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Item 7. Management’s Discussion and Analysis

2025-03-27 compared with 2024-03-26 · 110 added, 95 removed, 151 unchanged (58% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are 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.

GT-02287 - our lead product candidate:

for the treatment of GBA1 Parkinson’s disease and other synucleinopathies

Our clinical stage product candidate, GT-02287, is being developed for the treatment of GBA1 Parkinson’s disease.

We have generated an extensive preclinical data package providing evidence of the mechanism of action and safety of GT-02287.

In preclinical models of GBA1 Parkinson’s disease, GT-02287 has been shown to restore glucocerebrosidase, or GCase, function in the lysosome, reduce toxic lipid substrates and toxic forms of alpha-synuclein, improve survival of dopaminergic neurons, increase dopamine levels, completely restore locomotor function, and reduce plasma-based neurodegeneration maker, neurofilament light chain, or NfL, back to the level of healthy animals.

In September 2023, we initiated the first-in-human Phase 1 clinical trial to assess the safety, tolerability, pharmacokinetics, and food effect of GT-02287 in healthy participants.

The study design includes a single ascending dose part during which the study participants receive one dose of GT-02287 at different dose levels, and a multiple ascending dose part during which the study participants receive one daily dose of GT-02287 for 14 days at different dose levels.

In February 2024, we initiated the multiple ascending dose part of this Phase 1 clinical trial, which we anticipate completing in the second quarter of 2024, with the availability of the quality assurance audited interim report in the third quarter of 2024.

We are planning to expand the scope of this Phase 1 clinical trial by amending the study protocol to include a cohort of 12-15 patients with Parkinson’s disease.

These patients will be treated for a period of three months to evaluate safety, tolerability, and pharmacokinetics in patients, as well as to assess the effect of GT-02287 on certain biomarkers of the GCase disease cascade.

In preparation for the treatment of Parkinson’s disease patients, in September 2023, we initiated the sub chronic (13 weeks treatment) preclinical toxicity study.

The in-vivo phase of the preclinical toxicity study was concluded in January 2024 with the final, quality assurance audited, report expected by the beginning of the second quarter of 2024.

In addition, we are planning to initiate the chronic (6 months in rodents and 9 months in non-rodents) preclinical toxicity study in the second half of 2024, enabling the conduct of clinical studies in patients with a GT-02287 treatment duration beyond three months .

On June 1, , 2023 our Australian subsidiary (Gain Therapeutics Australia PTY LTD or “Gain Therapeutics Australia” ) was established.

Gain Therapeutics Australia is our wholly owned subsidiary with the business purpose to conduct and supervise the Phase 1 clinical trial of our lead product candidate GT-02287.

We are 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”) and metabolic disorders through molecular chaperoning to stabilize misfolded proteins and increase their activity, as well as other diseases that can be targeted through protein inactivation or modulation, such as oncology.

We use our computational target and drug discovery platform, Magellan™, 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.

We believe that Magellan™ is uniquely suited to identify allosteric binding sites on the protein surface, which are different from the active (or orthosteric) binding site where the natural ligand of the protein binds.

Targeting an allosteric binding site instead of the active binding site of a protein provides numerous advantages, including:

the ability to regulate proteins implicated in disease through several different mechanisms of action covering both functional and conformational effects, including stabilization, destabilization, targeted degradation, allosteric inhibition, and allosteric activation of the targeted protein;

improved specificity of small molecules because binding to an allosteric binding site is non-competitive with the natural substrate that binds to the active binding site;

and the ability to identify small molecules with more favorable drug-like properties.

We have used our drug discovery platform to identify novel allosteric sites and small molecules for all of our pipeline programs.

We plan to continue to advance our existing research programs and initiate additional programs targeting allosteric binding sites identified with the Magellan™ platform in various therapeutic areas through academic partnerships, co-development and licensing arrangements.

Our clinical stage product candidate, GT-02287, is being developed for the treatment of Parkinson’s disease with and without GBA1 mutations.

We have generated an extensive preclinical data package providing evidence of the mechanism of action, in vivo pharmacology, and safety of GT-02287.

In preclinical models of GBA1 Parkinson’s disease, GT-02287 has been shown to restore glucocerebrosidase, or GCase, function in the lysosome, reduce toxic lipid substrates and toxic forms of alpha-synuclein, reduce endoplasmic reticulum stress, improve mitochondrial health and overall survival of dopaminergic neurons, increasing dopamine levels, restoring locomotor and cognitive function, and reducing plasma-based neurodegeneration maker, neurofilament light chain (NfL), back to the level of control animals.

