What changed in this filing

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Item 1A. Risk Factors

2025-09-17 compared with 2024-09-19 · 49 added, 87 removed, 278 unchanged (33% of the section changed)

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Any delays in the commencement or completion, or termination or suspension, of our future clinical trials, if any, could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.

Department of Health and Human Services (“FDA”) and analogous authorities in other jurisdictions outside of the United States (“Regulatory Authorities”), we must conduct extensive clinical studies to demonstrate safety and efficacy.

Before obtaining approval from the government authorities or professional bodies with authority to grant regulatory approval for our drug candidates in a particular country, such as the EMA, the FDA and analogous authorities in other jurisdictions outside of the United States (“Regulatory Authorities”), we must conduct extensive clinical studies to demonstrate safety and efficacy.

Clinical testing is expensive, time consuming and uncertain as to the outcome.

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We cannot assure you that any of our product candidates will prove safe for human use.

We are exposed to additional risks as we conduct the sunRIZE study outside of the U.S.

and may not be successful in meeting the study’s primary endpoint.

Prior to the FDA’s lift of the partial clinical hold in September 2024, we initiated and are advancing the sunRIZE study outside of the U.S.

The sunRIZE study may not produce positive results and meet its primary endpoint outside of the U.S.

We may need to commence and complete additional clinical trials that satisfy the specified primary endpoint criteria in order to obtain necessary regulatory approvals from the EMA for ersodetug.

Conducting clinical trials outside the U.S.

also exposes us to additional risks, including risks associated with:

● additional foreign regulatory requirements;

● foreign exchange fluctuations;

● compliance with foreign manufacturing, customs, shipment and storage requirements;

● potential political or economic instability in the jurisdictions where we initiate clinical trials;

● cultural differences in medical practice and clinical research;

● diminished protection of intellectual property in some countries.

We are exposed to additional risks associated with regulatory approval.

After the completion of our clinical studies, we cannot predict whether or when we will obtain regulatory approval to commercialize our product candidates and we cannot, therefore, predict the timing of any future revenue from these product candidates.

Even if we achieve positive clinical results and file for regulatory approval, we cannot commercialize any of our product candidates until the appropriate Regulatory Authorities have reviewed and approved the applications for such product

We cannot provide assurance that the Regulatory Authorities will complete their review processes in a timely manner or that we will obtain regulatory approval for any product candidate we develop.

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refuse to approve pending applications or supplements to applications filed by us;

suspend or impose restrictions on operations, including costly new manufacturing requirements;

suspend or impose restrictions on operations, including costly new

manufacturing requirements;

or seize or detain products, refuse to permit the import or export of products, or require us to initiate a product recall.

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and changes in Regulatory Authority approval policies or adoption of new regulations may require additional clinical trials or work on our end.

Any delay in, or failure to receive or maintain, approval for any of our products could prevent us from ever generating meaningful revenues or achieving profitability.

Any delay in, or failure to receive or maintain, approval for any of our product candidates could prevent us from ever generating meaningful revenues or achieving profitability.

Our product candidates are prone to the risks of failure inherent in drug development.

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If we are unable to arrange for third-party sources, or do so on commercially unreasonable terms, we may not be able to complete development of or market our product candidates.

In addition, third-party suppliers that we engage may be adversely impacted by COVID-19.

It is possible that our raw material suppliers may not be able to sell these raw materials at the times we need them or on commercially reasonable terms due to forces outside of our control including, but not limited to, inflation and global conflicts.

We do not have any control over the process or timing of the acquisition of these raw materials by our manufacturers.

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Although we generally do not begin a clinical study unless we believe we have a sufficient supply of a product candidate to complete the clinical study, any significant delay in the supply of raw material components needed to produce a product candidate for a clinical study due to the need to replace a third-party manufacturer could considerably delay completion of our clinical studies, product testing and potential regulatory approval of our product candidates.

If we or our manufacturers are unable to purchase these raw materials after regulatory approval has been obtained for our product

candidates, the commercial launch of our product candidates would be delayed or there would be a shortage in supply of such product candidates, which would impair our ability to generate revenues from the sale of our product candidates.

If we or our manufacturers are unable to purchase these raw materials after regulatory approval has been obtained for our product candidates, the commercial launch of our product candidates would be delayed or there would be a shortage in supply of such product candidates, which would impair our ability to generate revenues from the sale of our product candidates.

If we successfully commercialize any of our product candidates, we may be required to establish commercial manufacturing capabilities of larger scale.

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We have no experience manufacturing pharmaceutical products on a commercial scale and we may need to rely on third-party manufacturers with capacity for increased production scale to meet our projected needs for commercial manufacturing, the satisfaction of which on a timely basis may not be met.

We may be unable to manage our anticipated growth effectively.

If any of our product candidates move from clinical development into commercialization, this anticipated growth will place significant strains on our management, operational systems and processes, financial systems and internal controls and other aspects of our business.

We must upgrade our internal business processes and capabilities to create the scalability that a growing business demands.

As of September 15, 2025, we had 77 full-time employees.

To execute our anticipated growth successfully, we must continue to attract and retain qualified personnel and manage and train them effectively.

Commercializing any of our product candidates will require us to hire and retain scientific, sales and marketing, software, manufacturing, customer service, distribution and quality assurance personnel.

In addition, we expect that we will need to hire additional accounting, finance and other personnel.

Further, our anticipated growth will place additional strain on our suppliers, resulting in an increased need for us to carefully monitor quality assurance.

Any failure by us to manage our growth effectively could have an adverse effect on our ability to achieve our development and commercialization goals.

Our ability to successfully transition from a largely development stage company to a full scale commercial operation is uncertain given the fact that we have been in operation for numerous years.

As we continue to grow, we will be required to implement more complex organizational management structures and may find it increasingly difficult to maintain the benefits of our corporate culture.

If we do not successfully manage our anticipated growth, our business, financial condition, results of operations, and prospects could be harmed.

If we use hazardous and biological materials in a manner that causes injury or violates applicable law, we may be liable for damages.

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Even if we continue to comply with all applicable laws and regulations regarding hazardous materials, we cannot eliminate the risk of accidental contamination or discharge and our resultant liability for any injuries or other damages caused by these accidents.

Guidelines and recommendations published by various organizations may adversely affect the use of any products for which we may receive regulatory approval.

Government agencies issue regulations and guidelines directly applicable to us and to our product candidates.

In addition, professional societies, practice management groups, private health or science foundations and organizations involved in various diseases from time to time publish guidelines or recommendations to the medical and patient communities.

These various sorts of recommendations may relate to such matters as product usage and use of related or competing therapies.

For example, organizations like the American Diabetes Association have made recommendations about therapies in the diabetes therapeutics market.

Changes to these recommendations or other guidelines advocating alternative therapies could result in decreased use of any products for which we may receive regulatory approval, which may adversely affect our results of operations.

Risks Related to Our Business

Changes in financial accounting standards or policies have affected, and in the future may affect, our reported financial condition or results of operations;

there are inherent limitations to our system of internal controls;

changes in corporate governance policies and practices may impact our business .

We prepare our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

The preparation of our financial statements in accordance with GAAP requires that we make estimates and assumptions that affect the recorded amounts of assets, liabilities and net income during the reporting period.

A change in the facts and circumstances surrounding those estimates could result in a change to our estimates and could impact our future operating results.

GAAP is subject to interpretation by the Financial Accounting Standards Board (“FASB”), the SEC and various bodies formed to interpret and create accounting policies.

A change in those policies can have a significant effect on our reported results and may affect our reporting of transactions which are completed before a change is announced.

In general, changes to accounting rules or challenges to our interpretation or application of the rules by regulators may have a material adverse effect on our reported financial results or on the way we conduct business.

Our system of internal and disclosure controls and procedures was designed to provide reasonable assurance of achieving its objectives.

However, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been or will be detected.

As a result, there can be no assurance that our system of internal and disclosure controls and procedures will be successful in preventing all errors, theft and fraud, or in informing management of all material information in a timely manner.

Finally, corporate governance, public disclosure and compliance practices continue to evolve based upon continuing legislative action, SEC rulemaking and policy positions taken by large institutional stockholders and proxy advisors.

As a result, the number of rules, regulations and standards applicable to us may become more burdensome to comply with, could increase scrutiny of our practices and policies by these or other groups and increase our legal and financial compliance costs and the amount of time management must devote to governance and compliance activities.

For example, the SEC has recently proposed rules requiring that issuers provide significantly increased disclosures concerning cybersecurity matters and the impact of climate changes on their business and has adopted rules requiring public companies to adopt more stringent executive compensation clawback policies.

Increasing regulatory burdens and corporate governance requirements could also make it more difficult for us to attract and retain qualified members of our Board of Directors and qualified executive officers.

We have a history of losses and may not achieve profitability in the future.

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We expect that the amount of cash used in our operating activities will continue to increase for the next several years.

As of June 30, 2024, we had cash and cash equivalents of $70.4 million and investments in marketable debt securities of $56.7 million that is expected to provide us with adequate capital resources to fund planned activities at least through the second quarter of calendar year 2026.

As of June 30, 2025, we had cash and cash equivalents of $94.1 million and investments in marketable debt securities of $73.8 million that is expected to provide us with adequate capital resources to fund planned activities for at least 12 months from the issuance date of the consolidated financial statements for the year ended June 30, 2025.

Since our inception, we have not generated meaningful revenue.

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We may be required to cease operations or seek partners for our product candidates at an earlier stage than otherwise would be desirable and on terms that are less favorable than might otherwise be available.

In the absence of additional capital we may also be required to relinquish, license or otherwise dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize on terms that are less favorable than might otherwise be available.

In the absence of

additional capital we may also be required to relinquish, license or otherwise dispose of rights to technologies, product candidates or products that we would otherwise seek to develop or commercialize on terms that are less favorable than might otherwise be available.

If we are unable to secure additional capital, we may be required to take additional measures to reduce costs in order to conserve our cash in amounts sufficient to sustain operations and meet our obligations.

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This product liability insurance coverage for our clinical studies may not be sufficient to reimburse us for all expenses or losses we may suffer.

Moreover, insurance

coverage is becoming increasingly expensive, and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability.

Moreover, insurance coverage is becoming increasingly expensive, and, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses due to liability.

If and when we obtain marketing approval for any of our product candidates, we intend to expand our insurance coverage to include the sale of commercial products;

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Due to our financing activities, we experienced ownership changes that have resulted in significant limitations on the future use of our NOL carryforwards.

As of June 30, 2024, we have US federal NOL carryforwards of approximately $171.7 million, of which $33.4 million will expire without any opportunity for utilization due to the limitations set forth in IRC Section 382.

Assuming that further IRC Section 382 ownership changes do not occur, the remaining $138.3 million of NOL carryforwards consist of approximately (i) $38.0 million that never expire and are currently available to offset taxable income, (ii) $9.6 million that are currently available to offset taxable income but if not utilized will expire in 2031 through 2035, (iii) $11.7 million that becomes available through 2038 and that expire by June 30, 2038 if not utilized, and (iv) $79.0 million that never expire.

With respect to $79.0 million of NOL carryforwards that never expire, this amount will become available in varying annual amounts for an aggregate of approximately $13.2 million through fiscal year 2038, and $1.2 million annually thereafter.

As of June 30, 2025, we have U.S.

federal NOL carryforwards of approximately $201.4 million, of which $33.4 million will expire without any opportunity for utilization due to the limitations set forth in IRC Section 382.

Assuming that further IRC Section 382 ownership changes do not occur, the remaining $168.0 million of NOL carryforwards consist of approximately (i) $10.5 million that are currently available to offset taxable income but if not utilized will expire in 2031 through 2035, (ii) $10.8 million that becomes available through 2038 and that expire by June 30, 2038 if not utilized, and (iii) $146.7 million that never expire.

It should be noted that there was an ownership change in 2025 that the $201.4 million will be subject to going forward.

However, the ownership limitation that occurred in the 2022 fiscal year was more restrictive.

It should be noted that with respect to $75.7 million of the $146.7 million of NOL carryforwards that never expire, the $75.7 million are subject to more restrictive prior 382 limitations, and as such will become available in varying annual amounts for an aggregate of approximately $9.9 million through fiscal year 2038, and $1.2 million annually thereafter.

It is possible that any future ownership changes could result in further limitations on the use of our NOL carryforwards or other tax attributes, which could adversely affect our future financial position, profitability and cash flows.

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Undetected material weaknesses in our internal control over financial reporting could lead to financial statement restatements and require us to incur the expense of remediation.

After remediation of a material weakness identified during the fiscal quarter ended March 31, 2024, we have determined that our internal control over financial reporting was effective as of June 30, 2024.

However, we cannot provide assurance that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future.

Although we have determined that our internal control over financial reporting was effective as of June 30, 2025, we cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future.

Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows.

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Failure to remediate any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

In the future we may not qualify as are no a “smaller reporting company” within the meaning of the Securities Act and as a result we would be will be subject to certain enhanced disclosure requirements which will require us to incur significant expenses and expend time and resources.

As of September 15, 2025, our market capitalization was $678.4 million.

If our market capitalization continues on its current trajectory it is possible that as of December 31, 2025, we may no longer qualify as a “smaller reporting company,” and, as a result, we would be required to comply with various disclosure and compliance requirements that did not previously apply, such as the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, the requirement that we hold a nonbinding advisory vote on executive compensation and obtain stockholder approval of any golden parachute payments not previously approved, the requirement to provide full and more detailed executive compensation disclosure and the reduction in the amount of time for filing our periodic and annual reports.

Compliance with these additional requirements increases our legal and financial compliance costs and causes management and other personnel to divert attention from operational and other business matters to these additional public company reporting requirements.

In addition, if we are not able to comply with changing requirements in a timely manner, the market price of our stock could decline and we could be subject to delisting proceedings by the stock exchange on which our common shares are listed, or sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

Operations outside the United States may be affected by different local politics, business and cultural factors, different regulatory requirements and prohibitions between jurisdictions.

We intend to seek regulatory approval in foreign countries for all of our potential products prior to commercialization.

We intend to seek regulatory approval in foreign countries for all of our potential product candidates prior to commercialization.

Pharmaceutical therapies are subject to rigorous preclinical testing and clinical trials and other pre-market approval requirements by Regulatory Authorities in foreign countries.

Operations outside the United States may be affected by different local business and cultural factors, different regulatory requirements and prohibitions between jurisdictions, including the Foreign Corrupt Practices Act and local laws prohibiting corrupt payments, and changes in regulatory requirements for financing activities.

Operations outside the United States may

be affected by different local business and cultural factors, different regulatory requirements and prohibitions between jurisdictions, including the Foreign Corrupt Practices Act and local laws prohibiting corrupt payments, and changes in regulatory requirements for financing activities.

Our collection, use, processing, and cross-border transfer of personal information, including individually identifiable health information, is governed by restrictive regulations.

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Unrealized losses in our marketable debt securities portfolio may increase in the future due to the aforementioned economic factors.

While our goal

is to hold each security until maturity, that may not be possible in light of our policy to preserve capital and liquidity and because investment in securities with unrealized losses has a diminished utility as a source of liquidity prior to maturity.

While our goal is to hold each security until maturity, that may not be possible in light of our policy to preserve capital and liquidity and because investment in securities with unrealized losses has a diminished utility as a source of liquidity prior to maturity.

Selling securities with an unrealized loss would result in the realization of such losses, which could have an adverse effect on our financial condition and results of operations.

Unfavorable global and regional economic, political and health conditions could adversely affect our business, financial condition or results of operations.

Unfavorable global and regional economic and political conditions could adversely affect our business, financial condition or results of operations.

Our business could be adversely affected by global or regional economic, political and health conditions.

Various macroeconomic factors could adversely affect our business, financial condition and results of operations, including changes in inflation, interest rates and overall economic conditions and uncertainties, including those resulting from political instability, trade disputes between nations and the current and future conditions in the global financial markets.

For example, beginning in fiscal year ended June 30, 2023, much of the world, including the U.S.

and the E.U., began to experience inflation levels not seen in more than 30 years.

As a result, prices for many of our inputs have risen, in some cases dramatically.

If inflation stays at elevated levels or increases, we may not be able to mitigate the impact of the increased costs we will bear, which could have an impact on our results of operations and financial condition.

A global financial crisis or global or regional political and economic instability, wars, terrorism, civil unrest, outbreaks of disease (for example, COVID-19), and other unexpected events, such as supply chain constraints or disruptions, could cause extreme volatility in the capital and credit markets and disrupt our business.

Business disruptions could include, among others, disruptions to our commercial activities, including due to supply chain or distribution constraints or challenges, clinical enrollment, clinical site availability, patient accessibility, and conduct of our clinical trials, as well as temporary closures of the facilities of suppliers or contract manufacturers in the biotechnology supply chain.

In addition, during certain crises and events, patients may prioritize other items over certain or all of their treatments and/or medications, which could have a negative impact on our commercial sales.

A severe or prolonged economic downturn, political disruption or adverse health conditions could result in a variety of risks to our business, including our ability to raise capital when needed on acceptable terms, if at all.

Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the political or economic climate and financial market conditions could adversely impact our business.

Various macroeconomic factors could adversely affect our business, financial condition and results of operations, including changes in inflation, tariffs, interest rates and overall economic conditions and uncertainties, including those resulting from political instability, trade disputes between nations and the current and future conditions in the global financial markets.

For example, the current U.S.

trade policy is focused on tariffs and retaliatory tariffs which has had a significant impact on the global economy which could potentially adversely affect our business, financial condition or results of operations.

Certain Provisions of Nevada law may have anti-takeover effects.

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Risks Related to Our Common Stock

Exercise or conversion of warrants, stock options and other convertible securities will dilute shareholder’s percentage of ownership.

In addition to pre-funded warrants (“PFWs”), we have issued stock options and other warrants to purchase shares of our common stock.

In the future, we may grant additional stock options, warrants and convertible securities.

The exercise, conversion or exchange of stock options, warrants and convertible securities will dilute the percentage ownership of our shareholders.

The dilutive effect of the exercise or conversion of these securities may adversely affect our ability to obtain additional capital.

The holders of these securities may be expected to exercise or convert such stock options, warrants and convertible securities at a time when we would be able to obtain additional equity capital on terms more favorable than such securities or when our common stock is trading at a price higher than the exercise or conversion price of the securities.

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 (i) limited trading activity on our common stock, (ii) positive or negative results achieved in our clinical activities, including regulatory determinations, (iii) our ability to obtain financing, (iv) additions or departures of key personnel, (v) the specific terms associated with new debt or equity financings, (vi) our ability to execute our business plan, (vii) loss of any strategic relationship, and (viii) economic and other external factors.

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 companies.

These market fluctuations may also materially and adversely affect the market price of our common stock.

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our shareholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period or lockup agreements, under Rule 144, or issued upon the exercise of outstanding PFWs, stock options, warrants or other convertible securities, it could create a circumstance commonly referred to as an “overhang” and in

anticipation of which the market price of our common stock could fall.

If our shareholders sell substantial amounts of our common stock in the public market upon the expiration of any statutory holding period or lockup agreements, under Rule 144, or issued upon the exercise of outstanding PFWs, stock options, RSUs, warrants or other convertible securities, it could create a circumstance commonly referred to as an “overhang” and

in anticipation of which the market price of our common stock could fall.

The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

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Investor awareness activities may also be suspended or discontinued, which may impact the trading market of our common stock.

We have no current plan to pay dividends on our common stock and investors may lose the entire amount of their investment.

We have never paid cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock for the foreseeable future.

Accordingly, any income derived from our common stock would only come from a rise in the market price of our common stock, which is uncertain and unpredictable.

We cannot assure investors of a positive return on their investment.

Changes in U.S.

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Changes to tax laws (which changes may have retroactive application) could adversely affect us or the holders of our common stock.

For example, for the fiscal year ended June 30, 2023, we became subject to Internal Revenue Code Section 174 that requires capitalization of the vast majority of research and development costs whereas under prior tax law substantially all of these costs were deductible in the year incurred.

Section 174 provides that such newly-capitalized costs may be amortized and become deductible over a period of 5 years for U.S.

based costs and 15 years for foreign- based costs.

It cannot be predicted whether, when, in what form, or with what effective dates, new tax laws or regulations may be enacted under existing or new tax laws.

This could result in an increase in our tax liability or require changes in our business in order to mitigate any adverse effects of changes in tax laws.

One Big Beautiful Bill Act (“OBBBA”)

The recent enactment of the OBBBA may adversely affect our business, financial condition, results of operation and future plans.

Because the OBBBA is a wide reaching law, we are assessing its potential impact on our business, financial condition, results of operations and future plans and we plan to provide an update in future SEC filings once this assessment is complete.

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