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Item 1A. Risk Factors

2021-03-24 compared with 2019-09-24 · 1107 added, 1537 removed, 107 unchanged (96% of the section changed)

An investment in our common stock involves

a high degree of risk.

You should carefully consider the risks described below, together with all of the other information included

in this report, before making an investment decision.

If any of the following risks actually occurs, our business, financial condition

or results of operations could suffer.

In that case, the trading price of our shares of common stock could decline, and you may

lose all or part of your investment.

You should read the section entitled “Forward-Looking Statements”

discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context

of this Annual Report.

Risk Related to Our Business

Our product candidates are in early

stages of clinical testing.

Our product candidates are still in the

early stages of clinical testing.

None has gone beyond the Phase 1/Phase 2a stage and FDA approval requires that a drug candidate

complete a Phase 3 study program, to test the safety and efficacy of the drug candidate on a large sample of patients.

between a Phase 1 study and a Phase 3 study and subsequent filing of a NDA can be several years.

We will need to commit substantial

time and additional resources to conducting further nonclinical studies and clinical trials before we can submit an NDA with respect

to any of these product candidates.

We cannot predict with any certainty if or when we might submit an NDA for regulatory approval

of any of our product candidates.

We have generated no revenue from

commercial sales to date and our future profitability is uncertain.

We have a limited operating history and

our business is subject to all of the risks inherent in the establishment of a new business enterprise.

Our likelihood of success

must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection

Since we began our business, we have focused on research, development and clinical trials of product candidates, and

have incurred significant losses since inception and generated no product revenues.

If we continue to incur operating losses and

fail to become a profitable company, we may be unable to continue our operations.

We expect to continue to operate at a net loss

for at least the next several years as we continue our research and development efforts, continue to conduct clinical trials and

develop manufacturing, sales, marketing and distribution capabilities.

There can be no assurance that the products under development

by us will be approved for sales in the US or elsewhere.

Furthermore, there can be no assurance that if such products are approved

they will be successfully commercialized, and the extent of our future losses and the timing of our profitability are highly uncertain.

International commercialization of

our product candidates faces significant obstacles.

We may plan to commercialize some of our

products internationally through collaborative relationships with foreign partners.

We have limited foreign regulatory, clinical

and commercial resources.

Future partners are critical to our international success.

We may not be able to enter into collaboration

agreements with appropriate partners for important foreign markets on acceptable terms, or at all.

Future collaborations with foreign

partners may not be effective or profitable for us.

We will need to obtain approvals from the appropriate regulatory, pricing and

reimbursement authorities to market any of our proposed products internationally, and we may be unable to obtain foreign regulatory

Pursuing foreign regulatory approvals will be time-consuming and expensive.

The regulations can vary among countries

and foreign regulatory authorities may require different or additional clinical trials than we conducted to obtain FDA approval

for our product candidates.

In addition, adverse clinical trial results, such as death or injury due to side effects, could jeopardize

not only regulatory approval, but if approval is granted, may also lead to marketing restrictions.

Our product candidates may also

face foreign regulatory requirements applicable to controlled substances.

We need to raise additional capital

to operate our business.

We are a company focused on product development

and have not generated any product revenues to date.

Until, and if, we receive approval from the FDA and other regulatory authorities

for our product candidates, we cannot sell our drugs and will not have product revenues.

Therefore, for the foreseeable future,

we will have to fund all of our operations and capital expenditures from the net proceeds of future offerings and grants.

capital requirements will depend on many factors.

If we experience unanticipated cash requirements, we may need to seek additional

sources of financing, which may not be available on favorable terms, if at all.

If we do not succeed in raising additional funds

on acceptable terms, we may be unable to complete planned nonclinical studies and clinical trials or obtain approval of our product

candidates from the FDA and other regulatory authorities.

In addition, we could be forced to discontinue product development, reduce

or forego sales and marketing efforts and attractive business opportunities, or discontinue operations.

We have a history of losses and we

may never achieve or sustain profitability.

We have incurred substantial losses since

our inception, and we may not achieve profitability for the foreseeable future, if at all.

Since inception, we have an accumulated

deficit of approximately $111.7 million at June 30, 2019.

The Company has cash and cash equivalents of approximately $9.2 million

at June 30, 2019.

Even if we succeed in developing and commercializing one or more of our product candidates, we expect to incur

substantial net losses and negative cash flows for the foreseeable future due in part to increasing research and development expenses,

including clinical trials, and increasing expenses from leasing additional facilities and hiring additional personnel.

we will need to generate significant revenues in order to achieve and maintain profitability.

We may not be able to generate these

revenues or achieve profitability in the future.

Even if we do achieve profitability, we may not be able to sustain or increase

profitability.

We have a limited operating history

upon which to base an investment decision.

Our limited operating history may limit

your ability to evaluate our prospects due to our limited historical financial data and our unproven potential to generate profits.

You should evaluate the likelihood of financial and operational success in light of the risks, uncertainties, expenses and difficulties

associated with an early-stage business, many of which may be beyond our control, including:

our potential inability to continue to undertake preclinical studies, pharmaceutical development and clinical trials,

our potential inability to obtain regulatory approvals, and

our potential inability to manufacture, sell and market our products.

Our operations have been limited to organizing

and staffing, on a limited basis, our company, acquiring, developing and securing our proprietary technology and undertaking preclinical

studies and early stage clinical trials of our principal product candidates.

These operations provide a limited basis for you to

assess our ability to commercialize our product candidates and the advisability of investing in our common stock.

If we fail to obtain the capital

necessary to fund our operations, we will be unable to continue or complete our product development and you will likely lose your

entire investment.

The Company has cash and cash equivalents

of approximately $9.2 million at June 30, 2019, which will not be sufficient to capitalize the development and commercialization

of d-methadone and we will need to continue to seek capital from time to time to continue the development and to acquire and develop

other product candidates.

Our first product is not expected to be commercialized until at least 2023 and the revenues it will

generate may not be sufficient to fund our ongoing operations.

Accordingly, we believe that we will need to raise substantial

additional capital to fund our continuing operations and the development and commercialization of our product candidates in or

before the end of calendar year 2020.

Our business or operations may change in a manner that would consume available funds more

rapidly than anticipated and substantial additional funding may be required to maintain operations, fund expansion, develop new

or enhanced products, acquire complementary products, business or technologies or otherwise respond to competitive pressures and

opportunities, such as a change in the regulatory environment or a change in preferred depression treatment modalities.

we may need to accelerate the growth of our sales capabilities and distribution beyond what is currently envisioned and this would

require additional capital.

However, we may not be able to secure funding when we need it or on favorable terms.

raise adequate funds to satisfy our capital requirements, we will have to delay, scale-back or eliminate our research and development

activities, clinical studies or future operations.

We may also be required to obtain funds through arrangements with collaborators,

which arrangements may require us to relinquish rights to certain technologies or products that we otherwise would not consider

relinquishing, including rights to future product candidates or certain major geographic markets.

We may further have to license

our technology to others.

This could result in sharing revenues which we might otherwise retain for ourselves.

Any of these actions

may harm our business, financial condition and results of operations.

The amount of capital we may need depends

on many factors, including the progress, timing and scope of our product development programs;

the progress, timing and scope of

our nonclinical studies and clinical trials;

the time and cost necessary to obtain regulatory approvals;

the time and cost necessary

to further develop manufacturing processes and arrange for contract manufacturing;

our ability to enter into and maintain collaborative,

licensing and other commercial relationships;

and our partners’

commitment of time and resource to the development and commercialization

of our products.

We have limited access to the capital markets and even

if we can raise additional funding, we may be required to do so on terms that are dilutive to you.

We have limited access to the capital markets

to raise capital.

The capital markets have been unpredictable in the recent past for unprofitable companies such as ours.

it is generally difficult for companies to raise capital under current market conditions.

The amount of capital that a company

such as ours is able to raise often depends on variables that are beyond our control.

As a result, we may not be able to secure

financing on terms attractive to us, or at all.

If we are able to consummate a financing arrangement, the amount raised may not

be sufficient to meet our future needs.

If adequate funds are not available on acceptable terms, or at all, our business, results

of operations, financial condition and our continued viability will be materially adversely affected.

agreement for our product dextromethadone could terminate under certain circumstances.

business faces significant risks.

You should carefully consider the risks described below, together with all of the other information

included in our filings with the United States Securities and Exchange Commission (SEC) when evaluating our business.

the following risks actually occurs, our business, financial condition or results of operations could be materially adversely

affected and the trading price of shares of our common stock could decline.

The occurrence of any of the following risks could

cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and

those we may make from time to time.

Summary of Risks

This section provides a summary of the

risks that may impact our performance in the future.

For details of our various risk factors and their impacts, see “Risk

Factors Discussion.”

Our risk factors are organized into the

following categories:

1) Risks related to our business, 2) Risks related to clinical and regulatory matters, 3) Risks related

to our intellectual property, 4) Risks related to government regulations, 5) Risks related to our reliance on third parties, and

6) Risks related to our common stock,

Risks related

to our business

Business risks include risks associated

with our products and regulatory approval, licensing agreements, historical losses, managing growth, acquisitions and the COVID-19

In general, the risks related to our business can cause variability in the future profits of the Company.

Risks related

to Clinical and Regulatory Matters

Clinical and regulatory

matters include risks associated with clinical trials and the future ability to commercially market the product.

In order for any

of our products to be commercialized and produce future profits, successful trials need to be completed with supporting data to

receive regulatory approval.

Failing to complete the trial will significantly increase our cost of doing business.

the active ingredient in our products is a controlled substance which can affect the supply available for clinical trials, as well

as commercial sales.

A limited supply could increase the time needed to complete clinical trials and overall costs including product

liability claims.

We could also face potential fines or reputational risk if we do not comply.

Developments from competitors and

the ability to obtain market exclusivity could also negatively impact future profits.

Risks related

to our intellectual property

Our products depend

upon securing and protecting critical intellectual property.

Patent positions are highly uncertain and involve complex legal and

factual questions.

Infringing upon a patents or trade secrets could force us to cease or alter our product development efforts

or obtain a license to continue to develop or sale our products.

These risks could not only impact the future profits of the company

but also create adverse publicity for us.

Risks related

to government regulations

We are required

to comply with various federal and state pharmaceutical and healthcare laws and regulations, and to maintain secure systems to

protect sensitive confidential information.

Complying with the various regulations can increase our cost of doing business.

could also face potential fines or reputational risk if we do not comply.

Litigation or investigations can increase costs, negatively

affect our operating results and create adverse publicity for us.

Risks related

to our reliance on third parties

The Company relies on third parties to

conduct preclinical and clinical studies, as well as to manufacture our product candidates.

Third parties’

failure to perform

the trials as contractually require could impact our ability to obtain regulatory approval.

If manufacturers fail to meet our requirements

and strict regulatory requirements, our product development and commercialization efforts may be materially harmed.

Risks related

to our common stock

Common stocks

risks includes risks associated with the limited market for our common stock, a potential issuance of a substantial number of additional

shares, stock price volatility, and reporting requirements of federal securities laws.

The net effect of these risks can include

reductions in future profits, additional operating expenses, inability to meet liquidity needs, inability to access capital and

increased cost of capital.

Risk Factors Discussion

Related to Our Business

Our business depends on the success

of esmethadone (d-methadone, dextromethadone, REL-1017), our only product candidate currently under clinical development, which

has recently entered into a pivotal clinical trial for the adjunctive treatment of MDD.

If we are unable to obtain regulatory approval

for and successfully commercialize REL-1017 or other future product candidates, or we experience significant delays in doing so,

our business will be materially harmed.

To date, the primary focus of our product

development has been esmethadone (d-methadone, dextromethadone, REL-1017) for the adjunctive treatment of patients with MDD.

esmethadone is our only product candidate under clinical development.

This may make an investment in our company riskier than similar

companies that have multiple product candidates in active development and that therefore may be able to better sustain a setback

of a lead candidate.

Successful continued development and ultimate regulatory approval of esmethadone for the adjunctive treatment

of MDD, and potentially as a monotherapy for MDD, or other indications is critical to the future success of our business.

invested, and will continue to invest, a significant portion of our time and financial resources in the clinical development of

If we cannot successfully develop, obtain regulatory approval for and commercialize esmethadone, we may not be able

to continue our operations.

The future regulatory and commercial success of esmethadone is subject to a number of risks, including

the following:

may not be able to obtain adequate evidence from clinical trials of efficacy and safety for esmethadone for the adjunctive

treatment of MDD, monotherapy for MDD or other indications;

we may not be able

to demonstrate that the benefits of esmethadone for the adjunctive treatment of MDD, monotherapy for MDD or other indications

outweigh the risks;

in our clinical

trials for esmethadone, enrollment may be slower than anticipated and we may need additional clinical trial sites than originally

planned, which could delay our clinical trial progress;

the results of our

clinical trials may not meet the level of statistical or clinical significance required by the FDA or comparable foreign regulatory

authorities for marketing approval;

patients in our

clinical trials may suffer serious adverse effects for reasons that may or may not be related to esmethadone, which could

delay or prevent further clinical development;

the standards implemented

by clinical or regulatory agencies may change at any time and we cannot be certain what efficacy endpoints the FDA or foreign

clinical or regulatory agencies may require in pivotal clinical trials with respect to the adjunctive treatment of MDD, monotherapy

for MDD or any other indication for the approval of esmethadone;

the results of later

stage clinical trials may not be as favorable as the results we have observed to date in our preclinical studies and Phase

1 and 2 clinical trials;

we cannot be certain

of the number and type of clinical trials and preclinical or toxicology studies that the FDA or other regulatory agencies

will require in order to approve esmethadone for the adjunctive treatment of MDD, monotherapy for MDD or any other indication;

we may not have

sufficient financial and other resources to complete the necessary clinical trials for esmethadone, including, but not limited

to, the clinical trials needed to obtain drug approval;

if approved for

the adjunctive treatment of MDD or as a monotherapy for MDD, esmethadone will likely compete with products that may reach

approval prior to esmethadone, products that are currently approved for the adjunctive treatment of MDD or as a monotherapy

for MDD and the off-label use of currently marketed products for MDD;

we may not be able

to obtain, maintain or enforce our patents and other intellectual property rights.

Esmethadone and any future product candidates will be subject to rigorous and extensive clinical

trials and extensive regulatory approval processes implemented by the FDA and comparable foreign regulatory authorities before

obtaining marketing approval from these regulatory authorities, if at all.

The drug development and approval process is lengthy

and expensive, and approval is never certain.

Investigational new drugs, such as esmethadone, may not prove to be safe and effective

in clinical trials.

We have no direct experience as a company in conducting later stage clinical trials required to obtain regulatory

We may be unable to conduct clinical trials at preferred sites, enlist clinical investigators, enroll sufficient numbers

of participants or begin or successfully complete clinical trials in a timely fashion, if at all.

In addition, the design of a

clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial

may not become apparent until the clinical trial is well advanced.

Because we have limited experience as a company designing clinical

trials, we may be unable to design and execute a clinical trial to support regulatory approval.

is a high failure rate for drugs and biological products proceeding through clinical trials.

Failure can occur at any time during

the clinical trial process.

The results of preclinical studies and early clinical trials of esmethadone or any future product

candidate may not be predictive of the results of later-stage clinical studies or trials and the results of studies or trials

in one set of patients or line of treatment may not be predictive of those obtained in another.

In fact, many companies in the

pharmaceutical and biotechnology industries have suffered significant setbacks in late stage clinical trials even after achieving

promising results in preclinical studies and earlier stage clinical trials.

In addition, data obtained from preclinical and clinical

activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval.

Owing in part to the

complexity of biological pathways, esmethadone or any future product candidate may not demonstrate in patients the biochemical

and pharmacological properties we anticipate based on laboratory studies or earlier stage clinical trials, and they may interact

with human biological systems or other drugs in unforeseen, ineffective or harmful ways.

The number of patients exposed to product

candidates and the average exposure time in the clinical development programs may be inadequate to detect rare adverse events

or findings that may only be detected once a product candidate is administered to more patients and for greater periods of time.

To date, our Phase 2 clinical study has involved a small population of subjects with MDD, and, because of the small sample size

in such trial, the results of this clinical trial may be subject to substantial variability and may not be indicative of either

future top-line results or final results.

If we are unable to successfully demonstrate the safety and efficacy of esmethadone

or other future product candidates and receive the necessary regulatory approvals, our business will be materially harmed.

Even if we do receive regulatory approval

to market esmethadone, any such approval may be subject to limitations on the indicated uses or patient populations for which

we may market the products.

Accordingly, even if we are able to obtain the requisite financing to continue to fund our development

programs, we may be unable to successfully develop or commercialize esmethadone.

If we or any of our future development collaborators

are unable to develop, or obtain regulatory approval for, or, if approved, successfully commercialize esmethadone, we may not

be able to generate sufficient revenue to continue our business.

Top-line results may not accurately

reflect the complete results of the clinical study.

In October 2019, we reported top-line data

from our Phase 2a study of esmethadone in adults with MDD who did not respond to one to three courses of antidepressant treatment

in their current episode.

Although the top-line data indicated that subjects experienced statistically significant improvement

of their depression compared to subjects in the placebo group, as well as a favorable safety and tolerability profile, the top-line

data are based on preliminary analysis of key pharmacokinetic, safety and efficacy data, and such data may change following a more

comprehensive review of the data and may not accurately reflect the complete results of the study.

Preliminary data also remain

subject to audit and verification procedures that may result in the final data being materially different from the preliminary

As a result, preliminary data should be viewed with caution until the final data are available.

agreement for esmethadone, our only product candidate currently under clinical development, could terminate under certain circumstances,

including if we terminate our chief executive officer except for cause, and we would be unable to conduct our business as planned.

In January 2018,

we entered into an Intellectual Property Assignment Agreement (the “Assignment Agreement”) and License Agreement

(the “License Agreement”

and together with the Assignment Agreement, the “Agreements”) with Dr.

(the License Agreement and together with the Assignment Agreement, the Agreements), with Dr.

Inturrisi and Dr.

Paolo Manfredi (collectively, the “Licensor”).

Pursuant to the Agreements, Relmada assigned its

existing rights, including patents and patent applications, to d-methadone in the context of psychiatric use (the “Existing

Invention”) to Licensor.