In a Phase 1 first-in-human study (n = 72), GT-02287 was safe and generally well tolerated up to and including

the highest planned dose level, enabling further development in GBA1 Parkinson’s patients.

Additionally, administration of GT-02287 was associated with a mean increase in GCase activity of 53% among healthy volunteers at doses that were predicted to be in the therapeutic range based on preclinical models and will be carried forward in later stage trials of GT-02287.

The good safety and tolerability profile and the observed range of plasma exposure levels achieved after oral administration further bolster GT-02287’s best in-class potential.

We continue to monitor the impacts on our operations and access to financing, global and worsening macroeconomic conditions, such as the war in Ukraine, the Hamas-Israel conflict, global geopolitical tension, exchange rate fluctuations, supply chain disruptions, liquidity concerns and increases in commodity, energy and fuel prices.

Financial Condition

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Even if our product development efforts are successful, it is uncertain when, if ever, we will realize significant revenue from product sales.

In May 2022, we filed a shelf registration statement on Form S-3, which covers the offering, issuance and sale of up to a maximum aggregate offering price of $100.0 million of any combination of our common stock, preferred stock, debt securities and/or warrants from time to time in one or more offerings (the “Shelf Registration Statement”).

In May 2022, we entered into a Controlled Equity OfferingSM Sales Agreement, or Sales Agreement, with Cantor Fitzgerald & Co., or Cantor, pursuant to which we were able to offer and sell shares of our common stock having an aggregate offering price of up to $16.0 million from time to time through or to Cantor, acting as our agent or principal, in a series of one or more at-the-market equity offerings, which we refer to as our ATM Program.

During the year ended December 31, 2023, we sold an aggregate of 862,535 shares of common stock at an average price of $4.60 per share, raising gross proceeds of $3.9 million, which includes $0.4 million in sales and commissions and other offering expenses.

The Sales Agreement and the ATM Program were terminated in conjunction with the public offering and concurrent private placement of shares of the Company’s common stock in November 2023, as described below.

In the second quarter of fiscal year 2022, we entered into a Controlled Equity Offering Sales Agreement (the “Cantor Sales Agreement”), with Cantor Fitzgerald & Co.

(“Cantor”), pursuant to which we were able to offer and sell shares of our common stock having an aggregate offering price of up to $16.0 million from time to time through or to Cantor, acting as our agent or principal, in a series of one or more at-the-market equity offerings.

During the year ended December 31, 2023, we sold an aggregate of 862,535 shares of common stock at an average price of $4.60 per share, raising gross proceeds of $3.9 million, which included $0.4 million in sales and commissions and other offering expenses.

The Cantor Sales Agreement was terminated in conjunction with the public offering and concurrent private placement of shares of our common stock in November 2023, as described below.

In November 2023, we completed the public offering of 2.5 million shares of our common stock and warrants to purchase 1.3 million shares of our common stock.

The warrants have an exercise price of $2.75 per share and were sold at the rate of one warrant for every two shares of common stock purchased in the public offering.

The public offering price for each set of two shares of common stock and accompanying warrant to purchase one share of commons stock was $4.01 (with an effective price of $2.00 per share and $0.01 per warrant).

The public offering price for each set of two shares of common stock and accompanying warrant to purchase one share of common stock was $4.01 (with an effective price of $2.00 per share and $0.01 per warrant).

In a private placement that was completed concurrently with the public offering we also issued to accredited investors 2.5 million of shares of our common stock (or pre-funded warrants in lieu thereof) and private warrants to purchase 2.5 million shares of our common stock with an exercise price of $2.75 per share.

The private offering price per share and accompanying warrant in the private placement was $2.00 per set of securities sold privately.

The public offering and the concurrent private placement resulted in combined gross proceeds of $10.1 million, which includes $1.2 million of underwriting commissions, placement agent’s fees and other expenses connected with the financing round.

As of December 31, 2023 $0.9 million of the costs associated with the financing round had already been paid or deducted from the gross proceeds, while the reminder of the amount has been paid in the first quarter of 2024.

From inception through December 31, 2023, we have raised an aggregate of $74 million of gross proceeds through equity financings, including the issuance of convertible preferred stock, our IPO and sales under our ATM Program.

