# Outlook Therapeutics, Inc.: Form 10-Q for the period ended Dec 31, 2023

- Company: [Outlook Therapeutics, Inc.](/companies/otlk.md) (CIK 1649989)
- Form: 10-Q
- Filed: 2024-02-14
- Accepted by EDGAR: Feb 14, 2024, 22:10 ET
- Period: 2023-12-31
- Accession: 0001558370-24-001172
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1649989/000155837024001172/otlk-20231231x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1649989/000155837024001172/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-12-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2023-10-01 to 2023-12-31 | $4.5m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-10-01 to 2023-12-31 | −$10.3m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2023-10-01 to 2023-12-31 | −$11.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-10-01 to 2023-12-31 | −$0.04 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-10-01 to 2023-12-31 | −$0.04 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-10-01 to 2023-12-31 | 260,257,517 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-10-01 to 2023-12-31 | −$13.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2023-12-31 | $10.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-12-31 | $20.4m | us-gaap:AssetsCurrent |
| Total assets | at 2023-12-31 | $21.7m | us-gaap:Assets |
| Current liabilities | at 2023-12-31 | $46.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-12-31 | $46.0m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-12-31 | −$24.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 53,772 characters.

*You should read this section in conjunction with our unaudited interim consolidated financial statements and related notes included in Part I, Item 1 of this report and our audited consolidated financial statements and related notes thereto and management’s discussion and analysis of financial condition and results of operations for the years ended September 30, 2023 and 2022 included in our Annual Report on Form 10-K for the year ended September 30, 2023, filed with the Securities and Exchange Commission, or SEC, on December 22, 2023.*

### Forward-Looking Statements

*This discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “seek,” “should,” “will,” “would,” or the negative of these terms or similar expressions in this report. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other forward-looking information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. These forward-looking statements are subject to certain risks and uncertainties that could cause a material difference including, but not limited to, those discussed under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended September 30, 2023, filed with the SEC on December 22, 2023, and elsewhere in this report. See “Special Note Regarding Forward-Looking Statements.” Forward-looking statements are based on our management’s current beliefs and assumptions and based on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments.*

### Overview

We are a biopharmaceutical company working to launch the first ophthalmic formulation of bevacizumab approved by the U.S. Food and Drug Administration, or the FDA, for use in retinal indications. Our goal is to launch directly in the United States as the first and only approved ophthalmic bevacizumab for the treatment of wet age-related macular degeneration, or wet AMD, diabetic macular edema, or DME, and branch retinal vein occlusion, or BRVO. Our plans also include seeking approval and launching the product in the United Kingdom, Europe, Japan and other markets, either directly or through a strategic partner. If approved, we expect to receive 12 years of regulatory exclusivity in the United States and up to 10 years of market exclusivity in the European Union.

Bevacizumab is a full-length, humanized anti-VEGF (Vascular Endothelial Growth Factor) recombinant monoclonal antibody, or mAb, that inhibits VEGF and associated angiogenic activity. In March 2022, we submitted a BLA with the FDA for ONS-5010 (LYTENAVA (bevacizumab-vikg)), an investigational ophthalmic formulation of bevacizumab, which we have developed to be administered as an intravitreal injection for the treatment of wet AMD and other retinal diseases. In May 2022, we voluntarily withdrew our BLA to provide additional information requested by the FDA. We re-submitted the BLA to the FDA for ONS-5010 on August 30, 2022, and in October 2022, we received confirmation from the FDA that our BLA had been accepted for filing with a goal date of August 29, 2023 for a review decision by the FDA. On August 29, 2023, we received a Complete Response Letter, or CRL, in which the FDA concluded it could not approve the BLA during this review cycle due to several chemical, manufacturing and control, or CMC, issues, open observations from pre-approval manufacturing inspections, and a lack of substantial evidence. At subsequent Type A meetings with the FDA, we learned that the FDA requires the successful completion of an additional adequate and well-controlled clinical trial evaluating ONS-5010, as well as additional requested CMC data indicated in the CRL to approve ONS-5010 for use in wet AMD.

We agreed to conduct an additional adequate, and well-controlled clinical trial following discussions with the FDA in support of our BLA for ONS-5010. In December 2023, we submitted a Special Protocol Assessment, or SPA, to the FDA for this study (NORSE EIGHT) seeking confirmation that, if successful, it will address the FDA’s requirement for a second adequate and well-controlled clinical trial to support our planned resubmission of the ONS-5010 BLA. In January 2024, we received confirmation that the FDA has reviewed and agreed upon the NORSE EIGHT trial protocol pursuant to the SPA. If the NORSE EIGHT trial is successful, it would satisfy the FDA’s requirement for a second adequate and well- controlled clinical trial to address fully the clinical deficiency identified in the CRL. The first subject was enrolled in NORSE EIGHT in January 2024. In addition, through a Type A meeting and additional interactions, we have identified the approaches needed to resolve the CMC comments in the CRL. We are working to address the open items and expect to resolve these comments prior to the expected completion of NORSE EIGHT.

Separately, in October 2022 we submitted a Marketing Authorization Application, or MAA, for ONS-5010 with the European Medicines Agency, or the EMA. On December 22, 2022, our MAA was validated for review by the EMA. The MAA was submitted as a ‘full-mixed marketing authorisation application’ based on Article 8.3 of Directive 2001/83/EC. The formal review process of the MAA by the EMA’s Committee for Medicinal Products for Human Use, or CHMP, is now underway with an estimated decision date expected in the first half of calendar 2024. ONS-5010 is our sole product candidate in active development.

Our initial BLA submission for ONS-5010 in wet AMD involved three clinical trials, which we refer to as NORSE ONE, NORSE TWO and NORSE THREE. The study design for our clinical program to evaluate ONS-5010 as an ophthalmic formulation of bevacizumab was reviewed at an end of Phase 2 meeting with the FDA in April 2018, and we filed our investigational new drug application, or IND, with the FDA in the first quarter of calendar 2019. In August 2020, we reported achieving the anticipated safety and efficacy and positive proof-of-concept topline results from NORSE ONE, a clinical experience study. NORSE TWO is our pivotal Phase 3 clinical trial comparing ONS-5010 (bevacizumab-vikg) to ranibizumab (LUCENTIS). The topline results reported from NORSE TWO in August 2021 showed that ONS-5010 met the primary and key secondary endpoint for efficacy with clinically impactful change observed for treated patients. The NORSE TWO primary endpoint difference in proportion of subjects gaining at least 15 letters in Best Corrected Visual Acuity, or BCVA, score was met and was both highly statistically significant and clinically relevant. In the intent to treat, or ITT, primary dataset, the percentage of patients who gained at least 15 letters who were treated with ONS-5010, was 41.7%, and the percentage of patients who gained at least 15 letters who were treated with ranibizumab was 23.1% (p = 0.0052). The primary endpoint was also statistically significant and clinically relevant in the secondary per protocol, or PP, dataset (p = 0.04) where the percentages were almost identical, at 41.0% with ONS-5010, and 24.7% with ranibizumab. The key secondary endpoint BCVA score change from baseline to month 11 in the primary ITT dataset was also highly statistically significant and clinically relevant (p = 0.0035). A mean change of 11.2 letters in BCVA score was observed with ONS-5010, and with ranibizumab the mean change was 5.8 letters. The results were also statistically significant in the secondary PP dataset (p = 0.01) with a mean change with ONS-5010 of 11.1 letters versus 7.0 letters with ranibizumab. Additionally, the majority of ONS-5010 subjects maintained or gained BCVA during the study (defined as change from baseline in BCVA ≥ 0), with at least 80% of ONS-5010 subjects maintaining BCVA each month. Results were also positive for the remaining NORSE TWO secondary endpoints with 56.5% (p = 0.0016) of ONS-5010 subjects gaining ≥ 10 letters of vision and 68.5% (p = 0.0116) of ONS-5010 subjects gaining ≥ 5 letters of vision. NORSE THREE is an open-label safety study we conducted to ensure the adequate number of safety exposures to ONS-5010 were available for the initial ONS-5010 BLA submission with the FDA. In March 2021, we reported that the results from NORSE THREE showed a positive safety profile for ONS-5010. The NORSE BLA registration program is also being used to support our MAA submission in the European Union.

As agreed to with the FDA in the SPA, NORSE EIGHT will be a randomized, controlled, parallel-group, masked, non-inferiority study of approximately 400 newly diagnosed, wet AMD subjects randomized in a 1:1 ratio to receive 1.25 mg ONS-5010 or 0.5 mg ranibizumab intravitreal injections. Subjects will receive injections at Day 0 (randomization), Week 4, and Week 8 visits. The primary endpoint will be mean change in BCVA from baseline to week 8. The first subject was enrolled in NORSE EIGHT in January 2024. We expect NORSE EIGHT topline results and potential resubmission of the ONS-5010 BLA by the end of calendar year 2024.

Additionally, in November 2021, we began enrolling patients in our NORSE SEVEN clinical trial. The study compares the safety of ophthalmic bevacizumab in vials versus pre-filled syringes in subjects diagnosed with a retinal condition that would benefit from treatment with intravitreal injection of bevacizumab, including exudative age-related macular degeneration, DME, or BRVO. Subjects will be treated for three months, and the enrollment of subjects in the arm of the study receiving ONS-5010 in vials has been completed.

We have also received agreement from the FDA on three Special Protocol Assessments, or SPAs, for three additional registration clinical trials for our ongoing Phase 3 program for ONS-5010. The agreements reached with the FDA on these SPAs cover the protocols for NORSE FOUR, a registration clinical trial evaluating ONS-5010 to treat BRVO, and NORSE

FIVE and NORSE SIX, two registration clinical trials evaluating ONS-5010 to treat DME. We intend to initiate these studies following the anticipated FDA approval of our BLA for wet AMD.

Because there are no approved bevacizumab products for the treatment of retinal diseases in the United States and other major markets, we submitted a standard BLA, and are not using the biosimilar drug development pathway that would be required if Avastin were an approved drug for the targeted diseases. If approved, we believe ONS-5010 has potential to mitigate risks associated with off-label use of unapproved bevacizumab. In the United States, approximately 66.3% of new patient starts are off-label repackaged bevacizumab (ASRS 2022 Membership Survey Presented at ASRS NY 2022).

### Going Concern

Through December 31, 2023 we have funded substantially all of our operations with $470.6 million in proceeds from the sale and issuance of our equity and debt securities. We have also received $29.0 million pursuant to our collaboration and licensing agreements through such date. Our net loss for the three months ended December 31, 2023 was $11.2 million. We also had a net loss of $18.7 million for the three months ended December 31, 2022. We have not generated any revenue from product sales. We anticipate incurring additional losses until such time, if ever, that we can generate significant sales of ONS-5010 or any other product candidate we may develop.

In January 2024, we entered into a securities purchase agreement with the investors named therein, pursuant to which we agreed to sell and the investors agreed to purchase shares of common stock and accompanying warrants to purchase shares of common stock in a private placement, or the Private Placement, for gross proceeds of up to $60 million at closing, plus up to an additional $99 million upon full cash exercise of the warrants. In addition, in January 2024, we entered into a securities purchase agreement with Syntone Ventures, LLC, or Syntone, pursuant to which the Company agreed to sell and Syntone agreed to purchase shares of common stock and accompanying warrants to purchase shares of common stock in a private placement (the “Syntone Private Placement” and together with the Private Placement, the “Private Placements”), for gross proceeds of up to $5 million at closing. Concurrently with the Private Placements, we entered into an amendment to the December 2022 Note (as defined under “—Liquidity and Capital Resources”), which, among other things, would extend the maturity of the December 2022 Note to July 1, 2025. Both the Private Placements and December 2022 Note amendment are subject to satisfaction of certain closing conditions, including (i) an authorized share capital increase and (ii) a reverse stock split, each of which must be implemented prior to closing of the Private Placements, as well as (iii) approval of the private placement under for Nasdaq Rule 5635(d). The Private Placements will not close, the shares of common stock and warrants will not be issued and the proceeds will not be received by us unless and until the closing conditions are satisfied. Similarly, the December 2022 Note amendment will not be effective unless the relevant conditions are satisfied. Therefore, there can be no assurance that the Private Placements will close successfully or that the December 2022 Note amendment will become effective. See Note 12 to the unaudited consolidated interim financial statements included herein for additional information on the private placements and the December 2022 Note amendment.

We evaluated whether there are conditions or events considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern. We do not believe that the existing cash and cash equivalents as of December 31, 2023 are sufficient to fund the Company’s operations through one year from the Form 10-Q filing date. However, we do believe that our existing cash and cash equivalents of $10.4 million as of December 31, 2023, in combination with the expected proceeds from the Private Placements (subject to closing conditions being met and meeting the requirements for calling the associated warrants) are sufficient to support our operations, complete the execution of NORSE EIGHT, resubmit the ONS-5010 BLA and, if approved, support the commercial launch of ONS-5010. If our stockholders do not approve the Private Placements or the change in terms for our December 2022 Note at our upcoming annual meeting of stockholders, it would raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

### Collaboration, License and Strategic Partnership Agreements

From time to time, we enter into collaboration and license agreements for the research and development, manufacture and/or commercialization of our products and/or product candidates. These agreements generally provide for non-refundable upfront license fees, development and commercial performance milestone payments, cost sharing, royalty payments and/or profit sharing. We have also licensed rights to our inactive biosimilar program product candidates (ONS-3010, ONS-1045 and ONS-1050) in other markets.

### Syntone – PRC Joint Venture

In May 2020, we entered into a stock purchase agreement with Syntone Ventures LLC, or Syntone Ventures, the United States-based affiliate of Syntone Technologies Group Co. Ltd., or Syntone PRC, pursuant to which we sold and issued in June 2020, in a private placement, 16,000,000 shares of our common stock at a purchase price of $1.00 per share, for aggregate gross proceeds of $16.0 million. In connection with the entry into the stock purchase agreement, we entered into a joint venture agreement with Syntone PRC pursuant to which we agreed to form a People’s Republic of China, or PRC joint venture, Beijing Syntone Biopharma Ltd, or Syntone JV, that is 80% owned by Syntone PRC and 20% owned by us. Upon formation of Syntone JV in April 2021, we entered into a royalty-free license with Syntone JV for the development, commercialization and manufacture of ONS-5010 in the greater China market, which includes Hong Kong, Taiwan and Macau.

We used approximately $0.9 million of the proceeds from the May 2020 private placement to Syntone Ventures to fund our initial capital contribution to Syntone JV and are committed to making capital contributions to Syntone JV of approximately $2.1 million, based upon the development plan contemplated in the license agreement. The maximum exposure to a loss as a result of our involvement in Syntone JV is limited to the initial investment and the future capital contributions totaling approximately $2.1 million.

### Selexis SA

In October 2011, we entered into a research license agreement with Selexis whereby we acquired a non-exclusive license to conduct research internally or in collaboration with third parties to develop recombinant proteins from cell lines created in mammalian cells using the Selexis expression technology, or the Selexis Technology. The research license expired on October 9, 2018 and accordingly, we are no longer using the Selexis Technology in our research.

Selexis also granted us a non-transferrable option to obtain a perpetual, non-exclusive, worldwide commercial license under the Selexis Technology to manufacture, or have manufactured, a recombinant protein produced by a cell line developed using the Selexis Technology for clinical testing and commercial sale. We exercised this option in April 2013 and entered into three commercial license agreements with Selexis for our ONS-3010, ONS-1045 (which covers ONS-5010) and ONS-1050 product candidates. We paid an upfront licensing fee to Selexis for each commercial license and also agreed to pay a fixed milestone payment for each licensed product. In addition, we are required to pay a single-digit royalty on a final product-by-final product and country-by-country basis, based on worldwide net sales of such final products by us or any of our affiliates or sub-licensees during the royalty term. At any time during the term, we have the right to terminate our royalty payment obligation by providing written notice to Selexis and paying Selexis a royalty termination fee. The initiation of our Phase 3 clinical program for ONS-5010 triggered a CHF 65,000 (approximately $0.1 million) milestone payment under the commercial license agreement, which we paid in November 2019.

### Components of our Results of Operations

### Research and Development Expenses

Research and development expense consists of expenses incurred in connection with the discovery and development of our product candidates. We expense research and development costs as incurred. These expenses include:

- expenses incurred under agreements with contract research organizations, or CROs, as well as investigative sites and consultants that conduct our preclinical studies and clinical trials;
- expenses incurred by us directly, as well as under agreements with contract manufacturing organizations, or CMOs, for manufacturing scale-up expenses and the cost of acquiring and manufacturing preclinical and clinical trial materials and commercial materials, including manufacturing validation batches;
- outsourced professional scientific development services;
- employee-related expenses, which include salaries, benefits and stock-based compensation;
- payments made under a third-party assignment agreement, under which we acquired intellectual property;
- expenses relating to regulatory activities, including filing fees paid to regulatory agencies;
- laboratory materials and supplies used to support our research activities; and
- allocated expenses, utilities and other facility-related costs.

The successful development of our product candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder of the development of, or when, if ever, material net cash inflows may commence from any of our other product candidates. This uncertainty is due to the numerous risks and uncertainties associated with the duration and cost of clinical trials, which vary significantly over the life of a project as a result of many factors, including:

- the number of clinical sites included in the trials;
- the length of time required to enroll suitable patients;
- the number of patients that ultimately participate in the trials;
- the number of doses patients receive;
- the duration of patient follow-up;
- the results of our clinical trials;
- the establishment of commercial manufacturing capabilities;
- the receipt of marketing approvals; and
- the commercialization of product candidates.

Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals. We may never succeed in achieving regulatory approval for any of our biosimilar product candidates. We may obtain unexpected results from our clinical trials. We may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the FDA or other regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development. Full product commercialization will take several years and millions of dollars in additional costs.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size, complexity and duration of later-stage clinical trials.

### General and Administrative Expenses

General and administrative expenses consist principally of salaries and related costs for personnel in executive, administrative, finance and legal functions, including stock-based compensation, travel expenses and recruiting expenses. Other general and administrative expenses include facility related costs, patent filing and prosecution costs and professional fees for business development, legal, auditing and tax services and insurance costs.

We anticipate that our general and administrative expenses will increase if and when we believe a regulatory approval of a product candidate appears likely, and we anticipate an increase in payroll and expense as a result of our preparation for commercial operations, particularly as it relates to the sales and marketing of our product.

### Income on Equity Method Investment

Income on equity method investment represents our proportionate share for the period of the net income of our investee to which the equity method of accounting is applied. We account for equity investments where we own a non-controlling interest, but have the ability to exercise significant influence, under the equity method of accounting.

### Interest (Income) Expense, Net

Interest (income) expense, net consists of cash paid and non-cash interest expense related to our senior secured notes, equipment loans, lease liabilities and other finance obligations, net of de minimis amount of interest income.

### Loss on Extinguishment of Debt

Loss on extinguishment of debt is related to the prepayment and cancellation or amendment of promissory notes during the period that was accounted for as an extinguishment.

### Change in Fair Value of Promissory Notes

The change in fair value relates to convertible promissory notes that we elected to account for at fair value. As permitted under ASC 825, we elected the fair value option to account for our convertible promissory notes. We recorded the convertible promissory note at fair value with changes in fair value recorded in the consolidated statements of operations.

### Change in Fair Value of Warrant Liability

We issued warrants to purchase our common stock in conjunction with convertible senior secured notes issued pursuant to a certain Note and Warrant Purchase Agreement dated December 22, 2017, which are classified as liabilities and recorded at fair value. The warrants are subject to re-measurement at each balance sheet date and we recognize any change in fair value in our statements of operations.

### Income Taxes

During the years ended September 30, 2023 and 2022, we had no accruals for foreign withholding taxes in connection with our collaboration and licensing agreements. We did not sell any NOLs or unused research and development tax credits during the years ended September 30, 2023 and 2022.

Since inception, we have not recorded any U.S. federal or state income tax benefits (excluding the sale of New Jersey state NOLs and research and development, or R&D, tax credits) for the net losses we have incurred in each year or on our earned R&D tax credits, due to our uncertainty of realizing a benefit from those items. As of September 30, 2023, we had federal and state NOL carryforwards of $371.7 million and $207.5 million, respectively, that will begin to expire in 2030 and 2039, respectively. As of September 30, 2023, we had federal foreign tax credit carryforwards of $1.6 million available to reduce future tax liabilities, which began to expire in 2023. As of September 30, 2023, we also had federal and state R&D tax credit carryforwards of $11.2 million and $0.8 million, respectively, that will begin to expire in 2032 and 2033, respectively.

In general, under Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its NOLs to offset future taxable income. We have not completed a study to assess whether an ownership change has occurred in the past. Our existing NOLs may be subject to limitations arising from previous ownership changes, and if we undergo an ownership change in connection with or after our initial public offering, our ability to utilize NOLs could be further limited by Section 382 of the Code. Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Code. Our NOLs are also subject to international regulations, which could restrict our ability to utilize our NOLs. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

On August 16, 2022, President Biden signed the Inflation Reduction Act, or the IRA. The IRA contains a number of tax related provisions including a 15% minimum corporate income tax on certain large corporations as well as an excise tax on stock repurchases, both provisions are effective for tax years beginning after December 31, 2022. We are in the process of evaluating the IRA, but do not expect it to have a material impact on our consolidated financial statements.

Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

### Results of Operations

### Comparison of Three Months Ended December 31, 2023 and 2022

| ​ ​ ​ Operating expenses: | ​ ​ ​ | ​ ​ Three months ended December 31, 2023 ​ ​ | ​ ​ | ​ ​ 2022 ​ ​ | ​ ​ ​ | ​ ​ ​ ​ Change ​ ​ |
| --- | --- | --- | --- | --- | --- | --- |
| Research and development | ​ | $4,529,358 | ​ | $9,862,424 | ​ | $(5,333,066) |
| General and administrative | ​ | ​ 5,793,764 | ​ | ​ 5,825,604 | ​ | ​ (31,840) |
| Loss from operations | ​ | ​ (10,323,122) | ​ | ​ (15,688,028) | ​ | ​ 5,364,906 |
| ​ | ​ | ​ ​ | ​ | ​ ​ | ​ | ​ ​ |
| Loss on equity method investment | ​ | ​ (2,548) | ​ | ​ (21,505) | ​ | ​ 18,957 |
| Interest (income) expense, net | ​ | ​ (188,677) | ​ | ​ 2,448,591 | ​ | ​ (2,637,268) |
| Loss on extinguishment of debt | ​ | ​ — | ​ | ​ 577,659 | ​ | ​ (577,659) |
| Change in fair value of promissory notes | ​ | ​ 993,000 | ​ | ​ — | ​ | ​ 993,000 |
| Change in fair value of warrant liability | ​ | ​ 53,342 | ​ | ​ (30,260) | ​ | ​ 83,602 |
| Net loss | ​ | $(11,178,239) | ​ | $(18,662,513) | ​ | $7,484,274 |

#### Research and development expenses

The following table summarizes our research and development expenses by functional area for the three months ended December 31, 2023 and 2022:

| ​ ​ ​ | ​ ​ | ​ ​ Three months ended December 31, 2023 | ​ | ​ ​ 2022 |
| --- | --- | --- | --- | --- |
| ONS-5010 development | ​ | $3,326,461 | ​ | $10,941,055 |
| Compensation and related benefits | ​ | ​ 750,224 | ​ | ​ 748,198 |
| Stock-based compensation | ​ | ​ 231,416 | ​ | ​ 290,656 |
| Other research and development | ​ | ​ 221,257 | ​ | ​ (2,117,485) |
| Total research and development expenses | ​ | $4,529,358 | ​ | $9,862,424 |

Research and development expenses for the three months ended December 31, 2023 decreased by $5.3 million compared to the three months ended December 31, 2022. The decrease was due to a $7.6 million decrease in ONS 5010 development costs in the current period, as drug development activities were scaled back after receipt of the CRL. The decrease was partly offset by the FDA's waiver and refund of BLA submission fees amounting to $2.3 million during the three months ended December 31, 2022, which were paid in 2021.

#### General and administrative expenses

The following table summarizes our general and administrative expenses by type for the three months ended December 31, 2023 and 2022:

| ​ ​ ​ | ​ ​ | ​ ​ Three months ended December 31, 2023 | ​ | ​ ​ 2022 |
| --- | --- | --- | --- | --- |
| Professional fees | ​ | $2,142,669 | ​ | $2,769,884 |
| Compensation and related benefits | ​ | ​ 1,977,487 | ​ | ​ 1,255,416 |
| Stock-based compensation | ​ | ​ 1,041,195 | ​ | ​ 1,101,737 |
| Facilities, fees and other related costs | ​ | ​ 632,413 | ​ | ​ 698,567 |
| Total general and administrative expenses | ​ | $5,793,764 | ​ | $5,825,604 |

General and administrative expenses for the three months ended December 31, 2023 were comparable to the three months ended December 31, 2022. The decrease in professional fees by $0.6 million due to discontinuing commercial launch activities following receipt of the CRL was offset by a $0.7 million increase in compensation and benefits, mainly due to severance costs from headcount reduction.

#### Interest (income) expense, net

Interest (income) expense, net decreased by $2.6 million, from an expense of $2.4 million to a net income of $0.2 million, for the three months ended December 31, 2023, compared to December 31, 2022. This change was primarily due to the recognition of the original issue discount on the December 2022 Note during the three months ended December 31, 2022 after we elected the fair value option to account for the December 2022 Note. There was no interest during the three months ended December 31, 2023, as we accounted for the December 2022 Note under the fair value option.

#### Change in fair value of promissory notes

The change in fair value relates to the promissory notes that we elected to account for at fair value. As permitted under ASC 825, we elected the fair value option to account for our promissory notes. We record the promissory notes at fair value with changes in fair value recorded in the unaudited interim consolidated statements of operations.

### Liquidity and Capital Resources

We have not generated any revenue from product sales. Since inception, we have incurred net losses and negative cash flows from our operations. Through December 31, 2023, we have funded substantially all of our operations with $470.6 million in net proceeds from the sale and issuance of our equity securities, debt securities and borrowings under debt facilities. We have also received an aggregate of $29.0 million pursuant to emerging markets collaboration and licensing agreements for our inactive biosimilar development programs.

We anticipate incurring additional losses until such time, if ever, that we can generate significant sales of ONS-5010 or any other product candidate we may develop. We will need additional financing to fund our operations and to commercially develop ONS-5010 or any other product candidate we may develop and to continue as a going concern. Management is currently evaluating various strategic opportunities to obtain the required funding for future operations. These strategies may include but are not limited to potential licensing and/or marketing arrangements or collaborations with pharmaceutical or other companies, the issuance of equity securities, including through an at-the-market offering program, the issuance of additional debt, and revenues from potential future product sales, if any. Alternatively, we may be required to, among other things, modify our clinical trial plans for ONS-5010 in additional indications, make reductions in our workforce, scale back our plans and place certain activities on hold, discontinue our development programs, liquidate all or a portion of our assets, and/or seek protection under the provisions of the U.S. Bankruptcy Code.

On November 16, 2021, we received $10.0 million in net proceeds from the issuance of the November 2021 Note, with a face amount of $10.2 million. The November 2021 Note bore interest at a rate of 9.5% per annum, was due to mature January 1, 2023 and included an original issue discount of $0.2 million. We could prepay all or a portion of the note at any time by paying 105% of the outstanding balance elected for pre-payment. On December 28, 2022, we prepaid the November 2021 Note in full by paying 105% of the outstanding balance. The total payment was $11.9 million, which included interest of $1.2 million and a prepayment fee of $0.6 million.

During the three months ended December 31, 2022, we sold 895,391 shares of common stock under our Wainwright ATM Offering for $1.1 million in net proceeds, and the fees paid to the sales agent were immaterial.

In December 2022, in a registered direct equity offering to certain institutional and accredited investors, including GMS Ventures, our largest stockholder, we issued 28,460,831 shares of common stock at a purchase price per share of $0.8784 for $23.2 million in net proceeds after payment of placement agent fees and other offering costs. GMS Ventures purchased an aggregate of 14,230,418 shares of common stock in the registered direct equity offering. In connection with the registered direct equity offering, we issued to M.S. Howells & Co., as placement agent for certain accredited investors in the offering, warrants to purchase up to an aggregate of 515,755 shares of common stock, which will be exercisable commencing on the one-year anniversary of the closing of the offering at an exercise price of $1.05 per share, which warrants have a three-year term.

On December 22, 2022, we entered into a Securities Purchase Agreement and issued an unsecured convertible promissory note with a face amount of $31.8 million, or the December 2022 Note, to Streeterville Capital, LLC, or the Lender, the holder of our November 2021 Note. The December 2022 Note has an original issue discount of $1.8 million. A portion of the proceeds from the December 2022 Note were used to repay in full the remaining outstanding principal and accrued interest on the November 2021 Note, which was cancelled upon repayment. We received net proceeds of $18.1 million upon the closing on December 28, 2022, after deducting the Lender’s transaction costs in connection with the issuance and November 2021 Note repayment. The December 2022 Note bears interest at 9.5% per annum and matures on January 1, 2024. The December 2022 Note contains customary covenants, including a restriction on our ability to pledge certain of our assets, subject to certain exceptions, without the Lender’s consent. The Lender has the right to convert the December 2022 Note at an initial conversion price of $2.00 per share. The principal amount and conversion price of the December 2022 Note are subject to adjustment upon certain triggering events. See “Description of Indebtedness” below for additional detail.

In January 2024, we entered into a securities purchase agreement with the investors named therein, pursuant to which we agreed to sell and the investors agreed to purchase shares of common stock and accompanying warrants to purchase shares of common stock in the Private Placement (as defined under “—Overview”), for gross proceeds of up to $60 million at closing, plus up to an additional $99 million upon full cash exercise of the warrants. In addition, in January 2024, we entered into a securities purchase agreement with Syntone Ventures, LLC, or Syntone, pursuant to which we agreed to sell and Syntone agreed to purchase shares of common stock and accompanying warrants to purchase shares of common stock in the Syntone Private Placement (as defined under “—Overview”) for gross proceeds of up to $5 million at closing. Concurrently with the Private Placements (as defined under “—Overview”), we entered into an amendment to the December 2022 Note (as defined above), which, among other things, would extend the maturity of the December 2022

Note to July 1, 2025. Both the Private Placements and December 2022 Note amendment are subject to satisfaction of certain closing conditions, including (i) an authorized share capital increase and (ii) a reverse stock split, each of which must be implemented prior to closing of the Private Placements, as well as (iii) approval of the private placement under for Nasdaq Rule 5635(d). The Private Placements will not close, the shares of common stock and warrants will not be issued and the proceeds will not be received by us unless and until the closing conditions are satisfied. Similarly, the December 2022 Note amendment will not be effective unless the relevant conditions are satisfied. Therefore, there can be no assurance that the Private Placements will close successfully or that the December 2022 Note amendment will become effective. See Note 12 to the unaudited consolidated interim financial statements included herein for additional information on the private placements and the December 2022 Note amendment.

We evaluated whether there are conditions or events considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern. We do not believe that the existing cash and cash equivalents as of December 31, 2023 are sufficient to fund the Company’s operations through one year from the Form 10-Q filing date. However, we do believe that our existing cash and cash equivalents of $10.4 million as of December 31, 2023, in combination with the expected proceeds from the Private Placements (subject to closing conditions being met and meeting the requirements for calling the associated warrants) are sufficient to support our operations, complete the execution of NORSE EIGHT, resubmit the ONS-5010 BLA and, if approved, support the commercial launch of ONS-5010. If our stockholders do not approve the Private Placements or the change in terms for our December 2022 Note at our upcoming annual meeting of stockholders, it would raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Our future operations are highly dependent on a combination of factors, including: (i) the timely and successful completion of additional financing discussed above; (ii) our ability to successfully begin marketing of our product candidates or complete revenue-generating partnerships with other companies; (iii) the success of our research and development; (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies; and, ultimately; (v) regulatory approval and market acceptance of our proposed future products. Additionally, the global financial markets have experienced significant disruptions due to various macroeconomic factors, including, among other things, the impacts of ongoing overseas conflict, resulting in a general global economic slowdown. Furthermore, inflation rates, particularly in the United States and the United Kingdom, have increased recently to levels not seen in decades. In addition, the U.S. Federal Reserve has raised, and is expected to further raise, interest rates in response to concerns about inflation. Increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may further increase economic uncertainty and heighten these risks. Moreover, the recent closures of Silicon Valley Bank, Signature Bank and First Republic Bank have resulted in broader financial institution liquidity risk and concerns. If other banks and financial institutions fail or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our ability to access our cash, cash equivalents and investments may be threatened and our ability to raise additional capital could be substantially impaired. If the disruptions and slowdown deepen or persist, we may not be able to access additional capital on favorable terms, or at all, which could in the future negatively affect our ability to pursue our business strategy.

#### Funding Requirements

We plan to focus in the near term on supporting the review of our BLA submission for ONS-5010 with the FDA and to prepare for the potential launch of LYTENAVATM, if approved, to support the generation of commercial revenues. We anticipate we will incur net losses and negative cash flow from operations for the foreseeable future. We may not be able to initiate commercialization of ONS-5010 if, among other things, the FDA does not approve our BLA when we expect, or at all, or if we are not able to secure sufficient funding of our expected post-launch commercial costs.

Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, manufacturing and facility costs, external research and development services, legal and other regulatory expenses and administrative and overhead costs. Our future funding requirements will be heavily determined by the resources needed to support development of our lead product candidate and any other product candidates we may choose to pursue.

We do not believe that the existing cash and cash equivalents as of December 31, 2023 are sufficient to fund the Company’s operations through one year from the Form 10-Q filing date. However, we do believe that our existing cash and cash equivalents of $10.4 million as of December 31, 2023, in combination with the expected proceeds from the Private

Placements (subject to closing conditions being met and meeting the requirements for calling the associated warrants) are sufficient to support our operations, complete the execution of NORSE EIGHT, resubmit the ONS-5010 BLA and, if approved, support the commercial launch of ONS-5010. If our stockholders do not approve the Private Placements or the change in terms for our December 2022 Note at our upcoming annual meeting of stockholders, it would raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

We plan to finance our future operations with a combination of proceeds from potential strategic collaborations, sale of the development and commercial rights to our drug product candidates, the issuance of equity securities, the issuance of additional debt, and revenues from potential future product sales, if any. If we raise additional capital through the sale of equity or convertible debt securities, your ownership will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a holder of our common stock. Further, due to current market volatility, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. There are no assurances that we will be successful in obtaining an adequate level of financing for the commercialization of ONS-5010 or the development of any other current or future product candidates. Alternatively, we will be required to, among other things, modify our clinical trial plans for ONS-5010 in additional indications, make reductions in our workforce, scale back our plans and place certain activities on hold, discontinue our development programs, liquidate all or a portion of our assets, and/or seek protection under the provisions of the U.S. Bankruptcy Code.

### Cash Flows

The following table summarizes our cash flows for each of the periods presented:

| ​ ​ ​ | ​ ​ | ​ ​ Three months ended December 31, 2023 | ​ | ​ ​ 2022 |
| --- | --- | ---: | --- | ---: |
| Net cash used in operating activities | ​ | $(13,032,169) | ​ | $(8,901,246) |
| Net cash (used in) provided by financing activities | ​ | ​ (3,183) | ​ | ​ 43,845,282 |
| Net (decrease) increase in cash and cash equivalents | ​ | $(13,035,352) | ​ | $34,944,036 |

#### Operating Activities

During the three months ended December 31, 2023, we used $13.0 million of cash in operating activities resulting primarily from our net loss of $11.2 million. This use of cash was partially offset by $2.3 million of non-cash items such as stock-based compensation, change in fair value of promissory notes, change in fair value of warrant liability, income on equity method investment and depreciation and amortization expense. The net cash outflow of $4.2 million from changes in our operating assets and liabilities was primarily due to a net decrease in accounts payable and accrued expenses of $1.8 million and a decrease in prepaid expenses of $2.4 million for timing of payments associated with ONS-5010 development costs.

During the three months ended December 31, 2022, we used $8.9 million of cash in operating activities resulting primarily from our net loss of $18.7 million. This use of cash was partially offset by $4.5 million of non-cash items such as stock-based compensation, non-cash interest expense, change in fair value of warrant liability, loss on extinguishment of debt, income on equity method investment and depreciation and amortization expense. We also paid interest on debt of $1.2 million during the period. The net cash inflow of $6.5 million from changes in our operating assets and liabilities was primarily due to an increase in accounts payable and accrued expenses of $5.7 million, and a decrease in prepaid expenses of $0.8 million for timing of payments associated with ONS-5010 development costs.

#### Financing Activities

During the three months ended December 31, 2023, net cash used in financing activities was immaterial.

During the three months ended December 31, 2022, net cash provided by financing activities was $43.8 million, primarily attributable to $23.5 million in net proceeds from a registered direct equity offering in December 2022 of an aggregate of 28,460,831 shares of our common stock and accompanying 515,755 warrants to purchase shares of our common stock, $1.1 million in net proceeds from the sale of common stock under the ATM Offering and $30.0 million in net proceeds from the issuance of an unsecured convertible promissory note with a face amount of $31.8 million in December 2022. We also made $10.2 million in debt and finance lease obligation payments and a $0.6 million payment of financing costs.

### Description of Indebtedness

On December 22, 2022, we entered into the Securities Purchase Agreement and issued the December 2022 Note to the Lender. The December 2022 Note, which was amended in December 2023, has a face value of $31.8 million and an original issue discount of $1.8 million. The December 2022 Note bears interest at 9.5% per annum and matures on April 1, 2024. The December 2022 Note contains customary covenants, including a restriction on our ability to pledge certain of our assets, subject to certain exceptions, without the Lender’s consent. Beginning on April 1, 2023, the Lender will have the right to convert the December 2022 Note at the Conversion Price (as defined below). The principal amount and Conversion Price of the December 2022 Note are subject to adjustment upon certain triggering events. In addition, the Company has the right to convert all or any portion of the outstanding balance under the December 2022 Note into shares of common stock at the Conversion Price if certain conditions have been met at the time of conversion, including if at any time after the six-month anniversary of the closing date, the daily volume-weighted average price of the common stock on Nasdaq equals or exceeds $2.50 per share (subject to adjustments for stock splits and stock combinations) for a period of 30 consecutive trading days. We may make payments (i) in cash, (ii) in shares of common stock, with the number of shares being equal to the portion of the applicable payment amount divided by the Conversion Price (as defined below), or (iii) a combination of cash and shares of common stock. Any payments made by us in cash, including prepayments or repayment at maturity, will be subject to an additional fee of 7.5%. Upon the occurrence of certain events described in the December 2022 Note, including, among others, the Company’s failure to pay amounts due and payable under the December 2022 Note, events of insolvency or bankruptcy, failure to observe covenants contained in the Securities Purchase Agreement and the December 2022 Note, breaches of representations and warranties in the Securities Purchase Agreement, and the occurrence of certain transactions without the Lender’s consent, each such event, a Trigger Event, the Lender shall have the right, subject to certain exceptions, to increase the balance of the December 2022 Note by 10% for a Major Trigger Event (as defined in the December 2022 Note) and 5% for a Minor Trigger Event (as defined in the December 2022 Note). If a Trigger Event is not cured within ten (10) trading days of written notice thereof from the Lender, it will result in an event of default, such event, an Event of Default. Following an Event of Default, the Lender may accelerate the December 2022 Note such that all amounts thereunder become immediately due and payable, and interest shall accrue at a rate of 22% annually until paid. Under the December 2022 Note, “Conversion Price” means, prior to a Major Trigger Event, $2.00 per share (subject to adjustment for stock splits and stock combinations), and following a Major Trigger Event, the lesser of (i) $2.00 per share (subject to adjustment for stock splits and stock combinations), and (ii) 90% multiplied by the lowest closing bid price of the Company’s common stock in the three trading days prior to the date on which the conversion notice is delivered. In February 2023, the December 2022 Note was amended to provide that if the Conversion Price is below $0.1756 per share, the Company will be required to satisfy a conversion notice from the Lender in cash. While the December 2022 Note is outstanding, the Lender will have a consent right on any future variable rate transactions or any debt. Lender will also have a 10% participation right in any future debt or equity financings. The maturity date of the December 2022 Note was extended from January 1, 2024 to April 1, 2024 in December 2023. In January 2024, an amendment to the December 2022 Note was entered into as defined in Note 12 of the unaudited consolidated interim financial statements included herein. The amendment would further extend the maturity of the December 2022 Note to July 1, 2025. However, the effectiveness of the amendment to the December 2022 Note is subject to certain closing conditions, including required stockholder approvals, and will not take effect unless these conditions are met.

### Critical Accounting Policies and Significant Judgments and Estimates

The Critical Accounting Policies and Significant Judgments and Estimates included in our Form 10-K for the fiscal year ended September 30, 2023, filed with the SEC on December 22, 2023, have not materially changed.

## Controls and procedures

As filed, 2,503 characters.

### Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Because there are inherent limitations in all control systems, a control system, no matter how well conceived and operated, can provide only reasonable, as opposed to absolute, assurance that the objectives of the control system are met. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, as of the end of the period covered by this report.

### Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during our first fiscal quarter ended December 31, 2023.

## Risk factors

As filed, 228 characters.

As of December 31, 2023, there have been no material changes to the risk factors that were previously disclosed in Item 1A in the Company’s Form 10-K for the year ended September 30, 2023 filed with the SEC on December 22, 2023.

Filed Feb 14, 2024.
Source: SEC EDGAR, the filing index for accession 0001558370-24-001172. Last ingested by Listed: Oct 24, 2026, 15:14 ET. No prices; not investment advice.