Risk Factors Update Summary

• The company significantly reduced resources for IGALMI commercialization, impacting revenue generation. Revenue for IGALMI was $1.4 million in 2023.
• Added legal proceedings detail, including multiple stockholder derivative complaints and SEC investigation.
• Increased litigation risks due to new laws regulating AI in the EU and potential impact on operations.
• Minimum cash liquidity requirement under the Credit Agreement increased from $15 million to $65 million.
• Reduction in force may lead to unintended costs and consequences, impacting institutional knowledge and expertise.
• Investigator misconduct in the TRANQUILITY II trial may impact data integrity and FDA acceptance.
• Net loss increased from $165.8 million in 2022 to $179.1 million in 2023.
• EU AI Act with fines up to 7% of worldwide annual turnover expected to apply in 2024.
• Failure to raise additional financing could trigger default under the Credit Agreement.
• Stockholders' equity deficit decreased from approximately $76 million to $56 million.
• The company may need to rebuild a commercial sales team post-Reprioritization, incurring significant costs.
• Decrease in beneficial ownership from 37% to 35% by directors, executives, and affiliates.
• Changes in healthcare laws, such as the Medicare prescription Inflation Reduction Act, could impact pricing and reimbursement.
• FDA feedback requires additional Phase 3 efficacy and safety data for BXCL501 approval.
• The company's estimated total addressable market is subject to challenges and uncertainties, impacting revenue.
• Going concern doubt raised due to insufficient cash to support operations and service debt obligations.
• The company faces challenges in accurately forecasting demand for IGALMITM, risking inventory write-downs.
• Potential impact of the UK Extension to the DPF on data transfer mechanisms.
• Change from "emerging growth company" to "smaller reporting company" with reduced disclosure requirements.
• Reprioritization shifts focus to at-home settings, impacting commercialization and revenue generation.
• Workforce reduced by approximately 60% as part of strategic reprioritization in August 2023.
• The company's reliance on third parties for manufacturing and clinical trials poses risks to commercialization efforts.
• The company may face competitive disadvantages due to higher fixed costs associated with a direct sales force.
• Limited clinical data for at-home use of BXCL501 may hinder FDA approval in this setting.
• Limited ability to use federal NOLs of $351 million and state NOLs of $360 million.
• Risks associated with patent protection, potential invalidation, and enforcement challenges.
• Fast Track designation obtained for BXCL501 and BXCL701, potentially expediting regulatory processes.
• Risks related to maintaining patent protection, including uncertainties with the UPC system in Europe.
• Regulatory changes in the UK post-Brexit may impact clinical trial approvals and regulatory flexibility.
• Failure to gain market acceptance for products like IGALMITM may impact revenue generation.
• Challenges in enforcing intellectual property rights, potential infringement, and legal proceedings.