LIPO 10-K & 10-Q changes, risk factors and insider trading

Our business, financial condition and operating results are subject to a number of risk factors, both those that are known to us and identified below and others that may arise from time to time. These risk factors could cause our actual results to differ materially from those suggested by forward-looking statements in this Report and elsewhere, and may adversely affect our business, financial condition or operating results. If any of these risk factors should occur, moreover, the trading price of our securities could decline, and investors in our securities could lose all or part of their investment in our securities. These risk factors should be carefully considered in evaluating our prospects.

To become and remain profitable, we must develop and eventually commercialize one or more product candidates with significant market potential. This will require us to to be successful in a range of challenging activities, including completing the clinical trials, developing and validating commercial scale manufacturing processes, obtaining marketing approval for this product candidate, manufacturing, marketing and selling any future product candidates for which we may obtain marketing approval and satisfying any post-marketing requirements. If we were required to discontinue development of LP-10,LP-10 or LP-310, if LP-10 doesor LP-310 do not receive regulatory approval, if we do not obtain our targeted indication(s) for LP-10,LP-10 or LP-310, or if LP-10 or LP-310 fails to achieve sufficient market acceptance for any indication, we could be delayed by many years in our ability to achieve profitability for thissuch asset.assets. Lipella has additional pipeline assets, including but not limited to LP-310. LP-410 and LP-50. As with LP-10,LP-10 and LP-310, if LP-310LP-410 doesor LP-50 do not receive regulatory approval, if we do not obtain our targeted indication(s) for LP-310,such assets, or if LP-310 failssuch assets fail to achieve sufficient market acceptance for any indication, we could be delayed by many years in our ability to achieve profitability for such asset.assets. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our company also could cause you to lose all or part of your investment.

To complete the process of obtaining regulatory approval for LP-10 and our other product candidates and to build the sales, marketing and distribution infrastructure that we believe will be necessary to commercialize LP-10,such product candidates, if approved, we will require substantial additional funding. In addition, if we obtain marketing approval for LP-10,LP-10 and any of our other product candidates, we expect to incur significant expenses related to product sales, medical affairs, marketing, manufacturing and distribution. We also anticipate that we will require substantial additional funding for LP-310 LP-310, LP-410, LP-50 and product candidates that we decide to develop in the future.

U.S. federal government agencies currently face potentially significant spending reductions. The U.S. federal budget remains in flux, however, which could, among other things, result in a cut to Medicare payments to providers and otherwise affect federal spending on clinical and pre-clinical research and development. The Medicare program is frequently mentioned as a target for spending cuts. The full impact on our business of any future cuts in Medicare or other programs is uncertain. In addition, we cannot predict any impact which the actions of Presidentthe current Biden’sPresidential administration and the U.S. Congress may have on the federal budget. If federal spending is reduced, anticipated budgetary shortfalls may also impact the ability of relevant agencies, such as the FDA or the NIH, to continue to function at current levels. Amounts allocated to federal grants and contracts may be reduced or eliminated. These reductions may also impact the ability of relevant agencies to timely review and approve drug research and development, manufacturing, and marketing activities, which may delay our ability to develop, market and sell any products we may develop.

We are substantially dependent on the success of our lead product candidate,candidates, LP-10.LP-10 and LP-310. If we are unable to commercialize LP-10,LP-10 or LP-310, or experience significant delays in doing so, our business will be materially harmed.

Our ability to generate product revenues, which may not occur for several years, if ever, currently depends heavily on the successful development development and commercialization of LP-10.LP-10 and LP-310. The success of LP-10 and LP-310 will depend on a number of factors, including the following:

If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize LP-10,LP-10 and LP-310, which would materially harm our business. We have not yet demonstrated our ability to successfully complete development of any product candidates, obtain marketing approvals, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization.

We are early in our efforts to develop LP-10, LP-10LP-310, and LP-310.our other product candidates. If we are unable to advance LP-10LP-10, orLP-310, LP-310and such other candidates through clinical trials, obtain regulatory approval and ultimately commercialize such product candidates, or if we experience significant delays in doing so, our business will be materially harmed.

We are early in our development of LP-10, which will begin its phase 2b clinical trial, asLP-310, wellwhich asis expected to complete its multi-center Phase 2a clinical trial in ourthe developmentsecond quarter of LP-310, 2025, and LP-410, which recently received FDA clearance for a Phase 2a clinical trial. The development and commercialization of LP-10LP-10, LP-310 and LP-310 LP-410 (or any other product candidate that we may develop) is subject to many uncertainties, including the following:

In addition, if we make manufacturing or formulation changes to LP-10, LP-310 or any of our other product candidates, we may need to conduct additional studies to bridge our modified product candidate to earlier versions. If we elect, or are required, to delay, suspend, or terminate any clinical trial of LP-10 or LP-310, or any of our product candidates at suchany stage, it could shorten any periods during which we may have the exclusive right to commercialize LP-10, LP-310 or such other product candidate candidates or allow our competitors to bring products to market before we do, which could limit our potential revenue or impair our ability to successfully commercialize LP-10our orcurrent LP-310product candidates now, or such other product candidate in the future, and may harm our business, financial condition, results of operations and prospects. Any such significant changes, delays, setbacks or failures we experience, including our inability to obtain regulatory approval for or successfully commercialize LP-10,our product candidates, particularly LP-10 and LP-310, would materially harm our business, financial condition, results of operations and prospects.

We are heavily dependent on the success of our product candidates, which are in the early stages of clinical development. Although we have reported positive results from our phase 2a clinical trialtrials for LP-10,LP-10 and LP-310, we cannot give any assurance that our trial results are indicative of success for future trials or commercialization.

We have reported positive top-line results from our recently completed phase 2a clinical trial evaluating the safety and efficacy of LP-10.LP-10 and our recently completed dosing of the first cohort of our phase 2a clinical trial evaluating the safety and efficacy of LP-310. The top-line results from such clinical trialtrials does not indicate or guarantee the future success for future clinical trials or for commercialization for commercialization of LP-10 or any of our other products. There can be no assurance that the data from such trial for LP-10LP-10, LP-310 or any future trial for LP-10LP-10, LP-310 or any of our other product candidates in our planned indications will be sufficiently supportive to rely on Fast Track designation or to obtain regulatory approval for such products. If our data is not supportive of, or the FDA will not allow us to apply for, Fast Track designation of LP-10LP-10, LP-310 or such other products, we cannot predict when, if ever, we will be able to seek the FDA approval for LP-10LP-10, LP-310 or such other products.

