UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

For the fiscal year ended December 31, 2023

For the transition period from ________to_________

Commission file number 001-31361

MIRA Pharmaceuticals, Inc.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code: 786-432-9792

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of June 30, 2023, was $0 based on the closing sale price of the company’s common stock on such date of $0.00 per share, as reported by the NASDAQ Capital Market.

As of March 28, 2024, there were 14,780,885 shares of common stock, par value $0.0001, issued and outstanding.

Mira Pharmaceuticals, Inc.

Annual Report on Form 10-K

For the fiscal year ended December 31, 2023

TABLE OF CONTENTS

Unless we have indicated otherwise, or the context otherwise requires, references in this Report to “MIRA,” the “Company,” “we,” “us” and “our” or similar terms refer to Mira Pharmaceuticals, Inc., a Florida corporation.

From time to time, we may use our website, our Facebook page at https://www.facebook.com/people/Mira-Pharmaceuticals-Inc/100087641460083, our Twitter at https://twitter.com/PharmaMira and on our LinkedIn account at www.linkedin.com/company/mira-pharmaceuticals-inc to distribute material information. Our financial and other material information is routinely posted to and accessible on the Investors section of our website, available at www.mirapharmaceuticals.com. Investors are encouraged to review the Investors section of our website because we may post material information on that site that is not otherwise disseminated by us. However, information that is contained in and can be accessed through our website, our Facebook page, our Twitter posts and our LinkedIn posts are not incorporated into, and does not form a part of, this Annual Report.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Report”) contains forward-looking statements (as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act) that reflect our current expectations and views of future events. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential”, or “continue” or the negative of these terms or other similar expressions. In particular, statements about our pre-clinical and clinical trials and expectations regarding such trials, the markets in which we operate, including growth of such markets, and our expectations, beliefs, plans, strategies, objectives, prospects, assumptions, or future events or performance contained in this Report generally under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” are forward-looking statements.

We have based these forward-looking statements on our current expectations, assumptions, estimates and projections. While we believe these expectations, assumptions, estimates, and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond our control. These and other important factors, including those discussed in this Report under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” may cause our actual results, performance, or achievements to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements, or could affect our share price. Important factors that could cause actual results or events to differ materially from those expressed in forward-looking statements include, but are not limited to, the following:

Given the risks and uncertainties set forth in this Report, you are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements contained in this Report are not guarantees of future performance and our actual results of operations, financial condition, and liquidity, and the development of the industry in which we operate, may differ materially from the forward-looking statements contained in this Report. In addition, even if our results of operations, financial condition and liquidity, and events in the industry in which we operate, are consistent with the forward-looking statements contained in this Report, they may not be predictive of results or developments in future periods.

Any forward-looking statement that we make in this Report speaks only as of the date of such statement. Except as required by federal securities laws, we do not undertake any obligation to update or revise, or to publicly announce any update or revision to, any of the forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Report.

Summary of Principal Risks

Our business is subject to numerous risks and uncertainties that represent challenges that we face in connection with the implementation of our strategy and the growth of our business. In particular, the following are the principal risks which could cause a decline in the price of shares of our common stock:

PART I

ITEM 1. Description of Business

Overview

We are a pre-clinical-stage pharmaceutical development company with two neuroscience programs targeting a broad range of neurologic and neuropsychiatric disorders. We hold exclusive license rights in the U.S., Canada and Mexico for Ketamir-2, a novel, patent pending oral ketamine analog under pre-clinical investigation to potentially deliver ultra-rapid antidepressant effects, providing hope for individuals battling treatment-resistant depression (or TRD), major depressive disorder with suicidal ideation (or MDSI) and potentially post-traumatic stress disorder (or PTSD).

Additionally, our novel oral pharmaceutical marijuana molecule, MIRA-55, is being studied for its potential to alleviate neuropathic pain, as well as anxiety and cognitive decline, symptoms commonly associated with early-stage dementia. MIRA-55, if approved by the U.S. Food and Drug Administration (or FDA), could mark a significant advancement in addressing various neuropsychiatric, inflammatory, and neurologic diseases and disorders.

The U.S. Drug Enforcement Administration (DEA)’s scientific review of Ketamir-2 concluded that it would not be considered a controlled substance or listed chemical under the Controlled Substances Act (CSA) and its governing regulations. Additionally, we have submitted the required paperwork for MIRA-55 to be evaluated by the DEA.

We were incorporated under the laws of the State of Florida in September 2020 and commenced substantive operations, including our pharmaceutical development program, in late 2020.

Our Product Candidates in Development

KETAMIR-2

Major Depressive Disorder (or MDD) is a significant global health concern, affecting over 264 million people worldwide and ranking among the leading causes of disability according to the World Health Organization. In the United States alone, it impacts nearly 21.1 million adults, accounting for about 8.3 % of the adult population in 2-2021 according to data form the National Institutes of Health. This widespread mental health disorder not only undermines the quality of life and daily functioning of individuals but also imposes a substantial economic burden, with costs in the U.S. amounting to tens of billions of dollars annually. MDD is also a major risk factor for suicide, a leading cause of death globally, highlighting its profound impact on public health and the urgent need for effective treatment and management strategies. If approved by the FDA, Ketamir-2 may potentially provide antidepressant therapeutic effects.

Despite the fact that antidepressants have been on the market for decades, with imipramine being the first FDA-approved antidepressant in 1959, the need for a rapid-acting antidepressant that can help patients with Treatment-Resistant Depression (or TRD) using a novel mechanism of action (e.g. not a monoamine reuptake inhibitor) has been growing. In 2019, ketamine was introduced but required by the FDA to utilize a Risk Evaluation and Mitigation Strategy (REMS) because of its: (1) poor oral availability requiring intravenous (or IV) or intranasal (or IN) administration, (2) ability to cause side effects including dissociation, sedation and acute hypertension, and (3) potential abuse liability.

Ketamir-2 is a new chemical entity, an analog of ketamine that is designed to potentially preserve the same rapid antidepressant response but with improved bioavailability. It may also have decreased side effects, and decreased abuse liability, though such conclusions are within the sole authority of the FDA. This combination is intended to potentially facilitate safer and less cumbersome dosing requirements, with the goal of obtaining an orally administered pill that can be taken at home.

Figure: Chemical structures of ketamine and Ketamir-2 for comparison purposes.

The DEA conducted a scientific review of the Ketamir-2 in 2023 in accordance with the definitions within the CSA and its implementing regulations. Based on this review, DEA determined that” Ketamir-2 is “not a controlled substances or listed chemical under the CSA.”

Mechanism of Action of Ketamir-2

Ketamir-2’s mechanism of action (or MOA) as a rapid acting antidepressant is the same as ketamine’s, based on the fact that the two share a common inhibitory effect on the N-methyl-D-aspartate (or NMDA) receptor, a type of glutamate receptor that is believed to be integral to the antidepressant effects of both of these ketamine and Ketamir-2. In fact, Ketamir-2 and ketamine differ in less than 2% in their antagonist activity at the GRIN1/GRIN2B receptor subunit of the NMDA receptor (based in in silico analysis, see below). This subunit combination is prominently linked to neuroplasticity, believed to be a key factor in depression and the action of antidepressants such as ketamine. GRIN2B-containing NMDA receptors are implicated in synaptic plasticity changes associated with depression and its treatment.

Ketamine’s mechanism of action (or MOA) as a rapidly acting antidepressant is multifaceted and distinct from traditional antidepressants like selective serotonin reuptake inhibitors (or SSRIs) and tricyclic antidepressants. While ketamine has shown promise as a rapid-acting antidepressant, especially in treatment-resistant depression, its use is limited due to potential side effects and abuse potential that Ketamir-2 has been targeted to minimize. Moreover, whereas ketamine has a poor oral bioavailability and must therefore be given IV or IN, Ketamir-2 has a much better bioavailability suggesting it may be appropriate for oral use.

The following is a detailed synopsis of the MOAs of both Ketamir-2 and ketamine:

In summary, while Ketamir-2’s and ketamine’s antidepressant MOA are still being studied and explored, current evidence suggests a complex and involved synergistic action on various neural pathways, primarily through the modulation of glutamatergic neurotransmission, enhancement of neuroplasticity, and potentially through anti-inflammatory and neuroendocrine mechanisms. Both drugs rapid onset and efficacy in treatment-resistant cases make them potentially valuable tools in psychiatry, but the potentially improved side effect profile and oral bioavailability are what differentiate Ketamir-2 and ketamine as described below.

Ketamir-2 Clinical Development Program

The clinical development plan for Ketamir-2 involves a series of methodically structured phases, starting with IND-enabling studies and progressing through Phase 1 and Phase 2 clinical trials. These trials aim to establish the safety, efficacy, and optimal use of Ketamir-2 in treating psychiatric conditions like TRD, Major Depressive Disorder with Suicidal Ideation (MDSI), and potentially PTSD. The strategy underscores patient safety while evaluating Ketamir-2’s therapeutic benefits and risks. The successful development of Ketamir-2 could significantly impact the treatment landscape for depression, offering a novel approach that addresses the shortcomings of current therapies.

Initially, the development process begins with completion of all necessary IND-enabling studies. These preclinical studies, encompassing pharmacokinetics, pharmacodynamics, toxicology, and safety pharmacology, are crucial for ensuring that the investigational drug meets regulatory standards. The successful completion of these studies allows for the submission of an Investigational New Drug (IND) application to the FDA, specifically targeting TRD. We anticipate that we will submit our IND for Ketamir-2 by the end of 2024. See the section below titled “Research and Testing to Date – Ketamir-2” for more information.

Upon FDA acceptance of our Ketamir-2 IND, our plan progresses to Phase 1 clinical trials. These trials are designed to assess the safety and tolerability of Ketamir-2 in healthy volunteers. They are typically randomized, double-blind, and placebo-controlled, and aim to determine the appropriate dosing while closely monitoring for adverse effects. Key to this phase is the collection of pharmacokinetic and pharmacodynamic data, which guides the dosing strategies for subsequent trials.

Phase 1: Safety and Dosage Determination in Healthy Volunteers

Following the establishment of safety and initial dosing parameters in Phase 1, the development plan moves into Phase 2. This phase involves trials with patients diagnosed with TRD. The primary goal here is to evaluate the optimal dose and tolerability of Ketamir-2 in this specific patient population. Additionally, these trials provide preliminary data on the efficacy of Ketamir-2 for the treatment of TRD. Safety remains a priority, with close monitoring for any adverse events and detailed assessments using depression rating scales.

Phase 2: Dose, Tolerability, and Early Efficacy in TRD

As the development of Ketamir-2 progresses, there is potential to expand its indications. One such area is MDSI, where Ketamir-2’s application could be particularly beneficial given ketamine’s established efficacy in this domain. This would involve designing a trial specifically targeting MDSI, with a focus on the rapid onset of action and short-term safety considerations.

Furthermore, given the emerging research suggesting ketamine’s therapeutic potential in PTSD, a similar approach could be considered for Ketamir-2. Developing a trial protocol for PTSD treatment requires a careful balance, considering the complexity of the disorder, potential comorbidities, and the need for robust safety and efficacy data.

Pursuing Additional INDs:

In summary, the clinical development plan for Ketamir-2 is a meticulous, multi-phase strategy that prioritizes patient safety while exploring the drug’s potential in treating complex psychiatric conditions. Each phase is carefully designed to address specific research questions and regulatory requirements, ensuring a thorough evaluation of Ketamir-2’s therapeutic benefits and risks.

Manufacture of Product for Pre-Clinical and Clinical Development Activities

Recipharm Israel LTD, a leading global contract development and manufacturing organization (or CMDO), is currently developing a large-scale synthesis protocol for us and will be supplying quantities of Ketamir-2 and MIRA-55 needed for our pre-clinical and clinical development activities. We previously utilized Curia Global as our CMDO and are currently in discussions with other partners to have Ketamir-2 and MIRA-55 formulated into solid oral dosage forms for clinical trials.

We also utilize Frontage Laboratories and Pharmaseed LTD to conduct preclinical studies on Ketamir-2.

MIRA1A

In early February 2024, we made a significant discovery during the manufacturing and scale-up process of our patented molecule known as “MIRA1a,” which we believed was the molecule used in our pre-clinical trials and had been synthesized by contract manufacturer. Through this process, we identified a novel and improved version of the molecule, which we call MIRA-55.

As part of our due diligence and subsequent testing, which began in late 2023, we discovered that the pre-clinical studies we conducted, previously attributed to MIRA1a, were in fact performed on MIRA-55. Following this revelation, in early March 2024, we promptly filed a provisional patent for MIRA-55, which encompasses all pre-clinical studies disclosed in our two registration statements on Form S-1, declared effective on August 2, 2023, and December 27, 2023 (File Nos. 333-273024 and 333-276118, respectively). If such patent is issued, we would own the patent rights to both MIRA1a and MIRA-55.

Moreover, based on our pre-clinical analyses to date, we believe that MIRA-55 is an improvement over MIRA1a in that it displays enhanced potency and potential for efficacy.

Based on our discoveries to date, we decided to advance MIRA-55 as our lead compound for our oral pharmaceutical marijuana drug candidate while still retaining our rights to MIRA1a. As such, we do not intend to move MIRA1a forward as of the date of this Report.

MIRA-55

Our objective is to develop and commercialize new treatment options for neuropsychiatric, inflammatory, and neurologic diseases and disorders. Cannabinoids are a class of chemical compounds that are naturally occurring and are primarily found in cannabis plant extracts. The two major cannabinoids found in cannabis plant extracts include tetrahydrocannabinol, a compound that is the main psychoactive ingredient of cannabis (or THC) and cannabidiol, the second most prevalent active ingredient in cannabis which does not have psychoactive properties (or CBD). These compounds bind to CB1 and CB2 cannabinoid receptors, which are found throughout the body. Specifically, CB1 receptors are concentrated in the central nervous system (or CNS), while CB2 receptors are found mostly in peripheral organs and are associated with the immune system. When the chemical compounds bind to these cannabinoid receptors, the process elicits certain physiological responses. Physiological responses to cannabinoids may vary among individuals. Some of the effects of cannabinoids have been shown to impact nervous system functions, immune responses, muscular motor functions, gastrointestinal maintenance, blood sugar management, and the integrity of ocular functions. Based on pre-clinical testing, our product candidate, MIRA-55, appears to have a strong selectivity for CB2 versus CB1, and is designed to minimize the risk of psychoactive adverse events associated with CB1 activation.

Mechanism of Action of MIRA-55

We believe that the effects of MIRA-55 at the cannabinoid receptors CB1 and CB2 is predicted to account for the majority of its potential therapeutic effects, especially as it relates to its anti-anxiety, anti-pain and anti-inflammatory properties. For example, the difference in the dose-response effects of MIRA-55 compared with THC on CB1 receptors appears to coincide with its improved therapeutic profile. If approved by the FDA, MIRA-55 may potentially provide therapeutic effects and enhanced cognition for anxiety, pain and inflammation.

THC has been demonstrated to have biphasic physiological effects (meaning effects in two phases), which have been described for over 40 years: at low levels THC has positive effects while high doses cause the opposite, undesirable symptoms. Examples of biphasic effects at low versus high levels of THC include the anti-anxiety versus pro-anxiety effects, respectively. Through pre-clinical test, we obtained the following dose-response effects for MIRA-55 and THC at the CB1 receptor (see below). In contrast to THC, which displays an initial maximally stimulatory and then inhibitory response at CB1, MIRA-55 appears to act as a monophasic partial agonist (meaning it has a lower intrinsic activity than full agonists) in that it creates a stimulation throughout its dose range, achieving a moderate activation of the CB1 even at high doses. We believe that this accounts for the potential broad therapeutic efficacy of MIRA-55 and the observed absence of negative symptoms even at maximal doses of the drug.

Figure: Compound activity with the selected GPCR Biosensor Assays: THC vs MIRA-55 agonist activity at the CB1 Receptor.

In pharmacology, “efficacy” or “Emax” refers to the maximum response that can be achieved with a drug or agent. It represents the extent or magnitude of the response produced by the drug once it has bound to its target, typically referred to as a receptor. The binding between a drug and its receptor is characterized by affinity, which quantifies the strength of their interaction. Efficacy, however, assesses the action or effect of the drug following binding to the receptor.

The dose-response curve is a commonly used graph in pharmacology that depicts the relationship between the effect of a drug and its dosage. The X-axis represents the increasing doses of the drug, while the Y-axis represents the response produced by the drug. In the case of the figure above, the term “% Efficacy” on the Y-axis refers to the maximum response that can be achieved with the agonist (MIRA-55 or THC) in relation to its ability to activate GPCR receptors (specifically CB1 receptors). GPCRs are G-protein-coupled receptors that form a large group of proteins which are expressed on the cell surface of eukaryotic cells to detect molecules outside the cell and activate cellular response.

The data presented in the figure above has been normalized to the maximal and minimal responses observed in the presence of a control compound and vehicle, respectively. This normalization allows for a standardized comparison of the agonist’s efficacy.

MIRA-55 Pre-clinical Developments and Studies

As of the date of this Report, we completed several pre-clinical studies of MIRA-55, including, but not limited to, radio-ligand binding assay, elevated plus maze (or EPM) model of anxiety and hot plate model thermal sensitivity testing.

We have studied the effects of acute administration of MIRA-55 on anxiety-related phenotypes in mice to model human conditions. An intraperitoneal injection of Placebo [PBO] (e.g. saline) or MIRA-55 (e.g. 50mg/kg = Treatment) was administered to C57Bl/6 mice (n=5/group) that were 8-12 weeks old. Thirty minutes following injection, mice were tested in anxiety related measures using the Elevated Plus Maze (EPM). The EPM is a widely used pre-clinical behavioral assay for rodents and it has been validated to assess the anti-anxiety effects of pharmacological agents. If determined and approved by the FDA or other regulatory agencies, MIRA-55 appears to have anti-anxiety effects at doses that lacked side effects of sedation or intoxication in mice. The EPM is a test measuring anxiety in rodents as a screening test for putative anxiolytic compounds and as a general research tool in neurobiological anxiety research such as Generalized Anxiety Disorder (or GAD) or Post-Traumatic Stress Disorder (or PTSD). The model is based on the animal’s aversion to open spaces which are present in the open arms (Open Arm) of the maze. Anti-anxiety effects of test agents are demonstrated by an increase in the percentage of time spent in the Open Arm with treatment compared to placebo. The total distance traveled is a measure of the overall level of arousal and mobility of the mice undergoing testing on the EPM and is used to rule out any sedating or intoxicating effects of the test agent.

Pre-clinical studies also have shown the potential of MIRA-55 for relieving pain. A number of clinically approved pharmacological agents used to treat pain, including opioids, have been demonstrated to delay or ameliorate the onset of heat sensitivity upon paw exposure of mice to heat. Thirty minutes after treatment with either a placebo (control) or MIRA-55, mice were placed on a heated plate to measure the time it took for each mouse to lift its paw in response to the mild pain they felt from the heat. Mice treated with pain alleviating drugs took significantly longer to become bothered by the heat and to lift their paws. Similarly, mice treated with MIRA-55 statistically took significantly more time to lift their legs, indicating MIRA-55’s potential effectiveness as a possible treatment for pain in this model. If approved by the FDA, MIRA-55 may potentially provide therapeutic effects for pain control.

MIRA-55 is a CB2 agonist which may also be an optimal treatment for neurodegenerative diseases associated with neuroinflammation caused by microglial activation. CB2 agonism has been shown in pre-clinical studies to regulate neuroinflammatory processes, reducing the neuronal damage characteristic of degeneration. We believe there may be a strong rationale for CB2 agonism in neurodegenerative diseases, given increased CB2 expression in patients with these diseases as well as preliminary results from animal models. We see potential for a potent CB2 agonist to treat a range of neurodegenerative diseases. MIRA-55, through its robust activity at CB2 compared to CB1, was designed to minimize the risk of psychotropic adverse events associated with CB1 activation. If approved by the FDA, MIRA-55 may potentially provide therapeutic effects for neurodegenerative and neuroinflammatory illnesses.

Our pre-clinical development program for MIRA-55 has included a variety of testing. Summarized below are the tests we have completed. Our interpretation of results derived from pre-clinical data or our conclusions based on our pre-clinical data may prove inaccurate and are not necessarily predictive indicators of future results. See the section below titled “Research and Testing to Date – MIRA-55” for more information.

Our MIRA-55 Clinical Development Program

Following the pre-clinical development plan outlined above, we plan to submit to the FDA an Investigational New Drug application (or IND) focused on investigating MIRA-55 for the treatment of anxiety and cognitive decline in elderly patients.

We expect that our first IND application submission relating to MIRA-55 for the treatment of elderly patients suffering from anxiety with some cognitive decline is currently planned for the end of the second quarter of 2025, as we believe this is a patient population with unmet needs. If allowed to proceed by the FDA, a Phase I trial will be initiated 30 days post-IND submission. We expect that our second IND for MIRA-55 will focus on investigating MIRA-55 for the treatment of neuropathic pain.

All development plans depend on FDA acceptance of our IND applications. As appropriate and pursuant to discussions with the FDA, we may periodically adjust the timeline for certain filings and associated clinical trials. It is important to note that the process for conducting clinical trials is uncertain and there is no assurance that our clinical development activities will meet the planned timelines set forth above.

Our Market Opportunity and Market Advantage

Ketamir-2

Ketamir-2’s market opportunity and market advantage was analyzed by IQVIA who were contracted to perform an independent Market Characterization and Drug Valuation Analysis. TRD and MDSI indications represent areas of high unmet medical need, with significant disease burden and limited effective treatments available. Ketamir-2’s formulation as a once-daily oral medication addresses shortcomings in existing treatments, such as route of administration (RoA) and time to effectiveness.

The market opportunity for Ketamir-2 is substantial. Based on the IQVIA analysis, the U.S. has a large patient pool looking for effective treatments, with diagnosed prevalence rates of 3.1% for MDSI and 2.4% for TRD, translating to total addressable populations of 4.9 million and 3.8 million patients respectively. Based on total estimates of MDSI and TRD together, this represents a Total Diagnosed Prevalence rate of 12.3 million patients and, assuming a Treatment Rate of 65%, the Total Addressable Population is 8.7 million patients This represents a significant market, especially considering the current limitations and side effects associated with existing treatments.

Figure: Estimates by IQVIA of the total addressable populations affected with MDSI and TRD.

Ketamir-2’s market advantage lies in its novel profile and potential to address these unmet needs. As a synthetic ketamine derivative, we believe it potentially offers an improved mechanism to treat disease, building on the success of existing marketed therapeutics but with differences to the base molecules that potentially reduce unwanted side effects. Ketamir-2’s oral formulation is being developed to potentially not require health care professional supervision, potentially improving patient compliance and ease of use.

Figure: Summary of assessment by IQVIA of valuation of Ketamir-2, including the background, commercial opportunity, and drivers of valuation assessment.

The projected addressable market for Ketamir-2 are promising. If approved by the FDA and deemed safe, peak annual net sales in the U.S. are estimated to potentially reach approximately $3 billion across both MDSI and TRD, with a base case eNPV (expected net present value) of around $92 million. In the high case scenario, the unadjusted peak revenue opportunity could go up to about $7.8 billion by 2035, with the eNPV potentially reaching $324 million. The estimated patient pool for Ketamir-2 treatment may reach approximately 0.2 million patients in the U.S. by 2036. The NPV (net present value) ranges from approximately $270 million to $4.6 billion, with the base case being around $1.4 billion.

Figure: Actual valuation of Ketamir-2 over time, including base and peak revenue opportunities in the US.

These estimates are based on several key assumptions, including the market share Ketamir-2 might achieve, the years to peak sales, gross price per dose, and the Probability of Technical & Regulatory Success (PTRS). Feedback from key opinion leaders (KOLs) and payors suggests that there is a significant unmet need in behavioral health, particularly for treatments like Ketamir-2 with fewer adverse effects and more consistent outcomes. However, issues such as pricing, insurance coverage, and potential DEA scheduling are important considerations that could affect Ketamir-2’s market penetration.

As such, we believe Ketamir-2 presents a significant market opportunity in the treatment of TRD and MDSI, with the potential in the PTSD market, offering a novel approach with potential advantages over existing therapies in terms of efficacy, safety, and patient compliance. The financial outlook is positive, contingent upon successful market penetration and realization of its therapeutic potential.

MIRA-55

MIRA-55, if approved, will compete in three key overlapping growth markets: the anxiety, cognitive decline (CNS/dementia), and neuropathic pain markets where multiple products with varying safety and efficacy profiles are already on the market. MIRA-55 competes at the intersection of these three markets given the target patient profile for MIRA-55.

MIRA-55 will compete primarily within the CNS market that encapsulates anxiety, dementia, other pain, Alzheimer’s, migraines and related conditions. Based on the market size of the CNS opportunity as set forth in IQVIA’s Global Use of Medicines 2023 analysis (the “IQVIA Report”), we estimate that by 2027, the U.S. CNS market will be worth $48 billion, growing between two and five percent during the period from 2023 to 2027. Within that market opportunity, anxiety is worth between approximately $10 billion and $15 billion in annual sales. If approved by the FDA, MIRA-55 may potentially provide therapeutic effects for anxiety, dementia and pain.

Anxiety and pain are expected to grow approximately five percent over the same period according to the IQVIA Report, while Alzheimer’s is expected to grow approximately twelve percent. This is critical given MIRA-55’s focus on early-stage patients with dementia, as according to the Alzheimer’s Association 2023 Alzheimer’s Disease Facts and Figures analysis (the “Alzheimer Association”), 500,000 new Alzheimer cases emerge in the U.S. each year. According to the Alzheimer Association, about 60 to 80 percent of Alzheimer cases evolve into dementia. Thus, Alzheimer case directions are an important signal and gateway for MIRA-55-related opportunities in dementia. Based on that epidemiology, the U.S. Center for Disease Control (“CDC”) estimates that approximately 5.8 million Americans are living with Alzheimer’s, with that number expected to grow to 14 million by 2060 (“CDC Alzheimer”).

MIRA-55’s other key market will be the neuropathic pain market. Developing targeted and efficient therapies for neuropathic pain stands as a priority to address this common source of suffering and morbidity. Innovative strategies are under exploration to tackle the distinctive challenges posed by this type of pain. According to the International Association for The Study of Pain, neuropathic pain affects approximately 7-10% of the world’s population. Examples include diabetic peripheral neuropathy, postherpetic neuralgia, and multiple sclerosis related neuropathy.

Our initial focus will be a dual path: potentially winning in traditional markets as well as the marijuana analog markets using a safe, effective and, if determined by the FDA, an FDA-approved treatment option since safety and efficacy determinations are in the exclusive purview of the FDA. According to Grandview Research, today, legal medical marijuana is a $11.6 billion industry whereas legal recreational marijuana is a $26.9 billion industry. Both are sub-sets of the traditional pain and anxiety markets. However, in many patient populations, non-U.S. legal, and cultural settings, marijuana may not be the first or a viable option for treatment of neurological disorders. As a result, these patients will typically use non-steroidal anti-inflammatory drugs (NSAIDs) or various mood management drugs, opening them up to a range of non-ideal outcomes. The objective of MIRA-55 is to offer physicians and patients an approved, viable synthetic option. Thus, if approved by the FDA, we believe that MIRA-55 may potentially provide a preferred alternative in such patient populations, as it is not derived from the marijuana plant.

MIRA-55 is being developed as the first manufactured prescription drug to potentially target the CB1 and CB2 receptors for neuropathic pain and anxiety without the impurities of marijuana or its side effects, such as increased appetite and paranoia. MIRA-55 has demonstrated the ability to rapidly and significantly improve cognitive performance with acute use—i.e. doubling cognitive performance after a single dose in normal mice MIRA-55 is a novel synthetic cannabinoid analog directed at potentially treating patients with dementia associated cognitive decline and anxiety diagnoses. Unlike other cannabinoids in the market, MIRA-55 is not derived from plants. Plants generate alkaloids as a defense mechanism, and it has been speculated that plant-derived cannabinoids have adverse side effects in humans.

Furthermore, in animal studies conducted by us, MIRA-55 has preliminarily demonstrated more than 30-fold increased CB2 activation compared to CBD.

Our Strategy

Ketamir-2

The goal is to continue develop Ketamir-2 as an orally administered medication with potentially fewer side effects, free from the restrictions such as those imposed by ketamine’s REMS, to fill the current clinical need for a rapid acting antidepressant to manage TRD and MDSI in patients who are able to take Ketamir-2 at home. The strategic plan for Ketamir-2’s development encompasses several critical stages, from scaling up manufacturing to exploring effective exit strategies.

Additionally, the potential for an acquisition from a larger pharmaceutical company remains a viable exit strategy, especially if Ketamir-2 demonstrates substantial promise.

Throughout this process, it is crucial for us to maintain a robust intellectual property strategy, regularly assess the antidepressant market landscape, especially for TRD, and engage with key stakeholders. Implementing a risk management plan is also essential to navigate potential development and commercialization challenges. This strategic plan must be adaptable, capable of responding to new data, regulatory feedback, and changes in the market. Regular assessments and checkpoints will ensure the project aligns with our strategic goals and the evolving landscape of pharmaceutical development.

MIRA-55

Our goal is to develop therapeutics targeting well-characterized CB1 and CB2 receptors with optimized pharmacological properties to transform the lives of patients with neurological diseases. Key elements of our strategy to achieve this goal include:

Competition

Ketamir-2

The principle competitor of Ketamir-2 is ketamine or ketamine analogs. Ketamine, originally known as a dissociative anesthetic, has emerged as a significant breakthrough in the treatment of depression, particularly due to its rapid-acting antidepressant properties. The FDA approved in 2019 esketamine delivered intranasal, developed by Janssen with the brand name Spravato. This has opened new avenues in psychiatric treatment, especially for patients who do not respond to traditional antidepressants, have depression with suicidal ideation, or require rapid antidepressant responses.

In contrast to most novel antidepressants, which are multi-billion dollar drugs annually, for 2023 Janssen reported $683 million in revenue from Spravato. We believe the primary reason for Spravato’s revenue performance versus other antidepressants is because Spravato’s REMS requires Spravato to be patient administered but clinician observed for 2 hours, with the patient unable to drive for the rest of the day. As described further below, we believe this presents challenges for both patients and clinicians, which has restricted the use of this form of ketamine from patients who would benefit from this treatment (e.g. those with TRD and MDSI). Ketamir-2, if ultimately FDA approved without the requirement of a REMS, could potentially avoid these challenges.

Niche Filled by ketamine

Limitations of ketamine Due to Side Effects

Requirements of ketamine under the REMS (Risk Evaluation and Mitigation Strategy)

The use of ketamine, especially Esketamine (a nasal spray form of ketamine approved for treatment-resistant depression), is regulated under the Risk Evaluation and Mitigation Strategy (REMS) program to ensure safe use:

Ketamine’s possible role as a rapid-acting antidepressant could fill a crucial niche in the management of treatment-resistant depression and acute suicidality. However, its potential use is tempered by significant side effects and the stringent requirements of the REMS program, which necessitate careful patient selection and monitoring to optimize safety and efficacy.

The finding of up to 80% oral bioavailability with the potential for decreased abuse liability (e.g. because of the lack of opiate agonist activity) and potentially decreased side effects (e.g. fewer dissociative experiences and less hypertension) puts Ketamir-2 in a situation to potentially offer the same antidepressant effects but with fewer restrictions, perhaps even permitting patients to take it orally at home.

MIRA-55

We are subject to competition from pharmaceutical and biotechnology companies and academic and research institutions. We believe our future success will depend, in large part, on our ability to maintain a first mover advantage and competitive lead in our industry.

Competition arises mainly from two sources, traditional cell-based in vitro culture approaches and traditional in vivo animal models and testing. We also face future competition from companies developing cannabinoid therapies, as summarized in the table below:

Sativex (delta-9-tetrahydrocannibinol and cannabidiol in the EU) is an oromucosal spray indicated as treatment for symptom improvement in adult patients with moderate to severe spasticity due to multiple sclerosis (MS) who have not responded adequately to other anti-spasticity medication and who demonstrate clinically significant improvement in spasticity related symptoms during an initial trial of therapy. Sativex is not assigned a schedule in the U.S. by the DEA as it is not approved but is a Class B controlled drug under the Misuse of Drugs Act 1971 and is placed in Schedule 4 to the Misuse of Drug Regulations 2001 in the United Kingdom.

Marinol (dronabinol) is an oral cannabinoid indicated in adults for the treatment of: Anorexia associated with weight loss in patients with AIDS and nausea and vomiting associated with cancer chemotherapy in patients who have failed to respond adequately to conventional antiemetic treatments. Marinol is a Schedule III controlled substance.

Cesamet (Nabilone) is a synthetic cannabinoid for oral administration that are indicated for the treatment of the nausea and vomiting associated with cancer chemotherapy in patients who have failed to respond adequately to conventional antiemetic treatments. Cesamet contains nabilone, which is a controlled in Schedule II of the Controlled Substances Act (CSA).

Research and Testing to Date

Ketamir-2

Preclinical Research Findings

In Silico Analysis of Targets of Ketamir-2 vs ketamine

In silico analysis, referring to computer-based techniques, has become an integral part of pharmaceutical research and development.⁷ This approach utilizes computational methods to analyze and predict the properties and behaviors of pharmaceutical compounds. The use of in silico analysis is especially crucial in the early stages of drug development, as it aids in identifying potential drug targets and elucidating differences between a new drug and its parent compound. By analyzing large datasets, such as genomic, proteomic, and metabolomic data, researchers can predict how different compounds might interact with various biological targets. This approach helps in understanding the mechanism of action of new drugs and can significantly reduce the time and cost associated with experimental screening. InSilico Trials was contracted to provide a comparison between targets of Ketamir-2 vs ketamine employing their target identification protocol. The following characterize some of the unique targets that are predicted to interact with either Ketamir-2 or ketamine, thereby differentiating one drug from the next.

Ketamir-2 selective target:

BRD4, or Bromodomain-containing protein 4, is a member of the bromodomain and extra-terminal (BET) family of proteins and has been implicated in the regulation of gene expression, particularly those involved in cell cycle progression and inflammatory responses.⁸ In the context of depression, research has started to explore the role of BRD4 and its potential impact.

Ketamine selective targets:

Alpha-2a adrenergic receptor: Alpha-2a adrenergic receptors are G protein-coupled receptors (GPCRs) involved in the modulation of neurotransmitter release. They are generally thought to be inhibitory, reducing the release of norepinephrine when activated, which can lead to various physiological effects.

Sigma Opioid Receptor: Ketamine is known for its dissociative anesthetic properties, which are primarily attributed to its antagonism of the N-methyl-D-aspartate (NMDA) receptor. However, the sigma receptors, particularly the sigma-1 receptor, have also been implicated in the psychotomimetic and dissociative effects of ketamine. Here’s how ketamine’s interaction with sigma opioid receptors might contribute to its dissociative side effects:

Mu-Opioid Receptor: The Mu-opioid receptor (MOR) is one of the principal targets within the central nervous system for endogenous opioids like endorphins and enkephalins, as well as for exogenous opioid analgesics such as morphine and fentanyl. Activation of MOR typically results in analgesic effects, reduced gastrointestinal motility, respiratory depression, and can influence the reward system in the brain, which is associated with the pleasurable sensations or euphoria. Activation of the MOR by ketamine could contribute to side effects related to its abuse liability:

Bioavailability:

The Caco-2 cell model, originating from a human colorectal adenocarcinoma cell line, plays a significant role in pharmaceutical research for estimating the intestinal absorption and indirectly the bioavailability of drugs. Bioavailability, the proportion of a drug that enters the systemic circulation when introduced into the body, is crucial for determining a drug’s effectiveness. Traditionally, bioavailability is determined through in vivo studies, including human and animal trials, as well as in vitro models like the Caco-2 cell model and in silico computational approaches.

The Caco-2 model involves culturing cells that differentiate into a monolayer mimicking the intestinal epithelium, complete with tight junctions and microvilli. This model is pivotal in permeability studies to assess how well drugs can pass through the intestinal barrier and in understanding both active and passive drug transport mechanisms. While primarily used for estimating drug absorption, the Caco-2 model also serves to predict potential drug-drug interactions within the gastrointestinal system.

The Caco-2 model offers a high-throughput, cost-effective, and human-relevant system, making it a preferred choice for initial screening of multiple compounds. In pharmaceutical research, the Caco-2 model often serves as an initial study to predict the absorption properties of new drugs and is typically validated against clinical data once that becomes available. It plays a crucial role in the early stages of drug development, influencing decisions on which compounds to advance. 

CaCO-2 cells are human epithelial colorectal adenocarcinoma cells that are widely used as an in vitro model of the intestinal barrier. The CaCO-2 assay is employed to study the absorption and transport of orally administered drugs across the intestinal epithelium. The assay evaluates the permeability of a drug from the apical (AP) side, representative of the intestinal lumen, to the basolateral (BL) side, representative of the blood side, and vice versa.

The bidirectional transport assays conducted with CaCO-2 cells can provide the following insights about two different drugs:

In summary, the CaCO-2 intestinal absorption (AB-BA) assay is a valuable tool for predicting the intestinal absorption and oral bioavailability of drugs. Differences in the assay results between two drugs can provide important information about their absorption characteristics, potential interactions with transporters, overall oral bioavailability, and possible drug-drug interactions.

Figure: Model of the CaCO-2 model of drug intestinal absorption and how well it correlates with actual measures of human intestinal absorption. 

Figure: Data obtained from the CaCO-2 model of intestinal absorption. Propranolol, a commonly prescribed beta-blocker that is taken orally and used to treat hypertension, is included as a positive control. The intestinal absorption (AB), Intestinal efflux (BA) and net absorption (AB-BA) are shown.

As can be seen in in the figure above, the absorption from the intestinal lumen into the blood that is 80% greater (80.6 vs 44.5), the rate of efflux back into the intestinal lumen that is 35% less (-38.7 vs -59.6), and the net absorption (AB-BA) rate is 3.77 fold greater [(41.9+15.1)/15.1=3.77], respectively. Since the reported oral bioavailability of ketamine has been reported to be between 16-30% (average of 23%), then the predicted oral bioavailability of Ketamir-2 could be as high as 87% (i.e. Ketamir-2’s oral bioavailability is 3.77 fold greater than ketamine’s = 23%*3.77=87%).

This is just an approximation, and when sufficient Ketamir-2 has been synthesized to do in vivo animal initially and then human Pharmacokinetic (PK) studies, it will be possible to get a more precise estimate of Ketamir-2’s Oral Bioavailability compared to ketamine by testing and calculating the area under the concentration-time curve (AUCoral) for oral dosing divided by the AUC for IV dosing (i.e. AUCoral/AUCiv). But based on the available preliminary estimates, it appears highly likely that the oral bioavailability of Ketamir-2 in humans is going to be substantially larger than that of ketamine. Orally available Ketamir-2, as opposed to IV or IN ketamine, would be much easier to be patient self-delivered at home, thereby improving on the ease and availability of this rapid acting antidepressant for TRD & MDSI.

MIRA-55

Eurofins DiscoverX has developed a panel of cell lines stably expressing non-tagged GPCRs that signal through cyclic adenosine monophosphate, a messenger used for intracellular signal transduction in many different organisms (or cAMP). Hit Hunter® cAMP assays are specialized tests that track the activation of a type of cell receptor known as GPCR. GPCRs play a crucial role in how cells respond to external signals, and they are activated through two pathways: Gi and Gs secondary messenger signaling. These pathways are like internal communication systems in cells that relay signals from the outside to trigger specific responses inside the cell. The assay is conducted in a straightforward, uniform manner without the need for image-based analysis. This method uses a technology developed by DiscoverX called Enzyme Fragment Complementation (or EFC). In EFC, fragments of an enzyme, specifically β-galactosidase (β-Gal), are brought together to become functional only when the GPCR is activated. β-Galactosidase, the enzyme used as a functional reporter in this assay, is typically inactive in fragmented form and becomes active when the fragments reassemble, indicating the activation of the GPCR. In this case, the GPCR target was CB1 receptor. Compounds were tested in agonist and antagonist mode with the requested GPCR Biosensor Assays. For agonist assays, data was normalized to the maximal and minimal response observed in the presence of control ligand and vehicle. This Eurofins DiscoverX system was used to test THC vs MIRA-55 agonist activity at the CB1 receptor.

Unlike CB1 receptors that mediate many of the psychotropic effects of cannabinoids on the CNS, CB2 receptors are predominantly present on cells of the immune system. Based on preliminary results of our GPCR biosensor assays, the CB2 receptor agonistic effects of MIRA-55 are 8-fold more potent than THC and 30-fold more potent than CBD.

The study regarding the ability of MIRA-55 vs THC vs CBD to activate CB2Receptors and alter intracellular cAMP levels was performed by the CRO Eurofins DiscoverX. 

As can be seen in the table below, the EC50 (i.e. concentration required to induce a half maximal response) for MIRA-55 was 8 times more potent than THC and at least 30 times more potent that CBD—i.e. it only took 1 uM of MIRA-55 to induce the same response that required 8 uM of THC and >30 uM of CBD.

Figure: The foregoing measurements were performed as follows:

DiscoverX has developed a panel of cell lines that stably express non-tagged GPCRs (G-protein coupled receptors) capable of signaling through cAMP. The Hit Hunter® assay platform is used to investigate the functionality and response of these GPCRs.

In the case of the CB2 receptor, which is a GPCR involved in various physiological processes and has potential therapeutic implications, the Hit Hunter® assay can be employed to study the effects of drug agonists on CB2 receptor activity.

To measure the half maximal response (EC50) of CB2 receptor activation by a drug agonist that leads to a decrease in cAMP levels, an alternative approach may be required. One common method involves using forskolin, an activator of adenylate cyclase, to stimulate cAMP production. Forskolin bypasses the GPCR signaling and directly activates adenylate cyclase, resulting in increased cAMP levels.

In the presence of forskolin, the drug agonist at the CB2 receptor can then be tested at various concentrations to determine its ability to inhibit the forskolin-induced cAMP production. The drug’s concentration that leads to a 50% reduction in forskolin-stimulated cAMP levels can be considered the half maximal response or EC50.

Completed Pre-Clinical Tests*

* These were non-human studies that were not powered for statistical significance and as such, no p-values are available.

Figure: Effects of MIRA-55 vs Placebo Treatment on Mouse Behavior in the Elevated Plus Maze.

EPM is a widely used behavioral test to assess anxiety-like behavior in rodents. Typically, rodents tend to avoid open spaces due to their natural aversion to potentially dangerous areas. Therefore, spending more time in the open arms of the maze indicates decreased anxiety-like behavior. Similarly, the total distance travelled can reflect general locomotor activity and exploratory behavior, which can be influenced by the state of anxiety and the effect of drugs.

The EPM apparatus consists of two open arms and two enclosed arms elevated above the floor. Blue Bars represent the percentage of time spent in the open arms by mice in the placebo and drug-treated groups. Green Bars show the total distance travelled by mice in both groups during the EPM test.

Figure: In this thermal sensitivity test, mice are placed on a heated metal plate (e.g. 52-55 degrees Celsius). The time taken for the mouse to show a pain response - licking or shaking of the paws, jumping, or trying to escape from the hot plate - is measured. This time interval is known as the “hot-plate latency”. A longer latency is indicative of reduced pain sensation or a higher pain tolerance.

The Thermal Sensitivity Model of Pain in mice is a widely used experimental approach to study nociception, which is the perception of pain. In this model, thermal stimuli are applied to the hind paws of mice to assess their sensitivity to heat-induced pain. The procedure typically involves placing the mouse on a temperature-controlled surface, such as a hot plate or a radiant heat source. The temperature is gradually increased, and the response of the mouse is measured, such as the latency to withdraw its paw from the heat source. The withdrawal latency is considered an indicator of pain sensitivity, with shorter latencies indicating greater sensitivity. By comparing the response of normal mice to that of mice with altered pain sensitivity, such as genetically modified mice or mice treated with analgesic drugs, researchers can gain insights into the mechanisms underlying pain perception and potential therapeutic interventions. The Thermal Sensitivity Model of Pain in mice provides a controlled and reproducible method for studying thermal nociception, allowing researchers to investigate the effects of various genetic, pharmacological, and environmental factors on pain sensitivity. This model has contributed significantly to our understanding of pain pathways and the development of novel analgesic treatments.

As performed at Johns Hopkins, in our thermal sensitivity test, which measured sensitivity to thermal pain, MIRA-55 significantly increased the time it took mice to lift their legs in comparison to placebo (p=0.006) at 75mg/kg. This indicates that MIRA-55 has an analgesic effect and may be a potential treatment for pain. Each group (i.e. placebo and 75 mg/kg) was comprised of 9 mice, for a total of 18 mice.

The issue of how to test the effect of MIRA-55 on cognition was complicated by the following:1) MIRA-55 has anti-anxiety (i.e. anxiolytic) effects, 2) anxiolytics can potentially improve cognitive assessment outcomes by reducing anxiety levels that may otherwise hinder cognitive functioning. Thus, in commonly performed tests of cognition in mice, such as novel object recognition and Morris water maze, anxiolytic medications can indirectly result in improved performance by decreasing anxiety rather than by directly improving cognition. In order to separate assessments of the impact of MIRA-55 on cognitive performance from its demonstrated anti-anxiety effects, we employed a model of context fear conditioning wherein we dosed the mice after training. Context fear conditioning in mice is a behavioral paradigm used to measure cognitive processes related to associative learning and memory. Associative learning, where an individual learns to associate specific stimuli or contexts with particular outcomes, in this case the mice associate being in a specific chamber with receiving a mild foot shock that occurs during training the day before testing. This process of forming associations between stimuli, actions, and consequences is involved in numerous skills and behaviors in everyday life: it underlies learning new skills, developing habits, and acquiring knowledge through experiences and conditioning. The use of associating the chamber with the foot shock on day one, means that when the mice are returned to the chamber on day 2 a measure of how much freezing they do corresponds to a read out of how well they can recall the experiences they had during training on day 1 (i.e. the greater the freezing, the better the recollection of the association between the chamber and food shock). Since the mice are given MIRA-55 AFTER training that takes place on day 1, and only before testing on day 2, there is no concern about the anxiolytic effects of MIRA-55 on learning during training, but rather this model tests MIRA-55’s effects on performance only—which in this case represents memory (i.e. the ability to recognize and recall the chamber where they had previously been shocked) and to translate that into an associated behavior (i.e. freezing). As published in the Journal of Neuropharmacology in 2023, THC and cannabis impair context fear conditioning, both when given prior to training (because of its anti-anxiety effects) and when given prior to testing (because of its cognitive impairing effects). As demonstrated in the figure below, MIRA-55 resulted a dramatic effect on cognitive performance in the context fear conditioning model: as shown in B, the second panel from the left, the percentage of time spent freezing—that is a demonstration of their memory and association—in the mice who received MIRA-55 at a dose of 75 mg/kg was more than twice that of those who received 0 mg/kg=placebo (i.e. 55% vs 25%, p<0.0001). Thus, MIRA-55 doubled the cognitive performance of the mice compared to placebo. This degree of improvement in cognitive performance in healthy mice dosed just prior to testing and after learning has not been demonstrated with any cannabinoid compound previously.

Figure: The Contextual Fear Conditioning Model of Cognition in mice is an experimental paradigm used to study associative learning and memory processes. It focuses on the ability of mice to form an association between a specific environmental context and an aversive stimulus, which leads to the acquisition and subsequent retrieval of contextual memories. During the acquisition phase of the model, mice are exposed to a distinct context, such as a particular chamber or environment. In this context, they receive an aversive stimulus, typically a mild foot shock. The presentation of the foot shock creates an association between the contextual cues and the aversive experience. Following the acquisition phase, the mice undergo a testing phase to assess their memory of the association between the context where they received the foot shock and the memory of the aversive stimulus. They are returned to the same context where the conditioning took place and their behavioral responses, particularly fear-related behaviors such as freezing or defensive reactions, are measured.

These behavioral responses serve as indicators of the mice’s ability to retrieve the associative memory formed during the acquisition phase. The Contextual Fear Conditioning Model of Cognition in mice has been widely used in neuroscience research to explore the mechanisms of associative learning, memory formation, and the neural circuits involved in fear-related associations. It has contributed to our understanding of how animals, including humans, learn to associate environmental cues with aversive experiences, and has implications for understanding and treating conditions related to associative learning, memory deficits, and emotional disorders.

As performed at Johns Hopkins, in the Contextual Fear Conditioning Model the data shows that during training (in the absence of any treatment) the mice learned as indicated by increased freezing over time. The following day, 30 minutes after MIRA-55 administration, the mice were tested in the context test, which showed significantly increased % freezing (p=<0.0001) in females given 50mg/kg or 75mg/kg MIRA-55. The experiments were conducted with 10 mice in each group (placebo, 50 or 75 mg/kg MIRA-55) for a total of 30 mice.

In the context conditioning figure above, mice learn to associate the neutral context (the chamber) with the aversive stimulus (the foot shock), leading to a conditioned fear response (freezing). This is indicated by ‘freezing’ behavior - a fear-related response in mice characterized by immobility except for respiratory movements.

A timeline of the experimental procedure, indicating acclimatization, training (conditioning), and testing phases is shown above. Panel A, the left-most panel, shows that on day 1 the pairing of a neutral context (the conditioning chamber shown in panel C) with an aversive stimulus (a mild foot shock). With successive foot shocks the mice show increasing amounts of freezing, since they instinctively freeze in anticipation of being shocked. Panel B, titled “Context Recognition: Fear Conditioning,” shows the percentage freezing the mice did on day 2 after receiving placebo or MIRA-55 just prior to being placed in the same chamber they had been shocked on day 1. Since mice freeze in anticipation of receiving a shock, the relative amount of freezing in those mice given 0 mg/kg (placebo) vs either 50 or 75 mg/kg MIRA-55 is a readout of (i.e. proportional to) how well the mice recalled that the chamber they were returned to was the one in which they had been shocked. As shown in panel B, the mice who received 75 mg/kg of MIRA-55 right before being placed into the chamber showed 200% of the freezing than did the mice who received placebo (55% vs 25%, respectively. Panel D, in the lower right corner of the figure, shows that at 1 min after being placed in the chamber on day 2, the mice that got vehicle (=0 mg/kg MIRA-55), relative to those that got MIRA-55, have much less freezing, and in fact have less freezing over time. The mice given MIRA-55 start off with better recognition and recall of the chamber (demonstrated as increased freezing) at 1 minute and increase the association of the chamber with the prior shocks (because they increase freezing over time).

Because MIRA-55 is an anxiolytic, we decided to test whether it could impair cognitive function. We therefore sought to determine if MIRA-55 could impair attention—a different aspect of cognition than memory, recall and associative learning, and one that is affected negatively by sedating compounds (e.g. THC, Cannabis, benzodiazepine, etc.) and positively by stimulants (e.g. caffeine, nicotine, amphetamine) In order to assess whether MIRA-55 affected attention as compared to THC required a different testing model—Psychomotor Vigilance Test (PVT). The rat Psychomotor Vigilance Test (rPVT) is a widely used method to measure sustained attention in rodents. In the rPVT model, rats are trained to respond to a visual stimulus by pressing a lever, with shorter reaction times indicative of better attentional performance. Mice with longer reaction times or higher variability in response times may be considered to have attention deficits or altered vigilance. Data is shown as percentage accuracy at pressing the lever within the allowed reaction time vs dose of drug used. In the figure below, it can be seen that at doses of THC that impair attention, MIRA-55 had no negative effects on attention (i.e. their accuracy at pressing a lever at the right amount of time after receiving a trained cue was not impaired at all).

Figure: Comparison of MIRA-55 versus THC on Psychomotor Vigilance Test (PVT) Performance in Rats. The figure displays the percentage accuracy of rats in the Psychomotor Vigilance Test (PVT) following administration of MIRA-55 (blue) or THC (red). The y-axis represents the percentage accuracy (% Accuracy), indicating the proportion of correct responses in the PVT task. The x-axis represents the treatment condition, with increasing amount of compound being given to the rats before testing. The data shows that rats treated with MIRA-55 exhibited no decrease in percentage accuracy compared to the THC group (p < 0.05). The results indicate that administration of MIRA-55 had no negative impact on attention performance in the PVT task, as evidenced by the maintenance of 100% accuracy across the dosage range, compared to THC that impaired attention leading to decreased accuracy more and more with increasing dosages.

The Psychomotor Vigilance Test (PVT) is a behavioral test used in rats to assess attention and speed of response, providing insights into their vigilance and cognitive performance. It is based on the measurement of reaction times to visual stimuli, typically presented in a simple reaction time task paradigm.

In the PVT, rats are typically placed in an operant chamber or testing apparatus equipped with a visual stimulus, such as a light or LED. The rats are trained to perform a specific response, such as pressing a lever or nose-poking, when the visual stimulus appears. The timing of the visual stimuli is randomized to prevent predictability and maintain the animals’ attention.

During the test, the rats are required to pay attention to the visual stimuli and respond as quickly as possible when they appear. The reaction time, which represents the time it takes for the rat to initiate the response upon stimulus presentation, is recorded. This measure reflects the speed of response and can provide an indication of the rat’s attentional state and ability to sustain attention over time. By analyzing the reaction time data, researchers can evaluate the rat’s attentional performance, including measures such as mean reaction time, variability in response times, and the occurrence of lapses or errors. The PVT has been widely used to investigate the effects of different manipulations, such as pharmacological interventions that cause sedation, sleep deprivation, or experimental treatments, on attention, alertness, and cognitive performance in rats.

Therefore, the combination of cognitive assessments demonstrated the following: despite having anxiolytic effects, 1) MIRA-55 significantly improved associative learning, memory and recall in the context fear conditioning model, and 2) MIRA-55 had no negative effects on attention at doses that THC showed significant impairment. This is the first time a cannabinoid has been shown to enhance (rather than inhibit) cognition when given to normal healthy mice after training but before testing, demonstrating a specific cognitive improvement as a direct effect on the brain that is independent of indirect effects—such as with acute administration by decreasing anxiety or with long term administration by having anti-inflammatory effects in neurodegenerative diseases.

Due to further optimization of the manufacturing process, our pre-clinical work in 2024 will include the conduct of several other pre-clinical studies and initiation of a 7-day maximum tolerated dose study of MIRA-55 in rats and dogs.

We further plan on neurobehavioral evaluation of orally and intraperitoneally administered MIRA-55 in rats and mice, respiratory evaluation of orally administered MIRA-55 in rats, and in vitro testing for effects of MIRA-55 on hERG (the human Ether-à-go-go-Related Gene) channel currents. The hERG is an early in vitro assay required by the FDA to alert companies of any potential cardiac abnormalities by the product before proceeding with dose studies in humans. hERG is a gene that codes for a protein known as the alpha subunit of a potassium ion channel. This ion channel (sometimes simply denoted as ‘hERG’) is best known for its contribution to the electrical activity of the heart: the hERG channel mediates the repolarizing current in the cardiac action potential, which helps coordinate the heart’s beating. When this channel’s ability to conduct electrical current across the cell membrane is inhibited or compromised, either by application of drugs or by rare mutations in some individuals, it can result in a potentially fatal disorder called long QT syndrome.

Testing is anticipated to conclude in the first quarter of 2025. Additionally, a 28-day toxicology analysis for dogs and rats is expected to begin at the end of the fourth quarter of 2024 and continue through the first quarter of 2025.

We have started the analytical development and manufacturing of MIRA-55 as of January 2023. By the third quarter of 2024, we anticipate our suppliers will be developing MIRA-55 at scale and manufactured under GLP/cGMP conditions, expanding on earlier non-GMP volumes of MIRA-55 for use in our initial testing programs. We plan to work closely with our suppliers to generate sufficient volumes of cGMP-grade MIRA-55 materials for the planned pre-clinical toxicity programs, expanded animal testing and human trials expected to be performed in 2025, subject to FDA approval.

Regulation

The FDA and comparable regulatory authorities in state and local jurisdictions impose substantial and burdensome requirements upon companies involved in the clinical development, manufacture, marketing, and distribution of drugs. These agencies and other federal, state, and local entities regulate, among other things, the research and development, testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion, distribution, post-approval monitoring and reporting, sampling and export and import of our drug candidates.

U.S. Government Regulation

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve pending New Drug Applications (or NDAs), withdrawal of an approval, imposition of a clinical hold, issuance of warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.

The process required by the FDA before a drug may be marketed in the United States generally involves the following:

Pre-clinical studies

Before testing any drug or biological product candidate in humans, the product candidate must undergo rigorous pre-clinical testing. The pre-clinical developmental stage generally involves laboratory evaluations of drug chemistry, formulation, and stability, as well as studies to evaluate toxicity in animals, to assess the potential for adverse events (“AEs”) and, in some cases, to establish a rationale for therapeutic use. The conduct of pre-clinical studies is subject to federal regulations and requirements, including GLP regulations for safety/toxicology studies. An IND sponsor must submit the results of the pre-clinical studies, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.

An IND is a request for authorization from the FDA to ship an investigation product and then administer it to humans and must be allowed to proceed by the FDA before human clinical trials may begin. Some long-term pre-clinical testing, such as animal tests of reproductive AEs and carcinogenicity, may continue after the IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA raises concerns or questions before that time related to one or more proposed clinical trials and places the trial on clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to commence.

Clinical trials

The clinical stage of development involves the administration of the investigational product to healthy volunteers or patients under the supervision of qualified investigators, generally physicians not employed by, or under control of, the trial sponsor, in accordance with GCPs, which include the requirement that all research patients provide their informed consent for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, dosing procedures, subject selection and exclusion criteria and the parameters to be used to monitor subject safety and assess efficacy. Each protocol, and any subsequent amendments to the protocol, must be submitted to the FDA as part of the IND. Furthermore, each clinical trial must be reviewed and approved by an IRB for each institution at which the clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable in relation to anticipated benefits. The IRB also approves the informed consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed. There also are requirements governing the reporting of ongoing clinical trials and completed clinical trial results to public registries. Information about most clinical trials must be submitted within specific timeframes for publication on the www.clinicaltrials.gov website. Information related to the product, patient population, phase of investigation, study sites and investigators and other aspects of the clinical trial is made public as part of the registration of the clinical trial. Sponsors are also obligated to disclose the results of their clinical trials after completion. Disclosure of the results of these trials can be delayed in some cases for up to two years after the date of completion of the trial. Competitors may use this publicly available information to gain knowledge regarding the progress of development programs.

Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined:

Post-approval trials, sometimes referred to as Phase IV clinical trials, may be conducted after initial marketing approval. These trials are used to gain additional experience from the treatment of patients in the intended therapeutic indication, particularly for long-term safety follow up. In certain instances, the FDA may mandate the performance of Phase IV clinical trials as a condition of approval of an NDA or a Biologics License Application (“BLA”).

Progress reports detailing the results of the clinical trials must be submitted at least annually to the FDA and more frequently if significant adverse events (“SAEs”) occur. The FDA or the sponsor may suspend or terminate a clinical trial at any time, or the FDA may impose other sanctions on various grounds, including a finding that the research patients are being exposed to an unacceptable health risk. Similarly, an IRB can refuse, suspend, or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the drug has been associated with unexpected serious harm to patients.

Concurrently with clinical trials, companies usually complete additional pre-clinical studies and must also develop additional information about the physical characteristics of the drug or biological product as well as finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality, potency, and purity of the final biological product. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.

Marketing Approval

Assuming successful completion of the required clinical testing, the results of the pre-clinical studies and clinical trials, together with detailed information relating to the product’s chemistry, manufacture, controls, and proposed labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications. In most cases, the submission of an NDA is subject to a substantial application user fee.

The review process typically takes twelve months from the date the NDA is submitted to the FDA. The FDA conducts a preliminary review of all NDAs within the first 60 days after submission to determine whether they are sufficiently complete to permit substantive review before accepting them for “filing.” The FDA may request additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with the additional information and may be subject to an additional application user fee. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged, or held meets standards designed to assure the product’s continued safety, quality and purity. Under the current guidelines in effect in the Prescription Drug User Fee Act (PDUFA), the FDA has a goal to review and act on the submission within ten months from the completion of the preliminary review of a standard NDA for a new molecular entity.

The FDA also may require submission of a REMS plan to ensure that the benefits of the drug outweigh its risks. The REMS plan could include medication guides, physician communication plans, assessment plans, and/or elements to assure safe use, such as restricted distribution methods, patient registries, or other risk minimization tools.

The FDA may refer an application for a novel drug to an advisory committee. An advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA may inspect one or more clinical trial sites to assure compliance with GCP requirements.

After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter. A complete response letter generally contains a statement of specific conditions that must be met in order to secure final approval of the NDA and may require additional clinical trials or pre-clinical studies in order for FDA to reconsider the application. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.

Post-approval requirements

Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims are subject to prior FDA review and approval. There also are continuing annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as new application fees for supplemental applications with clinical data.

Intellectual Property

KETAMIR-2 

We license the U.S., Canadian, and Mexican patent rights for the use of KETAMIR-2 in human applications from MIRALOGX. MIRALOGX filed international application no. PCT/US2024/018594 under the Patent Cooperation Treaty (PCT) on March 6, 2024, titled, ANTIDEPRESSANT COMPOUNDS, PHARMACEUTICAL COMPOSITIONS, AND METHODS OF TREATING DEPRESSION AND OTHER DISORDERS, and in due course intends to enter the national phase in the United States, Canada and Mexico, among other countries. These applications, if granted and subject to payment of patent maintenance fees, would offer protection extending through at least March 6, 2044. The patent rights for KETAMIR-2 outside of the United States, Canada, and Mexico are not included in our current patent rights.

Our license from MIRALOGX is set forth in the Exclusive License Agreement, dated November 15, 2023, pursuant to which the licensed field of use includes therapeutic treatments and other medical or health uses in humans, and related preclinical studies and activities conducted in furtherance of obtaining regulatory approval for and commercialization of human therapeutic treatments and uses (the “MIRALOGX License Agreement”). “Licensed Product” is defined as a drug product containing as an active agent 2-(2-chlorophenyl)-2-(methylamino)cyclopentan-1-one or a pharmaceutically acceptable salt or ester thereof. We also have the right to grant corresponding sublicenses under the licensed patent rights. The MIRALOGX License Agreement provides for the payment to MIRALOGX of an 8% royalty (payable quarterly) on our net sales of Licensed Products by us or our sublicensees and on non-royalty bearing milestone revenue, with the royalty obligation ceasing upon the later of the expiration of the last-to-expire licensed patent. The agreement also provides for an up-front Cost Reimbursement of $100,000 payable to MIRALOGX to cover the already-incurred costs associated with the patent rights. The Cost Reimbursement is the only payment made to date under the agreement. MIRALOGX may terminate the agreement upon insolvency, an uncured breach including the failure to make any payment owed under the agreement or the failure to use commercially reasonable efforts to develop the licensed product, or upon a default of the November 15, 2023 Promissory Note and Loan Agreement. The MIRALOGX License Agreement provides that MIRALOGX will have sole control over the filing, prosecution, maintenance, and management of the licensed patent rights, provided that we will be responsible for the cost of prosecuting and maintaining the licensed patents. The agreement grants to us the primary right, but not the obligation, to enforce the licensed patent rights. 

Besides relying on patents, we also rely on trade secrets, proprietary know-how and continuing innovation to develop and maintain our competitive position, especially when we do not believe that patent protection is appropriate or can be obtained. We seek protection of these trade secrets, proprietary know-how and any continuing innovation, in part, through confidentiality and proprietary information agreements. However, these agreements may not provide meaningful protection for, or adequate remedies to protect, our technology in the event of unauthorized use or disclosure of information. Furthermore, our trade secrets may otherwise become known to, or be independently developed by, our competitors. We intend to seek appropriate patent protection for technology in our research and development programs, where applicable, and their uses by filing patent applications in the United States and other selected countries. We intend for these patent applications to cover, where possible, claims for compositions of matter, medical uses, processes for preparation and formulations.

MIRA-55

We have a pending provisional patent application directed to MIRA-55, a structure that was synthesized and isolated during the research and development of MIRA1a titled “Synthetic Cannabinoid Analogs, Pharmaceutical Compositions and Methods of Treating Anxiety and Other Disorders”. The Company intends to pursue domestic and foreign filings based on the provisional application to seek global patent protection for MIRA-55.

MIRA1a

The U.S. Patent 10,787,675 B2, titled “Purified Synthetic Marijuana and Methods of Treatment by Administering Same,” which covers the MIRA1a compound per se as a racemic mixture, an isolated R-enantiomer, or an isolated S-enantiomer, as well as pharmaceutical formulations of the compound, was assigned to our Company by SRQ Patent Holdings II, LLC (“SRQ”) in December 2021. This patent also covers MIRA1a in methods of treating Alzheimer’s disease, anxiety, depression, and addictions. Subject to payment of patent maintenance fees, the ‘675 patent offers protection extending through at least February 11, 2039. According to the assignment and royalty agreement, we owe 8% in royalty revenue on net sales price and royalty revenue and 8% of milestone payment revenue to SRQ.

The royalties shall continue, in each country on a product-by-product and country-by-country basis until the later of i) the date of expiration of the last to expire patent included within the Innovation, or ii) the date of expiration of the last strategic partnership/licensing agreement including the Innovation.

We currently have no plans to develop the MIRA1a compound for approval and commercialization in or outside of the United States. See “Risk Factors— Risks Related to Our Intellectual Property— We own the rights associated with our patents in the United States, but we do not own the rights to patents covering MIRA1a in foreign jurisdictions.”

Properties

Our corporate headquarters and executive offices were in Baltimore, Maryland, which lease expires on April 30, 2024. Our current business address is 1200 Brickell Avenue, Suite 1950 #1183, Miami, Florida 32183, which is a virtual office.

Employees

As of March 28, 2024, we had three employees and various consultants providing support. None of our employees are represented by a labor union or are covered by a collective bargaining agreement. We consider our relationship with our employees to be satisfactory.

Legal Proceedings

From time to time, we may be named in claims arising in the ordinary course of business. Currently, no legal proceedings, government actions, administrative actions, investigations, or claims are pending against us or involve us that, in the opinion of our management, could reasonably be expected to have a material adverse effect on our business and financial condition.

We anticipate that we will expend significant financial and managerial resources in the defense of our intellectual property rights in the future if we believe that our rights have been violated. We also anticipate that we will expend significant financial and managerial resources to defend against claims that our products and services infringe upon the intellectual property rights of third parties.

Corporation Information

Our corporate headquarters is located at 1200 Brickell Avenue, Suite 1950 #1183, Miami, Florida 32183. Our telephone number is 786-432-9792.

Our principal website address is www.mirapharmaceuticals.com. The information contained on, or that can be accessed through, our website is deemed not to be incorporated in this Report or to be part of this Report. You should not consider information contained on our website to be part of this Report.

ITEM 1A. Risk Factors

RISK FACTORS

Investing in shares of our common stock is very speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties described below, the section of this Report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related notes included elsewhere in this Report before investing in shares of our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect us. If any of the following risks occur, our business, operating results and prospects could be materially harmed. In that event, the price of our common stock could decline, and you could lose part or all of your investment.

Risks Related to Our Operations and Financial Condition

We are an early development-stage company with no revenues. As such, our losses from operations and negative cash flows as of December 31, 2023 raise substantial doubt about our ability to continue as a going concern absent obtaining adequate new debt or equity financings.

As a very early development-stage enterprise that is focused on the development of a pre-clinical pharmaceutical product, we have generated no revenue and have an accumulated deficit of $21.3 million through December 31, 2023, and $9.3 million through December 31, 2022. We have concluded that substantial doubt exists about our ability to continue as a going concern for the 12 months following the issuance of the financial statements included in this Annual Report on Form 10-K. As of the issuance date of these financial statements, we believe that we have sufficient resources available to support our development activities and business operations and timely satisfy our obligations as they come due into the fourth quarter of 2024. We do not have sufficient cash and cash equivalents as of the date of filing this Annual Report on Form 10-K to support our operations for at least the 12 months following the issuance of the financial statements.

To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, we plan to secure additional capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential alliances and drug product collaborations, however, none of these alternatives are committed at this time. There can be no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all, identify and enter into any strategic transactions that will provide the capital that we will require or achieve the other strategies to alleviate the conditions that raise substantial doubt about our ability to continue as a going concern. If none of these alternatives are available, or if available, are not available on satisfactory terms, we will not have sufficient cash resources and liquidity to fund our business operations for at least the 12 months following the date the financial statements are issued. The failure to obtain sufficient capital on acceptable terms when needed may require us to delay, limit, or eliminate the development of business opportunities and our ability to achieve our business objectives and our competitiveness, and our business, financial condition, and results of operations will be materially adversely affected. In addition, the perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations.

The report of our independent registered accounting firm on our audited financial statements for the fiscal year ended December 31, 2023 contains an explanatory paragraph relating to our ability to continue as a going concern.

The auditor’s opinion on our audited financial statements for the year ended December 31, 2023 includes an explanatory paragraph stating that we have incurred recurring losses from operations that raise substantial doubt about our ability to continue as a going concern. While we believe that we will be able to obtain the capital we need to continue our operations, there can be no assurances that we will be successful in these efforts or will be able to resolve our liquidity issues or eliminate our operating losses. If we are unable to obtain sufficient funding, we would need to significantly reduce our operating plans and curtail some or all of our development efforts. Accordingly, our business, prospects, financial condition, and results of operations will be materially and adversely affected, and we may be unable to continue as a going concern. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all.

Because we have a limited operating history, you may not be able to accurately evaluate our operations.

We have had limited operations to date. Therefore, we have a limited operating history upon which to evaluate the merits of investing in our company. Potential investors should be aware of the difficulties normally encountered by new companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications, and delays encountered in connection with the operations that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to the ability to generate sufficient cash flow to operate our business, and additional costs and expenses that may exceed current estimates. We expect to continue to incur significant losses into the foreseeable future. We recognize that if the effectiveness of our business plan is not forthcoming, we will not be able to continue business operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and it is doubtful that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.

We have significant and increasing liquidity needs and will require additional funding.

Our operations have consumed substantial amounts of cash since inception. For the year ended December 31, 2023, we reported a net operating cash outflow of $4.5 million and a net cash inflow from investing activities of $8.8 million. For the year ended December 31, 2022, we reported a net operating cash outflow of $5.6 million and a net cash inflow from investing activities of $3.1 million.

Research and development, and general and administrative expenses, and cash used for operations will continue to be significant and may increase substantially in the future in connection with new research and development initiatives and continued product commercialization efforts. We may need to raise additional capital to fund our operations, continue to conduct clinical trials to support potential regulatory approval of marketing applications and to fund commercialization of our products. 

The amount and timing of our future funding requirements will depend on many factors, including, but not limited to:

While we expect to fund our future capital requirements from a number of sources including existing cash balances, future cash flows from operations and the proceeds from further public offerings, we cannot assure you that any of these funding sources will be available to us on favorable terms, or at all. Further, even if we can raise funds from all of the above sources, the amounts raised may not be sufficient to meet our future capital requirements.

Operating results may vary significantly in future periods.

Our operating and financial results are likely to fluctuate significantly in the future. Our operating and financial results are unpredictable and may fluctuate, for among other reasons, due to:

In addition, a high portion of our costs are determined on an annual basis, due in part to our significant research and development costs. Thus, increases in our costs could disproportionately affect financial results in a quarter. Other factors, including non-cash expenses associated with financing activity, could also lead to fluctuations in our results of operations. Because of these factors, our operating and financial results in one or more future quarters may fail to meet the expectations of securities analysts or investors, which could cause our share price to decline.

We have yet to generate revenues or achieve a profit and may not generate revenue or achieve a profit for many years, if at all.

We have not yet produced any revenues or profit and may not for many years, if at all. Our ability to generate revenue is dependent on the receipt of regulatory approval of our product candidates, which will take years to achieve and may not be obtained. We therefore cannot assure you we will be able to ever generate sufficient revenue to pay for our expenses or achieve profitability. Our ability to continue as a going concern in the future is dependent upon raising capital from financing transactions and keeping operating expenses below our revenue levels in order to achieve positive cash flows, none of which can be assured.

Conflicts of interest may arise between us and MIRALOGX.

MIRALOGX licenses us the patent pending rights to KETAMIR-2. MIRALOGX is a separate intellectual property development company owned by the Bay Shore Trust. The Bay Shore Trust is also our largest stockholder. The interests of MIRALOGX are 100% owned by the Bay Shore Trust. Our relationship with MIRALOGX and the Bay Shore Trust may create, or may create the appearance of, conflicts of interest when we are faced with decisions that could have different implications for MIRALOGX than the decisions have for us. Furthermore, in light of the license agreement that we have with MIRALOGX, if a dispute were to arise between MIRALOGX and us relating to our past or future relationship with MIRALOGX or with respect to intellectual property matters, these potential conflicts of interest may make it more difficult for us to favorably resolve such disputes.

Certain of our executive officers will not be employed by us on a full-time basis.

Erez Aminov, our Chairman and Chief Executive Officer, will not be employed by our company on full-time basis. As provided in his respective employment agreement with our company, Mr. Aminov is expected to devote approximately fifty percent (50%) of his business time to the affairs of our company. Because this officer will not work full time for our company, instances may occur where he may not be immediately available to provide solutions to problems or address concerns that arise in the course of us conducting our business and thus adversely affect our business. In addition, he can become subject to conflicts of interest because he devotes part of his working time to other business endeavors and has responsibilities to other entities. Although such officer is aware of his duty and accountability to our company and to applicable laws and policies relating to corporate opportunity and conflicts of interest, such conflicts of interest may include deciding how much time to devote to our affairs, as well as what business opportunities should be presented to us.

Risks Relating to Our Business and Our Industry

Our future viability will largely depend on the positive development of Ketamir-2 and MIRA-55, and any future product candidates, which development will require significant capital resources and years of clinical development effort.

We currently have no drug products on the market, and all of our drug development projects are in a pre-clinical stage of development. Our business depends almost entirely on the successful pre-clinical and clinical development, FDA regulatory approval, and commercialization of our product candidates, principally Ketamir-2 and MIRA-55. Investors need to be aware that substantial additional investments including pre-clinical and clinical development and FDA regulatory submission and approval efforts will be required before we are permitted to undertake clinical studies and market and commercialize our product candidates, if ever. It may be several years before we can commence clinical trials, if ever. Any clinical trial will be subject to extensive and rigorous review and regulation by numerous government authorities in the United States and other jurisdictions where we intend, if approved, to market our product candidates. Before obtaining regulatory approvals for any of our product candidates, we must demonstrate through pre-clinical testing and clinical trials that the product candidate is safe and effective for its specific application. This process can take many years and may include post- marketing studies and surveillance, which would require the expenditure of substantial resources. Of the large number of drugs in development for approval in the United States (and the rest of the world), only a small percentage will successfully complete the FDA regulatory approval financing to fund our planned research, development, and clinical programs, we cannot assure you that any of our product candidates will be successfully developed or commercialized.

We may be unable to formulate or scale up any or all of our product candidates. There is no guarantee that any of the product candidates will be or are able to be manufactured or produced in a manner to meet the FDA’s criteria for product stability, content uniformity and all other criteria necessary for product approval in the United States and other markets. Any of our product candidates may fail to achieve their specified endpoints in clinical trials.

Furthermore, product candidates may not be approved even if they achieve their specified endpoints in clinical trials. The FDA may disagree with our trial design and our interpretation of data from clinical trials or may change the requirements for approval even after it has reviewed and commented on the design for our clinical trials. The FDA may also approve a drug for fewer or more limited indications than we request or may grant approval contingent on the performance of costly post-approval clinical trials (i.e., Phase IV trials). In addition, the FDA may not approve the labeling claims that we believe are necessary or desirable for the successful commercialization of our product candidates.

If we are unable to obtain regulatory approval for Ketamir-2 and MIRA-55 within the timeline we anticipate, we will not be able to execute our business strategy effectively and our ability to substantially grow our revenues will be limited, which would have a material adverse impact on our long-term business, results of operations, financial condition, and prospects.

We are dependent on our current and future product candidates, some of which may not receive regulatory approval or be successfully commercialized.

Our ability to progress our plan will depend on our ability to clinically develop, gain regulatory approval for and ultimately commercialize our product candidates. Our ability to successfully commercialize our product candidates will depend on, among other things, our ability to:

Our failure or delay with respect to any of the factors above could have a material adverse effect on our business, results of operations and financial condition.

Impact of global tensions may increase uncertainty of our future operations.

The global tensions arising from the Palestine-Israel war and the war in Ukraine may result in disruptions in the broader global economic environment. The uncertain nature, magnitude, and duration of hostilities stemming from such conflicts, including the potential effects of sanctions and countersanctions, or retaliatory cyber-attacks on the world economy and markets, have contributed to increased market volatility and uncertainty, which could have an adverse impact on macroeconomic factors that affect our business and operations, such as pre-clinical study issues, manufacturer delays or shipping delays.

Moreover, the conflict between Palestine and Israel could impact future business decisions to locate potential clinical trials in Israel. It is not possible to predict the short and long-term implications of military conflicts or wars or geopolitical tensions which could include further sanctions, uncertainty about economic and political stability, increases in inflation rate and energy prices, cyber-attacks, supply chain challenges and adverse effects on currency exchange rates and financial markets.

Results of pre-clinical studies and earlier clinical trials are not necessarily predictive indicators of future results.

Any positive results from future pre-clinical testing of our product candidates and potential future clinical trials may not necessarily be predictive of the results from Phase 1, Phase 2 or Phase 3 clinical trials. In addition, our interpretation of results derived from clinical data or our conclusions based on our pre-clinical data may prove inaccurate. Frequently, pharmaceutical and biotechnology companies have suffered significant setbacks in clinical trials after achieving positive results in pre-clinical testing and early phase clinical trials, and we cannot be certain that we will not face similar setbacks. These setbacks may be caused by the fact that pre-clinical and clinical data can be susceptible to varying interpretations and analyses. Furthermore, certain product candidates may perform satisfactorily in pre-clinical studies and clinical trials, but nonetheless fail to obtain FDA approval or appropriate approvals by the appropriate regulatory authorities in other countries. If we fail to produce positive results in our clinical trials for our product candidates, the development timeline and regulatory approval and commercialization prospects for them and as a result our business and financial prospects, would be materially adversely affected.

We have limited marketing experience, and we do not anticipate at this time establishing a sales force or distribution and reimbursement capabilities, and we may not be able to successfully commercialize any of our product candidates if they are approved in the future.

If regulatory approval of our products is ever obtained, our ability to generate revenues ultimately depends on our ability to sell our approved products and secure adequate third-party reimbursement. We currently have limited experience in marketing and selling our products. We currently do not have any products approved for sale in the United States or in any other country.

The commercial success of our product candidates will not even be possible for the foreseeable future and will depend on a number of factors beyond our control, including the willingness of physicians to prescribe our products to patients, payers’ willingness and ability to pay for the drugs, the level of pricing achieved, patients’ response to our drugs and the ability of our marketing partners to generate sales. There can be no guarantee that we will be able to establish or maintain the personnel, systems, arrangements and capabilities necessary to successfully commercialize Ketamir-2 and MIRA-55 or any product candidate approved by the FDA in the future. If we fail to establish or maintain successful marketing, sales and reimbursement capabilities or fail to enter into successful marketing arrangements with third parties, our product revenues may suffer.

Should we later determine it is in our best interest to develop a sales force we may be unable to effectively train and equip our sales force, therefore our ability to successfully commercialize our products may be harmed.

We will be required to expend significant time and resources to train our sales force to be credible, persuasive and compliant with applicable laws in marketing Ketamir-2 and MIRA-55 or our other product candidates to physicians for their approved uses. In addition, we must continue to train our sales force to ensure that a consistent and appropriate message about Ketamir-2 and MIRA-55 or our other product candidates are being delivered to our potential customers. If we are unable to effectively train our sales force and equip them with effective materials, including medical and sales literature to help them inform and educate potential customers about the benefits of Ketamir-2 and MIRA-55 and our product candidates and its proper administration, our efforts to successfully commercialize Ketamir-2 and MIRA-55 and our product candidates could be jeopardized, which would negatively impact our ability to generate product revenues.

We will need to further increase the size and complexity of our organization in the future, and we may experience difficulties in managing our growth and executing our growth strategy.

Our management and personnel, systems, and facilities currently in place may not be adequate to support our business plan and future growth. As a result, we may need to further expand certain areas of our organization.

Our need to effectively manage our operations, growth and various projects requires that we:

In addition, we may utilize the services of part-time outside consultants and contractors to perform several tasks for us, including tasks related to compliance programs, clinical trial management, regulatory affairs, formulation development and other drug development functions. Our growth strategy may entail expanding our use of consultants and contractors to implement these and other tasks going forward. If we are not able to effectively expand our organization by hiring new employees and expanding our use of consultants and contractors, we may be unable to successfully implement the tasks necessary to effectively execute on our planned research, development, manufacturing, and commercialization activities and, accordingly, may not achieve our research, development and commercialization goals.

Our product candidates, if approved, may be unable to achieve the expected market acceptance and, consequently, limit our ability to generate revenue from new products.

Even when product development is successful and regulatory approval has been obtained, our ability to generate sufficient revenue depends on the acceptance of our products by physicians and patients. We cannot assure you that our product candidates will achieve the expected level of market acceptance and revenue if and when they obtain the requisite regulatory approvals. The market acceptance of any product depends on a number of factors, including the indication statement and warnings required by regulatory authorities in the product label. Market acceptance can also be influenced by continued demonstration of efficacy and safety in commercial use, physicians’ willingness to prescribe the product, reimbursement from third-party payers such as government health care programs and private third-party payers, the price of the product, the nature of any post-approval risk, management activities mandated by regulatory authorities, competition, and marketing and distribution support. Further, an ineffective or inefficient distribution model at launch may lead to the inability to fulfill demand, and consequently a loss of revenue. Any factors preventing or limiting the market acceptance of our products could have a material adverse effect on our business, results of operations and financial condition.

If the price for any future approved products decreases or if government and other third-party payers do not provide coverage and adequate reimbursement levels, our revenue and prospects for profitability will suffer.

Patients who are prescribed medicine for the treatment of their conditions generally rely on third-party payers to reimburse all or part of the costs associated with their prescription drugs. Reimbursement systems in international markets vary significantly by country and by region, and reimbursement approvals generally must be obtained on a country-by-country basis. Coverage and adequate reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payers is critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower-cost therapeutic alternatives are already available or subsequently become available. Even if we obtain coverage for products we may market, the resulting reimbursement payment rates may require co-payments that patients find unacceptably high. Patients may not use our products if coverage is not provided, or reimbursement is inadequate to cover a significant portion of its cost.

In addition, the market for our products will depend significantly on access to third-party payers’ drug formularies or lists of medications for which third-party payers provide coverage and reimbursement. The industry competition to be included in such formularies often leads to downward pricing pressures on pharmaceutical companies. Also, third-party payers may refuse to include a particular branded drug in their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or other alternative is available, even if not approved for the indications for which our products are approved.

Third-party payers or governmental or commercial entities are developing increasingly sophisticated methods of controlling healthcare costs. The current environment is putting pressure on companies to price products below what they may feel is appropriate. Selling our products at less than an optimized price could impact our revenues and overall success as a company. It will be difficult to determine the optimized price for our products. In addition, in the U.S., no uniform policy of coverage and reimbursement for drug products exists among third-party payers. Therefore, coverage and reimbursement for our products may differ significantly from payer to payer. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payer separately, with no assurance that coverage will be obtained. If we are unable to obtain coverage of, and adequate payment levels for, products we may market to third-party payers, physicians may limit how much or under what circumstances they will prescribe or administer them, and patients may decline to purchase them. This in turn could affect our ability to successfully commercialize products we may market, and thereby adversely impact our profitability, results of operations, financial condition, and future success.

In addition, where we have chosen to collaborate with a third party on product candidate development and commercialization, our partner may elect to reduce the price of our products in order to increase the likelihood of obtaining reimbursement approvals. In many countries, products cannot be commercially launched until reimbursement is approved and the negotiation process in some countries can exceed 12 months. In addition, pricing and reimbursement decisions in certain countries can be affected by decisions taken in other countries, which can lead to mandatory price reductions and/or additional reimbursement restrictions across a number of other countries, which may thereby adversely affect our sales and profitability. In the event that countries impose prices that are not sufficient to allow us or our partners to generate a profit, our partners may refuse to launch the product in such countries or withdraw the product from the market, which would adversely affect sales and profitability. Events, such as price decreases, government mandated rebates or unfavorable reimbursement decisions, could affect the pricing and reimbursement of Ketamir-2 and MIRA-55 and our other product candidates and could have a material adverse effect on our business, reputation, results of operations and financial condition.

We expect to face intense competition, often from companies with greater resources and experience than we have. 

Demand for ketamine analogs like Ketamir-2 and synthetic cannabinoids such as MIRA-55 and will likely be dependent on a number of social, political, legislative, and economic factors that are beyond our control. While we believe that there will be a demand for such drugs, and that the demand will grow, there is no assurance that such demand will happen, that we will benefit from any demand or that our business, in fact, will ever generate revenues from our drug development programs or become profitable.

The emerging markets for product candidates like ours and related medical research and development is and will likely remain competitive. The development and commercialization of drugs and medicines is highly competitive. We compete with a variety of multinational pharmaceutical companies and specialized biotechnology companies, as well as products and processes being developed by universities and other research institutions. Many of our competitors have developed, are developing, or will develop drugs and processes which may be competitive with our drug candidates. Competitive therapeutic treatments include those that have already been approved by medicines regulators and accepted by the medical community and any new treatments that may enter the market. For some of our drug development programs / areas of therapeutic interest, other treatment options are currently available, under development, and may become commercially available in the future. If any of our product candidates are approved for the diseases and conditions we are currently pursuing, they may compete with a range of medicines or therapeutic treatments that are either in development, will be developed in the future or currently marketed.

Established companies may have a competitive advantage over us due to their size and experiences, financial resources, and institutional networks. Many of our competitors may have significantly greater financial, technical, and human resources than we do. Due to these factors, our competitors may have an advantage in marketing their approved drugs and may obtain regulatory approval of their drug candidates before we are able to, which may limit our ability to develop or commercialize our drug candidates. Our competitors may also develop drugs / medicines that are safer, more effective, more widely used and less expensive than ours. These advantages could materially impact our ability to develop and, if approved, commercialize our product candidates successfully. Furthermore, some of these competitors may make acquisitions or establish collaborative relationships among themselves or with third parties to increase their ability to rapidly gain market share.

Our product candidates may compete with other synthetic cannabinoids, as well as with cannabinoid or cannabis-based drugs, in addition to competing with state-licensed medical and recreational marijuana, in markets where the recreational and/or medical use of marijuana is legal. There is continuing support in the U.S. for further state legalization of marijuana. In markets where recreational and/or medical marijuana is not legal, our product candidates, once approved by regulators, may compete with marijuana or marijuana-based products purchased in the illegal drug market. This may or may not affect the commercial price that we may be able to achieve for our synthetic regulatory-approved medicines, should they be approved by the FDA.

Moreover, as generic versions of drug products enter the market, the price for such medicines may be expected to decline rapidly and substantially. Even if we are the first to obtain FDA approval of one of our product candidates, the future potential approval of generics could adversely affect the price we are able to charge, and the profitability of our product(s) will likely decline.

Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies.

These companies may compete with us in recruiting and retaining qualified scientific, management and commercial personnel, utilizing contract manufacturing facilities or contract research organizations (CROs), or establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to our research projects.

Product shipment delays could have a material adverse effect on our business, results of operations and financial condition.

The shipment, import and export of Ketamir-2 and MIRA-55 and our other product candidates require import and export licenses. In the U.S., FDA, U.S. Customs and Border Protection and the DEA, and in other countries similar regulatory authorities, regulate the import and export of pharmaceutical products that contain controlled substances. Specifically, the import and export process require the issuance of import and export licenses by the relevant controlled substance authority in both the importing and exporting country. We may not be granted, or if granted, maintain, such licenses from the authorities in certain countries. Even if we obtain the relevant licenses, shipments of Ketamir-2 and MIRA-55 and our product candidates may be held up in transit, which could cause significant delays and may lead to product batches being stored outside required temperature ranges. Inappropriate storage may damage the product shipment resulting in a partial or total loss of revenue from one or more shipments of Ketamir-2 and MIRA-55 or our other product candidates. A partial or total loss of revenue from one or more shipments of Ketamir-2 and MIRA-55 or our other product candidates could have a material adverse effect on our business, results of operations and financial condition. Even though the DEA has confirmed in writing that it conducted a scientific review of the chemical structure of MIRA1a and Ketamir-2 in accordance with the definitions within the CSA and its implementing regulations and determined that MIRA1a and Ketamir-2 is not a controlled substance or listed chemical, there is no assurance that the DEA may not change its position. We have filed the necessary requirements with the DEA to review MIRA-55, however, there can be no assurance that the DEA will conclude that MIRA-55 is not a controlled substance or listed chemical.

The manufacture of our product candidates is complex and uncertain, and until we develop a validated manufacturing process, we may encounter difficulties in supplying our planned and future clinical trials. If we encounter such difficulties, or fail to meet quality standards, our ability to meet clinical timelines and expand our development strategy could be impacted.

The processes involved in manufacturing Ketamir-2, MIRA-55 and other product candidates are complex, expensive, highly regulated and subject to multiple risks and uncertainties. We have been faced with issues such as this in the initial synthesis of MIRA-55 (which we initially believed was based on our patented MIRA1a molecule).

In addition, as product candidates are developed through early to late-stage clinical trials and then to approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods, are modified along the way to optimize the scale, process and results. Any changes to the manufacturing processes carry the risk that they will not achieve these intended objectives, or that the product candidates may not meet the rigorous quality standards necessary for use in our pre-clinical or clinical trials.

Also, if planned or future manufacturing of Ketamir-2, MIRA-55 or other product candidates fails to meet the quality standards for use in our pre-clinical or clinical trials, or the active drug substance does not meet our quality specifications, it could impact our timelines and limit our development strategy. For example, and as discussed above, in the first quarter of 2024, we concluded that during the manufacturing and scale-up process of MIRA1a, the intended MIRA1a compound was in fact synthesized as MIRA-55.

Moreover, our contract manufacturing organizations (“CMOs”) or contract development and manufacturing organization (“CDMOs”) may be unable to successfully increase the manufacturing scale for our product candidates in a timely or cost-effective manner and may experience delays due to limited manufacturing capacity. In addition, quality issues may arise during manufacturing activities. If our CMOs or CDMOs are unable to successfully manufacture our product candidates in sufficient quantity in a timely manner or produce active drug substances that do not meet our quality specifications, our planned pre-clinical or clinical trials may be delayed or modified.

We may fail to expand our manufacturing capability in time to meet market demand for our products and product candidates, and the FDA may refuse to accept our facilities or those of our contract manufacturers as being suitable for the production of our products and product candidates. Any problems in our manufacturing process could have a material adverse effect on our business, results of operations and financial condition.

Before we can begin commercial manufacture of any product candidates for sale in the U.S., we must obtain FDA regulatory approval for the product, which requires a successful FDA inspection of our manufacturing facilities and those of our contract manufacturers, processes, and quality systems in addition to other product-related approvals. Although we may successfully navigate this pre-approval inspection process as it relates in the U.S., pharmaceutical manufacturing facilities are continuously subject to post-approval inspection by the FDA and foreign regulatory authorities. Due to the complexity of the processes used to manufacture our product candidates, we may be unable to initially or continue to pass federal, state or international regulatory inspections in a cost-effective manner. If we are unable to comply with manufacturing regulations, we may be subject to fines, unanticipated compliance expenses, recall or seizure of any approved products, total or partial suspension of production and/or enforcement actions, including injunctions, and criminal or civil prosecution. These possible sanctions would adversely affect our business, results of operations and financial condition.

Business interruptions could delay us in the process of developing our product candidates and could disrupt our product sales.

Our research and development activities are conducted through outside contractors and manufacturers. Loss of our contracted manufacturing facilities, stored inventory or laboratory facilities through fire, theft or other causes, or loss of our raw material, could have an adverse effect on our ability to continue product development activities and to conduct our business. Failure to supply our partners with commercial product may lead to adverse consequences, including the right of partners to take over responsibility for product supply. We currently do not have insurance coverage to compensate us for such business interruptions. Our contract manufacturers and suppliers provide that in their separate operations; however, such coverage may prove insufficient to fully compensate us for the damage to our business resulting from any significant property or casualty loss to those facilities.

If product liability lawsuits are successfully brought against us, we will incur substantial liabilities and may be required to limit the commercialization of Ketamir-2 and MIRA-55 and our product candidates.

Although we have never had any product liability claims or lawsuits brought against us, we face potential product liability exposure related to the testing of our product candidates in human clinical trials. We may face exposure to claims by an even greater number of persons when we begin to market and distribute our products commercially in the U.S., Europe and elsewhere. Now, and in the future, an individual may bring a liability claim against us alleging that Ketamir-2, MIRA-55 or one of our other product candidates caused an injury. While we continue to take what we believe are appropriate precautions, we may be unable to avoid significant liability if any product liability lawsuit is brought against us. Large judgments have been awarded in class action or individual lawsuits based on drugs that had unanticipated side effects. If we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

Counterfeit versions of our products could harm our business.

Counterfeiting activities and the presence of counterfeit products in a number of markets and over the Internet continue to be a challenge for maintaining a safe drug supply for the pharmaceutical industry. Counterfeit products are frequently unsafe or ineffective and can be life-threatening. To distributors and users, counterfeit products may be visually indistinguishable from the authentic version. Reports of adverse reactions to counterfeit drugs along with increased levels of counterfeiting could be mistakenly attributed to the authentic product, affect patient confidence in the authentic product and harm the business of companies such as ours. If our products were to be the subject of counterfeits, we could incur reputational and financial harm.

We depend upon our key personnel and our ability to attract and retain employees.

Our future growth and success depend on our ability to recruit, retain, manage, and motivate our employees. The inability to hire or retain experienced management personnel could adversely affect our ability to execute our business plan and harm our operating results. Due to the specialized scientific and managerial nature of our business, we rely heavily on our ability to attract and retain qualified scientific, technical, and managerial personnel. The competition for qualified personnel in the pharmaceutical field is intense. Due to this intense competition, we may be unable to continue to attract and retain the qualified personnel necessary for the development of our business or to recruit suitable replacement personnel.

Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA or foreign regulations, provide accurate information to FDA or other regulatory authorities, comply with applicable manufacturing standards, comply with other foreign, federal, and state laws and regulations, report information or data accurately or disclose unauthorized activities to us. Employee misconduct could also involve the improper use of information, including information obtained during clinical trials, or illegal appropriation of drug products, which could result in government investigations and serious harm to our reputation. The precautions we take to detect and prevent these prohibited activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.

We are subject to the U.S. Foreign Corrupt Practices Act and other anti-corruption laws, as well as export control laws, customs laws, sanctions laws and other laws governing our operations. If we fail to comply with these laws, we could be subject to civil or criminal penalties, other remedial measures, and legal expenses, which could adversely affect our business, results of operations and financial condition.

Our operations are subject to anti-corruption laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), and other anti-corruption laws that apply in countries where we do business. The FCPA and these other laws generally prohibit us and our employees and intermediaries from bribing, being bribed or making other prohibited payments to government officials or other persons to obtain or retain business or gain some other business advantage. We and our commercial partners operate in a number of jurisdictions that pose a high risk of potential FCPA violations, and we participate in collaborations and relationships with third parties whose actions could potentially subject us to liability under the FCPA or local anti-corruption laws. In addition, we cannot predict the nature, scope, or effect of future regulatory requirements to which our international operations might be subject or the manner in which existing laws might be administered or interpreted.

We are also subject to other laws and regulations governing our international operations, including regulations administered by the government of the U.S. and other countries in which we operate or plan to operate, including applicable export control regulations, economic sanctions on countries and persons, customs requirements, and currency exchange regulations, (collectively referred to as the “Trade Control laws”).

However, there is no assurance that we will be completely effective in ensuring our compliance with all applicable anti-corruption laws, including the FCPA or other legal requirements, including Trade Control laws. If we are not in compliance with the FCPA and other anti-corruption laws or Trade Control laws, we may be subject to criminal and civil penalties, disgorgement and other sanctions and remedial measures, and legal expenses, which could have an adverse impact on our business, financial condition, results of operations and liquidity, as well as our reputation. Likewise, any investigation of any potential violations of the FCPA, other anti-corruption laws or Trade Control laws by the U.S. or other authorities could also have an adverse impact on our reputation, our business, results of operations and financial condition.

Our proprietary information, or that of our suppliers and business partners, may be lost or we may suffer security breaches.

In the ordinary course of our business, we will collect and store sensitive data, including valuable and commercially sensitive intellectual property, clinical trial data, our proprietary business information and that of our suppliers and business partners, and personally identifiable information of our clinical trial subjects and employees, on our networks, and with our third-party cloud service providers. The secure processing, maintenance and transmission of this information is critical to our operations. Despite our security measures, our information technology and infrastructure, and that of our third parties, may be vulnerable to attacks by hackers or breached due to employee error, malfeasance, or other disruptions. Any breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost, or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disrupt our operations, damage our reputation, and cause a loss of confidence in our products and our ability to conduct clinical trials, which could adversely affect our business and reputation and lead to delays in gaining regulatory approvals for Ketamir-2 and MIRA-55 or other product candidates.

Failure of our information technology systems, including cybersecurity attacks or other data security incidents, could significantly disrupt the operation of our business.

Our business is increasingly dependent on critical, complex, and interdependent information technology (“IT”) systems, including internet-based systems, some of which are managed or hosted by third parties, to support business processes as well as internal and external communications. The size and complexity of our IT systems make us potentially vulnerable to IT system breakdowns, malicious intrusion, and computer viruses, which may result in the impairment of our ability to operate our business effectively.

We are continuously evaluating and, where appropriate, enhancing our IT systems to address our planned growth, including to support our planned manufacturing operations. There are inherent costs and risks associated with implementing the enhancements to our IT systems, including potential delays in access to, or errors in, critical business and financial information, substantial capital expenditures, additional administrative time and operating expenses, retention of sufficiently skilled personnel to implement and operate the enhanced systems, demands on management time, and costs of delays or difficulties in transitioning to the enhanced systems, any of which could harm our business and results of operations. In addition, the implementation of enhancements to our IT systems may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. In addition, our systems and the systems of our third-party providers and collaborators are potentially vulnerable to data security breaches which may expose sensitive data to unauthorized persons or to the public. Such data security breaches could lead to the loss of confidential information, trade secrets or other intellectual property, could lead to the public exposure of personal information (including personally identifiable information or individually identifiable health information) of our employees, clinical trial patients, customers, business partners, and others, could lead to potential identity theft, or could lead to reputational harm. Data security breaches could also result in loss of clinical trial data or damage to the integrity of that data. In addition, the increased use of social media by our employees and contractors could result in inadvertent disclosure of sensitive data or personal information, including but not limited to, confidential information, trade secrets and other intellectual property.

Any such disruption or security breach, as well as any action by us or our employees or contractors that might be inconsistent with the rapidly evolving data privacy and security laws and regulations applicable within the United States and elsewhere where we conduct business, could result in enforcement actions by U.S. states, the U.S. federal government or foreign governments, liability or sanctions under data privacy laws, including healthcare laws such as HIPAA, that protect certain types of sensitive information, regulatory penalties, other legal proceedings such as but not limited to private litigation, the incurrence of significant remediation costs, disruptions to our development programs, business operations and collaborations, diversion of management efforts and damage to our reputation, which could harm our business and operations. Because of the rapidly moving nature of technology and the increasing sophistication of cybersecurity threats, our measures to prevent, respond to and minimize such risks may be unsuccessful.

Security breaches, loss of data and other disruptions could compromise sensitive information related to our business, prevent us from accessing critical information or expose us to liability, which could adversely affect our business and our reputation.

In the ordinary course of our business, we, our vendors, and our third-party cloud service providers may collect and store sensitive data, including legally protected patient health information, credit card information, personally identifiable information about our employees and patients, intellectual property, and proprietary business information. We manage and maintain our applications and data utilizing cloud-based and on-site systems. These applications and data encompass a wide variety of business-critical information including research and development information, commercial information and business and financial information.

The secure processing, storage, maintenance, and transmission of this critical information is vital to our operations and business strategy, and we devote significant resources to protecting such information. Although we take measures to protect sensitive information from unauthorized access or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers, or viruses, breaches, or interruptions due to employee error, malfeasance or other disruptions, or lapses in compliance with privacy and security mandates. Any such virus, breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, publicly disclosed, lost or stolen. We have measures in place that are designed to prevent, and if necessary to detect and respond to such security incidents, breaches of privacy, and security mandates. However, in the future, any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, such as HIPAA in the United States and the General Data Protection Regulation in the European Union, or GDPR, government enforcement actions and regulatory penalties. Unauthorized access, loss or dissemination could also disrupt our operations, including our ability to process samples, provide test results, share and monitor safety data, bill payers or patients, provide customer support services, conduct research and development activities, process and prepare company financial information, manage various general and administrative aspects of our business and may damage our reputation, any of which could adversely affect our business, financial condition and results of operations.

Legislative or regulatory reform of the health care system in the U.S. may affect our ability to profitably sell our products, if approved.

Our ability to commercialize our future products successfully, alone or with collaborators, will depend in part on the extent to which coverage and reimbursement for the products will be available from government and health administration authorities, private health insurers and other third-party payers. The continuing efforts of the U.S. government, insurance companies, managed care organizations and other payers for health care services to contain or reduce health care costs may adversely affect our ability to set prices for our products which we believe are fair, and our ability to generate revenues and achieve and maintain profitability.

Specifically, in the U.S., there have been a number of legislative and regulatory proposals to change the health care system in ways that could affect our ability to sell our products profitably. For example, certain states in the U.S. are proposing legislation mandating publicly funded health program coverage of medical cannabis. In addition, the 2010 Affordable Care Act, or the ACA, substantially changed the way healthcare is financed by both governmental and private insurers. Both Congress and the U.S. President have already taken some actions that are intended to significantly limit the ACA, and we expect efforts to further modify or repeal the ACA to continue. The success and potential effects of these efforts to repeal or modify the ACA are not clear.

We expect additional federal and state legislative proposals for health care reform, which could limit the prices that can be charged for the products we develop and may limit our commercial opportunity.

The continuing efforts of government and other third-party payers to contain or reduce the costs of health care through various means may limit our commercial opportunity. It will be time-consuming and expensive for us to go through the process of seeking coverage and reimbursement from Medicare, Medicaid, and other governmental health programs and from private payers. Our products may not be considered cost-effective, and government and third-party private health insurance coverage and reimbursement may not be available to patients for any of our future products or sufficient to allow us to sell our products on a competitive and profitable basis. Our results of operations could be adversely affected by ACA, changes to the ACA, and by other health care reforms that may be enacted or adopted in the future. In addition, increasing emphasis on managed care in the U.S. will continue to put downward pressure on the pricing of pharmaceutical products. Cost-control initiatives could decrease the price that we or any potential collaborators could receive for any of our future products and could adversely affect our ability to generate revenue in the U.S. market and maintain profitability.

We may acquire other companies which could divert our management’s attention, result in additional dilution to our shareholders and otherwise disrupt our operations and harm our operating results.

We may in the future seek to acquire businesses, products, or technologies that we believe could complement or expand our product offerings, enhance our technical capabilities or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are consummated. If we acquire additional businesses, we may not be able to integrate the acquired personnel, operations and technologies successfully, effectively manage the combined business following the acquisition or realize anticipated cost savings or synergies. We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including:

In the future, if our acquisitions do not yield expected returns, we may be required to take charges to our operating results arising from the impairment assessment process. Acquisitions may also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our operating results. In addition, if an acquired business fails to meet our expectations, our business, results of operations and financial condition may be adversely affected.

Risks Related to Development and Regulatory Approval of Our Product Candidates

Clinical trials for our product candidates are expensive, time-consuming, uncertain, and susceptible to change, delay or termination. The results of clinical trials are open to differing interpretations.

Clinical trials are expensive, time consuming and difficult to design and implement. Regulatory agencies may analyze or interpret the results differently than us. Even if the results of our clinical trials are favorable, the clinical trials for a number of our product candidates are expected to continue for several years and may take significantly longer to complete. In addition, we, the FDA, or other regulatory authorities, including state and local authorities, or an Institutional Review Board, or IRB, with respect to a trial at its institution, may suspend, delay or terminate our clinical trials at any time, require us to conduct additional clinical trials, require a particular clinical trial to continue for a longer duration than originally planned, require a change to our development plans such that we conduct clinical trials for a product candidate in a different order, e.g., in a step-wise fashion rather than running two trials of the same product candidate in parallel, or the DEA could suspend or terminate the registrations and quota allotments we require in order to procure and handle controlled substances, for various reasons, including:

Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

Clinical trials of synthetic cannabinoid drug candidates and ketamine analogs are novel with very limited or non-existing history; we face a significant risk that the trials will not result in commercially viable drugs and treatments.

At present, there is only a very limited documented clinical trial history from which we can derive any scientific conclusions for our product candidates or prove that our present assumptions for the current and planned research are scientifically compelling. The active pharmaceutical ingredient (or API) content shown in INDs can vary from one IND to another – hence it is not necessarily possible to extrapolate results from studies with one product and predict efficacy of safety with another product containing a similar API and different source. Whilst the principal synthetic cannabinoid component may be similar, the APIs may differ in terms of minor cannabinoid content, impurity profiles or degradant profiles. While we are encouraged by the results of clinical trials by others (where they exist), there can be no assurance that any pre-clinical study or clinical trial will result in in commercially viable drugs or treatments.

Clinical trials are expensive, time consuming and difficult to design and implement. We, as well as the regulatory authorities may suspend, delay or terminate our clinical trials at any time, may require us, for various reasons, to conduct additional clinical trials, or may require a particular clinical trial to continue for a longer duration than originally planned, including, among others:

Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

Any failure by us to comply with existing regulations could harm our reputation and operating results.

We are subject to extensive regulation by U.S. federal and state governments in each of the markets where we have product candidates progressing through the approval process.

We must also adhere to all regulatory requirements including FDA’s Good Laboratory Practice, Good Clinical Practice, and current Good Manufacturing Practices requirements (“cGMP”) pharmacovigilance requirements, advertising, and promotion restrictions, reporting and recordkeeping requirements. If we or our suppliers fail to comply with applicable regulations, including FDA pre-or post-approval cGMP requirements, then FDA could sanction us. Even if a drug is FDA-approved, regulatory authorities may impose significant restrictions on a product’s indicated uses or marketing or impose ongoing requirements for potentially costly post-marketing trials. Ketamir-2 and MIRA-55, and any of our product candidates that may be approved in the U.S. in the future, will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, distribution, import, export, advertising, promotion, sampling, recordkeeping and submission of safety and other post-market information, including both federal and state requirements in the U.S. In addition, manufacturers and manufacturers’ facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to GMP. As such, we, and our contract manufacturers (in the event contract manufacturers are appointed in the future) are subject to continual review and periodic inspections to assess compliance with GMP. Accordingly, we and others with whom we work must continue to spend time, money, and effort in all areas of regulatory compliance, including manufacturing, production, quality control and quality assurance. We will also be required to report certain adverse reactions and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion for our products. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product’s approved label.

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of the product, it may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may:

In addition, any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from our product candidates. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our business and our operating results may be adversely affected.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business and damage our reputation. We expend significant resources on compliance efforts and such expenses are unpredictable and might adversely affect our results. Changing laws, regulations and standards might also create uncertainty, higher expenses and increase insurance costs. As a result, we intend to invest all reasonably necessary resources to comply with evolving standards, and this investment might result in increased management and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

We are subject to federal and state healthcare laws and regulations and implementation of or changes to such healthcare laws and regulations could adversely affect our business and results of operations.

In the United States, there have been a number of legislative and regulatory proposals to change the healthcare system in ways that could impact our ability to sell our product candidates. If we are found to be in violation of any of these laws or any other federal or state regulations, we may be subject to administrative, civil and/or criminal penalties, damages, fines, individual imprisonment, exclusion from federal health care programs and the restructuring of our operations. Any of these could have a material adverse effect on our business and financial results. Since many of these laws have not been fully interpreted by the courts, there is an increased risk that we may be found in violation of one or more of their provisions. Any action against us for violation of these laws, even if we ultimately are successful in our defense, will cause us to incur significant legal expenses and divert our management’s attention away from the operation of our business.

We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we may receive for any approved product. There have been judicial challenges to certain aspects of the ACA and numerous legislative attempts to repeal and/or replace the ACA in whole or in part, and we expect there will be additional challenges and amendments to the ACA in the future. At this time, the full effect that the ACA will have on our business in the future remains unclear. An expansion in the government’s role in the U.S. healthcare industry may cause general downward pressure on the prices of prescription drug products, lower reimbursements, or any other product for which we obtain regulatory approval, reduce product utilization, and adversely affect our business and results of operations. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payers. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize products for which we may receive regulatory approval.

The regulatory approval processes with the FDA are lengthy and inherently unpredictable.

We are not permitted to market our drug candidates as medicines in the United States or other countries until we receive approval of a New Drug Application (“NDA”) from the FDA or in any foreign countries until we receive the approval from the regulatory authorities of such countries. Prior to submitting an NDA to the FDA for approval of our drug candidates we will need to have completed our pre-clinical studies and clinical trials and demonstrate that our products meet all applicable standards of identity, strength, quality, and purity throughout their expiration date. Successfully completing any clinical program and obtaining approval of an NDA is a complex, lengthy, expensive, and uncertain process, and the FDA (or other country medicines regulatory body) may delay, limit, or deny approval of product candidates for many reasons, including, among others, because:

Any of these factors, many of which are beyond our control, could increase development time and / or costs or jeopardize our ability to obtain regulatory approval for our drug candidates.

There is a high rate of failure for drug candidates proceeding through clinical trials.

Generally, there is a high rate of failure for drug candidates proceeding through clinical trials. We may suffer significant setbacks in our clinical trials similar to the experience of a number of other companies in the pharmaceutical and biotechnology industries, even after receiving promising results in earlier trials. Further, even if we view the results of a clinical trial to be positive, FDA may disagree with our interpretation of the data. In the event that we obtain negative results from clinical trials for product candidates or other problems related to potential chemistry, manufacturing and control issues or other hurdles occur and our product candidates are not approved, we may not be able to generate sufficient revenue or obtain financing to continue our operations, our ability to execute on our current business plan may be materially impaired, our reputation in the industry and in the investment community might be significantly damaged and the price of our common stock could decrease significantly. In addition, our inability to properly design, commence and complete clinical trials may negatively impact the timing and results of our clinical trials and ability to seek approvals for our drug candidates.

If we are found in violation of federal or state “fraud and abuse” laws, we may be required to pay a penalty and/or be suspended from participation in federal or state health care programs, which may adversely affect our business, financial condition, and results of operations.

In the United States, we are subject to various federal and state health care “fraud and abuse” laws, including anti-kickback laws, false claims laws and other laws intended to reduce fraud and abuse in federal and state health care programs, which could affect us particularly upon successful commercialization of our products in the U.S. The Medicare and Medicaid Patient Protection Act of 1987, or federal Anti-Kickback Statute, makes it illegal for any person, including a prescription drug manufacturer (or a party acting on its behalf), to knowingly and willfully solicit, receive, offer or pay any remuneration that is intended to induce the referral of business, including the purchase, order or prescription of a particular drug for which payment may be made under a federal health care program, such as Medicare or Medicaid. Under federal law, some arrangements, known as safe harbors, are deemed not to violate the federal Anti-Kickback Statute. Although we seek to structure our business arrangements in compliance with all applicable requirements, it is often difficult to determine precisely how the law will be applied in specific circumstances. Accordingly, it is possible that our practices may be challenged under the federal Anti-Kickback Statute and Federal False Claims Act. Violations of fraud and abuse laws may be punishable by criminal and/or civil sanctions, including fines and/or exclusion or suspension from federal and state health care programs such as Medicare and Medicaid and debarment from contracting with the U.S. government. In addition, private individuals have the ability to bring actions on behalf of the government under the federal False Claims Act as well as under the false claims laws of several states.

Many states have adopted laws similar to the federal anti-kickback statute, some of which apply to the referral of patients for health care services reimbursed by any source, not just governmental payers. There are ambiguities as to what is required to comply with these state requirements and if we fail to comply with an applicable state law requirement, we could be subject to penalties.

Neither the government nor the courts have provided definitive guidance on the application of fraud and abuse laws to our business. Law enforcement authorities are increasingly focused on enforcing these laws, and it is possible that some of our practices may be challenged under these laws. While we believe we have structured our business arrangements to comply with these laws, it is possible that the government could allege violations of, or convict us of violating, these laws. If we are found in violation of one of these laws, we could be required to pay a penalty and could be suspended or excluded from participation in federal or state health care programs, and our business, results of operations and financial condition may be adversely affected.

Serious adverse events or other safety risks could require us to abandon development and preclude, delay or limit approval of our product candidates, limit the scope of any approved label or market acceptance, or cause the recall or loss of marketing approval of products that are already marketed.

If any of our product candidates prior to or after any approval for commercial sale, cause serious or unexpected side effects, or are associated with other safety risks such as misuse, abuse or diversion, a number of potentially significant negative consequences could result, including:

We may voluntarily suspend or terminate our clinical trials if at any time we believe that they present an unacceptable risk to participants or if preliminary data demonstrate that our product candidates are unlikely to receive regulatory approval or unlikely to be successfully commercialized. Following receipt of approval for commercial sale of a product we may voluntarily withdraw or recall that product from the market if at any time we believe that its use, or a person’s exposure to it, may cause adverse health consequences or death. To date we have not withdrawn, recalled, or taken any other action, voluntary or mandatory, to remove an approved product from the market. In addition, regulatory agencies, IRBs, or data safety monitoring boards may at any time recommend the temporary or permanent discontinuation of our clinical trials or request that we cease using investigators in the clinical trials if they believe that the clinical trials are not being conducted in accordance with applicable regulatory requirements, or that they present an unacceptable safety risk to participants. Although we have never been asked by a regulatory agency, IRB, or data safety monitoring board to discontinue a clinical trial temporarily or permanently, if we elect or are forced to suspend or terminate a clinical trial of any of our product candidates, the commercial prospects for that product will be harmed and our ability to generate product revenue from that product may be delayed or eliminated. Furthermore, any of these events may result in labeling statements such as warnings or contraindications. In addition, such events or labeling could prevent us or our partners from achieving or maintaining market acceptance of the affected product and could substantially increase the costs of commercializing our product candidates and impair our ability to generate revenue from the commercialization of these products either by us or by our collaboration partners.

Risks Related to Our Reliance Upon Third Parties

Our existing collaboration arrangements and any that we may enter into in the future may not be successful, which could adversely affect our ability to develop and commercialize our product candidates.

We may seek additional collaboration arrangements with pharmaceutical or biotechnology companies for the development or commercialization of our product candidates. We may, with respect to our product candidates, enter into new arrangements on a selective basis depending on the merits of retaining commercialization rights for ourselves as compared to entering into selective collaboration arrangements with leading pharmaceutical or biotechnology companies for each product candidate, both in the U.S. and internationally. To the extent that we decide to enter into collaboration agreements, we will face significant competition in seeking appropriate collaborators and the terms of any collaboration or other arrangements that we may establish may not be favorable to us.

Any existing or future collaboration that we enter may not be successful. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations. Disagreements between parties to a collaboration arrangement regarding development, intellectual property, regulatory or commercialization matters can lead to delays in the development process or commercialization of the applicable product candidate and, in some cases, termination of the collaboration arrangement. These disagreements can be difficult to resolve if neither of the parties has final decision-making authority. Any such termination or expiration could harm our business reputation and may adversely affect us financially.

We depend on a limited number of suppliers for materials and components required to manufacture our product candidates. The loss of these suppliers, or their failure to supply us on a timely basis, could cause delays in our current and future capacity and adversely affect our business.

We depend on a limited number of suppliers for the materials and components required to manufacture our product candidates. As a result, we may not be able to obtain sufficient quantities of critical materials and components in the future. A delay or interruption by our suppliers may also harm our business, results of operations and financial condition. In addition, the lead time needed to establish a relationship with a new supplier can be lengthy, and we may experience delays in meeting demand in the event we must switch to a new supplier. The time and effort to qualify for and, in some cases, obtain regulatory approval for a new supplier could result in additional costs, diversion of resources or reduced manufacturing yields, any of which would negatively impact our operating results. Our dependence on single-source suppliers exposes us to numerous risks, including the following: our suppliers may cease or reduce production or deliveries, raise prices or renegotiate terms; our suppliers may become insolvent or cease trading; we may be unable to locate a suitable replacement supplier on acceptable terms or on a timely basis, or at all; and delays caused by supply issues may harm our reputation, frustrate our customers and cause them to turn to our competitors for future needs.

We maintain our cash at financial institutions, at times in balances that exceed federally insured limits. The failure of financial institutions could adversely affect our ability to pay operational expenses or make other payments.

Our cash held in non-interest-bearing and interest-bearing accounts can at times exceed the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. If such banking institutions were to fail, we could lose all or a portion of those amounts held in excess of such insurance limitations. In addition, even if account holders are ultimately made whole with respect to a future bank failure, account holders’ access to their accounts and assets held in their accounts may be substantially delayed. Any material loss that we may experience in the future or inability for a material time period to access our cash and cash equivalents could have an adverse effect on our ability to pay our operational expenses or make other payments, which could adversely affect our business.

We rely on, and expect to continue to rely on, third parties to conduct clinical trials for our product candidates. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain marketing approval for or commercialize our product candidates, and our business could be substantially harmed.

We have agreements with third-party CROs to operationalize, provide monitors for and to manage data for our ongoing clinical trials. We rely heavily on these parties for the execution of clinical trials and control only certain aspects of their activities. As a result, we have less direct control over the start-up, conduct, timing and competition of these clinical trials, and the management of data developed through the clinical trials than would be the case if we were relying entirely upon our own staff. Communicating with outside parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating activities. However, we remain responsible for the conduct of these trials and are subject to enforcement which may include civil and criminal liabilities for any violations of FDA rules and regulations and the comparable foreign regulatory provisions during the conduct of our clinical trials. Outside parties may:

These factors, among others, may materially adversely affect the willingness or ability of third parties to conduct our clinical trials and may subject us to unexpected cost increases that are beyond our control. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on CROs does not relieve us of our regulatory responsibilities. We and our CROs are required to comply with GCPs, which are guidelines enforced by the FDA, the competent authorities of the EU member states and equivalent competent authorities in foreign jurisdictions for any products in clinical development. The FDA and foreign regulatory authorities enforce these regulations and GCP guidelines through periodic inspections of clinical trial sponsors principal investigators, and trial sites, and IRBs. If we or our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be deemed unreliable and the FDA or other equivalent competent authorities in foreign jurisdictions may require us to perform additional clinical trials before approving our marketing applications. We cannot assure you that, upon inspection, the FDA or foreign regulatory authorities will determine that any of our clinical trials comply with GCPs. In addition, our clinical trials must be conducted with products produced under current Good Manufacturing Practices, or cGMPs and similar foreign requirements. Our failure or the failure of our CROs to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process and could also subject us to enforcement action up to and including civil and criminal penalties.

If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain are compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, any such clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, Ketamir-2, MIRA-55 or our other product candidates. As a result, our financial results and the commercial prospects for Ketamir-2 MIRA-55 or our other product candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed.

We rely and expect to continue to rely on third parties to manufacture our clinical product supplies and clinical candidates, and we may rely on third parties for at least a portion of the manufacturing process of our product candidates, if approved. Our business could be harmed if those third parties fail to provide us with sufficient quantities of product supplies or product candidates or fail to do so at acceptable quality levels or prices.

We do not currently own any facility that may be used as a clinical-scale manufacturing and processing facility, and we rely on outside vendors and collaborators to manufacture supplies and process our product candidates. For certain of our components or product candidates, we rely on single suppliers or manufacturers to supply or manufacture, but we plan to expand the number of suppliers and manufacturers as we advance our product candidates through clinical development. Our product candidates are not yet manufactured or processed on a commercial scale and we may remain unable to do so for any of our product candidates. Although in the future we may develop our own manufacturing facilities, we may also continue to use third parties as part of our manufacturing processes and may, in any event, never be successful in developing our own manufacturing facilities. Our anticipated reliance on third-party manufacturers exposes us to the following risks:

Each of these risks could delay or prevent the completion of our clinical trials or the approval of any of our product candidates by the FDA, result in higher costs or adversely impact commercialization of our product candidates. In addition, we will rely on third parties to perform certain specification tests on our product candidates prior to delivery to patients. If these tests are not appropriately done and test data are not reliable, patients could be put at risk of serious harm and the FDA could place significant restrictions on our company until deficiencies are remedied. Furthermore, our or a third party’s failure to execute on our manufacturing requirements, to do so on commercially reasonable terms or to comply with cGMP could adversely affect our business in a number of ways, including:

If any CMO or CDMO with whom we contract fails to perform its obligations, we may be forced to enter into an agreement with a different CMO or CDMO, which we may not be able to do on reasonable terms, if at all. In such scenario, our clinical trials supply could be delayed significantly as we establish alternative supply sources. In some cases, the technical skills required to manufacture our products or product candidates may be unique or proprietary to the original CMO or CDMO and we may have difficulty, or there may be contractual restrictions prohibiting us from, transferring such skills to a back-up or alternate supplier, or we may be unable to transfer such skills at all. In addition, if we are required to change CMOs or CDMOs for any reason, we will be required to verify that the new CMO or CDMO maintains facilities and procedures that comply with quality standards and with all applicable regulations. We will also need to verify, such as through a manufacturing comparability study, that any new manufacturing process will produce our product candidate according to the specifications previously submitted to the FDA or another regulatory authority. The delays associated with the verification of a new CMO or CDMO could negatively affect our ability to develop product candidates or commercialize our products in a timely manner or within budget. In addition, changes in manufacturers often involve changes in manufacturing procedures and processes, which could require that we conduct bridging studies between our prior clinical supply used in our clinical trials and that of any new manufacturer. We may be unsuccessful in demonstrating the comparability of clinical supplies which could require the conduct of additional clinical trials.

We rely on, and expect to continue to rely on, third parties to conduct clinical trials for our product candidates. If these third parties do not successfully carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain marketing approval for or commercialize our product candidates, and our business could be substantially harmed.

We are dependent on third parties to conduct our clinical trials and preclinical and nonclinical studies. Specifically, we rely on, and intend to continue to rely on, medical institutions, clinical investigators, contract research organizations, or CROs, and consultants to conduct nonclinical studies and clinical trials, in each case in accordance with our study protocols and applicable regulatory requirements. These CROs, investigators and other third parties play a significant role in the conduct and timing of these studies or trials and the subsequent collection and analysis of data. Though we expect to carefully manage our relationships with our CROs, investigators and other third parties, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects. Further, while we have and will have agreements governing the activities of our third-party contractors, we have limited influence over their actual performance. Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards and requirements, and our reliance on our CROs and other third parties does not relieve us of our regulatory responsibilities. In addition, we and our CROs are required to comply with GLP and GCP requirements, as applicable, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities related to the conduct of nonclinical studies and clinical trials, respectively. Regulatory authorities enforce GCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any of our CROs or trial sites fail to comply with applicable GLP or GCP or other requirements, the collected nonclinical data or the clinical data generated in our clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional nonclinical studies or clinical trials before approving our marketing applications, if ever. Furthermore, our clinical trials must be conducted with materials manufactured in accordance with cGMP regulations. Failure to comply with these regulations may require us to repeat clinical trials, which would delay the regulatory approval process.

There is a risk that our CROs, investigators or other third parties will be unable to devote adequate time and resources to such trials or studies or perform as contractually required. If any of these third parties fail to meet expected deadlines, adhere to our clinical protocols or meet regulatory requirements, or otherwise perform in a substandard manner, our clinical trials may be extended, delayed or terminated. In addition, many of the third parties with whom we contract may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials or other development activities that could harm our competitive position. In addition, principal investigators for our clinical trials are expected to serve as scientific advisors or consultants to us from time to time and may receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected the interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection by the FDA of any NDA we submit. Any such delay or rejection could prevent us from receiving regulatory approval for, or commercializing, TELOIR-1 and any future product candidates.

Our CROs have the right to terminate their agreements with us in the event of an uncured material breach and under other specified circumstances. If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties on commercially reasonable terms, in a timely manner or at all. Switching or adding CROs, investigators and other third parties involves additional cost and requires our management’s time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. Though we work to carefully manage our relationships with our CROs, investigators and other third parties, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

Risks Related to Our Intellectual Property

We may not be able to adequately protect our product candidates or our proprietary technology in the marketplace.

Our success will depend, in part, on our ability to obtain patents, protect our trade secrets and operate without infringing on the proprietary rights of others. We may rely upon a combination of patents, trade secret protection (i.e., know-how), trademarks, licenses, and confidentiality agreements to protect the intellectual property of our product candidates. The strengths of patents in the pharmaceutical field involve complex legal and scientific questions and can be uncertain. Where appropriate, we seek patent protection for certain aspects of our products and technology. However, patent protection for naturally occurring compounds is exceedingly difficult to obtain, defend and enforce. Filing, prosecuting and defending patents throughout the world would be prohibitively expensive, so our policy is to look to patent technologies with commercial potential in jurisdictions with significant commercial opportunities. However, patent protection may not be available for some of the products or technology we are developing. If we must spend significant time and money protecting, defending, or enforcing our patents, designing around patents held by others or licensing, potentially for large fees, patents or other proprietary rights held by others, our business, results of operations and financial condition may be harmed. We may not develop additional proprietary products that are patentable.

The patent positions of pharmaceutical products are complex and uncertain. The scope and extent of patent protection for our product candidates are particularly uncertain. To date, our principal product candidates have been based on specific formulations of certain previously known cannabinoids found in nature in the cannabis sativa plant. While we have sought patent protection, where appropriate, directed to, among other things, composition-of-matter for our specific formulations, their methods of use, and methods of manufacture, we do not have and will not be able to obtain composition of matter protection on these previously known cannabinoids per se. We anticipate that the products we develop in the future will continue to be based on the same or other naturally occurring compounds, as well as additional synthetic compounds we may discover. Although we have sought and expect to continue to seek patent protection for our product candidates, their methods of use, and methods of manufacture, any, or all of them may not be subject to effective patent protection. If any of our products are approved and marketed for an indication for which we do not have an issued patent, our ability to use our patents to prevent a competitor from commercializing a non-branded version of our commercial products for that non-patented indication could be significantly impaired or even eliminated.

Publication of information related to our product candidates by us, or others may prevent us from obtaining or enforcing patents relating to these products and product candidates. Furthermore, others may independently develop similar products, may duplicate our products, or may design around our patent rights. In addition, any of our issued patents may be opposed and/or declared invalid or unenforceable. If we fail to adequately protect our intellectual property, we may face competition from companies who attempt to create a generic product to compete with our product candidates. We may also face competition from companies who develop a substantially similar product to one of our product candidates that is not covered by any of our patents.

If third parties claim that our intellectual property, products, processes, or anything else used by us infringes upon their intellectual property, our operating profits could be adversely affected.

There is a substantial amount of litigation, both within and outside the U.S., involving patent and other intellectual property rights in the pharmaceutical industry. We may, from time to time, be notified of claims that we are infringing upon patents, trademarks, copyrights, or other intellectual property rights owned by third parties, and we cannot provide assurances that other companies will not, in the future, pursue such infringement claims against us, our commercial partners or any third-party proprietary technologies we have licensed. If we were found to infringe upon a patent or other intellectual property right, or if we failed to obtain or renew a license under a patent or other intellectual property right from a third party, or if a third party that we were licensing technologies from was found to infringe upon a patent or other intellectual property rights of another third party, we may be required to pay damages, including damages of up to three times the damages found or assessed, if the infringement is found to be willful, suspend the manufacture of certain products or reengineer or rebrand our products, if feasible, or we may be unable to enter certain new product markets. Any such claims could also be expensive and time consuming to defend and divert management’s attention and resources. Our competitive position could suffer as a result. In addition, if we have declined or failed to enter into a valid non-disclosure or assignment agreement for any reason, we may not own the invention or our intellectual property, and our products may not be adequately protected. Thus, we cannot guarantee that our product candidates, or our commercialization thereof, does not and will not infringe any third party’s intellectual property.

If we are unable to obtain and maintain intellectual property protection for our technology and products, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be impaired.

Our success depends in large part on our ability to obtain and maintain patent protection in relevant countries with respect to our proprietary technology and products. We seek to protect our proprietary position by filing patent applications in the United States and internationally that are related to our novel technologies and product candidates. This patent portfolio includes issued patents and pending patent applications covering pharmaceutical compositions and methods of use.

The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions, and under the laws of certain jurisdictions, patents or other intellectual property rights may be unavailable or limited in scope. It is also possible that we will fail to identify patentable aspects of our discovery and nonclinical development output before it is too late to obtain patent protection. Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from third parties. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, India and China do not allow patents for methods of treating the human body. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the EU, the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.

The risks described pertaining to our patents and other intellectual property rights also apply to the intellectual property rights that we license, and any failure to obtain, maintain and enforce these rights could have a material adverse effect on our business. In some cases, we may not have control over the prosecution, maintenance or enforcement of the patents that we license, and our licensors may fail to take the steps that we believe are necessary or desirable in order to obtain, maintain and enforce the licensed patents. Any inability on our part to protect adequately our intellectual property may have a material adverse effect on our business, operating results and financial position.

The USPTO and various non-U.S. governmental patent agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patent application process. In certain situations, non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business.

In addition, we acquired rights to Ketomir-2 through a license agreement with MIRALOGX and may in the future enter into other license agreements with third parties for other intellectual property rights or assets. These license agreements may impose various diligence, milestone payment, royalty, and other obligations on us. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, we may be required to make certain payments to the licensor, we may lose the exclusivity of our license, or the licensor may have the right to terminate the license, in which event we would not be able to develop or market products covered by the license. Additionally, the milestone and other payments associated with these licenses will make it less profitable for us to develop our drug candidates than if we had developed the licensed technology internally.

In some cases, patent prosecution of our licensed technology may be controlled solely by the licensor. If our licensors fail to obtain and maintain patent or other protection for the proprietary intellectual property we license from them, we could lose our rights to the intellectual property or our exclusivity with respect to those rights, and our competitors could market competing products using the intellectual property. In certain cases, we may control the prosecution of patents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners. If disputes over intellectual property and other rights that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates.

We have no patent protection for MIRA-55, which could adversely impact MIRA-55’s potential competitive position.

We have no issued patents relating to MIRA-55 and our patent application for MIRA-55 may not result in an issued patent. While we attempt to protect our proprietary information as trade secrets through certain agreements with our employees, consultants, agents and other organizations to which we disclose our proprietary information, we cannot give assurance that these agreements will provide effective protection for our proprietary information in the event of unauthorized use or disclosure of such information. If other products similar to MIRA-55 are approved and marketed, we may be unable to prevent them from competing with MIRA-55 in MIRA-55’s potential marketplace. We expect that the presence of one or more competing products could reduce our potential market share and could negatively impact potential price levels and third-party reimbursement for MIRA-55, any of which would materially affect our business.

Risks Relating to the Ownership of our Common Stock

Because of the speculative nature of investment risk, you may lose your entire investment.

An investment in our securities carries a high degree of risk and should be considered as a speculative investment. We have a limited operating history, no revenues, have not paid dividends, and are unlikely to pay dividends in the immediate or near future. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered in connection with the establishment of any business. An investment in our securities may result in the loss of an investor’s entire investment. Only potential investors who are experienced in high-risk investments and who can afford to lose their entire investment should consider an investment in our securities.

Certain of our founding stockholders, plus our existing officers and directors, control a substantial interest in us and thus may influence certain actions requiring stockholder vote.

Our founding stockholders, which include the Bay Shore Trust, and MIRALOGX, collectively own in excess of 30% of our issued and outstanding common stock. Our officers and directors also own shares of our common stock. Therefore, these entities and individuals could influence the outcome of matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.

Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur, could depress the market price of our common stock.

Sales of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur as a result of our utilization of a universal shelf registration statement or otherwise could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities. Notably, a large number of shares of our common stock held by Bay Shore Trust and MIRALOGX have been registered for public resale and could be sold in the public market, depressing our stock price. Moreover, we cannot in general predict the effect that future sales of our common stock or the market perception that we are permitted to sell a significant number of our securities would have on the market price of our common stock.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

As a reporting issuer, we are subject to the reporting requirements of applicable securities legislation of the jurisdiction in which we are a reporting issuer, the listing requirements of Nasdaq and other applicable securities rules and regulations. Compliance with these rules and regulations increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on its systems and resources. Applicable securities laws require us to, among other things, file certain annual and quarterly reports with respect to its business and results of operations. In addition, applicable securities laws require us to, among other things, maintain effective disclosure controls and procedures and internal control over financial reporting.

In order to maintain and, if required, improve its disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight are required and, as a result, management’s attention may be diverted from other business concerns, which could harm our business and results of operations. To comply with these requirements, we may need to hire more employees in the future or engage outside consultants, which will increase its costs and expenses.

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to continue to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us, which could adversely affect our business and financial results.

As a public company subject to these rules and regulations, it may be more expensive to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of the Board, particularly to serve on the Audit Committee and Compensation Committee, and qualified executive officers.

We are an “emerging growth company,” and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to emerging growth companies could make shares of our common stock less attractive to investors.

We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act. For as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to have our independent registered public accounting firm audit our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company until the fifth anniversary of the fiscal year end date following the completion of our initial public offering, however, our status would change more quickly if we have more than US$1.235 billion in annual revenue, if the market value of our shares of common stock held by non-affiliates equals or exceeds US$700 million as of June 30 of any year, or we issue more than US$1.0 billion of non-convertible debt over a three-year period before the end of that period.

Investors could find our shares less attractive if we choose to rely on these exemptions. If some investors find shares less attractive as a result of any choice to reduce future disclosure, there may be a less active trading market for our shares and our share price may be more volatile.

For as long as we are an “emerging growth company”, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal controls over financial reporting pursuant to Section 404. We could be an “emerging growth company” until the fifth anniversary of the fiscal year end date following the completion of our initial public offering. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation.

If we identify material weaknesses in our internal control over financial reporting, or if we are unable to comply with the requirements of Section 404 in a timely manner or assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting when required, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our securities could be negatively affected, and we could become subject to investigations by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.

Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of any fiscal year for so long as either: (i) the market value of our shares of common stock held by non-affiliates does not equal or exceed $250 million as of the prior June 30^th; or (ii) our annual revenues did not equal or exceed $100 million during such completed fiscal year. To the extent we take advantage of such reduced disclosure obligations, it may also make the comparison of our financial statements with other public companies difficult or impossible.

If we fail to maintain compliance with Nasdaq Listing Rules, our shares may be delisted from Nasdaq, which would result in a limited trading market for our shares and make obtaining future debt or equity financing more difficult for the us.

Our common stock is listed on the Nasdaq Capital Market under the symbol “MIRA”. However, there is no assurance that we will be able to continue to maintain our compliance with the Nasdaq continued listing requirements. If we fail to do so, our securities may lose their status on Nasdaq and they would likely be traded on the over-the-counter markets, including the Pink Sheets market. As a result, selling our securities could be more difficult because smaller quantities of shares or warrants would likely be bought and sold, transactions could be delayed, and security analysts’ coverage of us may be reduced. In addition, in the event our securities are delisted, broker dealers would bear certain regulatory burdens which may discourage broker dealers from effecting transactions in the securities and further limit the liquidity of the securities. These factors could result in lower prices and larger spreads in the bid and ask prices for the securities. Such delisting from Nasdaq and continued or further declines in the share price of the securities could also greatly impair our ability to raise additional necessary capital through equity or debt financing and could significantly increase the ownership dilution to shareholders caused by our issuing equity in financing or other transactions.