RELMADA THERAPEUTICS, INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION FORWARD-LOOKING STATEMENT NOTICE This Quarterly Report on Form 10-Q (this Report) contains forward looking statements that involve risks and uncertainties, principally in the sections entitled “Description of Business,” “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” All statements other than statements of historical fact contained in this Quarterly Report, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors” or elsewhere in this Quarterly Report, which may cause our or our industry’s actual results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this Quarterly Report on Form-10-Q. Before you invest in our securities, you should be aware that the occurrence of the events described in the section entitled “Risk Factors” and elsewhere in this Quarterly Report could negatively affect our business, operating results, financial condition and stock price. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this Quarterly Report on Form-10-Q to conform our statements to actual results or changed expectations. Business Overview Relmada Therapeutics, Inc. (Relmada or the Company, we or us) (a Nevada corporation), is a clinical-stage biotechnology company focused on the development of esmethadone (d-methadone, dextromethadone, REL-1017), an N-methyl-D-aspartate (NMDA) receptor antagonist. Esmethadone is a new chemical entity (NCE) that potentially addresses areas of high unmet medical need in the treatment of central nervous system (CNS) diseases and other disorders. Our lead product candidate, esmethadone, is being developed as a rapidly acting, oral agent for the treatment of depression and other potential indications. On October 15, 2019 we reported top-line data from study REL-1017-202. This was a double-blind, placebo-controlled Phase 2 clinical trial evaluating the safety, tolerability and efficacy of two oral doses of REL-1017, 25 mg once a day and 50 mg once a day, as an adjunctive treatment in patients with major depressive disorder (MDD), who experienced an inadequate response to 1 to 3 treatments with an antidepressant medication. In the REL-1017-202 study, 62 subjects, with an average age of 49.2 years, with an average Hamilton Depression Rating Scale score of 25.3 and an average Montgomery-Asberg Depression Rating Scale (MADRS) score of 34.0 (severe depression), were randomized. Other demographic characteristics were balanced across all arms. After an initial screening period, subjects were randomized to one of three arms: placebo, REL-1017 25 mg or REL-1017 50 mg, in addition to stable background antidepressant therapy. Subjects in the REL-1017 treatment arms received one loading dose of either 75 mg (25 mg arm) or 100 mg (50 mg arm) of REL-1017. Subjects were treated inpatient for 7 days and discharged home at Day 9. They returned for follow-up visits at Day 14 and Day 21. Efficacy was measured on Days 2, 4 and 7 in the dosing period and on Day 14, one week after treatment discontinuation. 61 subjects received all treatment doses and were included in the per-protocol population (PPP) treatment analysis; 57 subjects completed all visits. All 62 randomized subjects were part of the intention-to-treat (ITT) analysis. No differences were observed between the ITT and PPP analyses and results. 14 Key findings: We observed that subjects in both the REL-1017 25 mg and 50 mg treatment groups experienced statistically significant improvement on all efficacy measures tested as compared to subjects in the placebo group, including: MADRS; the Clinical Global Impression – Severity (CGI-S) scale; the Clinical Global Impression – Improvement (CGI-I) scale; and the Symptoms of Depression Questionnaire (SDQ). Improvements on the MADRS endpoint appeared on Day 4 in both REL-1017 dose groups and continued through Day 7 and Day 14, seven days after treatment discontinuation, with P values< 0.03 and large effect sizes (a measure of quantifying the difference between two groups), ranging from 0.7 to 1.0. Similar findings emerged from the CGI-S and CGI-I scales. MADRS: Analysis of Change from Baseline to Day 7 and to Day 14 ITT Population Day 2 Day 4 Day 7 Day 14 LS Means Difference P-value d LS Means Difference P-value d LS Means Difference P-value d LS Means Difference P-value d REL-1017 25mg vs Placebo -1.9 0.4340 0.3 -7.9 0.0087 0.9 -8.7 0.0122 0.8 -9.4 0.0103 0.9 REL-1017 50mg vs Placebo -0.3 0.9092 0.0 -7.6 0.0096 0.8 -7.2 0.0308 0.7 -10.4 0.0039 1.0 LS = Least Squares; d = Cohen’s effect size The study also confirmed the tolerability profile of REL-1017, which was observed in the Phase 1 studies. Subjects experienced only mild and moderate adverse events (AEs), and no serious adverse events, without significant differences between placebo and treatment groups. The AEs observed in the Phase 2a clinical study were of the same nature as those observed in the Phase 1 clinical studies in d-Methadone, and there was no evidence of either treatment induced psychotomimetic and dissociative AEs or withdrawal signs and symptoms upon treatment discontinuation. Phase 3 Program On December 20, 2020, Relmada announced that the first patient had been enrolled in the first Phase 3 clinical trial (RELIANCE I) for the Company’s lead product candidate, REL-1017, as an adjunctive treatment for MDD. Following discussions with the Food and Drug Administration (FDA), Relmada’s adjunctive MDD Phase 3 program includes the following key attributes: ● The Phase 3 program consists of two sister, two-arm, placebo-controlled clinical trials. Each trial is being conducted in 55 clinical sites in the United States. Patients will add either a 25 mg oral dose of REL-1017 once per day or placebo to their ongoing antidepressant treatment. ● The primary endpoint to be evaluated will be the change from baseline on the MADRS score at day-28 for REL-1017 compared to placebo. Success on this endpoint with the collection of sufficient safety data could support the use of REL-1017 for chronic treatment, if approved. ● The change from baseline and the 7-day MADRS score will serve as a key secondary endpoint and will provide information on the time to treatment effect. On April 1, 2021, Relmada announced the initiation of RELIANCE II, the second of two sister pivotal Phase 3 clinical trials (RELIANCE I and RELIANCE II) for the Company’s lead product candidate, REL-1017, as an adjunctive treatment for MDD. On October 4, 2021, Relmada announced RELIANCE III, the ongoing monotherapy trial for the Company’s lead product candidate, REL-1017. On August 9, 2022, Relmada announced that the FDA granted Fast Track designation to REL-1017 as a monotherapy for the treatment MDD. Patients who complete the RELIANCE trials are eligible to rollover into the long-term, open-label study, which also is expected to include subjects who had not previously participated in a REL-1017 clinical trial. In addition, in order to support potential regulatory submissions seeking approval for REL-1017 as monotherapy and adjunctive treatment, the FDA confirmed that, based on what is known at this time, Relmada will not be required to conduct a two-year carcinogenicity study of REL-1017, as sufficient clinical data have been generated to date. The FDA also confirmed that Relmada does not need to conduct a thorough QT analysis (TQT) cardiac study in humans to support cardiac safety in potential regulatory submissions for REL-1017, as the data provided so far and the data generated by the Phase 3 program will be adequate to evaluate the cardiac safety profile of REL-1017. 15 Human Abuse Potential (HAP) Study top-line results - Oxycodone: On July 27, 2021, we announced top-line results that showed that all three doses of REL-1017 (25 mg, 75 mg and 150 mg, the therapeutic, supratherapeutic and maximum tolerated doses (MTD), respectively) tested in recreational opioid users, demonstrated a highly statistically significant difference vs. the active control drug, oxycodone 40 mg. The study’s primary endpoint was a measure of “likability” with the subjects rating the maximum effect (or Emax) for Drug Liking “at the moment”, using a 1=100 bipolar rating scale (known as a visual analog scale or VAS), with 100 as the highest likability, 50 as neutral (placebo-like), and 0 the highest dislike. In summary, all tested doses of REL-1017, including the 150 mg maximum tolerated dose, showed a highly statistically significant difference in abuse potential versus oxycodone with p-values less than 0.05. Consistent results were seen for the secondary endpoints. Additionally, all REL-1017 doses including 150 mg (6 times the therapeutic dose and MTD) were statistically equivalent to placebo (p<0.05). These results support the lack of opioid effects on REL-1017. Human Abuse Potential (HAP) Study top-line results - Ketamine: On February 23, 2022, we announced top-line results that showed that all three doses of REL-1017 (25 mg, 75 mg, and 150 mg, the therapeutic, supratherapeutic and maximum tolerated doses, respectively) tested in recreational drug users, demonstrated a substantial (30+ points) and statistically significant difference vs. the active control drug, intravenous ketamine 0.5 mg/kg over 40 minutes, and, importantly, were statistically equivalent to placebo. The study’s primary endpoint was a measure of “likability” with the subjects rating the maximum effect (or Emax) for Drug Liking “at this moment”, using a 1-100 bipolar rating scale (known as a visual analog scale or VAS), with 100 as the highest likability, 50 as neutral (placebo-like), and 0 the highest dislike. Consistent results are seen for the secondary endpoints. Key Upcoming Anticipated Milestones We expect multiple key milestones over the next 12-18 months. These include: ● Results of RELIANCE III monotherapy MDD trials in the second half of 2022 with last patient enrolled by the end of August, 2022. ● Results of RELIANCE I and RELIANCE II adjunctive MDD trials in the second half of 2022. ● Results of RELIANCE – OLS (Long-term, Open-label) study in MDD in the first half of 2023. Our Development Program Esmethadone (d-Methadone, dextromethadone, REL-1017) as a treatment for MDD Background In 2014, the National Institute of Mental Health (NIMH) estimated that 15.7 million adults aged 18 or older in the United States had at least one major depressive episode in the past year. According to data from nationally representative surveys supported by NIMH, only about half of Americans diagnosed with major depression in a given year receive treatment. Of those receiving treatment with as many as four different standard antidepressants, 33% of drug-treated depression patients do not achieve adequate therapeutic benefits according to the Sequenced Treatment Alternatives to Relieve Depression (STAR*D) trial published in the American Journal of Psychiatry. In addition to the high failure rate, only one of the marketed products for depression, esketamine (marketed by Johnson and Johnson as Spravato), an in-clinic nasal spray treatment can demonstrate rapid antidepressant effects, while the other currently approved products can take two to eight weeks to show activity. The urgent need for improved, faster acting antidepressant treatments is underscored by the fact that severe depression can be life-threatening, due to heightened risk of suicide. 16 Esmethadone Overview and Mechanism of Action Esmethadone’s mechanism of action, as a low affinity, non-competitive NMDA channel blocker or antagonist, is fundamentally differentiated from most currently FDA-approved antidepressants, as well as all atypical antipsychotics used adjunctively with standard, FDA-approved antidepressants. Working through the same brain mechanisms as ketamine and esketamine but potentially lacking their adverse side effects, esmethadone is being developed as a rapidly acting, oral agent for the treatment of depression and potentially other CNS conditions. In chemistry an enantiomer, also known as an optical isomer, is one of two stereoisomers that are mirror images of each other that are non-superimposable (not identical), much as one’s left and right hands are the same except for being reversed along one axis. A racemic compound, or racemate, is one that has equal amounts of left- and right-handed enantiomers of a chiral molecule. For racemic drugs, often only one of a drug’s enantiomers is responsible for the desired physiologic effects, while the other enantiomer is less active or inactive. As a single isomer of racemic methadone, esmethadone has been shown to possess NMDA antagonist properties with virtually no traditional opioid or ketamine-like adverse events at the expected therapeutic doses. In contrast, racemic methadone is associated with common opioid side effects that include anxiety, nervousness, restlessness, sleep problems (insomnia), nausea, vomiting, constipation, diarrhea, drowsiness, and others. It has been shown that the left (levo) isomer, l-methadone, is largely responsible for methadone’s opioid activity, while the right (dextro) isomer, esmethadone, at the currently therapeutic doses used in development is virtually inactive as an opioid while maintaining affinity for the NMDA receptor. NMDA receptors are present in many parts of the CNS and play important roles in regulating neuronal activity and promoting synaptic plasticity in brain areas important for cognitive functions such as executive function, learning and memory. Based on these premises, esmethadone could show benefits in several different CNS indications. Esmethadone (d-methadone, dextromethadone, REL-1017) in other indications In addition to developing esmethadone as an adjunctive treatment of MDD, we are evaluating the utility of esmethadone as a front line monotherapy treatment for MDD. Additionally, other indications that Relmada may explore in the future, include, restless leg syndrome and other glutamatergic system activation related diseases. Our Corporate History and Background We are a clinical-stage, publicly traded biotechnology company developing NCEs and novel versions of drug products that potentially address areas of high unmet medical need in the treatment of depression and other CNS diseases. Currently, none of our product candidates have been approved for sale in the United States or elsewhere. We have no commercial products nor do we have a sales or marketing infrastructure. In order to market and sell our products we must conduct clinical trials on patients and obtain regulatory approvals from appropriate regulatory agencies, like the FDA in the United States, and similar organizations elsewhere in the world. We have not generated revenues and do not anticipate generating revenues for the foreseeable future. We had net loss of $79,680,751 for the six months ended June 30, 2022. At June 30, 2022, we have an accumulated deficit of $384,747,863. Business Strategy Our strategy is to leverage our considerable industry experience, understanding of CNS markets and development expertise to identify, develop and commercialize product candidates with significant market potential that can fulfill unmet medical needs in the treatment of CNS diseases. We have assembled a management team along with both scientific advisors, including recognized experts in the fields of depression, and business advisors with significant industry and regulatory experience to lead and execute the development and commercialization of esmethadone. We plan to further develop esmethadone as our priority program. As the drug esmethadone is an NCE, the regulatory pathway required to support a new drug application (NDA) submission involves a full clinical development program. We plan to continue to generate intellectual property (IP) that will further protect our products from competition. We will also continue to prioritize our product development activities after taking into account the resources we have available, market dynamics and potential for adding value. 17 Market Opportunity We believe that the market for addressing areas of high unmet medical need in the treatment of CNS diseases will continue to be large for the foreseeable future and that it will represent a sizable revenue opportunity for us. For example, the World Health Organization (WHO) has estimated that CNS diseases affect nearly 2 billion people globally, making up approximately 40% of total disease burden (based on disability adjusted life years), compared with 13% for cancer and 12% for cardiovascular disease. The depression treatment market is segmented on the basis of antidepressants drugs, devices, and therapies. Antidepressants are the largest and most popular market segment. The antidepressants segment consists of large pharmaceutical and generic companies, such as Eli Lilly, Pfizer, GlaxoSmithKline, Allergan, Sage Therapeutics and Johnson & Johnson. Some of the notable drugs produced by these companies are Cymbalta® (Eli Lilly), Effexor® (Pfizer), Pristiq® (Pfizer), Zulresso® (Sage) and Spravato® (Johnson & Johnson). Intellectual Property Portfolio and Market Exclusivity We have over 50 issued patents and pending patent applications related to REL-1017 for multiple uses, including psychological and neurological conditions, potentially provide coverage beyond 2033. We have also secured an Orphan Drug Designation from the FDA for d-methadone for “the treatment of postherpetic neuralgia”, which, upon NDA approval, carries 7-year FDA Orphan Drug marketing exclusivity. In the European Union, some of our actual and prospective products may be eligible up to 10 years of market exclusivity, which includes 8 years data exclusivity and 2 years market exclusivity. In addition to any granted patents, REL-1017 will be eligible for market exclusivity to run concurrently with the term of the patent for 5 years in the U.S. (Hatch Waxman Act) plus additional 6 months of pediatric exclusivity and up to 10 years of exclusivity in the European Union. We believe an extensive intellectual property estate of US and foreign patents and applications, once approved, will protect our technology and products. Key Strengths We believe that the key elements for our market success include: ● Compelling lead product opportunity, REL-1017 currently in Phase 3 trials for the adjunctive and monotheraphy treatment of MDD. ● Robust, and highly statistically significant, efficacy seen with esmethadone in a randomized Phase 2 trial, the primary endpoint at 7 days, with onset of action seen at 4 days, and the effect carrying through to 14 days (7 days post-treatment). ● Successful Phase 1 safety studies of esmethadone and strong clinical activity signal in depression established in three independent animal models in preclinical studies. ● Potential in additional multiple indications in underserved markets with large patient population in other affective disorders, and cognitive disorders ● Scientific support of leading experts: Our scientific advisors include clinicians and scientists who are affiliated with a number of highly regarded medical institutions such as Harvard, Cornell, Yale, and University of Pennsylvania. ● Substantial IP portfolio and market protection: approved and filed patent applications potentially provide coverage beyond 2033. A vailable Information Reports we file with the Securities and Exchange Commission (SEC) pursuant to the Exchange Act of 1934, as amended (the Exchange Act), including annual and quarterly reports, and other reports we file, can be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street NE, Washington, D.C. 20549. 18 Results of Operations For the Three Months Ended June 30, 2022 versus June 30, 2021 Three Months Ended Three Months Ended June 30, 2022 June 30, 2021 Increase (Decrease) Operating Expenses Research and development $ 30,912,671 $ 17,331,507 $ 13,581,164 General and administrative 14,599,401 9,130,373 5,469,028 Total $ 45,512,072 $ 26,461,880 $ 19,050,192 Research and Development Expense Research and development expense for the three months ended June 30, 2022 was approximately $30,912,700 compared to $17,331,500 for the three months ended June 30, 2021, an increase of approximately $13,581,200. The increase was primarily due to: ● Increase in study costs of $6,651,300 associated with the execution of our Phase 3 studies. ● Increase in manufacturing and drug storage costs of $132,500; ● Increase in compensation expense of $58,100 due to a increase in research and development employees and their related bonuses; ● A decrease in stock-based compensation expense of $724,400; ● Increase in other research expenses of $7,463,700 primarily associated with the addition of consultants, clinical research associates, and medical science liaisons contracted to assist in the execution of our Phase 3 trials. General and Administrative Expense General and administrative expense for the three months ended June 30, 2022 was approximately $14,599,400 compared to $9,130,400 for the three months ended June 30, 2021, an increase of approximately $5,469,000. The increase was primarily due to: ● Decrease in compensation expense of $151,600 related a decrease of general and administrative employees; ● Increase in stock-based compensation expense of $4,751,000 primarily related to options granted to employees, as well as key consultants; ● Increase in other general and administrative expenses of $869,600 primarily due to an increase in consulting services. Other Income (Expense) Interest / investment income was approximately $387,300 and $322,800 for the three months ended June 30, 2022 and 2021, respectively. Realized gain on short-term investments was approximately $24,500 for the three months ended June 30, 2022 compared to a realized loss of approximately $123,600 for the three months ended June 30, 2021. Unrealized loss on short-term investments was approximately $1,186,300 for the three months ended June 30, 2022 compared to an unrealized loss of approximately $289,300 for the three months ended June 30, 2021. Gain of settlement of fees was $6,351,600 for the three months ended June 30,2022. Net Loss The net loss for the Company for the three months ended June 30, 2022 and 2021 was approximately $39,935,000 and $26,551,900, respectively. The Company had loss per share basic and diluted of $1.33 and $1.56 for the three months ended June 30, 2022 and 2021, respectively. Income Taxes The Company did not provide for income taxes for the six months ended June 30, 2022 and 2021, since there was a loss and a full valuation allowance against all deferred tax assets. 19 Results of Operations For the Six Months Ended June 30, 2022 versus June 30, 2021 Six Months Ended Six Months Ended June 30, 2022 June 30, 2021 Increase (Decrease) Operating Expenses Research and development $ 55,925,524 $ 31,353,734 $ 24,571,790 General and administrative 27,883,971 17,513,349 10,370,622 Total $ 83,809,495 $ 48,867,083 $ 34,942,412 Research and Development Expense Research and development expense for the six months ended June 30, 2022 was approximately $55,925,500 compared to $31,353,700 for the six months ended June 30, 2021, an increase of approximately $24,571,800. The increase was primarily due to: ● Increase in study costs of $14,434,700 associated with the execution of our Phase 3 studies. ● Decrease in manufacturing and drug storage costs of $479,900; ● Increase in pre-clinical and toxicology expenses of $336,200; ● Decrease in compensation expense of $395,500 due to a decrease in research and development employees and their related bonuses; ● A decrease in stock-based compensation expense of $11,900; ● Increase in other research expenses of $10,688,200 primarily associated with the addition of consultants, clinical research associates, and medical science liaisons contracted to assist in the execution of our Phase 3 trials. General and Administrative Expense General and administrative expense for the six months ended June 30, 2022 was approximately $27,884,000 compared to $17,513,300 for the six months ended June 30, 2021, an increase of approximately $10,370,700. The increase was primarily due to: ● Decrease in compensation expense of $267,200 primarily related a decrease of general and administrative employees; ● Increase in stock-based compensation expense of $10,117,900 related to option grants to employees and key consultants; ● Increase in other general and administrative expenses of $520,000 primarily due to an increase in consulting services. Other Income (Expense) Interest / investment income was approximately $717,300 and $742,800 for the six months ended June 30, 2022 and 2021, respectively. Realized gain on short-term investments was approximately $9,500 for the six months ended June 30, 2022 compared to a realized loss of approximately $176,400 for the six months ended June 30,2021. Unrealized loss on short-term investments was approximately $2,949,600 and $466,400 for the six months ended June 30, 2022 and 2021, respectively. Gain on settlement fees of $6,351,600 for the six months ended June 30, 2022. Net Loss The net loss for the Company for the six months ended June 30, 2022 and 2021 was approximately $79,680,800 and $48,767,100, respectively. The Company had loss per share basic and diluted of $2.73 and $2.90 for the six months ended June 30, 2022 and 2021, respectively. Income Taxes The Company did not provide for income taxes for the six months ended June 30, 2022 and 2021, since there was a loss and a full valuation allowance against all deferred tax assets. 20 Liquidity As shown in the accompanying financial statements, the Company incurred negative operating cash flows of $41,055,884 for the six months ended June 30, 2022 and has an accumulated deficit of $384,747,863 from inception through June 30, 2022. At June 30, 2022, the Company had cash and short term investments of $211,955,077. Relmada has funded its past operations through equity raises and in the six months ended June 30, 2022, the Company raised net proceeds of $42,728,599 from the sale of common stock through our ATM equity offering, and $417,544 through the exercise of options and $895,356 through the exercise of warrants. On April 8, 2022, we raised net proceeds of $13,145,057 from the sale of common stock through our ATM equity offering. On April 6, 2022, we entered into a new Open Market Sale Agreement with Jefferies, as sales agent, pursuant to which we may offer and sell, from time to time, through Jefferies, shares of our common stock, having an aggregate offering price of up to $100,000,000. We are not obligated to sell any shares under the agreement. Management believes that the Company’s existing cash and cash equivalents will enable it to fund operating expenses and capital expenditure requirements for at least 12 months from the issuance of these unaudited condensed consolidated financial statements. Beyond that point management will evaluate the size and scope of any subsequent trials that will affect the timing of additional financings through public or private sales of equity or debt securities or from bank or other loans or through strategic collaboration and/or licensing agreements. Any such expenditures related to any subsequent clinical trials will not be incurred until such additional financing is raised. Further, additional financing related to subsequent clinical trials does not affect the Company’s conclusion that based on the cash on hand and the budgeted cash flow requirements, the Company has sufficient funds to maintain operations for at least 12 months from the issuance of these unaudited condensed consolidated financial statements. The following table sets forth selected cash flow information for the periods indicated below: Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Cash used in