Even if we complete the necessary clinical trials for LP-10LP-10, LP-310 or for any of our other product candidates in the future, such as LP-310, LP-410 or LP-50, we cannot predict when, or if, we will obtain regulatory approval to commercialize LP-10 or such other product candidates, and the approval may be for a narrower indication than we seek.

We cannot commercialize a product candidate until the appropriate regulatory authorities have reviewed and approved such product candidate. Even if LP-10 meetsand LP-310 meet the applicable safety and efficacy standards in clinical trials, the regulatory authorities may not complete their review processes in a timely manner, or we may not be able to obtain regulatory approval for LP-10.LP-10 and LP-310. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval for LP-10.LP-10 and LP-310. In addition, we may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory authority policy during the period of LP-10’s or LP-310’s product development, clinical trials and the review process. Similar issues could arise with respect to LP-310LP-410 and LP-50 in the event itsuch entersproducts itsenter their planned clinical clinical trial phase,phases, as well as any of our other product candidates developedwe develop in the future.

Regulatory authorities also may approve a product candidate for more limited indications than requested or they may impose significant limitations in the form of narrow indications, warnings or a post-approval safety monitoring program. These regulatory authorities may require precautions or contra-indications with respect to conditions of use or they may grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of LP-10LP-10, LP-310 or another product candidate. Any of the foregoing scenarios could materially harm the commercial prospects for LP-10, LP-10LP-310 or our other product candidates and materially and adversely affect our business, financial condition, results of operations and prospects.

LP-10 or LP-310 may cause undesirable side effects or have other properties that could delay or prevent its regulatory approval, limit its commercial potential, or result in significant negative consequences following any potential marketing approval.

In addition to side effects caused by LP-10,LP-10 and LP-310, the administration process or related procedures also can cause adverse side effects. If in the future we are unable to demonstrate that such adverse events were caused by the administration process or related procedures, the FDA, the EMA or other regulatory authorities could order us to cease further development of, or deny approval of, LP-10 and LP-310, for any or all targeted indications. Even if we can demonstrate that any serious adverse events are not product-related, such occurrences could affect patient recruitment or the ability of enrolled patients to complete our clinical trials. Any of these occurrences may harm our ability to develop other product candidates, and may harm our business, financial condition and prospects significantly.

Additionally, if LP-10 or LP-310 receives marketing approval, the FDA could require us to adopt a post-approval safety monitoring program to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners. Furthermore, if we or others later identify undesirable side effects caused by LP-10,LP-10 and LP-310, several potentially significant negative consequences could result, including:

Any of these events could prevent us from achieving or maintaining market acceptance of LP-10 and LP-310 and could significantly harm our business, financial condition, results of operations and prospects.

Our pipeline of products, including LP-10, LP-10LP-310, LP-410 and LP-310,LP-50, are each based on novel technology, which makes it difficult to predict the time and cost of development and of subsequently obtaining regulatory approval.

For example, we intend to submit a marketing authorization application to the EMA for approval of LP-10 and LP-310 in the European Union, but obtaining such approval from the European Commission following the opinion of the EMA is a lengthy and expensive process. Even if LP-10 isand LP-310 are approved, the FDA or the European Commission, as the case may be, may limit the indications for which the product may be marketed, require extensive warnings on the product labeling or require expensive and time-consuming additional clinical trials or reporting as conditions of approval. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our product candidates in certain countries.

We intend to seek FDA approval through the 505(b)(2) regulatory pathway for LP-10LP-10, LP-310 and certain of our other product candidates, although we have not received any indication from the FDA that the 505(b)(2) regulatory pathway will be available for LP-10LP-10, LP-310, or any of our other product candidates. The Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, added Section 505(b)(2) to the FDCA. Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies that were not conducted by or for the applicant. We anticipate referencing relevant publicly available data, including the publicly disclosed FDA drug approval package for tacrolimus, in the preparation and submission of our aNDA for LP-10.LP-10 and LP-310.

We have received “orphan drug” designation covering LP-10 and LP-310LP-410 from the FDA, but there is no assurance that any of our other product candidates will receive a similar designation from the FDA or that we will receive Breakthrough Therapy or Fast Track designations covering any of our product candidates (including LP-10 and LP-310LP-410) from the FDA. Our initial request to obtain Fast Track designation covering LP-10 in July 2021 was denied by the FDA in September 2021; howeverhowever, we are still seeking to obtain Fast Track designation covering LP-10. In addition, we anticipate the submission for Breakthrough Designation Request for LP-310 for the treatment of OLP in the second half of 2025. Further, even if we do receive favorable designations from the FDA, the receipt of any of these designations covering any of our product candidates may not result in a faster development process, review or approval of such product candidates compared compared to products considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA.

Although we focus a substantial amount of our efforts on the potential approval of LP-10,LP-10 and LP-310, a key component of our strategy is to discover, develop and potentially commercialize a portfolio of other product candidates, including LP-310,LP-410 and LP-50, to treat orphan diseases and ultimately, ultimately, non-orphan diseases. Identifying new product candidates requires substantial technical, financial and human resources, whether whether any product candidates are ultimately identified. Even if we identify product candidates that initially show promise, we may fail to successfully develop and commercialize such product candidates for many reasons, including the following:

We face significant competition in an environment of rapid technological change and the possibility that our competitors may achieve regulatory approval before us or develop therapies that are more advanced or effective than ours, which may adversely affect our financial condition and our ability to successfully market or commercialize our product candidates, including LP-10 and LP-310.candidates.

Many of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical and other resources, such as larger research and development, clinical, marketing and manufacturing organizations. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of competitors. Our commercial opportunity could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any product candidate that we may develop. Also, competitors may obtain FDA or other regulatory approval for their products more rapidly or earlier than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market. Additionally, technologies developed by our competitors may render our product candidates, including, in particular, LP-10 and LP-310, uneconomical or obsolete, and we may not be successful in marketing these and our other product candidates, generally, and LP-10 and LP-310, specifically,candidates against competitors.

Delays in obtaining regulatory approvals of the process and facilities needed to manufacture any of our product candidates, including LP-10, LP-10 and LP-310, or disruptions in our manufacturing process may delay or disrupt our product development and commercialization efforts.

Before we can begin to commercially manufacture any of our product candidates, including LP-10,LP-10 or LP-310, in a manufacturing facility, whether in a third-party facility or in a facility that we maintain and operate, the facility must pass a pre-approval inspection by the FDA, and a manufacturing authorization must be obtained from the appropriate regulatory authorities. The timeframe required to obtain such approvals is uncertain. In order to obtain approval, we will need to ensure that all our processes, methods and equipment are compliant with cGMP and perform extensive audits of vendors, contract laboratories and suppliers. If any of our vendors, contract laboratories or suppliers is found to be out of compliance with cGMP, we may experience delays or disruptions in manufacturing while we work with these third parties to remedy the violation or while we work to identify suitable replacement vendors. The cGMP requirements govern quality control of the manufacturing process and documentation policies and procedures. In complying with cGMP, we will be obligated to expend time, money and effort in production, record keeping and quality control to assure that the product meets applicable specifications and other requirements. If we fail to comply with these requirements, we would be subject to possible regulatory action and may not be permitted to sell any product candidate that we may develop.

In addition, the manufacturing process used to produce our product candidates is complex, novel and has not been validated for commercial use. In order to produce enough quantities of our product candidates for future clinical trials and initial U.S. commercial demand, we will need to increase the scale of our manufacturing process. The production of our product candidates requires processing steps that are more complex than those required for most chemical pharmaceuticals. We employ multiple steps to control our manufacturing process to assure that the process works and that each of our products candidates will be, and LP-10 is,be made strictly and consistently in compliance with the process. Problems with the manufacturing process, even minor deviations from the normal process, could result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient inventory. We may encounter problems achieving adequate quantities and quality of clinical-grade materials that meet FDA, EMA or other applicable standards or specifications with consistent and acceptable production yields and costs.

Even if we obtain the validation from the FDA of our Facility, we intend to maintain third-party manufacturing capabilities in order to provide multiple sources of supply. In the event that these third-party manufacturers do not successfully carry out their contractual duties, meet expected deadlines or manufacture LP-10 or LP-310 in accordance with regulatory requirements, or if there are disagreements between us and these third-party manufacturers, we will not be able to complete, or may be delayed in completing, the preclinical studies required to support future IND submissions of other product candidates or the clinical trials required for approval of LP-10. LP-10 or LP-310. In such instances, we may need to locate an appropriate replacement third-party relationship, which may not be readily available or on the same economic terms, which would cause additional delay or increased expense prior to the approval of LP-10 or LP-310 and would thereby have a material adverse effect on our business, financial condition, results of operations and prospects.

Some of the raw materials required in our manufacturing process are derived from biologic sources. Such raw materials are difficult to procure and may be subject to contamination or recall. A material shortage, contamination, recall or restriction on the use of biologically derived substances in the manufacture of any of our product candidates, including LP-10,LP-10 and LP-310, could adversely impact or disrupt the commercial manufacturing or the production of clinical material, which could materially and adversely affect our development timelines and our business, financial condition, results of operations and prospects.

We currently have a small market development organization. To successfully commercialize LP-10LP-10, LP-310, LP-410 or LP-310,LP-50, if approved, and any other products that may result from our development programs, we plan to expand our capabilities to promote market access and build awareness, either on our own or with one or more third parties. The development of our own market development team will be expensive and time-consuming and could delay any product launch. Moreover, we cannot be certain that we will be able to successfully develop this capability. We may enter into collaboration agreements regarding any of our product candidates with third parties to utilize their established marketing and distribution capabilities, but we may be unable to enter into such agreements on favorable terms, if at all. If any future collaborators do not commit sufficient resources to commercialize our products, or we are unable to develop the necessary capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business. We compete with many companies that currently have extensive, experienced and well-funded medical affairs, marketing and sales operations to recruit, hire, train and retain marketing and sales personnel. We also face competition in our search for third parties to assist us with the sales and marketing efforts of our product candidates. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.

If the market opportunities for LP-10 or LP-310 are smaller than we believe they are, our product revenues may be adversely impacted, and our business may suffer.

We are currently primarily focusing our research research and product development efforts on LP-10 for HC.HC and LP-310 for OLP. Our understanding of both the number of people who have these thisdiseases, disease, as well as the subset of people with thisthese diseasediseases who have the potential to benefit from treatment with LP-10,LP-10 or LP-310, are based on estimates in published literature. These estimates may prove to be incorrectincorrect, and new studies may reduce the estimated incidence or prevalence of this disease. The number of patients in the United States, the EU and elsewhere may turn out to be lower than expected or these patients may not be otherwise amenable to treatment with LP-10 or LP-310, or may become increasingly difficult to identify and access, all of which would adversely affect our business, financial condition, results of operations and prospects.

Further, there are several factors that could contribute to making the actual number of patients who receive LP-10 or LP-310 less than the potentially addressable market. These These include the lack of widespread availability of, and limited reimbursement for, new therapies in many underdeveloped markets. These These risks could similarly apply to LP-310,LP-410 and LP-50, each of which we are simultaneously developing.

Government price controls or other changes in pricing regulation could restrict the amount that we are able to charge for any of our product candidates that may be approved in the future, including LP-10,LP-10 and LP-310, which would adversely affect our revenue and results of operations.

If we obtain FDA approval for any of our product candidates, including LP-10,LP-10 and LP-310, and begin the process of commercialization in the United States, our operations will be directly, or indirectly through our prescribers, customers and purchasers, subject to various federal and state fraud and abuse laws and regulations, including, without limitation, the federal Anti-Kickback Statute, federal civil and criminal false claims laws and the Physician Payments Sunshine Act and regulations. These laws will impact, among other things, our proposed sales, marketing and educational programs. In addition, we may be subject to patient privacy laws by both the federal government and the states in which we conduct our business as well as other jurisdictions. The laws that will affect our operations include, but are not limited to:

We are exposed to the risk of fraud or other misconduct by our employees, principal investigators and advisors. Principal investigators are physicians who we utilize to lead the conduct of our clinical trials and assist us with the development of our drug product candidates, including LP-10.LP-10 and LP-310. Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in the EU and other jurisdictions, provide accurate information to the FDA, the EMA and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. Sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Such misconduct also could involve the improper use of information obtained in the course of clinical trials or interactions with the FDA or other regulatory authorities, which could result in criminal and civil penalties or sanctions and cause serious harm to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with these 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, financial condition, results of operations and prospects, including the imposition of significant fines, criminal penalties, or other sanctions.

Public health crises such as pandemics, epidemics or similar outbreaks could adversely impact our business, preclinical or clinical trial operations, including our ability to recruit and retain patients and principal investigators and site staff .staff. Public health crises may also affect employees of third-party contract research organizations (“CROs”) located in geographies where we carry out our clinical trials.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including conditions that are outside of our control, globalsuch supply chain disruptions, inflation in the United States,as conflict, loss of life and disaster connected to ongoing armed conflicts between Ukraine and Russia in Europe and Israel and Hamas in the Middle East, and the foreign and domestic government sanctions imposed on Russia as a result of its invasion of Ukraine. There continues to be volatility and disruptions in the capital and credit markets, and a severe or prolonged economic downturn, including, but not limited to as a result of such events, could result in a variety of risks to our business, such as weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could strain our suppliers, possibly resulting in supply disruption, or cause delays in payments for our services by third-party payors or our collaborators. Any of the foregoing could harm our business and we cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact our business.

Natural disasters could severely disrupt our operations or the operations of manufacturing facilities and have a material adverse effect on our business, financial condition, results of operations and prospects. If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as manufacturing facilities, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a substantial period of time. The disaster recovery and business continuity plans that we have in place currently are limited and may not prove adequate in the event of a serious disaster or similar event. Substantially all of our current supply of LP -10LP-10 and LP-310 are located at at our Facility. We are in the early stages of investigating the construction of an additional manufacturing facility and establishing a relationship with a third-party contract manufacturer as a back-up supplier for the commercial supply of our products, if necessary, but there is no assurance that we will establish such a relationship in a timely manner, on acceptable terms, or at all. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

If we are unable to obtain and maintain adequate U.S. and foreign patent protection for our product candidates, including LP-10, LP-310, LP-410, LP-50 and any future product candidates that we may develop, and/or our Platform, or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize products and technologies similar or identical to ours, and our ability to successfully commercialize such products and technologies may be adversely affected.

Our commercial success depends upon our our ability (and the ability of any potential future collaborators) to develop, manufacture, market and sell our product candidates, and to freely use our proprietary technologies (e.g., without infringing the rights and intellectual property of others). Many companies and institutions have filed, and continue to file, patent applications related to various aspects of drug delivery therapy. In some instances, patent applications or patents may be abandoned or allowed to lapse, resulting in partial or complete loss of patent rights in a relevant jurisdiction. The biotechnology and pharmaceutical industries are characterized by extensive and complex litigation regarding patents and other intellectual property rights. We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to LP-10LP-10, LP-310 or any other product candidate, or related technologies, including, for example, derivation proceedings, post grant review challenges, and inter partes review before the USPTO. For example, a third party may bring an inter partes review challenging our patents and any future patent that may be granted to us. Our competitors or other third parties may assert infringement claims against against us, alleging that our therapeutics, manufacturing methods, formulations or administration methods are covered by their patents. patents. Moreover, we may face patent infringement claims from non-practicing entities that have no relevant product revenue, and against whom our patent portfolio may therefore have no deterrent effect. Further, while the existing patents may be extendable for regulatory delay, there is no guarantee that they will be extended. The Company may also be able to rely on market data exclusivity for the Company’s products, but there is no guarantee the Company will be able to do so.

Patent and other types of intellectual property litigation can involve complex factual and legal questions, and their outcomes are uncertain. If we are found, or believe there is a risk that we may be found, to infringe a third party’s valid and enforceable intellectual property rights, we could be required (or may choose) to obtain a license from such a third party to continue developing, manufacturing and marketing our technologies. However, we may not be able to obtain any required license on commercially reasonable terms, if at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to us, and further, it could require us to make substantial licensing and royalty payments. We could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing technologies, including includingLP-10 LP-10.or LP-310. We also could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. A finding of infringement could prevent us from manufacturing and commercializing our technologies, including LP-10,LP-10 or LP-310, or force us to cease some or all our business operations. operations. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative negative impact on our business, financial condition, results of operations and prospects.

Although ourOur Common Stock is currently listed on the Nasdaq Capital Market,Market. weWe mayhave notbeen benotified ableby Nasdaq of our failure to comply continuewith tocertain meet the exchange’s minimumcontinued listing requirements orand, those of any other national exchange. Ifif we are unable to maintainregain thecompliance with all applicable continued listing requirements and standards of our Common Stock on Nasdaq or if a liquid market forNasdaq, our Common Stock doescould notbe developdelisted orfrom isthe sustained,Nasdaq ourCapital Common Stock may remain thinly traded.Market.

As of FebruaryMarch 26, 23, 2024,2025, our directors, executive officers and principal stockholders, and their respective affiliates, beneficially own 2,938,006466,808 shares of Common Stock, or approximately 38%17% of our outstanding shares of Common Stock. If these stockholders sell, or indicate an intent to sell, substantial amounts of our Common Stock in the public market after the expiration of such lock-up period, the trading price of our Common Stock could decline significantly.

As of FebruaryMarch 26, 23, 2024,2025, our directors, executive officers and principal stockholders, and their respective affiliates, beneficially own 2,938,006466,808 shares of Common Stock, or approximately 38%17% of our outstanding shares of Common Stock. As a result, these stockholders, acting together, would have the ability to control the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, these stockholders, acting together, would have the ability to control the management and affairs of our Company. Accordingly, this concentration of ownership might harm the market price of our Common Stock by:

Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies, including LP-10 LP-10.and LP-310.

In the event that our Common Stock is delisted from Nasdaq,the Nasdaq Capital Market, U.S. broker-dealers may be discouraged from effecting transactions in shares of our Common Stock because they may be considered penny stocks and thus be subject to the penny stock rules.

The SEC has adopted a number of rules to regulate “penny stock” that restricts transactions involving stock which is deemed to be penny stock. Such rules include Rules 3a51-1, 15g-1, 15g-2, 15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Exchange Act. These rules may have the effect of reducing the liquidity of penny stocks. “Penny stocks” generally are equity securities with a price of less than $5.00 per share (other than securities registered on certain national securities exchanges or quoted on the Nasdaq Capital Market if current price and volume information with respect to transactions in such securities is provided by the exchange or system). Our shares of Common Stock may in the future constitute, “penny stock” within the meaning of the rules. The additional sales practice and disclosure requirements imposed upon U.S. broker-dealers for sales of penny stocks may discourage such broker-dealers from effecting transactions in shares of our Common Stock, which could severely limit the market liquidity of such shares and impede their sale in the secondary market.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” In particular, while we are an “emerging growth company”: (i) we will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act; (ii) we will be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial statements; (iii) we will be subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements; and (iv) we will not be required to hold nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments not previously approved. We have taken advantage of reduced reporting burdens in this Report.

Consistent with our strategy, the initial indication that we are currently addressing (two indications via development of our product candidate, which we have designated ascandidates, LP-10) isfor HC, whichand LP-310 for OLP. HC is chronic, uncontrolled urinary blood loss that results from certain chemotherapies (such as alkylating agents) or pelvic radiation therapy (also called “radiation cystitis”). Many radiation cystitis patients experience severe morbidity (and in some cases, mortality), and currently, there is no therapy for their condition approved by the FDA, or, to our knowledge, any other regulatory body. LP-10 is the development name of our reformulation of tacrolimus (an approved generic active agent) specifically optimized for topical deposition to the internal surface of the urinary bladder lumen using a proprietary drug delivery platform that we have developed and that we refer to as our metastable liposome drug delivery platform (our “Platform”). We are developing LP-10 and our Platform to be, to our knowledge, the first drug candidate and drug delivery technology that could be successful in treating cancer survivors who acquire HC.

In a second program, we are developing a product candidate, which we have designated LP-310 and which employs a formulation similar to LP-10, for the treatment of OLP. OLP is a chronic, T-cell-mediated, autoimmune oral mucosal disease, and LP-310 contains tacrolimus which inhibits T-lymphocyte activation. Symptoms of OLP include painful burning sensations, bleeding and irritation with tooth brushing, painful, thickened thickened patches on the tongue, and discomfort when speaking, chewing or swallowing. These symptoms frequently cause weight loss, nutritional deficiency, anxiety, depression, and scarring from erosive lesions. OLP can also be a precursor to cancer, predominately squamous cell carcinoma, with a malignant transformation rate of approximately one percent. LP-310 is the development name of our oral, liposomal formulation of tacrolimus (the same approved generic active agent in LP-10) specifically optimized for local delivery to oral mucosa. We believe that our approach of using metastable liposomal tacrolimus as a treatment for OLP is novel. To date, upon review of relevant FDA public data resources on approved drugs and biologics, we are not aware of any other liposomal products developed to treat such disease. We have completed a pre-investigational new drug meeting with the FDA, and on October 17, 2023, the FDA approved an IND application for a multi-center, phase-2a, dose-escalation clinical trial to assess the safety and efficacy of LP-310 in patients with symptomatic OLP.

Additionally, the Company is developing an oral, liposomal formulation of tacrolimus, called LP-410, for the treatment of oral GVHD. GVHD is a clinical syndrome where donor-derived immunocompetent T cells react against patient tissues directly or through exaggerated inflammatory responses following HCT. GVHD remains a major cause of morbidity and mortality for patients who undergo HCT treatment, with chronic GVHD being the leading cause of nonmalignant fatality for such patients who receive such HCT treatment. Topical and local management of symptomatic oral GVHD can reduce oral symptoms that can interfere with oral function and quality of life and can reduce the need for more intensive immunosuppressive systemic therapies. However, there is currently no FDA approved local drug treatment of oral GVHD. On November 11, 2023, we received “orphan drug” designation from the FDA for LP-410 for oral GVHD. We received IND approval from the FDA for LP-410’s treatment of oral GVHD on March 5, 2024.

On December 22, 2022, we completed our IPO and issued and sold 1,217,391 shares of Common Stock at a price to the public of $5.75 per share, which when accounting for the reverse split stock split that occurred on November 7, 2024, converts to 152,173 shares at a price of $46.00 per share. The aggregate net proceeds from the IPO were approximately $5.0 million after deducting underwriting discounts and commissions of approximately $630,000 and offering expenses of approximately $1.16 million.

We have not yet commercialized any products products, and we do not expect to generate revenue from sales of any product candidates for several years. We recognize revenue from grants when the related costs are incurred and the right to payment is realized. For the year ended December 31, 2022,2023, we derived revenue from a series of grantsgrant awarded by the NIH on May 4, 2017 and September 19, 2018 totaling approximately $2,240,000 (the “NIH Grants”). On September 15, 2022 we received a new award of approximately $673,000 (the “ 2022 NIH Grant”). The NIH approved an additional year of funding under the 2022 NIH Grant in June 2023, increasing the total funding provided under the 2022 NIH Grant to $1,353,000.

For the year ended December 31, 2023,2024, we we received approximately $450,000$536,000 in connection with the 2022 NIH Grant, recognized as revenue, compared to a total of $184,000$450,000 in connection with the NIH Grants and 2022 NIH Grant,Grant recognized as revenue,revenue asin ofthe year ended December 31, 2022.2023. The increase in annual grant revenue revenue from 20222024 to 2023 is related to the awardtime devoted to the grant work and thesubcontractor extension of the 2022 NIH Grant, which was in place for only one quarter in 2022, but the full year of 2023.costs.

R&D expenses increased by approximately $574,000, $491,000, to approximately $3,039,000$3,613,000 for the year ended December 31, 20232024, from approximately $2,548,000$3,039,000 for year ended December 31, 2022. 2023. The increase in R&D expenses was primarily attributable to costan of labor, supplies and overhead of $251,000, offset by a decreaseincrease in outside services of $77,000 corresponding with$823,000, the endmajority of thewhich was lastfor our current clinical trial,trial andfor anLP-310, increaseoffset by reduction in employee stock option expense of $317,000.$392,000. There was also an increase in personnel and facility costs of $143,000.

General and administrative expenses consist primarily of managementmanagement, andoverhead businesscosts, consultantsoutside services fees and other related costs, including stock-based compensation. General and administrative expenses also include board of directors’ expenses and professional fees for legal, patent, consulting, accounting, auditing, tax services and insurance costs.

Other Income for the year ended December 31, 20232024 was $127,000,$64,000, compared to an other expenseincome of $8,000$127,000 in the year ended December 31, 2022.2023. The increasedecrease was due primarily to a $136,000$75,000 increasedecrease in interest income on our higherliquid cashinvestments. balanceThis andwas offset by a highsavings of $11,000 in interest rateexpense on environmentnotes in 2023. The net other expensepayable in the year ended December 31, 20222024 consistedversus ofthe interestprior expense on notes payable, as well as interest income on marketable securities.year.

From inception through December 31, 2023,2024, we have funded our operations primarily through (i) private equity financings (from which we have raised an aggregate of approximately $11 million,million), (ii) grants received from the U.S. government (from which we have received an aggregate of approximately $10$10.5 million,million since inception), (iii) the IPO (from which we raised net proceeds of approximately $5.0 million, andmillion), (iv) a private placement transaction in October 2023 in which we raised net proceeds of approximately $1.6$1.0 million, (v) a registered direct offering in July 2024 (from which we raised net proceeds of approximately $1.3 million, and (vi) additional issuances of equity through a private placement in 2024 netting approximately $1.8 million. Until such time, if ever, as we can generate substantial revenue, we expect to finance our cash needs through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements.

Net Cash used in operating activities for the year ended December 31, 20232024 was approximately $3,150,000.$3,951,000. This comprised a net loss of $4,567,00$5,016,000 for the yearyear, offset by non-cash stock option expense of $1,355,000$749,000 and shares issued for services expense of $121,000.$200,000. Changes in operating assets and liabilities provided in net cash inflows of $113,000.

We expect our expenses to increase substantially in connection with our ongoing R&D activities, particularly as we continue R&D, advance clinical trials of LP-10 and LP-310, and advance the preclinical development of our other programs, including LP-310.programs. In addition, we expect to incur additional costs associated with operating as a public company. As a result, we expect to incur substantial operating losses and negative operating cash flows for the foreseeable future.

We are party to employment agreements with each of Drs. Kaufman and Chancellor and Mr. Johnston, executive officers of the Company, the material terms of each of which are described in the section entitled “Executive Compensation – ExecutiveEmployment Employment Agreements”.

We are party to a lease agreement, dated June 1, 2019, with Bridgeway Development Corporation, as amended, for the lease of 2,690 square feet of office and lab and manufacturing space in Pittsburgh, Pennsylvania commencing on July 1, 2020.2020 (the “Lease”). The current lease term expires on June 30, 2025 and we have the right to exercise a one-time option to extend the term of the lease for an additional five-year term. The annual base rent under the lease is approximately $66,000.$67,000. On July 26, 2023, the Company entered into a second lease for additional space in the same building (the “Additional Lease,” and together, the “Leases Lease”), commencing August 1, 2023 and co-terminating with the existing Lease on June 30, 2025. Annual rent under the Additional Lease was approximately $28,000. As space became available in the immediate proximity to our existing offices at the beginning of 2024, we terminated the Fourth Floor Lease upon mutual agreement with the landlord and replaced it with a lease for Suite 504 (“the Suite 504 Lease”). The Suite 504 Lease became effective January 1, 2024, and the term co-terminates with the Lease. The annual base rent for the current year for the Suite 504 Lease is approximately $28,000.$29,000. See Note 1213 of the notes to our audited financial statements included in this Report.

We enter into service agreements in the normal course of business with CROs and for clinical trials, preclinical research studies and testing, manufacturing, and other services and products for operating purposes. These contracts do not contain any minimum purchase commitments. Certain agreements provide for termination rights subject to termination fees or wind down costs. Under such agreements, we are contractually obligated to make certain payments to vendors, mainly to reimburse them for their unrecoverable outlays incurred prior to cancellation. The exact amounts of such obligations are dependent on the timing of termination, and the exact terms of the relevant agreement and cannot be reasonably estimated. The expense we incurred pursuant to these agreements for the year ended December 31, 2023 2024 was approximately $675,000,$1,359,000, compared to approximately $676,000$675,000 for the year ended December 31, 2023. The increase was due to our current phase 2a clinical trial for LP-310 that started in 2024.

The following table sets forth by grant date, after giving effect to the reverse stock splitsplits of the Company’s outstanding shares of Common StockStock, on a 1-for-2.5 basis, with respect tothe stock options granted during the years ended December 31, 20232024 and December 31, 2022,2023, including the (i) number of shares of our Common Stock issuable upon exercise of such stock options, (ii) per share exercise price of such options and (iii) estimated fair value per share of our Common Stock on each such date. We did not grant any shares of restricted Common Stock during this period.

We may take advantage of these exemptions until such time that we are no longer an emerging growth company. We would cease to be an emerging growth company upon the earliest of

As of AugustNovember 13, 2025, we had outstanding 1,260 shares of our Series B Preferred Stock, convertible into 53,096 shares of Common Stock, and 153,442 shares of our Series C Preferred Stock, convertible into 153,442 shares of Common Stock. In addition, as of August 13, 2025, we had outstanding Series B Warrants to purchase up to 72,000 shares of Series B Preferred Stock. The shares of Series B Preferred Stock issuable upon exercise of the Series B Warrants are convertible into 3,333,319 shares of Common Stock at a conversion price of $2.16. If any of the Series B Warrants are exercised, additional shares of Series C Preferred Stock will be issued to Spartan as per the terms of the Spartan Agreements.

Each holder of the outstanding shares of Series B Preferred Stock may, at its option, convert its shares of Series B Preferred Stock into that number of shares of Common Stock equal to the stated value of such share of Series B Preferred Stock, $100 per share, divided by the conversion price. The conversion prices of the outstanding shares of Series B Preferred Stock range from from $2.18 to $3.00. Each holder of the outstanding shares of Series C Preferred Stock may, at its option, convert its shares of Series C Preferred Stock into that number of shares of Common Stock equal to the stated value of such share of Series C Preferred Stock, $1.00 per share, divided by the conversion price, $1.00 per share.

The issuance of Common Stock upon conversion of the outstanding shares Series B Preferred Stock and Series C Preferred Stock and additional shares, if any, issued in connection with the exercise of the Series B Warrants, will result in immediate dilution to the existing holders of our Common Stock.

In addition, the availability of shares of Common Stock upon conversion of the Series B Preferred Stock and Series C Preferred Stock for public resale, as well as any actual resales of these shares, could adversely affect the trading price of our Common Stock. We cannot predict the size of future issuances of our Common Stock upon the conversion of our Series B Preferred Stock and Series C Preferred Stock, or the effect, if any, that future issuances and sales of shares of our Common Stock may have on the market price of our Common Stock. Sales or distributions of substantial amounts of our Common Stock upon the conversion of our Series B Preferred Stock and Series C Preferred Stock, or the perception that such sales could occur, may cause the market price of our Common Stock to decline.

The following discussion and analysis of our financial condition and results of operations for the three months ended JuneSeptember 30, 2025 should be read together with our unaudited condensed financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q for the quarterly period ended JuneSeptember 30, 2025 (this “Form 10-Q”), as well as the audited financial statements, the related notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2024 contained in our Annual Report on Form 10-K for the year ended December 31, 2024, that was filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 28, 2025 (our “Annual Report”), and all risk factors disclosed herein and therein.

LP-310 is the development name of our oral, liposomal formulation of tacrolimus (the same approved generic active agent in LP-10) specifically optimized for local delivery delivery to oral mucosa. We believe that our approach of using metastable liposomal tacrolimus as a treatment for OLP is novel. To date, upon review of relevant FDA public data resources on approved drugs and biologics, we are not aware of any other liposomal products products developed to treat such disease. In the fourth quarter of 2024, we announced the completion of dosing for the first cohort in in a multi-center Phase 2a clinical trial of LP-310. No product-related serious adverse events were reported. Pharmacokinetic data demonstrated that whole blood tacrolimus levels in all patients were either undetectable or minimal, highlighting LP-310’s potential to deliver localized therapeutic effects while minimizing systemic exposure. Additionally, all patients tolerated LP-310 without significant adverse reactions. The trial is expected to be completed in the third quarter of 2025. The top line data from the first two dose cohorts of this trial was presented at the 2025 American Association of Oral Medicine and European Association of Oral Medicine Joint Meeting that was held in Las Vegas, NV on May 15, 2025. The trial was completed in the third quarter of 2025, with results announced on September 18, 2025.

Comparison of the Three Months Ended June September 30, 2025 and 2024

The following table summarizes our results of operations for the three months ended JuneSeptember 30, 2025 and 2024 (in thousands):

We have not yet commercialized any products, and we do not expect to generate revenue from sales of any product candidates for several years. ForWe the three months ended June 30, 2025 and 2024, wehave recognized revenue from a grant awarded by the National Institutes of Health (“NIH”) in September of 2022 (the “2022 NIH Grant”), which was an award of an aggregate of $673,000. NIH approved an additional year of funding under the 2022 NIH Grant in June 2023, increasing the total funding provided under the 2022 NIH Grant to $1,353,000. The grant expired in June 2025.

We recognize revenue from grants when the related costs are incurred and the right to payment is realized. For the three months ended June September 30, 2025, we recognized $86,727 $0 of revenue in connection with the 2022 NIH Grant, compared with $136,431$80,380 of revenue in the three months ended JuneSeptember 30, 2024. The decrease in grant revenue was due to the fact that the funds awarded under the grant were fully depleted and the grant expired during the quarter ended June 30, 2025.

We expect that our R&D expenses will increase substantially in connection with our clinical development activities for our LP-10 and LP-310 programs, and other product candidates and we will need to obtain additional capital to continue to develop our product candidates. At this time, we cannot accurately estimate or know the nature, timing and costs of the efforts that will be necessary to complete the clinical development of, or obtain regulatory approval for, any of our current or future product candidates. This is due to the numerous risks and uncertainties associated with product development and commercialization, including the specific factors set forth in the section of our Annual Report titled “Risk Factors.” If any events described in the applicable risk factors included in the section of our Annual Report titled “Risk Factors” occur, then the costs and timing associated with the development of any of our product candidates could significantly change. We may never succeed in obtaining regulatory approval for, of commercialization of, LP-10, LP-310, or any of our other product candidates.

General and administrative expenses were $651,721 $552,375 for the three months ending JuneSeptember 30, 2025, compared to $427,062$493,102 for the three months ended JuneSeptember 30, 2024, an increase of approximately $225,000.$60,000. The increase was primarily due to professional and outside services costs which were higher by $323,000, includingapproximately in legal, accounting, and investor relations.$99,000. This was offset by decreases in employee costs of $38,000,decrease stock option expense of $41,000,approximately and facility and overhead costs of $20,000.$41,000.

Net other income for the three months ended June September 30, 2025 was $29,089,$20,194, as compared to $14,043$14,778 for the three months ended June September 30, 2024. There was an approximately $15,000 $6,000 increase in interest income on the Company’sour short-term investment portfolio, due to a higher investment balance during the period. period, reduced by slightly higher interest expense of approximately $2,000.

Comparison of the SixNine Monthsmonths Ended June September 30, 2025 and 2024

The following table summarizes our results of operations for the sixnine months ended JuneSeptember 30, 2025 and 2024 (in thousands):

For the sixnine months ended JuneSeptember 30, 2025, we recognized $216,117 of revenue in connection with the 2022 NIH Grant, compared with $282,311 of revenue in the sixnine months ended June September 30, 2024. The decrease in grant revenue was due to the fact that the fundsgrant expired awardedin underJune the2025, and therefore there were only six months of grant werefunding fullyin depleted2025 during theversus quarternine endedmonths Junein 30, 2025.2024.

The following table summarizes our R&D expenses by program for the sixnine months ended JuneSeptember 30, 2025 and 2024 (in thousands):

R&D expenses increased by approximately $281,000, to $1,785,056 for the sixnine months ended June September 30, 2025,2025 were $2,506,028, as compared to $1,504,158$2,550,852 for the sixnine months ended JuneSeptember 30, 2024. This decrease of approximately The increase$45,000 in R&D expenses was primarily attributable to ana increasedecrease in stock opstion expense of approximately $585,000, offset by increases in outside services of approximately $376,000,$372,000 and salaries and benefits of about $186,000, primarily for work done foron our current clinical trial for LP-310, and salaries and benefits of $209,000.LP-310. Indirect costs related to operational overhead and facilities decreased $58,000,about while stock option expense decreased $247,000.$18,000.

General and administrative expenses were $1,115,457 $1,668,757 for the sixnine months ended JuneSeptember 30, 2025, compared to $947,988$1,441,089 for the six nine months ended JuneSeptember 30, 2024, an increase of approximately $167,000.$228,000. The increase was primarily due to professional and outside services costs which were higher by approximately $240,000, $329,000, including infor legal,legal accounting,counsel and investor relations.relations, Thisproduct was offset by decreases in employee costs of approximatelycommercialization $41,000 and stockboard option expense of $43,000, whilecompensation. facility and overhead costs increased by approximately $11,000.$25,000. This was offset by decreases in employee costs of approximately $44,000 and stock option expense of $84,000.

Net other income for the sixnine months ended June September 30, 2025 was $50,387,$70,581, as compared to $39,880$54,658 for the sixnine months ended June September 30, 2024. There was an approximately $10,000$15,000 increase in interest income on our short-term investment portfolio, due to a higher investment balance during the period.

We have not yet commercialized any products, and we do not expect to generate revenue from sales of any product candidates for several years, if at all. Cash and cash equivalents totaled $3,437,246$1,855,771 as of JuneSeptember 30, 2025. We consider all highly liquid investments that mature in 90 days or less when purchased to be cash equivalents.

We have incurred operating losses and experienced negative operating cash flows for the threenine months ended June September 30, 2025 and the year ended December 31, 2024, and we anticipate that we will continue to incur losses for the foreseeable future. Our net loss totaled $1,327,486$1,254,078 and $938,146$1,444,637 for the three months ended JuneSeptember 30, 2025 and 2024, respectively. We incurred net losses for the sixnine months ended JuneSeptember 30, 2025 and 2024 of $2,634,009$3,888,087 and $2,129,955,$3,574,592, respectively, and $5,016,264 for the year ended December 31, 2024.

Net cash used in operating activities for the sixnine months ended JuneSeptember 30, 2025 was $2,859,264.$3,785,321. This comprised a net loss for the period of approximately $2,634,000$3,888,000 and increased prepaid expenses (primarily insurance policies and clinical trial operations services) of approximately $266,000. Cash increased as a result of a decrease in our grants receivable asset of approximately $43,000, which was offset by a decrease of approximately $2,000$109,000 from otherin operating assets and liabilities and depreciation.liabilities.

Net cash used in operating activities for the sixnine months ended JuneSeptember 30, 2024 was $2,307,231.$2,960,334. This comprised a net loss for the period of approximately $2,130,000,$3,575,000, and increased prepaid expenses (primarily insurance policies, outside services, and clinical trial operations services) of $758,000,$592,000, offset by increased operating liabilities of $90,000.$334,000. In addition, noncash adjustments reduced the net loss by approximately $289,000$669,000 in stock option expense and $200,000 in shares of Common Stock issued for services.

Net cash provided by financing activities for the sixnine months ended JuneSeptember 30, 2025 was $3,456,228. This reflects net proceeds from the issuance of preferred stock and warrants in connection with a private placement transaction. Net cash provided by financing activities for the sixnine months ended JuneSeptember 30, 2024 was $200,000, received for the issuance of Common Stock.Stock, and approximately $800,000 for the issuance of pre-funded warrants, net of issuance costs.

There were no cash flows related to investing activities. activities in either period.

Our management may raise additional funds through the issuance of equity securities or debt. If we raise additional funds by issuing equity securities, our stockholders will experience dilution. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Any debt financing or additional equity that we raise may contain terms, such as liquidation liquidation and other preferences that are not favorable to us or our existing stockholders. Adequate funding may not be available to us on acceptable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back, discontinue the development of our product candidates or cease operations.operations or file for bankruptcy protection or pursue a dissolution of and liquidation of all of our remaining assets. These factors raise substantial doubt about about the our ability to continue as a going concern. The accompanying unaudited condensed financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

We did not have during the three months ended JuneSeptember 30, 2025, or the year ended December 31, 2024, and we do not currently have, any off-balance sheet arrangements, as defined under applicable Securities and Exchange Commission (“SEC”) rules.

We did not have during the sixnine months ended June September 30, 2025 or the year ended December 31, 2024, and we do not currently have, any material contractual obligations, such as license agreements or similar arrangements, other than as described below and in the financial notes to our unaudited condensed financial statements included in this Form 10-Q and in our Annual Report.

We are party to a lease agreement, dated June 1, 2019, with Bridgeway Development Corporation, as amended, for the lease of 2,690 square feet of office and lab and manufacturing space in Pittsburgh, Pennsylvania, commencing on July 1, 2020 (the “Lease”). On On March 20, 2025, we notified Bridgeway Development Corporation of our intent to renew the Lease at the end of its existing term, JuneSeptember 30, 2025, for an additional five year term beginning July 1, 2025..2025. The annual base rent under the Lease is approximately $67,000. On July 26, 2023, the Company entered into a second lease for additional space in the same building (the “Additional Lease”), commencing August 1, 2023 and co-terminating with the Lease on JuneSeptember 30, 2025. Annual rent under the Additional Lease Lease was approximately $28,000. As space became available in the immediate proximity to our existing offices at the beginning of 2024, we terminated the Additional Lease upon mutual agreement with the landlord and replaced it with a lease for Suite 504 (the “Suite 504 Lease”, and together, the “Leases”). The Suite 504 Lease became effective January 1, 2024, and the term co-terminates with the Lease. The annual base rent for the current year for the Suite 504 Lease is approximately $29,000. The Leases were renewed for an additional five year term, commencing July 1, 2025. See Note 13 of the notes to our unaudited condensed financial statements included in this Form 10-Q for more details.

We enter into service agreements in the normal course of business with CROs and for clinical trials, preclinical research studies and testing, manufacturing, and other services and products for operating purposes. These contracts do not contain any minimum purchase commitments. Certain agreements provide for termination rights subject to termination fees or wind down costs. Under such agreements, we are contractually obligated to make certain payments to vendors, mainly to reimburse them for their unrecoverable outlays incurred prior to cancellation. The exact amounts of such obligations are dependent on the timing of termination, and the exact terms of the relevant agreement cannot be reasonably estimated. The expense we incurred pursuant to these agreements for the sixnine months ended JuneSeptember 30, 2025 was approximately $819,000,$1,147,000, which was an increase of approximately $398,000$453,000 from the approximately $421,000$694,000 of expense incurred for the sixnine months ended JuneSeptember 30, 2024. The spending was primarily attributable to expenses relating to our ongoing research and development work, and the increase in costs related to our active clinical trials for LP-310.

With respect to stock options granted during the sixnine months ended JuneSeptember 30, 2025 and 2024, the following table sets forth by grant date the (i) number of shares of our Common Stock issuable upon exercise of such stock options, (ii) per share exercise price of such options and (iii) estimated fair value per share of our Common Stock on each such date. All amounts have been adjusted to reflect the reverse stock split that occurred on November 7, 2024. We did not grant any shares of restricted stock during this period.