What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-12 compared with 2022-08-12 · 116 added, 120 removed, 154 unchanged (61% of the section changed)

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

You should read the following discussion and analysis of NRx Pharmaceuticals’ financial condition and plan of operations together with NRx Pharmaceuticals' unaudited, condensed consolidated financial statements and the related notes appearing elsewhere herein.

You should read the following discussion and analysis of NRx Pharmaceuticals’ financial condition and plan of operations together with “Selected Financial Data” and NRx Pharmaceuticals' financial statements and the related notes appearing elsewhere in this proxy statement / prospectus / consent solicitation statement.

In addition to historical information, this discussion and analysis contains forward looking statements that involve risks, uncertainties and assumptions.

NRx Pharmaceuticals’ actual results may differ materially from those discussed below.

Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section entitled “Risk Factors” included elsewhere herein.

All amounts in this report are in U.S.

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On the Closing Date, BRPA changed its name to NRX Pharmaceuticals, Inc.

Unless the context suggests otherwise, references to “NRx Pharmaceuticals,” “NeuroRx”, “NRXP,” “we,” or the “Company” refer to NRX Pharmaceuticals, Inc.

and, where appropriate, its subsidiaries.

NRx Pharmaceuticals is a clinical stage pharmaceutical company that is developing NRX-101, the first investigational oral therapeutic for the treatment of Acute Suicidal Behavior/Ideation (ASIB) in Bipolar Disorder and Aviptadil (reformulated as ZYESAMI ® ), an investigational intravenous and inhaled drug to treat respiratory failure in COVID-19.

(“NRx Pharmaceuticals"

or the "Company”).

NRx Pharmaceuticals is a clinical stage pharmaceutical company that is developing NRX-101, the first oral therapeutic for the treatment of Acute Suicidal Behavior/Ideation (ASIB) in Bipolar Disorder and ZYESAMI (aviptadil), an intravenous and inhaled drug to treat respiratory failure in COVID-19.

The NRx Pharmaceuticals Antidepressant Regime was developed based upon 30 years of basic science and clinical expertise contributed by Prof.

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The NRx Pharmaceuticals Antidepressant Regime begins with a single dose of ketamine, an FDA approved anesthetic, followed by approximately six weeks of daily oral NRX-101.

NRX-101 is being developed and investigated as a rapid-onset and sustained treatment for acute suicidal crisis associated with bipolar depression.

NRX-101 is being developed as a rapid-onset and sustained treatment for acute suicidal crisis associated with bipolar depression.

NRX-101 combines DCS, a NMDA receptor modulator, and lurasidone, a 5-HT2a receptor antagonist.

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Findings from one of these studies found that bipolar patients who were already receiving a 5-HT2a antagonist demonstrated more than a 50% reduction in symptoms of depression and a 75% reduction in suicidal ideation when ketamine and DCS were added to their treatment regimen.

Side effects for patients in a Phase 2a combination study of DCS and 5HT2a included mild sedation, headaches and hypomania.

Side effects for patients in a P2a combination study of DCS and 5HT2a included mild sedation, headaches and hypomania.

Breakthrough Therapy designation was awarded based on the STABIL-B study ( www.clinicaltrials.gov NCT02974010) that demonstrated a statistically significant advantage of NRX-101 vs.

lurasidone (the current standard of care) in maintaining remission from depression and suicidality following a single stabilizing dose of ketamine.

In March 2020, the Company initiated development of RLF-100 ZYESAMI in partnership with Relief Therapeutics through a collaboration agreement (“Relief Agreement”).

In March 2020, NRx Pharmaceuticals initiated development of RLF-100 (aviptadil acetate) (now reformulated as ZYESAMI) in partnership with Relief Therapeutics.

ZYESAMI is based on 50 years of research, pioneered by Professor Sami Said, on the role of Vasoactive Intestinal Peptide in preventing and treating acute lung injury by protecting the Type II cell in the lung.

The rights to Dr.

Said’s scientific work are licensed by the Company from the Research Foundation of the State University of New York.

On September 18, 2020, the Company entered into a collaboration agreement with Relief for the clinical development and, if approved, the sale of Aviptadil.

The collaboration agreement provides for funding by Relief of certain clinical trials, formulation and manufacturing of Aviptadil as well as establishing specified sales territories for each party and share of the profits in those territories for “Product” as defined in the collaboration agreement.

Relief has reimbursed the Company approximately $10.9 million for expenses but has subsequently declined to reimburse the Company for additional costs of the IV clinical trial, the inhaled use trial, formulation and manufacture of ZYESAMI, statistical analysis, and regulatory

The financial statements reflect $13.8 million in unreimbursed Research and Development costs in the nine months ended September 30, 2021, prior to the allocation of corporate overhead.

Additional unreimbursed costs were reported for the year ended December 31, 2020.

The Company advised Relief that the Company is funding those costs with other capital.

On October 6, 2021, Relief filed a lawsuit against the Company.

See Contractual Obligations and Commitments below.

Said’s scientific work are licensed by NRx Pharmaceuticals from the Research Foundation of the State University of New York and NRx Pharmaceuticals expects to cross-license such rights to Relief Therapeutics for use outside US, Canada, and Israel.

In that partnership and pursuant to the Relief Agreement, Relief has committed to fund all costs of formulations and clinical development of the RLF Product for the treatment of COVID-19.

The companies agreed that NRx Pharmaceuticals would lead all development and sales in the United States, Canada, and Israel, with NRx Pharmaceuticals receiving 50% of the profits generated in those territories.

Relief is to lead the development and sale of the RLF Product in the rest of the world with NRx Pharmaceuticals receiving 15% of profits in Europe and the United Kingdom, together with 20% of profits in the rest of the world.

For the six months ended June 30, 2021.

Relief has reimbursed NRx Pharmaceuticals for approximately $10.9 million of expenses, but has declined to pay approximately $6 million in invoiced costs associated with conduct of the RLF Product clinical trial, reformulation, and manufacture of ZYESAMI.

Relief has additionally declined to fund the costs of the inhaled trial product.

NRx Pharmaceuticals has advised Relief that NRx Pharmaceuticals is funding those costs with other capital.

In an open-label, single center trial at Houston Methodist Hospital, ZYESAMI demonstrated a statistically significant 9-fold advantage in probability of survival and recovery from respiratory failure compared to the standard of care among patients with COVID-19 Respiratory Failure.

On June 1, 2021, NRx Pharmaceuticals reported phase IIb/III study results of ZYESAMI in patients with respiratory failure due to critical COVID-19.

The study failed to meet its primary endpoint of being alive and free of respiratory failure at day 60 without controlling for ventilation status or site of care (i.e.

tertiary care hospital vs.

community hospital), but did demonstrate a statistically significant increase in the likelihood that patients treated with ZYESAMI would be alive and free of respiratory failure at 60 days, compared to those treated with placebo when controlling for ventilation status and site of care.

The clinical study did demonstrate a 2-fold, statistically-significant increased odds of surviving COVID-19 respiratory failure across all patients and sites of care when controlling for baseline severity of COVID-19 in each patient.

This survival endpoint was a declared secondary endpoint of the clinical trial.

In November 2021, the FDA declined the Company’s application for Emergency Use Authorization for ZYESAMI.

The Company continues to provide the FDA with new data from ongoing trials as such data become available and the FDA has stated that it remains committed to working with the Company on the development of ZYESAMI.

The Company expects to file a new drug application (NDA) based on the recently completed Phase 2b/3 clinical trial and additional clinical trials currently underway, including the National Institutes of Health ACTIV3b/TESICO trial (NCT 04843761).

The Company plans to file for accelerated approval of ZYESAMI based on the IL-6 and RDR data in the two clinical studies.

If granted approval, ZYESAMI would be the first medicine in the United States indicated specifically for patients suffering from critical COVID-19 with respiratory failure.

The study identified a statistically significant increase in the likelihood that patients treated with ZYESAMI would be alive and free of respiratory failure at 60 days, compared to those treated with placebo, and identified a significantly shorter median hospital stay.

The clinical study report filed with the FDA further documented statistically significant advantages for ZYESAMI on all major secondary endpoints.

On the basis of these results, the Company applied for FDA Emergency Use Authorization on May 31, 2021 and is currently awaiting the FDA’s response to such application.

Should Emergency Use Authorization be granted, this would provide the Company with a one-year period during which ZYESAMI could be marketed for the treatment of COVID-19 in the United States in advance of the Company filing a new drug application (NDA) with the FDA for formal approval of ZYESAMI for the treatment of COVID-19 based on the recently completed clinical trial and the additional clinical trials currently underway, including the NIH ACTIV3b/TESICO trial (NCT 04843761).

If authorized for use, ZYESAMI would be the first drug in the United States indicated specifically for COVID-19 patients who are critically ill with respiratory failure.

In July 2021, the nation of Georgia issued an Emergency Use Authorization (EUA) for intravenous ZYESAMI (aviptadil) for the treatment of critical COVID-19.

Pursuant to this EUA, the Company has sent a team of physicians to Georgia to train local doctors to appropriately administer ZYESAMI and the effects of the medicine.

The supply of intravenous doses by the Company is being discussed with the Georgia Ministry of Health and with the Ministries of Health of other nations in the Caucasus region.

On October 8, 2021, the Company submitted an updated manufacturing module to its FDA Investigational New Drug file documenting this change in manufacture and stability.

On November 8, 2021, the FDA communicated with the Company that the manufacturing update had been reviewed and that no “clinical hold” items had been identified (this is the regulatory language that allows an investigational product to be given to patients).

The Company initiated a parallel manufacturing process to conform to EU and UK standards.

In October 2021, the Company announced that a European Qualified Person audit was conducted and no major deficiencies were identified, thus clearing ZYESAMI’s use in EU investigational programs.

Although the initial focus has been on the use of intravenous ZYESAMI, the Company has received permission from the FDA to test inhaled ZYESAMI in a phase 2/3 clinical trial for patients with early COVID-19 disease.

The Company believes that the inhaled medicine will be more convenient for patients to self-administer than the intravenous drug, provided patients are still able to inhale normally and do not have inflammatory debris clogging the alveoli.

This clinical trial commenced in January 2021 and is expected to conclude in the first half of 2022.

On July 11, 2021, the Company signed a Memorandum of Understanding (MoU) with the Government of Israel.

The MoU allows for the Company to hold an exclusive, worldwide license to develop the BriLife TM vaccine, a novel COVID-19 vaccine developed by the Israel Institute for Biological Research (IIBR).

The vaccine is a self-propagating live virus vaccine based on World Health Organization sponsored research that resulted in the development of a successful vaccine against Ebola.

Pursuant to this EUA, the Company has sent a team of physicians to Georgia to train local doctors about administering ZYESAMI and the effects of the medicine.

The supply of intravenous doses by the Company is being discussed with the Georgia Ministry of Health and with the Ministries of Health of surrounding nations.

The Company believes that the inhaled drug will be more convenient for patients to self-administer than the intravenous drug, provided patients are still able to inhale normally and do not have inflammatory debris clogging the alveoli.

This clinical trial commenced in January 2021 and is expected to conclude by October 2021.

In addition, the Company announced in July 2021 that the phase 2/3 trial for the use of inhaled ZYESAMI has been extended to the nation of Georgia.

The Company has also commenced work on a third potential drug product by signing a Memorandum of Understanding with the Government of Israel (MoU) for an exclusive, worldwide license to develop a novel Coronavirus vaccine (BriLife) developed by the Israel Institute for Biological Research (IIBR).

The vaccine has demonstrated a statistically-significant increase in COVID-neutralizing antibody (a sign of immunity to SARS-CoV-2) compared to placebo in phase 2a trials conducted in Israel.

The vaccine has further shown indications of neutralizing antibody against variants of concern, including the Delta variant of the SARS-CoV-2 virus in

early human and preclinical studies.

The Company is commencing a registration trial of the vaccine in the nations of Georgia, Ukraine, Israel and additional countries.

The vaccine has further shown indications of neutralizing antibody against that Delta variant of the SARS-CoV-2 virus in early human studies and in preclinical studies.

Under the MoU, the Company is initiating a phase 2b/3 dose-confirmatory trial of the vaccine against COVID-19 in the nation of Georgia.

The IIBR will provide technical assistance for the clinical trial.

The Company has contracted with a GMP Viral Vector manufacturing partner to scale up the vaccine manufacturing.

If the BriLife clinical trials are successful, and subject to the negotiation of definitive licensing agreements with the IIBR, the Company would have an exclusive license to commercialize the vaccine in exchange for agreed upon milestone and royalty payments.

The clinical trial in Georgia will take place at the same time as the completion of the second phase of clinical trials in Israel.

If the clinical trials are successful, and subject to the negotiation of definitive licensing agreements with the IIBR, the Company would have an exclusive license to commercialize the vaccine in exchange for agreed upon milestone and royalty payments.

Since inception, NRx Pharmaceuticals has incurred significant operating losses.

For the three months ended September 30, 2021 and 2020, NRx Pharmaceuticals’ net loss was $37,049,331 and $5,161,712, respectively.

For the nine months ended September 30, 2021 and 2020, NRx Pharmaceuticals’ net loss was $62,655,819 and $6,649,481, respectively.

As of September 30, 2021, NRx Pharmaceuticals had an accumulated deficit of $152,835,538.

For the three months ended June 30, 2021 and 2020, NRx Pharmaceuticals, net loss was $117,613 and $102,287, respectively.

For the six months ended June 30, 2021 and 2020, NRx Pharmaceuticals’ net loss was $25,606,487 and $1,487,769, respectively.

As of June 30, 2021, NRx Pharmaceuticals had an accumulated deficit of $115,786,207.

COVID-19 Outbreak

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

Aside from our COVID-19 related trials, as a result of the COVID-19 Outbreak most of our other trials have been halted.

Except as otherwise discussed in the preceding sentence and otherwise in this Quarterly Report on Form 10-Q, there have been no material changes or impact of COVID-19 on our business.

However, the full impact of the COVID-19 Outbreak continues to evolve as of the date hereof.

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

The full impact of the COVID-19 Outbreak continues to evolve as new variants of the virus appear, including the delta variant.

As such, NRx Pharmaceuticals cannot estimate the full magnitude, whether positive or negative, that the pandemic will have on NRx Pharmaceuticals’ business.

If the COVID-19 Outbreak continues, it may have a material adverse effect on NRx Pharmaceuticals’ financial condition, liquidity, and future results of operations for the year ending December 31, 2020 and beyond.

Management is actively monitoring the impact of the global pandemic on its financial condition, liquidity, operations, industry, and workforce.

Alternatively, the COVID-19 Outbreak could have a material positive effect on market demand for the COVID-19 targeted therapeutics currently under development by NRx Pharmaceuticals.

Given the daily evolution of the COVID-19 Outbreak and the global responses to curb its spread, NRx Pharmaceuticals.

is not able to estimate the effects of the COVID-19 Outbreak on its results of operations, financial condition, or liquidity for the year ending December 31, 2021 and beyond.

Aside from our COVID-19 related trials, as a result of the COVID-19 Outbreak, most of our other trials have been halted.

Components of Results of Operations

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Settlement Expense

Settlement expense consists primarily of settlement expenses related to the GEM Warrant.

See Note 10 “Commitments and Contingencies – Share Subscription Facility Agreement – GEM” of the notes to the Company’s unaudited condensed consolidated financial statements included elsewhere in this report for further information.

Settlement expense consists primarily of settlement expenses related to the GEM Warrant as further discussed under “—Contractual Obligations and Commitments—GEM Share Subscription Facility and Warrant.”

Reimbursement of expenses from Relief Therapeutics

Reimbursement of expenses from Relief consists primarily of reimbursable expenses as part of the Relief Agreement.

Results of operations for the three months ended September 30, 2021 and 2020

Results of operations for the three months ended June 30, 2021 and 2020

The following table sets forth NRx Pharmaceuticals’ selected statements of operations data for the following periods:

Three months ended September 30,

Three months ended June 30,

2021 (As restated)

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Research and development expenses

For the three months ended September 30, 2021, NRx Pharmaceuticals recorded $6,275,911 of research and development expenses compared to $4,331,709 for the three months ended September 30, 2020.

The increase of $1,944,202 related primarily to an increase of $1,278,166 in clinical trials and development expenses related to ZYESAMI (Aviptadil), an increase of $569,804 in other regulatory and process development expenses in, and an increase of $93,656 in stock-based compensation expense.

The $6,275,911 and $4,331,709 of research and development expenses for the three months ended September 30, 2021 and 2020, respectively, include $219,802 and $126,146, respectively, of non-cash stock-based compensation.

For the three months ended June 30, 2021, NRx Pharmaceuticals recorded $4,659,280 of research and development expenses compared to $1,390,376 for the three months ended June 30, 2020.

The increase of $3,268,904 related primarily to an increase of $2,907,887 in clinical trials and development expenses related to ZYESAMI (aviptadil), an increase of $361,017 in other research and development expenses, which includes an increase of $146,196 in stock-based compensation expense and an increase of $247,787 in regulatory consultants expense.

General and administrative expenses

For the three months ended September 30, 2021, NRx Pharmaceuticals recorded $13,823,240 of general and administrative expenses compared to $3,753,704 for the three months ended September 30, 2020.

The increase of $10,069,536 related primarily to $8,619,077 of consultant fees of which $7,925,511 relates to non-cash consulting fees paid in common stock, an increase of $1,275,419 in stock-based compensation expense, an increase of $1,618,271 in insurance expense, and an increase of $891,301 in other general and administrative expenses.

The increase is partially offset by a decrease of $2,689,684 for warrant expense for warrants issued to board members for services.

The $13,823,240 and $3,753,704 of general and administrative expenses for the three months ended September 30, 2021 and 2020, respectively, include $9,265,534 and $2,754,288, respectively, of non-cash stock based compensation, consulting fees and warrant expense.

For the three months ended June 30, 2021, NRx Pharmaceuticals recorded $12,457,534 of general and administrative expenses compared to $525,736 for the three months ended June 30, 2020.

The increase of $11,931,798 related primarily to $5,474,283 of consultant fees of which $4,850,000 relates to non-cash consulting fees paid to EBC in common stock, $4,043,668 in stock compensation expense of which $3,345,212 relates to modification of stock options and warrants pursuant to the Merger, $710,381 of insurance expenses, $501,782 of payroll expenses, and $185,951 in other general and administrative expenses, partially offset by decrease of $1,015,733 in legal and professional fees.

Reimbursement of expenses from Relief Therapeutics

For the three months ended September 30, 2021, NRx Pharmaceuticals recorded $0 of reimbursement of expenses from Relief compared to $2,936,214 of reimbursement of expenses from Relief for the three months ended September 30, 2020.

For the three months ended June 30, 2021, NRx Pharmaceuticals recorded $0 of reimbursement of expenses from Relief compared to $2,020,931 of reimbursement of expenses from Relief for the three months ended June 30, 2020.

Other (income) expenses

Interest expense

For the three months ended September 30, 2021, NRx Pharmaceuticals recorded $5,368 of interest expense compared to $12,513 for the three months ended September 30, 2020.

The decrease of $7,145 related primarily to the accrued interest for outstanding notes during the period.

For the three months ended June 30, 2021, NRx Pharmaceuticals recorded $5,107 of interest expense compared to $2,532 for the three months ended June 30, 2020.

The increase of $2,575 related primarily to the accrued interest for outstanding notes during the period.

Change in fair value of warrant liabilities

For the three months ended September 30, 2021, NRx Pharmaceuticals recorded a loss of $16,536,470 related to the change in fair value of the warrant liabilities compared to $0 for the three months ended September 30, 2020.

The decrease of $16,536,470 related to the increase in the fair value of certain Substitute Warrants and the Placement Warrants assumed pursuant to the Merger Agreement.

For the three months ended June 30, 2021, NRx Pharmaceuticals recorded a gain of $17,359,009 related to the change in fair value of the warrant liabilities compared to $0 for the three months ended June 30, 2020.

The increase of $17,359,009

related to the decrease in the fair value of certain Substitute Warrants and the Placement Warrants assumed pursuant to the Merger Agreement.

Change in fair value of Earnout Cash liability

For the three months ended September 30, 2021, NRx Pharmaceuticals recorded a loss of $408,342 related to the change in fair value of the Earnout Cash liability compared to $0 for the three months ended September 30, 2020.

The loss related to the increase in the fair value of the Earnout Cash liability pursuant to the Merger Agreement.

Results of operations for the nine months ended September 30, 2021 and 2020

For the three months ended June 30, 2021, NRx Pharmaceuticals recorded a loss of $354,701 related to the change in fair value of the earnout cash liability compared to $0 for the three months ended June 30, 2020.

The increase of $354,701 related to the increase in the fair value of the earnout cash liability pursuant to the Merger Agreement.

Results of operations for the six months ended June 30, 2021 and 2020

The following table sets forth NRx Pharmaceuticals' selected statements of operations data for the following periods:

Nine months ended September 30,

Six months ended June 30,

2021 (As restated)

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Research and development expenses

For the nine months ended September 30, 2021, NRx Pharmaceuticals recorded $13,843,895 of research and development expenses compared to $6,326,416 for the nine months ended September 30, 2020.

The increase of $7,517,479 related primarily to an increase of $5,847,974 in clinical trials and development expenses related to ZYESAMI (Aviptadil), an increase of $1,405,167 in regulatory and process development expenses, and an increase of $245,302 in stock-based compensation expense.

The $13,843,895 and $6,326,416 of research and development expenses for the nine months ended September 30, 2021 and 2020, respectively, include $436,247 and $190,945, respectively, of non-cash stock-based compensation.

For the six months ended June 30, 2021, NRx Pharmaceuticals recorded $7,567,984 of research and development expenses compared to $1,994,709 for the six months ended June 30, 2020.

The increase of $5,573,275 related primarily to an increase of $4,569,807 in clinical trials and development expenses related to ZYESAMI (aviptadil) and an increase of $1,003,469 in other research and development expenses, which includes an increase of $608,266 in regulatory consultants expense and an increase of $151,645 in stock-based compensation expense.

General and administrative expenses

For the nine months ended September 30, 2021, NRx Pharmaceuticals recorded $28,382,177 of general and administrative expenses compared to $4,895,092 for the nine months ended September 30, 2020.

The increase of $23,487,085 related primarily to increases of $14,541,460 for consultant fees of which $12,775,511 relates to non-cash consulting fees paid in common stock, an increase of $5,596,533 in stock-based compensation expense of which $3,345,212 relates to modification of stock options and warrants pursuant to the Merger, an increase of $2,390,615 for insurance expense, an increase of $1,343,432 for legal and professional services, an increase of $1,130,578 for payroll expenses, and an increase $1,174,149 in other general and administrative expenses.

The increase is partially offset by a decrease of $2,689,684 for warrant expense for warrants issued to board members for services.

The $28,382,177 and $4,895,092 of general and administrative expenses for the nine months ended September 30, 2021 and 2020, respectively, include $18,554,117 and $2,871,757, respectively, of non-cash stock-based compensation, consulting fees and warrant expense.

For the six months ended June 30, 2021, NRx Pharmaceuticals recorded $14,558,936 of general and administrative expenses compared to $1,141,390 for the six months ended June 30, 2020.

The increase of $13,417,546 related primarily to increases of $5,922,383 for consultant fees of which $4,850,000 relates to non-cash consulting fees paid to EBC in common stock, $4,321,114 in stock-based compensation expense of which $3,345,212 relates to modification of stock options and warrants pursuant to the Merger, $830,368 for payroll expenses, $772,343 of insurance expenses, and $282,849 in other general and administrative expenses, partially offset by a decrease of $1,288,490 in legal and professional fees,

Settlement expense

For the nine months ended September 30, 2021, NRx Pharmaceuticals recorded $21,365,641 of settlement expense related to the GEM Warrant reflecting the incremental value through the date of issuance compared to $0 of settlement expense for the nine months ended September 30, 2020.

Settlement expense is a non-cash expense.

For the six months ended June 30, 2021, NRx Pharmaceuticals recorded $21,365,641 of settlement expense related to the GEM Warrant reflecting the incremental value through the date of issuance compared to $0 of settlement expense for the six months ended June 30, 2020.

Reimbursement of expenses from Relief Therapeutics

For the nine months ended September 30, 2021, NRx Pharmaceuticals recorded $771,244 of reimbursement of expenses from Relief compared to $4,957,145 of reimbursement of expenses from Relief for the nine months ended September 30, 2020.

For the six months ended June 30, 2021, NRx Pharmaceuticals recorded $771,244 of reimbursement of expenses from Relief compared to $2,020,931 of reimbursement of expenses from Relief for the six months ended June 30, 2020.

NRx Pharmaceuticals has received $10,904,065 in total from Relief in accordance with the Relief Agreement.

Gain on extinguishment of debt

For the nine months ended September 30, 2021, NRx Pharmaceuticals recorded $120,810 of gain on extinguishment of debt compared to $0 for the nine months ended September 30, 2020.

For the six months ended June 30, 2021, NRx Pharmaceuticals recorded $120,810 of gain on extinguishment of debt compared to $0 for the six months ended June 30, 2020.

The increase of $120,810 related to the forgiveness of the PPP Loan which resulted in a gain on extinguishment for the outstanding principal and accrued and unpaid interest.

Interest expense

For the nine months ended September 30, 2021, NRx Pharmaceuticals recorded $15,656 of interest expense compared to $51,317 for the nine months ended September 30, 2020.

For the six months ended June 30, 2021, NRx Pharmaceuticals recorded $10,288 of interest expense compared to $38,800 for the six months ended June 30, 2020.

The decrease of $28,512 related primarily to the conversion of convertible notes payable in 2020.

Change in fair value of warrant liabilities

For the nine months ended September 30, 2021, NRx Pharmaceuticals recorded a gain of $822,539 related to the change in fair value of the warrant liabilities compared to $0 for the nine months ended September 30, 2020.

For the six months ended June 30, 2021, NRx Pharmaceuticals recorded a gain of $17,359,009 related to the change in fair value of the warrant liabilities compared to $0 for the six months ended June 30, 2020.

The increase of $17,359,009 related to the decrease in the fair value of certain Substitute Warrants and the Placement Warrants assumed pursuant to the Merger Agreement.

Change in fair value of Earnout Cash liability

For the nine months ended September 30, 2021, NRx Pharmaceuticals recorded a loss of $763,043 of change in fair value of the Earnout Cash liability compared to $0 for the nine months ended September 30, 2020.

The loss related to the increase in the fair value of the Earnout Cash liability pursuant to the Merger Agreement.

For the six months ended June 30, 2021, NRx Pharmaceuticals recorded other expense of $354,701 of change in fair value of the earnout cash liability compared to $0 for the six months ended June 30, 2020.

The increase of $354,701 related to the increase in the fair value of the Earnout Cash liability pursuant to the Merger Agreement.

Change in fair value of embedded put

For the nine months ended September 30, 2021, NRx Pharmaceuticals recorded $0 of change in fair value of embedded put compared to $27,160 for the nine months ended September 30, 2020.

For the six months ended June 30, 2021, NRx Pharmaceuticals recorded $0 of change in fair value of embedded put compared to $27,160 for the six months ended June 30, 2020.

The decrease of $27,160 related primarily to the conversion of convertible notes payable in 2020.

Loss on conversion of convertible notes payable

For the nine months ended September 30, 2021, NRx Pharmaceuticals recorded $0 of loss on conversion of convertible notes payable compared to $306,641 for the nine months ended September 30, 2020.

The decrease of $306,641 related to the loss on extinguishment which was recorded upon the conversion of the convertible notes payable in 2020 for the difference between the carrying value of the convertible notes, unamortized debt discount, and the fair value of the embedded put option, and the fair value of common shares issued.

For the six months ended June 30, 2021, NRx Pharmaceuticals recorded $0 of loss on conversion of convertible notes payable compared to $306,641 for the six months ended June 30, 2020.

The decrease of $306,641 related to the loss on extinguishment which was recorded upon the conversion of the convertible notes payable in 2020 for the difference

between the carrying value of the convertible notes, unamortized debt discount, and the fair value of the embedded put option, and the fair value of common shares issued.

Liquidity and Capital Resources

NRx Pharmaceuticals has generated no revenues, has incurred operating losses since inception, and expects to continue to incur significant operating losses for the foreseeable future and may never become profitable.

Until such time as NRx Pharmaceuticals is able to establish a revenue stream from the sale of its therapeutic products, NRx Pharmaceuticals is dependent upon obtaining necessary equity and/or debt financing to continue operations.

NRx Pharmaceuticals cannot make any assurances that sales of ZYESAMI will commence in the near term or that additional financings will be available to it and, if available, on acceptable terms or at all.

This could negatively impact NRx Pharmaceuticals' business and operations and could also lead to the reduction of NRx Pharmaceuticals' operations.

Reverse Recapitalization Merger and Subsequent Equity Issuances

Pursuant to the terms of the Merger Agreement, NeuroRx’s securityholders (including option holders and warrant holders) who own NeuroRx securities immediately prior to the Effective Time will have the contingent right to receive their pro rata portion of (i) an aggregate of 25,000,000 shares of Common Stock (“Earnout Shares”) if, prior to December 31, 2022, the NeuroRx COVID-19 Drug (i.e., ZYESAMI) receives emergency use authorization by the Food and Drug Administration (“FDA”) and NeuroRx submits and the FDA files for review a new drug application for the NeuroRx COVID-19 Drug (i.e., ZYESAMI) (the occurrence of the foregoing, the “Earnout Shares Milestone”), and (ii) an aggregate of $100,000,000 in cash (“Earnout Cash”) upon the earlier to occur of (x) FDA approval of the NeuroRx COVID-19 Drug (i.e., ZYESAMI) and the listing of the NeuroRx COVID-19 Drug in the FDA’s “Orange Book” and (y) FDA approval of the NeuroRx Antidepressant Drug Regimen (i.e., NRX-100/101) and the listing of the NeuroRx Antidepressant Drug Regimen (i.e., NRX-100/101) in the FDA’s “Orange Book,” in each case prior to December 31, 2022 (the occurrence of either of clauses (x) or (y), the “Earnout Cash Milestone”).

From the inception of the ZYESAMI drug development program NRx Pharmaceuticals had funded all operating expenses related to the US development of ZYESAMI and the portion of corporate overhead attributable to that program from the Relief Agreement.

The proceeds recorded as “Reimbursement of expenses from Relief Therapeutics” amounted to $771,244 for the six months ended June 30, 2021.

Pursuant to the Relief Agreement, NRx Pharmaceuticals is responsible for not exceeding the Relief Product trial budget of $8.3 million by more than 30% (approximately $10.7 million) for the original sample size of 144 participants (the “ Initial Budget ”).

In October 2020, the study’s Data Safety Monitoring Board and statistical consultant advised NRx Pharmaceuticals to increase the size of the study to at least 200 participants, resulting in an additional $4 million in potential study costs.

The Relief Agreement states that costs of drug formulation, manufacture, CMC, stability, etc., are not included within the Initial Budget, however, Relief is required to fund the costs of formulation, stability, and manufacturing at MedisourceRx, Bachem, and Nephron Pharmaceuticals.

The Relief Agreement states that in the event Relief does not approve additional overages to the Initial Budget, NRx Pharmaceuticals shall be free to bring in other parties in order to complete the aviptadil study.

The Relief Agreement further provides for Relief to fund the costs associated with the clinical development of the inhaled Relief Product in the United States in reliance upon NRx Pharmaceuticals' agreement to conduct, manage, supervise and oversee its clinical development.

Should Relief not fund the costs associated with the clinical development of the inhaled Relief Product in the United States, then NRx Pharmaceuticals shall have the freedom to bring a replacement investor.

Relief has declined to pay approximately $6 million in invoiced costs associated with conduct of the IV trial, reformulation, and manufacture of ZYESAMI incurred subsequent to December 31, 2020.

Relief has additionally declined to fund the costs of the inhaled ZYESAMI product.

NRx Pharmaceuticals has initiated the inhaled use clinical trial with other capital.

Reverse Recapitalization Merger

Pursuant to the terms of the Merger Agreement, NeuroRx’s securityholders (including option holders and warrant holders) who own NeuroRx securities immediately prior to the Effective Time will have the contingent right to receive their pro rata portion of (i) an aggregate of 25,000,000 shares of Common Stock (“Earnout Shares”) if, prior to December 31, 2022, the NeuroRx COVID-19 Drug (i.e., ZYESAMI TM ) receives emergency use authorization by the Food and Drug Administration (“FDA”) and NeuroRx submits and the FDA files for review a new drug application for the NeuroRx COVID-19 Drug (i.e., ZYESAMI TM ) (the occurrence of the foregoing, the “Earnout Shares Milestone”), and (ii) an aggregate of $100,000,000 in cash (“Earnout Cash”) upon the earlier to occur of (x) FDA approval of the NeuroRx COVID-19 Drug (i.e., ZYESAMI TM ) and the listing of the NeuroRx COVID-19 Drug in the FDA’s “Orange Book” and (y) FDA approval of the NeuroRx Antidepressant Drug Regimen (i.e., NRX-100/101) and the listing of the NeuroRx Antidepressant Drug Regimen (i.e., NRX-100/101) in the FDA’s “Orange Book,” in each case prior to December 31, 2022 (the occurrence of either of clauses (x) or (y), the “Earnout Cash Milestone”).

If the Earnout Shares Milestone is achieved, the Earnout Shares will be issued within five (5) Business Days after the occurrence of the Earnout Shares Milestone.

If the Earnout Cash Milestone is achieved, the Merger Agreement does not require the Earnout Cash to be delivered to NeuroRx securityholders within any specified period of time, and the board of directors of NRx Pharmaceuticals will use its good faith judgment to determine the date to pay the Earnout Cash.

At September 30, 2021, the fair value of the Earnout Cash liability has been estimated to be $26,283,238.

At June 30, 2021, the fair value of the Earnout Cash liability has been estimated to be $25,874,896.

Upon closing of the Merger, the estimated fair value of the Earnout Shares was $255,822,071 with such amount recognized as a deemed dividend.

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The benefit of the contingent right to receive Earnout Cash for option and warrant holders occurs through the Option Exchange Ratio and therefore the amount of Earnout Cash for common stockholders is approximately $88,837,121.

In connection with the Merger, a number of subscribers (each, a “Subscriber”) purchased from the Company an aggregate of 1,000,000 shares of Common Stock (the “PIPE”), for a purchase price of $10.00 per share and an aggregate purchase price of $10,000,000 (the “PIPE Shares”), pursuant to separate subscription agreements (each, a “Subscription Agreement”) entered into prior to the Closing Date.

price of $10,000,000 (the “PIPE Shares”), pursuant to separate subscription agreements (each, a “Subscription Agreement”) entered into prior to the Closing Date.

The Company received $8,100,000 in net proceeds after transaction costs.

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NRx Pharmaceuticals intends to fund ongoing activities by raising additional capital through equity or debt financings.

There can be no assurance that NRx Pharmaceuticals will be successful in raising that additional capital or that such capital, if available, will be on terms that are acceptable to NRx Pharmaceuticals.

If NRx Pharmaceuticals is unable to raise

sufficient additional capital, NRx Pharmaceuticals may be compelled to reduce the scope of its operations and planned capital expenditures.

The Company sold 3,238,338 and 3,642,515 shares of common stock during the three and nine months ended September 30, 2021, respectively, generating gross proceeds of $31,134,816 and $39,624,175, respectively.

The Company issued 2,334,370 and 3,830,586 shares of common stock pursuant to warrants and Unit Purchase Options exercised during the three and nine months ended September 30, 2021, and received gross proceeds from the warrant exercise of $9,199,471 and $16,699,489, respectively.

The Company issued 634,045 and 834,045 shares of common stock for consulting services during the three and nine months ended September 30, 2021, respectively.

The Company sold 292,534 and 343,378 shares of common stock during the three and nine months ended September 30, 2020 and received gross proceeds of $1,412,067 and $1,589,092, respectively.

The Company issued 1,138,199 shares of common stock to settle the notes conversion during the three and nine months ended September 30, 2020 and recorded a loss of $306,641.

Cash Flow Summary for the nine months ended September 30, 2021 and 2020

There can be no assurance that NRX will be successful in raising that additional capital or that such capital, if available, will be on terms that are acceptable to NRx Pharmaceuticals.

If NRx Pharmaceuticals is unable to raise sufficient additional capital, NRx Pharmaceuticals may be compelled to reduce the scope of its operations and planned capital expenditures.

Prior to the Merger, the Company sold 62,366 shares of common stock during the three months ended June 30, 2021 and received gross proceeds of $1,436,274.

The Company sold 398,647 shares of common stock during the six months ended June 30, 2021 and received gross proceeds of $8,363,132.

In addition, 1,496,216 warrants were exercised generating gross proceeds of $7,500,018.

Subsequent to June 30, 2021, NRx Pharmaceuticals received $9,186,316 from the exercise of the GEM Warrant for the purchase of 1,833,596 shares.

NRx Pharmaceuticals’ research programs beyond 2021 would require additional funding either from sales of product or from external investment.

NRx Pharmaceuticals cannot make any assurances that sales of ZYESAMI will commence in 2021 or that additional financings will be available to it and, if available, on acceptable terms or at all.

This could negatively impact NRx Pharmaceuticals' business and operations and could also lead to the reduction of NRx Pharmaceuticals' operations.

Cash Flow Summary for the six months ended June 30, 2021 and 2020

The following table shows a summary of NRx Pharmaceuticals' cash flows for each of the periods shown below:

Nine months ended September 30,

Six months ended June 30,

2021 (As restated)

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Operating activities

During the nine months ended September 30, 2021, operating activities used $26,423,097 of cash, primarily resulting from a net loss of $62,655,819, reduced by non-cash charges of $40,192,959, including $21,365,641 of non-cash settlement expense related to the GEM Warrant, $12,775,511 of non-cash consulting fees paid in common stock, $6,214,853 of stock-based compensation expense and $763,043 change in fair value of earn out liability, partially offset by $822,539 of gain from the change in fair value of warrant liabilities, $120,810 of gain on the extinguishment of debt;

During the six months ended June 30, 2021, operating activities used $14,408,126 of cash, primarily resulting from a net loss of $25,606,487, reduced by non-cash charges of $8,906,806, including $21,365,641 of non-cash settlement expense related to the GEM Warrant, $4,655,028 of stock-based compensation expense, $354,701 of change in fair value of earnout cash liability, partially offset by $120,810 of gain on the extinguishment of debt, and $17,359,009 of gain from the change in fair value of warrant liabilities;

and a decrease in operating assets and liabilities of $2,558,445.

During the nine months ended September 30, 2020, operating activities used $1,858,294 of cash, primarily resulting from a net loss of $6,649,481, reduced by non-cash charges of $3,449,286, including $2,689,684 of warrant expense for warrants issued to board members for services, $306,641 of loss on conversion of notes payable, $373,018 of stock-based compensation expense, $35,198 of non-cash interest expense, and $16,475 of amortization of debt discount.

During the six months ended June 30, 2020, operating activities used $728,272 of cash, primarily resulting from a net loss of $1,487,769, partially reduced by non-cash charges of $559,516, including $306,641 of loss on conversion of notes payable, $26,992 of non-cash interest expense, $182,269 of stock-based compensation expense, and $16,454 of amortization of debt discount.

Investing activities

During the nine months ended September 30, 2021, investing activities used $6,612 of cash, primarily resulting from the purchase of computer equipment.

There were no investing activities for the nine months ended September 30, 2020.

During the six months ended June 30, 2021, investing activities used $2,783 of cash, primarily resulting from the purchase of computer equipment.

There were no investing activities for the six months ended June 30, 2020.

Financing activities

During the nine months ended September 30, 2021, financing activities provided $63,454,765 of cash, primarily resulting from $27,358,223 from the issuance of common stock and preferred investment options in private placement, $16,699,489 from the issuance of common stock for the exercise of the GEM Warrants, and $11,049,628 for the effect of the Merger, net of transaction costs, and $9,623,899 from the issuance of shares of NRx Pharmaceuticals common stock, partially

offset by a $1,100,000 repayment of notes payable assumed in the Merger and a $176,474 repayment of a note payable plus accrued and unpaid interest with a related party.

During the nine months ended September 30, 2020, financing activities provided $2,268,630 of cash, primarily resulting from $1,589,103 of proceeds from the issuance of shares of NRx Pharmaceuticals common and preferred stock and $629,523 of proceeds from notes payable.

During the six months ended June 30, 2021, financing activities provided $25,938,728 of cash, primarily resulting from $8,489,082 from the issuance of shares of NRx Pharmaceuticals common stock, $7,500,018 of the issuance of common stock for the partial exercise of the GEM Warrant, and $11,049,628 for the effect of the Merger, net of transaction costs, partially offset by a $1,100,000 repayment of notes payable.

During the six months ended June 30, 2020, financing activities provided $846,836 of cash, primarily resulting from $619,842 of proceeds from notes payable and $226,994 of proceeds from the issuance of shares of NRx Pharmaceuticals common stock.

Contractual Obligations and Commitments

See Note 10, Commitments and Contingencies, of the notes to NRx Pharmaceuticals’ unaudited condensed consolidated financial statements as of and for the three months ended and nine months ended September 30, 2021 included elsewhere in this report for further discussion of NRx Pharmaceuticals' commitments and contingencies.

See Note 9, Commitments and Contingencies, of the notes to NRx Pharmaceuticals’ unaudited condensed consolidated financial statements for the three months ended and six months ended June 30, 2021 included elsewhere in this report for further discussion of NRx Pharmaceuticals' commitments and contingencies.

Milestone Payments

Pursuant to the legal settlement with Sarah Herzog Memorial Hospital Ezrat Nashim (“SHMH”) in September 2018, which included the license of intellectual property rights from SHMH, an ongoing royalty of 1% to 2.5% of NRX-101 gross sales shall be due to SHMH, together with milestone payments of $250,000, upon completion of phase 3 trials and commercial sale of NRX-101.

Pursuant to the legal settlement with SHMH in September 2018, which included the license of intellectual property rights from SHMH, an ongoing royalty of 1% to 2.5% of NRX-101 gross sales shall be due to SHMH, together with milestone payments of $250,000, upon completion of phase 3 trials and commercial sale of NRX-101.

The milestone payments for developmental and commercial milestones range from $100,000 to $750,000.

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Critical Accounting Policies and Significant Judgments and Estimates

NRx Pharmaceuticals' management’s discussion and analysis of its financial condition and results of operations is based on its financial statements, which have been prepared in accordance with GAAP.

NRx Pharmaceuticals' management’s discussion and analysis of its financial condition and results of operations is based on its financial statements, which have been prepared in accordance with U.S.

The preparation of these financial statements requires NRx Pharmaceuticals to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of expenses during the reporting period.

In accordance with GAAP, NRx Pharmaceuticals evaluates its estimates and judgments on an ongoing basis.

In accordance with U.S.

GAAP, NRx Pharmaceuticals evaluates its estimates and judgments on an ongoing basis.

The most significant estimates relate to the valuation of conversion features of convertible notes and common stock, the valuation of stock options and warrants and the valuation allowance of deferred tax assets resulting from net operating losses.

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Warrant liabilities

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”).

The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own common stock and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification.

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Earnout Cash liability

The fair value of the Earnout Cash liability has been estimated using probability-weighted discounted cash flow models (DCFs) with significant inputs that are not observable in the market, including probability of achievement, and thus represents a Level 3 fair value measurement as defined in ASC 820.

The fair value of the Earnout Cash liability has been estimated using probability-weighted discounted cash flow models (DCFs) with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820.

The DCFs incorporate Level 3 inputs including estimated discount rates that we believe market participants would consider relevant in pricing and the projected timing and amount of cash flows, which are estimated and developed, considering the uncertainties associated with the obligations.

This liability is most sensitive to change based on progress of clinical trials, results of such trials, ability to complete the patent application process, assessment of likelihood of approval from the FDA and United States Patent Office, and remaining time to December 31, 2022.

Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.

Quantitative and Qualitative Disclosures About Market Risk.

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

What changed 10-Q/A

Item 2. Management’s Discussion and Analysis