Risk Factors Update Summary

• Inability to meet commercial demands due to manufacturing facility disruptions could impact profitability.
• Added "Limited Operating History" risk factor. Net cash may be less than $18 million at merger closing.
• The company relies on third parties for manufacturing, increasing the risk of delays or interruptions.
• Increased reliance on trade secrets protection with potential competitor discovery risks. This may lead to misappropriation or disclosure of proprietary technologies.
• Failure to obtain or maintain necessary rights to product components could significantly impact the business.
• Provided all maintenance fees are timely paid, a patent generally has a term of 20 years. Extensions may be available, but the life of a patent is limited.
• Unexpected side effects could lead to trial halts, regulatory denials, and potential product liability claims.
• Expanded clinical trials in India may introduce political and economic risks, impacting trial success.
• The IRA extends enhanced subsidies for health insurance coverage through plan year 2025.
• Added "Need for Additional Capital" risk factor. Current resources may fund operations into the second half of 2025.
• Added "Need for Additional Capital" risk factor. Accumulated deficit of $204.8 million as of December 31, 2022.
• Failure to comply with regulatory requirements or maintain quality standards could delay commercialization efforts.
• Addition of licensing compositions, methods of use, processes from third parties identified as useful or necessary.
• Regulatory authorities may not accept data from trials conducted outside the U.S., impacting approvals.
• The IRA eliminates the Medicare Part D "donut hole" starting in 2025.
• Conducting trials in foreign countries may lead to delays due to differences in regulatory schemes.
• Failure to comply with procedural, fee payment, and other requirements could reduce or eliminate patent protection.
• Failure to achieve market acceptance by physicians, patients, and payors may limit product revenue.
• Sales of our product candidates could be weakened, impacting our ability to raise capital.
• Obtaining and enforcing patents in biotech/pharma is costly and uncertain due to evolving U.S. and foreign patent laws.
• Uncertainty regarding FDA disclosure policies and potential impact on trade secrets. This could affect competitive business position.
• Depending on FDA approval timing, patents may be eligible for up to 5 years extension under Hatch-Waxman Amendments.
• Inclusion of potential penalties up to 20 million euros, 17.5 million pounds sterling under UK GDPR for noncompliance.
• The reliance on single-source suppliers, including one in China, for components increases supply chain risk.
• Added "Need for Additional Capital" risk factor. Accumulated deficit of $146.1 million as of December 31, 2023.
• Failure to comply with GCP requirements may result in unreliable data and additional clinical trials.
• Added "Financial Position" risk factor. A condition causing merger failure if net cash is less than $18 million.
• Inadequate control over third-party manufacturing may lead to delays, compliance issues, or termination.
• Delays in patient enrollment could increase trial costs and hinder commercialization efforts.
• Potential legal challenges and time-consuming litigation to enforce proprietary rights. Failure could harm competitive position.
• Limited manufacturing arrangements for product candidates may lead to delays or quality issues.
• Changes in U.S. patent law could diminish patent value, impacting the ability to protect Auxora.
• Reliance on third parties for clinical trials may lead to delays, increased costs, or termination.
• Failure to obtain patent term extension for Auxora may materially harm the business.
• Competition may result in reduced commercial opportunity if competitors develop safer, more effective products.
• A weak economy could strain suppliers, leading to delayed payments from customers.
• Legislative changes reduce Medicare payments to providers by 2% per fiscal year until 2032.
• Pediatric trials are costly and challenging, with limited specialized sites and potential recruitment difficulties.
• Added "Capital Requirements" risk factor. Failure may lead to merger termination due to industry-wide changes.
• Added "Need for Additional Capital" risk factor. Cash, cash equivalents, and short-term investments decreased from $39.1 million to $11.2 million.
• Disclosure of federal and state net operating loss carryforwards of approximately $278.7 million and $103.5 million.
• President Biden's executive order includes mandates on pharmaceutical and healthcare industries.
• Financial relationships with investigators may lead to conflicts of interest, jeopardizing trial integrity.
• Reduced disclosure as a smaller reporting company may hinder investor analysis of our prospects.
• Mention of potential lawsuits and reputation harm due to breaches in third-party partners' supply chains.
• Need for substantial additional capital for the development and commercialization of product candidates.
• Risks associated with trademark protection and potential infringement claims. Failure to protect trademarks could impact name recognition.
• Inclusion of potential penalties for violations under the CCPA and private right of action for data breaches.
• Difficulty in managing growth and attracting/retaining skilled personnel may disrupt operations.
• HHS announced the first ten drugs subject to price negotiations on August 29, 2023.
• Environmental, health, and safety compliance risks could lead to fines or penalties impacting financial condition.
• Disclosure of potential adverse effects from cyber incidents, including theft of intellectual property and data leakage.
• Volatility in stock price due to various factors beyond company control. Market fluctuations may affect stock value.
• HHS released a report outlining new models for drug cost reduction on February 14, 2023.
• Uncertainty in establishing collaborations for product development and commercialization may delay programs.
• Increased compliance costs due to changes in financial accounting standards. Compliance efforts may impact expenses and management focus.
• Reliance on CROs and other organizations for conducting clinical trials may impact efficiency and effectiveness.
• The Biden administration announced an initiative to control prescription drug prices through march-in rights.
• Addition of potential limitations on the use of net operating losses due to ownership changes.