What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-11-13 compared with 2023-08-11 · 137 added, 118 removed, 170 unchanged (60% of the section changed)

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These forward-looking statements

speak only as of the date of filing this Quarterly Report with the SEC and include, without limitation, statements about the following:

our lack of operating history;

the expectation that we will incur significant operating losses for the foreseeable future and will need significant additional capital;

the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements;

our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

our plans to develop and commercialize our product candidates;

the timing of our Investigational New Drug (“IND”) submission with the U.S.

Food and Drug Administration or other regulatory submissions

with foreign regulatory agencies for PAS-004;

the timing of our planned clinical trials for PAS-004;

the ability of our clinical trials to demonstrate safety and efficacy of our future product candidates, and other positive results;

disruptions to the development of our product candidates due to the continued spread of COVID-19 and the resulting global pandemic;

the timing and focus of our future preclinical studies and clinical trials, and the reporting of data from those studies and trials;

the size of the market opportunity for our future product candidates, including our estimates of the number of patients who suffer from the diseases we are targeting;

the success of competing therapies that are or may become available;

the beneficial characteristics, safety, efficacy and therapeutic effects of our future product candidates;

our ability to obtain and maintain regulatory approval of our future product candidates;

our plans relating to the further development of our future product candidates, including additional disease states or indications we may pursue;

existing regulations and regulatory developments in the United States and other jurisdictions;

our dependence on third parties;

the need to hire additional personnel and our ability to attract and retain such personnel;

our plans and ability to obtain or protect intellectual property rights, including extensions of patent terms where available and our ability to avoid infringing the intellectual property rights of others;

our financial performance and sustaining an active trading market for our Common Stock and Warrants;

our ability to restructure our operations to comply with any potential future changes in government regulation.

speak only as of the date of filing this Quarterly Report with the SEC.

There are a number of important factors that could

cause the actual results to differ materially from those expressed in any forward-looking statement made by us.

These factors include,

but are not limited to:

lack of operating history;

expectation that we will incur significant operating losses for the foreseeable future and will need significant additional capital;

period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital

expenditure requirements;

estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

plans to develop and commercialize our product candidates;

timing of our Investigational New Drug (“IND”) submission with the U.S.

Food and Drug Administration or other regulatory

submissions with foreign regulatory agencies for PAS-004;

timing of our planned clinical trials for PAS-004;

ability of our clinical trials to demonstrate safety and efficacy of our future product candidates, and other positive results;

timing and focus of our future preclinical studies and clinical trials, and the reporting of data from those studies and trials;

size of the market opportunity for our future product candidates, including our estimates of the number of patients who suffer from the

diseases we are targeting;

success of competing therapies that are or may become available;

beneficial characteristics, safety, efficacy and therapeutic effects of our future product candidates;

ability to obtain and maintain regulatory approval of our future product candidates;

plans relating to the further development of our future product candidates, including additional disease states or indications we may

regulations and regulatory developments in the United States and other jurisdictions;

dependence on third parties;

need to hire additional personnel and our ability to attract and retain such personnel;

plans and ability to obtain or protect intellectual property rights, including extensions of patent terms where available and our ability

to avoid infringing the intellectual property rights of others;

financial performance and sustaining an active trading market for our Common Stock and Warrants;

ability to restructure our operations to comply with any potential future changes in government regulation.

Because forward-looking

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on the development of our discovery programs through lead identification of drug candidates, including PAS-003, a monoclonal

antibody targeting a5b1 integrin for the treatment of amyotrophic lateral sclerosis (ALS), PAS-002, a DNA vaccine targeting GlialCAM

for the treatment of multiple sclerosis (MS), and PAS-001, a small molecule targeting the compliment component 4 (C4) gene for the

treatment of schizophrenia.

antibody targeting α5β1 integrin for the treatment of amyotrophic lateral sclerosis (ALS), PAS-002, a DNA vaccine

targeting GlialCAM for the treatment of multiple sclerosis (MS), and PAS-001, a small molecule targeting the compliment component 4

(C4) gene for the treatment of schizophrenia.