operating activities $ (41,055,884 ) $ (33,296,890 ) Cash (used in) provided by investing activities (10,168,188 ) 9,553,562 Cash provided by financing activities 44,041,499 25,917,276 Net (decrease) increase in cash and cash equivalents $ (7,182,573 ) $ 2,173,948 For the six months ended June 30, 2022, cash used in operating activities was $41,055,884 primarily due to the net loss of $79,680,751, decrease in accounts payable of 3,652,816, increase in other current assets of $256,192, realized gain of 9,480, offset by non-cash stock compensation charges of $24,225,697, decrease in prepaid expenses and other assets of $7,810,846, increase in accrued expenses of $7,513,045 and unrealized loss of $2,949,624. For the six months ended June 30, 2021, cash used in operating activities was $33,296,890 primarily due to the net loss of $48,767,125, increase in prepaid expense and other assets of $645,690, decrease in accrued expenses of $796,162, offset by non-cash stock compensation charges of $14,119,660, increase in accounts payable of $2,109,447, unrealized loss of $466,444, and realized loss of $176,379. For the six months ended June 30, 2022, cash used in investing activities was $10,168,188 related to the net purchase and sale of short-term investments. For the six months ended June 30, 2021, cash provided by investing activities was $9,553,562 related to the net purchase and sale of short-term investments. Net cash provided by financing activities for the six months ended June 30, 2022 was $44,041,499 due to proceeds from options exercised for common stock of $417,544, proceeds from warrants exercised for common stock of $895,356, and sales of common stock of $42,728,599. Net cash provided by financing activities for the six months ended June 30, 2021 was $25,917,276 due to proceeds from options exercised for common stock of $517,271, proceeds from warrants exercised for common stock of $1,941,955, and sales of common stock of $23,458,050. 21 Effects of Inflation Our assets are primarily monetary, consisting of cash and cash equivalents and short term investments. Because of their liquidity, these assets are not directly affected by inflation. However, the rate of inflation affects our expenses, such as those for employee compensation and contract services, which could increase our level of expenses and the rate at which we use our resources. Commitments and Contingencies Please refer to Note 9 in our Annual Report on Form 10-K for the year ended December 31, 2021 under the heading Commitments and Contingencies. To our knowledge there have been no material changes to the risk factors that were previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. Critical Accounting Policies and Estimates A critical accounting policy is one that is both important to the portrayal of a company’s financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Our unaudited condensed consolidated financial statements are presented in accordance with U.S. GAAP, and all applicable U.S. GAAP accounting standards effective as of June 30, 2022 have been taken into consideration in preparing the unaudited consolidated financial statements. The preparation of unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. On a continual basis, management reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience, and reasonable assumptions. After such reviews, and if deemed appropriate, managements estimates are adjusted accordingly. Actual results could differ from those estimates and assumptions under different and/or future circumstances. Management considers an accounting estimate to be critical if: ● it requires assumptions to be made that were uncertain at the time the estimate was made; and ● changes in the estimate, or the use of different estimating methods that could have been selected, could have a material impact on the results of operations or financial condition. We evaluate our estimates and assumptions on an ongoing basis and none of the Company’s estimates and assumptions used within the unaudited condensed consolidated financial statements involve a high level of estimation uncertainty. For additional discussion regarding the application of the significant accounting policies, see Note 2 to the Company’s unaudited condensed consolidated financial statements included in this report. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. There have been no material changes to our exposures to market risks as disclosed under the heading “Quantitative and Qualitative Disclosures About Market Risks” in the annual MD&A contained in our Form 10-K for the year ended December 31, 2021.