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Item 8. Financial Statements and Supplementary Data

2023-03-23 compared with 2022-03-25 · 283 added, 261 removed, 576 unchanged (49% of the section changed)

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Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

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Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

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Cash and cash equivalents

Restricted cash

Accounts receivable

Marketable securities - current

Prepaid expenses and other current assets

Deferred offering costs

Total current assets

Non-current assets:

Marketable securities - non current

Property and equipment, net

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Deferred income

Loans - short term

Loans - current

Total current liabilities

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Operating lease liability - non-current

Loans - long term

Loans - non-current

Total non-current liabilities

1 unchanged sentence

Stockholders’ equity

Series A Preferred Stock, $ 0.0001 par value:

nil and 1,185,879 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

Series B Preferred Stock, $ 0.0001 par value:

nil and 2,965,600 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized;

nil shares issued and outstanding as of December 31, 2022 and 2021

Common stock, $ 0.0001 par value:

50,000,000 shares authorized;

11,883,368 and 3,543,163 issued and outstanding as of December 31, 2021 and December 31, 2020, respectively

11,883,368 issued and outstanding as of December 31, 2022 and December 31, 2021

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated other comprehensive income / (loss)

Accumulated deficit

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Net loss per share attributable to common stockholders - basic and diluted

Weighted average common shares - basic and diluted

Weighted average common stock - basic and diluted

Gain Therapeutics, Inc

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( 13,890,606 )

Unrealized loss on available-for-sale marketable securities

Defined benefit pension plan

Foreign currency translation

Other comprehensive gain/(loss):

Other comprehensive gain:

Comprehensive loss

7 unchanged sentences

( 20,925,459 )

Conversion of Series A Preferred Stock into Common Stock

( 1,185,879 )

Conversion of Series B Preferred Stock into Common Stock

( 2,965,600 )

Issuance of Common Stock in IPO, net of issuance costs

Issuance of Common Stock due to warrants cashless exercise

Issuance of Common Share due to stock option exercise

Stock-based compensation expense

Issuance of warrants

Defined benefit pension plan

Foreign currency translation

Net unrealized gain on available for sale securities

( 17,590,738 )

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( 7,034,853 )

Issuance of Series A Preferred Stock, net of issuance cost

Issuance of Series B Preferred Stock, net of issuance cost

Issuance of Common Stock, net of issuance costs

Issuance of warrants

Conversion of Series A Preferred Stock into Common Stock

( 1,185,879 )

Conversion of Series B Preferred Stock into Common Stock

( 2,965,600 )

Issuance of Common Stock in IPO, net of issuance costs

Issuance of Common Stock due to warrants cashless exercise

Issuance of Common Stock due to stock option exercise

Stock-based compensation expense

Issuance of warrants

Defined benefit pension plan

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Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Stock based compensation expense

Other non cash items

Issuance of warrants

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Cash flows from investing activities:

Purchase of property and equipment

Purchase of property and equipment and internal-use of software

Purchases of marketable securities

( 17,735,355 )

Maturities of marketable securities

Net cash used in investing activities

( 14,774,813 )

Cash flow from financing activities:

Proceeds from long-term debts

Proceeds from issuance of Series A Preferred Stock, net of issuance costs

Proceeds from issuance of Series B Preferred Stock, net of issuance costs

Proceeds from issuance of common shares upon completion of initial public offering, net of underwriter discounts

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Proceeds from stock option exercise

Net cash provided by financing activities

Net cash (used) / provided by financing activities

Effect of exchange rate changes

Net increase in cash, cash equivalents and restricted cash

Net (decrease) / increase in cash, cash equivalents and restricted cash

( 29,569,523 )

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

Supplemental Data:

Income taxes paid

Notes to the Consolidated Financial Statements

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As a result of the corporate reorganization, GT Gain Therapeutics SA became a wholly-owned subsidiary of Gain Therapeutics, Inc.

For periods and at dates prior to the corporate reorganization, the consolidated financial statements presented were prepared based on the historical financial statements of GT Gain Therapeutics SA, adjusted to give retroactive effect to the share exchange transactions.

On March 17, 2021, the Company’s registration statement on Form S-1 related to its Initial Public Offering (“IPO”) was declared effective by the Securities and Exchange Commission (“SEC”).

The IPO closed on March 17, 2021 at the Nasdaq.

In conjunction with the IPO the Company completed a reverse stock split of the Company’s outstanding equity instruments.

The reverse stock split was approved by the stockholders on March 4, 2021 and became effective on March 17, 2021.

Upon closing of the IPO, the Series A and the Series B Preferred Stock, as resulting form the reverse stock split, were converted to common stock at a ratio of 1 -for-1.

The Company is a biotechnology company developing novel therapies to treat diseases caused by protein misfolding, with an initial focus on rare genetic diseases and neurological disorders.

We use our licensed platform, SEE-Tx®, to discover novel allosteric sites on misfolded proteins and identify proprietary small molecules that bind these sites, potentially restoring protein folding and treating disease.

These small molecule binding sites, away from the protein’s active areas, are called allosteric sites.

Targeting the allosteric binding site instead of the active binding site provides superior regulation of misfolded enzymes implicated by disease, is non-competitive with the natural substrate, provides superior drug-like properties and ultimately enhances both safety and efficacy.

Upon closing of the IPO, the Series A and the Series B Preferred Stock, as resulting from the reverse stock split, were converted to common stock at a ratio of 1 -for-1.

The Company is a biotechnology company developing novel small molecule therapeutics to treat diseases across several therapeutic areas, including central nervous system (“CNS”) disorders, lysosomal storage disorders (“LSDs”), metabolic disorders, and other diseases that can be targeted through protein degradation, such as oncology.

The Company uses its exclusively in-licensed computational target and drug discovery platform, Site-Directed Enzyme Enhancement Therapy (“SEE-Tx®”), to discover novel allosteric binding sites on proteins implicated in a disease and to identify proprietary small molecules that bind these sites to modulate protein function and treat the underlying cause of the disease.

Risks and uncertainties

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Going concern

The Company has incurred recurring losses and negative cash flows from operations since its inception and has primarily funded these losses through proceeds from capital contributions.

The Company has incurred recurring losses and negative cash flows from operations since its inception and has primarily funded these losses through proceeds from capital contributions and from its initial public offering.

The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales of its product candidates currently in development.

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The Company faces risks associated with early-stage biotechnology companies whose product candidates are in development.

Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing, establishing manufacturing capacity and regulatory approval prior to commercialization.

These efforts require significant amounts of additional capital for the Company to complete its research and development, achieve its research and development objectives, defend its intellectual property rights, and recruit and retain skilled personnel, and key members of management.

candidates currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing, establishing manufacturing capacity and regulatory approval prior to commercialization.

These efforts require significant amounts of additional capital for the Company to complete its research and development objectives, defend its intellectual property rights, and recruit and retain skilled personnel, and key members of management.

Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales.

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2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, the Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued.

As of the issuance date of these financial statements, the Company expects that its cash and cash equivalents will be sufficient to fund its forecasted operating expenses and capital expenditure requirements for at least the next twelve months from the issuance date of these financialstatements.

Accordingly, the consolidated financial statements have been prepared assuming that the Company will continue as a going concern.

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All amounts in the consolidated financial statements are expressed in United States Dollars (USD/$) and disclosed within these explanatory notes in United States Dollars (USD/$) or Swiss Franc (CHF), which are the functional currencies of the Company and its operating subsidiary, GT Gain Therapeutics SA, respectively.

The consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements as of and for the year ended December 31, 2020, and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of December 31, 2021, and the results of its operations for the years ended December 31, 2021 and 2020, its statements of stockholders’ equity and its statements of cash flows for the years then ended.

The consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements as of and for the year ended December 31, 2021, and, in the opinion of management, reflect all adjustments, consisting of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of December 31, 2022 and 2021, and the results of its operations, its statements of stockholders’ equity and its statements of cash flows for the years then ended.

Reverse Stock Split

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The reverse stock split was approved by the stockholders on March 4, 2021 and became effective in conjunction with the IPO on March 17, 2021.

Stockholders were no entitled to fractional shares as a result of the reverse stock split.

All share and per share data shown in the accompanying consolidated financial statements and

related notes have been retroactively revised to reflect the reverse stock split.

Stockholders were not entitled to fractional shares as a result of the reverse stock split.

All share and per share data shown in the accompanying consolidated financial statements and related notes have been retroactively revised to reflect the reverse stock split.

Shares of common stock underlying outstanding stock options and other equity instruments were proportionately reduced and the respective exercise prices, if applicable, were proportionately increased in accordance with the terms of the agreements governing such securities.

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The IPO closed on March 17, 2021 and the Company issued and sold 3,636,364 common shares at a public offering price of $ 11.00 per share for net proceeds of $ 34,978 thousand after deducting underwriting discounts and commissions of $ 2,950 thousand and other offering expenses of $ 2,071 thousand.

On March 22, 2021, the Company issued and sold 545,454 additional common shares, pursuant to the full exercise of the underwriters’ option to purchase additional shares, for net proceeds of $ 5,580 thousand after deducting underwriting discounts and commissions of $ 420 thousand.

Also on March 22, 2021, the Company issued and sold 545,454 additional common shares, pursuant to the full exercise of the underwriters’ option to purchase additional shares, for net proceeds of $ 5,580 thousand after deducting underwriting discounts and commissions of $ 420 thousand.

Thus, the aggregate net proceeds to the Company from the IPO, after deducting underwriting discounts commissions, were $ 42,630 thousand.

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The preparation of our consolidated financial statements in conformity with US GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.

On an ongoing basis, we evaluate our estimates judgments and, assumptions including those related to recognition of grant funds, accrued expenses, defined benefit pension liability, warrants and stock-based compensation.

These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the

basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

On an ongoing basis, we evaluate our estimates judgments and, assumptions including those related to recognition of accrued expenses, defined benefit pension liability, share-based compensation, and recognition of research grants.

These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

Actual results may differ materially and adversely from these estimates.

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To the extent that material differences arise between the estimates and actual results, the Company’s future results of operations will be affected.

The COVID-19 pandemic did not have a significant impact on the Company’s estimates.

Cash and cash equivalents

The Company reports cash on hand and held at banks, and all highly liquid investments in money market, certificates of deposit, time deposit, and other short-term liquid securities with original maturities of less than 90 day, as cash and cash equivalents.

Marketable Securities

The Company classifies marketable securities as held-to-maturity or available-for-sale at the time these instruments are purchased, based on the requirements of ASC 320.

Marketable securities are classified as held-to-maturity when the Company has the positive intent and the capacity to hold the marketable securities until the maturity date.

Held-to-maturity marketable securities are carried out at amortized cost, with the accretion of discount (or amortization of premiums) included within the calculation of the effective interest method.

The effective interest of the period is accounted for in the Company’s statements of operations as financial income (or expense).

Marketable securities are classified as available-for-sale when the Company does not have the positive intent and the capacity to hold the marketable securities until the maturity date.

Available-for-sale marketable securities are carried out at fair value with the “unrealized gains/loss” excluded from the computation of the earnings of the period and accounted for in other comprehensive income.

The accretion of discounts (or amortization of premiums) are accounted for in the Company’s statements of operations as financial income (or expense).

Marketable securities are classified in the Company’s balance sheet based on their maturities and the Company’s reasonable expectation with regard to those securities.

Marketable securities with a maturity date within 12 months from reporting date are classified as “current assets”.

Marketable securities with a maturity date over 12 months from reporting date are classified as “non-current assets”.

Concentrations of credit risk

The Company has no significant off-balance sheet risk, such as foreign exchange contracts, option contracts, or other foreign hedging arrangements.

Financial instruments that may expose the Company to concentrations of credit risk consist primarily of cash, cash equivalents which are deposited in accredited financial institutions in excess of federally insured limits.

Financial instruments that may expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents which are deposited in accredited financial institutions in excess of federally insured limits.

The Company deposits its cash and cash equivalents in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

Deferred Issuance Costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred issuance costs until such financings are consummated.

After consummation of the equity financing, these costs are recorded as a reduction of the proceeds generated as a result of the offering.

Should the planned equity financing be abandoned, the deferred issuance costs will be expensed immediately as a charge to operating expenses in the consolidated statements of operations.

There were nil and $ 1,217,988 deferred issuance costs as of December 31, 2021 and 2020, respectively.

Property and equipment

Property and equipment are stated at cost, including any accessory and direct costs that are necessary to make the assets fit for use, and adjusted by the corresponding accumulated depreciation.

The depreciation rates recorded in the consolidated financial statements of operations have been calculated by taking into consideration the use, purpose and financial-technical duration of the assets, on the basis of their estimated useful economic lives.

The depreciation expenses are recorded using the straight-line method in the consolidated financial statements of operations and have been calculated by taking into consideration the use, purpose and financial-technical duration of the assets, on the basis of their estimated useful economic lives.

The Company believes the above criteria to be represented by the following depreciation rates:

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All other costs, primarily related to maintenance and minor software fixes, are expensed as incurred.

As of December 31, 2021 and 2020, internal-use software amount to $ 202,609 and nil , and refer to the

external and internal labor costs incurred in the development of the Company ERP, amounting respectively to $ 168,474 and $ 34,135 .

As of December 31, 2022 and 2021, internal-use software amount to $ 213,967 and $ 202,609 , respectively, and refer to the external and internal labor costs incurred in the development of the Company’s enterprise resource planning system.

The additions of capitalized software for the current year amount to $ 46,382 .

The Company amortizes the capitalized software development costs on a straight-line basis over the estimated useful life of the software, which is generally six years , beginning when the asset is substantially ready for use.

The amortization of capitalized software development costs is reflected in general and administrative expenses.

Amortization expense for the years ended December 31, 2022 and 2021 was $ 37,536 and nil , respectively.

Impairment of long-lived assets

5 unchanged sentences

Amounts incurred are classified as general and administrative expenses.

Effective January 1, 2018, the Company adopted ASC 842, using the additional transition method option provided by ASU 2018-11.

Under this transition method, we applied the new accounting guidance as of the date of adoption.

Upon adoption, a cumulative effect adjustment was not required.

Subsequent to the adoption, the Company determines if an arrangement contains a lease at inception based on whether or not the Company has the right to control the asset during the contract period and other facts and circumstances.

The Company is the lessee in a lease contract when it obtains the right to control the asset.

Operating lease right of use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.

Leases with a term of 12 months or less at inception are expensed on a straight-line basis over the lease term in the statement of operations.

The Company determines if an arrangement contains a lease at inception based on whether or not the Company has the right to control the asset during the contract period and other facts and circumstances as per ASC 842.

Operating lease right of use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.

Leases with a term of 12 months or less at inception are expensed on a straight-line basis over the lease term in the consolidated statement of operations.

The Company determines the lease term by assuming the exercise of renewal options that are reasonably certain.

In addition, the Company subleases portions of its office premises in Lugano.

The Company recognizes sublease income on a straight-line basis over the sublease terms, reported within other income.

Accounts Payable

2 unchanged sentences

cash discounts are recorded at the time of payment.

Payables for Social Securities

Payables for Social Security Charges

Social Security charges are reported in compliance with rules and laws applicable in the countries where our employees work.

1 unchanged sentence

Accrued expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued expenses as of each balance sheet date.

This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf and estimating the level

of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost.

We make estimates of our accrued expenses as of each balance sheet date based on facts and circumstances known to us at that time at the date of the preparation of the consolidated financial statements.

There may be instances in which payments made to our vendors exceed the level of services provided, and result in prepayment reported under other current assets, which are subsequently expenses in the consolidated statement of operations when the related activity has been performed rather than when the payment is made.

To date, there have been no material differences between our estimates of accrued expenses reported at each balance sheet date and the amounts actually incurred.

As part of the process of preparing the Company’s consolidated financial statements, the Company is required to estimate its accrued expenses as of each balance sheet date.

This process involves reviewing open contracts and purchase orders, communicating with the Company personnel to identify services that have been performed on its

behalf and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been invoiced or otherwise notified of the actual cost.

The Company makes estimates of its accrued expenses as of each balance sheet date based on facts and circumstances known at the time of the preparation of its consolidated financial statements.

There may be instances in which payments made to the Company’s vendors exceed the level of services provided, and result in a prepayment reported under other current assets, which is subsequently expensed in the consolidated statement of operations when the related activity has been performed.

To date, there have been no material differences between the Company’s estimates of accrued expenses reported at each balance sheet date and the amounts actually incurred.

Pension obligations

We operate defined benefit pension plan and defined contribution pension plans in accordance with local regulations and practices in the countries in which the Company operates.

These plans are funded by regular contribution made by the employer and the employees.

For defined benefit pension plan, the liability recognized in the consolidated balance sheets is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets.

The Company operates defined benefit pension plan and defined contribution pension plans in accordance with local regulations and practices in the countries in which the Company operates.

These plans are funded by regular contributions made by the Company and its employees.

For the defined benefit pension plan, the liability recognized in the consolidated balance sheets is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets.

The overfunded or underfunded status of the defined benefit plan is calculated as the difference between plan assets and the projected benefit obligations.

Estimates are used in determining the assumptions incorporated in the calculation of the pension obligations, which is supported by input from independent actuaries.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in “Accumulated other comprehensive income (loss)” in the consolidated statements of equity and are charged or credited to income over the employees’ expected average remaining working lives.

The measurement date used for our employee benefit plan is December 31.

For defined contribution pension plans, the Company pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or volutanry basis.

Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the consolidated statements of equity under accumulated other comprehensive income (loss), and are charged or credited to income over the employees’ expected average remaining working lives.

The measurement date used for the Company’s employees defined benefit plan is December 31.

For defined contribution pension plans, the Company pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis.

The Company has no further payment obligations once the contributions have been paid.

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The Company applies the fair value method of measuring equity-based compensation and warrants, which requires an entity to measure the cost of services received in exchange for an award of equity instruments based on the grant-date fair value of the award.

The Company issues equity-based compensation with only service-based vesting conditions and record the expense for these awards using the straight-line method.

The Company has not issued any stock-based awards with performance- or market-based vesting conditions.The Company recognizes the related costs in the consolidated statement of operations and as additional paid-in capital in the consolidated statement of shareholders’ equity, in accordance with the vesting period during which the award recipients are required to provide services in exchange for the award.

The Company issues equity-based compensation with service-based vesting conditions and records the expense for these awards using the straight-line method.

The Company recognizes the related costs in the consolidated statement of operations and as additional paid-in capital in the consolidated statement of shareholders’ equity, in accordance with the vesting period during which the award recipients are required to provide services in exchange for the award.

The Company accounts for forfeitures as they occur.

Before being a public company, given the absence of an active market for the Company’s common stock, the Company and the Board of Directors estimated the fair value of the Company’s common stock at the grant date determining the estimated fair value of the Company’s equity instruments based on a number of factors, including prices paid for the Company’s convertible preferred stock sold to outside investors in arm’s-length transactions;

the Company’s stage of development;

the fact that the grants of stock-based awards involved illiquid securities in a private company.

Before becoming a public company, given the absence of an active market for the Company’s common stock, the Company and its Board of Directors estimated the fair value of the Company’s common stock at the grant date for determining the estimated fair value of the Company’s equity instruments based on a number of factors, including prices paid for the Company’s convertible preferred stock sold to outside investors in arm’s-length transactions, the Company’s stage of development and the fact that the grants of stock-based awards involved illiquid securities in a private company.

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

Given the absence of an active public market for the Company’s common stock prior to March 19, 2021, which was the first day of trading, the Company determined the volatility and the expected term for awards granted based on an analysis of reported data for a peer group of similar biopharmaceuticals companies that issued options with substantially similar terms.

After the IPO, we continued to do so, and we expect not to change our methodology until such time as we will have reliable historical data regarding the volatility of our traded stock price and expected term of exercise patterns.

Given the absence of an active public market for the Company’s common stock prior to March 18, 2021, which was the first day the Company’s common stock began trading on the Nasdaq Global Market (“Nasdaq”), the Company determined the volatility and the expected term for awards granted based on an analysis of reported data for a peer group of similar biopharmaceutical companies that issued options with substantially similar terms.

After the IPO, the Company continues to determine its volatility in the same manner, and it expects not to change its methodology until such time as the Company has reliable historical data regarding the volatility of the Company’s traded stock price and expected term of exercise patterns.

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

Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.

The Company has not paid, and does not anticipate paying, cash dividends on our common stock;

The Company has not paid, and does not anticipate paying, cash dividends on its common stock;

therefore, the expected dividend yield is assumed to be zero .

The Black-Scholes option pricing model is also used for warrants issued, using consistent inputs and methodology to quantify such inputs, as described above in relation to equity-based compensation.

The Black-Scholes option pricing model is also used for the warrants issued, using consistent inputs and methodology to quantify such inputs, as described above in relation to equity-based compensation.

The assumptions used in calculating the fair value of share-based awards and warrants represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment.

The fair market value for RSUs is based on the closing price of our stock on the grant date.

We recognize expenses related to RSUs based on the fair market value, as determined on the grant date, on a straight line basis over the requisite service period for the entire award.

Forfeitures are recognized as they occur.

Revenue Recognition

The Company derives revenues from collaboration and licensing agreements.

The Company recognize revenue related to these agreements in accordance with ASC 606, Revenues from contracts with customers and ASC 808, Collaborative arrangements .

The terms of these arrangements typically include payment from third parties customers of one or more of the following:

non-refundable initiation fee, reimbursement of development costs, development and regulatory milestone payments and royalties on net sales of the licensed product.

In determining the appropriate amount of revenue to be recognized as we fulfill our obligations, the Company applies the five steps model of ASC606:

The Company derives limited revenue from its collaboration and licensing agreements.

The Company recognizes revenue related to these agreements in accordance with ASC 606, “Revenues from Contracts with Customers” and ASC 808, “Collaborative Arrangements”.

The terms of these arrangements typically include payment from third-party customers of one or more of the following:

non-refundable initiation fee, reimbursement of development costs, future development and regulatory milestone payments and royalties on net sales of the licensed product.

In determining the appropriate amount of revenue to be recognized as we fulfill our obligations, the Company applies the five-step model of ASC606:

(i) identify the contract(s) with a customer;

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(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) we satisfy a performance obligation.

The Company only apply the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer.

and (v) recognize revenue when (or as) it satisfies a performance obligation.

The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to the customer.

If a contract is determined to be within the scope of ASC 606 at inception, the Company assesses the goods or services promised within such contract, determines which of those goods and services are performance obligations, and assesses whether each promised good or service is distinct.

The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Costs and revenues associated with collaborative arrangements are reported in the consolidated statements of operations on a gross basis when the counterpart is identified as being a customer, when the performance obligations incurred and rendered to fulfil the agreements are deemed to be in the ordinary course of the Company’s business, or when there is an expectation that the collaborative arrangement will result in a future constant flow of revenues in the form of sale of products, royalties or licenses.

Research grants

Under the terms of the research and development grants awarded (such as those awarded by the The Michael J.

Fox Foundation for Parkinson’s Research (MJFF) and The Silverstein Foundation for Parkinson’s Disease and from Innosuisse – Swiss Innovation Agency), we are entitled to receive reimbursement of our allowable direct expenses and payroll costs.

Contributions from research and development activities under the grants are recorded based on management’s best estimate of the periods in which the related expenditures are incurred and activities performed and are classified in the statement of operations as a reduction to research and development expenses, measuring according to the time periods during which the research and development activities are carried out and related costs sustained.

Under the terms of the research and development grants awarded, the Company is entitled to receive reimbursement of its allowable direct expenses and payroll costs.

Contributions from research and development activities under the grants are recorded based on management’s best estimate of the periods in which the related expenditures are incurred and activities performed and are classified in the consolidated statement of operations as a reduction to research and development expenses.

Research and development expenses

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The Company accounts for income taxes under the liability method.

Under this method deferred income tax liabilities and assets are determined based on the difference between the financial statement carrying amounts of assets and liabilities and the related tax basis using enacted tax rates in effect in the years in which the associated deferred taxes are expected to reverse.

Under this method deferred income tax liabilities and assets are determined based on the difference between the financial statements carrying amounts of assets and liabilities and the related tax basis using enacted tax rates in effect in the years in which the associated deferred taxes are expected to reverse.

A valuation allowance is recorded if it is “more likely than not” that a portion or all of a deferred tax asset will not be realized.

As of each reporting date, the Company considers existing evidence, both positive and negative, that could impact its view with regards to future realization of deferred tax assets.

As of each reporting date, the Company considers existing evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets.

In consideration of the start-up status of the Company, a full valuation allowance has been established to offset the deferred tax assets, as the related realization is currently uncertain.

In the future, should management conclude that it is more likely than not that the deferred tax assets are partially or fully realizable, the valuation allowance will be reduced to the extent of such expected realization, and the corresponding amount will be recognized as income tax benefit in the Company’s consolidated statement of operations.

The Company recognizes tax liabilities from an uncertain tax position if it is more likely than not that the tax position will not be sustained upon examination by the taxing authorities, based on the technical merits of the tax position.

There are no uncertain tax positions that have been recognized in the accompanying consolidated financial statements.

Fair value measurements

6 unchanged sentences

Comprehensive income/(loss)

Comprehensive income/(loss) is composed of net income(loss) and certain changes in stockholder’s equity that are excluded from the net income(loss), primarily foreign currency translation adjustments and defined benefit obligation adjustments.

Comprehensive income/(loss) is composed of net income/(loss) and certain changes in stockholder’s equity that are excluded from the net income/(loss), primarily foreign currency translation adjustments, defined benefit obligation adjustments and unrealized income/(loss) on available for sale securities.

Net loss per share

1 unchanged sentence

The Company gives consideration to all potentially dilutive impacts, except where the effect of including such securities would be antidilutive.

As of December 31, 2021, common stock equivalents consisted of stock options and warrants, while as of December 31, 2020, common stock equivalents consisted of the Series A preferred stock, Series B preferred stock, stock options and warrants.

As of December 31, 2022, common stock equivalents consisted of stock options, RSUs, PRSUs and warrants, while as of December 31, 2021, common stock equivalents consisted of stock options and warrants.

Because the Company has reported net losses since inception, these potential impacts would be anti-dilutive, and therefore common stock equivalents have been excluded from the computation, resulting in basic and diluted net loss per share being the same for all periods presented.

COVID-19 Pandemic

In regard to the ongoing COVID-19 global pandemic, the Company has taken measures to secure its research and development activities, while work in its laboratories and facilities has been re-organized to reduce risks of COVID-19 transmission.

Given the global impact and the other risks and uncertainties associated with the COVID-19 pandemic, the Company’s business, financial condition and results of operations could be materially adversely

The Company continues to closely monitor the COVID-19 pandemic and evolve its business continuity plans, clinical development plans and response strategy to mitigate any potential impact.

As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, assumptions and judgments or revise the carrying value of its assets or liabilities.

Actual results could differ from those estimates, and any such differences may be material to the Company’s financial statements.

Recently issued accounting pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that we adopt as of the specified effective date.

We do not believe that the adoption of any recently issued standards have or may have a material impact on our consolidated financial statements or disclosures.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that the Company adopts as of the specified effective date.

There were no new material accounting pronouncements issued in fiscal year 2022 with a material impact on the Company’s consolidated financial statements.

Research Grants

In December 2018 and in February 2019, our wholly owned subsidiary, GT Gain Therapeutics SA, obtained a research grants for a total amount of USD 186,956 from The Michael J.

Fox Foundation for Parkinson's Research (MJFF) and The Silverstein Foundation for Parkinson's disease with GBA to advance its proprietary non-competitive molecular chaperones for Parkinson's disease and research project "therapeutic target of GCase enzyme in Parkinson's disease with novel pharmacological chaperones".

Under the terms of the research and development grants awarded, we are entitled to receive reimbursement of our allowable direct expenses.

As of December 31, 2021 and 2020, we recorded as reductions to research and development expenses of nil , since the grant term terminated in 2020, and USD 98,318 , respectively.

In July 2019, our wholly owned subsidiary, GT Gain Therapeutics SA, announced that, in a consortium with the Institute for Research in Biomedicine, Bellinzone (Switzerland) and Neuro-Sys SAS in Gardanne (France), it obtained a research grant of approximately USD 1,500,000 from Eurostars-2 joint programme, with co-funding from the European Union Horizon 2020 research and Innosuisse – Swiss Innovation Agency.

The contribution attributed to our subsidiary was CHF 386,218 , of which CHF 286,787 was already received as of December 31, 2019.

The funding will support the development of the drugs portfolio for the treatment of Gaucher Disease, GM1 Gangliosidosis, Mucopolysaccharidosis type 1 and Krabbe.

Under the terms of the research and development grants awarded, we are entitled to receive reimbursement of our allowable direct expenses.

As of December 31, 2021 and 2020, we recorded as reductions to research and development expenses USD 136,177 and USD 151,230 , respectively and receivables of USD 81,862 and USD 51,665 , respectively.

The unrecognized portions of the grants are reported as deferred income on the consolidated balance sheet.

During the course of its business, the Company applies for research grants with public or private organization to funds is research projects.

Under the terms of these grants , the Company is entitled to receive reimbursement of its allowable direct research expenses.

In July 2019, the Company’s wholly owned subsidiary, GT Gain Therapeutics SA, announced that, in a consortium with the Institute for Research in Biomedicine, Bellinzone (Switzerland) and Neuro-Sys SAS in Gardanne (France), it obtained a three-years research grant to support the development of the drugs portfolio for the treatment of Gaucher Disease, GM1 Gangliosidosis, Mucopolysaccharidosis type 1 and Krabbe.The grant was approved by the Eurostars-2 joint programme, with co-funding from the European Union Horizon 2020 research and Innosuisse – Swiss Innovation Agency.

As of December 31, 2022 and 2021, the Company recorded as reductions to research and development expenses USD 82,133 and USD 184,748 , respectively and receivables of USD 87,430 and USD 81,862 , respectively.

Cash, cash equivalents and restricted cash

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Details of the cash and cash equivalents balances as of December 31, 2022 and 2021, broken down by currency in which the funds are denominated, are reported in the following table:

Other Current Assets

Other current assets consist of the following:

Marketable Securities

As of December 31, 2022 the Company reports $ 14,768 thousand of marketable securities, related to United States Treasury Securities (“USTS”), within current and non-current assets.

The USTS purchased have maturity dates going from January 2023 to February 2024, on a monthly basis, in tranches of USD 1,000 thousand each month.

The Company classifies the USTS, which are accounted for as available-for-sale, within the Level 1 fair value hierarchy category as the fair value is based on quoted market prices in active markets with a high level of daily trading volume.

The following table summarizes the Company’s investment in available-for-sale marketable securities with the detail of the unrealized gains / (losses) and the estimated fair value as of December 31, 2022:

December 31, 2022

Allowance for

Estimated Fair

Amortized Cost

Credit Losses

Marketable securities available for sale

Debt Securities - U.S.

government treasury securities, current

Debt Securities - U.S.

government treasury securities, non current

The Company regularly reviews the securities in an unrealized loss position and evaluates the current expected credit loss by considering factors such historical experience, market data, the financial condition and near term prospects of the investee, the extent of the loss related to credit of the issuer, the expected cash flows from the security, the Company’s intent to sell the security, and whether or not the Company will be required to sell the security before the recovery of its amortized cost.

As of December 31, 2022 the Company did not intend to sell any of the debt securities included in the table above, and it is not “more likely than not” that the Company will be required to sell any of these securities before the recovery of the unrealized losses, which will be at maturity.

Unrealized losses on available-for-sale debt securities as of December 31, 2022 were primarily due to changes in interest rates, and not due to increased credit risks associated with specific securities.

Accordingly, as of December 31, 2022, the Company has not recorded an allowance for credit losses related to its available-for-sale debt securities.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

Prepaid and deferred expenses

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Tax credit consist of a value added tax credit (“VAT”).

It is an indirect tax receivables from Switzerland and Spain tax authorities on purchases of goods and services executed on those countries.

Prepaid expenses refers to pre-payments made to vendors for future services.

It is an indirect tax receivables from Switzerland and Spain tax authorities on purchases of goods and services executed in those countries.

Prepaid expenses refers to pre-payments made to the Company’s vendors for future services.

Deferred expenses mainly refer to research agreements entered into with third parties for research projects that will be recognized as expenses throughout the research period.

Prepaid D&O insurance costs relate to insurance premium which will be recognized in the statement of operations on a monthly basis through the twelve months insurance period.

Other receivables refers to the Eurostars-2 grant, with co-funding from the European Union Horizon 2020 and Innosuisse – Swiss Innovation Agency, that contractually will be collected in March 2023.

Prepaid D&O insurance costs relate to an annual insurance premium which will be recognized in the statement of operations on a monthly basis throughout the one-year insurance period.

Property and Equipment, net

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Property and equipment, net

Property and equipment mainly consist of computers and set-up of a conference room in our Spanish and Lugano offices.

Property and equipment consist of computers, furniture and fixtures, lab instruments.

No disposals, nor impairments occurred during the periods.

Depreciation has been calculated by taking into consideration the use, purpose and financial-technical duration of the assets, based on their estimated economic lives.

Depreciation expense for the year ended December 31, 2021, and 2020 was USD 15,484 and USD 9,592 , respectively.

Depreciation expense for the years ended December 31, 2022 and 2021 was $ 26,632 and $ 15,484 , respectively.

Operating lease;

Right of use (“ROU”) assets

Our leased assets include offices in Bethesda, Lugano and Barcelona and a lab in Barcelona.

Our current lease portfolio consists of leases with remaining terms ranging from three to five years .

Renewal options are excluded

from our calculation of lease liabilities unless we are reasonably certain that we will exercise the renewal option.

Our lease agreements do not contain residual value guarantees or material restrictive covenants.

The Company’s leased assets include offices in Bethesda, Maryland, Lugano, Switzerland and Barcelona, Spain and a lab in Barcelona, Spain.

Its current lease portfolio consists of leases with remaining terms ranging from three to five years .

Renewal options are excluded from the calculation of lease liabilities since the Company is not reasonably certain that we will exercise the renewal option.

The Company’s lease agreements do not contain residual value guarantees or material restrictive covenants.

On December 24, 2020, the Company renewed a five-year operating lease term in Cluster II Building with Parc Scientific de Barcelona to lease lab and office space of 1,042 square feet.

In connection with the lease, the Company paid a security deposit of EUR 6,469 classified as deposit in non-current assets.

The Company is required to pay for operating costs, which are billed monthly based on the Company’s share of the total rentable square footage.

These additional charges are considered variable lease costs and are recognized in the period in which the costs are incurred.

The Company accounted for the renewal as a modification of the original agreement and recorded an additional right-of-use asset and corresponding lease liability based on the incremental borrowing rate determined as of the effective date of the modified lease.

On June 1, 2021, the Company entered into a five-year operating lease agreement to lease office space in Via Soave, n.6 in Lugano, Switzerland.

The lease agreement is renewable for additional five years .

The Company is required to pay for operating costs, including heating and water, which are adjusted and billed yearly based on usage.

These additional charges are considered variable lease costs and are recognized in the period in which the costs are incurred.

In connection with the lease, as guarantee for any damages claimed by the lessor, the Company deposited into a restricted bank account CHF 28,500 or USD 31,279 classified as restricted cash.

On August 31, 2021, the three year operating lease agreement to lease office space in Via Pietro Peri, 9D Lugano, Switzerland terminated and CHF 10,500 or USD 11,371 deposited into a restricted bank account were remitted to the Company.

The Company is required to pay for operating costs, which are considered variable lease costs and are recognized in the period in which the costs are incurred.

In connection with the lease, as guarantee for any damages claimed by the lessor, the Company deposited CHF 28,500 into a restricted bank account, which is classified in the financial statements as restricted cash.

On October 1, 2021, the Company entered into a three-year operating lease agreement to lease office space in Bethesda, Maryland.

In connection with the lease, the Company paid a security deposit of USD 5,227 , classified as deposit in non-current assets, for the performance of all obligations, covenants and conditions and agreements under the lease.

On November 1, 2021, the Company entered into a five-years new operating lease agreement in Torre D Building with Parc Cientific de Barcelona for larger office space of 1,417 square feet to accommodate the Company’s continued continuos growth and contemporaneosly terminated a lease, entered in October 2020, in Torre I Building for 830 square feet.

In connection with the Torre D Building lease, the Company paid a security deposit of EUR 4,325 or USD 4,918 classified as deposit in non-current assets.

The Company is required to pay for operating costs, including general services, scientific services, utilities, waste management services and taxes, which are billed monthly based on the Company's share of the total rentable square footage.

In connection with the lease, the Company paid a security deposit of USD 5,227 , classified as

deposit in non-current assets, for the performance of all obligations, covenants and conditions and agreements under the lease.

On November 1, 2021, the Company entered into a five-year operating lease agreement in Torre D Building with Parc Scientific de Barcelona for larger office space of 1,417 square feet to accommodate the Company’s continued growth and contemporaneously terminated a lease, entered in October 2020, in Torre I Building for 830 square feet.

In connection with the Torre D Building lease, the Company paid a security deposit of EUR 4,325 classified as deposit in non-current assets.

The Company is required to pay for operating costs, which are billed monthly based on the Company's share of the total rentable square footage.

These additional charges are considered variable lease costs and are recognized in the period in which the costs are incurred.

On July 10, 2022, the Company entered into a new three-year operating lease agreement in Cluster II Building with Parc Scientific de Barcelona for a warehouse space of 245 square feet.

In connection with the lease, the Company paid a security deposit of EUR 685 classified as deposit in non-current assets.

The Company is required to pay for operating costs, which are billed monthly based on the Company's share of the total rentable square footage.

These additional charges are considered variable lease costs and are recognized in the period in which the costs are incurred.

Operating leases are reflected on our balance sheet as operating lease ROU assets and the related current and non-current operating lease liabilities.

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Variable lease costs such as common area maintenance, property taxes and insurance are expensed as incurred.

The breakdown of the significant components of ROU assets and lease liabilities as of December 31, 2021 and 2020 is reported in the table below, together with the discount rate used in order to calculate the net present value of the lease liabilities as of those periods.

Operating Lease

The breakdown of the significant components of ROU assets, lease liabilities and operating lease expense is reported in the table below, together with the discount rate used in order to calculate the net present value of the lease liabilities as of those periods.

Operating lease- right of use assets

3 unchanged sentences

Weighted average discount rate

The components of the lease costs which are included in the consolidated statements of operations and comprehensive loss were as follows:

The amounts related to lease costs included in the consolidated statements of operations were as follows:

Operating lease costs

The future minimum lease payments for the Company’s operating leases as of December 31, 2021, were as follows:

The future minimum lease payments for the Company’s operating leases as of December 31, 2022, are as follows:

Operating Leases

4 unchanged sentences

Accounts payable are reported at their nominal value.

Accounts payable refer to amounts due to third parties on outstanding invoices received before year-end for services already provided.

As of December 31, 2021 and 2020, accounts payable amounted to USD 560,479 and USD 961,516 , respectively.

Accounts payable refer to amounts due to third parties on outstanding invoices received for services already provided.

As of December 31, 2022 and December 31, 2021, accounts payable amounted to $ 1,626,100 and $ 560,479 , respectively.

All accounts payable are due in less than 12 months.

Details of the vendor outstanding payables as of December 31, 2021 and 2020, broken down by currencies in which they are denominated, are reported in the following table:

Vendors Payables in CHF

Vendors Payables in EUR

Vendors Payables in USD

Other current liabilities and deferred income

Other current liabilities and deferred income consist of the following as of December 31, 2022 and 2021:

Payable for social securities

Payable for social security

Accrued payroll

4 unchanged sentences

Total Other Current Liabilities and Deferred Income

Payables for social securities refer to amounts due to social securities and employees withholding tax.

Payables for social security refer to amounts due to social security and employees withholding tax.

Accrued payroll refers to accruals for year-end bonuses, accrued vacations and extra-hours including social security charges, to be paid to employees.

Accrued expenses refer to invoices to be received from vendors for services performed and not yet billed.

Deferred income mainly refers to research grants received and, as of December 31, 2021, to a collaboration agreement entered into with Zentalis.

Deferred income will be recognized in the consolidated statement of operations in accordance with the costs sustained.

Tax provision refers to a tax payable due to the Spanish Tax Authorities related to taxable income generated in Spain.

Increase versus prior year is attributable to the allocation of stock based compensation expenses on stock options granted to our Spanish employees whose costs, for tax purposes, will be deductible at the time of the exercise.

Deferred income refers to income from the Company’s collaboration agreement with Zentalis Pharmaceuticals, Inc.

It will be recognized in the statement of operations in accordance with the costs sustained.

Pension obligations

Net pension obligations related to the Company’s defined pension plan refer only to Swiss employees and as of December 31, 2022 and 2021 can be summarized as follows:

End of year funed status:

End of year funded status:

Fair value of plan assets

2 unchanged sentences

Funded status

Accumululated benefit obligation

Accumulated benefit obligation

Reconciliation of funded status:

9 unchanged sentences

Amortization of prior service cost

Service cost is reported in research and development and general and administrative expenses.

Service cost is reported in general and administrative expenses.

All other components of net period costs are reported in interest income, net in the consolidated statement of operations

5 unchanged sentences

Benefit payments

(Gain)/loss on financial assumption

(Gain)/loss on demographic assumption

(Gain) / loss on financial assumptions

(Gain) / loss on demographic assumptions

(Gain) / loss on experience

Plan Amendement

Translation differences

Plan Amendment

Reconciliation of fair value of plan assets:

5 unchanged sentences

Benefit payments

Translation differences

Fair value at December 31

1 unchanged sentence

(Gain)/loss at beginning of year

(Gain)/loss on PBO during year

(Gain)/loss on assets during year

(Gain)/loss on PBO during the year

(Gain)/loss on assets during the year

Amortization of gain/(loss)

9 unchanged sentences

The assumptions used in the determination of the benefit obligation and the plan assets for the pension plans and the pension obligation were as follows:

Actuarial Assumptions (%pa):

Financial Assumptions (%pa):

Discount rate

18 unchanged sentences

Next year's expected employer contribution

The actuarial gains in 2022 were primarily due to an increase in discount rates applied against future expected benefit payments and resulted in a decrease of the benefit obligation.

The Company’s investment strategy for its pension plans is to optimize the long-term investment return on plan assets in relation to the liability structure to maintain an acceptable level of risk while minimizing the cost of providing pension benefits and maintaining adequate funding levels in accordance with applicable rules in each jurisdiction.

The Company does not manage any assets internally.

The plan assest relates to mandatory and discretionary contributions made in accordance with Swiss Law to a leading pension provider.

The capital is fully insured and provides for a fixed rate of return.

The plan asset relates to mandatory and discretionary contributions made in accordance with Swiss Law to a leading pension provider.

The capital is insured and provides for a minimum rate of return.

The fair value is based on the value of the assets held by the provider and as such has been classified within Level 3 of the fair value hierarchy.

3 unchanged sentences

All matching contributions and participant contribution vest immediately.

The expense related to our 401(k) Savings Pan consist of our matching contributions.

Expenses related to our 401(k) Savings Plan totaled USD 3,243 and nil for the years ended December 31, 2021 and 2020.

In March 2020, the Company obtained a CHF 14,600 (USD 16,024 ) five-year loan.

The loan had zero interest and original maturity on March 31, 2025.

The expense related to our 401(k) Savings Plan consist of our matching contributions.

Expenses related to our 401(k) Savings Plan totaled $ 15,875 and $ 3,243 for the years ended December 31, 2022 and 2021.

Our UK employees are eligible to participate to our UK defined contribution pension scheme upon commencement of employment.

The employees and the Company will make such contributions in line with the rules of the Pension Scheme in force.

The expense related to our pension scheme consist of our matching contributions and totaled GBP 4,283 and nil for the years ended December 31, 2022 and 2021.

In March 2020, the Company obtained a CHF 14,600 five-year loan.

The loan had zero interest and original maturity on June 30, 2025.

The loan was guaranteed through joint and several sureties by the Swiss government.

The loan is part of the infrastructure put in place by the Federal Council and Swiss Parliament in view of the economic consequences of the coronavirus.

As of December 31, 2021, the outstanding balance has been reclassified as current as the Company decided to estinguish the loan.

No expenses or charges were due for the early extinguishment.

In August 2020, the Company obtained a CHF 638,000 (USD 700,221 at the historical forex exchange rate) nine-year loan.

The loan has zero interest.

The loan is due in quarterly installments of CHF 20,000 , with payments commencing on December 31, 2021 and ending on September 30, 2029.

The loan is part of the infrastructure put in place by the Federal Council and Swiss Parliament in view of the economic consequences of the coronavirus.

Loans granted do not bear interest and no issuance costs have been borne.

As such they have been accounted for at face value, which is deemed to approximate the related fair value.

The loan is part of the infrastructure put in place by the Federal Council and Swiss Parliament in view of the economic consequences of the COVID-19 pandemic.

In February 2022, the Company early extinguished the loan.

No expenses or charges were incurred for the early extinguishment of the loan.

In August 2020, the Company obtained a CHF 638,000 (USD 700,221 at the historical foreign exchange rate) nine-year loan.

The loan has zero interest and is due in quarterly installments of CHF 20,000 , with payments commencing on December 31, 2021 and ending on September 30, 2029.

The loan is part of the infrastructure put in place by the Federal Council and Swiss Parliament in view of the economic consequences of the COVID-19 pandemic, and the loan issued under the program does not bear interest and there are no applicable issuance costs.

The Company accounts for its loan at face value, which is deemed to approximate the related fair value.

The future loan payments are reported in the table below:

10 unchanged sentences

December 31, 2022:

Marketable securities available for sale

Debt securities - U.S.

government treasury securities, current

Debt securities - U.S.

government treasury securities, non current

Total marketable securities available for sale

Cash and cash equivalents:

8 unchanged sentences

The carrying amounts of prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair value due to their short-term maturities.

Common and Preferred Stock

Common Stock, Preferred Stock and Warrants

As of December 31, 2022 and 2021, the authorized capital stock of the Company included 50,000,000 shares of common stock, $ 0.0001 par value and 10,000,000 shares of preferred stock, $ 0.0001 par value.

As of December 31, 2021 and 2020, 11,883,368 and 3,543,163 ( 4,022,736 before the reverse stock split) shares of common stock, $ 0.0001 par value, were issued and outstanding .

No preferred stocks were outstanding as of December 31, 2021.

There were 1,185,879 ( 1,346,390 before the reverse stock split) shares of Series A Preferred Stock, par value $ 0.0001 and 2,965,600 ( 3,366,999 before the reverse stock split) shares of Series B Preferred Stock, par value $ 0.0001 , issued and outstanding as of December 31, 2020.

The reverse stock split did not result in any change of the original par value of the Company common and preferred stock.

Upon closing of the IPO, the Preferred Stock, as resulting from the reverse stock split, were converted to common stock at a ratio of 1 -for- 1 .The holders of the Company’s Preferred Stock had certain voting, dividend, and redemption rights, as well as liquidation preferences and conversion privileges.

All rights, preferences, and privileges associated with the preferred stock were terminated at the time of the Company’s IPO in conjunction with the conversion of all outstanding shares of Preferred Stock into shares of common stock.

In July, 2020, in connection with the issuance of the Series B Preferred Stock through a private placement, the Company issued equity-classified warrants to designees of the placement agent to purchase an aggregate of 269,360 shares of our common stock at an exercise price of $ 4.46 per share, valued in the aggregate at USD 413,887 and included in the issuance costs of the Series B Preferred Stock.

The warrants vested immediately upon issuance,

provide for a cashless exercise right and are exercisable for a period of five years from July 20, 2020.

As of December 31, 2022 and 2021, 11,883,368 shares of common stock, $ 0.0001 par value, were issued and outstanding .

No preferred stocks were outstanding as of December 31, 2022 and 2021.

In July 2020, in connection with the issuance of the Series B Preferred Stock through a private placement, the Company issued equity-classified warrants to designees of the placement agent to purchase an aggregate of

269,360 shares of our common stock at an exercise price of $ 4.46 per share, valued in the aggregate at USD 413,887 and included in the issuance costs of the Series B Preferred Stock.

The warrants vested immediately upon issuance, provide for a cashless exercise right and are exercisable for a period of five years from July 20, 2020.

On March 3, 2021, the Board approved a 1-for- 0.880784 reverse stock split of the Company’s outstanding equity instruments.

The reverse stock split was approved by the stockholders on March 4, 2021 and became effective on March 17, 2021.

The reverse stock split was approved by the Company’s stockholders on March 4, 2021 and became effective on March 17, 2021.

Shares of common stock underlying outstanding warrants were proportionately reduced from 269,360 to 237,249 and the respective exercise prices, were proportionately increased from $ 4.46 to $ 5.07 in accordance with the terms of the agreements governing such securities.

As of December 31, 2021, 11,862 warrants were exercised resulting in 3,283 shares having been issued following the cashless mechanism as per the terms of the agreement.

On May 6, 2021, the Company entered into nine months investing banking services and financial advisory agreement and issued equity-classified warrants to designees of the investment bank to purchase an aggregate of 200,000 shares of the Company common stock at an exercise price of $ 13.75 per share, valued in the aggregate at USD 1,034 thousand.

The warrants vested immediately upon issuance, do not provide cashless exercise right and are exercisable for a period of four years from May 6, 2021.

The fair value of the warrants is recognized on a straight-line basis over the nine months service period as general and administrative expense.

As of December 31, 2021 and 2022, 11,862 and nil warrants, respectively, were exercised resulting in 3,283 shares having been issued following the cashless mechanism as per the respective warrant agreement.

On May 6, 2021, the Company entered into an investment banking services and financial advisory agreement and issued equity-classified warrants to designees of the investment bank to purchase an aggregate of 200,000 shares of the Company common stock at an exercise price of $ 13.75 per share, valued in the aggregate at USD 1,034 thousand.

The warrants vested immediately upon issuance, do not provide for a cashless exercise right and are exercisable for a period of four years from May 6, 2021.

The fair value of the warrants was fully recognized on a straight-line basis over the nine months service period as general and administrative expense.

As of December 31, 2022, no warrants were exercised or exchanged.

The fair value of the warrants issued in 2020 and 2021 is estimated using the Black-Scholes option pricing model with the following assumptions:

Year Ended December 31,

Grant date fair value

Expected term (years)

Risk-free interest rate

Expected dividend yield -

Equity Incentive Plan

On September 24, 2020, the Board of Directors adopted the 2020 Omnibus Incentive Plan (the “2020 Omnibus Plan”).

The 2020 Omnibus Plan provides for the granting of equity-based awards to our named executive officers, other employees, consultants and non-employee directors at a price to be determined by the Board of Directors.

The 2020 Omnibus Plan is intended to encourage ownership of stock by employees and consultants of the Company and to provide additional incentives for them to promote the success of the Company’s business.

The maximum number of shares to be issued under the 2020 Omnibus Plan is 1,310,000 .

The 2020 Omnibus Plan expires after ten years , unless terminated prior to that date by the Board of Directors.

The Board of Directors is responsible for determining the individuals to be granted options, the number of options each individual will receive, the option price per share, and the exercise period of each option.

Equity Incentive Plans

On September 24, 2020, the Board adopted the 2020 Omnibus Incentive Plan (the “2020 Omnibus Plan”).

The 2020 Omnibus Plan provided for the granting of equity-based awards to our named executive officers, other employees, consultants and non-employee directors at a price to be determined by the Company’s Board.

The maximum number of shares to be issued under the 2020 Omnibus Plan was 1,153,827 , as adjusted after a stock split of 1-for- 0.880784 approved by stockholders on March 4, 2021.

The 2020 Omnibus Plan has been succeeded by the 2022 Equity Incentive Plan (as described below), and no additional awards will be granted under the 2020 Omnibus Plan although all outstanding awards granted under the 2020 Omnibus Plan will continue to be subject to the terms and conditions as set forth in the agreements evidencing such awards and the terms of the 2020 Omnibus Plan.

On December 23, 2021, the Board determined it advisable and in the best interests of the Company to adopt an Inducement Equity Incentive Plan (the “2021 Inducement Equity Incentive Plan”) intended to induce new employees to join the Company for the benefit of individuals who satisfy the standards for inducement grants under Rule 5635(c)(4) of the Nasdaq Listing Rules and the related guidance issued thereunder with respect to the Company and its affiliates.

The maximum number of shares reserved for issuance pursuant to awards granted under the 2021 Inducement Equity Incentive Plan is 1,000,000 .

On June 16, 2022, at the Company’s annual meeting of stockholders, the Company’s stockholders approved the Company’s 2022 Equity Incentive Plan (the “2022 Plan”).

The 2022 Plan is the successor to and continuation of the 2020 Omnibus Plan, in order to allow the Company to continue to utilize a broad array of equity incentives in order to secure and retain the services of its employees, directors, and consultants, and that are intended to align the interests of employees, directors, and consultants with the interests of the Company’s stockholders.

The number of newly authorized shares that can be issued under the 2022 Equity Incentive Plan is 646,173 , and the total number of shares reserved for issuance under the 2022 Plan (which amount includes shares remaining available for issuance under the 2020 Omnibus Plan as well as certain shares underlying awards then outstanding under the 2020 Omnibus Plan that will become available for issuance under the 2022 Plan if certain conditions are met) is 1,800,000 .

In addition, beginning on January 1, 2023 and ending on (and including) January 1, 2032, the maximum number of shares of common stock that may be issued under the 2022 Plan will cumulatively be increased by 6 % of the number of shares of common stock issued and outstanding on the immediately preceding December 31st, or such lesser number of shares as determined by the Board.

No incentive stock options may be granted under the 2022 Plan after May 12, 2032 and the Board may suspend or terminate the 2022 Plan at any time.

The Board is responsible for administering the 2022 Plan, including determining the individuals to be granted options and other awards, the number of shares of common stock subject to each award that an individual will receive, the exercise price per share (if any) subject to an award, and the exercise period of each option, subject to the terms of the 2022 Plan.

No option will have a term in excess of 10 years .

The exercise price for a stock option awarded under the 2020 Omnibus Plan shall not be less than the fair market value of the Company’s common stock on the date of the grant.

On December 23, 2021, the Board of Directors, has determined that it is advisable and in the best interests of the Company to adopt an Inducement Equity Incentive Plan (the “2021 Inducement Equity Incentive Plan”) intended to induce new employees to join the Company for the benefit of individuals who satisfy the standards for inducement grants under Rule 5635(c)(4) of the NASDAQ Listing Rules and the related guidance issued thereunder with respect to the Company and its affiliates.

The maximum number of shares reserved for issuance pursuant to awards to be granted under the 2021 Inducement Equity Incentive Plan is to 1,000,000 .

The exercise price of a stock option generally cannot be less than 100 % of the fair market value of our common stock on the date of grant for non-statutory stock options.

Stock Option Grants

The following tables summarize stock option activity for the year ended December 31, 2021 :

The following tables summarize the stock option activity for the year ended December 31, 2022 :

Weighted Average

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Weighted Average

Remaining Contractual

Grant Date Fair Value

Exercise Price

Terms (Years)

Outstanding as of December 31, 2020

Options outstanding after stock splits

Options outstanding as of December 31, 2021

Options granted

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On March 3, 2021, the Board approved a 1-for- 0.880784 reverse stock split of the Company’s outstanding equity instruments.

The reverse stock split was approved by the stockholders on March 4, 2021 and became effective on March 17, 2021.

The reverse stock split was approved by the Company’s stockholders on March 4, 2021, and became effective on March 17, 2021.

Shares of common stock underlying outstanding stock options were proportionately reduced from 588,000 to 517,902 and the respective exercise prices were proportionately increased from $ 2.97 to $ 3.38 in accordance with the terms of the agreements governing such securities.

The reverse stock split did not impact the fair value of the stock option previously recorded and no modification accounting is required because all the three following conditions were met:

The reverse stock split did not impact the fair value of the stock option awards previously recorded because all the three following conditions were met:

(i) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified;

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The aggregate intrinsic value of stock options is calculated as the difference between the weighted average exercise price of the underlying stock options and the market price of the Company’s common stock on December 31, 2022.

As of December 31, 2021, the total unrecognized compensation cost related to non-vested stock options granted was USD 2,403 thousand and is expected to be recognized over 4 years .

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options on the date of grant.

The Black-Scholes option pricing model takes into account variables such as volatility, dividend yield rate, and risk-free interest rate.

The computation of expected volatility and expected term of exercise is based on a representative group of companies with similar characteristics, including stage of product development and life science industry focus, since we do not have a reliable history.

The risk-free interest rate is based on US treasury bonds whose term is consistent with the expected term of exercise of the stock options.

The expected dividend yield is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock.

The Company’s policy is to account for forfeitures when they occur.

Based on this calculation the intrinsic value of the outstanding stock options as of December 31, 2022 is nil .

The assumptions that the Company used to determine the grant-date fair value of stock options granted were as follows, presented on a weighted-average basis:

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The weighted average grant-date fair value of the Company’s stock options granted as of December 31, 2022 and 2021 was $ 2.49 and $ 4.27 , respectively.

Total stock-based compensation expense is recognized for stock options granted to employees and non-employees and has been reported in the Company’s condensed consolidated statements of operations and comprehensive loss as follows:

Total stock-based compensation expense is recognized for stock options granted to employees and non-employees and has been reported in the Company’s consolidated statements of operations as follows:

Restricted Stock Units and Performance Stock Units

The following table lists the RSUs awarded under the 2022 Plan for year ended December 31, 2022 and 2021:

Year Ended December 31

RSUs granted and outstanding

Grant date fair value

In 2022 the Company granted a total of 103,050 RSUs covering an equal number of shares of the Company’s common stock to employees and consultants with a weighted-average grant date fair value of $ 3.48 .

The fair value of the RSUs is based on the closing price of the Company’s stock on the grant date.

The fair value of the RSUs is recognized as an expense over the duration of the vesting period.

The weighted average duration of the vesting period for the RSUs granted is two years .

In December 2021, the Compensation Committee of the Board approved 200,000 awards of performance-based restricted stock units (“PRSUs”) to an executive officer of the Company, subject to vesting on the achievement of certain services, business development and clinical development performance criteria.

The grant date fair value for this PRSUs award was determined to be nil under ASC 718 based upon a determination that as of the grant date, it was not probable that the performance conditions will be achieved.

The Company evaluates the performance targets in the context of its business development plan and product candidates’ development pipeline and recognized compensation expense based on the probable number of PRSUs that will ultimately vest.

The maximum potential fair value for the PRSU award, based on achieving the maximum level of performance under the award as of the grant date, was calculated to be $ 1,139 thousand, using the closing price of the Company’s common stock on the grant date.

RSUs and PRSUs do not have the voting rights of shares of common stock, and the shares underlying the RSUs and PRSUs are not considered issued and outstanding.

Under the 2022 Plan, each RSU/PRSU represents a contingent right to receive one share of the Company’s common stock.

Total stock-based compensation expense is recognized for stock options and RSUs granted to employees and non-employees has been reported in the Company’s consolidated statements of operations as follows:

Year Ended December 31

Research and development

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Total stock-based compensation

As of December 31, 2022, the total unrecognized compensation cost related to non-vested stock options and RSUs granted was USD 3,503 thousand and is expected to be recognized over 4 years .

Collaboration Agreement

On April 20, 2021, the Company entered into a multi-target collaboration agreement with Zentalis Pharmaceuticals, Inc.

On April 20, 2021, we entered into a multi-target collaboration agreement with Zentalis Pharmaceuticals, Inc.

(“Zentalis”) to discover new product candidates for the treatment of cancer.

Under the terms of the agreement, the Company will use its in-licensed SEE-Tx® computational platform technology to identify binding sites on target proteins and determine the potential suitability of these sites as drug targets, as well as their prospective therapeutic use in oncology.

Under the terms of the agreement, the Company used its licensed SEE-Tx® computational platform technology to identify binding site on target proteins

and determine the potential suitability of these sites as drug targets, as well as their prospective therapeutic use in oncology.

Pursuant the terms of the agreement, Zentalis agreed to pay the Company, on a program-by-program basis, a non-creditable, non-refundable, program initiation fee and reimbursement of expenses incurred by the Company in accordance with the agreed-upon research budget for each target in a multi-target agreement with a maximum of five mutually agreed to targets at the option of Zentalis.

With respect to any development program, and subject the delivery of the data package, the Company granted to Zentalis an option to obtain an exclusive, transferable worldwide license, with the right to sublicense, under relevant intellectual property rights and know-how of the Company arising from the collaboration to develop, manufacture and commercialize any products resulting from the development program.

Zentalis may exercise the option, at its reasonable discretion, and shall use commercially reasonable efforts to develop and obtain market approval for products developed from the applicable programs.

Unless terminated earlier, the agreement expires at the expiration of the last valid claim of the licensed patents, subject to certain surviving rights and obligations.

Zentalis and the Company can each terminate the agreement in the event of the bankruptcy or insolvency of the other party, or a material breach by the other party and failure to cure such breach within a certain period of time.

Zentalis shall have the right, at its sole discretion, exercisable at any time to terminate the agreement on a program-by-program basis, upon ninety ( 90 ) days’ prior written notice to the Company or, at any time, if a safety concerns arises with respect to any development program or product.

In May 2021, the first target development program was identified, and the estimated development cost were approved and collected in July 2021.

The transaction price of this first target development program includes (i) $ 50 thousand of fixed consideration as program initiation fee, (ii) up to $ 272 thousand as reimbursement for employee and external research and development cost, (iii) $ 250 thousand subject to the exercise of a research program option, (iv) up to $ 41.5 million of variable consideration in the form of event-based milestone payments, if goals will be met in the future, and (v) other royalty-based payments based on future net sales.

The Company analyzed the Zentalis Collaboration Agreement and concluded that it represents a contract with a customer within the scope of ASC 606 and ASC 808.

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The Company will recognize revenue associated with the performance obligation as the research and development services are provided using an input method, according to the costs incurred.

During the course of 2022, Zentalis informed us of its desire to wind down the collaboration.

As of December 31, 2022, the Company recognized $ 133 thousand of revenues and reported current portion of deferred revenues for $ 55 thousand.

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The Company report a provision for income taxes due to the Spanish tax authorities pertaining to our branch Gain Therapeutics Sucursal en España.

Spanish corporate income taxes have been computed based on an effective tax rate of 25 %, which represents the statutory tax rate, as no discrete items were noted in the computation of income taxes.

For financial reporting purposes, loss before income taxes provision includes the following components:

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( 34,289,160 )

( 18,239,792 )

Deferred tax assets related to:

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Net operating loss (domestic)

Stock based compensation

Stock based compensation (foreign)

Stock based compensation (domestic)

Warrant expense

Patent expense

Other temporary differences

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Net deferred tax assets

According to Swiss tax law, the NOLs can be carried forward for seven years and will begin to expire commencing from 2025 for the NOLs generated in 2017.

Foreign NOLs refer to the Company’s Swiss subsidiary and according to Swiss tax law such NOLs can be carried forward for seven years and will begin to expire commencing from 2025 for the NOLs generated in 2017.

According to the U.S.

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Such assessment is made on a jurisdiction-by-jurisdiction basis.

The Company’s assessment includes an evaluation of cumulative losses, future sources of taxable income, exclusive of reversing temporary differences, and risks and uncertainties related to our business.

The Company’s assessment includes an evaluation of cumulative losses, future sources of taxable income and risks and uncertainties related to our business.

As of December 31, 2022 and 2021, the Company has determined that there is not sufficient evidence that the Company will be able to realize the benefits of the domestic and foreign deferred tax assets.

Accordingly, due to uncertainty regarding the realization of our deferred tax assets, the Company continues to maintain a full valuation allowance on the Company’s domestic and foreign deferred tax assets as of December 31, 2021 and 2020 and until sufficient positive evidence will exist to support the reversal of the valuation allowance.

A reconciliation of income tax expense (benefit) computed at the statuory federal income tax rate to the Compan’s effective tax rate as reflected in the consolidated financial statements is as follows:

Accordingly, due to uncertainty regarding their realization, the Company continues to maintain a full valuation allowance on the Company’s domestic and foreign deferred tax assets as of December 31, 2022 and 2021 and until sufficient positive evidence will exist to support the reversal of the valuation allowance.

A reconciliation of income tax expense computed at the statutory federal income tax rate to the Company’s effective tax rate as reflected in the consolidated financial statements is as follows:

Federal income tax at US statutory rate

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Effective income tax rate

As of December 31, 2021 and 2020, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statement of operations.There are no changes expected to occur in the next 12 months with respect to the status of the Company’s uncertain tax positions.

As of December 31, 2022 and 2021, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts have been recognized in the Company’s statement of operations.

There are no changes expected to occur in the next 12 months with respect to the status of the Company’s uncertain tax positions.

The Company files income tax returns in Switzerland, Spain and in the United States.

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Basic net loss per common share is computed by dividing the net loss available to common stockholders by the weighted-average number of shares of common stock outstanding during the period.

Diluted net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding during the period determined using the treasury-stock and if-converted methods.

For purposes of the diluted net loss per share calculation, preferred stock, warrants and stock options are considered to be potentially dilutive securities, but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore basic and diluted net loss per share are the same for all periods presented.

The following table sets forth the outstanding potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to do so would have resulted in anti-dilutive impacts:

For purposes of the diluted net loss per share calculation, preferred stock, warrants, stock options and RSUs are considered to be potentially dilutive securities, but are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive and therefore basic and diluted net loss per share are the same for all periods presented.

The following table sets forth the outstanding weighted-average potentially dilutive securities that have been excluded from the calculation of diluted net loss per share because to do so would have resulted in anti-dilutive impacts:

Year Ended December 31

Series A Preferred Stock

Series B Preferred Stock

Options to purchase common stock

Warrants to purchase common stock

The net loss per share for the comparative period ending December 31, 2020 of $ 1.17 has been recomputed to take into account the reverse stock split, resulting in $ 1.33 net loss per share.

In addition 200,000 PRSUs, granted in December 2021, contingently issuable upon meeting certain performance conditions are outstanding and will be included in the computation upon not resulting in anti-dilutive impacts and when the related performance conditions will be met.

Related Parties

Khalid Islam, the Chairman of our Board of Directors, shareholders and founder of the Company, is currently the Chairman of the board of directors of Minoryx, and therefore Minoryx is considered a related party.

In December 2017, the Company entered into an exclusive worldwide, royalty-bearing, assignable, transferable license agreement with Minoryx Therapeutics SL to use and exploit Minoryx’s IP and into an exclusive worldwide, royalty-bearing, assignable, transferable sublicense agreement with Universitat de Barcelona and Institucio Catalana Recerca Estudis Avancats in order to be able to develop its business, directly or indirectly, through sub-licensing to third parties

or any other way of operation.

According to the Minoryx License Agreement, the Company shall pay to Minoryx as royalties:

Khalid Islam, the Chairman of the Company’s Board, shareholder and founder of the Company, is currently the Chairman of the Board of Directors of Minoryx Therapeutics SL (“Minoryx”), and therefore Minoryx is considered a related party of the Company.

In December 2017, the Company entered into an exclusive worldwide, royalty-bearing, assignable, transferable license agreement with Minoryx to use and exploit Minoryx’s intellectual property and into an exclusive worldwide, royalty-bearing, assignable, transferable sublicense agreement with Universitat de Barcelona and Institucio Catalana Recerca Estudis Avancats in order to be able to develop its business, directly or indirectly, through sub-licensing to third parties or any other way of operation.

According to the terms and

conditions of the Minoryx License Agreement, the Company shall pay to Minoryx as royalties:

● an amount equal to 8 % of (i) net revenues with regard to products that would infringe (a) at least one composition of matter claim or (b) Minoryx molecules and (ii) sublicensing revenues;

● an amount equal to 3 % of net revenues with regard to products that would infringe at least (a) one method of claim or (b) Minoryx know-how.

In addition to royalties, the Company shall pay Minoryx certain milestones payments of 1.25 % of any consideration received in the event of a sale of the Company or substantially all of the assets, including by merger, change of control, or reorganization.

● an amount equal to 3 % of net revenues with regard to products that would infringe at least (a) one method of claim or (b) Minoryx know-how (as such term is defined in the agreement).

As of December 31, 2022 and 2021, there were no receivables and payables, revenues or expenses with Minoryx.

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The Company does not hold, either directly or indirectly, its own shares and in these periods has not purchased or alienated its own shares.

As of December 31,2021, the Company had research commitments with contractual maturity date in 2022 for $ 453,305 .

Significant events after the balance sheet date

As of December 31, 2022 and 2021, the Company had research commitments with one year contractual maturity date for $ 1,461 thousand and $ 453 thousand, respectively.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 8. Financial Statements and Supplementary Data