Licensor then granted Relmada under the License Agreement a perpetual, worldwide, and exclusive

license to commercialize the Existing Invention and certain further inventions regarding d-methadone in the context of neurological

and other uses.

In consideration of the rights granted to Relmada under the License Agreement, Relmada will pay Licensor an upfront,

non-refundable license fee of $180,000.

Additionally, Relmada will pay Licensor $45,000 every three months until the earliest

to occur of the following events:

(i) the first commercial sale of a licensed product anywhere in the world, (ii) the expiration

or invalidation of the last to expire or be invalidated of the patent rights anywhere in the world, or (iii) the termination of

Manfredi (collectively, the “Licensor”).

Pursuant to the Assignment Agreement, we assigned our existing rights, including

patents and patent applications, to esmethadone in the context of psychiatric use to Licensor, and pursuant to the License Agreement,

Licensor then granted us an exclusive perpetual, worldwide license under the assigned intellectual property rights as well as patents

and know-how covering certain new inventions developed by Licensor and relating to esmethadone in neurological and other uses,

to develop and commercialize esmethadone in all fields of use.

The License Agreement also grants to us rights in all future inventions

developed by Licensor, whether or not in collaboration with us that relate in any way to esmethadone or the use thereof.

Agreement was amended in December 2019 to modify certain termination rights relating to the Chief Executive Officer, which are

described further below.

If we develop

any new inventions relating to esmethadone, we are required to do so in collaboration with Licensor, and to file patents covering

such inventions jointly in the name of the Company and Licensor.

All such future inventions or patents shall be jointly owned by

us and Licensor and, will be included in and subject to the financial and other terms of the License Agreement.

The License Agreement

Relmada will also pay Licensor tiered royalties with a maximum rate of 2%, decreasing to 1.75%, and 1.5%

in certain circumstances, on net sales of licensed products covered under the License Agreement.

Relmada will also pay Licensor

tiered payments up to a maximum of 20%, and decreasing to 17.5%, and 15% in certain circumstances, of all consideration received

by Relmada for sublicenses granted under the License Agreement.

The License Agreement may terminate under certain circumstances,

including bankruptcy, failure to perform certain covenants (including, but not limited, to payment obligations and certain key

man provisions regarding our CEO), and invalidation or unenforceability of patent rights.

Risks Related to Clinical and Regulatory Matters

If we or our potential collaborators

fail to obtain the necessary regulatory approvals, or if such approvals are limited, we and our potential collaborators will not

be allowed to commercialize our drug candidates, and we will not generate product revenues.

Satisfaction of all regulatory requirements

for commercialization of a drug candidate typically takes many years, is dependent upon the type, complexity and novelty of the

drug candidate, and requires the expenditure of substantial resources for research and development.

Our research and clinical approaches

may not lead to drugs that the FDA considers safe for humans and effective for indicated uses we are studying.

The FDA may require

additional studies, in which case we or our collaborators would have to expend additional time and resources and would likely delay

the date of potentially receiving regulatory approval.

The approval process may also be delayed by changes in government regulation,

future legislation or administrative action or changes in FDA policy that occur prior to or during our regulatory review.

in obtaining regulatory approvals would:

delay commercialization of, and product revenues from, our drug candidates;

diminish the competitive advantages that we may have otherwise enjoyed, which would have an adverse effect on our operating results and financial condition.

Even if we or our collaborators comply

with all FDA regulatory requirements, our drug candidates may never obtain regulatory approval.

If we or our collaborators fail

to obtain regulatory approval for any of our drug candidates we will have fewer commercial products, if any, and corresponding

lower product revenues, if any.

Even if our drug candidates receive regulatory approval, such approval may involve limitations

on the indications and conditions of use or marketing claims for our products.

Further, later discovery of previously unknown

problems or adverse events could result in additional regulatory restrictions, including withdrawal of products.

The FDA may also

require us or our collaborators to commit to perform lengthy Phase 4 post-approval clinical efficacy or safety studies.

Our expending

additional resources on such trials would have an adverse effect on our operating results and financial condition.

In jurisdictions outside the United States,

we or our collaborators must receive marketing authorizations from the appropriate regulatory authorities before commercializing

Regulatory approval processes outside the United States generally include all of the aforementioned requirements and

risks associated with FDA approval.

If we or our collaborators are unable

to design, conduct and complete clinical trials successfully, our drug candidates will not be able to receive regulatory approval.

In order to obtain FDA approval for any

of our drug candidates, we or our collaborators must submit to the FDA an NDA that demonstrates with substantive evidence that

the drug candidate is both safe and effective in humans for its intended use.

This demonstration requires significant research

and animal tests, which are referred to as preclinical studies, as well as human tests, which are referred to as clinical trials.

Results from Phase 1 clinical programs

may not support moving a drug candidate to Phase 2 or Phase 3 clinical trials.

Phase 3 clinical trials may not demonstrate the

safety or efficacy of our drug candidates.

Success in preclinical studies and early clinical trials does not ensure that later

clinical trials will be successful.

Results of later clinical trials may not replicate the results of prior clinical trials and

preclinical studies.

Even if the results of Phase 3 clinical trials are positive, we or our collaborators may have to commit substantial

time and additional resources to conducting further preclinical studies and clinical trials before obtaining FDA approval for

any of our drug candidates.

includes standard termination rights for Licensor in the event of our insolvency, challenge of the licensed patents and uncured

material breach of our obligations under the License Agreement.

In addition, the License Agreement contains certain “Key

provisions such that the Licensor may terminate the License Agreement if we terminate the employment of our Chief Executive

Sergio Traversa for any reason other than for specified causes determined by a majority of our Board of Directors (including

fraud, gross negligence, unauthorized use of our confidential information, conduct including harassment or discrimination, breach

of fiduciary duty or uncured material breach), or if we (a) substantially modify Mr.

Traversa’s job responsibilities or decision-making

rights in connection with the development and commercialization of esmethadone, (b) remove him from the role of Chief Executive

Officer other than in connection with a permitted change-of-control transaction, (c) materially reduce his compensation, or (d)

assign or transfer our rights under the License Agreement or the esmethadone intellectual property without Mr.

Traversa’s

consent, in each case (termination or the events in (a) through (d) during the period commencing on the effective date and ending

on the later of five years from the original effective date of the License Agreement on December 31, 2022 (the “Key Man Term”).

The December 2019 amendment to the License Agreement made certain clarifications to the nature of a termination for Cause, including

to clarify that termination due to Mr.

Traversa’s death or disability does not give Licensor the right to terminate the License

a result of the provisions described above, we are limited in our ability to terminate, as well as to decrease the salary or authority

of, our Chief Executive Officer until December 31, 2022.

In addition, the agreement provides that any assignor that we assign

the agreement to must agree in writing to all terms of the license, including the key man provisions, and as noted above, our

Chief Executive Officer has the right to consent to any such assignment of the agreement unless previously terminated for cause

or due to death.

As the license agreement relates to our only product candidate currently under clinical development, these provisions may

be deemed to have an anti-takeover effect and may delay, deter or prevent a tender offer or takeover attempt that a stockholder

might consider to be in its best interests, including attempts that might result in a premium being paid over the market price

for the shares held by stockholders.

If we fail to comply with the terms of the License Agreement, our rights to those patents

may be terminated, and we will be unable to conduct our business.

have generated no revenue from commercial sales to date and our future profitability is uncertain.

have a limited operating history and our business is subject to all of the risks inherent in the establishment of a new business

Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays

frequently encountered in connection with this.

Since we began our business, we have focused on research, development and clinical

trials of product candidates, and have incurred significant losses since inception and generated no product revenues.

If we continue

to incur operating losses and fail to become a profitable company, we may be unable to continue our operations.

We expect to continue

to operate at a net loss for at least the next several years as we continue our research and development efforts, continue to

conduct clinical trials and develop manufacturing, sales, marketing and distribution capabilities.

There can be no assurance that

the products under development by us will be approved for sales in the US or elsewhere.

Furthermore, there can be no assurance

that if such products are approved they will be successfully commercialized, and the extent of our future losses and the timing

of our profitability are highly uncertain.

International

commercialization of our product candidates faces significant obstacles.

may plan to commercialize some of our products internationally through collaborative relationships with foreign partners.

limited foreign regulatory, clinical and commercial resources.

Future partners are critical to our international success.

not be able to enter into collaboration agreements with appropriate partners for important foreign markets on acceptable terms,

Future collaborations with foreign partners may not be effective or profitable for us.

We will need to obtain approvals

from the appropriate regulatory, pricing and reimbursement authorities to market any of our proposed products internationally,

and we may be unable to obtain foreign regulatory approvals.

Pursuing foreign regulatory approvals will be time-consuming and

The regulations can vary among countries and foreign regulatory authorities may require different or additional clinical

trials than we conducted to obtain FDA approval for our product candidates.

In addition, adverse clinical trial results, such

as death or injury due to side effects, could jeopardize not only regulatory approval, but if approval is granted, may also lead

to marketing restrictions.

Our product candidates may also face foreign regulatory requirements applicable to controlled substances.

have a history of losses and we may never achieve or sustain profitability.

We have incurred substantial losses since

our inception, and we may not achieve profitability for the foreseeable future, if at all.

Since inception, we have an accumulated

deficit of approximately $179.3 million at December 31, 2020.

The Company had cash, cash equivalents and short term investments

of approximately $117.1 million at December 31, 2020.

Even if we succeed in developing and commercializing one or more of our product

candidates, we expect to incur substantial net losses and negative cash flows for the foreseeable future due in part to increasing

research and development expenses, including clinical trials, and increasing expenses from leasing additional facilities and hiring

additional personnel.

As a result, we will need to generate significant revenues in order to achieve and maintain profitability.

We may not be able to generate these revenues or achieve profitability in the future.

Even if we do achieve profitability, we may

not be able to sustain or increase profitability.

have a limited operating history upon which to base an investment decision.

limited operating history may limit your ability to evaluate our prospects due to our limited historical financial data and our

unproven potential to generate profits.

You should evaluate the likelihood of financial and operational success in light of the

risks, uncertainties, expenses and difficulties associated with an early-stage business, many of which may be beyond our control,

our potential inability

to continue to undertake preclinical studies, pharmaceutical development and clinical trials,

our potential inability

to obtain regulatory approvals, and

our potential inability

to manufacture, sell and market our products.

operations have been limited to organizing and staffing, on a limited basis, our company, acquiring, developing and securing our

proprietary technology and undertaking preclinical studies and early stage clinical trials of our principal product candidates.

These operations provide a limited basis for you to assess our ability to commercialize our product candidates and the advisability

of investing in our common stock.

ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

As of December 31, 2020, we had Federal, New York State and

New York City net operating loss (NOL) carryforwards of approximately $72,507,000, $68,854,000 and $68,470,000, respectively, which

begin expiring in 2027, 2032 and 2032, respectively.

federal tax legislation enacted in 2017, informally titled the

Tax Cuts and Jobs Act, or Tax Act, federal NOLs incurred in 2018 and in future years may be carried forward indefinitely, but the

deductibility of such federal NOLs is limited to 80% of taxable income in the year.

It is uncertain if and to what extent various

states will conform to the Tax Act.

Under Sections 382 and 383 of the U.S.

Internal Revenue Code of 1986, as amended, if a corporation

undergoes an “ownership change”

(generally defined as a greater than 50 percentage-point cumulative change (by value)

in the equity ownership of certain stockholders over a rolling three-year period), the corporation’s ability to use its pre-change

NOLs and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited.

We may also experience

ownership changes as a result of stock offerings or as a result of subsequent shifts in our stock ownership, some of which are

outside our control.

We have not completed an analysis to determine whether any such limitations have been triggered.

determined to be triggered, our ability to use our current NOLs and other pre-change tax attributes to offset post-change taxable

income or taxes would be subject to limitation.

We will be unable to use our NOLs if we do not attain profitability sufficient

to offset our available NOLs prior to their expiration.

may not be successful in hiring and retaining key employees.

future operations and successes depend in large part upon the continued service of key members of our senior management team whom

we are highly dependent upon to manage our business, specifically Dr.

Sergio Traversa, our Chief Executive Officer.

If he terminates

employment with us, such a departure would have a material adverse effect on our business.

Our future success also depends on our

ability to identify, attract, hire or engage, retain and motivate other well-qualified managerial, technical, clinical and regulatory

We currently only have 14 full time employees and are likely to hire additional qualified personnel with expertise in

nonclinical pharmacology and toxicology, pharmaceutical development, clinical research, regulatory affairs, manufacturing, sales

and marketing.

We compete for qualified individuals with numerous biopharmaceutical companies, universities and other research

institutions.

Competition for such individuals, particularly in the United States, is intense, and we may not be able to hire sufficient

personnel to support our efforts.

There can be no assurance that these professionals will be available in the market, or that we

will be able to retain existing professionals or to meet or to continue to meet their compensation requirements.

Furthermore, the

cost base in relation to such compensation, which may include equity compensation, may increase significantly, which could have

a material adverse effect on us.

Failure to establish and maintain an effective management team and work force could adversely

affect our ability to operate, grow and manage our business.

our growth as we expand operations may strain our resources.

We expect to need to grow rapidly in order

to support additional, larger, and potentially international, pivotal clinical trials of our drug candidates, which will place

a significant strain on our financial, managerial and operational resources.

In order to achieve and manage growth effectively,

we must continue to improve and expand our operational and financial management capabilities.

Moreover, we will need to increase

staffing and to train, motivate and manage our employees.

may expand our business through the acquisition of rights to new drug candidates that could disrupt our business, harm our financial

condition and may also dilute current stockholders’

ownership interests in our company.

business strategy includes expanding our products and capabilities, and we may seek acquisitions of drug candidates or technologies

Acquisitions involve numerous risks, including substantial cash expenditures;

potentially dilutive issuance of equity

incurrence of debt and contingent liabilities, some of which may be difficult or impossible to identify at the time

of acquisition;

difficulties in assimilating the acquired technologies or the operations of the acquired companies;

our management’s attention away from other business concerns;

risks of entering markets in which we have limited or no direct

and the potential loss of our key employees or key employees of the acquired companies.

cannot assure you that any acquisition will result in short-term or long-term benefits to us.

We may incorrectly judge the value

or worth of an acquired product, company or business.

In addition, our future success would depend in part on our ability to manage

the rapid growth associated with some of these acquisitions.

We cannot assure you that we will be able to make the combination

of our business with that of acquired products, businesses or companies work or be successful.

Furthermore, the development or

expansion of our business or any acquired products, business or companies may require a substantial capital investment by us.

We may not have these necessary funds or they might not be available to us on acceptable terms or at all.

We may also seek to

raise funds by selling shares of our preferred or common stock, which could dilute each current stockholder’s ownership

interest in us.

interruptions could limit our ability to operate our business.

operations as well as those of our collaborators on which we depend are vulnerable to damage or interruption from computer viruses,

human error, natural disasters, electrical and telecommunication failures, international acts of terror and similar events.

have not established a formal disaster recovery plan and our back-up operations and our business interruption insurance may not

be adequate to compensate us for losses we may suffer.

A significant business interruption could result in losses or damages incurred

by us and require us to cease or curtail our operations.

business could be adversely affected by the effects of health epidemics, including the global COVID-19 pandemic.

In December 2019, a novel strain of COVID-19

was reported in China.

Since then, COVID-19 has spread globally, to include the United States.

The spread of COVID-19 has resulted

in the World Health Organization (WHO) declaring the outbreak of COVID-19 as a “pandemic,”

or a worldwide spread of

a new disease, on March 11, 2020.

Many countries around the world have imposed quarantines, travel restrictions, limitations on

gatherings, closures of businesses and other social distancing measures.

local jurisdictions continue to put restrictions in place, our ability to continue to operate our business may also be limited.

Such events may result in a period of business and manufacturing disruption, and in reduced operations, any of which could materially

affect our business, financial condition and results of operations.

The COVID-19 pandemic and efforts to contain

the outbreak have led to economic disruption, including declines in interest rates, extreme volatility in financial markets, fluctuations

in foreign currency exchange rates, reduced economic activity and a sharp increase in unemployment claims.

While the potential

economic impact brought by COVID-19 may be difficult to assess or predict, a more protracted pandemic could result in significant

disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our

In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect our business

and the value of our common shares.

continued spread of COVID-19 globally could also adversely affect our planned clinical trial operations, including our ability

to initiate the trials on the expected timelines and recruit and retain patients and principal investigators and site staff who,

as healthcare providers, may have heightened exposure to COVID-19 if an outbreak occurs in their geography.

Further, the COVID-19

outbreak could result in delays in our clinical trials due to prioritization of hospital resources toward the outbreak, restrictions

in travel, potential unwillingness of patients to enroll in trials at this time, or the inability of patients to comply with clinical

trial protocols if quarantines or travel restrictions impede patient movement or interrupt healthcare services.

In addition, we

rely on independent clinical investigators, contract research organizations and other third-party service providers to assist

us in managing, monitoring and otherwise carrying out our preclinical studies and clinical trials, and the outbreak may affect

their ability to devote sufficient time and resources to our programs or to travel to sites to perform work for us.

Additionally,

COVID-19 may also result in delays in receiving approvals from local and foreign regulatory authorities, delays in necessary interactions

with local and foreign regulators, ethics committees and other important agencies and contractors due to limitations in employee

resources or forced furlough of government employees.

The global outbreak of COVID-19 continues

to rapidly evolve.

The ultimate long-term impact of COVID-19 is highly uncertain and cannot be predicted with confidence.

since COVID-19 is a pandemic, it could materially affect our operations globally, including at our headquarters in the New York

City area and at our future clinical trial sites throughout the globe.

business could be adversely affected by health epidemics in regions where we have significant manufacturing and distribution facilities,

concentrations of clinical trial sites or other business operations.

ultimate impact of the COVID-19 outbreak or a similar health epidemic is highly uncertain and subject to change.

We do not yet

know the full extent of potential delays or impacts on our business, our supply chain, clinical trials, healthcare systems or

the global economy as a whole.

However, these effects could have a material impact on our operations, and, therefore, we will

continue to monitor the COVID-19 situation closely and implement risk mitigation as needed.

Related to Clinical and Regulatory Matters

we or our potential collaborators fail to obtain the necessary regulatory approvals, or if such approvals are limited, we and

our potential collaborators will not be allowed to commercialize our drug candidates, and we will not generate product revenues.

of all regulatory requirements for commercialization of a drug candidate typically takes many years, is dependent upon the type,

complexity and novelty of the drug candidate, and requires the expenditure of substantial resources for research and development.

Our research and clinical approaches may not lead to drugs that the FDA considers safe for humans and effective for indicated

uses we are studying.

The FDA may require studies in addition to those we plan to conduct, in which case we or our collaborators

would have to expend additional time and resources and would likely delay the date of potentially receiving regulatory approval.

The approval process may also be delayed by changes in government regulation, future legislation or administrative action or changes

in FDA policy that occur prior to or during our regulatory review.

Delays in obtaining regulatory approvals would:

delay commercialization

of, and product revenues from, our drug candidates;

diminish the competitive

advantages that we may have otherwise enjoyed, which would have an adverse effect on our operating results and financial condition.

if we or our collaborators comply with all FDA regulatory requirements, our drug candidates may never obtain regulatory approval.

If we or our collaborators fail to obtain regulatory approval for any of our drug candidates we will have fewer commercial products,

if any, and corresponding lower product revenues, if any.

Even if our drug candidates receive regulatory approval, such approval

may involve limitations on the indications and conditions of use or marketing claims for our products.

Further, later discovery

of previously unknown problems or adverse events could result in additional regulatory restrictions, including withdrawal of products.

The FDA may also require us or our collaborators to commit to perform lengthy Phase 4 post-approval clinical efficacy or safety

Our expending additional resources on such trials would have an adverse effect on our operating results and financial

jurisdictions outside the United States, we or our collaborators must receive marketing authorizations from the appropriate regulatory

authorities before commercializing our drugs.

Regulatory approval processes outside the United States generally include all of

the aforementioned requirements and risks associated with FDA approval.

we or our collaborators are unable to design, conduct and complete successful clinical trials, our drug candidates will not be

able to receive regulatory approval.

obtaining regulatory approvals for the commercial sale of any of our product candidates, we must demonstrate through lengthy,

complex and expensive nonclinical testing and clinical trials that the product is both safe and effective for use in each target

from early clinical trials may not support moving a drug candidate to later-stage clinical trials.

Phase 3 clinical trials may

not demonstrate the safety or efficacy of our drug candidates.

Success in preclinical studies and early clinical trials does not

ensure that later clinical trials will be successful.

Results of later clinical trials may not replicate the results of prior

clinical trials and preclinical studies.

Even if the results of Phase 3 clinical trials are positive, we or our collaborators

may have to commit substantial time and additional resources to conducting further preclinical studies and clinical trials before

obtaining FDA approval for any of our drug candidates.

Clinical trials are very expensive and

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Our clinical trials and our future clinical

trials for dextromethadone measure clinical symptoms, such as depression that are not biologically measurable.

The success in clinical

trials depends on reaching statistically significant changes in patients’

symptoms based on clinician-rated scales.

part to a lack of consensus on standardized processes for assessing clinical outcomes, these scores may or may not be reliable,

useful or acceptable to regulatory agencies.

We have no history of developing drug candidates.

We do not know whether any of our planned clinical trials will result in marketable drugs.

In addition, completion of clinical trials

can be delayed by numerous factors, including:

delays in identifying and agreeing on acceptable terms with prospective clinical trial sites;

slower than expected rates of patient recruitment and enrollment;

unanticipated patient dropout rates;

increases in time required to complete monitoring of patients during or after participation in a clinical trial;

Any of these delays could significantly

impact the timing, approval and commercialization of our drug candidates and could significantly increase our overall costs of

drug development.

Even if clinical trials are completed as

planned, their results may not support expectations or intended marketing claims.

The clinical trials process may fail to demonstrate

that our drug candidates are safe and effective for indicated uses.

Such failure would cause us to abandon a drug candidate and

could delay development of other drug candidates.

With respect to the Phase 2a clinical

trial, these discussions are not binding obligations on the part of regulatory authorities.

Regulatory authorities may revise previous

guidance or decide to ignore previous guidance at any time during the course of our clinical activities or after the completion

of our clinical trials.

Even with successful clinical safety and efficacy data, including such data from a clinical trial conducted

pursuant to an SPA, we or our collaborators may be required to conduct additional, expensive clinical trials to obtain regulatory

We may not receive royalty or milestone

revenue under our collaboration and license agreements for several years, or at all.

Certain of our license agreements provide

for payments on achievement of development or commercialization milestones and for royalties on product sales.

However, because

none of our drug candidates has been approved for commercial sale, many of our drug candidates are at early stages of development

and drug development entails a high risk of failure, we may never realize much of the milestone revenue provided for in our collaboration

and license agreements and we do not expect to receive any royalty revenue for several years, if at all.

Similarly, drugs we select

to commercialize ourselves or partner for later stage co-development and commercialization may not generate revenue for several

years, or at all.

Developments by competitors may establish

standards of care that affect our ability to conduct our clinical trials as planned.

Changes in standards related to clinical

trial design could affect our ability to design and conduct clinical trials as planned.

For example, regulatory authorities may

not allow us to compare our drug candidates to placebo in a particular clinical indication where approved products are available.

In that case, both the cost and the amount of time required to conduct a clinical trial could increase.

The DEA limits the availability of

the active ingredients in certain of our current drug candidates and, as a result, quotas for these ingredients may not be sufficient

to complete clinical trials, or to meet commercial demand or may result in clinical delays.

trials for esmethadone measure clinical symptoms, such as depression that are not biologically measurable.

The primary measure

of depression is subjective and can be influenced by factors outside of our control, and can vary widely from day to day for a

particular patient, and from patient to patient and site to site within a clinical study.

The results we have obtained in completed

animal studies or we have observed in our clinical trials conducted to date may not be predictive of results from our future clinical

In addition, clinical trial results from the study of depression are inherently difficult to predict.

have no history of developing drug candidates.

We do not know whether any of our planned clinical trials will result in marketable

addition, completion of clinical trials can be delayed by numerous factors, including:

delays in identifying

and agreeing on acceptable terms with prospective clinical trial sites;

slower than expected

rates of patient recruitment and enrollment;

unanticipated patient

dropout rates;

increases in time

required to complete monitoring of patients during or after participation in a clinical trial;

of these delays could significantly impact the timing, approval and commercialization of our drug candidates and could significantly

increase our overall costs of drug development.

cannot predict whether regulatory agencies will determine that the data from our clinical trials support marketing approval.

The FDA’s and other regulatory agencies’

decision to approve our depression product candidate will depend on our ability to demonstrate with substantial clinical evidence

through adequate well-controlled clinical trials, that the product candidate is effective, as measured statistically by comparing

the overall improvement in depression in actively-treated patients against improvement in depression in the control group (usually

a placebo control).

However, there is a possibility that our data may fail to show a statistically significant difference from

the placebo control or the active control (if applicable).

Alternatively, there is a possibility that our data may be statistically

significant, but that the actual clinical benefit of the product candidates may not be considered to be clinically significant,

clinically relevant or clinically meaningful.

Even if we believe that the data from our trials will support marketing approval

in the United States or in Europe, we cannot predict whether the agencies will agree with our analysis and approve our applications.

by competitors may establish standards of care that affect our ability to conduct our clinical trials as planned.

in standards related to clinical trial design could affect our ability to design and conduct clinical trials as planned.

case, both the cost and the amount of time required to conduct a clinical trial could increase.

DEA through its quota system limits the availability of the active ingredients in certain of our current drug candidates and,

as a result, the Company’s quotas for these ingredients may not be sufficient to complete clinical trials, or to meet commercial

demand or may result in clinical delays.

Drug Enforcement Administration,

or DEA, regulates chemical compounds as Schedule I, II, III, IV or V substances, with Schedule I substances considered to present

the highest risk of substance abuse and Schedule V substances the lowest risk.

Certain active ingredients in our current drug

candidates, such as oxycodone, are listed by the DEA as Schedule II under the Controlled Substances Act of 1970.

Consequently,

their manufacture, research, shipment, storage, sale and use are subject to a high degree of oversight and regulation.

all Schedule II drug prescriptions must be signed by a physician, physically presented to a pharmacist and may not be refilled

without a new prescription.

Furthermore, the amount of Schedule II substances that can be obtained for clinical trials and commercial

distribution is limited by the DEA and quotas for these substances may not be sufficient to complete clinical trials or meet commercial

There is a risk that DEA regulations may interfere with the supply of the drugs used in clinical trials for our product

candidates, and, in the future, the ability to produce and distribute our products in the volume needed to meet commercial demand.

Conducting clinical trials of our

drug candidates or commercial sales of a drug candidate may expose us to expensive product liability claims and we may not be able

to maintain product liability insurance on reasonable terms or at all.

The risk of product liability is inherent

in the testing of pharmaceutical products.

If we cannot successfully defend ourselves against product liability claims, we may

incur substantial liabilities or be required to limit or terminate testing of one or more of our drug candidates.

Our inability

to obtain sufficient product liability insurance at an acceptable cost to protect against product liability claims could prevent

or inhibit the commercialization of our drug candidates.

We currently carry clinical trial insurance but do not carry product liability

If we successfully commercialize one or more of our drug candidates, we may face product liability claims, regardless

of FDA approval for commercial manufacturing and sale.

We may not be able to obtain such insurance at a reasonable cost, if at

Even if our agreements with any current or future corporate collaborators entitle us to indemnification against product liability

losses, such indemnification may not be available or adequate should any claim arise.

or DEA, regulates certain controlled substance chemical compounds as Schedule I, II, III, IV or V substances, with Schedule I substances

considered to present the highest risk of abuse and Schedule V substances the lowest risk.

Esmethadone is the single isomer of

methadone, a Schedule II compound, and its handling (including manufacture, research, shipment, storage, sale and use) is subject

to a high degree of federal and state oversight and regulation.

Furthermore, the amount of Schedule II substances that can be obtained

for clinical trials and commercial distribution is limited by the DEA through its quota system.

Quotas may not be sufficient to

complete clinical trials or meet commercial demand.

There is a risk that federal statutes and DEA regulations concerning applicable

quotas may interfere with the supply of the drugs used in clinical trials for our product candidates, and, in the future, the ability

to manufacture and distribute esmethadone in the volume needed to meet commercial demand.

clinical trials of our drug candidates or commercial sales of a drug candidate may expose us to expensive product liability claims

and we may not be able to maintain product liability insurance on reasonable terms or at all.

risk of product liability is inherent in the testing of pharmaceutical products.

If we cannot successfully defend ourselves against

product liability claims, we may incur substantial liabilities or be required to limit or terminate testing of one or more of

our drug candidates.

Our inability to obtain sufficient product liability insurance at an acceptable cost to protect against product

liability claims could prevent or inhibit the commercialization of our drug candidates.

We currently carry clinical trial insurance

but do not carry product liability insurance.

If we successfully commercialize our drug candidates, we may face product liability

claims, regardless of FDA approval for commercial manufacturing and sale.

We may not be able to obtain such insurance at a reasonable

cost, if at all.

Even if our agreements with any current or future corporate collaborators entitle us to indemnification against

product liability losses, such indemnification may not be available or adequate should any claim arise.

If our drug candidates receive regulatory

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for costly post-marketing follow-up studies.

In addition, if the FDA approves any of our drug candidates, the labeling, packaging,

adverse event reporting, storage, advertising, promotion and record keeping for the drug will be subject to extensive regulatory

requirements.

The subsequent discovery of previously unknown problems with the drug, including but not limited to adverse events

of unanticipated severity or frequency, or the discovery that adverse events previously observed in preclinical research or clinical

trials that were believed to be minor actually constitute much more serious problems, may result in restrictions on the marketing

of the drug, and could include withdrawal of the drug from the market.

In addition, if the FDA approves any of our drug candidates, the manufacturing processes,

labeling, packaging, distribution, post-approval monitoring and adverse event reporting, storage, import, export, advertising,

promotion and record keeping for the drug will be subject to extensive and ongoing regulatory requirements.

The FDA has significant

post-market authority, including the authority to require labeling changes based on new safety information and to require post-market

studies or clinical trials to evaluate safety risks related to the use of a product or to require withdrawal of the product from

The manufacturing facilities used to manufacture our product candidates will also be subject to periodic review and

inspection by the FDA and other regulatory agencies, including for continued compliance with current good manufacturing practices

(cGMPs) requirements.

The discovery of any new or previously unknown problems with our third-party manufacturers, manufacturing

processes or facilities may result in restrictions on the product, manufacturer or facility, including withdrawal of the product

from the market.

Any product promotion and advertising will also be subject to regulatory requirements and continuing regulatory

The FDA imposes stringent restrictions on manufacturers’

communications regarding use of their products.

If we promote

our product candidates in a manner inconsistent with FDA-approved labeling or otherwise not in compliance with FDA regulations,

we may be subject to enforcement action.

If we or our collaborators, manufacturers or service providers fail to comply with applicable

continuing regulatory requirements in the United States or foreign jurisdictions in which we seek to market our products, we or

they may be subject to, among other things, fines, warning or untitled letters, holds on clinical trials, suspension or withdrawal

of regulatory approval, product recalls and seizures, administrative detention of products, refusal to permit the import or export

of products, operating restrictions, injunction, civil penalties and criminal prosecution.

The FDA’s policies may change and

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for extended-release and long-acting opioid analgesics, or ER/LA opioid analgesics.

This REMS will require companies affected

by the REMS to make available training for health care professionals who prescribe ER/LA opioid analgesics on proper prescribing

practices and also to distribute educational materials to prescribers and patients on the safe use of ER/LA opioid analgesics.

We cannot predict the likelihood, nature

or extent of adverse government regulation that may arise from future legislation or administrative action, either in the United

States or abroad.

If we are not able to maintain regulatory compliance, we may be subject to fines, suspension or withdrawal of

regulatory approvals, product recalls, seizure of products, operating restrictions and criminal prosecution.

Any of these events

could prevent us from marketing our drugs and our business could suffer.

If time and resources devoted are limited or there is

a failure to fund the continued development of our drug candidates or there is otherwise a failure to perform as we expect to do,

we may not achieve clinical and regulatory milestones and regulatory submissions and related product introductions may be delayed

or prevented, and revenues that we would receive from these activities will be less than expected.

We may depend on independent investigators

and collaborators, such as universities and medical institutions, to conduct our preclinical and clinical trials under agreements

These investigators and collaborators are not our employees and we cannot control the amount or timing of resources that

they devote to our programs.

They may not assign as great a priority to our programs or pursue them as diligently as we would if

we were undertaking such activities ourselves.

If these investigators or collaborators fail to devote sufficient time and resources

to our drug development programs, or if their performance is substandard, the approval of our regulatory submissions and our introductions

of new drugs will be delayed or prevented.

Our potential collaborators may also have

relationships with other commercial entities, some of which may compete with us.

If outside collaborators assist our competitors

to our detriment, the approval of our regulatory submissions will be delayed and the sales from our products, if any are commercialized,

will be less than expected.

We may not succeed at in-licensing

drug candidates or technologies to expand our product pipeline.

We may not successfully in-license drug

candidates or technologies to expand our product pipeline.

The number of such candidates and technologies is limited.

among large pharmaceutical companies and biopharmaceutical companies for promising drug candidates and technologies is intense

because such companies generally desire to expand their product pipelines through in-licensing.

If we fail to carry out such in-licensing

and expand our product pipeline, our potential future revenues may suffer.

If we fail to obtain or maintain

necessary U.S.

Food and Drug Administration clearances for our products, or if such clearances are delayed, we will be unable to

commercially distribute and market our products.

Our products are subject to rigorous regulation

by the FDA and numerous other federal, state and foreign governmental authorities.

The process of seeking regulatory clearance

or approval to market a depression product is expensive and time consuming and, notwithstanding the effort and expense incurred,

clearance or approval is never guaranteed.

If we are not successful in obtaining timely clearance or approval of our products from

the FDA, we may never be able to generate significant revenue and may be forced to cease operations.

In particular, the FDA permits

commercial distribution of a new depression therapy product only after the product has received approval of a NDA filed with the

FDA pursuant to 21 C.F.R.

314, seeking permission to market the product in interstate commerce in the United States.

NDA process is costly, lengthy and uncertain.

Any NDA application filed by the Company will have to be supported by extensive data,

including, but not limited to, technical, nonclinical, clinical trial, manufacturing and labeling data, to demonstrate to the FDA’s

satisfaction the safety and efficacy of the product for its intended use.

Obtaining clearances or approvals from

the FDA and from the regulatory agencies in other countries could result in unexpected and significant costs for us and consume

management’s time and other resources.

The FDA and other agencies could ask us to supplement our submissions, collect non-clinical

data, conduct additional clinical trials or engage in other time-consuming actions, or they could simply deny our applications.

In addition, even if we obtain an NDA approval or pre-market approvals in other countries, the approval could be revoked or other

restrictions imposed if post-market data demonstrates safety issues or lack of effectiveness.

We cannot predict with certainty

how, or when, the FDA will act.

If we are unable to obtain the necessary regulatory approvals, our financial condition and cash

flow may be adversely affected, and our ability to grow domestically and internationally may be limited.

Additionally, even if

cleared or approved, the Company’s products may not be approved for the specific indications that are most necessary or desirable

for successful commercialization or profitability.

Our clinical trials may fail to demonstrate

adequately the safety and efficacy of our product candidates, which could prevent or delay regulatory approval and commercialization.

Before obtaining regulatory approvals for

the commercial sale of any of our product candidates, we must demonstrate through lengthy, complex and expensive nonclinical testing

and clinical trials that the product is both safe and effective for use in each target indication.

Clinical trial results from

the study of depression, chronic pain (e.g., osteoarthritis and chronic low back pain) and neuropathic pain (e.g., painful diabetic

neuropathy, postherpetic neuralgia and painful HIV-associated neuropathy) are inherently difficult to predict.

The primary measure

of depression is subjective and can be influenced by factors outside of our control, and can vary widely from day to day for a

particular patient, and from patient to patient and site to site within a clinical study.

The results we have obtained in completed

animal studies or we have observed in published clinical trials conducted by third parties of other dosage forms of the same drug

(e.g., sublingual, immediate release oral, parenteral) may not be predictive of results from our future clinical trials.

Additionally,

we may suffer significant setbacks in advanced clinical trials, even after promising results in earlier studies.

We cannot predict whether regulatory

agencies will determine that the data from our clinical trials support marketing approval.

The FDA’s and other regulatory agencies’

decision to approve our depression product candidates will depend on our ability to demonstrate with substantial clinical evidence

through well-controlled clinical trials, that the product candidates are effective, as measured statistically by comparing the

overall improvement in depression in actively-treated patients against improvement in depression in the control group (usually

a placebo control).

However, there is a possibility that our data may fail to show a statistically significant difference from

the placebo-control or the active control.

Alternatively, there is a possibility that our data may be statistically significant,

but that the actual clinical benefit of the product candidates may not be considered to be clinically significant, clinically relevant

or clinically meaningful.

Consequently, we believe that the FDA may consider additional data, such as a “responder”

analysis, secondary efficacy endpoints and even safety when evaluating whether our product can be approved.

We cannot predict whether

the regulatory agencies will find that our clinical trial results provide compelling “responder”

or other secondary

endpoint data.

Even if we believe that the data from our trials will support marketing approval in the United States or in Europe,

we cannot predict whether the agencies will agree with our analysis and approve our applications.

This REMS will require companies affected by

the REMS to make available training for health care professionals who prescribe ER/LA opioid analgesics on proper prescribing practices

and also to distribute educational materials to prescribers and patients on the safe use of ER/LA opioid analgesics.

predict the likelihood, nature or extent of adverse government regulation that may arise from future legislation or administrative

action, either in the United States or abroad.

Fast Track Designation may not lead to a faster development

or regulatory review or approval process.

We have obtained Fast Track Designation for esmethadone for

the adjunctive treatment of MDD.

Fast Track Designation is granted if a drug is intended for the treatment of a serious or life-threatening

condition and the drug demonstrates the potential to address unmet medical needs for this condition.

Fast Track Designation does

not guarantee a faster development process, review or approval compared to conventional FDA procedures.

The FDA may withdraw Fast

Track Designation if it believes that the designation is no longer supported by data from our clinical development program.

We may not be able to obtain marketing

exclusivity under the Hatch-Waxman Amendments or equivalent regulatory data exclusivity protection in other jurisdictions for our

We intend to rely, in part, on Hatch-Waxman

exclusivity for the commercialization of our products in the United States, if approved.

The Hatch-Waxman Amendments provide marketing

exclusivity to the first applicant to gain approval of an NDA under specific provisions of the Federal Food, Drug, and Cosmetic

For esmethadone, which we intend to elect to have not be considered the same active ingredient as methadone and therefore

an NCE, we anticipate obtaining 5-year exclusivity.

If FDA were to determine that we do not meet the requirements to make the election,

we may not be able to obtain 5-year exclusivity for the product.

In addition, under the statute, this election currently may only

be made in an NDA submitted before October 1, 2022.

If we do not submit an NDA before that date or if the statute is not amended

to extend the election, we may not obtain 5-year exclusivity for esmethadone, if approved.

For esmethadone, which is an NCE, we

anticipate obtaining 5-year exclusivity for a product containing an active moiety that the FDA has not previously approved.

There can be no assurance that European

authorities will grant data exclusivity for our products, because it does not contain a new active molecule.

Even if European data

exclusivity is granted for esmethadone, this may not protect us from direct competition.

A competitor(s) with a generic version

of our products may be able to obtain approval of its product during our product’s period of data exclusivity, by submitting

a marketing authorization application (MAA) with a less than full package of nonclinical and clinical data.

We may need to focus our future efforts

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Although our primary strategic interest

is in the areas of depression, dextromethadone has potential benefits in other therapeutic areas.

If our drug development efforts

in depression fails, or if the competitive landscape or investment climate for antidepressant drug development is less attractive,

is in the areas of depression, esmethadone has potential benefits in other therapeutic areas.

If our drug development efforts in

depression fail, or if the competitive landscape or investment climate for antidepressant drug development is less attractive,

we may need to change the company’s strategic focus to include development of our product candidates, or of newly acquired

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substances, the supply of which may be limited by U.S.

government policy and the use of which may generate public controversy.

The active ingredients in our current

product candidates, including levorphanol, buprenorphine and d-methadone are listed by the DEA, as “Controlled Substances”

or schedule substances, under the Controlled Substance Act of 1970.

The DEA regulates chemical compounds as Schedule I, II, III,

IV or V substances, with Schedule I substances considered to present the highest risk of substance abuse and Schedule V substances

the lowest risk.

These product candidates are subject to DEA regulations relating to manufacturing, storage, distribution and

physician prescription procedures.

For example, all regular Schedule II drug prescriptions must be signed by a physician and may

not be refilled.

Some of our drug products (e.g., buprenorphine,

REL-1041) have a less restrictive controlled substance schedule (i.e., within the Schedule III to V range) than Schedule II drugs.

According to the DEA, Schedule V drugs have lower abuse potential than Schedule II, III and IV drugs, Schedule IV drugs have lower

abuse potential than Schedule II and III drugs and Schedule III drugs have lower abuse potential than Schedule II.

However, despite

the foregoing reduced risk of abuse from Schedule III, IV and V drugs, when compared to Schedule II drugs, there is no assurance

that such reduced risk can be demonstrated in well controlled non-clinical and/or clinical studies in models of physical dependence,

psychic dependence, addiction or precipitated withdrawal, or in studies of addiction or abuse liability in opioid addicts, opioid

ex-addicts or recreational drug users.

In the event that a reduced risk of abuse from Schedule III, IV and V drugs, when compared

to Schedule II drugs is demonstrated in well controlled non-clinical and/or clinical studies, there is no assurance that the FDA

will agree to incorporation of such favorable language in the products prescribing information.

Our LevoCap ER is a Schedule II drug in

an abuse resistant, abuse deterrent or tamper resistant dosage form.

Although the dosage form is referred to as abuse resistant,

abuse deterrent or tamper resistant, a determined or persistent abuser can defeat, wholly or partially, the tamper resistance within

the dosage form.

In addition, opioid addicts and recreational opioid users can over time find new methods to defeat the tamper

resistance mechanism within the dosage form.

Although our LevoCap ER is a tamper resistant

dosage form, we may elect to not seek specific language in the prescribing information to describe this feature in order to reduce

the amount of data required for our NDA, the time required to file the NDA and/or the probability of a protracted review process.

The absence of such language in the prescribing information may reduce the commercial value of the product.

Even if we do seek

specific language in the prescribing information to describe the tamper resistance feature, there is no assurance that FDA will

agree to any such language.

statutes and regulations, and the use of which may generate public controversy.

The active ingredients in esmethadone are

listed by the DEA as controlled substances under the Controlled Substances Act of 1970.

The DEA regulates certain drug substances

in Schedule I, II, III, IV or V, with Schedule I substances considered to present the highest risk of substance abuse and Schedule

V substances the lowest risk.

These product candidates are also subject to DEA regulations relating to their handling (i.e., manufacturing,

storage, distribution, prescribing and dispensing procedures).

Products containing controlled substances

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or restrict the introduction and marketing of our product candidates.

Failure to comply with the Drug Enforcement

Administration regulations, or the cost of compliance with these regulations, may adversely affect our business.

A number of our products are opioids and

subject to extensive regulation by the DEA, due to their status as controlled substances or scheduled drugs.

Although d-methadone

is substantially devoid of opioid activity, the DEA may elect to designate it as a controlled substance falling under a Schedule,

up to the Schedule II [C-II].

Any level of DEA scheduling for d-methadone, particularly Schedule II, III or IV, would substantially

reduce commercial interest in d-methadone.

Additionally, d-Methadone is produced by separation from racemic methadone, a scheduled

drug subject to extensive regulation by the DEA.

Failure to comply with the Controlled

Substances Act or DEA regulations, or the cost of compliance with these regulations, may adversely affect our business.

Esmethadone is subject to extensive regulation

Although esmethadone is substantially devoid of opioid activity, and psychotomimetic effects, the DEA may elect to

designate it as a controlled substance falling under a DEA controlled substance Schedule.

Additionally, esmethadone is produced

by separation from racemic methadone, a scheduled drug subject to extensive regulation by the DEA.

The manufacture, shipment, storage, sale

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The DEA limits the availability and production

of all scheduled substances, including dextromethadone, through a quota system.

of all scheduled substances, including esmethadone, through a quota system.

The DEA requires substantial evidence and documentation

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could have a material adverse effect on our business, results of operations, financial condition and prospects.

Some of our products for clinical

trials are manufactured outside the United States including Schedule II controlled substances.

Drug Enforcement Administration regulations

require Scheduled II controlled substances to be manufactured in the United States if the products are to be marketed in the United

There is no guarantee that we will secure a commercial supply agreement with a manufacturer based in the United States.

Switching or adding commercial manufacturing capability can involve substantial cost and require extensive management time and

focus, as well as additional regulatory filings.

In addition, there is a natural transition period when a new manufacturing facility

commences work.

As a result, delays may occur, which can materially impact our ability to meet our desired commercial timelines,

thereby increasing our costs and reducing our ability to generate revenue.

The facilities of any of our future manufacturers

of controlled substances must be approved by the FDA after we submit our NDA and before approval.

We are dependent on the continued

adherence of third party manufacturers to GMP manufacturing and acceptable changes to their process.

If our manufacturers cannot

successfully produce material that conforms to our specifications and the FDA’s strict regulatory requirements, they will

not be able to secure FDA approval for their manufacturing facilities.

If the FDA does not approve these facilities for the commercial

manufacture, we will need to find alternative suppliers, which would result in significant delays in obtaining FDA approvals.

challenges may have a material adverse impact on our business, results of operations, financial condition and prospects.

We manufacture some products outside the

United States for development and to conduct human clinical studies either in the US or outside the US.

These products are for

development purposes only, and not for commercial manufacturing.

If the supplier of active pharmaceutical

ingredient (API) or pharmaceutical excipient fails to provide us sufficient quantities, we may not be able to obtain an alternative

supply on a timely or acceptable basis.

We currently rely on a single source for

our supply of levorphanol.

There are presently no alternative sources of pharmaceutical grade levorphanol.

We may also not be able

to find alternative suppliers in a timely manner that would provide levorphanol at acceptable quantities and prices.

Any interruption

in the supply of levorphanol would disrupt our ability to manufacture LevoCap ER and could have a material adverse effect on our

Currently this single source supplies the API for research and development purposes only.

There is no material agreement

for commercial supply at this time.

Our pharmaceutical excipients and other

API’s are multisource, although not all sources have an active Drug Master File (DMF) with the FDA.

(A DMF is a submission

to the FDA used to provide confidential detailed information about facilities, processes, or articles used in the manufacturing,

processing, packaging, and storing of drugs to support a drug development and approval).

In addition, some of the countries for

our multisource APIs are not the same as our drug manufacturing locations.

Thus, any disruption in supply from our preferred vendor

could result in significant delays with our pharmaceutical development, clinical trials, NDA filing, NDA approval or commercial

sale of the finished product due to contract delays, the need to manufacture a new batch of API, out of specification API, the

need for import and export permits, and the failure of the newly sourced API to perform to the standards of the previously sourced

Our pain product candidates are in

the early stages of development and we have not demonstrated that any of our products can actually treat pain.

Adverse or inconclusive results from pre-clinical

testing or clinical trials of product candidates may substantially delay, or halt entirely, any further development of one or more

of our products.

The projected timetables for continued development of the technologies and related product candidates by us may

otherwise be subject to delay or suspension.

a supplier of an active pharmaceutical ingredient (API) or a pharmaceutical excipient fails to provide us sufficient quantities,

we may not be able to obtain an alternative supply on a timely or acceptable basis.

pharmaceutical excipients and other APIs are multisource, although not all sources have an active Drug Master File (DMF) with

(A DMF is a submission to the FDA used to provide confidential detailed information about facilities, processes, or articles

used in the manufacturing, processing, packaging, and storing of drugs to support drug development and approval).

some of the countries for our multisource APIs are not the same as our drug manufacturing locations.

Thus, any disruption in supply

from our preferred vendor could result in significant delays with our pharmaceutical development, clinical trials, NDA submission,

NDA approval or commercial sale of the finished product due to contract delays, the need to manufacture a new batch of API, out

of specification API, the need for import and export permits, and the failure of the newly sourced API to perform to the standards

of the previously sourced API.

Modifications to our products may

require new NDA approvals.

Once a particular company product receives

FDA approval or clearance, expanded uses or uses in new indications of our products may require additional human clinical trials

and new regulatory approvals or clearances, including additional IND and NDA submissions and premarket approvals before we can

begin clinical development, and/or prior to marketing and sales.

If the FDA requires new clearances or approvals for a particular

use or indication, we may be required to conduct additional clinical studies, which would require additional expenditures and harm

our operating results.

If the products are already being used for these new indications, we may also be subject to significant

enforcement actions.

Conducting clinical trials and obtaining

clearances and approvals can be a time consuming process, and delays in obtaining required future clearances or approvals could

adversely affect our ability to introduce new or enhanced products in a timely manner, which in turn would harm our future growth.

There is no guarantee that the FDA

will grant NDA approval of our future products and failure to obtain necessary clearances or approvals for our future products

would adversely affect our ability to grow our business.

We are currently conducting a Phase 2a

clinical trial for d-methadone and in the future expect to submit an NDA to the FDA for approval of d-methadone for the treatment

of depression.

The FDA may not approve or clear d-methadone or other product candidates for the indications that are necessary

or desirable for successful commercialization.

Indeed, the FDA may refuse our requests for NDA market approval of new products,

new intended uses or indications to existing or future products.

Failure to receive approval for our new products would have an

adverse effect on our ability to expand our business.

Delays in the commencement or completion

of pharmaceutical development, manufacturing or clinical efficacy and safety testing could result in increased costs to us and

delay our ability to generate revenues.

We do not know whether our pharmaceutical

development, manufacturing or clinical efficacy and safety testing will begin on time or be completed on schedule, if at all.

example, we may encounter delays during the manufacture of pilot scale batches including delays with our contract development or

manufacturing organization, sourcing satisfactory quantities of active pharmaceutical ingredient, narcotic import and export permits,

sourcing of excipients, contract disputes with our third party vendors and manufacturers, or failure of the product to meet specification.

Similar delays may occur a during our GMP manufacture of the product.

The commencement and completion of clinical

trials can be disrupted for a variety of reasons, including difficulties in:

recruiting and enrolling patients to participate in a clinical trial;

obtaining regulatory approval to commence a clinical trial;

reaching agreement on acceptable terms with prospective clinical research organizations and trial sites;

manufacturing sufficient quantities of a product candidate;

investigator fraud, including data fabrication by clinical trial personnel;

diversion of controlled substances by clinical trial personnel;

A clinical trial may also be suspended

or terminated by us, the FDA or other regulatory authorities due to a number of factors, including:

failure to conduct the clinical trial in accordance with regulatory requirements or in accordance with our clinical protocols;

inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;

unforeseen safety issues;

inadequate patient enrollment or lack of adequate funding to continue the clinical trial.

In addition, changes in regulatory requirements

and guidance may occur and we may need to amend clinical trial protocols to reflect these changes, which could impact the cost,

timing or successful completion of a clinical trial.

If we experience delays in the commencement or completion of our clinical

trials, the commercial prospects for our product candidates will be harmed, and our ability to generate product revenues will be

Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also lead

to the denial of regulatory approval of a product candidate.

Clinical trials necessary to support

NDA approval of our future products will be time consuming and expensive.

Delays or failures in our clinical trials will prevent

us from commercializing our products and will adversely affect our business, operating results and prospects and could cause us

to cease operations.

Initiating and completing clinical trials

necessary to support NDA approval of a new formulation of an existing product or a new product, will be time consuming and expensive

and the outcome uncertain.

Moreover, the results of early clinical trials are not necessarily predictive of future results, and

any product we advance into clinical trials may not have favorable results in later clinical trials.

Some of the trials we undertake are not

designed to support final NDA approval of the product and additional trials will have to be conducted in the future before we file

In addition, there can be no assurance that the data generated during the trials will meet our chosen safety and effectiveness

endpoints or otherwise produce results that will eventually support the filing or approval of an NDA.

After a product candidate receives FDA

approval, expanded uses or uses in new indications of our products may require additional clinical trials and new regulatory approvals,

including additional IND submissions before we can begin clinical development and supplemental NDA approval prior to marketing

If we are required to conduct additional clinical studies, it would require additional expenditures and harm our operating

Delays in obtaining required future approvals could adversely affect our ability to introduce new or enhanced products

in a timely manner, which in turn would harm our future growth.

in the commencement or completion of pharmaceutical development, manufacturing or clinical testing could result in increased costs

to us and delay our ability to generate revenues.

do not know whether our pharmaceutical development, manufacturing or clinical testing will begin on time or be completed on schedule,

For example, we may encounter delays during the manufacture of pilot scale batches including delays with our contract

development or manufacturing organization, sourcing satisfactory quantities of APIs, narcotic import and export permits, sourcing

of excipients, contract disputes with our third party vendors and manufacturers, or failure of the product to meet specification.

Similar delays may occur a during our cGMP manufacture of the product.

commencement and completion of clinical trials can be disrupted for a variety of reasons, including difficulties in:

recruiting and enrolling

patients to participate in a clinical trial;

obtaining regulatory

approval to commence a clinical trial;

reaching agreement

on acceptable terms with prospective clinical research organizations and trial sites;

obtaining approval

of the institutional review board (IRB) at each site selected for participation in our clinical trials;

manufacturing sufficient

quantities of a product candidate;

investigator fraud,

including data fabrication by clinical trial personnel;

diversion of controlled

substances by clinical trial personnel;

clinical trial may also be suspended or terminated by us, the FDA or other regulatory authorities due to a number of factors,

failure to conduct

the clinical trial in accordance with regulatory requirements or in accordance with our clinical protocols;

inspection of the

clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical

unforeseen safety

inadequate patient

enrollment or lack of adequate funding to continue the clinical trial.

addition, changes in regulatory requirements and guidance may occur and we may need to amend clinical trial protocols to reflect

these changes, which could impact the cost, timing or successful completion of a clinical trial.

If we experience delays in the

commencement or completion of our clinical trials, the commercial prospects for our product candidates will be harmed, and our

ability to generate product revenues will be delayed.

Many of the factors that cause, or lead to, a delay in the commencement

or completion of clinical trials may also lead to the denial of regulatory approval of a product candidate.

Conducting successful clinical studies

may require the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit.

Patient enrollment in clinical trials and

completion of patient participation and follow-up depends on many factors, including the size of the patient population;

of the trial protocol;

the attractiveness of, or the discomforts and risks associated with, the treatments received by enrolled

enrollment in clinical trials and completion of patient participation and follow-up depends on many factors, including the size

of the patient population;

the nature of the trial protocol;

the attractiveness of, or the discomforts and risks associated with,

the treatments received by enrolled subjects;

the availability of appropriate clinical trial investigators;

support staff;

the number of ongoing clinical trials in

the same indication that compete for the same patients;

and proximity of patients to clinical sites and ability to comply with

the eligibility and exclusion criteria for participation in the clinical trial and patient compliance.

For example, patients may

be discouraged from enrolling in our clinical trials if the trial protocol requires them to undergo extensive post-treatment procedures

or follow-up to assess the safety and effectiveness of our products or if they determine that the treatments received under the

trial protocols are not attractive or involve unacceptable risks or discomforts.

Patients may also not participate in our clinical

trials if they choose to participate in contemporaneous clinical trials of competitive products.

Development of sufficient and appropriate

clinical protocols to demonstrate safety and efficacy are required and we may not adequately develop such protocols to support

clearance and approval.

The FDA may require us to submit data

on a greater number of patients than we originally anticipated and/or for a longer follow-up period or change the data collection

requirements or data analysis applicable to our clinical trials.

They may also require additional data on certain categories of

patients, should it emerge during the conduct of our clinical trials that certain categories of patients are likely to be affected

in different and/or additional manner than most of the patients.

In addition to FDA requirements, our clinical trial requires

the approval of the institutional review board (IRB), at each site selected for participation in our clinical trial.

Additional delays to the completion

of clinical studies may result from modifications being made to the protocol during the clinical trial, if such modifications are

warranted and/or required by the occurrences in the given trial.

Each of such modifications has to be submitted

This could result in the delay or halt of a clinical trial while the modification is evaluated.

In addition, depending

on the magnitude and nature of the changes made, FDA could take the position that the data generated by the clinical trial cannot

be pooled because the same protocol was not used throughout the trial.

This might require the enrollment of additional subjects,

which could result in the extension of the clinical trial and the FDA delaying clearance or approval of a product.

There can be no assurance that the

data generated using modified protocols will be acceptable to FDA.

There can be no assurance that the data

generated using modified protocols will be acceptable to FDA or that if future modifications during the trial are necessary, any

such modifications will be acceptable to FDA.

If FDA believes that its prior approval is required for a particular modification,

it can delay or halt a clinical trial while it evaluates additional information regarding the change.

number of ongoing clinical trials in the same indication that compete for the same patients;

and proximity of patients to clinical

sites and ability to comply with the eligibility and exclusion criteria for participation in the clinical trial and patient compliance.

For example, patients may be discouraged from enrolling in our clinical trials if the trial protocol requires them to undergo

extensive post-treatment procedures or follow-up to assess the safety and effectiveness of our products or if they determine that

the treatments received under the trial protocols are not attractive or involve unacceptable risks or discomforts.

also not participate in our clinical trials if they choose to participate in contemporaneous clinical trials of competitive products.

Adverse safety outcomes could affect

our ability to conduct our clinical trials or obtain approval of our product candidates.

Serious injury or death resulting from

a failure of one of our drug candidates during current or future clinical trials could also result in the FDA delaying our clinical

a failure of one of our drug candidates during current or future clinical trials could result in the FDA delaying our clinical

trials or denying or delaying clearance or approval of a product.

Even though an adverse event may not be

the result of the failure of our drug candidate, FDA or an IRB could delay or halt a clinical trial for an indefinite period of

time while an adverse event is reviewed, and likely would do so in the event of multiple such events.

Any delay or termination of our current

or future clinical trials as a result of the risks summarized above, including delays in obtaining or maintaining required approvals

from IRBs, delays in patient enrollment, the failure of patients to continue to participate in a clinical trial, and delays or

termination of clinical trials as a result of protocol modifications or adverse events during the trials, may cause an increase

in costs and delays in the filing of any product submissions with the FDA, delay the approval and commercialization of our products

or result in the failure of the clinical trial, which could adversely affect our business, operating results and prospects.

delays in the completion of clinical trials of our products would adversely affect our business and prospects and could cause us

to cease operations.

On November 29, 2006, the FDA imposed a

bold warning on the label of racemic methadone, a parent compound to our d-methadone related to cardiac death.

Although the decision

was based on case reports and not on a controlled clinical trial, as part of the development of d-methadone we will likely have

to conduct a specific study to evaluate the effects of d-methadone on QTc interval prolongation.

QT interval is a measure of the

time between the start of the Q wave and the end of the T wave in the heart’s electrical cycle.

Drugs that prolong the corrected

QT interval (QTc) are associated with an increased risk of serious disturbances in heart rhythm, potentially leading to sudden

QT interval studies can be costly and there is no assurance that we will have funds to undertake such a study.

even if we do a QT interval prolongation study in accordance with regulatory guidelines, there is no assurance that the results

of the study will demonstrate an absence of QT interval prolongation with d-methadone.

An adverse safety outcome from such study

could result in a similar bolded warning on the label of d-methadone or in a decision not to approve d-methadone, either one of

which could have serious consequences for our continued operation.

The future results of our current

or future clinical trials may not support our product candidate claims or may result in the discovery of unexpected adverse side

Even if our clinical trials are completed

as planned, we cannot be certain that their results will support our drug candidate claims or that the FDA or foreign authorities

will agree with our conclusions regarding them.

Success in pre-clinical studies and early clinical trials does not ensure that

later clinical trials will be successful, and we cannot be sure that the later trials will replicate the results of prior trials

and pre-clinical studies.

The clinical trial process may fail to demonstrate that our drug candidates are safe and effective for

the proposed indicated uses.

If FDA concludes that the clinical trials for any of our products for which we might seek clearance,

have failed to demonstrate safety and effectiveness, we would not receive FDA clearance to market that product in the United States

for the indications sought.

In addition, such an outcome could cause us to abandon the product candidate and might delay development

Any delay or termination of our clinical trials will delay the filing of any product submissions with the FDA and, ultimately,

our ability to commercialize our product candidates and generate revenues.

It is also possible that patients enrolled in clinical

trials will experience adverse side effects that are not currently part of the product candidate’s profile.

our clinical trials performed until now involve a relatively small patient population.

Because of the small sample size, their

results may not be indicative of future results.

Future products may never achieve

market acceptance.

Future products that we may develop may

never gain market acceptance among physicians, patients and the medical community.

The degree of market acceptance of any of our

products will depend on a number of factors, including the actual and perceived effectiveness and reliability of our products;

the results of any long−term clinical trials relating to use of our products;

the availability, relative cost and perceived

advantages and disadvantages of alternative technologies;

the degree to which treatments using our products are approved for reimbursement

by public and private insurers;

the strength of our marketing and distribution infrastructure;

and the level of education and awareness

among physicians and hospitals concerning our products.

Failure of any of our products to significantly penetrate current or new

markets would negatively impact our business, financial condition and results of operations.

To be commercially successful, physicians

must be persuaded that using our products for treatment of depression are effective alternatives to existing therapies and treatments.

We believe that doctors and other physicians

will not widely adopt our products unless they determine, based on experience, clinical data, and published peer reviewed journal

articles, that the use of our products provides an effective alternative to other means of treating depression.

Patient studies

or clinical experience may indicate that treatment with our products does not provide patients with sufficient benefits in depression

relief and/or quality of life.

We believe that recommendations and support for the use of our products from influential physicians

will be essential for widespread market acceptance.

Our products are still in the development stage and it is premature to attempt

to gain support from physicians at this time.

We can provide no assurance that such support will ever be obtained.

If our products

do not receive such support from these physicians and from long-term data, physicians may not use or continue to use, and hospitals

may not purchase or continue to purchase, our products.

Even if our products are approved

by regulatory authorities, if we or our suppliers fail to comply with ongoing FDA regulation or if we experience unanticipated

problems with our products, these products could be subject to restrictions or withdrawal from the market.

Any product for which we obtain clearance

or approval, and the manufacturing processes, reporting requirements, post-approval clinical data and promotional activities for

such product, will be subject to continued regulatory review, oversight and periodic inspections by the FDA.

In particular, we

and our suppliers are required to comply with FDA’s Quality System Regulations, or QSR, and International Standards Organization, or ISO, regulations for the manufacture of our products and other regulations which cover the methods and documentation of the

design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of any product for which we

obtain clearance or approval.

Regulatory bodies, such as the FDA, enforce these regulations through periodic inspections.

failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory

bodies, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues could

result in, among other things, enforcement actions by the FDA.

If any of these actions were to occur it

would harm our reputation and cause our product sales and profitability to suffer and may prevent us from generating revenue.

our key component suppliers may not currently be or may not continue to be in compliance with all applicable regulatory requirements

which could result in our failure to produce our products on a timely basis and in the required quantities, if at all.

Even if regulatory clearance or approval

of a product is granted, such clearance or approval may be subject to limitations on the intended uses for which the product may

be marketed and reduce the potential to successfully commercialize the product and generate revenue from the product.

determines that the product promotional materials, labeling, training or other marketing or educational activities constitute promotion

of an unapproved use, it could request that we or our commercialization partners cease or modify our training or promotional materials

or subject us to regulatory enforcement actions.

It is also possible that other federal, state or foreign enforcement authorities

might take action if they consider such training or other promotional materials to constitute promotion of an unapproved use, which

could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement.

In addition, we may be required to conduct

costly post-market testing and surveillance to monitor the safety or effectiveness of our products, and we must comply with adverse

event and pharmacovigilance reporting requirements, including the reporting of adverse events which occur in connection with, and

whether or not directly related to, our products.

Later discovery of previously unknown problems with our products, including unanticipated

adverse events or adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory

requirements, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products

from the market, voluntary or mandatory recalls, a requirement to recall, replace or refund the cost of any product we manufacture

or distribute, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal

penalties which would adversely affect our business, operating results and prospects.

Some of our other product candidates

will require Risk Evaluation and Mitigation Strategies (REMS).

The FDA Amendments Act of 2007 implemented

safety-related changes to product labeling and requires the adoption of REMS.

Some of our product candidates, the controlled substance-based

and maybe others, will require REMS.

The REMS may include requirements for special labeling or medication guides for patients,

special communication plans to health care professionals and restrictions on distribution and use.

We cannot predict the specific

REMS to be required as part of the FDA’s approval of any of our products.

Depending on the extent of the REMS requirements,

our costs to commercialize our products may increase significantly.

Furthermore, controlled substances risks that are not adequately

addressed through proposed REMS for our product candidates may also prevent or delay their approval for commercialization.

Our revenue stream will depend upon

third party reimbursement.

The commercial success of our products

in both domestic and international markets will be substantially dependent on whether third-party coverage and reimbursement is

available for patients that use our products.

However, the availability of insurance coverage and reimbursement for newly approved

drugs to treat depression is uncertain, and therefore, third-party coverage may be particularly difficult to obtain even if our

products are approved by the FDA as safe and efficacious.

Many patients using existing approved therapies are generally reimbursed

all or part of the product cost by Medicare or other third-party payors.

Medicare, Medicaid, health maintenance organizations and

other third-party payors are increasingly attempting to contain healthcare costs by limiting both coverage and the level of reimbursement

of new drugs, and, as a result, they may not cover or provide adequate payment for these products.

Submission of applications for

reimbursement approval generally does not occur prior to the filing of an NDA for that product and may not be granted for as long

as many months after NDA approval.

In order to obtain reimbursement arrangements for these products, we or our commercialization

partners may have to agree to a net sales price lower than the net sales price we might charge in other sales channels.

The continuing

efforts of government and third-party payors to contain or reduce the costs of healthcare may limit our revenue.

Initial dependence

on the commercial success of our products may make our revenues particularly susceptible to any cost containment or reduction efforts.

We may have conflicts with our partners

that could delay or prevent the development or commercialization of our product candidates.

We may have conflicts with our partners,

such as conflicts concerning the interpretation of nonclinical or clinical data, the achievement of milestones, the interpretation

of contractual obligations, payments for services, development obligations or the ownership of intellectual property developed

during our collaboration.

If any conflicts arise with any of our partners, such partner may act in a manner that is adverse to

our best interests.

Any such disagreement could result in one or more of the following, each of which could delay or prevent the

development or commercialization of our product candidates, and in turn prevent us from generating revenues:

unwillingness on the

part of a partner to pay us milestone payments or royalties we believe are due to us under a collaboration;

uncertainty regarding

ownership of intellectual property rights arising from our collaborative activities, which could prevent us from entering into

additional collaborations;

unwillingness by the partner to cooperate in the development or manufacture of the product, including

providing us with product data or materials;

unwillingness on the part of a partner to keep us informed regarding the progress

of its development and commercialization activities or to permit public disclosure of the results of those activities;

of litigation or alternative dispute resolution options by either party to resolve the dispute;

or attempts by either party to

terminate the agreement.

Even though an adverse event may not be the result of the failure

of our drug candidate, FDA or an IRB could delay or halt a clinical trial for an indefinite period of time while an adverse event

is reviewed, and likely would do so in the event of multiple such events.

Any delay or termination of our current or future clinical

trials as a result of the risks summarized above, including delays in obtaining or maintaining required approvals from IRBs, delays

in patient enrollment, the failure of patients to continue to participate in a clinical trial, and delays or termination of clinical

trials as a result of protocol modifications or adverse events during the trials, may cause an increase in costs and delays in

the submission of any NDAs to the FDA, delay the approval and commercialization of our products or result in the failure of the

clinical trial, which could adversely affect our business, operating results and prospects.

Lengthy delays in the completion of

clinical trials of our products would adversely affect our business and prospects and could cause us to cease operations.

On November 29, 2006, the FDA required

a boxed warning to be added to the Prescribing Information for racemic methadone, a parent compound to our esmethadone related

to cardiac death.

Although the decision was based on case reports and not on a controlled clinical trial, as part of the development

of esmethadone we will likely have to conduct a specific study to evaluate the effects of esmethadone on QTc interval prolongation.

QT interval is a measure of the time between the start of the Q wave and the end of the T wave in the heart’s electrical

Drugs that prolong the corrected QT interval (QTc) are associated with an increased risk of serious disturbances in heart

rhythm, potentially leading to sudden death.

If we do a QT interval prolongation study in accordance with regulatory guidelines,

there is no assurance that the results of the study will demonstrate an absence of QT interval prolongation with esmethadone.

adverse safety outcome from such study could result in a similar bolded warning on the label of esmethadone or in a decision not

to approve esmethadone, either one of which could have serious consequences for our continued operation.

Esmethadone may require Risk Evaluation

and Mitigation Strategies (REMS).

Esmethadone, may require REMS.

may include requirements for special labeling or medication guides for patients, special communication plans to health care professionals

and restrictions on distribution and use.

We cannot predict the specific REMS to be required as part of the FDA’s approval

of any of our products.

Depending on the extent of the REMS requirements, our costs to commercialize our products may increase

significantly.

Furthermore, controlled substances risks that are not adequately addressed through proposed REMS for our product

candidates may also prevent or delay their approval for commercialization.

Our products will face significant

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Our chief competitors include companies such as Johnson and Johnson, Allergan,

Pfizer, Eli Lilly, Sage Therapeutics, Vistagen among others.

We are faced with intense competition

and rapid technological change, which may make it more difficult for us to achieve significant market penetration.

compete successfully for market share against other drug companies, we may not achieve sufficient product revenues and our business

The market for our product candidates is

characterized by intense competition and rapid technological advances.

If our product candidates receive FDA approval, they will

compete with a number of existing and future drugs and therapies developed, manufactured and marketed by others.

If our competitors’

existing products or new products are more effective than or considered superior to our future products, the commercial opportunity

for our product candidates will be reduced or eliminated.

Existing or future competing products may provide greater therapeutic

convenience or clinical or other benefits for a specific indication than our products, or may offer comparable performance at a

We face competition from fully integrated pharmaceutical companies and smaller companies that are collaborating with

larger pharmaceutical companies, academic institutions, government agencies and other public and private research organizations.

If we are successful in penetrating the relevant markets for pain treatment with our product candidates, other companies may be

attracted to the market.

Many of our competitors have products already approved or in development.

In addition, many of these competitors,

either alone or together with their collaborative partners, are larger than we are and have substantially greater financial, technical,

research, marketing, sales, distribution and other resources than we do.

Our competitors may develop or market products that are

more effective or commercially attractive than any that we are developing or marketing.

Our competitors may obtain regulatory approvals,

and introduce and commercialize products before we do.

These developments could have a significant negative effect on our financial

Even if we are able to compete successfully, we may not be able to do so in a profitable manner.

Adverse events involving our products

may lead the FDA to delay or deny clearance for our products or result in product recalls that could harm our reputation, business

and financial results.

Once a product receives FDA clearance or

approval, the agency has the authority to require the recall of commercialized products in the event of adverse side effects, material

deficiencies or defects in design or manufacture.

The authority to require a recall must be based on an FDA finding that there

is a reasonable probability that the device would cause serious injury or death.

Manufacturers may, under their own initiative,

recall a product if any material deficiency in a product is found.

A government-mandated or voluntary recall by us or one of our

distributors could occur as a result of adverse side effects, impurities or other product contamination, manufacturing errors,

design or labeling defects or other deficiencies and issues.

Recalls of any of our products would divert managerial and financial

resources and have an adverse effect on our financial condition and results of operations.

The FDA requires that certain classifications

of recalls be reported to FDA within 10 working days after the recall is initiated.

Companies are required to maintain certain

records of recalls, even if they are not reportable to the FDA.

We may initiate voluntary recalls involving our products in the

future that we determine do not require notification of the FDA.

If the FDA disagrees with our determinations, they could require

us to report those actions as recalls.

A future recall announcement could harm our reputation with customers and negatively affect

In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.

We may be exposed to liability claims

associated with the use of hazardous materials and chemicals.

Our research and development activities

involve the controlled use of hazardous materials and chemicals.

Although we believe that our safety procedures for using, storing,

handling and disposing of these materials comply with federal, state and local laws and regulations, we cannot completely eliminate

the risk of accidental injury or contamination from these materials.

In the event of such an accident, we could be held liable

for any resulting damages and any liability could materially adversely affect our business, financial condition and results of

In addition, the federal, state and local laws and regulations governing the use, manufacture, storage, handling and

disposal of hazardous or radioactive materials and waste products may require us to incur substantial compliance costs that could

materially adversely affect our business and financial condition.

We may incur substantial liabilities

and may be required to limit commercialization of our products in response to product liability lawsuits.

The testing and marketing of medical products

entail an inherent risk of product liability.

We may be held liable if serious adverse reactions from the use of our product candidates

If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be

required to limit commercialization of our product candidates.

Our inability to obtain sufficient product liability insurance at

an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of pharmaceutical

products we develop, alone or with corporate collaborators.

We currently do not carry product liability insurance.

We, or any corporate

collaborators, may not be able to obtain insurance at a reasonable cost, if at all.

Even if our agreements with any future corporate

collaborators entitle us to indemnification against losses, such indemnification may not be available or adequate if any claim

Our business depends upon securing

and protecting critical intellectual property.

Our commercial success will depend in part

on our obtaining and maintaining patent, trade secret, copyright and trademark protection of our technologies in the United States

and other jurisdictions as well as successfully enforcing this intellectual property and defending this intellectual property against

third-party challenges.

We will only be able to protect our technologies from unauthorized use by third parties to the extent that

valid and enforceable intellectual property protection, such as patents or trade secrets, cover them.

In particular, we place considerable

emphasis on obtaining patent and trade secret protection for significant new technologies, products and processes.

the degree of future protection of our proprietary rights is uncertain because legal means afford only limited protection and may

not adequately protect our rights or permit us to gain or keep our competitive advantage.

Moreover, the degree of future protection

of our proprietary rights is uncertain for products that are currently in the early stages of development because we cannot predict

which of these products will ultimately reach the commercial market or whether the commercial versions of these products will incorporate

proprietary technologies.

Our patent position is highly uncertain

and involves complex legal and factual questions.

Accordingly, we cannot predict the breadth

of claims that may be allowed or enforced in our patents or in third-party patents.

For example, we or our licensors might not

have been the first to make the inventions covered by each of our pending patent applications and issued patents;

we or our licensors

might not have been the first to file patent applications for these inventions;

others may independently develop similar or alternative

technologies or duplicate any of our technologies;

it is possible that none of our pending patent applications or the pending patent

applications of our licensors will result in issued patents;

our issued patents and issued patents of our licensors may not provide

a basis for commercially viable technologies, or may not provide us with any competitive advantages, or may be challenged and invalidated

by third parties;

and, we may not develop additional proprietary technologies that are patentable.

As a result, our owned and licensed patents

may not be valid and we may not be able to obtain and enforce patents and to maintain trade secret protection for the full commercial

extent of our technology.

The extent to which we are unable to do so could materially harm our business.

We or our licensors have applied for and

will continue to apply for patents for certain products.

Such applications may not result in the issuance of any patents, and any

patents now held or that may be issued may not provide us with adequate protection from competition.

Furthermore, it is possible

that patents issued or licensed to us may be challenged successfully.

In that event, if we have a preferred competitive position

because of such patents, any preferred position held by us would be lost.

If we are unable to secure or to continue to maintain

a preferred position, we could become subject to competition from the sale of generic products.

Failure to receive, inability to

protect, or expiration of our patents would adversely affect our business and operations.

Patents issued or licensed to us may be

infringed by the products or processes of others.

The cost of enforcing our patent rights against infringers, if such enforcement

is required, could be significant, and the Company does not currently have the financial resources to fund such litigation.

such litigation can go on for years and the time demands could interfere with our normal operations.

There has been substantial

litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical industry.

become a party to patent litigation and other proceedings.

The cost to us of any patent litigation, even if resolved in our favor,

could be substantial.

Some of our competitors may be able to sustain the costs of such litigation more effectively than we can

because of their substantially greater financial resources.

Litigation may also absorb significant management time.

Unpatented trade secrets, improvements,

confidential know-how and continuing technological innovation are important to our scientific and commercial success.

we attempt to and will continue to attempt to protect our proprietary information through reliance on trade secret laws and the

use of confidentiality agreements with our corporate partners, collaborators, employees and consultants and other appropriate means,

these measures may not effectively prevent disclosure of our proprietary information, and, in any event, others may develop independently,

or obtain access to, the same or similar information.

Certain of our patent rights are licensed

to us by third parties.

If we fail to comply with the terms of these license agreements, our rights to those patents may be terminated,

and we will be unable to conduct our business.

If we are found to be infringing

on patents or trade secrets owned by others, we may be forced to cease or alter our product development efforts, obtain a license

to continue the development or sale of our products, and/or pay damages.

Our manufacturing processes and potential

products may violate proprietary rights of patents that have been or may be granted to competitors, universities or others, or

the trade secrets of those persons and entities.

As the pharmaceutical industry expands and more patents are issued, the risk increases

that our processes and potential products may give rise to claims that they infringe the patents or trade secrets of others.

other persons could bring legal actions against us claiming damages and seeking to enjoin clinical testing, manufacturing and marketing

of the affected product or process.

If any of these actions are successful, in addition to any potential liability for damages,

we could be required to obtain a license in order to continue to conduct clinical tests, manufacture or market the affected product

or use the affected process.

Required licenses may not be available on acceptable terms, if at all, and the results of litigation

are uncertain.

If we become involved in litigation or other proceedings, it could consume a substantial portion of our financial

resources and the efforts of our personnel.

Pfizer, Eli Lilly, Sage Therapeutics, and Axsome Therapeutics among others.

may be exposed to liability claims associated with the use of hazardous materials and chemicals.

research and development activities involve the controlled use of hazardous materials and chemicals.

Although we believe that

our safety procedures for using, storing, handling and disposing of these materials comply with federal, state and local laws

and regulations, we cannot completely eliminate the risk of accidental injury or contamination from these materials.

of such an accident, we could be held liable for any resulting damages and any liability could materially adversely affect our

business, financial condition and results of operations.

In addition, the federal, state and local laws and regulations governing

the use, manufacture, storage, handling and disposal of hazardous or radioactive materials and waste products may require us to

incur substantial compliance costs that could materially adversely affect our business and financial condition.

may incur substantial liabilities and may be required to limit commercialization of our products in response to product liability

testing and marketing of medical products entail an inherent risk of product liability.

We may be held liable if serious adverse

reactions from the use of our product candidates occur.

If we cannot successfully defend ourselves against product liability claims,

we may incur substantial liabilities or be required to limit commercialization of our product candidates.

Our inability to obtain

sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent

or inhibit the commercialization of pharmaceutical products we develop, alone or with corporate collaborators.

We currently do

not carry product liability insurance.

We, or any corporate collaborators, may not be able to obtain insurance at a reasonable

cost, if at all.

Even if our agreements with any future corporate collaborators entitle us to indemnification against losses,

such indemnification may not be available or adequate if any claim arises.

Related to Our Intellectual Property

business depends upon securing and protecting critical intellectual property.

commercial success will depend in part on our obtaining and maintaining patent, trade secret, copyright and trademark protection

of our technologies in the United States and other jurisdictions as well as successfully enforcing this intellectual property

and defending this intellectual property against third-party challenges.

We will only be able to protect our technologies from

unauthorized use by third parties to the extent that valid and enforceable intellectual property protection, such as patents or

trade secrets, cover them.

In particular, we place considerable emphasis on obtaining patent and trade secret protection for significant

new technologies, products and processes.

Furthermore, the degree of future protection of our proprietary rights is uncertain

because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our

competitive advantage.

Moreover, the degree of future protection of our proprietary rights is uncertain for products that are

currently in the early stages of development because we cannot predict which of these products will ultimately reach the commercial

market or whether the commercial versions of these products will incorporate proprietary technologies.

patent position is highly uncertain and involves complex legal and factual questions.

we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents.

we or our licensors might not have been the first to make the inventions covered by each of our pending patent applications and

issued patents;

we or our licensors might not have been the first to file patent applications for these inventions;

independently develop similar or alternative technologies or duplicate any of our technologies;

it is possible that none of our

pending patent applications or the pending patent applications of our licensors will result in issued patents;

our issued patents

and issued patents of our licensors may not provide a basis for commercially viable technologies, or may not provide us with any

competitive advantages, or may be challenged and invalidated by third parties;

and, we may not develop additional proprietary

technologies that are patentable.

a result, our owned and licensed patents may not be valid and we may not be able to obtain and enforce patents and to maintain

trade secret protection for the full commercial extent of our technology.

The extent to which we are unable to do so could materially

harm our business.

trade secrets, improvements, confidential know-how and continuing technological innovation are important to our scientific and

commercial success.

Although we attempt to and will continue to attempt to protect our proprietary information through reliance

on trade secret laws and the use of confidentiality agreements with our corporate partners, collaborators, employees and consultants

and other appropriate means, these measures may not effectively prevent disclosure of our proprietary information, and, in any

event, others may develop independently, or obtain access to, the same or similar information.

of our patent rights are licensed to us by third parties.

If we fail to comply with the terms of these license agreements, our

rights to those patents may be terminated, and we will be unable to conduct our business.

we are found to be infringing on patents or trade secrets owned by others, we may be forced to cease or alter our product development

efforts, obtain a license to continue the development or sale of our products, and/or pay damages.

manufacturing processes and potential products may violate proprietary rights of patents that have been or may be granted to competitors,

universities or others, or the trade secrets of those persons and entities.

As the pharmaceutical industry expands and more patents

are issued, the risk increases that our processes and potential products may give rise to claims that they infringe the patents

or trade secrets of others.

These other persons could bring legal actions against us claiming damages and seeking to enjoin clinical

testing, manufacturing and marketing of the affected product or process.

If any of these actions are successful, in addition to

any potential liability for damages, we could be required to obtain a license in order to continue to conduct clinical tests,

manufacture or market the affected product or use the affected process.

Required licenses may not be available on acceptable terms,

if at all, and the results of litigation are uncertain.

If we become involved in litigation or other proceedings, it could consume

a substantial portion of our financial resources and the efforts of our personnel.

Our ability to protect and enforce

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be commercialized if it infringes the valid patent rights of another party.

We rely on confidentiality agreements

to protect our trade secrets.

If these agreements are breached by our employees or other parties, our trade secrets may become

known to our competitors.

We rely on trade secrets that we seek to

protect through confidentiality agreements with our employees and other parties.

If these agreements are breached, our competitors

may obtain and use our trade secrets to gain a competitive advantage over us.

We may not have any remedies against our competitors

and any remedies that may be available to us may not be adequate to protect our business or compensate us for the damaging disclosure.

In addition, we may have to expend resources to protect our interests from possible infringement by others.

If we are unable to obtain the statutory

patent extension related to the review time in the United States, we may need to rely on the 3-year Hatch-Waxman Act marketing

exclusivity, the six month pediatric exclusivity, any approved 7- year Orphan Drug exclusivities, potential future formulation

patents and up to ten years of data exclusivity in Europe.

We may not be able to obtain or maintain

orphan drug exclusivity for our products.

The FDA Office of Orphan Products (OOPD)

has granted orphan drug designation for mepivacaine to which we have secured rights.

The orphan designations cover postherpetic

neuralgia (PHN) and painful HIV neuropathy.

We have also received orphan designation covering d-methadone for PHN.

that has orphan drug designation subsequently receives FDA approval for the indication for which it has such designation, the product

is entitled to orphan exclusivity, i.e., for seven years, the FDA may not approve any other applications to market the same drug

for the same indication, except in very limited circumstances.

We may be unable to obtain orphan drug designations for any additional

product candidates or orphan exclusivity for any of our product candidates, or our potential competitors may obtain orphan drug

exclusivity for d-methadone or mepivacaine-based products competitive with our product candidates before we do, in which case we

may be excluded from that market for the exclusivity period.

Even if we obtain orphan drug exclusivity for any of our product candidates,

we may not be able to maintain it if a competitive product is shown to be clinically superior to our product.

Although obtaining

FDA approval to market a product with orphan exclusivity can be advantageous, there can be no assurance that it would provide us

with a significant commercial advantage.

We may not be able to obtain Hatch-Waxman

Act marketing exclusivity or equivalent regulatory data exclusivity protection in other jurisdictions for our products.

We intend to rely, in part, on Hatch-Waxman

exclusivity for the commercialization of our products in the United States.

The Hatch-Waxman Act provides marketing exclusivity

to the first applicant to gain approval of an NDA under specific provisions of the Food, Drug and Cosmetic Act for a product using

an active ingredient that the FDA has not previously approved (five years) or for a new dosage form, route or indication (three

This market exclusivity will not prevent the FDA from approving a competitor’s NDA if the competitor’s NDA

is based on studies it has performed and not on our studies.

There can be no assurance that European

authorities will grant data exclusivity for our products, because it does not contain a new active molecule.

Even if European

data exclusivity is granted for our products, that may not protect us from direct competition.

Given the well-established

use of our product candidates as pain relievers, a competitor with a generic version of our products may be able to obtain approval

of their product during our product’s period of data exclusivity, by submitting a marketing authorization application (MAA)

with a less than full package of nonclinical and clinical data.

We may undertake international operations,

which will subject us to risks inherent with operations outside of the United States.

Although we do not have any foreign operations

at this time, we intend to seek to obtain market clearances in foreign markets that we deem to generate significant opportunities.

However, even with the cooperating of a commercialization partner, conducting drug development in foreign countries involves inherent

risks, including, but not limited to:

difficulties in staffing, funding and managing foreign operations;

unexpected changes in

regulatory requirements;

Intellectual property rights do not

necessarily address all potential threats to our competitive advantage.

The degree of future protection afforded

by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately

protect our business, or permit us to maintain our competitive advantage.

The following examples are illustrative:

others may be able to make product that is similar to our current and future product candidates we intend to commercialize that is not covered by the patents that we own or license and have the right to enforce;

others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

it is possible that our future patent applications will not lead to issued patents;

issued patents that we own or license may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges;

our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

and we may not develop additional proprietary technologies that are patentable.

Related to Government Regulation

may undertake international operations, which will subject us to risks inherent with operations outside of the United States.

we do not have any foreign operations at this time, we intend to seek to obtain market clearances in foreign markets that we deem

to generate significant opportunities.

However, even with the cooperating of a commercialization partner, conducting drug development

in foreign countries involves inherent risks, including, but not limited to:

difficulties in staffing, funding and managing foreign

unexpected changes in regulatory requirements;

export restrictions;

tariffs and other trade barriers;

difficulties in protecting, acquiring, enforcing

and litigating intellectual property rights;

in protecting, acquiring, enforcing and litigating intellectual property rights;

fluctuations in currency exchange rates;

and potentially adverse tax consequences.

If we were to experience any of the difficulties

listed above, or any other difficulties, any international development activities and our overall financial condition may suffer

and cause us to reduce or discontinue our international development and registration efforts.

We may not be successful in hiring

and retaining key employees.

Our future operations and successes depend

in large part upon the continued service of key members of our senior management team whom we are highly dependent upon to manage

our business, specifically Dr.

Sergio Traversa, our Chief Executive Officer.

If he terminates employment with us, such a departure

would have a material adverse effect on our business.

Our future success also depends on our

ability to identify, attract, hire or engage, retain and motivate other well-qualified managerial, technical, clinical and regulatory

We will need to hire additional qualified personnel with expertise in nonclinical pharmacology and toxicology, pharmaceutical

development, clinical research, regulatory affairs, manufacturing, sales and marketing.

We compete for qualified individuals with

numerous biopharmaceutical companies, universities and other research institutions.

Competition for such individuals, particularly

in the United States, is intense, and we may not be able to hire sufficient personnel to support our efforts.

There can be no assurance

that these professionals will be available in the market, or that we will be able to retain existing professionals or to meet or

to continue to meet their compensation requirements.

Furthermore, the cost base in relation to such compensation, which may include

equity compensation, may increase significantly, which could have a material adverse effect on us.

Failure to establish and maintain

an effective management team and work force could adversely affect our ability to operate, grow and manage our business.

Our employees may engage in misconduct

or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk of employee

fraud or other misconduct.

Misconduct by employees could include intentional failures to:

comply with FDA regulations or similar regulations of comparable foreign regulatory authorities;

provide accurate information to the FDA or comparable foreign regulatory authorities;

comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign regulatory authorities;

report financial information or data accurately;

disclose unauthorized activities to us.

In particular, sales, marketing and business

arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing

and other abusive practices.

These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing

and promotion, sales commission, customer incentive programs and other business arrangements.

Employee misconduct could also involve

the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious

harm to our reputation.

We have adopted a Code of Ethics, but it is not always possible to identify and deter employee misconduct,

and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks

or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance

with such laws or regulations.

If any such actions are instituted against us, and we are not successful in defending ourselves

or asserting our rights, those actions could have a significant impact on our business and results of operations, including the

imposition of significant fines or other sanctions.

Our relationships with customers

and payors will be subject to applicable anti-kickback, fraud and abuse, transparency, and other healthcare laws and regulations,

which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens, and

diminished profits and future earnings.

Healthcare providers, physicians and payors

play a primary role in the recommendation and prescription of any product candidates for which we may obtain marketing approval.

Our arrangements with payors and customers may expose us to broadly applicable fraud and abuse and other healthcare laws and regulations

that may constrain the business or financial arrangements and relationships through which we market, sell and distribute any product

candidates for which we may obtain marketing approval.

Restrictions under applicable federal, state and foreign healthcare laws

and regulations may affect our ability to operate, including:

the federal Anti-Kickback Statute, which prohibits, among other things, knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid;

the federal False Claims Act, which imposes criminal and civil penalties, including through civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;

state and foreign anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental payors, including private insurers;

the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 and its implementing regulations, which also imposes obligations on certain covered entity healthcare providers, health plans, and healthcare clearinghouses as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;

laws which require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restricting payments that may be made to healthcare providers;

federal laws requiring drug manufacturers to report information related to payments and other transfers of value made to physicians and other healthcare providers, as well as ownership or investment interests held by physicians and their immediate family members, including under the federal Open Payments program, as well as other state and foreign laws regulating marketing activities.

Managing our growth as we expand

operations may strain our resources.

We expect to need to grow rapidly in order

to support additional, larger, and potentially international, pivotal clinical trials of our drug candidates, which will place

a significant strain on our financial, managerial and operational resources.

In order to achieve and manage growth effectively,

we must continue to improve and expand our operational and financial management capabilities.

Moreover, we will need to increase

staffing and to train, motivate and manage our employees.

All of these activities will increase our expenses and may require us

to raise additional capital sooner than expected.

Failure to manage growth effectively could harm our business, financial condition

or results of operations.

We may not successfully manage our

Our success will depend upon the expansion

of our operations and the effective management of our growth.

We expect to experience significant growth in the scope of our operations

and the number of our employees.

If we grow significantly, such growth will place a significant strain on our management and on

our administrative, operational and financial resources.

To manage this growth, we must expand our facilities, augment our operational,

financial and management systems, internal controls and infrastructure and hire and train additional qualified personnel.

success is heavily dependent upon growth and acceptance of our future products.

If we are unable to scale our business appropriately

or otherwise adapt to anticipated growth and new product introduction, our business and financial condition will be harmed.

We may expand our business through

the acquisition of rights to new drug candidates that could disrupt our business, harm our financial condition and may also dilute

current stockholders’

ownership interests in our company.

Our business strategy includes expanding

our products and capabilities, and we may seek acquisitions of drug candidates or technologies to do so.

Acquisitions involve numerous

risks, including substantial cash expenditures;

potentially dilutive issuance of equity securities;

incurrence of debt and contingent

liabilities, some of which may be difficult or impossible to identify at the time of acquisition;

difficulties in assimilating

the acquired technologies or the operations of the acquired companies;

diverting our management’s attention away from other

business concerns;

risks of entering markets in which we have limited or no direct experience;

and the potential loss of our key

employees or key employees of the acquired companies.

We cannot assure you that any acquisition

will result in short-term or long-term benefits to us.

We may incorrectly judge the value or worth of an acquired product, company

In addition, our future success would depend in part on our ability to manage the rapid growth associated with some

of these acquisitions.

We cannot assure you that we will be able to make the combination of our business with that of acquired

products, businesses or companies work or be successful.

Furthermore, the development or expansion of our business or any acquired

products, business or companies may require a substantial capital investment by us.

We may not have these necessary funds or they

might not be available to us on acceptable terms or at all.

We may also seek to raise funds by selling shares of our preferred

or common stock, which could dilute each current stockholder’s ownership interest in the Company.

If we cannot compete successfully

for market share against other drug companies, we may not achieve sufficient product revenues and our business will suffer.

The market for our drug candidates is characterized

by intense competition and rapid technological advances.

If our drug candidates receive FDA approval, they will compete with a

number of existing and future drugs and therapies developed, manufactured and marketed by others.

Existing or future competing

products may provide greater therapeutic convenience or clinical or other benefits for a specific indication than our products,

or may offer comparable performance at a lower cost.

If our products are unable to capture and maintain market share, we may not

achieve sufficient product revenues and our business will suffer.

We and our collaborators will compete for

market share against fully integrated pharmaceutical companies or other companies that are collaborating with larger pharmaceutical

companies, academic institutions, government agencies and other public and private research organizations.

Many of these competitors

have drugs already approved or drug candidates in development that will or may compete against our approved drug candidates.

addition, many of these competitors, either alone or together with their collaborative partners, operate larger research and development

programs and have substantially greater financial resources than we do, as well as significantly greater experience in:

developing drugs;

conducting preclinical testing and human clinical trials;

obtaining FDA and other regulatory approvals of drugs;

formulating and manufacturing drugs;

launching, marketing, distributing and selling drugs.

Government agencies, professional and medical

societies, and other groups may establish usage guidelines that apply to our Law enforcement concerns over diversion of opioids

and social issues around abuse of opioids may make the regulatory approval process and commercialization of our drug candidates

very difficult.

Media stories regarding the diversion of

opioids and other controlled substances are commonplace.

Law enforcement agencies or regulatory agencies may apply policies that

seek to limit the availability of opioids.

Such efforts may adversely affect the regulatory approval and commercialization of our

drug candidates.

Developments by competitors may render

our products or technologies obsolete or non-competitive.

Alternative technologies and products are

being developed to improve or replace the use of opioids for pain management, several of which are in clinical trials or are awaiting

approval from the FDA.

In addition, the active ingredients in nearly all opioid drugs are available in generic form.

Drug companies

that sell generic opioid drugs represent substantial competition.

Many of these organizations competing with us have substantially

greater capital resources, larger research and development staffs and facilities, greater experience in drug development and in

obtaining regulatory approvals and greater manufacturing and marketing capabilities than we do.

Our competitors may market less

expensive or more effective drugs that would compete with our drug candidates or reach market with competing drugs before we are

able to reach market with our drug candidates.

These organizations also compete with us to attract qualified personnel and partners

for acquisitions, joint ventures or other collaborations.

Business interruptions could limit

our ability to operate our business.

Our operations as well as those of our

collaborators on which we depend are vulnerable to damage or interruption from computer viruses, human error, natural disasters,

electrical and telecommunication failures, international acts of terror and similar events.

We have not established a formal disaster

recovery plan and our back-up operations and our business interruption insurance may not be adequate to compensate us for losses

we may suffer.

A significant business interruption could result in losses or damages incurred by us and require us to cease or

curtail our operations.

Unfavorable media coverage of opioid

pharmaceuticals could negatively affect our business.

Opioid drug abuse receives a high degree

of media coverage.

Unfavorable publicity regarding, for example, the use or misuse of oxycodone or other opioid drugs, the limitations

of abuse-resistant formulations, public inquiries and investigations into prescription drug abuse, litigation or regulatory activity,

or the independent actions regarding the sales, marketing, distribution or storage of our drug products, could adversely affect

our reputation.

Such negative publicity could have an adverse effect on the potential size of the market for our drug candidates

and decrease revenues and royalties, which would adversely affect our business and financial results.

Risks Related to Our Reliance on Third

We have no manufacturing capabilities

and depend on other parties for our manufacturing operations.

If these manufacturers fail to meet our requirements and strict regulatory

requirements, our product development and commercialization efforts may be materially harmed.

We currently depend on contract manufacturers.

We plan to enter into long-term commercial supply agreements for our product candidates.

If any manufacturer is unable to produce

required quantities on a timely basis or at all, our operations would be delayed and our business harmed.

Our reliance on contract

manufacturers exposes us to additional risks, including:

failure of our future manufacturers to comply with strictly-enforced regulatory requirements;

failure to manufacture to our specifications, or to deliver sufficient quantities in a timely manner;

the possibility that we may terminate a contract manufacturer and need to engage a replacement;

the possibility that our future manufacturers may not be able to manufacture our product candidates and products without infringing the intellectual property rights of others;

the possibility that our future manufacturers may not have adequate intellectual property rights to provide for exclusivity and prevent competition;

insufficiency of intellectual property rights to any improvements in the manufacturing processes or new manufacturing processes for our products.

Any of these factors could result in significant

delay or suspension of our clinical trials, regulatory submissions, receipt of required approvals or commercialization of our products

and harm our business.

We intend to rely on third parties

to conduct our clinical trials.

If these third parties do not perform as contractually required or otherwise expected, we may not

be able to obtain regulatory approval for our product candidates.

We are currently conducting a Phase 2a clinical trial for dextromethadone.

We do not currently intend to conduct clinical trials on our own, and instead will rely

on third parties, such as contract research organizations, medical institutions, clinical investigators and contract

laboratories, to assist us with our clinical trials.

We are also required to comply with regulations and standards, commonly

referred to as good clinical practices, for conducting, recording and reporting the results of clinical trials to assure that

data and reported results are credible and accurate and that the trial participants are adequately protected.

If these third

parties do not successfully carry out their duties to us or regulatory obligations or meet expected deadlines, if the third

parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to

adhere to our clinical protocols or regulatory requirements or for other reasons, our nonclinical development activities or

clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for

our product candidates.

If the third parties on which we

rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or

expected, we may not be able to obtain regulatory approval for or commercialize our products.

We do not have the ability to independently

conduct all the pre-clinical and clinical trials for our products and we must rely on third parties, such as contract research

organizations, medical institutions, clinical investigators and contract laboratories to conduct such trials.

If these third parties

do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if these third parties

need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical

protocols or regulatory requirements or for other reasons, our pre-clinical development activities or clinical trials may be extended,

delayed, suspended or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, our

products on a timely basis, if at all, and our business, operating results and prospects may be adversely affected.

our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control.

We are dependent on third parties

for manufacturing and marketing of our proposed proprietary products.

If we are not able to secure favorable arrangements with

such third parties, our business and financial condition could be harmed.

We are not planning to manufacture any

of our proposed proprietary products for commercial sale nor do we have the resources necessary to do so.

In addition, we currently

do not have the capability to market our drug products ourselves.

We intend to contract with specialized manufacturing companies

to manufacture our proposed proprietary products and partner with larger pharmaceutical companies for commercialization of our

products, retaining the marketing and promotion rights for specialty medical areas.

In connection with our efforts to commercialize

our proposed proprietary products, we will seek to secure favorable arrangements with third parties to distribute, promote, market

and sell our proposed proprietary products.

If we are not able to secure favorable commercial terms or arrangements with third

parties for distribution, marketing, promotion and sales of our proposed proprietary products, we may have to retain promotional

and marketing rights and seek to develop the commercial resources necessary to promote or co-promote or co-market certain or all

of our proprietary drug candidates to the appropriate channels of distribution in order to reach the specific medical market that

we are targeting.

We may not be able to enter into any partnering arrangements on this or any other basis.

If we are not able to

secure favorable partnering arrangements, or are unable to develop the appropriate resources necessary for the commercialization

of our proposed proprietary products, our business and financial condition could be harmed.

In addition, we will have to hire additional

employees or consultants, since our current employees have limited experience in these areas.

Sufficient employees with relevant

skills may not be available to us.

Any increase in the number of our employees would increase our expense level, and could have

an adverse effect on our financial position.

In addition, we, or our potential commercial

partners, may not successfully introduce our proposed proprietary products or our proposed proprietary products may not achieve

acceptance by patients, health care providers and insurance companies.

Further, it is possible that we may not be able to secure

arrangements to manufacture, market, distribute, promote and sell our proposed proprietary products on favorable commercial terms

that would permit us to make a profit.

To the extent that corporate partners conduct clinical trials, we may not be able to control

the design and conduct of these clinical trials.

We must enter into an agreement,

including an existing agreement with a large shareholder, with, and depend upon, one or more partners to assist us in commercializing

our product candidates.

Because of our limited financial and other

resources, we must actively seek and enter into a collaboration with one or more partners to assist us in our product launch, if

marketing approval is granted.

Any collaboration agreement we enter into may contain unfavorable terms, for example, with respect

to product candidates covered, control over decisions and responsibilities, termination rights, payment, and other significant

Our ability to receive any significant revenue from our product candidates covered by the collaboration agreement will be

dependent on the efforts of our collaboration partner and may result in lower levels of income to us than if we marketed our product

candidates entirely on our own.

The collaboration partner may not fulfill its obligations or commercialize our product candidates

as quickly as we would like.

We could also become involved in disputes with our partner, which could lead to delays in or termination

of our commercialization programs and time-consuming and expensive litigation or arbitration.

If a collaboration partner terminates

or breaches its agreement with us, or otherwise fails to complete its obligations in a timely manner, the chances of successfully

developing or commercializing our product candidates would be materially and adversely affected.

We also currently have an existing agreement

with our largest shareholder where they have a right of first refusal to commercialize certain of our products in Asia, including

If the parties do not agree to the terms of such a license then they could force binding arbitration to protect their

rights to commercialize in Asia.

Accordingly, the terms of such a license could be on unfavorable terms to us.

Additionally, depending upon the collaboration

partner that we choose, other companies that might otherwise be interested in developing products with us could be less inclined

to do so because of our relationship with the collaboration partner.

If our ability to work with present or future strategic partners

or collaborators is adversely affected as a result of our collaboration agreement, our business prospects may be limited and our

financial condition may be adversely affected.

Upon commercialization of our products,

we may be dependent on third parties to market, distribute and sell our products.

Our ability to receive revenues may be

dependent upon the sales and marketing efforts of any future co-marketing partners and third-party distributors.

At this time,

we have not entered into an agreement with any commercialization partner and only plan to do so after the successful completion

of Phase 2 clinical trials and prior to commercialization.

If we fail to reach an agreement with any commercialization partner

or upon reaching such an agreement that partner fails to sell a large volume of our products, it may have a negative impact on

our business, financial condition and results of operations.

We are unable to develop our own

sales, marketing and distribution capabilities, or if we are not successful in contracting with third parties for these services

on favorable terms, or at all, our product revenues could be disappointing.

We currently have no sales, marketing or

distribution capabilities.

In order to commercialize our products, if any are approved by the FDA, we will either have to develop

such capabilities internally or collaborate with third parties who can perform these services for us.

If we decide to commercialize

any of our drugs ourselves, we may not be able to hire the necessary experienced personnel and build sales, marketing and distribution

operations which are capable of successfully launching new drugs and generating sufficient product revenues.

In addition, establishing

such operations will take time and involve significant expense.

If we decide to enter into new co-promotion

or other licensing arrangements with third parties, we may be unable to locate acceptable collaborators because the number of potential

collaborators is limited and because of competition from others for similar alliances with potential collaborators.

are able to identify one or more acceptable new collaborators, we may not be able to enter into any collaborative arrangements

on favorable terms, or at all.

In addition, any revenues we receive would

depend upon our collaborators’

efforts which may not be adequate due to lack of attention or resource commitments, management

turnover, change of strategic focus, business combinations or other factors outside of our control.

Depending upon the terms of

our collaboration, the remedies we have against an under-performing collaborator may be limited.

If we were to terminate the relationship,

it may be difficult or impossible to find a replacement collaborator on acceptable terms, or at all.

We have no experience selling, marketing

or distributing products and no internal capability to do so.

We currently have no sales, marketing or

distribution capabilities.

In order to commercialize our products, if any are approved, we may develop internal sales, marketing

and distribution capabilities to target particular markets for our products, as well as make arrangements with third parties to

perform these services for us with respect to other markets for our products.

We may not be able to establish these capabilities

internally or hire marketing and sales personnel with appropriate expertise to market and sell our products, if approved.

even if we are able to identify one or more acceptable collaborators to perform these services for us, we may not be able to enter

into any collaborative arrangements on favorable terms, or at all.

If we enter into any collaborative arrangements for the marketing

or sale of our products, our product revenues are likely to be lower than if we marketed and sold our products ourselves.

any revenues we receive would depend upon the efforts of our collaborators, which may not be adequate due to lack of attention

or resource commitments, management turnover, change of strategic focus, business combinations, and their inability to comply with

regulatory requirements or other factors outside of our control.

Depending upon the terms of our collaboration, the remedies we

have against an under-performing collaborator may be limited.

If we were to terminate a relationship, it may be difficult or impossible

to find a replacement collaborator on acceptable terms, if at all.

Risks Related to Ownership of Our Common

There is a limited market for our

common stock that may make it more difficult to dispose of your stock.

Our common stock is currently quoted on

the OTCQB under the symbol “RLMD”.

There is a limited trading market for our common stock.

Accordingly, there can be

no assurance as to the liquidity of any markets that may develop for our common stock, the ability of holders of our common stock

to sell shares of our common stock, or the prices at which holders may be able to sell their common stock.

A sale of a substantial number of

shares of our common stock may cause the price of the common stock to decline.

If our stockholders sell substantial amounts

of our common stock in the public market, the market price of our common stock could fall.

These sales also may make it more difficult

for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

who have held their shares for at least six months are be able to sell their shares pursuant to Rule 144 under the Securities

We are subject to the reporting requirements

of federal securities laws, which can be expensive and may divert resources from other projects, thus impairing our ability grow.

We are a public reporting company

and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities

laws, including compliance with the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act).

The costs of preparing and filing

annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to

stockholders would cause our expenses to be higher than they would be if we remained privately held and did not consummate

the Reverse Merger.

It may be time consuming, difficult and

costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act.

need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate

internal controls and reporting procedures.

If we are unable to comply with the internal controls requirements of the Sarbanes-Oxley

Act, then we may not be able to obtain the independent accountant certifications required by such act, which may preclude us from

keeping our filings with the SEC current.

If we fail to establish and maintain

an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud.

inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading

price of our Common Stock.

Effective internal control is necessary

for us to provide reliable financial reports and prevent fraud.

If we cannot provide reliable financial reports or prevent fraud,

we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business

and reputation with investors may be harmed.

As a result, our small size and any current internal control deficiencies may adversely

affect our financial condition, results of operation and access to capital.

We have not performed an in-depth analysis to determine

if historical un-discovered failures of internal controls exist, and may in the future discover areas of our internal control that

need improvement.

Public company compliance may make

it more difficult to attract and retain officers and directors.

The Sarbanes-Oxley Act and new rules subsequently

implemented by the SEC have required changes in corporate governance practices of public companies.

As a public company these

new rules and regulations to increase our compliance costs and make certain activities more time consuming and costly.

company, these new rules and regulations may make it more difficult and expensive for us to obtain director and officer liability

insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially higher costs

to obtain the same or similar coverage.

As a result, it may be more difficult for us to attract and retain qualified persons to

serve on our board of directors or as executive officers.

Our stock price may be volatile.

The market price of our Common Stock is

likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control,

including the following:

potentially adverse tax consequences.

we were to experience any of the difficulties listed above, or any other difficulties, any international development activities

and our overall financial condition may suffer and cause us to reduce or discontinue our international development and registration

depend on our information technology systems and those of our third-party collaborators, service providers, contractors or consultants.

Our internal computer systems, or those of our third-party collaborators, service providers, contractors or consultants, may fail

or suffer security breaches, disruptions, or incidents, which could result in a material disruption of our development programs

or loss of data or compromise the privacy, security, integrity or confidentiality of sensitive information related to our business

and have a material adverse effect on our reputation, business, financial condition or results of operations.

the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual

property, proprietary business information and personal information.

Our internal technology systems and infrastructure, and those

of our current or future third-party collaborators, service providers, contractors and consultants are vulnerable to damage from

computer viruses, unauthorized access or use resulting from malware, natural disasters, terrorism, war and telecommunication and

electrical failures, denial-of-service attacks, cyber-attacks or cyber-intrusions over the Internet, hacking, phishing and other

social engineering attacks, persons inside our organizations (including employees or contractors), loss or theft, or persons with

access to systems inside our organization.

Attacks on information technology systems are increasing in their frequency, levels

of persistence, sophistication and intensity, and they are being conducted by increasingly sophisticated and organized foreign

governments, groups and individuals with a wide range of motives and expertise.

In addition to extracting or accessing sensitive

information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering

and other means to affect service reliability and threaten the security, confidentiality, integrity and availability of information.

The prevalent use of mobile devices that access sensitive information also increases the risk of data security incidents which

could lead to the loss of confidential information or other intellectual property.

While to our knowledge we have not experienced

any material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our

operations or the operations of third-party collaborators, service providers, contractors and consultants, it could result in

a material disruption of our development programs and significant reputational, financial, legal, regulatory, business or operational

The costs to us to mitigate, investigate and respond to potential security incidents, breaches, disruptions, network security

problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and while we have

implemented security measures to protect our data security and information technology systems, our efforts to address these problems

may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service and other harm

to our business and our competitive position.

to comply with existing or future laws and regulations related to privacy or data security could lead to government enforcement

actions (which could include civil or criminal fines or penalties), private litigation, other liabilities, and/or adverse publicity.

Compliance or the failure to comply with such laws could increase the costs of our products and services, could limit their use

or adoption, and could otherwise negatively affect our operating results and business.

of data processing is evolving, as federal, state, and foreign governments continue to adopt new, or modify existing, laws and

regulations addressing data privacy and security, and the collection, processing, storage, transfer, and use of data.

partners may be subject to current, new, or modified federal, state, and foreign data privacy and protection laws and regulations

(e.g., laws and regulations that address data privacy and data security including, without limitation, health data).

or proposed laws and regulations are subject to differing interpretations and may be inconsistent among jurisdictions, and guidance

on implementation and compliance practices are often updated or otherwise revised, which adds to the complexity of processing

personal data.

These and other requirements could require us or our partners to incur additional costs to achieve compliance,

limit our competitiveness, necessitate the acceptance of more onerous obligations in our contracts, restrict our ability to use,

store, transfer, and process data, impact our or our partners’

ability to process or use data in order to support the provision

of our products or services, affect our or our partners’

ability to offer our products and services in certain locations,

or cause regulators to reject, limit or disrupt our clinical trial activities.

Failure to comply with U.S.

and international

data privacy and protection laws and regulations could result in government enforcement actions (which could include civil or criminal

penalties, fines or sanctions), private litigation, and/or adverse publicity and could negatively affect our operating results

and business.

Moreover, patients about whom we or our partners obtain information, as well as the providers who share this information

with us, may contractually limit our ability to use and disclose the information.

Claims that we have violated individuals’

privacy rights, failed to comply with data protection laws, or breached our contractual obligations related to security or privacy,

even if we are not found liable, could be expensive and time-consuming to defend and could result in adverse publicity that could

harm our business.

Compliance with data protection laws may be time-consuming, require additional resources and could result in

increased expenses, reduce overall demand for our products and services and make it more difficult to meet expectations of or commitments

to customers or partners.

relationships with customers and payors will be subject to applicable anti-kickback, fraud and abuse, transparency, and other

healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational

harm, administrative burdens, and diminished profits and future earnings.

providers, physicians and payors play a primary role in the recommendation and prescription of any product candidates for which

we may obtain marketing approval.

Our arrangements with healthcare providers, payors, customers and others may expose us to broadly

applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements

and relationships through which we research, market, sell and distribute any product candidates for which we may obtain marketing

Restrictions under applicable federal, state and foreign healthcare laws and regulations may affect our ability to operate.

Related to Our Reliance on Third Parties

have no manufacturing capabilities and depend on other parties for our manufacturing operations.

If these manufacturers fail to

meet our requirements and strict regulatory requirements, our product development and commercialization efforts may be materially

do not own or operate facilities for drug manufacturing, storage, distribution or quality testing.

We currently rely, and may

continue to rely, on third-party contract manufacturers to manufacture APIs, drug products and other components of our product

Reliance on third-party manufacturers may expose us to different risks than if we were to manufacture product candidates

The manufacturing process for a product

candidate is subject to FDA and foreign regulatory authority review.

We, and our suppliers and manufacturers, must meet applicable

manufacturing requirements and undergo rigorous facility and process validation tests required by regulatory authorities in order

to comply with regulatory standards, such as cGMPs.

Securing marketing approval also requires the submission of information about

the product manufacturing process to, and inspection of manufacturing facilities by, the FDA and foreign regulatory authorities.

If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory

requirements of the FDA or comparable foreign regulatory authorities, we may not be able to rely on their manufacturing facilities

for the manufacture of our product candidates.

Moreover, we do not control the manufacturing process at our contract manufacturers

and are completely dependent on them for compliance with current regulatory requirements.

In the event that any of our manufacturers

fails to comply with such requirements or to perform its obligations in relation to quality, timing or otherwise, or if our supply

of components or other materials becomes limited or interrupted for other reasons, we may be forced to enter into an agreement

with another third party, which we may not be able to do on reasonable terms, if at all.

In some cases, the technical skills or

technology required to manufacture our product candidates may be unique or proprietary to the original manufacturer and we may

have difficulty transferring such to another third party.

These factors would increase our reliance on such manufacturer or require

us to obtain a license from such manufacturer in order to enable us, or to have another third party, manufacture our product candidates.

We expect to continue to rely on third-party

manufacturers if we receive regulatory approval for any product candidate.

To the extent that we have existing, or enter into future,

manufacturing arrangements with third parties, we will depend on these third parties to perform their obligations in a timely manner

consistent with contractual and regulatory requirements, including those related to quality control and assurance.

Any manufacturing

facilities used to produce our products will be subject to periodic review and inspection by the FDA and foreign regulatory authorities,

including for continued compliance with cGMP requirements, quality control, quality assurance and corresponding maintenance of

records and documents.

If we are unable to obtain or maintain third-party manufacturing for product candidates, or to do so on

commercially reasonable terms, we may not be able to develop and commercialize our product candidates successfully.

Our or a third

party’s failure to execute on our manufacturing requirements, comply with cGMPs or maintain a compliance status acceptable

to the FDA or foreign regulatory authorities could adversely affect our business in a number of ways, including:

an inability to initiate or continue clinical trials of product candidates under development;

delay in submitting regulatory applications, or receiving regulatory approvals, for product candidates;

loss of the cooperation of existing or future collaborators;

subjecting third-party manufacturing facilities to additional inspections by regulatory authorities;

requirements to cease distribution or to recall batches of our product candidates;

in the event of approval to market and commercialize a product candidate, an inability to meet commercial demands for our products.

Our contract manufacturers may experience

manufacturing difficulties due to resource constraints or as a result of labor disputes or unstable political environments.

our contract manufacturers were to encounter difficulties, our ability to provide our product candidates to patients in preclinical

and clinical trials, or to provide product for treatment of patients once approved, would be jeopardized.

intend to rely on third parties to conduct our preclinical studies and clinical trials.

If these third parties do not perform

as contractually required or otherwise expected, we may not be able to obtain regulatory approval for our product candidates.

We do not currently, or in the future,

intend to conduct preclinical studies or clinical trials on our own, and instead will rely on third parties, such as contract research

organizations (CROs), medical institutions, clinical investigators and contract laboratories, to assist us with our preclinical

studies and clinical trials.

Accordingly, we will have less control over the timing, quality and other aspects of preclinical studies

and clinical trials than we would have had we conducted them on our own.

These investigators, CROs and consultants are not our

employees and we will have limited control over the amount of time and resources that they dedicate to our programs.

parties may have contractual relationships with other entities, some of which may be our competitors, which may draw time and resources

from our programs.

The third parties with which we may contract might not be diligent, careful or timely in conducting our preclinical

studies or clinical trials, resulting in the preclinical studies or clinical trials being delayed or unsuccessful.

we cannot contract with acceptable third parties on commercially reasonable terms, or at all, or if these third parties do not

carry out their contractual duties, satisfy legal and regulatory requirements for the conduct of preclinical studies or clinical

trials or meet expected deadlines, our clinical development programs could be delayed and otherwise adversely affected.

events, we will be responsible for ensuring that each of our preclinical studies and clinical trials are conducted in accordance

with the general investigational plan and protocols for the trial as well as applicable legal and regulatory requirements.

FDA generally requires preclinical studies to be conducted in accordance with good laboratory practices and clinical trials to

be conducted in accordance with good clinical practices, including for designing, conducting, recording and reporting the results

of preclinical studies and clinical trials to assure that data and reported results are credible and accurate and that the rights,

integrity and confidentiality of clinical trial participants are protected.

Our reliance on third parties that we do not control

will not relieve us of these responsibilities and requirements.

Any adverse development or delay in our preclinical studies or

clinical trials as a result of our reliance on third parties could have a material and adverse effect on our business, financial

condition, results of operations and prospects.

Related to Ownership of Our Common Stock

is a limited market for our common stock that may make it more difficult to dispose of your stock.

common stock is currently listed on the Nasdaq Capital Market under the symbol “RLMD”.

There is a limited trading

market for our common stock.

Accordingly, there can be no assurance as to the liquidity of any markets that may develop for our

common stock, the ability of holders of our common stock to sell shares of our common stock, or the prices at which holders may

be able to sell their common stock.

sale of a substantial number of shares of our common stock may cause the price of the common stock to decline.

our stockholders sell substantial amounts of our common stock in the public market, the market price of our common stock could

These sales also may make it more difficult for us to sell equity or equity-related securities in the future at a time and

price that we deem reasonable or appropriate.

Stockholders who have held their shares for at least six months are be able to sell

their shares pursuant to Rule 144 under the Securities Act of 1933, as amended (the Securities Act).

We have registered under

separate registration statements in aggregate up to 10,894,658 shares of our common stock for sale into the public market by certain

selling stockholders named therein.

These shares represent a large number of shares of our common stock, and if sold in the market

all at once or at about the same time, could depress the market price of our common stock during the period the registration statement

remains effective and could also affect our ability to raise equity capital.

are subject to the reporting requirements of federal securities laws, which can be expensive and may divert resources from other

projects, thus impairing our ability grow.

are a public reporting company and, accordingly, subject to the information and reporting requirements of the Exchange Act and

other federal securities laws, including compliance with the Sarbanes-Oxley Act of 2002 (the Sarbanes-Oxley Act).

preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited

reports to stockholders would cause our expenses to be higher than they would be if we remained privately held.

may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required

by the Sarbanes-Oxley Act.

We may need to hire additional financial reporting, internal controls and other finance personnel in

order to develop and implement appropriate internal controls and reporting procedures.

If we are unable to comply with the internal

controls requirements of the Sarbanes-Oxley Act, then we may not be able to obtain the independent accountant certifications required

by such act, which may preclude us from keeping our filings with the SEC current.

we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results

accurately or to prevent fraud.

Any inability to report and file our financial results accurately and timely could harm our reputation

and adversely impact the trading price of our common stock.

internal control is necessary for us to provide reliable financial reports and prevent fraud.

If we cannot provide reliable financial

reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment

existed, and our business and reputation with investors may be harmed.

As a result, our small size and any current internal control

deficiencies may adversely affect our financial condition, results of operation and access to capital.

We have not performed an

in-depth analysis to determine if historical un-discovered failures of internal controls exist, and may in the future discover

areas of our internal control that need improvement.

In addition, as a smaller reporting company, our independent registered

public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting

so long as we remain a smaller reporting company, which could increase the likelihood of undiscovered errors in our internal controls

or reported financial statements as compared to issuers whose independent registered public accounting firms have provided such

attestations.

stock price may be volatile.

market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors,

many of which are beyond our control, including the following:

changes in our industry;

competitive pricing pressures;

our ability to obtain working capital financing;

additions or departures of key personnel;

limited “public float”

in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock;

sales of our common stock;

our ability to execute our business plan;

operating results that fall below expectations;

loss of any strategic relationship;

competitive pricing

our ability to obtain

working capital financing;

additions or departures

of key personnel;

limited “public

in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing

pressure on the market price for our common stock;

sales of our common

our ability to execute

our business plan;

operating results

that fall below expectations;

regulatory developments;

economic and other external factors;

period-to-period fluctuations in our financial results;

inability to develop or acquire new or needed technology or products.

In addition, the securities markets have

from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular

These market fluctuations may also materially and adversely affect the market price of our Common Stock.

Our Common Stock may be deemed a

“penny stock,”

which would make it more difficult for our investors to sell their shares.

Our common stock may be subject to the

“penny stock”

rules adopted under Section 15(g) of the Exchange Act.

The penny stock rules generally apply to

companies whose common stock is not listed on The NASDAQ Stock Market or other national securities exchange and trades at less

than $5.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that

have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years).

require, among other things, that brokers who trade penny stock to persons other than “established customers”

certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading

in the security, including a risk disclosure document and quote information under certain circumstances.

Many brokers have decided

not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing

to act as market makers in such securities is limited.

If we remain subject to the penny stock rules for any significant period,

it could have an adverse effect on the market, if any, for our securities.

If our securities are subject to the penny stock rules,

investors will find it more difficult to dispose of our securities.

You may have difficulty trading and

obtaining quotations for our Common Stock.

Our securities are not actively traded,

and the bid and asked prices for our Common Stock on the Over-the-Counter Bulletin Board may fluctuate widely.

As a result, investors

may find it difficult to dispose of, or to obtain accurate quotations of the price of, our securities.

This severely limits

the liquidity of the Common Stock, and would likely reduce the market price of our Common Stock and hamper our ability to raise

additional capital.

There is a limited market for our securities.

Accordingly, investors may therefore bear the economic

risk of an investment in the Securities thereof, for an indefinite period of time.

Even if an active market develops for the common

stock, Rule 144 promulgated under the Securities Act (Rule 144), which provides for an exemption from the registration requirements

under the Securities Act under certain conditions, requires, among other conditions, a one-year holding period prior to the resale

(in limited amounts) of securities acquired in a non-public offering without having to satisfy the registration requirements under

the Securities Act.

There can be no assurance that we will fulfill any reporting requirements in the future under the Securities

Exchange Act of 1934, as amended, or disseminate to the public any current financial or other information concerning the Company,

as is required by Rule 144 as part of the conditions of its availability.

Our securities have not been registered under the Securities

economic and other

external factors;

period-to-period

fluctuations in our financial results;

inability to develop

or acquire new or needed technology or products.

addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated

to the operating performance of particular companies.

These market fluctuations may also materially and adversely affect the market

price of our common stock.

Nevada Revised Statutes and our articles of incorporation and bylaws contain provisions that could discourage, delay or prevent

a change in control of our Company, prevent attempts to replace or remove current management and reduce the market price of our

in our articles of incorporation and bylaws may discourage, delay or prevent a merger or acquisition involving us that our stockholders

may consider favorable.

For example, our articles of incorporation authorize our board of directors to issue up to 200,000,000

shares of “blank check”

preferred stock.

As a result, without further stockholder approval, the board of directors

has the authority to attach special rights, including voting and dividend rights, to this preferred stock.

With these rights,

preferred stockholders could make it more difficult for a third party to acquire us.

are also subject to the anti-takeover provisions of the Nevada Revised Statutes (NRS).

Depending on the number of residents in

the state of Nevada who own our shares, we could be subject to the provisions of Sections 78.378 et seq.

of the Nevada Revised

Statutes, which, unless otherwise provided in the Company’s articles of incorporation or by-laws, restricts the ability

of an acquiring person to obtain a controlling interest of 20% or more of our voting shares.

Our articles of incorporation and

by-laws do not contain any provision which would currently keep the change of control restrictions of Section 78.378 from applying

addition, our articles of incorporation and amended and restated bylaws provide that our board of directors is classified into

three classes of directors with staggered three-year terms.

Only one class of directors will be elected at each annual meeting

of stockholders, with the other classes continuing for the remainder of their respective three-year terms.

third party may be discouraged from making a tender offer or otherwise attempting to obtain control of us as it is more difficult

and time consuming for stockholders to replace a majority of the directors on a classified board of directors.

bylaws provides that a Nevada court and the federal district courts of the United States will be the exclusive forum for substantially

all disputes between us and our stockholders, which could limit our stockholders’

ability to obtain a favorable judicial

forum for disputes with us or our directors, officers or employees.

to our bylaws, to the fullest extent permitted by law, and unless we consent in writing to the selection of an alternative forum,

the Eighth Judicial District Court of Clark County, Nevada, is the sole and exclusive forum for any stockholder (including a beneficial

owner of stock) to bring (a) any derivative action or proceeding brought in the name or right of the Company or on our behalf,

(b) any action asserting a claim of, or a claim based on, breach of any fiduciary duty owed by any current or former director,

officer, employee, agent or stockholder of the Company to the Company or the Company’s stockholders, (c) any action arising

or asserting a claim arising pursuant to any provision of NRS Chapters 78 or 92A or any provision of the articles of incorporation

or our bylaws or (d) any action asserting a claim against us or any current or former director, officer, employee or stockholder

(including a beneficial owner of stock) governed by the internal affairs doctrine, including, without limitation, any action to

interpret, apply, enforce or determine the validity of our articles of incorporation or bylaws.

By its terms, to the fullest extent

permitted by law, our forum selection provision applies to actions arising under the Securities Act or Exchange Act.

Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability

created by the Exchange Act or the rules and regulations thereunder, and the Company does not intend for its exclusive forum jurisdiction

provision to apply to Exchange Act claims.) These choice of forum provisions may limit a stockholder’s ability to bring

a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees.

were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur

additional costs associated with resolving such action in other jurisdictions, which could harm our business.

UNRESOLVED STAFF COMMENTS

Not applicable

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

What changed 10-K

Item 1A. Risk Factors