What changed in this filing

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Item 1. Financial Statements

2023-05-08 compared with 2022-11-09 · 255 added, 426 removed, 374 unchanged (65% of the section changed)

3 unchanged sentences

Condensed Consolidated Balance Sheets

September 30,

Current assets:

7 unchanged sentences

Accrued expenses

Total current liabilities and total liabilities

Commitments and contingencies

Total current liabilities

Long term liabilities:

Warrant liability

Total liabilities

Commitments and contingencies (Note 5)

Stockholders' equity (deficit)

Preferred stock, $ 0.0001 par value, 30,000,000 and 70,000,000 shares

authorized at September 30, 2022 and December 31, 2021 respectively,

Preferred stock, $ 0.0001 par value, 30,000,000 shares

authorized at March 31, 2023 and December 31, 2022,

0 shares issued and outstanding

Common stock, $ 0.0001 par value, 70,000,000 and 30,000,000 shares

authorized at September 30, 2022 and December 31, 2021 respectively,

10,945,904 and 7,584,980 shares issued and outstanding at September 30, 2022

and December 31, 2021, respectively

Common stock, $ 0.0001 par value, 70,000,000 shares authorized at March 31, 2023

and December 31, 2022, 10,996,404 and 10,955,904 shares issued

and outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Total stockholders' equity

4 unchanged sentences

Co ndensed Consolidated Statements of Operations

Three Months Ended

September 30,

Nine Months Ended

September 30,

For the Three Months Ended March 31,

Operating expenses:

1 unchanged sentence

General and administrative expenses

Total operating costs and expenses

Total operating expenses

Loss from operations

Other income (expense):

Other (expense) income:

Interest expense

1 unchanged sentence

Australian research and development

Change in fair value of embedded

Change in fair value of warrant liability

Loss on extinguishment of convertible

notes and convertible notes, related

Other income (expense), net

Net loss attributable to noncontrolling

Deemed dividend on warrant

Deemed dividend for ratchet shares

issued at IPO

Other income, net

Deemed dividend on warrant modification

Net loss attributable to MAIA Biotechnology, Inc.

1 unchanged sentence

Basic and diluted

Weighted average common shares outstanding Basic and diluted

Weighted average common shares outstanding Basic and

See the accompanying notes to the unaudited condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Net loss attributable to MAIA Biotechnology, Inc.

Foreign currency translation adjustment

Comprehensive loss to MAIA Biotechnology, Inc.

Comprehensive loss

See the accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

Condensed Consolidated Statements of Chan ges in Stockholders' Equity (Unaudited)

For the three and nine months ended September 30, 2022

For the Three and Nine Months Ended

September 30, 2022

For the Three Months Ended

March 31, 2023

Preferred Stock

1 unchanged sentence

Accumulated Deficit

Accumulated other comprehensive income (loss)

Total MAIA Equity

Noncontrolling Interest

Total Stockholders' Equity

Accumulated other comprehensive loss

Stockholders'

Balance at December 31, 2022

Issuance of common shares upon exercise of stock options

Issuance of common shares upon exercise of warrants

Issuance of common shares in connection with Equity Financing

Issuance of restricted stock

Stock-based compensation expense

Modification of warrant in equity

Deemed dividend on modification of warrant

Foreign currency translation adjustment

Balance at March 31, 2023

Issuance of common shares upon exercise warrants

Issuance of common shares in connection with Equity Financing

Stock-based compensation expense

Foreign currency translation adjustment

Balance at June 30, 2022

Issuance of common shares upon exercise of stock options

Issuance of common shares in connection with initial public offering, net of $ 2,749,905 issuance cost

Issuance of warrants to underwriter in connection with initial public offering

Stock-based compensation expense

Issuance of ratchet shares

Deemed dividend for ratchet shares

Foreign currency translation adjustment

Balance at September 30, 2022

See the accompanying notes to the unaudited condensed consolidated financial statements.

1 unchanged sentence

and Subsidiaries

Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Unaudited)

For the three months ended September 30, 2021

For the Three and Nine Months Ended

September 30, 2021

Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)

For the Three Months Ended

March 31, 2022

Preferred Stock

1 unchanged sentence

Accumulated Deficit

Subscription Receivable

Total MAIA Equity (Deficit)

Noncontrolling Interest

Total Stockholders' (Deficit) Equity

Accumulated Other Comprehensive Income

Stockholders'

Balance at December 31, 2021

Issuance of restricted common shares

Cancellation of restricted common shares

Issuance of common shares upon exercise of stock options

Receipt of stock subscription receivable

Stock-based compensation expense - MAIA

Stock-based compensation expense - DGD

Stock-based compensation expense - THIO

Balance at March 31, 2021

Issuance of stock options to satisfy accrued bonus

Issuance of stock options to satisfy deferred compensation

Stock-based compensation expense - MAIA

Stock-based compensation expense - DGD

Stock-based compensation expense - THIO

Balance at June 30, 2021

Issuance of common shares upon conversion of convertible notes

Issuance of common shares upon conversion of SAFE

Issuance of common shares upon exercise of warrants

Issuance of common shares in connection with Equity Financing

Transaction costs incurred in connection with Equity Financing

Reclassification of warrant liability to equity

Issuance of restricted common shares to Jerry Shay pursuant to THIO Merger Agreement

Stock-based compensation expense - MAIA

Stock-based compensation expense - DGD

Stock-based compensation expense - THIO

Dissolution of DGD

Dissolution of THIO pursuant to Merger Agreement

Balance at September 30, 2021

Stock-based compensation expense

Modification of warrant in equity

Deemed dividend on modification of warrant

Foreign currency translation adjustment

Balance at March 31, 2022

See the accompanying notes to the unaudited condensed consolidated financial statements.

2 unchanged sentences

Condensed Consolidated S tatements of Cash Flows

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

2 unchanged sentences

Stock-based compensation

Loss on extinguishment of convertible notes

Loss on settlement of bonus

Change in fair value of embedded features

Consulting expense for restricted shares issued

Change in fair value of warrant liability

Amortization of debt discount

Change in operating assets and liabilities:

3 unchanged sentences

Accrued expenses

Due to related parties

Accrued interest

Deferred offering costs

Deferred compensation

Net cash used in operating activities

Cash flows from financing activities:

Proceeds from issuance of convertible notes, warrants, and embedded conversion

Proceeds from Paycheck Protection Program loan

Collections of subscriptions receivable

Proceeds from issuance of common stock, net of transaction

6 unchanged sentences

Net effect of foreign currency exchange on cash

Net increase in cash

Net decrease in cash

Cash at beginning of period

Cash at end of period

Supplemental disclosure of cash flow information:

Conversion of convertible notes and accrued interest into MAIA common stock

Conversion of SAFE into MAIA common stock

Subscription receivable for issuance of MAIA common stock

Options issued for accrued bonus

Options issued for deferred compensation

Reclassification of warrant liability to equity

Issuance of convertible note for payment on loan to officer

Previously paid issuance costs in connection with the initial public offering

Warrants issued to underwriters in connection with the initial public offering

See the accompanying notes to the unaudited condensed consolidated financial statements.

12 unchanged sentences

On August 13, 2021, MAIA and THIO completed a plan of reorganization in which THIO merged with and into MAIA.

Prior to the merger, MAIA owned 93.3 % of the outstanding shares of THIO common stock, which were cancelled in connection with the merger.

Prior to the merger, MAIA owned 93.3 % of the outstanding shares of THIO common stock, which were canceled in connection with the merger.

The remaining 6.7 % minority stockholder of THIO received one share of MAIA common stock for each share of THIO common stock owned prior to the merger.

6 unchanged sentences

In April 2022, the Company established a wholly owned Romanian subsidiary, MAIA Biotechnology Romania S.R.L., to conduct various pre-clinical and clinical activities for the development of the Company's product candidates.

At September 30, 2022 , the Company had working capital of $ 12,323,572 , accumulated deficit of $ 39,090,204 , cash of $ 14,063,642 and current liabilities of $ 2,456,293 .

Since inception the Company has experienced net losses and negative cash flows from operations each fiscal year.

The Company has no revenues and expects to continue to incur operating losses for the foreseeable future, and may never become profitable.

The Company is dependent on its ability to continue to raise equity and/or debt financing to continue operations, until the attainment of profitable operations.

During January and February 2022, the Company sold 263,729 shares of common stock at $ 9 per share for gross proceeds of $ 2,373,561 .

During May 2022, the company sold 11,111 shares of common stock at $ 9 per share for gross proceeds of $ 99,999 .

The Company completed an initial public offering on August 1, 2022 and has commenced trading on the NYSE American under the ticker symbol "MAIA.”

T he Company sold 2,000,000 shares of common stock at $ 5 per share for gross proceeds of $ 10,000,000 in the initial public offering.

On August 3, 2022, the Company sold an additional 300,000 shares of common stock at $ 5 per share for gross proceeds of $ 1,500,000 per the overallotment option for the underwriter.

After deducting $ 2,406,170 for cash issuance costs, net proceeds from the offering and overallotment were $ 9,093,830 .

The Company will require significant funding to perform the necessary clinical trials, and to meet the Company’s long-term development and commercialization goals.

The Company plans to meet its capital requirements primarily through issuances of equity securities, or debt financings, as well as other sources.

The Company cannot make any assurances that additional financings will be available, on acceptable terms or at all.

If the Company is unable to raise the necessary funding, management will undertake cost cutting measures to reduce compensation and reduce

the scope of or delay its clinical programs.

This could negatively impact the Company’s business and could also lead to the reduction of the Company’s operations.

Impact of the COVID-19 Pandemic on our Operations

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 Outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin.

In March 2020, the WHO classified the COVID-19 Outbreak as a pandemic, based on the rapid increase in exposure globally.

The full impact of the COVID-19 Outbreak continues to evolve as of the date of this report.

As a result, we cannot estimate the full magnitude that the pandemic will have on our business.

If the COVID-19 Outbreak continues, it may have a material adverse effect on our financial condition, liquidity, and future results of operations for the future.

We are actively monitoring the impact of the global pandemic on our financial condition, liquidity, operations, industry, and workforce.

Given the daily evolution of the COVID-19 Outbreak and the global responses to curb its spread, we are not able to estimate the effects of the COVID-19 Outbreak on our results of operations, financial condition, or liquidity for the future.

One of our initial clinical studies is taking place in Australia, which initially imposed one of the strictest COVID-19-related measures, including lock-downs.

While we are not currently experiencing any delays or increased costs as a result of these measures, we may do so in the future.

Going Concern Considerations

The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

To date the Company has incurred recurring losses, negative cash flow from operations and has accumulated a deficit of $ 48,324,148 from the Company’s inception through March 31, 2023.

As of March 31, 2023, the Company had $ 7,586,312 in cash and cash equivalents.

To meet the Company’s future working capital needs, the Company will need to raise additional equity or enter into debt financing.

While the Company has historically been able to raise additional capital through issuance of equity and/or debt financing, and while the Company has implemented a plan to control its expenses in order to satisfy its obligations due within one year from the date of issuance of these financial statements, the Company cannot guarantee that it will be able to raise additional equity, raise debt, or contain expenses.

Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern within one year after these financial statements are issued.

Basis of Presentation

5 unchanged sentences

however, the Company believes that the disclosures are adequate to make the information presented not misleading.

These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the fiscal year ended December 31, 2021 included in the Company’s final prospectus for its initial public offering dated July 27, 2022 and filed with the SEC on July 29, 2022.

These unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the fiscal year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed on March 24, 2023.

The condensed consolidated balance sheet as of December 31, 2022 was derived from the audited financial statements.

4 unchanged sentences

All adjustments and disclosures necessary for a fair presentation of these unaudited interim condensed consolidated financial statements have been included.

Reclassification

Certain 2021 amounts have been reclassified to conform to the 2022 presentation.

Segment Information

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision-maker in deciding how to allocate resources and assess performance.

The Company and the Company’s chief operating decision-maker, the Company’s Chief Executive Officer, views the Company’s operations and manages its business as a single operating segment, which is the business of discovering and developing products for the treatment of immunotherapies for cancer.

Use of Estimates

The preparation of the Company’s unaudited interim condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

The most significant estimates in the Company’s financial statements relate to the valuation of common stock, stock options and warrants, the embedded features in convertible notes, accruals for outsourced research and development activities, and the valuation allowance of deferred tax assets.

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.

The most significant estimates in the Company’s financial statements relate to the valuation of common stock, stock options and warrants, the embedded features in convertible notes, and accruals for outsourced research and development activities.

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.

10 unchanged sentences

Cash accounts are maintained at financial institutions that potentially subject the Company to concentrations of credit risk.

At September 30, 2022 and December 31, 2021 , substantially all of the Company’s cash was deposited in accounts at one financial institution.

At March 31, 2023 and December 31, 2022 , substantially all of the Company’s cash was deposited in accounts at one financial institution.

The Company maintains its cash deposits, which at times may exceed the federally insured limits, with a reputable financial institution and, accordingly, the Company believes such funds are subject to minimal credit risk.

1 unchanged sentence

The Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents.

As of September 30, 2022 and December 31, 2021 , cash includes cash in a depository bank account;

the Company has no cash equivalents as of September 30, 2022 and December 31, 2021 .

As of March 31, 2023 and December 31, 2022 , cash includes cash in a depository bank account;

the Company has no cash equivalents as of March 31, 2023 or December 31, 2022 .

Fair Value Measurements

ASC 820, Fair Value Measurements , provides guidance on the development and disclosure of fair value measurements.

The Company is required to disclose information on all assets and liabilities reported at fair value that enables an assessment of the inputs used in determining the reported fair values.

“Accounting Standards Codification (ASC) Topic 820”, Fair Value Measurements and Disclosures (“ASC 820”) establishes a hierarchy of inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the observable inputs be used when available.

Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

5 unchanged sentences

These valuations require significant judgment.

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the nine months ended September 30, 2022, and as of and during the twelve months ended December 31, 2021.

Fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management as of and during the three months ended March 31, 2023, and as of and during the twelve months ended December 31, 2022.

The carrying amount of accounts payable approximated fair value as they are short term in nature.

The fair value of warrants issued for services is estimated based on the Black-Scholes

model during the nine months ended September 30, 2021 and the nine months ended September 30, 2022 .

The carrying value of notes payable and convertible notes payable approximated the estimated fair values due to their recent issuances.

The estimated fair value of the warrants issued with the convertible notes and embedded features, represented Level 3 measurements.

The fair value of warrants issued for services is estimated based on the Black-Scholes model during the three months ended March 31, 2022 and the three months ended March 31, 2023 .

The estimated fair value of warrants issued to underwriters and embedded features, represented Level 3 measurements.

General and Administrative

General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses, depreciation and amortization, rent, outside legal expenses, insurance costs, and other general and administrative costs.

General and administrative expenses primarily consist of costs for corporate functions, including payroll and related expenses, rent, outside legal expenses, insurance costs, and other general and administrative costs.

Research and Development

2 unchanged sentences

Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received.

As part of the process of preparing the consolidated financial statements, the Company is required to estimate its accrued expenses.

As part of the process of preparing the condensed consolidated financial statements, the Company is required to estimate its accrued expenses.

This process involves reviewing quotations and contracts, identifying services that have been performed on the Company’s 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.

14 unchanged sentences

Under the program, a percentage of eligible research and development expenses incurred by the Company through its subsidiary in Australia are reimbursed.

Management has assessed the Company’s research and development activities and expenditures to determine which activities and expenditures are likely to be eligible under the research and development incentive regime described

At each period end, management estimates the refundable tax offset available to the Company based on available information at the time and it is included in Australian research and development incentives in the condensed consolidated statements of operations.

6 unchanged sentences

Stock-Based Compensation

The Company records share-based compensation for options granted to employees, non-employees, and to members of the board of directors based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period.

The Company records share-based compensation for awards granted to employees, non-employees, and to members of the board of directors based on the grant date fair value of awards issued, and the expense is recorded on a straight-line basis over the requisite service period.

Forfeitures are recognized when they occur.

15 unchanged sentences

and global economic and capital market conditions.

There were no issuances of common stock as it relates to DGD or THIO during nine months ended September 30, 2021.

During the three months ended March 31, 2023, 40,500 restricted shares of common stock were issued.

There were no issuances of restricted stock awards during three months ended March 31, 2022.

The fair value of restricted stock awards is based on the common stock price.

1 unchanged sentence

Common Stock Warrants

The Company accounts for common stock warrants as either equity instruments or liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity ("ASC 480"), depending on the specific terms of the warrant agreement.

When warrants are issued for services to non-employees, under ASC 718, Compensation - Stock Compensation ("ASC 718"), the warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets.

The measurement of equity-classified nonemployee share-based payments is generally fixed on the grant date and are considered compensatory, as defined by ASC 718.

The Company accounts for common stock warrants as either equity instruments or as liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), depending on the specific terms of the warrant agreement.

When warrants are issued for services provided by non-employees, under ASC 718, Compensation –

Stock Compensation (“ASC 718”), the warrants shall be classified as a liability if 1) the underlying shares are classified as liabilities or 2) the entity can be required under any circumstances to settle the warrant by transferring cash or other assets.

The measurement of equity-classified non-employee share-based payments is generally fixed on the grant date and are considered compensatory, as defined by ASC 718.

Income taxes are recorded in accordance with ASC 740, Income Taxes (“ASC 740”), which provides for deferred taxes using an asset and liability approach.

1 unchanged sentence

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Valuation allowances are provided, if based upon the weight of available evidence, it is more likely than not

that some or all of the deferred tax assets will not be realized.

The Company accounts for uncertain tax positions in accordance with the provisions of ASC 740.

3 unchanged sentences

Deferred Offering Costs

Deferred offering costs were included in other assets and consisted of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the initial public offering and were charged to additional paid-in capital upon the completion of the initial public offering on August 1, 2022.

Deferred offering costs are included in other assets and consist of legal, accounting, underwriting fees and other costs incurred through the December 31, 2022 and the March 31, 2023 balance sheet date that are directly related to a planned follow-on offering and will be charged to additional paid-in capital upon the completion of the follow-on offering.

Net Loss Per Share

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The following table summarizes the Company’s potentially dilutive securities, in common share equivalents, which have been excluded from the calculation of dilutive loss per share as their effect would be anti-dilutive:

Nine Months Ended

September 30,

Three Months Ended

Shares issuable upon exercise of stock options

3 unchanged sentences

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted by the Company as of the specified effective date.

Unless otherwise discussed, the Company believes that

the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

In February 2016, the FASB issued ASU No.

2016-02, as amended, Leases (“Topic 842”), which applies to all leases.

Under Topic 842, a right-of-use asset and lease obligation will be recorded for all leases, whether operating or financing leases, while the statement of operations will reflect lease expense for operating leases and amortization and interest expense for financing leases.

Topic 842 is effective for public entities for fiscal years beginning after December 15, 2018 and periods beginning after December 15, 2021 for all other entities.

Entities are required to use a modified retrospective approach of adoption for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements.

The Company adopted this new standard as of January 1, 2022.

At the inception of an arrangement the Company determines whether the arrangement is or contains a lease based on the circumstances present.

Currently none of the Company’s operating lease commitments are subject to the new standard as its leases are short-term in nature (i.e., less than twelve months).

RELATED PARTY TRANSACTIONS

Certain of our directors and executive officers have adopted written plans, known as Rule 10b5-1 plans, in which they have contracted with a broker to buy shares of our common stock on a periodic basis.

Our other directors and executive officers may also adopt Rule 10b5-1 plans in which they contract with a broker to buy or sell shares of our common stock on a periodic basis.

Under a Rule 10b5-1 plan, a broker executes trades pursuant to parameters established by the director or officer when entering into the plan, without further direction from the director or officer.

The director or officer may amend or terminate the plan in limited circumstances.

Our directors and executive officers may also buy or sell additional shares of our common stock outside of a Rule 10b5-1 plan when they are not in possession of material, nonpublic information.

ACCRUED EXPENSES

As of September 30, 2022 and December 31, 2021, accrued expenses consisted of the following:

September 30,

As of March 31, 2023 and December 31, 2022, accrued expenses consisted of the following:

Professional fees

Research and development costs

Deferred compensation to former officers

Total accrued expenses

STOCKHOLDERS' EQUITY

FAIR VALUE OF FINANCIAL LIABILITIES

Derivative Liability

Financial liabilities consisting of warrant liabilities measured at fair value on a recurring basis are summarized below.

The fair value of the warrant liabilities recorded are as follows:

Fair value at March 31, 2023

Warrant liability

Total liabilities

The table below provides a summary of the changes in fair value of the warrant liabilities measured on a recurring basis using significant unobservable inputs (Level 3):

Years Ended March 31,

Warrant liabilities:

Balance, beginning of period

Warrant liability

Gain on fair value of warrant liability

Reclassification of warrant liability to equity

Balance, end of period

STOCKHOLDERS’

Upon the closing of the Company’s initial public offering, the Company’s shareholders agreement terminated pursuant to its terms.

4 unchanged sentences

During May 2022, the Company sold 11,111 shares of common stock at $ 9 per share for gross proceeds of $ 99,999 with no transaction costs.

The Company issued these shareholders additional shares upon the closing of the Company's initial public offering such that the $ 9.00 price per share they paid was equal to the price per share in the Company's initial public offering of $ 5.00 .The number of Ratchet Shares were calculated using the $ 5.00 per share price in the Company's initial public offering and 219,872 shares of common stock were issued on August 1, 2022 to the investors in the Recent Private Rounds.

The Ratchet Shares were declared a deemed dividend of $ 1,099,360 based on the $ 5 price of the initial public offering.

The Company issued these shareholders additional shares (“Ratchet Shares”) upon the closing of the Company's initial public offering such that the $ 9.00 price per share they paid was equal to the price per share in the Company's initial public offering of $ 5.00 .

The number of Ratchet Shares were calculated using the $ 5.00 per share price in the Company's initial public offering and 219,872 shares of common stock were issued on August 1, 2022 to the investors in the Recent Private Rounds.

The Ratchet shares were determined to be a freestanding instrument that was classified as a liability when the right was granted and subsequently reclassified to equity when shares were issued.

The Ratchet Shares were valued at $ 1,099,360 , based on the $ 5 price of the initial public offering and were recorded as expense included in operating expense in the 2022 Consolidated Statement of Operations.

Initial Public Offering

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On August 3, 2022, the Company sold an additional 300,000 shares of common stock at $ 5.00 per share when the underwriter exercised the overallotment for gross proceeds of $ 1,500,000 prior to deducting underwriting discounts, commissions, and other offering expenses.

After deducting the underwriting discount and other offering expenses payable by the Company, the total net proceeds for the initial public offering and the overallotment were approximately $ 9.1 million.

After deducting the underwriting discount and other offering expenses payable by the Company, the total net proceeds for the initial public offering and the overallotment were $ 9,093,830 .

MAIA Biotechnology, Inc.

Restricted Stock Awards

During the nine months ended September 30, 2021 , MAIA recognized $ 202,500 of stock compensation expense related to 112,500 of MAIA’s restricted shares granted to the founders.

On August 13, 2021, upon the dissolution of THIO and merger into MAIA (see Note 1), a founder's 612,500 fully vested THIO restricted shares were cancelled and the founder was issued 612,500 MAIA restricted shares.

Additionally, in accordance with the founder's original award, the founder was also issued 87,500 MAIA restricted shares which vested ratably each quarter through April

1, 2022 to replace the equivalent number of unvested THIO restricted shares.

There are no unvested shares as of September 30, 2022 related to the founder's restricted shares.

Unvested balance at January 1, 2022

Unvested balance at September 30, 2022

During the three months ended March 31, 2022 , MAIA recognized $ 52,500 of stock compensation expense related to 29,168 of MAIA’s restricted shares granted to the founders.

During the three months ended March 31, 2023, the company expensed $ 164,070 to consulting for investor relations related to the grant of 40,500 restricted shares of common stock.

There are no unvested restricted shares as of March 31, 2023.

MAIA Stock Warrants

In January 2022, the Company and certain warrant holders executed waivers related to the acceptance and approval of an amendment to the holders' warrant agreements originally issued between May 6, 2020 and February 26, 2021 in connection with the Company's issuance of convertible notes.

In January 2022, the Company and certain warrant holders executed waivers related to the acceptance and approval of an amendment to the holders’

warrant agreements originally issued between May 6, 2020 and February 26, 2021 in connection with the Company’s issuance of convertible notes.

The amendment removed the IPO expiration provision from the warrant agreements, and the warrants are now only to be exercisable, in whole or in part, during the exercise period ending on the earliest to occur of:

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On August 3, concurrently with the full exercise of the Underwriter’s over-allotment option, the Company issued additional warrants to purchase an aggregate of up to 15,000 shares of its common stock to the Representative or its designees on the same terms.

The warrants are equity classified instruments and the value of the warrants determined using the black-sholes method was $ 343,735 using a term of five years , risk free interest rate of 2.82 % and volatility of 77.5 %.

The warrants are not indexed to the Company’s own stock and therefore meet the definition of a derivative liability.

The warrants are liability classified instruments and were initially recorded as $ 343,735 , which was the value determined using the Black-Scholes method using a term of five years , risk free interest rate of 2.82 % and volatility of 77.5 %.

As of March 31, 2023 and December 31, 2022 the Company remeasured the warrant liability resulting in a value of $ 224,399 and $ 245,341 respectively.

The gain on remeasurement of the warrant liability in the amount of $ 20,942 was included in other income.

Balance at January 1, 2023

Balance at September 30, 2022

Balance at March 31, 2023

MAIA Biotechnology, Inc.

1 unchanged sentence

In 2018, the Company adopted the MAIA Biotechnology, Inc.

2018 Stock Option Plan (the "MAIA 2018 Plan").

MAIA's board of directors administers the MAIA Plan for the purposes of attracting, retaining, and motivating key employees, directors, and consultants of MAIA.

The terms of the MAIA 2018 Plan continue to govern the 1,924,500 options outstanding in the plan of September 30, 2022.

2018 Stock Option Plan (the “MAIA 2018 Plan”).

MAIAs board of directors administers the MAIA Plan for the purposes of attracting, retaining, and motivating key employees, directors, and consultants of MAIA.

The terms of the MAIA 2018 Plan continue to govern the 1,924,500 options outstanding in the plan of March 31, 2023.

In 2020, the Company adopted the MAIA Biotechnology, Inc.

Amended and Restated 2020 Equity Incentive Plan (the "MAIA 2020 Plan"), also administered by the board of directors.

Amended and Restated 2020 Equity Incentive Plan (the “MAIA 2020 Plan’’), also administered by the board of directors.

The MAIA 2020 Plan permitted awards to take the form of stock options, restricted stock and restricted stock units.

The terms of the MAIA 2020 Plan continue to govern the 3,993,023 options outstanding in the plan as of September 30, 2022 .

The terms of the MAIA 2020 Plan continue to govern the 3,983,023 options outstanding in the plan as of March 31, 2023 .

There are no shares reserved for future issuance in the MAIA 2018 Plan or the MAIA 2020 Plan.

On August 1, 2022 the Company approved the MAIA Biotechnology, Inc.

2021 Equity Incentive Plan (the "MAIA 2021 Plan") with 1,909,518 shares of common stock reserved for issuance.

As of September 30, 2022 there are 1,315,131 available for future issuance under the MAIA 2021 Plan and 594,387 options are outstanding in the MAIA 2021 Plan.

Stock options are to be granted with an exercise price which is at least equal to the stock's estimated fair value at the date of grant, and with a contractual term of no more than ten years from the date of grant.

2021 Equity Incentive Plan (the “MAIA 2021 Plan’’) with 1,909,518 shares of common stock reserved for issuance.

As of March 31, 2023 there are 599,126 shares of common stock available for future issuance under the MAIA 2021 Plan and 1,310,392 options are outstanding in the MAIA 2021 Plan.

Stock options are to be granted with an exercise price which is at least equal to the stock’s estimated fair value at the date of grant, and with a contractual term of no more than ten years from the date of grant.

In the case of an option granted to a 10 % stockholder, the exercise price shall be generally no less than 110 % of the fair market value per share on the date of grant, and the contractual term shall be seven years .

Outstanding options awarded under the MAIA 2021 Plan may, but need not, vest and therefore become exercisable in periodic instalments that may, but need not, be equal.

The option may be subject to other terms and conditions as to the time or times when it may be exercised (which may be based on performance or other criteria) as the board of directors may deem appropriate.

Unexercised options are cancelled ninety days after termination of an employee, director, founder, or consultant.

Unexercised options are cancelled immediately if an employee, director, founder, or consultant is terminated for cause;

Outstanding options awarded under the MAIA 2021 Plan may, but need not, vest and therefore become exercisable in periodic installments that may, but need not, be equal.

The option may be subject to other terms and conditions as to the time or times when it may be

exercised (which may be based on performance or other criteria) as the board of directors may deem appropriate.

Unexercised options are canceled ninety days after termination of an employee, director, founder, or consultant.

Unexercised options are canceled immediately if an employee, director, founder, or consultant is terminated for cause;

under certain other circumstances, the period to cancellation may differ as described in the respective plan documents.

Certain clauses in the Plans also govern the Company's exercise repurchase rights and various other features of awards granted under the plans.

As of September 30, 2022, only stock options have been awarded pursuant to the MAIA stock award plans.

The following table summarizes the activity and information regarding MAIA's outstanding and exercisable options for the nine months ended September 30, 2022:

Certain clauses in the Plans also govern the Company’s exercise repurchase rights and various other features of awards granted under the plans.

As of March 31, 2023, only stock options have been awarded pursuant to the MAIA stock award plans.

The following table summarizes the activity and information regarding MAIA’s outstanding and exercisable options for the three months ended March 31, 2023:

Balance at January 1, 2023

Cancelled/forfeited

Balance at September 30, 2022

Options exercisable at September 30, 2022

During the nine months ended September 30, 2022 , the fair value of the Company's common stock was estimated for financial reporting purposes from January 1 to January 26, 2022 based on valuations of $ 8.87 per share as of December 31, 2021.

For our valuations of common stock performed, we used a hybrid method of the Option Pricing Method ("OPM”) and the Probability-Weighted Expected Return Method ("PWERM”).

Balance at March 31, 2023

Options exercisable at March 31, 2023

During the three months ended March 31, 2023, the fair value of our common stock is based on the closing price of the common stock in the public market.

During the three months ended March 31, 2022 , the fair value of the Company’s common stock was estimated for financial reporting purposes from January 1 to January 26, 2022 based on valuations of $ 8.87 per share as of December 31, 2021.

For our valuations of common stock performed, we used a hybrid method of the Option Pricing Method (“OPM”) and the Probability-Weighted Expected Return Method (“PWERM”).

PWERM considers various potential liquidity outcomes.

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Under the hybrid OPM and PWERM, the per share values calculated under the OPM and PWERM are weighted based on expected exit outcomes and the quality of the information specific to each allocation methodology to arrive at a final estimated fair value per share of the common stock before a discount for lack of marketability is applied.

From January 27 to May 31, 2022 the fair value of the Company’s common stock was estimated for financial reporting purposes at $ 9 per share based on the sale of common stock from January 27, 2022 to May 19, 2022.

From June 1, 2022 to August 1, 2022 the fair value of the Company's common stock was estimated for financial reporting purpose at $ 5 per share based on the price paid in the initial public offering.

During the nine months ended September 30, 2021 , the fair value of the Company’s common stock was estimated for financial reporting purposes based on valuations.

From January 1, 2021 to February 28, 2021 a valuation of $ 1.80 was used.

During the period of March 1, 2021 to June 6, 2021, the fair value of the Company’s common stock was estimated for financial reporting purposes based on valuations of $ 1.83 per share in February and April 2021 due to the lack of any single specific event that would have indicated a definitive change in the value of the Company.

The February and April 2021 valuations used the income approach and the market approach in estimating the fair value of our common stock.

The market approach utilized guideline public companies in estimating fair value of our stock.

The income approach estimates enterprise value based on the estimated present value of future cash flows the business is expected to generate over its remaining life.

The estimated present value is calculated using a discount rate reflective of the risks associated with an investment in a similar company in a similar industry or having a similar history of revenue growth.

The market approach measures the value of a business through an analysis of recent sales or offerings of comparable investments or assets, and in our case, focused on comparing us to a group of our peer companies.

In applying this method, valuation multiples are derived from historical and projected operating data of the peer company group.

We then apply the selected multiples to our operating data to arrive at a range of indicated enterprise values of the Company.

We then subtracted the net debt to determine equity value.

The value of option grants is calculated using the Black-Scholes option pricing model with the following assumptions for options granted during the nine months ended September 30, 2022 and 2021:

From January 27 to March 31, 2022 the fair value of the Company’s common stock was estimated for financial reporting purposes at $ 9 per share based on the sale of common stock from January 27, 2022 to March 31, 2022.

The value of option grants is calculated using the Black-Scholes option pricing model with the following assumptions for options granted during the three months ended March 31, 2023 and 2022:

Risk-free interest rate

3.64 % - 4.23 %

0.35 % - 1.05 %

Expected term (in years)

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Expected dividend yield

The weighted-average grant date fair value of stock options issued during the nine months ended September 30, 2022 and 2021 was $ 3.11 and $ 2.57 , respectively.

As of September 30, 2022 , the total unrecognized compensation related to unvested employee and non-employee stock option awards granted was $ 3,829,045 , which the Company expects to recognize over a weighted average period of approximately 3.4 years.

The weighted-average grant date fair value of stock options issued during the three months ended March 31, 2023 and 2022 was $ 3.27 and $ 5.78 , respectively.

As of March 31, 2023 , the total unrecognized compensation related to unvested employee and non-employee stock option awards granted was $ 5,097,294 , which the Company expects to recognize over a weighted average period of approximately 3.3 years.

Stock based compensation related to the Company’s stock plans are as follows:

Three Months Ended

September 30,

Nine Months Ended

September 30,

General and administrative

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Patent Licensing, Sponsored Research, and Patent & Technology Agreements

THIO - In November 2018 and as amended in December 2020, the Company entered into a Global Patent Licensing Agreement ("PLA") titled "Patent and Technology License Agreement AGT.

L2264 - MAIA Biotechnology" with the University of Texas Southwestern ("UTSW") to license patent families for a specific compound ("THIO") from UTSW to MAIA.

THIO –

In November 2018 and as amended in December 2020, the Company entered into a Global Patent Licensing Agreement (“PLA”) titled “Patent and Technology License Agreement AGT.

L2264 –

MAIA Biotechnology”

with the University of Texas Southwestern (“UTSW”) to license patent families for a specific compound (“THIO”) from UTSW to MAIA.

The agreement, as amended, has a term of 20 years.

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The agreement requires certain payments upon assignment of the license to a third party as well as upon reaching specific milestones, ranging between $ 1,000,000 and $ 50,000,000 , not to exceed a combined milestone payment total of $ 112,000,000 .

As of September 30, 2022 , no assignment has occurred and none of the defined milestones have been completed and therefore no payments are due to UTSW related to the milestones.

As of March 31, 2023, no assignment has occurred and none of the defined milestones have been completed and therefore no payments are due to UTSW related to the milestones.

The agreement requires royalties of 2 - 4 % (depending on THIO reaching specified sales levels in the respective jurisdictions) royalty payments on net sales up to $1,000,000,000, and 2.5 - 5 % on net sales above $1,000,000,000.

Also in December 2020, the Company entered into a second license agreement with UTSW titled "Patent and Technology License Agreement AGT.

Also in December 2020, the Company entered into a second license agreement with UTSW titled “Patent and Technology License Agreement AGT.

L3648 —

MAIA Biotechnology" pursuant to which UTSW is licensing an additional compound to MAIA.

MAIA Biotechnology”

pursuant to which UTSW is licensing an additional compound to MAIA.

The agreement has a term of 20 years and requires the Company to reimburse UTSW for certain agreed-upon expenses.

As of September 30, 2022 , no assignment has occurred and none of the defined milestones have been completed and therefore no payments are due to UTSW related to the milestones.

As of March 31, 2023, no assignment has occurred and none of the defined milestones have been completed and therefore no payments are due to UTSW related to the milestones.

The agreement requires royalties of 2 - 4 % (depending on THIO reaching specified sales levels in the respective jurisdictions) royalty payments on net sales up to $1,000,000, and 2.5 - 5 % on net sales above $1,000,000,000.

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The royalty obligations continue on a country-by-country basis until the later of expiration of the last Valid Claim in each country or ten ( 10 ) years after the First Commercial Sale (as defined in UTSW2 Agreement) in each country.

MJC13 —

In January 2019, MAIA entered into a Global PLA and SRA for Collaborative Research and Jointly Owned Intellectual Property for the MJC13 Family of Compounds for the Treatment of Prostate Cancer with UTEP.

The SRA requires MAIA to reimburse UTEP for research program expenditures up to $ 46,000 .

As amended, the SRA extended the research program to June 2020, since which point it has continued on an at-will basis.

Regeneron - In February 2021, the Company reached an agreement with Regeneron Pharmaceuticals, Inc.

("Regeneron") to perform one clinical trial for the treatment of patients with Non-Small Cell Lung Cancer (NSCLC) involving a Regeneron drug candidate that utilizes one of the Company's compounds/agents.

Regeneron –

In February 2021, the Company reached an agreement with Regeneron Pharmaceuticals, Inc.

(“Regeneron”) to perform one clinical trial for the treatment of patients with Non-Small Cell Lung Cancer (NSCLC) involving a Regeneron drug candidate that utilizes one of the Company’s compounds/agents.

The Company is responsible for all costs of the study with Regeneron supplying their drug cemiplimab representing a cost savings for the Company, the first phase of which is expected to take approximately two years.

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If either party terminates a study plan, the Company shall reimburse Regeneron for the Regeneron product it received in connection with such study plan based on the actual out-of-pocket cost to Regeneron of such Regeneron product.

As of September 30, 2022 neither party has terminated the agreement.

As of March 31, 2023 neither party has terminated the agreement.

The Company provides for income taxes using the asset and liability approach.

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The issuance of shares in connection with the Company’s IPO, as well as prior share issuances, may result in limitations on the utilization of the Company’s net operating loss carryforwards under IRS section 382.

As of September 30, 2022, and December 31, 2021, the Company had a full valuation allowance against its deferred tax assets.

For the nine months ended September 30, 2022 and 2021 , the Company recorded zero income tax expense.

No tax benefit has been recorded in relation to the pre-tax losses for nine months ended September 30, 2022 and 2021, due to a full valuation allowance to offset any deferred tax assets.

As of March 31, 2023, and December 31, 2022, the Company had a full valuation allowance against its deferred tax assets.

For the three months ended March 31, 2023 and 2022 , the Company recorded zero income tax expense.

No tax benefit has been recorded in relation to the pre-tax losses for three months ended March 31, 2023 and 2022 , due to full valuation allowance to offset any deferred tax assets.

SUBSEQUENT EVENTS

Employee Retirement Plan

The Company created MAIA's 401(k) plan (the "Plan"), which became effective on October 1, 2022.

All employees who have attained the age of 21 are eligible to participate in the Plan as the first entry date, as defined, following the employment date.

Each eligible employee can contribute a percentage of compensation up to a maximum of the statutory limits per year.

The Company will make a "safe harbor" matching contribution and deferrals will be determined on an annual basis.

Issuance of Common Stock

On April 3, 2023, the Company entered into an agreement with Acorn Management Partners, LLC for professional relations services, pursuant to which the Company agreed to issue 43,000 restricted shares of common stock on April 6, 2023 and an additional $ 45,000 worth of restricted shares of common stock, with the number of shares of the Company to be determined by dividing the $ 45,000 by the closing price in six months and again nine months after the execution date of the contract unless the contract is terminated.

On April 6, 2023, the Company entered into an agreement with Outside the Box Capital Inc.

for media services, pursuant to which we agreed to issue $ 50,000 worth of restricted shares of common stock on April 11, 2023, the effective date of the agreement.

Based on the closing price of common stock on April 11, 2023, 13,021 restricted shares of common stock were issued.

An additional $ 50,000 worth of restricted shares of common stock will be issued on June 11, 2023 if the agreement is not terminated.

On April 16, 2023, the Company issued 18,000 restricted shares of common stock to FON Consulting, an assignee of FORCE Family Office, LLC, for investor services through July 16, 2023.

On April 27, 2023, the Company sold 2,555,500 shares of the Company’s common stock at a price of $ 2.25 per share in an underwritten public offering.

ThinkEquity LLC (“ThinkEquity”) served as underwriter of the offering.

The aggregate net proceeds of the offering were approximately $ 5.1 million, after deducting underwriting discounts and expenses.

The shares of common stock were offered, issued and sold to the public pursuant to the Registration Statement on Form S-1, as amended from time to time (File No.

The Company intends to use the net proceeds from the offering to fund the ongoing clinical trials of THIO, pre-clinical development of second-generation of telomere targeting compounds, and other research and development activities, as well as for working capital and other general corporate purposes.

Concurrently with the closing of the public offering, the Company also issued warrants to purchase an aggregate of up to 127,775 shares of its common stock to ThinkEquity or its designees, at an exercise price of $ 2.8125 per share (the “Representative’s Warrants”).

The Representative’s Warrants are exercisable beginning on October 24, 2023 , and expire on April 24, 2028 , pursuant to the terms and conditions of the Representative’s Warrants.

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

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The patent license is global and exclusive for the duration of the patients’

In 2019, we completed a common stock seed round in the amount of $2 million.

In 2019, we generated the first data for THIO demonstrating complete regression with no recurrence when administered in advance of atezolizumab (TecentriQ®;

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In the First Quarter 2020, we filed a provisional patent application for THIO in sequential combination with checkpoint inhibitors, covering all tumor types.

The patent was allowed in the US in the First Quarter 2021 and expires in 2041.

The patent has not been allowed to date, but if it is allowed will have an expiration date in 2041, excluding any patent term adjustment or patent extension.

In the First Quarter 2021, we entered into a Drug Supply Agreement with Regeneron Pharmaceuticals, Inc.

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In the First Quarter 2021, we initiated our clinical supply manufacturing (CMC) under Good Manufacturing Practices (GMP) conditions to provide clinical supply for THIO-101 and other development needs.

In the Second Quarter 2021, we completed a convertible note funding round in the amount of approximately $8 million.

In the Third Quarter 2021 and Fourth Quarter 2021, we sold common shares of MAIA for total proceeds of approximately $6.2 million.

In the First Quarter 2022, we completed the Crossover Round for total proceeds of approximately $2.4 million.

1 unchanged sentence

In March 2022, the U.S.

Food and Drug Administration (FDA) granted Orphan Drug Designation (ODD) to THIO for the treatment of hepatocellular carcinoma, and in May 2022, the FDA granted ODD to THIO

for the treatment of small-cell lung cancer.

Food and Drug Administration (FDA) granted Orphan Drug Designation (ODD) to THIO for the treatment of hepatocellular carcinoma, and in May 2022, the FDA granted ODD to THIO for the treatment of small-cell lung cancer.

The FDA’s Office of Orphan Products Development may grant orphan designation status to drugs and biologics that are intended for the treatment, diagnosis or prevention of rare diseases, or conditions that affect fewer than 200,000 people in the U.S.

Orphan Drug Designation provides certain benefits, including financial incentives, to support clinical development and the potential for up to seven years of market exclusivity for the drug for the designated orphan indication in the U.S.

Orphan Drug Designation provides certain benefits, including financial incentives, to support clinical development and the potential

for up to seven years of market exclusivity for the drug for the designated orphan indication in the U.S.

if the drug is ultimately approved for its designated indication.

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In May 2022, we entered into a research and collaboration agreement with the Nationwide Children’s Hospital to evaluate the potential of THIO in combination with current standard-of-care therapies for brain cancer.

The organizations will conduct preclinical studies to assess the efficacy and safety of THIO in combination with radiotherapy and immune checkpoint inhibitors in vitro and in vivo models.

The organizations are conducting preclinical studies to assess the efficacy and safety of THIO in combination with radiotherapy and immune checkpoint inhibitors in vitro and in vivo models.

In July 2022, we completed our selection process for the clinical sites for our Phase 2 study in Australia and Europe and our application to start the Phase 2 study in Australia has been approved.

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We believe we have raised sufficient capital to fund the THIO-101 lead-in and preliminary efficacy of the phase 2 THIO-101 trial.

Impact of the COVID-19 Pandemic on Our Operations

In March 2020, the WHO classified the COVID-19 Outbreak as a pandemic, based on the rapid increase in exposure globally.

The full impact of the COVID-19 Outbreak continues to evolve as of the date of this report.

As a result, we cannot estimate the full magnitude that the pandemic will have on our business.

If the COVID-19 Outbreak continues, it may have a material adverse effect on our financial condition, liquidity, and future results of operations for the future.

We are actively monitoring the impact of the global pandemic on our financial condition, liquidity, operations, industry, and workforce.

One of our initial clinical studies is taking place in Australia, which initially imposed one of the strictest COVID-19-related measures, including lock-downs.

While are not currently experiencing any delays or increased costs as a result of these measures, we may do so in the future.

In November 2022, we completed a pre-Investigational New Drug (pre-IND) meeting with the U.S.

Food and Drug Administration (FDA) for the planned U.S.

expansion of the THIO-101 Phase 2 trial evaluating THIO, an investigational telomere-targeting agent, in patients with advanced non-small cell lung cancer (NSCLC).

In December 2022, regulatory authorities in three European countries, Hungary, Poland, and Bulgaria, approved the implementation of THIO-101, MAIA’s Phase 2 clinical trial.

THIO-101 is a critical component of THIO’s clinical development process and it is of the utmost importance that we collaborate with leading cancer institutes in Australia and now in Europe, for a target total of 30 clinical trial sites in six countries.

In the first week of March 2023, the first two patients were dosed in Europe in MAIA’s Phase 2 clinical trial, THIO-101 evaluating THIO in patients with advanced Non-Small Cell Lung Cancer (NSCLC).

Following regulatory clearances in Hungary, Poland, and Bulgaria, nine clinical sites have been activated in these three European countries.

On April 11, 2023, we announced positive topline data related to the completion of Part A, safety lead-in portion of the THIO-101 trial which showed that administration of THIO, at the highest dose of 360 mg/cycle in sequential combination with Regeneron’s anti-PD-1 therapy, Libtayo Ò

was well tolerated with no dose-limiting toxicities or significant treatment-related adverse events reported.

On April 18, 2023, we published data in HCC (liver cancer) models:

as monotherapy, THIO achieved complete and durable responses in Hepatocellular Carcinoma (HCC), the dominant histology in primary liver cancer (90%), in in vivo models.

When combined with Libtayo®, duration of response was further potentiated.

Upon rechallenge with two times more cancer cells and no additional treatment, tumor growth was completely prevented.

Administration of THIO alone and in combination with Libtayo® generated anti-cancer immune memory.

On April 20, 2023, we announced preliminary survival data from Part A of THIO-101.

The first two patients enrolled in Part A of the study continue to be alive, approximately 10 and 9 months respectively, from treatment initiation.

Both patients have advanced Stage IV metastatic disease and are heavily pretreated, receiving third and fourth line of therapy respectively after previously failing treatment with an immune checkpoint inhibitor.

They continue to be progression free following their last dose of THIO, 7 and 6 months respectively, with no new treatment.

The current treatment options in patients with advanced relapsed or refractory NSCLC who failed two or more therapy regimens are limited and show minimal benefit.

Furthermore, discontinuation of treatment is rapidly followed by physical decline and death, therefore seeing patients with such survival and no disease progression in this clinical setting, is

In real-world clinical practice, observed survival in such heavily pretreated patients is 3-4 months.

On April 27, we closed a follow-on offering and sold 2,555,500 shares of common stock at a public offering price of $2.25 per share, for gross proceeds of approximately $5.75 million, before deducting underwriting discounts and offering expenses.

The shares sold in the offering include the exercise in full by the underwriter of its option to purchase an additional 333,300 shares of common stock, in addition to the 2,222,200 shares of common stock which the underwriters initially agreed to purchase.

Impact of the War in Ukraine on Our Operations

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Because of the highly uncertain and dynamic nature of these events, the Company terminated any planned research activities in Russia.

Financial Operations Overview and Analysis for the Three Months Ended September 30, 2022 and 2021

Comparison of the three months ended September 30, 2022 and 2021

Financial Operations Overview and Analysis for the Three Months Ended March 31, 2023 and 2022

Comparison of the three months ended March 31, 2023 and 2022

Three Months Ended

September 30,

Operating expenses:

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development incentives

Change in fair value of embedded

Change in fair value of warrant

Loss on extinguishment of

convertible notes and convertible

notes, related parties

Other income (expense), net

Net loss attributable to noncontrolling

Deemed dividend for ratchet shares

issued at IPO

Net loss attributable to MAIA

Biotechnology, Inc.

Operating Expenses

Research and development expenses

Research and development expenses increased by approximately $1,261,000 or 117%, from approximately $1,082,000 for the three months ended September 30, 2021 to approximately $2,343,000 for the three months ended September 30, 2022.

The increase was primarily related to the increase in clinical expenses related to the clinical preparation and startup of THIO 101 trial of approximately $667,000, an increase in payroll and bonus expenses of approximately $610,000 related to increased headcount of additional research and development employees, an increase of approximately $111,000 in professional fees and other expenses, offset by a decrease in stock-based compensation costs of approximately $127,000.

General and administrative expenses

General and administrative expenses increased by approximately $502,000 or 44% from approximately $1,152,000 for the three months ended September 30, 2021 to approximately $1,653,000 for the three months ended September 30, 2022.

The increase was primarily related to an increase in payroll expense of approximately $228,000, an increase in other expenses of approximately $472,000 related to the costs of operating as a public

company, offset by a decrease in stock-based compensation of approximately $119,000 and professional fees of approximately $79,000.

Other income (expense), net

Other income (expense), net changed by approximately $3,034,000 or 102% from other expense of approximately $2,970,000 for the three months ended September 30, 2021 to other income of approximately $64,000 for the three months ended September 30, 2022.

The change in other income (expense), net was primarily the result of the following expenses in the three months ended September 30, 2021:

approximately $2,323,000 expense related to the loss on extinguishment of convertible notes, approximately $451,000 expense related to the interest for convertible notes, the change in the fair value of warrant liability expense of approximately $101,000 related to interest for convertible notes, approximately $96,000 of expense for the change in fair value of the bifurcated embedded feature, and by the increase of approximately $65,000 of income related to the Australian research and development incentives for the three months ended September 30, 2022.

This was offset by approximately $2,000 of interest for the three months ended September 30, 2022.

Comparison of nine months ended September 30, 2022 and 2021

Nine Months Ended

September 30,

Operating expenses:

Research and development

General and administrative

Total operating costs and expenses

Loss from operations

Other income (expense):

Interest expense

Interest income

Australian research and

development incentives

Change in fair value of embedded

Change in fair value of warrant

Loss on extinguishment of

convertible notes and convertible

notes, related parties

Other income (expense), net

Net loss attributable to noncontrolling

Other income, net

Deemed dividend on warrant

modifications

Deemed dividend for ratchet shares

issued at IPO

Net loss attributable to MAIA

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Research and development expenses

Research and development expenses increased by approximately $4,551,000 or 229%, from approximately $1,988,000 for the nine months ended September 30, 2021 to approximately $6,540,000 for the nine months ended September 30, 2022.

The increase was primarily related to an increase in clinical expenses of approximately $2,721,000 due to an increase in payments to clinical research organizations and payments to consultants primarily related to the THIO 101 trial start-up and pre-clinical activities, an increase in payroll related expenses and bonus expense of approximately $1,470,000 related to increased headcount of eight research and development employees during the nine months ended September 30, 2022, an increase of approximately $190,000 in professional fees, and an increase in other expenses of approximately $193,000, offset by a decrease in stock-based compensation of approximately $23,000.

Research and development expenses increased by approximately $119,000 or 6%, from approximately $2,077,000 for the three months ended March 31, 2022 to approximately $2,196,000 for the three months ended March 31, 2023.

The increase was primarily related to an increase in payroll and bonus expenses of approximately $462,000 related to the increased headcount of additional research and development employees and an increase in stock-based compensation costs of approximately $8,000 offset by a decrease in Clinical and Scientific research of approximately $227,000 due less THIO-101 trial start-up fees, and a decrease in consulting and other fees of approximately $124,000.

General and administrative expenses

General and administrative expenses increased by approximately $1,543,000 or 55% from approximately $2,799,000 for the nine months ended September 30, 2021 to approximately $4,342,000 for the nine months ended September 30, 2022.

The increase was primarily attributable to the increased costs to create additional infrastructure to support our operations as a public company.

Increases included an increase in payroll, bonus expenses and benefits of approximately $583,000 related to an increase in headcount over the same period last year, an increase in professional fees for approximately $623,000, and an increase in other expenses of approximately $592,000, offset by a decrease in stock-based compensation expense of approximately $255,000 primarily due to the 2021 expense related to founders' stock-based compensation expense.

Other income (expense), net

Other income (expense), net changed by approximately $5,128,000 or 105% from approximately $4,898,000 of other expenses for the nine months ended September 30, 2021 to approximately $230,000 of other income for the nine months ended September 30, 2022.

The change in other income (expense), net was primarily the result of approximately $2,323,000 expense related to loss of extinguishment of convertible notes, the approximately $1,546,000 of expense for the change in fair value of the warrant liability, the change in the fair value of bifurcated embedded feature of $203,000, and expense related to approximately $828,000 related to interest for convertible notes for the nine months ended September 30, 2021 .

Other income increased by approximately $230,000 of income related to the Australian research and development incentives and offset by approximately $2,000 of interest expense for nine months ended September 30, 2022 .

General and administrative expenses increased by approximately $622,000, or 46% from approximately $1,366,000 for the three months ended March 31, 2022 to approximately $1,988,000 for the three months ended March 31, 2023.

The increase was primarily related to an increase in payroll expense of approximately $278,000, an increase in other expenses of approximately $580,000 related to the costs of operating as a public company, offset by a decrease in stock-based compensation of approximately $184,000 and professional fees of approximately $52,000.

Other expense, net

Other income, net increased by approximately $38,000 or 127% from other income of approximately $30,000 for the three months ended March 31, 2022 to other income of approximately $67,000 for the three months ended March 31, 2023.

The increase was primarily related to increases in the Australia research and development incentives of approximately $22,000 and a gain on the change in the fair value of the warrant liability of approximately $21,000 offset by increases to interest expense of approximately $5,000.

Liquidity and Capital Resources

As of September 30, 2022, our cash totaled approximately $14,064,000 which represented an increase of approximately $3,489,000 compared to December 31, 2021.

As of September 30, 2022, we had working capital of approximately $12,324,000 which represents an increase of approximately $3,797,000 compared to December 31, 2021.

We have generated no revenues and we expect to continue to incur operating losses for the foreseeable future and may never become profitable.

We are dependent on our ability to continue to raise equity and/or debt financing to continue operations, until the attainment of profitable operations.

Our Ability to Continue as a Going Concern

As of March 31, 2023, our cash totaled approximately $7,586,000 which represented a decrease of approximately $3,365,000 compared to December 31, 2022.

As of March 31, 2023, we had working capital of approximately $4,567,000 which represents a decrease of approximately $3,972,000 compared to December 31, 2022.

We have generated no revenues as of March 31, 2023.

The Company’s current operating plan indicates that it will continue to incur losses from operations and generate negative cash flows from operating activities given ongoing expenditures related to the completion of its ongoing clinical trials and the Company’s lack of revenue generating activities.

Based on the Company’s cash reserves as March 31, 2023 of approximately $7,586,000 million and current financial condition as of the date of the Quarter Report on Form 10-Q, the accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

To meet the Company’s future working capital needs, the Company will need to raise additional equity or enter into debt financing.

Accordingly, there is substantial doubt about the Company’s ability to continue as a going concern within one year after these financial statements are issued.

Sales of Common Stock

On April 27, 2023, the Company sold 2,555,500 shares of the Company’s common stock at a price of $2.25 per share in an underwritten public offering.

ThinkEquity LLC (“ThinkEquity”) served as underwriter of the offering.

The aggregate net proceeds of the offering were approximately $5.1 million, after deducting underwriting discounts and estimated offering expenses.

The shares of common stock were offered, issued and sold to the public pursuant to the Registration Statement on Form S-1, as amended from time to time (File No.

Concurrently with the closing of the public offering, the Company also issued warrants to purchase an aggregate of up to 127,775 shares of its common stock to ThinkEquity or its designees, at an exercise price of $2.8125 per share (the “Representative’s Warrants”).

The Representative’s Warrants are exercisable beginning on October 24, 2023, and expire on April 24, 2028, pursuant to the terms and conditions of the Representative’s Warrants.

During January and February 2022, the Company sold 263,729 shares of common stock at $9 per share for gross proceeds of $2,373,561 before transaction costs and expenses.

Between April 22, 2022 and May 3, 2022, warrant holders exercised warrants, resulting in the issuance of 153,000 shares of common stock for proceeds of approximately $275,400.

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We will need to raise additional capital to fund our operations, to develop and commercialize THIO, and to develop, acquire or in-license other products.

We may seek to fund our operations through additional public equity, or debt

financings, as well as other sources.

We may seek to fund our operations through public equity, private equity, or debt financings, as well as other sources.

We cannot make any assurances that additional financings will be available to us and, if available, on acceptable terms or at all.

We believe that we currently have sufficient funds to support funding of the THIO-101 lead-in and preliminary efficacy of the phase 2 THIO-101 through the next 12 months from the date of this filing.

If the Company is unable to raise the necessary funding, management will undertake cost cutting measures to reduce compensation and reduce the scope of or delay its clinical programs.

This could negatively impact the Company’s business and could also lead to the reduction of the Company’s operations.

Cash Flows nine months ended September 30, 2022 and 2021

Nine Months Ended

September 30,

This could negatively impact our business and operations and could also lead to the reduction of our operations.

Cash Flows three months ended March 31, 2023 and 2022

Three Months Ended

Net cash flows used in operating activities

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Operating Activities

For the nine months ended September 30, 2022, net cash used in operating activities was approximately $9,146,000, which consisted of a consolidated net loss of approximately $10,652,000 offset by non-cash charges of approximately $1,831,000 in stock-based compensation.

Total changes in operating assets and liabilities of approximately $325,000 were driven by an approximate $412,000 increase in prepaid expense and other assets, and an approximate $230,000 increase in the Australia research and development incentives receivable offset by an increase of approximately $317,000 in other accounts payable and accrued expenses.

For the nine months ended September 30, 2021, net cash used in operating activities was approximately $2,516,000, which consisted of a net loss of approximately $9,685,000 offset by non-cash charges of approximately $6,785,000 which primarily includes approximately $2,109,000 in stock-based compensation, $2,323,000 loss on extinguishment of convertible notes, $203,000 related to the change in fair value of embedded features, $597,000 amortization of debt discount on convertible notes, a changes in the fair value of the warrant liability of approximately $1,546,000, and approximately $7,000 loss on settlement of bonus..

Total changes in operating assets and liabilities of approximately $385,000 were primarily driven by an approximate $345,000 increase in accrued expenses, an approximate increase of $342,000 in accounts payable and an approximate increase in accrued interest of $227,000 offset by and an approximate increase in prepaid expenses and other assets of $522,000 and an approximate decrease in amounts due to related parties of $7,000.

For the nine months ended September 30, 2022 the effect of foreign currency exchange rate changes on cash decreased the cash balance as of September 30, 2022 by approximately $34,000.

For the three months ended March 31, 2023, net cash used in operating activities was approximately $3,361,000, which consisted of a consolidated net loss of approximately $4,117,000 offset by non-cash charges of approximately $538,000 in stock-based compensation, approximately $164,000 of expense to issue stock to consultants offset by the remeasurement of the warrant liability of approximately $21,000.

Total changes in operating assets and liabilities of approximately $76,000 were driven by an approximate $154,000 decrease in prepaid expense and other assets, and an approximate $499,000 net increase in accounts payable and accrued expenses offset by an approximate $51,000 increase in the Australia research and development incentives receivable and by an increase of approximately $526,000 in deferred offering costs.

For the three months ended March 31, 2022, net cash used in operating activities was approximately $2,808,000, which consisted of a net loss of approximately $3,414,000 offset by non-cash charges of approximately $713,000 in stock-based compensation.

Total changes in operating assets and liabilities of approximately $107,000 were primarily driven by an approximate $286,000 net increase in accrued expenses and accounts payable and an approximate decrease of $3,000 in deferred compensation offset by an increase in deferred offering costs of approximately $262,000 and prepaid expenses and other current assets of approximately $134,000.

For the three months ended March 31, 2023 the effect of foreign currency exchange rate changes on cash decreased the cash balance as of March 31, 2023 by approximately $4,000.

Financing Activities

Net cash provided by financing activities was approximately $12,670,000 and $12,805,000 for the nine months ended September 30, 2022 and 2021, respectively.

Net cash provided by financing activities for the nine months ended September 30, 2022 consisted primarily of gross proceeds from the sale of common stock in the initial public offering of approximately $11,500,000, net proceeds from issuance of common stock of approximately of $2,474,000 in a crossover round, and proceeds from issuance of common stock upon exercise of warrants of approximately $385,000 and stock options of approximately $66,000 offset by approximately $1,755,000 of the offering costs paid in the nine months ended September 30, 2022.

Total Net cash provided by financing activities for nine months ended September 30, 2021 consisted of proceeds from issuance of convertible notes totaling approximately $7,369,000, proceeds for issuance of common stock net of transactions costs totaling approximately $5,366,000, collections of subscriptions receivable of approximately $2,000, proceeds from the paycheck protection program loan totaling approximately $63,000, and proceeds from exercise of stock options of approximately $5,000.

Net cash provided by financing activities was approximately $0 and $2,531,000 for the three months ended March 31, 2023 and 2022, respectively.

Total net cash provided by financing activities for three months ended March 31, 2022 consisted of proceeds for issuance of common stock net of transactions costs totaling approximately

$2,373,000, proceeds from exercise of stock options of approximately $48,000 and proceeds from the exercise of warrants of $110,000.

Critical Accounting Policies and Significant Judgments and Estimates

Management’s discussion and analysis of our financial condition and results of our operations is based on our consolidated financial statements, which have been prepared in accordance with U.S.

The preparation of these financial statements requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Actual results may differ materially and adversely from these estimates.

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

We define our critical accounting policies as those accounting principles that require it to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles.

While our significant accounting policies are more fully described in Note 1 to our financial statements, we believe the following are the critical accounting policies used in the preparation of its financial statements that require significant estimates and judgments.

Fair value of common stock

For all periods prior to the initial public offering, there was no public market for our common stock.

The Company sold shares of its common stock to third parties beginning in September 2018 through June 2019 at $1.80 per share.

Subsequent to July 2019 the fair value of the shares of common stock underlying our stock-based awards was estimated by our board of directors based in part on valuations until we began selling shares of our common stock to third parties beginning on July 15, 2021 through October 15, 2021 at $8.00 per share and beginning on January 27, 2022 through February 27, 2022 at $9.00 per share.

To determine the fair value of our common stock underlying annual option grants to officers and directors, our board of directors considered, among other things, input from management, valuations of our common stock valuation firms in accordance with the guidance provided by the American Institute of Certified Public Accountants 2013 Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, and our board of directors’

assessment of additional objective and subjective factors that it believed were relevant, and factors that may have changed from the date of the most recent valuation through the date of the grant.

These factors included, but were not limited to:

our results of operations and financial position, including our levels of available capital resources;

our stage of development and material risks related to our business;

our business conditions and projections;

the valuation of publicly traded companies in the life sciences industry sectors, as well as recently completed mergers and acquisitions of peer companies;

the lack of marketability of our common stock as a private company;

the likelihood of achieving a liquidity event for our security holders, such as an initial public offering or a sale of our company, given prevailing market conditions;

the hiring of key personnel and the experience and expertise of management;

trends and developments in our industry;

external market conditions affecting the life sciences industry sectors.

Our valuation as of February 28, 2021 indicated a fair value of our common stock of $1.83 per share.

For grants of stock awards and stock option awards during the period February 28, 2021 through July 12, 2021, management set the exercise prices for those awards based on the February 28, 2021 valuation until the Company initiated the sale of common stock at $8.00 per share which was first competed on July 18, 2021 and followed by additional sales through September 26, 2021.

The Company set the exercise price of awards granted from July 18, 2021 through October 30, 2021 at $8.00 per share.

In evaluating the fair value of our common stock during the period March 2021 through May 2021, management evaluated events and their potential impact on the estimated fair value per share of the common stock.

considered events during this period which would have an effect on the fair value of our common stock such as milestones related to the clinical development and operations of our drug substances and advances in the production of drug substances and our drug product, however, there were no specific events that would indicate a definitive change in the value of the Company.

Given that there were no specific events that caused the change in fair value of our common stock from the indicated value of $1.83 as of February 28, 2021 to the $8.00 per share realized from the sale of common stock initiated in mid July, we performed a retrospective valuation of our common stock as of April 30, 2021.

The retrospective valuation as of April 30, 2021 also indicated a fair value of our common stock of $1.83.

In estimating the fair value of stock and stock option awards, we used an estimated fair value of $1.83 for awards granted from February 28, 2021 through May 31, 2021, based on the February 28, 2021 and April 30, 2021 valuations.

From June 1, 2021 through October 30, 2021, we used an estimated of fair value of our common stock of $8.00 in valuing our stock and stock option awards.

We believe the fair values based on the valuations materially represents the fair value of our common stock during the period February 28, 2021 through May 31, 2021 since no single intervening specific event indicated a definitive change in the value of the Company.

The February 28, 2021 and the April 30, 2021 valuations used the income approach and the market approach in estimating the fair value of our common stock.

The market approach utilized guideline public companies in estimating fair value of our stock.

The income approach estimates enterprise value based on the estimated present value of future cash flows the business is expected to generate over its remaining life.

In applying this method, valuation multiples are derived from historical and projected operating data of the peer company group.

We then apply the selected multiples to our operating data to arrive at a range of indicated enterprise values of the Company.

We then subtracted the net debt to determine equity value.

During November 2021 and December 2021, the fair value of the Company’s common stock was determined to be $8.69 and $8.87, respectively.

For our valuations of common stock performed November 2021 and December 2021, we used a hybrid method of the Option Pricing Method ("OPM”) and the Probability-Weighted Expected Return Method ("PWERM”).

PWERM considers various potential liquidity outcomes.

Our approach included the use of an initial public offering scenario, a scenario assuming continued operation as a private entity, and a dissolution scenario.

Under the hybrid OPM and PWERM, the per share value calculated under the OPM and PWERM are weighted based on expected exit outcomes and the quality of the information specific to each allocation methodology to arrive at a final estimated fair value per share of the common stock before a discount for lack of marketability is applied.

In the First Quarter of 2022, the Company made further progress in its clinical programs, which included the approval of THIO by the Bellberry Human Research Ethics Committee (HREC) in Australia to initiate the THIO-101 Phase 2 clinical study.

Additionally, the Company completed its selection process for the clinical sites for its Phase 2 study in Australia and Europe and its application to start the Phase 2 study in Australia was approved.

The Company also submitted a similar application in the second quarter of 2022, to conduct the same Phase 2 study in Europe .

The events above resulted in the Company being able to complete sales of its common stock to unrelated third-party investors beginning in January 27, 2022, through February 28, 2022, of 263,729 shares of common stock at a price of $9.00 per share resulting in aggregate proceeds of approximately $2.4 million.

In May 2022, the Company completed additional sales of its common stock at a price of $9.00 per share resulting in aggregate proceeds of approximately $0.1 million.

Due to the lack of any single specific event that would have indicated a definitive change in the value of the Company, the fair value of the Company’s common stock from January 27, 2022 through May 31, 2022, was determined based on sales of the Company’s shares at arm’s length to unrelated third parties at $9.00 per share.

The fair value for common stock for June 2022 was determined based on the $5.00 per share for common stock initial public offering price.

Following the initial public offering, the fair value of our common stock, is based on the closing price of the common stock in the public market.

Stock-based compensation

Our stock-based awards are classified as equity (restricted stock awards, stock options, and warrants).

We recognize related stock-based compensation expense based on the grant date fair value of the awards.

The fair value of restricted stock awards is based on our common stock price.

We estimate the fair value of stock options and warrants using the Black-Scholes-Merton valuation model which requires the use of subjective assumptions that could materially impact the estimation of fair value and related compensation expense to be recognized.

One of these assumptions include the expected volatility of our stock price.

Developing this assumption requires the use of judgment.

The Company lacks company-specific historical and implied volatility information.

Therefore, we estimate our expected stock volatility based on the historical volatility of a publicly traded set of peer companies.

These estimates are highly subjective and now that the initial public offering is completed these estimates will no longer be necessary since the fair value will be based on the trading value of the Company’s common stock.

Two of the assumptions used in the Black-Scholes-Merton valuation model are historical volatility and fair value of common stock, both of which are subject to uncertainty.

Historical volatility is subject to uncertainty due to changes in the market over time.

The fair value of our common stock is subject to uncertainty due to the possibility of changes in the results of our clinical trials, which could impact the fair value of our common stock.

The total expense related to stock options is material to our financial statements on an annual basis, and significant fluctuations in the volatility assumption or the fair value of our common stock could result in material changes in related compensation expense to be recognized.

Prepaid and Accrued Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our prepaid and accrued research and development expenses.

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 prepaid and accrued research and development expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at the time.

We confirm the accuracy of estimates with the service providers and make adjustments if necessary.

Examples of estimated prepaid and accrued research and development expenses include expenses for:

Clinical Research Organizations (CROs) in connection with clinical studies;

Investigative sites in connection with clinical studies;

Vendors in connection with preclinical development activities;

Vendors related to product manufacturing, development and distribution of clinical materials.

We base our expenses related to clinical studies on our estimates of the services received and efforts expended pursuant to contracts with multiple CROs that conduct and manage clinical studies on our behalf.

The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows.

The scope of services under these contracts can be modified and some of the agreements may be cancelled by either party upon written notice.

There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the clinical expense.

Payments under some of these contracts depend on factors such as the successful enrollment of subjects and the completion of clinical study milestones.

In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period.

If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or prepaid accordingly.

Although we do not expect our estimates to be materially different from amounts actually incurred, if our estimates of the status and timing of services performed differ from the actual status and timing of services performed we may report amounts that are too high or too low in any particular period.

To date, there have been no material differences between our estimates and the amount actually incurred.

Our condensed consolidated financial statements are prepared in accordance with U.S.

generally accepted accounting principles (U.S.

These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements.

We believe that the estimates, judgments and assumptions are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made.

To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected.

For a discussion of our critical accounting estimates, please read Part II, Item 7., Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 24, 2023.

There have been no material changes to the critical accounting estimates previously disclosed in such report.

Quantitative and Qualitative Disclosures About Market Risk.

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What changed 10-Q

Item 1. Financial Statements