What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2025-03-10 compared with 2024-03-15 · 309 added, 410 removed, 303 unchanged (70% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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

and the potential for opioid misuse, abuse and overdose.

is a clinical stage pharmaceutical company developing innovative solutions for severe pain relief while reducing the fear of and the

potential for opioid misuse, abuse and overdose.

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

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particularly if and as we:

continue preclinical studies

and continues existing and initiates new clinical trials for PF614, PF614-MPAR and nafamostat, our lead product candidates being

tested for chronic pain and infectious disease;

advance the development

of our product candidate pipeline of other product candidates, including through business development efforts to invest in or in-license

other technologies or product candidates;

maintain, expand and protect

our intellectual property portfolio;

hire additional clinical,

quality control, medical, scientific and other technical personnel to support our clinical operations;

seek regulatory approval

for any product candidates that successfully complete clinical trials;

undertake any pre-commercialization

activities to establish sales, marketing and distribution capabilities for any product candidates for which we may receive regulatory

expand our infrastructure

and facilities to accommodate our growing employee base;

add operational, financial

and management information systems and personnel, including personnel to support our research and development programs, any future

commercialization efforts and our transition to operating as a public company.

preclinical studies and continues existing and initiates new clinical trials for PF614, PF614-MPAR and nafamostat, our lead product

candidates being tested for chronic pain and infectious disease;

the development of our product candidate pipeline of other product candidates, including through business development efforts to

invest in or in-license other technologies or product candidates;

expand and protect our intellectual property portfolio;

additional clinical, quality control, medical, scientific and other technical personnel to support our clinical operations;

regulatory approval for any product candidates that successfully complete clinical trials;

any pre-commercialization activities to establish sales, marketing and distribution capabilities for any product candidates for which

we may receive regulatory approval;

our infrastructure and facilities to accommodate our growing employee base;

operational, financial and management information systems and personnel, including personnel to support our research and development

programs, any future commercialization efforts and our transition to operating as a public company.

have incurred and expect to continue to incur additional costs associated with operating as a public company, including significant legal,

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Without raising additional capital through

a future offering, we believe that current cash on hand is sufficient to fund operations into the third quarter of 2024.

a future offering, we believe that current cash on hand is sufficient to fund operations into the second quarter of 2025.

We based this

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our product candidates, if approved, we may require substantial additional funding in the future.

September 24, 2021, we entered into the SPA for an aggregate financing of $15.0 million with institutional investors.

A first closing

under the SPA occurred on September 24, 2021 and a second closing under the SPA occurred on November 5, 2021.

At the first closing, the

Company issued to the investors (i) senior secured convertible promissory notes in the aggregate principal amount of $5.3 million for

an aggregate purchase price of $5.0 million and (ii) warrants to purchase 1,507 shares of the Company’s common stock in the aggregate

at a current exercise price of $3.64 per share.

At the second closing, the Company issued to the institutional investors referenced above,

(i) senior secured convertible promissory notes in the aggregate principal amount of $10.6 million for an aggregate purchase price of

$10.0 million and (ii) warrants to purchase 3,011 shares of the Company’s common stock in the aggregate at a current exercise price

of $3.64 per share.

The 2021 Notes were satisfied on October 10, 2022.

June 30, 2022, we entered into an $8.0 million convertible financing agreement with institutional investors.

The agreement provided for

two closings, each for notes payable of $4.24 million (resulting in gross cash proceeds of $4.0 million).

Funds were received for the

first closing on July 1, 2022 and for the second closing on August 9, 2022.

The remaining amount of principal and interest on the 2022

Notes was repaid in the first quarter of 2023.

We were obligated under the 2022 Notes to pay additional cash as true-up payments for

interest or redemption amounts that we paid in shares of common stock that were valued below $24.07 or the lower conversion price of

$9.01 in effect between January 12, 2023 and May 12, 2023.

The true-up payments compensate the holder for the difference between the

value of a share and the conversion price in effect at the time of redemption, multiplied by the number of shares paid.

The true-up payments

totaling $0.6 million were paid on May 12, 2023.

connection with each of the first and second closings of the 2022 Notes we also issued warrants to purchase 38,900 shares of the

Company’s common stock.

The warrants have a current exercise price of $3.64 and are exercisable for five years following

issuance of the 2022 Notes.

December Offering

December 7, 2022, we entered into an underwriting agreement with Lake Street Capital Management, LLC (the “ Underwriter ”),

pursuant to which we agreed to issue and sell (i) 190,000 shares of the Company’s common stock, par value $0.0001 per share, (ii)

pre-funded warrants to purchase 51,666 shares of common stock and (iii) warrants to purchase 483,333 shares of common stock to the Underwriter

in a public offering.

In addition, the Company granted the Underwriter the option, for 45 days from the closing of the offering, to purchase

up to 28,500 additional shares of common stock and common warrants to purchase up to an additional 72,500 shares of common stock.

Underwriter agreed to purchase the shares from the Company pursuant to at a price of $15.62 per share.

lieu of a purchase of common stock that would otherwise result in an investor’s beneficial ownership exceeding 4.99% (or, at the

election of the investor, 9.99%) of the outstanding common stock, a pre-funded warrant was offered, each of which enables the investor

to purchase one share of common stock at an exercise price of $0.0001.

Each pre-funded warrant was exercisable upon issuance and will

expire when exercised in full (all pre-funded warrants were exercised immediately upon issuance).

Each pre-funded warrant was sold with

a common warrant to purchase two shares of common stock.

The public purchase price of one share of common stock and accompanying common

warrant to purchase two shares of Common Stock is $16.80 and the combined purchase price of one pre-funded warrant and accompanying common

warrant to purchase two shares of common stock is $16.80.

common warrant is exercisable immediately at an exercise price of $16.80 per share and will expire five years following the date of issuance.

The offering closed on December 9, 2022 and we received aggregate gross proceeds of approximately $4.1 million from the Offering.

Registered Direct Offering and 2024 August Warrant Inducement

August 2024, we entered into a definitive Securities Purchase Agreement with certain institutional investors, pursuant to which we agreed

to issue and sell in a registered direct offering, (i) an aggregate of 166,054 shares of our common stock, par value $0.0001 per share

at an offering price of $7.05 per share, (ii) pre-funded warrants to purchase up to 70,827 shares of Common Stock, at a price per pre-funded

warrant equal to $7.0485, the price per share less $0.0001, for gross proceeds of approximately $1.7 million before the deduction of

placement agent fees and offering expenses.

The pre-funded warrants were subsequently exercised in full.

also entered into an inducement agreement with certain warrant holders for the exercise of certain outstanding warrants to purchase up

to an aggregate of 480,234 shares of our common stock originally issued in February 2024, having an exercise price of $15.90 per share,

at a reduced exercise price of $7.05 per share, for gross proceeds of approximately $3.4 million before the deduction of placement agent

fees and offering expenses.

We also agreed to amend certain existing warrants to purchase up to an aggregate of 133,334 shares of common

stock that were previously issued in November 2023 and have an exercise price of $23.5125 per share such that the amended warrants will

have a reduced exercise price of $7.05 per share effective upon the closing of the offering and will be exercisable from the date on

which stockholder approval is received with respect to the issuance of the shares of common stock issuable upon exercise of such warrants.

a concurrent private placement, pursuant to the terms of the inducement agreement and Securities Purchase Agreement, we also agreed to

issue and sell unregistered warrants to purchase up to 1,863,706 shares of common stock.

The warrants have an exercise price of $7.05

per share and are exercisable from the date on which stockholder approval is received with respect to the issuance of the shares of common

stock issuable upon exercise of the warrants.

One half of the warrants will expire eighteen months after they are exercisable and the

other half will expire five years after they are exercisable.

The warrants contain customary anti-dilution adjustments to the exercise

price, including for share splits, share dividends, rights offering and pro rata distributions.

agreed to pay the placement agent a cash fee equal to 7% of the aggregate gross proceeds of the offerings or $354,000.

We also agreed

to pay the placement agent $100,950 for expenses.

We also issued to the placement agent warrants to purchase up to 50,200 shares of common

These warrants have an exercise price equal to $8.8125 per share and are exercisable for five years from the commencement of sales

in the Offerings.

February Warrant Inducement

February 2024, we entered into an Inducement Letter with certain holders of existing warrants to purchase up to an aggregate of 240,120

shares of our common stock issued to the holders in connection with the 2023 May Offering.

Pursuant to the Inducement Letter, the holders

agreed to exercise for cash their existing warrants to purchase an aggregate of 240,120 shares of Common Stock at a reduced exercise

price of $19.65 per share in consideration of our agreement to issue new unregistered Series A Warrants to purchase up to 240,120 shares

of Common Stock and new unregistered Series B Warrants to purchase up to 240,120 shares of Common Stock.

The Series A Warrants have an

exercise price of $15.90 per share and have a term equal to eighteen months from the date of issuance.

The Series B Warrants have an

exercise price of $15.90 per share and will expire on May 12, 2028.

The gross proceeds to us from the exercise of the warrants were approximately

$4.7 million, prior to deducting placement agent fees and estimated offering expenses.

connection with the execution of the Inducement Letter, we entered into a waiver related to the 2023 Notes’ SPA it had entered

into as of October 23, 2023.

The SPA contained restrictions on our ability to undertake certain transactions, which included entering

into the Inducement Letter.

The Waiver permitted us to enter into the Inducement Letter but required repayment of the remaining $0.5

million of investor held notes issued under the SPA with a premium of $0.5 million following closing of the inducement transaction.

utilized an exclusive placement agent for the 2024 Warrant Inducement and incurred approximately $0.3 million in legal fees and other

closing costs.

Additionally, we issued to the placement agent as compensation unregistered warrants to purchase up to 16,811 shares of

Common Stock, equal to 7.0% of the aggregate number of shares of Common Stock (or warrants) placed in the transaction.

The placement

agent warrants expire on May 12, 2028, and have an exercise price of $24.5625 per share of Common Stock (equal to 125% of the reduced

exercise price per Existing Warrant).

October 23, 2023, we entered into a Securities Purchase Agreement (the “SPA”) for an aggregate financing of $1.7 million

with investors, including $0.2 million with a board member.

At the first closing under the SPA, which occurred on October 25, 2023, we

issued to the investors (i) senior secured convertible promissory notes in the aggregate principal amount of $612,000 for an aggregate

purchase price of $566,667 and (ii) warrants to purchase 83,714 shares of our common stock in the aggregate.

At the second closing under

the SPA, which occurred on November 28, 2023, we issued to the investors referenced above, (i) additional notes in the aggregate principal

amount of $1,224,000 for an aggregate purchase price of $1,133,333 and (i) additional warrants to purchase 167,427 shares of the common

stock in the aggregate.

The notes matured on April 25, 2024 and May 28, 2024, respectively.

combined notes are subject to an original issue discount of 8%, have a term of six months from their respective date of issuance and

accrue interest at the rate of 6.0% per annum.

The notes are convertible into common stock, at a per share conversion price equal to

Beginning ninety days following issuance of the notes at the first closing and second closing, respectively, we are obligated

to redeem monthly one third of the original principal amount under the applicable note, plus accrued but unpaid interest, liquidated

damages and any other amounts then owing to the holder of such note.

We are required to pay the redemption amount in cash with a premium

of 10% or, at the election of the investor at any time, some or all of the principal amount and interest may be paid by conversion of

shares under the note into common stock based on a conversion price equal to $23.51.

Conversions and repayments of principal and interest

on the notes in January and February 2024 totaled $1.7 million.

warrants have an exercise price of $23.51 and are exercisable for five years following issuance on each of the first and second closing

dates under the SPA.

Warrants for 88,261 shares of common stock were exercised in January 2024.

May 12, 2023, we completed a public offering of an aggregate of 120,059 shares of its common stock at par value $0.0001 per share (including

pre-funded warrants in lieu thereof), Series A-1 warrants to purchase up to 120,059 shares of common stock and Series A-2 warrants to

purchase up to 120,059 shares of common stock, at a combined public offering price of $58.31 per share (or pre-funded warrant in lieu

thereof) and accompanying warrants.

The Series A-1 warrants have an exercise price of $54.60 per share, are exercisable immediately upon

issuance and expire five years from the date of issuance, and the Series A-2 warrants have an exercise price of $54.60 per share, are

exercisable immediately upon issuance and expire eighteen months from the date of issuance.

of a warrant issued in the offering will not have the right to exercise any portion of its warrants if the holder, together with its

affiliates, would beneficially own in excess of 4.99% (or 9.99% at the election of the holder prior to the date of issuance) of the number

of shares of Common Stock outstanding immediately after giving effect to such exercise;

provided, however, that upon 61 days’ prior

notice us, the holder may increase or decrease the beneficial ownership limitation, provided that in no event shall the beneficial ownership

limitation exceed 9.99%.

Gross proceeds from this offering are approximately $7.0 million before the deduction of placement agent

fees and related costs of $0.7 million.

The Series A-1 and Series A-2 warrants were repriced to $19.65 per share and exercised in February

Wainwright & Co.

acted as the exclusive placement agent for the offering.

We also registered warrants issued to the placement agent

to purchase 8,404 shares of common stock at a per share exercise price of $72.882, which is 125% of the price of the shares in the offering.

connection with the offering, we amended certain existing warrants to purchase up to an aggregate of 14,006 shares of our common stock

that were previously issued in September 2021 through December 2022 to purchasers in the offering at exercise prices ranging from $252.00

to $2,808.00 per share, such that the amended warrants have a reduced exercise price of $54.60 per share, at an additional offering price

of $1.875 per amended warrant.

February Offering

February 2, 2023, we entered into a definitive Securities Purchase Agreement with certain institutional investors , pursuant to which

the Company agreed to issue and sell in a registered direct offering, priced “at-the-market” under the rules of The Nasdaq

Stock Market, an aggregate of 297,619 shares of common stock of the Company, par value $0.0001 per share, at an offering price of $10.08

per share, for gross proceeds of approximately $3.0 million before the deduction of placement agent fees and related costs of $0.3 million.

The closing of the Offering occurred on February 6, 2023.

a concurrent private placement, the Company issued to the institutional investors, for each share of common stock purchased in the offering,

a common warrant to purchase one share of common stock.

we agreed to issue and sell in a registered direct offering, priced “at-the-market” under the rules of The Nasdaq Stock Market,

an aggregate of 19,842 shares of our common stock, par value $0.0001 per share, at an offering price of $151.2 per share, for gross proceeds

of approximately $3.0 million before the deduction of placement agent fees and related costs of $0.3 million.

The closing of the Offering

occurred on February 6, 2023.

a concurrent private placement, we issued to the institutional investors, for each share of common stock purchased in the offering, a

common warrant to purchase one share of common stock.

The common warrants are exercisable immediately upon issuance and terminate five

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effect to such exercise;

provided, however, that upon 61 days’ prior notice to the Company, the holder may increase or decrease

the beneficial ownership limitation, provided that in no event shall the beneficial ownership limitation exceed 9.99%.

provided, however, that upon 61 days’ prior notice to us, the holder may increase or decrease the beneficial

ownership limitation, provided that in no event shall the beneficial ownership limitation exceed 9.99%.

Wainwright & Co.

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agent warrants to purchase up to 1,389 shares of common stock to the Placement Agent (including its designees).

These warrants have

an exercise price equal to $12.60 per share and are exercisable for five years from the commencement of sales in the offering.

These warrants have an

exercise price equal to $189.00 per share and are exercisable for five years from the commencement of sales in the offering.

warrants and placement agent warrants and the shares of our common stock issuable upon the exercise of the common warrants and placement

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or exercisable into, shares of common stock beneficially owned, held or thereafter acquired by them.

May 12, 2023, the Company completed a public offering of an aggregate of 1,800,876 shares of its common stock at par value $0.0001 per

share (including pre-funded warrants in lieu thereof), Series A-1 warrants to purchase up to 1,800,876 shares of common stock and Series

A-2 warrants to purchase up to 1,800,876 shares of common stock, at a combined public offering price of $3.887 per share (or pre-funded

warrant in lieu thereof) and accompanying warrants.

The Series A-1 warrants have an exercise price of $3.64 per share, are exercisable

immediately upon issuance and expire five years from the date of issuance, and the Series A-2 warrants have an exercise price of $3.64

per share, are exercisable immediately upon issuance and expire eighteen months from the date of issuance.

holder of a warrant issued in the offering will not have the right to exercise any portion of its warrants if the holder, together with

its affiliates, would beneficially own in excess of 4.99% (or 9.99% at the election of the holder prior to the date of issuance) of the

number of shares of Common Stock outstanding immediately after giving effect to such exercise;

provided, however, that upon 61 days’

prior notice to the Company, the holder may increase or decrease the beneficial ownership limitation, provided that in no event shall

the beneficial ownership limitation exceed 9.99%.

Gross proceeds from this offering are approximately $7.0 million before the

deduction of placement agent fees and related costs of $0.7 million.

The Series A-1 and Series A-2 warrants were repriced to $1.31 per

share and exercised in February 2024.

Wainwright & Co.

acted as the exclusive placement agent for the offering.

The Company also registered warrants issued to the placement

agent to purchase 126,061 shares of common stock at a per share exercise price of $4.8588, which is 125% of the price of the shares in

the offering.

connection with the offering, the Company amended certain existing warrants to purchase up to an aggregate of 210,085 shares of the Company’s

common stock that were previously issued in September 2021 through December 2022 to purchasers in the offering at exercise prices ranging

from $16.80 to $187.20 per share, such that the amended warrants have a reduced exercise price of $3.64 per share, at an additional offering

price of $0.125 per amended warrant.

October 23, 2023, the Company entered into a Securities Purchase Agreement (the “SPA”) for an aggregate financing of $1.7

million with investors, including $0.2 million with a board member.

At the first closing under the SPA, which occurred on October 25,

2023, the Company issued to the investors (i) senior secured convertible promissory notes in the aggregate principal amount of $612,000

for an aggregate purchase price of $566,667 and (ii) warrants to purchase 1,255,697 shares of the Company’s common stock in the

At the second closing under the SPA, which occurred on November 28, 2023, the Company issued to the investors referenced above,

(i) additional notes in the aggregate principal amount of $1,224,000 for an aggregate purchase price of $1,133,333 and (i) additional

warrants to purchase 2,511,394 shares of the common stock in the aggregate.

The notes mature on April 25, 2024 and May 28, 2024, respectively.

combined notes are subject to an original issue discount of 8%, have a term of six months from their respective date of issuance and

accrue interest at the rate of 6.0% per annum.

The notes are convertible into common stock, at a per share conversion price equal to

Beginning ninety days following issuance of the notes at the first closing and second closing, respectively, the Company is

obligated to redeem monthly one third of the original principal amount under the applicable note, plus accrued but unpaid interest, liquidated

damages and any other amounts then owing to the holder of such note.

The Company is required to pay the redemption amount in cash with

a premium of 10% or, at the election of the investor at any time, some or all of the principal amount and interest may be paid by conversion

of shares under the note into common stock based on a conversion price equal to $1.5675.

Conversions and repayments of principal and

interest on the notes in January and February 2024 totaled $1.7 million.

warrants have an exercise price of $1.5675 and are exercisable for five years following issuance on each of the first and second closing

dates under the SPA.

Warrants for 1.3 million shares of common stock were exercised in January 2024.

December Offering

December 7, 2022, we entered into an underwriting agreement with Lake Street Capital Management, LLC (the “ Underwriter ”),

pursuant to which we agreed to issue and sell (i) 12,667 shares of our common stock, par value $0.0001 per share, (ii) pre-funded warrants

to purchase 3,445 shares of common stock and (iii) warrants to purchase 32,223 shares of common stock to the Underwriter in a public

In addition, we granted the Underwriter the option, for 45 days from the closing of the offering, to purchase up to 1,900 additional

shares of common stock and common warrants to purchase up to an additional 4,834 shares of common stock.

The Underwriter agreed to purchase

our shares pursuant to at a price of $234.30 per share.

lieu of a purchase of common stock that would otherwise result in an investor’s beneficial ownership exceeding 4.99% (or, at the

election of the investor, 9.99%) of the outstanding common stock, a pre-funded warrant was offered, each of which enables the investor

to purchase one share of common stock at an exercise price of $0.0001.

Each pre-funded warrant was exercisable upon issuance and will

expire when exercised in full (all pre-funded warrants were exercised immediately upon issuance).

Each pre-funded warrant was sold with

a common warrant to purchase two shares of common stock.

The public purchase price of one share of common stock and accompanying common

warrant to purchase two shares of Common Stock is $252.00 and the combined purchase price of one pre-funded warrant and accompanying

common warrant to purchase two shares of common stock is $252.00.

common warrant is exercisable immediately at an exercise price of $252.00 per share and will expire five years following the date of

The offering closed on December 9, 2022 and we received aggregate gross proceeds of approximately $4.1 million from the Offering.

June 30, 2022, we entered into an $8.0 million convertible financing agreement with institutional investors.

The agreement provided for

two closings, each for notes payable of $4.24 million (resulting in gross cash proceeds of $4.0 million).

Funds were received for the

first closing on July 1, 2022 and for the second closing on August 9, 2022.

The remaining amount of principal and interest on the 2022

Notes was repaid in the first quarter of 2023.

We were obligated under the 2022 Notes to pay additional cash as true-up payments for

interest or redemption amounts that we paid in shares of common stock that were valued below $361.05 or the lower conversion price of

$135.15 in effect between January 12, 2023 and May 12, 2023.

The true-up payments compensate the holder for the difference between the

value of a share and the conversion price in effect at the time of redemption, multiplied by the number of shares paid.

The true-up payments

totaling $0.6 million were paid on May 12, 2023.

connection with each of the first and second closings of the 2022 Notes we also issued warrants to purchase 2,594 shares of our common

The warrants have a current exercise price of $54.60 and are exercisable for five years following issuance of the 2022 Notes.

of Our Operating Results

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on Drug Abuse (“NIDA”).

In September 2018, we were awarded a research and development grant related to the development of

our MPAR® overdose prevention technology (the “MPAR Grant”).

In September 2019, we were awarded a second research and

development grant related to the development of our TAAP/MPAR® abuse deterrent technology for Opioid Use Disorder (“OUD”)

In September 2018 and August 2024, we were awarded a research and development grant related to the

development of our MPAR® overdose prevention technology (the “MPAR Grant”).

In September 2019, we were awarded a second

research and development grant related to the development of our TAAP/MPAR® abuse deterrent technology for Opioid Use Disorder (“OUD”)

(the “OUD Grant”).

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We expense research and development costs as incurred, which include:

expenses incurred to conduct

the necessary preclinical studies and clinical trials required to obtain regulatory approval;

expenses incurred under

agreements with contract research organizations (“ CROs ”) that are primarily engaged in the oversight and conduct

of our drug discovery efforts and preclinical studies, clinical trials and contract manufacturing organizations (“ CMOs ”)

that are primarily engaged to provide preclinical and clinical drug substance and product for our research and development programs;

other costs related to

acquiring and manufacturing materials in connection with our drug discovery efforts and preclinical studies and clinical trial materials,

including manufacturing validation batches, as well as investigative sites and consultants that conduct our clinical trials, preclinical

studies and other scientific development services;

payments made in cash or

equity securities under third-party licensing, acquisition and option agreements;

employee-related expenses,

including salaries and benefits, travel and stock-based compensation expense for employees engaged in research and development functions;

costs related to compliance

with regulatory requirements;

allocated facilities-related

costs, depreciation and other expenses, which include rent and utilities.

incurred to conduct the necessary preclinical studies and clinical trials required to obtain regulatory approval;

incurred under agreements with CROs that are primarily engaged in the oversight and conduct of our drug discovery efforts and preclinical

studies, clinical trials and CMOs that are primarily engaged to provide preclinical and clinical drug substance and product for our

research and development programs;

costs related to acquiring and manufacturing materials in connection with our drug discovery efforts and preclinical studies and

clinical trial materials, including manufacturing validation batches, as well as investigative sites and consultants that conduct

our clinical trials, preclinical studies and other scientific development services;

made in cash or equity securities under third-party licensing, acquisition and option agreements;

employee-related

expenses, including salaries and benefits, travel and stock-based compensation expense for employees engaged in research and development

related to compliance with regulatory requirements;

facilities-related costs, depreciation and other expenses, which include rent and utilities.

recognize external development costs as incurred.

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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

resources primarily to conduct our research and development as well as to manage 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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As a result, we expect that our research and development expenses will remain elevated as we continue our existing,

and commences additional, planned clinical trials for PF614, PF614-MPAR® and nafamostat, as well as conduct other preclinical and

and commence additional, planned clinical trials for PF614, PF614-MPAR® and nafamostat, as well as conduct other preclinical and

clinical development, including submitting regulatory filings for our other product candidates, subject to our ability to obtain financing.

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to the numerous risks and uncertainties associated with product development and commercialization, including the uncertainty of the following:

the scope, progress, outcome

and costs of our preclinical development activities, clinical trials and other research and development activities;

establishing an appropriate

safety and efficacy profile with investigational new drug (“ IND ”) enabling studies;

successful patient enrollment

in and the initiation and completion of clinical trials;

the timing, receipt and

terms of any marketing approvals from applicable regulatory authorities including the FDA and non-U.S.

the extent of any required

post-marketing approval commitments to applicable regulatory authorities;

establishing clinical and

commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that we or our third-party

manufacturers are able to make product successfully;

development and timely

delivery of clinical-grade and commercial-grade drug formulations that can be used in our clinical trials and for commercial launch;

obtaining, maintaining,

defending and enforcing patent claims and other intellectual property rights;

significant and changing

government regulation;

launching commercial sales

of our product candidates, if and when approved, whether alone or in collaboration with others;

maintaining a continued

acceptable safety profile of our product candidates following approval, if any, of our product candidates.

scope, progress, outcome and costs of our preclinical development activities, clinical trials and other research and development

an appropriate safety and efficacy profile with investigational new drug (“ IND ”) enabling studies;

patient enrollment in and the initiation and completion of clinical trials;

timing, receipt and terms of any marketing approvals from applicable regulatory authorities including the FDA and non-U.S.

extent of any required post-marketing approval commitments to applicable regulatory authorities;

clinical and commercial manufacturing capabilities or making arrangements with third-party manufacturers in order to ensure that

we or our third-party manufacturers are able to make product successfully;

and timely delivery of clinical-grade and commercial-grade drug formulations that can be used in our clinical trials and for commercial

maintaining, defending and enforcing patent claims and other intellectual property rights;

and changing government regulation;

commercial sales of our product candidates, if and when approved, whether alone or in collaboration with others;

a continued acceptable safety profile of our product candidates following approval, if any, of our product candidates.

changes in the outcome of any of these variables with respect to the development of our product candidates in preclinical and clinical

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significant accounting, audit, legal, regulatory, compliance and director and officer insurance costs as well as investor and public

relations expenses 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.

relations expenses.

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)

on issuance of convertible notes

in fair value of convertible notes

2022 Notes were accounted for under ASC 480 – Distinguishing Liabilities from Equity, due to share settlement features contained

within the notes.

As a result, the 2022 Notes were recorded as liabilities at fair value upon initial recognition and at the balance

We used a discounted cash flow model and a Monte Carlo simulation to estimate the fair value of the notes, both of which

rely on unobservable Level 3 inputs.

The loss on issuance of convertible notes represents the difference between the gross proceeds received

and the calculated fair value on the issuance date of the notes.

costs for convertible notes

issuance costs for convertible notes represent the original issue discount (expensed immediately due to the initial recognition at fair

value of the 2022 Notes noted above), and legal and accounting fees incurred in connection with the issuance of the 2022 Notes.

on conversions and change in fair value of convertible notes

conversions on the 2021 Notes occurred, we calculated the difference between the conversion price and the average of the high and low

stock price on the date of conversion.

The resulting difference was 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.

elected the fair value option to account for the 2021 Notes as we believe the fair value option provided 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.

The 2022 Notes were accounted for under ASC 480 – Distinguishing

Liabilities from Equity, due to share settlement features contained within the notes.

We used a discounted cash flow model and a

Monte Carlo simulation 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.

of liability classified warrants

warrants issued with the 2021 Notes and 2022 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.

This represents the immediate expense upon initial recognition of the

liability that is included in the statement of operations.

The liability is remeasured each reporting period as described further below.

We used a discounted cash flow model and a Monte Carlo simulation 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

in fair value of liability classified warrants

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

Changes in the fair value of

the warrants are recognized through earnings for each reporting period.

expense consists of interest accrued on our financed directors’ and officers’ insurance, and accumulated interest from

the 2023 Notes based on the stated interest rate.

In addition, the 2023 Notes balance at December 31, 2023 reflects amortization of

the debt discount from the original issuance and a discount associated with the warrant issuances and amortization of the associated

debt issuance costs that are all recorded as interest expense.

Interest expense related to the 2021 Notes and 2022 Notes was included in

the estimate of fair value of the convertible notes.

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.

expense consists of interest accrued on our financed directors’ and officers’ insurance, and interest from the 2023 Notes

based on the stated interest rate.

In addition, the 2023 Notes reflects amortization of the debt discount from the original issuance

and a discount associated with the warrant issuances and amortization of the associated debt issuance costs that are all recorded as

interest expense.

Interest expense related to the 2022 Notes was included in the estimate of fair value of the convertible notes.

for Income Taxes

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Our tax return period for United States federal income taxes for the tax years since 2021

remain open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions are open for examination

We record reserves for potential tax payments to various tax authorities related to uncertain tax positions, if any.

of uncertain tax positions is subject to significant judgment by management and subject to change, which may be substantial.

These reserves

are based on a determination of whether and how much a tax benefit taken by us in our tax filings or whether our position is more likely

than not to be realized following the resolution of any potential contingencies related to the tax benefit.

We develop our assessment

of uncertain tax positions, and the associated cumulative probabilities, using internal expertise and assistance from third-party experts.

As additional information becomes available, estimates are revised and refined.

Differences between estimates and final settlement may

occur resulting in additional tax expense.

Potential interest and penalties associated with such uncertain tax positions is recorded

as a component of our provision for income taxes.

remain open to examination under the statute of limitations by the Internal Revenue Service and state jurisdictions.

We record reserves

for potential tax payments to various tax authorities related to uncertain tax positions, if any.

The nature of uncertain tax positions

is subject to significant judgment by management and subject to change, which may be substantial.

These reserves are based on a determination

of whether and how much a tax benefit taken by us in our tax filings or whether our position is more likely than not to be realized following

the resolution of any potential contingencies related to the tax benefit.

We develop our assessment of uncertain tax positions, and the

associated cumulative probabilities, using internal expertise and assistance from third-party experts.

As additional information becomes

available, estimates are revised and refined.

Differences between estimates and final settlement may occur resulting in additional tax

Potential interest and penalties associated with such uncertain tax positions is recorded as a component of our provision for

income taxes.

To date, no amounts are being presented as an uncertain tax position.

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of the Years ended December 31, 2024 and 2023

Year Ended December 31,

Federal grants

Ended December 31,

and development

and administrative

operating expenses

Research and development

$ (12,248,402 )

General and administrative

Total operating expenses

(13,796,771 )

Loss from operations

(10,718,187 )

from operations

(10,718,187 )

Other income (expense):

Loss on issuance of convertible notes

Issuance costs for convertible notes

Loss on conversions and change in fair value of convertible notes

Issuance of liability classified warrants

Change in fair value of liability classified warrants

Interest expense

Other income and expense, net

Total other income/(expenses), net

income (expense):

on conversions and change in fair value of convertible notes

in fair value of liability classified warrants

income and expense, net

other income (expenses), net

$ (7,987,009 )

$ (10,626,275 )

Net loss attributable to noncontrolling interests

Deemed dividend related to warrants down round provision

Net loss attributable to common stockholders

loss attributable to noncontrolling interests

dividend related to warrants down round provision

loss attributable to common stockholders

$ (7,987,225 )

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from federal grants totaled $5.2 million for the year ended December 31, 2024, compared to $2.2 million for the year ended December 31,

Revenue decreased $0.3 million during the year ended December 31, 2023, due to the timing of research activities eligible for funding

under the grants.

2023, respectively.

The $3.0 million difference is due to the timing of research activities eligible for funding, with increased activities

under the OUD grant following the selection of a lead drug candidate in June 2024 and funding under the newly awarded MPAR grant which

began in September 2024.

and Development Expenses

and development expenses were $7.2 million for the year ended December 31, 2024, compared to $7.6 million for the year ended December

The decrease was primarily the result of changes in timing of external research and development costs related to the clinical

programs for PF614 and PF614-MPAR.

31, 2023, respectively, representing a decrease of $0.4 million.

The decrease was primarily the result of reduced external research and

development costs related to clinical and pre-clinical programs for PF614 and PF614-MPAR, with decreased clinical trial activity for

both programs in the 2024 period.

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

We expect future research and development

expenses to approximate current levels but may need to be adjusted based on our ability to raise capital sufficient to fund these expenses.

and Administrative Expenses

and administrative expenses were $4.7 million for the year ended December 31, 2024, compared to $5.4 million for the year ended December

The decrease was primarily a result of reduced stock-based compensation, reduced liability insurance, legal, and consulting

fees and no employee bonus expenses in the 2023 period.

31, 2023 respectively, representing a decrease of $0.6 million.

The decrease was primarily a result of reduced stock-based compensation

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

Income and Expense

income and expenses, net, were $91,912 for the year ended December 31, 2023, compared to $14,410 for the year ended December 31,

The decrease was primarily the result of interest expense in the current year offset by changes in the fair value of certain

financial instruments.

The activity from 2022 included the accounting considerations of the conversions of the 2021 Notes as well as

the issuance of the 2022 Notes.

There was no corresponding conversions activity in the 2023 period associated with the 2022 Notes

due to the accounting under ASC 480.

Interest expense incurred in 2023 is primarily driven by the amortization of debt discount and

debt issuance costs related to the 2023 Notes.

income and expense for the year ended December 31, 2024, consisted primarily of interest expense associated with the amortization of

the original issue discount and the debt issuance costs for the 2023 Notes and represented a net change in other income and expense of

$1.3 million compared to the year ended December 31, 2023.

The comparative period for 2023 consisted primarily of changes in fair value

associated with the 2022 Notes and the liability-classified warrants.

and Capital Resources

16 unchanged sentences

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

funding under approved federal research grants totals $2.2 million and is expected to be utilized by August 2024.

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.

grant must be repaid.

To receive the remaining funding for each respective study covered by a grant, we must meet certain milestones.

We have met the required milestones under the MPAR Grant.

The remaining milestone under the OUD Grant is identification of a R-methadone-TAAP

clinical candidate that meet the specified criteria.

arising from the research projects funded with the grants are required to be reported to NIDA, per the Bayh-Dole Act (the Patent and

Trademark Law Amendments Act), that permits us to retain ownership of the inventions, while also giving NIDA the license to practice

the subject invention.

In turn, we are expected to file for patent protection and to ensure commercialization upon licensing for the

benefit of public health.

to the GEM Agreement, we are entitled to draw down up to $60.0 million of gross proceeds (“ Aggregate Limit ”) from

GEM Global in exchange for shares of our common stock, subject to meeting the terms and conditions of the GEM Agreement.

This share subscription

facility is available for a period of 36 months from the closing date of the Merger (July 2024).

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

We may not be able to utilize the facility before it expires.

Our ability to utilize this share subscription facility is

restricted while financing commitments to which we are subject remain 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 was equal to 67% of the commitment fee, or $800,000, was discharged

with 3,838 shares of common stock transferred from related parties in July 2022.

The commitment fee for the second tranche, which was

equal to the remaining 33% of the commitment fee, or $400,000 was paid in January 2023 through the issuance of 44,444 shares of registered

common stock.

Additionally,

we issued a warrant with a 36-month term at the closing of the Merger granting GEM Global the right to purchase 4,608 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 $2,402.40, which was the closing bid price

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

The exercise price was reduced to $1.5675 per share as of December 31, 2023

because of a pricing adjustment per the GEM Agreement which is reflected on the consolidated statement of operations as a deemed dividend.

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.

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 by us or

of our representations and warranties and covenants under the GEM Agreement or for any misstatement or omission of a material fact in

a registration statement registering those shares pursuant to the GEM Agreement.

Also, GEM Global is entitled to be reimbursed for legal

or other costs or expenses reasonably incurred in investigating, preparing, or defending against any such loss.

have generated limited revenues and have incurred significant operating losses since our inception and, as of December 31, 2023, we have

an accumulated deficit of $121.6 million.

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

Without capital raised through financing transactions, existing cash resources are sufficient to allow us to fund current planned

operations into the third quarter of 2024, which raises substantial doubt about the Company’s ability to continue as a going concern.

remaining cash funding under the MPAR federal research grant totaled $10.6 million at December 31, 2024 and is expected to be utilized

by May 31, 2027.

Pursuant to the terms and conditions, 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.

have generated limited revenues and have incurred significant operating losses since our inception.

We expect to continue to incur significant

expenses and operating losses for the foreseeable future.

Without capital raised through financing transactions, existing cash resources

are sufficient to allow us to fund current planned operations into the second quarter of 2025, which raises substantial doubt about our

ability to continue as a going concern.

additional information on risks associated with our substantial capital requirements, please read the section titled “ Risk Factors ”

2 unchanged sentences

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

Year Ended December 31,

Net cash used in operating activities

$ (10,779,982 )

Ended December 31,

cash used in operating activities

$ (7,502,700 )

Net cash provided by investing activities

Net cash provided by financing activities

Net decrease in cash and cash equivalents

$ (10,779,982 )

cash provided by financing activities

increase (decrease) in cash and cash equivalents

$ (2,024,098 )

the years ended December 31, 2024 and 2023, we used cash in operating activities of $7.5 million and $10.8 million, respectively.

decrease primarily resulted from the change in net loss between 2022 and 2023 and the timing of vendor invoicing and payments primarily

associated with research and development activities.

the years ended December 31, 2023 and 2022, net cash provided by financing activities was $8.7 million and $8.8 million, respectively.

For 2023, net cash proceeds from 2023 February and 2023 May offerings of $9.1 million, net of transaction costs of $0.4 million, net

cash proceeds from 2023 Notes of $1.6 million, and the repayment of financed insurance premiums of $0.5 million and cash payment of 2022

Notes of $1.0 million.

In 2022, net cash consisted primarily of net proceeds from the issuance of the 2022 Notes and the net proceeds

of the issuance of shares and related warrants in connection with the underwriting agreement completed in December of 2022.

decrease primarily resulted from additional revenue cash inflow from grant funding and a reduction in research and development activities

the year ended December 31, 2024, net cash provided by financing activities was $9.9 million, primarily consisting of net proceeds from

the August 2024 public offering $1.7 million, warrant exercises and warrant inducements of $9.1 million, net of transaction costs, less

repayment of convertible notes of $0.5 million and financed insurance premiums of $0.4 million.

During the year ended December 31, 2023,

net cash provided by financing activities was $8.8 million, primarily consisting of net proceeds from 2023 February and 2023 May offerings

of $8.7 million and net proceeds from 2023 Notes of $1.6 million, less the repayment of financed insurance premiums of $0.5 million and

cash payment of 2022 Notes of $1.0 million.

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

8 unchanged sentences

of our operating expenditures will depend largely on our ability to:

advance preclinical development

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

manufacture, or have manufactured

on our behalf, our preclinical and clinical drug material and develop processes for late state and commercial manufacturing;

seek regulatory approvals

for any product candidates that successfully complete clinical trials;

establish a sales, marketing,

medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain marketing approval

and intend to commercialize on our own;

hire additional clinical,

quality control and scientific personnel;

expand our operational,

financial and management systems and increase personnel, including personnel to support our clinical development, manufacturing and

commercialization efforts and our operations as a public company;

obtain, maintain, expand

and protect our intellectual property portfolio;

manage the costs of preparing,

filing and prosecuting patent applications, maintaining and protecting our intellectual property rights, including enforcing and

defending intellectual property related claims;

manage the costs of operating

as a public company.

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

or have manufactured on our behalf, our preclinical and clinical drug material and develop processes for late state and commercial

manufacturing;

regulatory approvals for any product candidates that successfully complete clinical trials;

a sales, marketing, medical affairs and distribution infrastructure to commercialize any product candidates for which we may obtain

marketing approval and intend to commercialize on our own;

additional clinical, quality control and scientific personnel;

our operational, financial and management systems and increase personnel, including personnel to support our clinical development,

manufacturing and commercialization efforts and our operations as a public company;

maintain, expand and protect our intellectual property portfolio;

the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual property rights,

including enforcing and defending intellectual property related claims;

the costs of operating as a public company.

commitments as of December 31, 2024 included an estimated $12.0 million related to open purchase orders and contractual obligations that

7 unchanged sentences

increase significantly as a result of many factors, including:

the scope, progress, results

and costs of researching and developing our product candidates, and conducting preclinical and clinical trials;

the costs, timing and outcome

of regulatory review of our product candidates;

the costs, timing and ability

to manufacture our product candidates to supply our clinical and preclinical development efforts and our clinical trials;

the costs of future activities,

including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product candidates for which

we receive marketing approval;

the costs of manufacturing

commercial-grade product and necessary inventory to support commercial launch;

the ability to receive

additional non-dilutive funding, including grants from organizations and foundations;

the revenue, if any, received

from commercial sale of our products, should any of our product candidates receive marketing approval;

the costs of preparing,

filing and prosecuting patent applications, obtaining, maintaining, expanding and enforcing our intellectual property rights and

defending intellectual property-related claims;

our ability to establish

and maintain collaborations on favorable terms, if at all;

the extent to which we

acquire or in-license other product candidates and technologies.

scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical and clinical

costs, timing and outcome of regulatory review of our product candidates;

costs, timing and ability to manufacture our product candidates to supply our clinical and preclinical development efforts and our

clinical trials;

costs of future activities, including product sales, medical affairs, marketing, manufacturing and distribution, for any of our product

candidates for which we receive marketing approval;

costs of manufacturing commercial-grade product and necessary inventory to support commercial launch;

ability to receive additional non-dilutive funding, including grants from organizations and foundations;

revenue, if any, received from commercial sale of our products, should any of our product candidates receive marketing approval;

costs of preparing, filing and prosecuting patent applications, obtaining, maintaining, expanding and enforcing our intellectual

property rights and defending intellectual property-related claims;

ability to establish and maintain collaborations on favorable terms, if at all;

extent to which we acquire or in-license other product candidates and technologies.

Accounting Policies and Significant Judgments and Estimates

23 unchanged sentences

of estimated accrued research and development expenses include fees paid to:

vendors, including research

laboratories, in connection with preclinical development activities;

CROs and investigative

sites in connection with preclinical studies and clinical trials;

CMOs in connection with

drug substance and drug product formulation of preclinical studies and clinical trial materials.

including research laboratories, in connection with preclinical development activities;

and investigative sites in connection with preclinical studies and clinical trials;

in connection with drug substance and drug product formulation of preclinical studies and clinical trial materials.

base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant

28 unchanged sentences

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

What changed 10-K

Item 7. Management’s Discussion and Analysis