Our ability to generate

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and capital requirements will increase significantly in connection with our ongoing activities as we:

continue our ongoing and planned research and development of our product candidates;

initiate nonclinical studies and clinical trials for any additional product candidates that we may pursue;

scale up external manufacturing capacity with the aim of securing sufficient quantities to meet our capacity requirements for clinical trials and potential commercialization;

establish a sales, marketing and distribution infrastructure to commercialize any approved product candidates and related additional commercial manufacturing costs;

develop, maintain, expand, protect and enforce our intellectual property portfolio;

acquire or in-license product candidates and technologies;

add clinical, operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts.

our ongoing and planned research and development of our product candidates;

nonclinical studies and clinical trials for any additional product candidates that we may pursue;

up external manufacturing capacity with the aim of securing sufficient quantities to meet our capacity requirements for clinical trials

and potential commercialization;

a sales, marketing and distribution infrastructure to commercialize any approved product candidates and related additional commercial

manufacturing costs;

maintain, expand, protect and enforce our intellectual property portfolio;

or in-license product candidates and technologies;

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

and planned future commercialization efforts.

Recent Developments

Clinics Segment

During the first quarter of 2023, we discontinued

our at-home services in New York, NY as well as our services in the U.K.

During the second quarter of 2023, we sold our assets associated

with the Clinics operations in Los Angeles, CA, and the lease associated with the related property was assumed by the buyer in the transaction.

Accordingly, as of the date of this Quarterly Report on Form 10-Q, the previously discontinued operations of our Clinics segment have

been disposed of.

Completion of GMP-Compliant Manufacturing

On June 29, 2023, we announced the successful

completion of manufacturing the GMP-compliant Phase 1 clinical supplies of the active pharmaceutical ingredient (“API”) of

our lead product candidate PAS-004.

We intend to utilize this supply of PAS-004 for our upcoming Phase I clinical trial following acceptance

of our regulatory application.

Tender Offer to Repurchase Shares of Common

Tender Offer to Repurchase Shares of Common Stock

On July 20, 2023, we announced that our Board

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We launched the Tender Offer on August

9, 2023, which is expected to expire on September 8, 2023, subject to the terms and conditions of the Tender Offer.

9, 2023 and it expired on September 8, 2023, subject to the terms and conditions of the Tender Offer.

The Tender Offer resulted in the

Company purchasing 5,323,451 shares of its common stock for an aggregate purchase price of approximately $3.7 million, excluding fees

and expenses relating to the Tender Offer.

For more information on the Tender Offer, see “Note 6 – Stockholders’ Equity”

in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.

Selection of PAS-003 Lead Candidate

On November 9, 2023,

we announced that we selected our PAS-003 lead development candidate, a humanized monoclonal antibody with optimal properties that targets

α5β1 integrin for the treatment of both sporadic and familial ALS.

PAS-003 is now ready for manufacturing and IND enabling

Impact of Inflation

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Results of Operations

Comparison of the Three and Six Months Ended

June 30 , 2023 and 2022

Our financial results for the three and six months

ended June 30 , 2023 and 2022 are summarized as follows:

For the Three

Comparison of the Three and Nine Months Ended

September 30 , 2023 and 2022

Our financial results for the three and nine months

ended September 30 , 2023 and 2022 are summarized as follows:

For the Three Months Ended

September 30,

Selling, general and administrative

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Loss from operations

Other income, net

Other income (expense), net

Net loss from continuing operations

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$ (4,586,130 )

$ (1,104,836 )

For the Nine Months Ended

September 30,

Selling, general and administrative

$ (1,185,877 )

Research and development

Loss from operations

(10,830,579 )

Other income, net

Net loss from continuing operations

(10,476,484 )

Net loss from discontinued operations, net of tax

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fees for accounting and consulting services.

For the three and six months ended June 30, 2023,

For the three and nine months ended September

30, 2023, selling, general and administrative expenses were approximately $2.2 million and $6.1 million, respectively.

Selling, general and administrative

expenses decreased for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022 primarily

due to the discontinued Clinics operations in 2023.

Selling, general

and administrative expenses decreased for the three and nine months ended September 30, 2023 compared to the three and nine months ended

September 30, 2022 primarily due to the discontinued Clinics operations in 2023.

We expect selling, general, and administrative

expenses to remain relatively flat throughout 2023.

expenses to remain relatively flat throughout the rest of 2023.

Research and Development

Research and development

expenses relate to our activities performed by our Therapeutics segment, which are primarily focused on the development of PAS-004, our

expenses relate to our activities performed by our Therapeutics segment, which is primarily focused on the development of PAS-004, our

lead product candidate, and PAS-003, our most advanced discovery candidate.

For the three and six

months ended June 30, 2023, research and development expenses were approximately $2.0 million and $3.1 million, respectively.

no research and development expenses for the three and six months ended June 30, 2022.

The increase is due to the commencement and expansion

of our drug development activities primarily related to PAS-004 and PAS-003.

We expect research and

development expenses to increase throughout 2023 primarily related to manufacturing, regulatory and clinical development of PAS-004.

Other income, net

For the three months

ended June 30, 2023, other income, net decreased by approximately $191,000 compared to the three months ended June 30, 2022.

is primarily due to the larger decrease in the fair value of the publicly traded warrants issued in our Initial Public Offering (the “Public

For the three and nine

months ended September 30, 2023, research and development expenses were approximately $1.6 million and $4.7 million, respectively.

and development expenses increased for the three and nine months ended September 30, 2023 compared to the three and nine months ended

September 30, 2022 primarily due to the commencement and expansion of our drug development activities

related to PAS-004 and PAS-003.

We expect research and development expenses to continue to increase

throughout the rest of 2023 primarily due to manufacturing, regulatory and clinical development of PAS-004.

Other income (expense),

For the three months ended September 30, 2023, other income (expense),

net increased by approximately $512 thousand compared to the three months ended September 30, 2022.

The increase in other income, net

is due primarily to the decrease in the fair value of the publicly traded warrants issued in our Initial Public Offering (the “Public

Warrants”) and the warrants issued as compensation to the underwriters in our Initial Public Offering (the “Representative

Warrants”) that occurred during the three months ended June 30, 2022, compared to the decrease that occurred during the three months

ended June 30, 2023.

For the six months ended

June 30, 2023, other income, net decreased by approximately $1.0 million compared to the six months ended June 30, 2022.

is primarily due to the $1.4 million decrease in the fair value of our Public Warrants and Representative Warrants that occurred during

the six months ended June 30, 2022, compared to a decrease of approximately $67,000 that occurred during the six months ended June 30,

Warrants”) that occurred during the three months ended September 30, 2023, compared to a larger increase in the fair value of the

Public Warrants and the Representative Warrants that occurred during the three months ended September 30, 2022.

See “Note 2 –

Summary of Significant Accounting Policies” in the Notes to Unaudited Condensed Consolidated Financial Statements in Part I, Item

1 of this Form 10-Q for more information on the accounting treatment of the Public Warrants and the Representative Warrants.

The remaining

increase in other income (expense), net is due to dividend income of $142 thousand during the three months ended September 30, 2023.

For the nine months ended

September 30, 2023, other income, net decreased by approximately $517 thousand compared to the nine months ended September 30, 2022.

decrease is primarily due to the decrease of approximately $67 thousand that occurred during the nine months ended September 30, 2023,

compared to a $1.4 million decrease in the fair value of our Public Warrants and Representative Warrants that occurred during the nine

months ended September 30, 2022, partially offset by an increase in dividend income of $253 thousand during the nine months ended September

Working Capital

September 30,

Current assets

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Working capital

Working capital decreased by approximately $6.5

million between December 31, 2022 and June 30, 2023 due primarily to cash used to fund operations for the six months ended June 30, 2023.

(1) the numbers for December 31, 2022, exclude the discontinued

Working capital decreased by approximately $13.5 million between December

31, 2022 and September 30, 2023 due primarily to cash used to repurchase shares of our common stock in the Tender Offer and to fund operations

for the nine months ended September 30, 2023.

Liquidity and Financial Condition

Six Months Ended

Net loss from continuing operations

Nine Months Ended

September 30,

$ (10,913,499 )

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$ (8,709,179 )

Net cash used in (provided by) investing activities

Net cash provided by financing activities

Net cash provided by investing activities

Net cash used in financing activities

Effect of foreign currency translation

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Cash and cash equivalents decreased by approximately

$6.4 million for the six months ended June 30, 2023, which was primarily attributable to cash used to fund operations and make equipment

purchases during the period.

$13.5 million for the nine months ended September 30, 2023, compared to a decrease of approximately $10.5 million for the nine months

ended September 30, 2022, which was primarily attributable to cash used to repurchase shares of our common shares in the Tender Offer

during the period and cash used to fund operations, partially offset by a decrease of approximately $271 thousand in net cash used in

discontinued operations, compared to a decrease of approximately $1.7 million in the corresponding period of 2022.

Liquidity & Capital Resources Outlook

As of June 30, 2023, we had approximately $26.6

As of September 30, 2023, we had approximately

$19.6 million in operating bank accounts and money market funds, with working capital of approximately $18.7 million.

We are dependent on obtaining

additional working capital funding from the sale of equity and/or debt securities in order to continue to execute our development plans

and continue operations.

Subsequent to the consummation of the Initial Public Offering, our liquidity was and will continue to be satisfied

through the net proceeds from the Initial Public Offering, a private placement in November 2021 and the receipt of cash upon the prior

exercise of our outstanding warrants.

Based on the foregoing, management believes that we will have sufficient working capital to meet

our needs through twelve months from the issuance date of the financial statements included in this quarterly report.

We are dependent

on obtaining additional working capital funding from the sale of equity and/or debt securities in order to continue to execute our development

plans and continue operations.

Subsequent to the consummation of the Initial Public Offering, our liquidity was and continues to be satisfied

through the net proceeds from the Initial Public Offering, the private placement we consummated in November 2021 and the receipt of cash

upon the prior exercise of our outstanding warrants.

Based on the foregoing, management believes that we will have sufficient working

capital to meet our needs through twelve months from the issuance date of the financial statements included in this quarterly report.

Liquidity & Capital Resources Outlook

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Our future funding requirements will depend on many factors, including, but not limited to:

the scope, timing, progress and results of discovery, preclinical development, laboratory testing and clinical trials for our product candidates;

the costs of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization;

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

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

the costs and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies;

expenses needed to attract and retain skilled personnel;

the costs required to scale up our clinical, regulatory and manufacturing capabilities;

the costs of future commercialization activities, if any, including establishing sales, marketing, manufacturing and distribution capabilities, for any of our product candidates for which we receive marketing approval;

revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.

scope, timing, progress and results of discovery, preclinical development, laboratory testing and clinical trials for our product candidates;

costs of manufacturing our product candidates for clinical trials and in preparation for marketing approval and commercialization;

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

costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending

intellectual property-related claims;

costs and fees associated with the discovery, acquisition or in-license of additional product candidates or technologies;

needed to attract and retain skilled personnel;

costs required to scale up our clinical, regulatory and manufacturing capabilities;

costs of future commercialization activities, if any, including establishing sales, marketing, manufacturing and distribution capabilities,

for any of our product candidates for which we receive marketing approval;

if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.

We will need significant additional funds to meet

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and operating expenditures associated with our current and anticipated clinical studies.

Tender Offer to Repurchase Shares of Common Stock

On July 20, 2023, we announced that our Board of Directors authorized

the Tender Offer to repurchase approximately 5.7 million shares of our outstanding common stock at a cash purchase price of $0.70 per

share, totaling $4.0 million.

We launched the Tender Offer on August 9, 2023, which is expected to expire on September 8, 2023, subject

to the terms and conditions of the Tender Offer.

On a proforma basis giving effect to the Tender Offer, management believes that we will

have sufficient working capital to meet our needs through twelve months from the issuance date of the financial statements included in

this quarterly report.

Contractual Obligations

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to our Consolidated Financial Statements included in our Form 10-K for the fiscal year ended December 31, 2022, as amended on April 4,

During the three and six months ended June 30, 2023, there were no material changes to our critical accounting policies and estimates

from those described in our Form 10-K.

During the three and nine months ended September 30, 2023, there were no material changes to our critical accounting policies and

estimates from those described in our Form 10-K.

We believe that the following critical accounting

estimates are particularly subject to management’s judgment and could materially affect our financial condition and results of operations.

Assumptions used in the Black-Scholes pricing model for valuation of stock option awards, such as expected volatility, risk-free interest rate, expected term and expected dividends.

Valuation of the liability for Representative Warrants, for which there is no active market, based on the relative fair value to the quoted market price of the Public Warrants, accounting for a small difference in the exercise price.

● Assumptions

used in the Black-Scholes pricing model for valuation of stock option awards, such as expected volatility, risk-free interest rate, expected

term and expected dividends.

of the liability for Representative Warrants, for which there is no active market, based on the relative fair value to the quoted market

price of the Public Warrants, accounting for a small difference in the exercise price.

Recent Accounting Pronouncements

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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-Q

Item 2. Management’s Discussion and Analysis