As of December 31, 2023, we had cash, cash equivalents and marketable securities of $16.8 million.

The public offering and the concurrent private placement resulted in combined gross proceeds of $10.1 million, which included $1.2 million of underwriting commissions, placement agent’s fees and other expenses connected with the financing round.

Additionally, a total of 353,156 warrants to purchase an equal amount of our common stock at an exercise price of $2.75 per share were granted to the underwriter and the placement agent associated with the offerings as consideration for the services provided, which provide for cash-less exercise.

In June 2024, we completed the public offering of 7.1 million shares of our common stock and 1.0 million pre-funded warrants (the “Pre-Funded Warrants”) to purchase an equal amount of our common stock at the nominal exercise price of $0.0001.

The public offering price is $1.35 per share while the purchase price of each pre-funded warrant was equal to the public offering price at which a share of common stock was sold to the public in this offering, minus $0.0001.

The public offering resulted in gross proceeds of $11.0 million, which included $1.2 million of underwriting commissions and other expenses connected with the financing round.

As part of the public offering in June 2024, we granted the underwriter an over-allotment option to purchase up to an additional 1,222,222 shares of our common stock, at the public offering price of $1.35, less underwriting discounts and commissions.

In July 2024, the underwriter partially exercised the over-allotment option and purchased an additional 337,076 shares of our common stock at the offering price mentioned above.

The exercise of the over-allotment option resulted in gross proceeds of $0.46 million, which included $42 thousand of underwriting commissions and other expenses connected with the exercise of the option.

We also issued 593,965 warrants to purchase an equal amount of our common stock at an exercise price of $1.6875 per share to the underwriter as consideration for the services provided, which provide for cash-less exercise.

In the third quarter of 2024, we entered into an Equity Distribution Agreement (the “Distribution Agreement”) with Oppenheimer & Co.

Inc., serving as agent (“Oppenheimer”) with respect to an at-the-market (“ATM”) offering program (the “2024 ATM Program”).

Under the 2024 ATM Program we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million.

We will pay Oppenheimer a commission equal to 3.0% of the gross sales proceeds of any shares sold through Oppenheimer under the Distribution Agreement.

During the year ended December 31, 2024, we sold an aggregate of 1,597,128 shares of our common stock at a weighted average price of $1.97 per share under the 2024 ATM Program, raising gross proceeds of $3.1 million, which included $0.2 million in sales commissions and other offering expenses.

From inception through December 31, 2024, we have raised an aggregate of $89 million of gross proceeds through equity financing, including the issuance of convertible preferred stock, our initial public offering, secondary offerings and previous sales under our ATM programs.

As of December 31, 2024, we had cash and cash equivalents of $10.4 million.

We have incurred recurring losses and negative cash flows from operations since inception and as of December 31, 2024 and December 31, 2023, had an accumulated deficit of $81.2 million and $60.8 million, respectively.

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Going Concern

As of December 31, 2023 and December 31, 2022, we had an accumulated deficit of $60.8 million and $38.5 million, respectively, and as of December 31, 2023, we had cash, cash equivalents and marketable securities of $16.8 million.

During the year ended December 31, 2023, we incurred net losses of $22.3 million and generated negative cash flows from operations of $18.9 million.

Our current operating plan indicates that it will continue to incur losses from operations and generate negative cash flows from operating activities.

Our projected cash outflows for the upcoming periods raise substantial doubt about our ability to continue as a going concern for at least 12 months from the issuance of the financial statements included elsewhere in this Annual Report on Form 10-K.

We will need to raise additional capital to fund continued operations beyond the first quarter of 2025.

As of December 31, 2024 and December 31, 2023, we had an accumulated deficit of $81.2 million and $60.8 million, respectively, and as of December 31, 2024, we had cash and cash equivalents of $10.4 million.

During the year ended December 31, 2024, we incurred net losses of $20.4 million and negative cash flows from operations of $18.9 million.

Our current operating plan indicates that we will continue to incur losses from operations and generate negative cash flows from operating activities.

We will need to raise additional capital to fund continued operations beyond the third quarter of 2025.

We plan to address our liquidity needs by taking steps to improve our operations and cash position, including identifying access to future capital and potential cost-reduction measures.

Investors should read the section below titled “Liquidity and Capital Resources” for additional information regarding our financial condition and ability to continue operations.

Financing Requirements;

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If we are unable to obtain funding, we could be required to delay, limit, reduce or eliminate research and development programs, product portfolio expansion or future commercialization efforts, or grant rights to develop, sell and market our product candidates even if we would otherwise prefer to develop and market such product candidates ourselves, which could adversely affect our business prospects.

The war in Ukraine, the conflict between Hamas and Israel, global geopolitical tension, and the post COVID-19 environment continue to have unpredictable impacts on global societies, economies, financial markets, and business practices.

The war in Ukraine, the conflict between Hamas and Israel, global geopolitical tensions, and the post COVID-19 environment continue to have unpredictable impacts on global societies, economies, financial markets, and business practices.

Recently worsening global macroeconomic conditions, liquidity concerns at and failures of banks and other financial institutions, volatility in the capital markets, and related market uncertainty may impact our ability to obtain additional financing when needed on favorable terms or at all.

For additional discussion of our financing requirements, see “—Liquidity and Capital Resources” and “—Funding Requirements” below.

Strategic Transactions;

Collaboration and Licensing Arrangement

In connection with our business development activities, we enter into collaboration and licensing arrangements with third parties, to use our licensed Magellan™ computational platform technology to discover novel allosteric sites on proteins and identify proprietary small molecules that bind these sites and may be developed into pharmaceutical products.

In connection with our business development activities, we are continually looking to enter into collaboration and licensing arrangements with third parties to use our licensed Magellan™ computational platform technology to discover novel allosteric sites on proteins and identify proprietary small molecules that bind these sites and may be developed into pharmaceutical products.

We expect to continue to identify and evaluate collaboration, co-development and licensing opportunities that may be similar to or different from the collaboration and licenses arrangements that we have entered into.

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We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products in the foreseeable future, if at all.

If we fail to complete the development of our product candidates in a timely manner or fail to obtain their regulatory approval and successfully commercialize them, we will not generate

revenues in the future.

Historically, we have received limited collaboration revenue pursuant to a collaboration agreement with Zentalis Pharmaceuticals which has been concluded in the year ended December 31, 2023.

If we fail to complete the development of our product candidates in a timely manner or fail to obtain their regulatory approval and successfully commercialize them, we will not generate revenues in the future.

Historically, we have received limited collaboration revenue pursuant to a collaboration agreement with Zentalis Pharmaceuticals which concluded in the year ended December 31, 2023.

Operating Expenses

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● expenses incurred under collaborations with third parties, including contract research organizations (“CROs”) and universities, that conduct research, preclinical and clinical studies, such as in-vitro and in-vivo absorption, distribution, metabolism and excretion (“ADME”), cell model studies, in-vivo pharmacology and pharmacokinetic studies, toxicology studies and chemical synthesis, stability studies, manufacturing and control materials, process characterization, scale-up and transfer, clinical trial expenses, on our behalf;

● employee salaries, benefits and other related costs, including share-based compensation expenses, for employees engaged in research and development functions and overhead allocations consisting of various support and facilities-related expenses, which include rent, utilities and maintenance of our facilities, depreciation, travel and conference expenses;

various support and facilities-related expenses, which include rent, utilities and maintenance of our facilities, depreciation, travel and conference expenses;

● fees paid to consultants who assist with research and development activities and related travel expenses;

● the cost of sponsored research, which includes laboratory materials and supplies, manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical studies.

The following table provides a breakout of our research and development expenses by major categories of expense:

The following table provides a breakout of our research and development expenses by major category:

Pre-clinical activities, clinical activities and outside services

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Such expenses are offset by contributions from research grants, which are recorded as a reduction to research and development expenses based on our best estimate of the periods in which the related expenditures are incurred and activities performed.

Our primary research and development focus since inception has been the application of our Magellan™ platform to various indications and targets, and more recently the development of our clinical stage lead product candidate GT-02287 for the treatment of Parkinson’s diseae and other neurodegenerative diseases.

Research and development activities are central to our business model.

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We will continue to focus on preserving our liquidity resources while we seek to maximize shareholders’ value.

We expect to continue the efforts started during the year ended December 31, 2023 to limit administrative expenses.

Other Financial Income (Expense)

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Consolidated Results of Operations

Comparison of the Years Ended December 31, 2023 and 2022

The following table summarizes our results of operations for the periods indicated, together with the changes in those items.

Collaborative Agreements

The following table summarizes our results of operations for the years ended December 31, 2024 and December 31, 2023.

Collaboration revenues

Total revenues

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Loss from operations

Other income (expense):

Interest income, net

Foreign exchange loss, net

Foreign exchange gain (loss), net

Loss before income tax

Net loss per ordinary share:

Basic and diluted loss per share

Weighted-average common stock used in per share calculations – basic and diluted

Net loss per shares:

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

Weighted average common stock - basic and diluted

Comparison of the Years Ended December 31, 2024 and 2023

For the years ended December 31, 2023 and 2022, total revenues were $55 thousand and $140 thousand, respectively, and consisted mainly of income from a collaboration agreement with Zentalis Pharmaceuticals.

For the years ended December 31, 2024 and 2023, total revenues were nil and $55 thousand, respectively, and consisted mainly of income from a collaboration agreement with Zentalis Pharmaceuticals that ended as of December 31, 2023.

Research and development expenses

Research and development expenses increased by $3.1 million to $11.5 million for the year ended December 31, 2023, from $8.4 million for the year ended December 31, 2022.

The increase in research and development expenses for the year ended December 31, 2023 was primarily attributable to increases in external R&D services and external expenses related to the commencement and conduct of our Phase 1 clinical trial with our lead drug candidate GT-02287 for the treatment of GBA1 Parkinson’s disease.

Research and development expenses decreased by $0.7 million to $10.8 million for the year ended December 31, 2024, as compared to $11.5 million for the year ended December 31, 2023.

The decrease in research and development expenses was primarily related to higher recognition of research grant income principally comprised of a tax credit for eligible research and development expenses in Australia.

These increases were partially offset by higher costs associated with the Clinical Phase 1 trial of our lead program compound GT-02287 for the treatment of Parkinson’s disease.

General and administrative expenses

General and administrative expenses increased by $1.3 million to $10.8 million for the year ended December 31, 2023 from $9.5 million for the year ended December 31, 2022.

The increase in general and administrative expenses for the year ended December 31, 2023 was primarily attributable to increases in professional fees for corporate compliance consulting and non cash costs related to share based compensation.

General and administrative expenses decreased by $1.2 million to $9.6 million for the year ended December 31, 2024 from $10.8 million for the year ended December 31, 2023.

The decrease in general and administrative expenses was primarily attributable to lower personnel and stock-based compensation costs.

Foreign exchange gain (loss), net

Foreign exchange loss, net decreased by $0.5 million to a gain of $0.1 million for the year ended December 31, 2024 from a loss of $0.4 million for the year ended December 31, 2023.

The decrease was mainly attributable to favorable foreign exchange currency translation as the Swiss franc weakened against the U.S.

Interest income, net

Interest income net increased by $0.12 million to $0.49 million for the year ended December 31, 2023 from $0.37 million for the year ended December 31, 2022.

The increase in interest income, net is mainly attributable to interest income derived from our investment in available for sale treasury securities.

Foreign exchange loss, net

Foreign exchange loss, net increased by $0.34 million to $0.43 million for the year ended December 31, 2023 from $96 thousand for the year ended December 31, 2022.

The increase is mainly attributable to the Swiss Franc strengthening its value against the US dollar.

Income Taxes are $80 thousand and $93 thousand for year ended December 31, 2023 and 2022, respectively.

Income Taxes are mainly related to taxable income that was generated in Spain.

Interest income, net decreased by $0.1 million to $0.4 million for the year ended December 31, 2024 from $0.5 million for the year ended December 31, 2023.

The decrease was mainly attributable to lower interest income from treasury securities that reached maturity in April 2024.

Income taxes are $537 thousand and $79 thousand for the years ended December 31, 2024 and 2023, respectively.

The increase was mainly attributable to higher income taxes payable in Australia.

Liquidity and Capital Resources

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As described in additional detail under “Financial Condition” above, we have funded our operations to date primarily through a combination of sales of our securities and research grants.

As of December 31, 2023, and December 31, 2022, we had $16.8 million and $22.1 million in cash and cash equivalents and marketable securities, respectively, and an accumulated deficit of $60.8 million and $38.5 million, respectively.

As of December 31, 2024 and December 31, 2023, we had $10.4 million in cash and cash equivalents and $16.8 million in cash, cash equivalents and marketable securities, respectively, and an accumulated deficit of $81.2 million and $60.8 million, respectively.

We had indebtedness of $0.4 million and $0.6 million as of December 31, 2024 and December 31, 2023, respectively.

Our cash and cash equivalents available at December 31, 2023 are expected to be sufficient to fund our anticipated operating and capital requirements into the first quarter of 2025, but may not be sufficient to fund the Company’s operations for one year from the issuance of the financial statements included in our 2023 Form 10-K.

Therefore, we have reported there is substantial doubt about our ability to continue as a going concern.

Our cash and cash equivalents available at December 31, 2024 are expected to be sufficient to fund our anticipated operating and capital requirements into the third quarter of 2025 and will not be sufficient to finance our operations for one year from the issuance of the financial statements included in this Annual Report.

Therefore, we have reported that there is substantial doubt about our ability to continue as a going concern.

Please refer to the discussion above titled “Going Concern”.

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Until such time, if ever, as we can generate substantial product revenues to support our business and corporate strategy, we expect to finance our cash needs through a combination of public and private equity offerings, debt financings, at-the-market offerings, government or private party grants, collaborations, strategic alliances, and licensing arrangements.

As of December 31, 2023, we did not maintain any lines of credit or equity capital committed for funding.

We continue to explore potential opportunities and alternatives to obtain the additional resources that will be necessary to support our ongoing operations beyond the first quarter of 2025, including raising additional capital through either private or public equity, including at-the-market offerings, or debt financing, or additional program collaborations or non-dilutive funding.

As of December 31, 2024, we did not maintain any lines of credit or equity capital committed for funding with the exception of the 2024 ATM Program.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders.

Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

If we raise funds

through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.

We may not be able to obtain additional funds through equity or debt financings when needed on favorable terms or at all, including as a result of rising interest rates, liquidity concerns at, and failures of, banks and other financial institutions, volatility in the capital markets and related market uncertainty.

If we raise funds through collaborations, or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock.

related market uncertainty.

Further, if we are unable to obtain additional funding to support our current or proposed activities and operations, we may not be able to continue our operations as currently anticipated, which may require us to suspend or terminate any ongoing development activities, modify our business plan, curtail various aspects of our operations, cease operations, or seek relief under applicable bankruptcy laws.

The following table provides information regarding our cash flows for the periods presented:

The following table summarizes our cash flows for the periods presented:

Cash used in operating activities

Cash provided/(used) by/in investing activities

Cash provided/(used) by/in financing activities

Cash provided by investing activities

Cash provided by financing activities

Effect of exchange rate changes

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

Cash Used in Operating Activities

During the year ended December 31, 2023 and 2022, we used $18.9 million and $14.7 million of cash, respectively, in operating activities, primarily to fund our operations related to the development of our product candidates and related general and administrative support activities.

Cash Used in Investing Activities

During the year ended December 31, 2023, cash provided by investing activities was $10.2 million, primarily due to maturity of marketable securities for $12.2 million partially offset by th purchase of marketable securities for $2 million.

During the year ended December 31, 2022, cash used in investing activities was $14.7 million, primarily due to purchase of marketable securities for $17.7 million, partially offset by the maturity of marketable securities for $3 million.

Cash Used/Provided by Financing Activities

During the year ended December 31, 2023, cash provided by financing activities was $12.6 million, mainly related to the net proceeds related to the public offering and the concurrent private placement for $9.2 million, and the net proceeds related to the ATM program for $3.5 million.

During the year ended December 31, 2022, cash used in financing activities was $78 thousand, reflecting the payment of current portion of long-term debt.

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

Cash Flows from Operating Activities

During the years ended December 31, 2024 and 2023, we used $18.9 million of cash in operating activities, primarily to fund our operations related to the development of our pipeline and product candidates as well as related general and administrative support activities.

Cash Flows from Investing Activities

During the year ended December 31, 2024, net cash provided by investing activities was $5.0 million, primarily due to the maturity of marketable securities.

During the year ended December 31, 2023, net cash provided by investing activities was $10.2 million, primarily due to the maturity of marketable securities for $12.2 million partially offset by the purchase of marketable securities for $2.0 million.

Cash Flows from Financing Activities

During the year ended December 31, 2024, cash provided by financing activities was $13.0 million primarily related to the following:

$10.3 million provided by net proceeds from the issuance of shares and warrants in the public offering, $3.0 million provided by net proceeds from issurance of shares in the ATM offering, $0.2 million provided by the exercise of stock options and public warrants, partially offset by $0.3 million payment of offering costs and $0.1 million repayment of long-term debt.

During the year ended December 31, 2023, cash provided by financing activities was $12.6 million mainly related to the net proceeds from the public offering and the concurrent private placement for $9.2 million, and the net proceeds related to the issurance of shares in the ATM offering of $3.5 million.

Funding Requirements

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● the extent to which we enter into collaborations or other arrangements with additional third parties in order to further develop our product candidates;

● the extent to which we encounter increased costs as a result of global and macroeconomic conditions, including heightened inflation and high interests rates, supply chain disruptions, fluctuating exchange rates, and increases in commodity, energy and fuel prices;

● the extent to which we encounter increased costs as a result of global and macroeconomic conditions, including high interests rates, supply chain disruptions, fluctuating exchange rates, and increases in commodity, energy and fuel prices;

● the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;

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We may not be able to obtain additional funds through equity or debt financings when needed on favorable terms or at all.

See “Financing Requirements;

Current Financing Environment” and “Liquidity and Capital Resources”.

Critical Accounting Policies and Use of Estimates

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We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

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

and the going concern assessment.

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

Our actual results may differ from these estimates under different assumptions or conditions.

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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 financial statements.

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

There may be instances in which payments made to our vendors exceed the level of services provided, and result in a prepayment reported under other current assets, which are subsequently expensed in the Consolidated Statements of Operations when the related activity has been performed.

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.

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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 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 defined benefit plan is December 31.

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 Changes in Stockholders’ Equity and are charged or credited to income over the employees’ expected average remaining working lives.

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

Share-based compensation

We recognize compensation costs related to share-based compensation granted to employees, consultants, and directors based on the estimated fair value of the awards as of the grant date.

We estimate the grant date fair value, and the resulting share-based compensation, using the Black-Scholes option-pricing model.

The grant date fair value of the stock based awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.

We estimate the fair value of stock options using the Black-Scholes option-pricing model, which requires assumptions, including the fair value of our common stock prior to our initial public offering, volatility, the expected term of exercise, the risk free interest rate for a period that approximates the expected term of exercise, and our expected dividend yield.

We estimate the grant date fair value and the resulting share-based compensation using the Black-Scholes option-pricing model for stock option awards.

The grant date fair value of the stock option awards is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards.

We estimate the fair value of stock options using the Black-Scholes option-pricing model, which requires assumptions, including volatility, the expected term of exercise, the risk free interest rate for a period that approximates the expected term of exercise, and our expected dividend yield.

Certain assumptions used in our Black-Scholes option-pricing model represent management’s best estimates and involve a number of assumptions and the application of management’s judgment, as they are inherently subjective.

We recognize expenses related to Restricted Stock Units (or RSUs) based on their fair market value, determined as the closing price on Nasdaq of our common stock as of the grant date, on a straight-line basis over the requisite service period.

For Restricted Stock Units with market or performance based vesting conditions (or PRSUs), the fair value at grant date is calculated using an option-pricing model (Monte Carlo Simulation) or based on management’s assessment of the likelihood of concurrence of the underlying performance, respectively.

We recognize expenses related to Restricted Stock Units (or RSUs) based on their fair market value, determined as the closing price on the Nasdaq of our common stock as of the grant date, on a straight-line basis over the requisite service period.

For restricted stock units with market or performance based vesting conditions (or PRSUs), the fair value at grant date is calculated using an option-pricing model (Monte Carlo Simulation) or based on management’s assessment of the likelihood of occurrence of the underlying performance.

Research grants

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

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.

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

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 Statements of Operations as a reduction to research and development expenses.

Under the Australian government’s Research and Development Tax Incentive (“R&DTI”) program, we are also eligible to obtain certain research and development tax credits.

The tax credits are available on the basis of specific criteria with which we must comply.

The tax credits are administered through the local tax authority and can be realized regardless of whether we have generated taxable income in the respective jurisdictions.

The tax credits are based on a percentage of eligible research and development activities under the program and 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 Statements of Operations as a reduction to research and development expenses when collectability is reasonably assured.

Going concern assessment

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The assessment over going concern is based on management’s most updated budget and forecast and does not take into consideration estimated future cash inflows that are not certain as of the date of preparation of the financial statements.

Jumpstart Our Business Startups (“JOBS”) Act

We qualify as an “emerging growth company”, as defined in the JOBS Act.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis