-12 · 238 added, 174 removed, 420 unchanged (50% of the section changed)

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is a clinical stage pharmaceutical company seeking to develop innovative solutions for severe pain relief while reducing

the fear of addiction and the potential for opioid misuse, abuse and overdose.

We have also incorporated a 79.2%-owned

subsidiary, Covistat, a clinical stage pharmaceutical company that is developing a compound utilized in Ensysce’s overdose protection

program for the treatment of respiratory diseases.

the fear of and the potential for addiction, opioid misuse, abuse and overdose.

We have also incorporated a 79.2%-owned subsidiary, Covistat,

a clinical stage pharmaceutical company that is developing a compound utilized in Ensysce’s overdose protection program for the

treatment of respiratory diseases.

Our lead product candidate, PF614, is an extended release TAAP prodrug of oxycodone.

TAAP modification of prescription drugs removes the ability to crush, chew or manipulate and inject to achieve the medication more quickly

than by swallowing.

TAAP modification

of prescription drugs removes the ability to crush, chew or manipulate and inject to achieve the medication more quickly than by swallowing.

MPAR™ adds a layer of overdose protection to each TAAP product.

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have incurred significant operating losses since inception.

As of March 31, 2022, we had an accumulated deficit of $87.5 million.

We expect to continue to incur net losses for the foreseeable future, and we expect our clinical development expenses, and general and

administrative expenses to continue to increase.

We expect that our expenses and capital requirements will increase substantially in

connection with our ongoing development activities, particularly if and as we:

As of June 30, 2022, we had an accumulated deficit of $95.5 million.

to continue to incur net losses for the foreseeable future, and we expect our clinical development expenses, and general and administrative

expenses to continue to increase.

We expect that our expenses and capital requirements will increase substantially in connection with

our ongoing development activities, particularly if and as we:

preclinical studies and continue existing and initiate new clinical trials for PF614, PF614-MPAR™ and nafamostat, our lead

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pandemic Business Update

March 2020, the World Health Organization declared COVID-19 a global pandemic.

To date, our financial condition and operations have not

been significantly impacted by the ongoing COVID-19 pandemic.

However, we cannot at this time predict the specific extent, duration,

or full impact that the ongoing COVID-19 pandemic will have on our financial condition and operations, including ongoing and planned

clinical trials and other operations required to support those clinical trials and research and development activities to advance our

The impact of the ongoing COVID-19 pandemic on our financial performance will depend on future developments, including the

duration and spread of the pandemic and related governmental advisories and restrictions.

These developments and the impact of the ongoing

COVID-19 pandemic on the financial markets and the overall economy are highly uncertain and cannot be predicted.

If the financial markets

and/or the overall economy are impacted for an extended period, our results may be materially adversely affected.

In March 2020, the World Health Organization declared COVID-19 a global

To date, our financial condition and operations have not been significantly impacted by the ongoing COVID-19 pandemic.

we cannot at this time predict the specific extent, duration, or full impact that the ongoing COVID-19 pandemic will have on our financial

condition and operations, including ongoing and planned clinical trials and other operations required to support those clinical trials

and research and development activities to advance our pipeline.

are continuing to evaluate the impact of the ongoing COVID-19 pandemic on our business and continue to take proactive measures to protect

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do not track our research and development expenses on a program-by-program basis.

Our direct external research and development expenses

consist primarily of external costs, such as fees paid to outside consultants, CROs, CMOs and research laboratories in connection with

our preclinical development, process development, manufacturing and clinical development activities.

We do not allocate employee costs,

costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or other indirect costs, to

specific programs because these costs are deployed across multiple programs and, as such, are not separately classified.

We use internal

resources primarily to conduct our research and discovery as well as for managing our preclinical development, process development, manufacturing

and clinical development activities.

These employees work across multiple programs and, therefore, we do not track our costs by program

and cannot state precisely the total costs incurred for each of our clinical and preclinical programs on a project-by-project basis.

Our direct external research and development

expenses consist primarily of external costs, such as fees paid to outside consultants, CROs, CMOs and research laboratories in

connection with our preclinical development, process development, manufacturing and clinical development activities.

allocate employee costs, costs associated with our discovery efforts, laboratory supplies, and facilities, including depreciation or

other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not

separately classified.

We use internal resources primarily to conduct our research and development as well as for managing our

preclinical development, process development, manufacturing and clinical development activities.

These employees work across

multiple programs and, therefore, we do not track our costs by program and cannot state precisely the total costs incurred for each

of our clinical and preclinical programs on a project-by-project basis.

and development activities are central to our business model.

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administrative costs as incurred.

anticipate that our general and administrative expenses, excluding non-cash expenses to recognize the fair value of warrants, will increase

in the future as we increase our headcount to support the continued development of our product candidates.

We also anticipate that we

will incur significantly increased accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well

as investor and public relations expenses associated with operating as a public company.

Additionally, if and when we believe a regulatory

approval of a product candidate appears likely, we anticipate an increase in payroll and other employee-related expenses as a result

of our preparation for commercial operations, especially as it relates to the sales and marketing of that product candidate.

We anticipate that our general and administrative

expenses, excluding non-cash expenses to recognize the fair value of warrants, will increase in the future as we increase our headcount

to support the continued development of our product candidates.

We also anticipate that we will continue to incur significant accounting,

audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public relations expenses as a public

Additionally, if and when we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in

payroll and other employee-related expenses as a result of our preparation for commercial operations, especially as it relates to the

sales and marketing of that product candidate.

income (expense)

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in the consolidated statements of operations.

Change in fair value of convertible notes

elected the fair value option to account for the 2021 Notes as we believe the fair value option provides users of the financial

statements with greater ability to estimate the outcome of future events as facts and circumstances change, particularly with respect

to changes in the fair value of the common stock underlying the conversion option.

We use a discounted cash flow model and a Monte Carlo

analysis to estimate the fair value of the notes, both of which rely on unobservable Level 3 inputs.

Changes in the fair value of the

notes are recognized through earnings for each reporting period.

Change in fair value of liability classified

The warrants issued with the 2021 Notes were liability

classified due to certain cash settlement features.

We use a Black-Scholes option pricing model to estimate the fair value of the warrants.

Changes in the fair value of the warrants are recognized through earnings for each reporting period.

Loss on debt conversions

When conversions on the 2021 Notes occur, we calculate

the difference between the conversion price and the average of the high and low stock price on the date of conversion.

The resulting

difference is either a loss if the conversion price was below the average of the high and low stock price on the date of conversion or

a gain if the conversion price was above the average of the high and low stock price on the date of conversion.

expense consists of interest accrued on our financed directors and officer insurance as well as imputed interest on the commitment fees

in fair value of convertible notes

elected the fair value option to account for the 2021 Notes as we believe the fair value option provides users of the financial statements

with greater ability to estimate the outcome of future events as facts and circumstances change, particularly with respect to changes

in the fair value of the common stock underlying the conversion option.

We use a discounted cash flow model and a Monte Carlo analysis

to estimate the fair value of the notes, both of which rely on unobservable Level 3 inputs.

Changes in the fair value of the notes are

recognized through earnings for each reporting period.

in fair value of liability classified warrants

warrants issued with the 2021 Notes are liability classified due to certain cash settlement features.

We use a Black-Scholes option pricing

model to estimate the fair value of the warrants.

Changes in the fair value of the warrants are recognized through earnings for each

reporting period.

on debt conversions

conversions on the 2021 Notes occur, we calculate the difference between the conversion price and the average of the high and low stock

price on the date of conversion.

The resulting difference is either a loss if the conversion price was below the average of the high

and low stock price on the date of conversion or a gain if the conversion price was above the average of the high and low stock price

on the date of conversion.

expense consists of interest accrued on our financed directors and officers insurance as well as imputed interest on the commitment fees

related to the share subscription facility.

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available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

As of March 31, 2022,

we continue to maintain a full valuation allowance against all of our deferred tax assets based on our evaluation of all available

As of June 30, 2022,

we continue to maintain a full valuation allowance against all of our deferred tax assets based on our evaluation of all available evidence.

file income tax returns in the United States federal tax jurisdiction and state jurisdictions and may become subject to income tax audit

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of Operations

of the three months ended March 31, 2022 and 2021

following table summarizes our results of operations for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

of the three months ended June 30, 2022 and 2021:

Three Months Ended June 30,

Federal grants

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Total other income (expense), net

Net income (loss) attributable to noncontrolling interests

$ (7,923,120 )

$ (6,965,509 )

Net loss attributable to noncontrolling interests

Deemed dividend related to warrants down round provision

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$ (7,999,290 )

$ (7,063,746 )

grant funding

Funding from federal grants for the three months

ended March 31, 2022 and 2021 totaled $0.6 million and $0.3 million, respectively, representing an increase of $0.3 million.

increased by $0.4 million under the MPAR Grant, offset by a decrease of $0.1 million under the OUD Grant, due to the timing of research

activities eligible for funding.

We expect that funding from federal grants may generally increase in the future due to

the timing of preclinical and clinical development activities under the grants.

Funding from federal grants for the three months ended

June 30, 2022 and 2021 totaled $0.2 million and $0.4 million, respectively, representing a decrease of $0.2 million.

Differences are due

to the timing of research activities eligible for funding as well as the grant period.

We expect funding from federal grants to generally

increase in the future due to the timing of preclinical and clinical development activities under the grants.

and development expenses

and development expenses for the three months ended March 31, 2022 and 2021 were $3.1 million and $0.2 million, respectively,

representing an increase of $2.9 million.

The increase was primarily the result of increased external research and development

costs related to preclinical and clinical programs for PF614 and PF614-MPAR™.

We do not currently track expenses on a program-by-program

We expect research and development expenses to increase in the future due to planned clinical trials and higher preclinical and

clinical development costs for our product candidates.

and administrative expenses

and administrative expenses for the three months ended March 31, 2022 and 2021 were $2.3 million and $0.5 million, respectively,

representing an increase of $1.8 million.

The increase was primarily a result of increased expenses related to operating as a

public company, including legal and accounting fees and director and officer insurance expenses.

We expect general and administrative

expenses in the future to approximate current levels.

Research and development expenses for the three months

ended June 30, 2022 and 2021 were $5.3 million and $0.5 million, respectively, representing an increase of $4.8 million.

was primarily the result of increased external research and development costs related to clinical and pre-clinical programs for PF-614

and PF614-MPAR™.

We do not currently track expenses on a program-by-program basis.

We expect future research and development expenses

to approximate current levels.

General and administrative expenses

General and administrative expenses for the three

months ended June 30, 2022 and 2021 were $2.0 million and $0.4 million, respectively, representing an increase of $1.6 million.

was primarily a result of increased expenses related to operating as a public company, including legal and accounting fees and director

and officer insurance expenses.

We expect future general and administrative expenses to approximate current levels.

income and expense

in the fair value of derivative liabilities during the three months ended June 30, 2021 resulted from the decreased likelihood of realization

of the embedded derivative instrument in convertible notes payable, resulting in a gain of $0.7 million during the three months ended

June 30, 2021.

All outstanding liabilities were settled in connection with the conversion of outstanding note payables on June 30, 2021.

in fair value of convertible notes and liability classified warrants for the 2022 period relate to the 2021 Notes.

Loss on debt conversions

is driven by the difference between the conversion price of the 2021 Notes and the average of the high and low stock price on the

date of conversion.

is driven by the difference between the conversion price of the 2021 Notes and the average of the high and low stock price on the date

of conversion.

There was no corresponding activity in the 2021 period.

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interest expense associated with the 2021 Notes is reflected in the fair value adjustments instead of separately presented as interest

of the six months ended June 30, 2022 and 2021

following table summarizes our results of operations for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

Federal grants

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

(11,857,986 )

(10,881,096 )

Other income (expense):

Change in fair value of derivative liabilities

Change in fair value of convertible notes

Change in fair value of liability classified warrants

Loss on debt conversions

Interest expense

Other income and expense, net

Total other income (expense), net

$ (8,874,044 )

$ (1,909,303 )

$ (6,964,741 )

Net loss attributable to noncontrolling interests

Deemed dividend related to warrants down round provision

Net loss attributable to common stockholders

$ (9,665,976 )

$ (1,883,275 )

$ (7,782,701 )

grant funding

Funding from federal grants for the months ended June

30, 2022 and 2021 totaled $0.8 million and $0.7 million, respectively, representing an increase of $0.1 million.

Differences are due to

the timing of research activities eligible for funding as well as the grant period.

We expect funding from federal grants to generally

increase in the future due to the timing of preclinical and clinical development activities under the grants.

Research and development expenses

Research and development expenses for the six months

ended June 30, 2022 and 2021 were $8.4 million and $0.8 million, respectively, representing an increase of $7.6 million.

was primarily the result of increased external research and development costs related to clinical programs for PF-614 and preclinical

programs for PF614-MPAR™.

We do not currently track expenses on a program-by-program basis.

We expect future research and development

expenses to approximate current levels.

General and administrative expenses

General and administrative expenses for the six months

ended June 30, 2022 and 2021 were $4.2 million and $0.9 million, respectively, representing an increase of $3.3 million.

was primarily a result of increased expenses related to operating as a public company, including legal and accounting fees and director

and officer insurance expenses.

We expect future general and administrative expenses to approximate current levels.

Other income and expense

Changes in the fair value of derivative liabilities

during the six months ended June 30, 2021 resulted from the decreased likelihood of realization of the embedded derivative instrument

in convertible notes payable, resulting in a gain of $0.7 million during the six months ended June 30, 2021.

All outstanding liabilities

were settled in connection with the conversion of outstanding note payables on June 30, 2021.

in fair value of convertible notes and liability classified warrants for the 2022 period relate to the 2021 Notes.

Loss on debt conversions

is driven by the difference between the conversion price of the 2021 Notes and the average of the high and low stock price on the date

of conversion.

There was no corresponding activity in the 2021 period.

expense decreased $1.2 million in the 2022 period due to the conversion of outstanding convertible notes on June 30, 2021 and because

interest expense associated with the 2021 Notes is reflected in the fair value adjustments instead of separately presented as interest

and capital resources

of liquidity and capital

of March 31, 2022, we had $8.4 million of cash and cash equivalents.

of June 30, 2022, we had $3.7 million of cash and cash equivalents.

Since inception, we have generated limited revenues and have incurred

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from sales of any product candidates for several years, if at all.

As of March 31, 2022, we had an accumulated deficit of $87.5

have funded our operations to date primarily with proceeds from the sale of common equity, funding under federal research grants and

borrowings under promissory notes.

To fund future operations, we will likely need to raise additional capital.

The amount and timing

of future funding requirements will depend on many factors, including the timing and results of our ongoing research and development

efforts and related general and administrative support.

We anticipate that we will seek to fund our operations through public or private

equity or debt financings or other sources, such as potential collaboration agreements.

We cannot make assurances that anticipated additional

financing will be available to us on favorable terms, if at all.

remaining funding under two approved federal research grants totals $4.1 million and is expected to be utilized by December 31, 2022.

Pursuant to the terms and conditions of the two grants, we are required to submit progress reports to NIDA on an annual basis and a final

research performance progress report within 120 days of the performance period end date.

Additionally, the grants limit the use of funds

to activities that are clearly severable and independent from activities that involve human subjects until the receipt by NIDA of (i)

Institutional Review Board (“ IRB ”) approval, (ii) federal-wide assurance from the Office for Human Research Protections,

(iii) a Data and Safety Monitoring Plan, (iv) certification that all key personnel have completed education on the protection of human

subjects and (v) a Clinical Trials Dissemination Plan.

We must also comply with the data sharing policies of NIDA and the NIH Public

Access Policy, that require submission of final peer-reviewed journal manuscripts that arise from the use of grants to PubMed Central

immediately upon acceptance for publication.

As of June 30, 2022, we had an accumulated deficit of $95.5 million.

We have funded our operations to date primarily with

proceeds from the sale of common equity, funding under federal research grants and borrowings under promissory notes.

To fund future operations,

we will likely need to raise additional capital.

The amount and timing of future funding requirements will depend on many factors, including

the timing and results of our ongoing research and development efforts and related general and administrative support.

We anticipate that

we will continue to fund our operations through public or private equity or debt financings or other sources which may include potential

collaboration agreements.

We cannot make assurances that anticipated additional financing will be available to us on favorable terms,

remaining funding under two approved federal research grants totals $6.3 million, covering the period through August 31, 2023.

to the terms and conditions of the two grants, we are required to submit progress reports to NIDA on an annual basis and a final research

performance progress report within 120 days of the performance period end date.

Additionally, the grants limit the use of funds to activities

that are clearly severable and independent from activities that involve human subjects until the receipt by NIDA of (i) Institutional

Review Board (“ IRB ”) approval, (ii) federal-wide assurance from the Office for Human Research Protections, (iii) a

Data and Safety Monitoring Plan, (iv) certification that all key personnel have completed education on the protection of human subjects

and (v) a Clinical Trials Dissemination Plan.

We must also comply with the data sharing policies of NIDA and the NIH Public Access Policy,

that require submission of final peer-reviewed journal manuscripts that arise from the use of grants to PubMed Central immediately upon

acceptance for publication.

grant has to be repaid.

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This share subscription

facility is available for a period of 36 months from the closing date of the Business Combination.

A draw down is subject to limitations

on the amount that is drawn under the facility and must comply with certain conditions precedent including the listing of our shares

on a principal market (which includes Nasdaq), having the necessary number of shares that are issuable pursuant to the draw down registered

under an effective registration statement, and other notice and timing requirements.

Upon our valid exercise of a draw down, pursuant

to delivery of a notice and in accordance with other conditions, GEM Global is required to pay, in cash, a per-share amount equal to

90% of the average closing bid price of the shares of our common stock recorded by Nasdaq during the 30 consecutive trading days commencing

on the first trading day that is designated on the draw down notice.

In no event may our draw down requests exceed 400% of the average

daily trading volume for the 30 trading days immediately preceding the date we deliver the draw down notice.

Our ability to utilize this

share subscription facility is restricted while the 2021 Notes are outstanding.

the closing of the Business Combination, GEM Global became entitled to a commitment fee in the form of cash or freely tradeable shares

of our common stock in an amount equal to 2% of the Aggregate Limit or $1.2 million to be paid in two tranches.

The commitment fee for

the first tranche, which is equal to 67% of the commitment fee, or $800,000, becomes payable on the first anniversary of the closing

of the Business Combination and the commitment fee for the second tranche, which is equal to the remaining 33% of the commitment fee,

or $400,000, becomes payable on the eighteen-month anniversary of the closing of the Business Combination.

facility is available for a period of 36 months from the closing date of the Merger.

A draw down is subject to limitations on the amount

that is drawn under the facility and must comply with certain conditions precedent including the listing of our shares on a principal

market (which includes Nasdaq), having the necessary number of shares that are issuable pursuant to the draw down registered under an

effective registration statement, and other notice and timing requirements.

Upon our valid exercise of a draw down, pursuant to delivery

of a notice and in accordance with other conditions, GEM Global is required to pay, in cash, a per-share amount equal to 90% of the average

closing bid price of the shares of our common stock recorded by Nasdaq during the 30 consecutive trading days commencing on the first

trading day that is designated on the draw down notice.

In no event may our draw down requests exceed 400% (“ Draw Down Limit ”)

of the average daily trading volume for the 30 trading days immediately preceding the date we deliver the draw down notice.

to utilize this share subscription facility is restricted while the 2021 Notes are outstanding.

the public listing of the Company’s shares following the closing of the Merger, GEM Global became entitled to a commitment fee

in the form of cash or freely tradeable shares of our common stock in an amount equal to 2% of the Aggregate Limit or $1.2 million to

be paid in two tranches.

The commitment fee for the first tranche, which is equal to 67% of the commitment fee, or $800,000, was paid

through issuance of 921,235 shares of common stock in July 2022.

The commitment fee for the second tranche, which is equal to the remaining

33% of the commitment fee, or $400,000, becomes payable in January 2023.

Additionally,

we issued a warrant with a 36-month term at the closing of the Business Combination granting GEM Global the right to purchase 1,106,108

shares of our common stock (an amount equal to 4% of the total number of our common stock outstanding as of the closing date of the Business

Combination (subject to adjustments described below), calculated on a fully diluted basis), at a strike price per share equal to $10.01,

which was the closing bid price for such common stock on the first day of trading on Nasdaq.

The strike price was reduced to $4.50 per

share at December 31, 2021 because of a pricing adjustment per the GEM Agreement.

The warrant can be exercised on a cashless basis in

part or in whole at any time during the term.

Any failure by us to timely transfer the shares under the warrant pursuant to GEM Global’s

exercise will entitle GEM Global to compensation in addition to other remedies.

The number of shares underlying the warrant as well as

the strike price is subject to adjustments for recapitalizations, reorganizations, change of control, stock split, stock dividend, reverse

stock splits, and issuances of additional common shares at a price per share less than the exercise price.

we issued a warrant with a 36-month term at the closing of the Merger granting GEM Global the right to purchase 1,106,108 shares of our

common stock (an amount equal to 4% of the total number of our common stock outstanding as of the closing date of the Merger (subject

to adjustments described below), calculated on a fully diluted basis), at a strike price per share equal to $10.01, which was the closing

bid price for such common stock on the first day of trading on Nasdaq.

The strike price was reduced to $0.46 per share at June 30, 2022

because of a pricing adjustment per the GEM Agreement.

The warrant can be exercised on a cashless basis in part or in whole at any time

during the term.

Any failure by us to timely transfer the shares under the warrant pursuant to GEM Global’s exercise will entitle

GEM Global to compensation in addition to other remedies.

The number of shares underlying the warrant as well as the strike price is

subject to adjustments for recapitalizations, reorganizations, change of control, stock split, stock dividend, reverse stock splits,

and issuances of additional common shares at a price per share less than the exercise price.

GEM Agreement contains certain negative covenants restricting us from securing a share subscription line similar to the financing provided

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and an issuance of options, warrants, or similar rights of subscription or the issuance of convertible equity or debt securities.

“ Risks Related to Our Business, Financial Condition and Capital Requirements ” for additional information.

pursuant to the terms of the GEM Agreement, we are required to indemnify GEM Global for any losses it incurs as a result of a breach

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(ii) warrants to purchase 1,083,475 shares of the Company’s common stock in the aggregate at an exercise price of $7.63 per share.

The SPA limits our ability to execute certain debt and equity financings, including our existing $60.0 million share subscription facility,

while the 2021 Notes remain outstanding.

June 30, 2022, we entered a second SPA for an aggregate financing of $8.0 million with institutional investors.

The Company issued

to the investors (i) 2022 Notes in the aggregate principal amount of $8.48 million for an aggregate purchase price of $8.0 million

and (ii) warrants to purchase 9,335,780 shares of the Company’s common stock in the aggregate at an exercise price of $0.7085

The first funding of $4.0 million occurred on July 1, 2022 and the second funding of $4.0 million occurred on August 9, 2022.

following table summarizes our cash flows for each of the periods presented:

Three Months Ended March 31,

Six Months Ended June 30,

Net cash used in operating activities

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$ (8,530,090 )

the three months ended March 31, 2022 and 2021, we used cash in operating activities of $3.4 million and $0.5 million, respectively.

The increase primarily resulted from the clinical advancement of our product candidates and increased costs related to operating as a public company.

the three months ended March 31, 2022, net cash provided by investing activities was $4,500 from the sale of certain property and equipment.

There were no comparable activities for the three months ended March 31, 2021.

the three months ended March 31, 2022, net cash used in financing activities was $0.4 million, primarily consisting of repayment

of financed insurance premiums.

During the three months ended March 31, 2021, net cash provided by financing activities was $0.6 million,

primarily consisting of proceeds from the issuance of promissory notes to related parties and from the exercise of stock options.

the six months ended June 30, 2022 and 2021, we used cash in operating activities of $7.9 million and $0.6 million, respectively.

increase primarily resulted from the clinical advancement of our product candidates, the timing of vendor invoicing and payments, and

increased costs related to operating as a public company.

the six months ended June 30, 2022, net cash provided by investing activities was $4,500 from the sale of certain property and equipment.

the six months ended June 30, 2022, net cash used in financing activities was $0.7 million, primarily consisting of repayment of financed

insurance premiums and cash redemption payment of convertible notes.

During the six months ended June 30, 2021, net cash provided by

financing activities was $8.5 million, primarily consisting of proceeds from issuance of common stock related to the Business Combination.

primary use of cash is to fund operating expenses, primarily related to our research and development activities.

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and clinical trials of our product candidates.

In addition, since the completion of the Business Combination, we incur costs associated

with operating as a public company, including significant legal, accounting, insurance, investor relations and other expenses that we

did not incur as a private company.

The timing and amount of our operating expenditures will depend largely on our ability to:

In addition, upon the completion of the Business Combination, we have incurred, and will

continue to incur, additional costs associated with operating as a public company, including significant legal, accounting, insurance,

investor relations and other expenses that we did not incur as a private company.

The timing and amount of our operating expenditures

will depend largely on our ability to:

preclinical development of our early-stage programs and clinical trials of our product candidates;

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the costs of operating as a public company.

have generated limited revenues and have incurred significant operating losses since our inception and, as of March 31, 2022, had an

accumulated deficit of $87.5 million.

We expect to continue to incur significant and increasing expenses and operating losses

for the foreseeable future.

have generated limited revenues and have incurred significant operating losses since our inception and, as of June 30, 2022, had an accumulated

deficit of $95.5 million.

We expect to continue to incur significant and increasing expenses and operating losses for the foreseeable

the completion of the Business Combination and public listing of our common stock on Nasdaq, we had access to up to $60.0 million from

a share subscription facility entered into in December 2020.

The 2021 Notes limit our ability to execute certain debt and equity financings,

including its existing $60.0 million share subscription facility, while the 2021 Notes are outstanding.

Without the availability of proceeds

through the share subscription facility, existing cash resources are not sufficient to allow us to fund current planned operations through

the next 12 months following the filing of this Quarterly Report on Form 10-Q, which raises substantial doubt about the Company’s

ability to continue as a going concern.

The 2021 Notes and 2022 Notes limit our ability to execute certain debt

and equity financings, including its existing $60.0 million share subscription facility, while the 2021 Notes and 2022 Notes are outstanding.

Without the availability of proceeds through the share subscription facility, existing cash resources are not sufficient to allow us

to fund current planned operations through the next 12 months following the filing of this Quarterly Report on Form 10-Q, which raises

substantial doubt about the Company’s ability to continue as a going concern.

of the numerous risks and uncertainties associated with research, development and commercialization of biologic product candidates, we

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to changes in the fair value of the common stock underlying the conversion option.

We use a Monte Carlo to estimate the fair value of

the notes, which relies on unobservable Level 3 inputs.

Changes in the fair value of the notes are recognized through earnings for each

reporting period.

We use a Monte Carlo simulation model to estimate

the fair value of the 2021 Notes, which relies on unobservable Level 3 inputs.

Changes in the fair value of the notes are recognized

through earnings for each reporting period.

sheet arrangements

23 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis