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Item 2. Management’s Discussion and Analysis

2023-11-14 compared with 2023-08-14 · 131 added, 66 removed, 187 unchanged (51% of the section changed)

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(“NRx Pharmaceuticals” or the “Company”).

NRx Pharmaceuticals is a clinical stage pharmaceutical company that is developing, through its wholly owned operating subsidiary, NeuroRx, NRX-100 and NRX-101, the first oral therapeutic for the treatment of Bipolar Depression in patients with Acute Suicidal Ideation and Behavior (ASIB) and Sub-Acute Suicidal Ideation and Behavior (“SSIB”).

NRX-100 and NRX-101 were developed based upon 30 years of basic science and clinical expertise contributed by Dr.

Daniel Javitt, MD, PhD, related to the role of the brain’s N-methyl-D-aspartate (“NMDA”) receptor in regulating human thought processes in general and in regulating depression and suicidality.

The NRX-100 and NRX-101 investigational therapy begins with a single dose of ketamine (NRX-100), a Food & Drug Administration (“FDA”) approved anesthetic, followed by approximately six weeks of daily oral NRX-101.

NRX-101 is being developed as a rapid-onset and sustained treatment for bipolar depression with ASIB and SSIB.

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

The Company is a clinical-stage pharmaceutical company which applies innovative science to known molecules to develop life-saving medicines through its wholly-owned operating subsidiary, NeuroRx.

The Company’s foundation product, NRX-101 (D-cycloserine/Lurasidone), for the treatment of bipolar depression in patients with suicidality, has been awarded Fast Track designation, Breakthrough Therapy designation, a Special Protocol Agreement, and a Biomarker Letter of Support by the U.S.

Food and Drug Administration (the “FDA”).

NRX-101 is covered by multiple U.S.

and foreign patents, including a Composition of Matter patent (U.S.

10,583,138) that was transferred to NRx Pharmaceuticals by Glytech, LLC.

NRX-101 has been awarded Fast Track designation, Breakthrough Therapy designation, a Biomarker Letter of Support, and a Special Protocol Agreement by the FDA.

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● In 2018, the FDA provided a Letter of Support to the Company encouraging the development of Glutamine+Glutamate (Glx) as a pharmacodynamic biomarker for depression.

The letter referenced published and unpublished data demonstrating a significant association between clinical symptoms of depression and levels of brain Glx.

The letter referenced published

and unpublished data demonstrating a significant association between clinical symptoms of depression and levels of brain Glx.

● In the STABIL-B Phase 2 trial, the Phase 2 portion of the Phase 2b/3 trial, patients with bipolar depression and ASIB received either NRX-101 or lurasidone after an intravenous infusion of NRX-100 (ketamine).

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all patients are being treated in an outpatient setting.

● The Company is nearing completion of enrollment of the originally-targeted 70 participants in the Phase 2b/3 trial of NRX-101 in TRBD;

enrollment will continue through November to increase study power.

Consolidated NRX-101 Program in Suicidal Treatment-Resistant Bipolar Depression

Safety Monitoring Board (the “DSMB”) regarding the ongoing Phase IIb/3 clinical study of NRX-101 for the treatment of severe bipolar depression in patients with SSIB, the Company is evaluating changes to its registrational program for NRX-101 and will seek to consolidate patients originally expected to enroll in the ASIB study into the currently enrolling Phase IIb/3 trial.

● Based on the comments and guidance from the FDA in its Type B meeting regarding the registrational Acute Suicidality trial and a potentially broader indication, as well as guidance the Company received from the Data Safety Monitoring Board (the “DSMB”) regarding the ongoing Phase IIb/3 clinical study of NRX-101 for the

treatment of severe bipolar depression in patients with SSIB, the Company is evaluating changes to its registrational program for NRX-101 and will seek to consolidate patients originally expected to enroll in the ASIB study into the currently enrolling Phase IIb/3 trial.

This would potentially allow registration of NRX-101 for Suicidal Treatment-Resistant Bipolar Depression, regardless of the mechanism of stabilization.

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● The US population of patients with Suicidal Treatment Resistant Bipolar Depression is estimated to be between 700,000 and 1,000,000 people.

● We expect top-line data from this trial in the fourth quarter of 2023.

● We expect top-line data from this trial in early 2024.

NRX-101 Indication – Post Traumatic Stress Disorder

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● In a preclinical PTSD study, D-cycloserine, a component of NRX-101, demonstrated the ability to extinguish recurring images of traumatic events, also known as fear memory, in a validated WKY model of PTSD.

Licensure of a US Patent to Support Use of NRX-101

The Company has entered into a License Agreement with Apkarian Technologies to in-license US Patent 8,653,120 that claims the use of D-cycloserine for the treatment of chronic pain in exchange for a commitment to pay milestones and royalties as development milestones are reached in the field of chronic pain.

The patent is supported by extensive nonclinical data and early clinical data that suggest the potential for NMDA antagonist drugs, such as NRX-101 to decrease both chronic pain and neuropathic pain while potentially decreasing craving for opioids.

The Company has signed an agreement with Dr.

Vania Apkarian, Professor of Physiology, Anesthesia, Surgery, and Neuroscience Institute, Northwestern University Feinberg School of Medicine to join the NRx Pharmaceuticals Scientific Advisory Board (SAB).

As of September 30, 2023, the Company has recorded $0.2 million worth of expenses relating to the licensure of the patent recorded in R&D patents expense on the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Financial Results

Since inception, NRx Pharmaceuticals has incurred significant operating losses.

For the three months ended June 30, 2023 and 2022, NRx Pharmaceuticals’ net loss was $8.7 million and $7.0 million, respectively.

For the six months ended June 30, 2023 and 2022, NRx Pharmaceuticals’ net loss was $19.8 million and $20.4 million, respectively.

As of June 30, 2023, NRx Pharmaceuticals had an accumulated deficit of $242.8 million.

For the three months ended September 30, 2023 and 2022, NRx Pharmaceuticals’ net loss was $6.1 million and $9.1 million, respectively.

For the nine months ended September 30, 2023 and 2022, NRx Pharmaceuticals’ net loss was $25.8 million and $29.5 million, respectively.

As of September 30, 2023, NRx Pharmaceuticals had an accumulated deficit of $248.8 million.

Going Concern

The Company’s ongoing clinical activities continue to generate losses and net cash outflows from operations.

The Company plans to pursue additional equity or debt financing or refinancing opportunities in 2023 to fund ongoing clinical activities, to meet obligations under its current debt arrangements and for the general corporate purposes of the Company.

Such arrangements may take the form of loans, equity offerings, strategic agreements, licensing agreements, joint ventures or other agreements.

The sale of equity could result in additional dilution to the Company’s existing shareholders.

The Company cannot make any assurances that additional financing will be available to it and, if available, on acceptable

terms, or that it will be able to refinance its existing debt obligations which could negatively impact the Company’s business and operations and could also lead to a reduction in the Company’s operations.

We will continue to carefully monitor the impact of our continuing operations on our working capital needs and debt repayment obligations.

As such, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least twelve months from the date of issuance of these unaudited condensed consolidated financial statements.

The Company may raise substantial additional funds, and if it does so, it may do so through one or more of the following:

issuance of additional debt or equity and/or the completion of a licensing or other commercial transaction for one of the Company’s product candidates.

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

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary if the Company is unable to continue as a going concern.

Nasdaq Listing Requirements

On July 20, 2023, we received a written notification (the “Notice”) from the Nasdaq Stock Market LLC (“Nasdaq”) indicating that NRx Pharmaceuticals is not in compliance with Nasdaq Listing Rule 5450(b)(2)(A) – Market Value of Listed Securities (“MVLS”) because the Company had not maintained a minimum MVLS of $50,000,000 for the last thirty-three (33) consecutive business days.

Pursuant to Nasdaq Listing Rule 5810(c)(3)(C), we have been provided an initial compliance period of 180 calendar days, or until January 22, 2024, to regain compliance with the MVLS requirement.

To regain compliance, our MVLS must meet or exceed $50,000,000 for a minimum period of ten consecutive business days prior to January 22, 2024.

If we do not regain compliance within the allotted compliance period Nasdaq will provide notice that our shares of common stock will be subject to delisting and may potentially be traded on the Over-the-Counter market thereafter.

On October 17, 2023, we received formal notice from the Nasdaq Listing Qualifications Staff (the “Staff”) indicating that, based upon our non-compliance with the minimum bid price requirement for continued listing on The Nasdaq Global Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Rule”), our securities were subject to delisting unless we timely request a hearing before the Nasdaq Hearings Panel (the “Panel”).

The Company has now been granted a hearing date of January 4, 2024 at which the Company will present its plan for achieving Nasdaq continued listing requirements.

The Nasdaq has invited the Company to submit a short-form written response detailing that compliance plan, which at Nasdaq’s election may substitute for the January 4 hearing.

The Company has submitted this short form plan to the Nasdaq.

We are diligently working to evidence compliance with the Rule;

however, there can be no assurance that the Panel will determine to continue the Company’s listing or that the Company will be able to evidence compliance with the applicable listing criteria within the time period of any extension that may be granted by the Panel.

Components of Results of Operations

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General and administrative expenses consist primarily of salaries, stock-based compensation, consultant fees, and professional fees for legal and accounting services.

Results of operations for the three months ended June 30, 2023 and 2022

Results of operations for the three months ended September 30, 2023 and 2022

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

Three months ended June 30,

Three months ended September 30,

Operating expenses:

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General and administrative

Settlement expense

Total operating expenses

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Interest income

Interest expense

Change in fair value of convertible note payable

Change in fair value of warrant liabilities

Change in fair value of Earnout Cash liability

Total other (income) expenses

Research and development expenses

For the three months ended June 30, 2023, NRx Pharmaceuticals recorded $3.9 million of research and development expenses compared to $3.0 million for the three months ended June 30, 2022.

The increase of $0.9 million is related primarily to an increase of $1.3 million in clinical trials and development expenses related to the NRX-101 program for Suicidal Treatment-Resistant Bipolar Depression and $0.1 million in shipping, freight, and delivery costs, partially offset by a decrease of $0.4 million related to fees paid to regulatory and process development consultants, and $0.1 million in stock-based compensation .

The research and development expenses for the three months ended June 30, 2023 and 2022, respectively, include $0.1 million and $0.2 million, respectively, of non-cash stock-based compensation.

For the three months ended September 30, 2023, NRx Pharmaceuticals recorded $3.3 million of research and development expenses compared to $4.1 million for the three months ended September 30, 2022.

The decrease of $0.8 million is related primarily to a decrease of $0.5 million in clinical trials and development expenses related to the NRX-101 program for Suicidal Treatment-Resistant Bipolar Depression, a decrease of $0.4 million related to fees paid to regulatory and process development consultants, a decrease of $0.1 million in shipping, freight, and delivery costs, a decrease of $0.1 million in other regulatory and process development costs, partially offset by an increase of $0.2 million related to licensure of a US Patent with Apkarian Technologies and an increase of $0.1 million in stock-based compensation .

The research and development expenses for the three months ended September 30, 2023 and 2022, respectively, includes less than $0.1 million and less than $0.1 million, respectively, of non-cash stock-based compensation.

General and administrative expenses

For the three months ended June 30, 2023, NRx Pharmaceuticals recorded $4.1 million of general and administrative expenses compared to $6.6 million for the six months ended June 30, 2022.

The decrease of $2.5 million is related primarily to a decrease of $1.0 million in insurance expenses, $0.7 million in consultant fees, $0.7 million in legal, professional and accounting fees, $0.3 million in stock-based compensation expense, partially offset by an increase in $0.2 million in employee expenses.

The general and administrative expenses for the three months ended June 30, 2023 and 2022, respectively, include $0.4 million and $0.8 million, respectively, of non-cash stock-based compensation.

For the three months ended September 30, 2023, NRx Pharmaceuticals recorded approximately $2.5 million of general and administrative expenses compared to approximately $5.0 million for the three months ended September 30, 2022.

The decrease of $2.5 million is related primarily to a decrease of $1.3 million in insurance expenses, $0.9 million in employee expenses, $0.2 million in stock-based compensation expense, $0.3 million in legal, professional and accounting fees partially offset by an increase of other general and administrative expenses of $0.2 million.

The general and administrative expenses for the three months ended September 30, 2023 and 2022, respectively, include $0.3 million and $0.5 million, respectively, of non-cash stock-based compensation.

Other (income) expenses

Interest income

For the three months ended June 30, 2023, NRx Pharmaceuticals recorded $0.1 million of interest income compared to less than $0.1 of interest income for the three months ended June 30, 2022.

The increase of $0.1 million is due to the Company’s money market account.

For the three months ended September 30, 2023, NRx Pharmaceuticals recorded of $0.1 million interest income compared to $0.1 million of interest income for the three months ended September 30, 2022.

The interest income increased by less than $0.1 million due to the interest earned in the Company’s money market account.

Change in fair value of convertible note payable

For the six months ended June 30, 2023, NRx Pharmaceuticals recorded a loss of $0.7 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

For the three months ended September 30, 2023, NRx Pharmaceuticals recorded a loss of approximately $0.4 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

Change in fair value of warrant liabilities

For the three months ended June 30, 2023, NRx Pharmaceuticals recorded a loss of less than $0.1 million in fair value of warrant liabilities compared to a gain of $0.1 million for the three months ended June 30, 2022.

The decrease of $0.1 million related to the decrease in the fair value of certain Substitute Warrants and the Private Placement Warrants assumed pursuant to the Merger Agreement.

Change in fair value of earnout cash liability

For the three months ended June 30, 2023, NRx Pharmaceuticals recorded no change in fair value of the earnout cash liability compared to a gain of $2.5 million for the three months ended June 30, 2022.

The earnout cash milestones were not achieved by December 31, 2022 and therefore the earnout cash liability expired.

The gain for the three months ended June 30, 2022 related to the decrease in fair value of the earnout cash liability.

Results of operations for the six months ended June 30, 2023 and 2022

For the three months ended September 30, 2023, NRx Pharmaceuticals recorded a gain of less than $0.1 million in fair value of warrant liabilities compared to a loss of less than $0.1 million for the three months ended September 30, 2022.

The gain of less than $0.1 million related to the increase in the fair value of certain Substitute Warrants and the Private Placement Warrants assumed pursuant to the Merger Agreement.

Results of operations for the nine months ended September 30, 2023 and 2022

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

Six Months Ended June 30,

Nine Months Ended September 30,

Operating expenses:

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Research and development expenses

For the six months ended June 30, 2023, NRx Pharmaceuticals recorded $7.5 million of research and development expenses compared to $8.4 million for the six months ended June 30, 2022.

The decrease of $0.9 million is related primarily to a decrease of $0.6 million in clinical trials and development expenses related to ZYESAMI, $0.5 million related to fees paid to regulatory and process development consultants, $0.2 million in stock-based compensation, partially offset by an increase in $0.2 million in other regulatory and process development costs and $0.2 million in shipping, freight, and delivery costs.

The research and development

expenses for the six months ended June 30, 2023 and 2022, respectively, include $0.2 million and $0.4 million, respectively, of non-cash stock-based compensation.

For the nine months ended September 30, 2023, NRx Pharmaceuticals recorded $10.8 million of research and development expenses compared to approximately $12.6 million for the nine months ended September 30, 2022.

The decrease of $1.7 million is related primarily to a decrease of $1.0 million in clinical trials and development expenses related to ZYESAMI, $0.9 million related to fees paid to regulatory and process development consultants, $0.2 million in stock-based compensation, partially offset by an increase of $0.2 related to licensure of a US Patent with Apkarian Technologies, $0.1 million in other regulatory and process development costs, and $0.1 million in shipping, freight, and delivery costs.

The research and development expenses for the nine months ended September 30, 2023 and 2022, respectively, include $0.3 million and $0.5 million, respectively, of non-cash stock-based compensation.

General and administrative expenses

For the six months ended June 30, 2023, NRx Pharmaceuticals recorded $9.9 million of general and administrative expenses compared to $16.9 million for the six months ended June 30, 2022.

The decrease of $7.0 million is related primarily to a decrease of $4.6 million in legal, professional and accounting fees, $1.6 million in insurance expenses, $0.9 million in stock-based compensation expense, $0.4 million in consultant fees, partially offset by an increase in $0.5 million in employee expenses.

The general and administrative expenses for the six months ended June 30, 2023 and 2022, respectively, include $1.0 million and $1.9 million, respectively, of non-cash stock-based compensation.

For the nine months ended September 30, 2023, NRx Pharmaceuticals recorded $12.3 million of general and administrative expenses compared to approximately $21.9 million for the nine months ended September 30, 2022.

The decrease of $9.5 million is related primarily to a decrease of $4.9 million in legal, professional and accounting fees, $2.8 million in insurance expenses, $1.1 million in stock-based compensation expense, $0.5 million in consultant fees, $0.4 million in employee expenses partially offset by

an increase of $0.2 in other general and administrative expenses.

The general and administrative expenses for the nine months ended September 30, 2023 and 2022, respectively, include $1.3 and $2.4 million, respectively, of non-cash stock-based compensation.

Other (income) expenses

Interest income

For the six months ended June 30, 2023, NRx Pharmaceuticals recorded $0.3 million of interest income compared to less than $0.1 of interest income for the six months ended June 30, 2022.

The increase of $0.3 million is due to the Company’s money market account.

For the nine months ended September 30, 2023, NRx Pharmaceuticals recorded $0.4 million of interest income compared $0.1 of interest income for the nine months ended September 30, 2022.

The increase of $0.3 million is due to interest earned in the Company’s money market account.

Change in fair value of convertible note payable

For the six months ended June 30, 2023, NRx Pharmaceuticals recorded a loss of $2.4 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

For the nine months ended September 30, 2023, NRx Pharmaceuticals recorded a gain of approximately $2.8 million related to the change in fair value of the convertible note payable which is accounted for under the fair value option.

Change in fair value of warrant liabilities

For the six months ended June 30, 2023, NRx Pharmaceuticals recorded a gain of less than $0.1 million related to the change in fair value of the warrant liabilities compared to a gain of $0.3 million for the six months ended June 30, 2022.

For the nine months ended September 30, 2023, NRx Pharmaceuticals recorded a gain of less than $0.1 million related to the change in fair value of the warrant liabilities compared to a gain of $0.2 million for the nine months ended September 30, 2022.

The decrease of $0.2 million 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 six months ended June 30, 2023, NRx Pharmaceuticals recorded no change in fair value of the earnout cash liability compared to a gain of $4.6 million for the six months ended June 30, 2022.

For the nine months ended September 30, 2023, NRx Pharmaceuticals recorded no change in fair value of the earnout cash liability compared to a gain of $4.6 million for the nine months ended September 30, 2022.

The earnout cash milestones were not achieved by December 31, 2022 and therefore the earnout cash liability expired.

The gain for the six months ended June 30, 2022 related to the decrease in fair value of the earnout cash liability.

The gain for the nine months ended September 30, 2022 related to the decrease in fair value of the earnout cash liability.

Liquidity and Capital Resources

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

On March 8, 2023, NRx Pharmaceuticals entered into a securities purchase agreement with certain accredited investors (the “March Investors”), providing for the issuance and sale of 3,866,666 shares of the Company’s common stock (“Common Stock”) and warrants to purchase up to 3,866,666 shares of Common Stock (the “March Investor Warrants”) in a registered direct offering priced at-the-market under Nasdaq rules for a purchase price of $0.75 per share (the “March

The March Investors have agreed not to transfer the Common Stock for six months following the date of issuance.

The March Investor Warrants have an exercise price of $0.75 per share, are initially exercisable beginning six months following the date of issuance (the “March Initial Exercise Date”) and will expire 5 years from the March Initial Exercise Date.

Streeterville Note

On November 4, 2022, we issued an 9% redeemable promissory note (as amended, the “Note”) to Streeterville Capital, LLC, a Utah limited liability company (“Streeterville”), for an aggregate principal amount of $11.0 million.

The Note matures 18 months from the date of issuance subject to certain acceleration provisions.

The Note carries an original issue discount of $1.0 million which was deducted from the principal balance of the Note.

The net proceeds from the issuance of the Note was $10.0 million after transaction costs including the original issue discount, legal and other fees are included.

The Company has the option to prepay the Note during the term by paying an amount equal to 110% of the principal, interest, and fees owed as of the prepayment date.

The noteholder has the right to redeem up to $1.0 million of the outstanding balance of the Note per month starting six months after the issuance date.

Payments may be made by the Company at their option in:

(i) in cash with a 10% premium for the amount redeemed, (ii) by paying the redemption amount in the form of shares of Common Stock with the number of redemption shares being equal to the portion of the applicable redemption amount divided by the Redemption Conversion Price (as defined below), or (iii) a combination of

cash and shares of common stock.

The “Redemption Conversion Price” on any given redemption date equals 85% multiplied by the average of the two lowest daily volume weighted average prices per share of the common stock during the ten trading days immediately preceding the date that the noteholder delivers notice electing to redeem a portion of the Note.

Beginning May 1, 2023, in the event (a) the daily dollar trading volume of the common stock of the Company on any given trading day is at least fifty percent (50%) greater than the lower of (i) the median daily dollar trading volume over the previous ten (10) trading days or (ii) the daily dollar trading volume on the trading day immediately preceding the date of measurement or (b) if the closing trade price on any given trading day is at least thirty percent (30%) greater than the Nasdaq Minimum Price, then the lender will be entitled to redeem over the following ten (10) trading days an amount of indebtedness then outstanding under the Note equal to twice the monthly redemption amount of $1.0 million solely by payment by stock, if permitted under the agreement, subject to the Maximum Percentage (as defined in the Note) and other ownership limitations.

On March 30, 2023, the Company entered into an Amendment to the Note (the “First Amendment”), pursuant to which the Maximum Percentage was set at 9.99% of the number of shares of Common Stock outstanding on a given date.

On July 7, 2023, the Company entered into Amendment #2 to the Note with Streeterville (the “Second Amendment”).

Pursuant to the Second Amendment, the Company agreed to amend the redemption provisions of the Note to provide that the Company would pay to Streeterville an amount in cash equal to $1,800,000 on or before July 10, 2023, which amount was paid on July 10, 2023.

In addition, the Company agreed that, beginning on or before July 31, 2023, and on or before the last day of each month until December 31, 2023 (the “Minimum Payment Period”), we would pay Streeterville an amount equal to $400,000 in cash (a “Minimum Payment”), less any amount satisfied by the delivery of Redemption Conversion Shares (as defined below).

Notwithstanding the foregoing, Streeterville may also submit a request for redemption of up to an aggregate of $1,000,000 per month (the “Maximum Monthly Redemption Amount” and, together with the Minimum Payment Amount, the “Redemption Amounts”) in accordance with the terms of the Note.

However, the portion of each Minimum Payment that is not satisfied by the delivery of Redemption Conversion Shares is the maximum amount of cash we will be required to pay in accordance with the Second Amendment during the Minimum Payment Period.

The redemption of the Maximum Monthly Redemption Amount in excess of the Minimum Amount may be satisfied by the delivery of additional Redemption Conversion Shares.

During the Minimum Payment Period, the Company is permitted to pay the Redemption Amounts in the form of shares of common stock of the Company (the “Redemption Conversion Shares”) calculated on the basis of the Redemption Conversion Price (as defined in the Note) without regard to the existence of an Equity Conditions Failure.

Moreover, the Redemption Premium (as defined in the Note) will continue to apply to the Redemption Amounts.

March Offering

The March Investors agreed not to transfer the Common Stock for six months following the date of issuance.

The March Investor Warrants have an exercise price of $0.75 per share, were initially exercisable beginning six months following the date of issuance (the “March Initial Exercise Date”) and will expire 5 years from the March Initial Exercise Date.

The aggregate gross proceeds to the Company from the March Offering were approximately $2.9 million.

The Company intends to use the net proceeds from such offering for working capital and general corporate purposes.

The closing of the sale of these securities occurred on March 9, 2023.

Alvogen License Agreement

On June 2, 2023, the Company entered into a License Agreement (the “License Agreement”) with Alvogen Pharma US, Inc., Alvogen, Inc.

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The term of the license is, on a country-by-country basis, 20 years from the first commercial sale of NRX-101 in such country, extendable by Alvogen for a two-year period upon its request made prior to the expiration of such 20-year period.

During the term of the License Agreement, the parties have agreed (on behalf of themselves and their affiliates) not to research, develop, seek or obtain any regulatory approval for the manufacturing, marketing, sale, or other commercialization of any product containing a fixed dose combination of D-cycloserine and lurasidone in the treatment of bipolar depression with suicidality, nor to authorize or assist (including by investing in or otherwise providing funding to) any third party to do so.

During the term of the License Agreement, the parties have agreed (on behalf of themselves and their affiliates) not to research, develop, seek or

obtain any regulatory approval for the manufacturing, marketing, sale, or other commercialization of any product containing a fixed dose combination of D-cycloserine and lurasidone in the treatment of bipolar depression with suicidality, nor to authorize or assist (including by investing in or otherwise providing funding to) any third party to do so.

During the term of the License Agreement, NRx is permitted to develop additional products containing D-cycloserine in combination with one or more other active antidepressant or antipsychotic ingredients for use outside of the field of treatment of bipolar depression with suicidality, such as in post-traumatic stress disorder (PTSD) or chronic pain in depression, in which case, if NRx wishes to license rights to develop or commercialize such additional products or indications, Alvogen has a right of first negotiation to obtain such a license.

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Alvogen has also agreed to pay the Company royalties based on the net sales of NRX-101.

June Offering

On June 6, 2023, the Company entered into a securities purchase agreement with institutional investors (the “June Investors”), providing for the issuance and sale of 9,670,002 shares of the Company’s Common Stock and warrants to purchase up to 9,670,002 shares of Common Stock (the “June Investor Warrants”).

The Common Stock was issued in a registered direct offering for a purchase price of $0.65 per share (the “June Offering”) and the June Investor Warrants were offered pursuant to a private placement under Section 4(a)(2) of the Securities Act.

The June Investor Warrants have an exercise price of $0.6525 per share, are initially exercisable beginning six months following the date of issuance (the “June Initial Exercise Date”) and will expire five and one half years from the date of issuance.

The aggregate net proceeds to the Company from the June Offering were approximately $6.28 million.

The Company intends to use the net proceeds from the June offering for working capital and general corporate purposes.

NRx Pharmaceuticals believes that it does not currently have sufficient funds and, if necessary, the ability to reduce expenditures, to support operations through at least the next twelve months from the date of this quarterly report.

NRx Pharmaceuticals is dependent upon obtaining necessary equity and/or debt financing to continue operating.

NRx Pharmaceuticals cannot make any assurances that additional financing will be available to it on acceptable terms or at all.

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

At The Market Offering

On August 14, 2023, we entered into an At The Market Offering Agreement (the “Sales Agreement”) with H.C.

Wainwright & Co., LLC (“Wainwright”), as sales agent, pursuant to which we may offer and sell, from time to time through Wainwright, shares of Common Stock having an aggregate offering price of up to $2,000,000 (the “ATM Shares”).

Upon delivery of an issuance notice and subject to the terms and conditions of the Sales Agreement, Wainwright may sell the ATM Shares by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act.

We are not obligated to make any sales of the ATM Shares under the Sales Agreement.

The offering pursuant to the Sales Agreement will terminate upon the earlier of (i) the issuance and sale of all the sale of the ATM Shares reaching an aggregate offering amount equal to $2,000,000, or (ii) the termination of the Sales Agreement as permitted therein.

The Company will pay Wainwright a commission rate of up to 3.0% of the aggregate gross proceeds from each sale of ATM Shares and has agreed to provide Wainwright with customary indemnification and contribution rights.

The Company will also reimburse Wainwright for certain specified expenses in connection with entering into the Sales Agreement.

For the three months ended September 30, 2023, we did not sell any shares of Common Stock.

August Offering

On August 28, 2023, the Company entered into a securities purchase agreement (the “Preferred Stock Securities Purchase Agreement”) with certain purchasers (the “August Investors”), pursuant to which the Company issued 3,000,000 shares of the Company’s Series A Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), and one (1) investor warrant (each an “August Investor Warrant”) for every share of Series A Preferred Stock issued.

The shares of Series A Preferred Stock and the August Investor Warrants were offered pursuant to a private placement under Section 4(a)(2) of the Securities Act.

Each August Investor Warrant entitles the holder to purchase one (1) share of Common Stock at a purchase price of $0.40 per share.

The aggregate purchase price for each share of Series A Preferred Stock and associated August Investor Warrant was $0.40.

The August Investor Warrants are exercisable starting on the six month

anniversary of the date of issuance and will have a term of five years from the date of issuance.

The August Investor Warrants may also be exercised during the initial six-month period after issuance, at the option of the August Investors, if the closing share price of the Common Stock equals or exceeds $1.20 per share on any trading day.

The aggregate proceeds to the Company from the private placement was approximately $1.2 million before expenses.

The following table presents selected financial information and statistics for each of the periods shown below:

June 30, 2023

September 30, 2023

December 31, 2022

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Total stockholders' (deficit) equity

September 30,

Statement of Cash Flow Data:

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Operating activities

During the six months ended June 30, 2023, operating activities used $13.9 million of cash, primarily resulting from a net loss of $19.8 million, reduced by (a) net non-cash losses of $3.9 million, including $2.4 million in change in fair value of convertible promissory note and $1.2 million of stock-based compensation, and (b) changes in operating assets and liabilities of $1.9 million.

During the six months ended June 30, 2022, operating activities used $25.2 million of cash, primarily resulting from a net loss of $20.4 million, increased by net non-cash gains of $2.5 million, including $4.6 million of gain from the change in fair value of earn out liability and $0.3 million of gain from the change in fair value of warrant liabilities, partially offset by $2.3 million of stock-based compensation expense, and an increase in net operating assets of $2.2 million.

During the nine months ended September 30, 2023, operating activities used approximately $18.5 million of cash, primarily resulting from a net loss of $25.8 million, reduced by (a) net non-cash losses of $4.6 million, including $2.8 million in change in fair value of convertible promissory note and $1.6 million of stock-based compensation, and (b) changes in operating assets and liabilities of $2.7 million.

During the nine months ended September 30, 2022, operating activities used $31.4 million of cash, primarily resulting from a net loss of $29.5 million, increased by net non-cash gains of $2.0 million, including $4.6 million of gain from the change in fair value of earn out liability and $0.2 million of gain from the change in fair value of warrant liabilities, partially offset by $2.9 million of stock-based compensation expense, and an increase in net operating assets of $0.1 million.

Financing activities

During the six months ended June 30, 2023, financing activities provided $8.8 million of cash resulting from $8.1 million in proceeds from issuance of common stock and warrants issued in a private placement, net of issuance costs.

During the six months ended June 30, 2022, financing activities provided $22.1 million of cash resulting from $22.6 million in net proceeds received by the Company from the issuance of common stock and preferred investment options in a private placement partially offset by $0.5 million of repayment of the loan between the Company and Relief Therapeutics Holding S.A.

During the nine months ended September 30, 2023, financing activities provided $7.3 million of cash resulting from $8.1 million in proceeds from issuance of common stock and warrants issued in a private placement, $1.2 million in proceeds from issuance of Series A preferred stock and warrants, partially offset by $2.3 million of repayments of convertible notes net of issuance costs.

During the nine months ended September 30, 2022, financing activities provided $22.1 million of cash resulting from $22.6 million in net proceeds received by the Company from the issuance of common stock and preferred investment options in a private placement partially offset by $0.5 million of repayment of the loan between the Company and Relief Therapeutics loan.

Contractual Obligations and Commitments

See Note 7, Debt, and Note 8, Commitments and Contingencies, of the notes to the Company’s unaudited condensed consolidated financial statements as of and for the three months ended June 30 , 2023 included elsewhere in this report for further discussion of the Company’s commitments and contingencies.

See Note 7, Debt, and Note 8, Commitments and Contingencies, of the notes to the Company’s unaudited condensed consolidated financial statements as of and for the nine months ended September 30 , 2023 included elsewhere in this report for further discussion of the Company’s commitments and contingencies.

Milestone Payments

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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”).

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.

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.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis