UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2022~~2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-38535

Aptinyx Inc.

(Exact name of registrant as specified in its charter)


Delaware		47-4626057
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

909 Davis Street, Suite 600

Evanston, IL 60201

(847) 871-0377

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

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

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	APTX	The Nasdaq ~~Global~~Capital ~~Select~~ Market

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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~November~~May 215, ~~2022~~2023 the registrant had 67,715,718 shares of common stock, $0.01 par value per share, outstanding.

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		Page
PART I.	FINANCIAL INFORMATION	54
Item 1.	Condensed Financial Statements (unaudited)	54
	Balance Sheets	54
	Statements of Operations	65
	Statements of Cash Flows	76
	Statements of Stockholders’ Equity	87
	Notes to Financial Statements	98
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1917
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2823
Item 4.	Controls and Procedures	2823
PART II.	OTHER INFORMATION	3024
Item 1.	Legal Proceedings	3024
Item 1A.	Risk Factors	3024
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3025
Item 3.	Defaults Upon Senior Securities	3125
Item 4.	Mine Safety Disclosures	3126
Item 5.	Other Information	3126
Item 6.	Exhibits	3227
Signatures		3328

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management and expected market growth are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

These forward-looking statements include, among other things, statements about:

● ~~the~~plans ~~timing, progress,~~ and ~~results~~expectations ~~of preclinical studies and clinical trials~~ for ~~NYX-783, NYX-458, and any future product candidates we may develop, including statements regarding~~ the timing of initiation, commencement, and completion of studies or trials and related preparatory work, and costs associated therewith, the period during which the results of the studies will become available, our research and development programs, and our ability to demonstrate safety and efficacy of our product candidates to the satisfaction of applicable regulatory authoritiesDissolution;

● the impacts of the current COVID-19 pandemic on our continuing operations, clinical development plans, including the timing of initiation, recommencement and completion of studies or trials, financial forecasts and expectations, and other matters related to our business and operations;

● the existence or absence of side effects or other properties relating to our product candidates that could delay or prevent their regulatory approval, limit their commercial potential, or result in significant negative consequences following any potential marketing approval;

● the potential for our identified research priorities to advance our technologies;

● our ability to establish or maintain future collaborations or strategic relationships or obtain additional funding in connection with these relationships;

● our ability to obtain and maintain regulatory approval of our product candidates NYX-783, NYX-458, and any other future product candidates, and any statements regarding the label of an approved product candidate, including any restrictions, limitations, and/or warnings therein;

● our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering NYX-783, NYX-458, and any additional product candidates we may develop, and any statements as to whether we do or do not infringe, misappropriate, or otherwise violate any third-party intellectual property rights;

● our ability and the potential to successfully manufacture our product candidates for clinical studies and for commercial use, if approved;

● our ability to commercialize our products in light of the intellectual property rights of others;

● our ability to obtain funding for our operations, including funding necessary to complete further development and commercialization of our product candidates;

● our plans to research, develop, and commercialize our product candidates;

● our ability to retain and attract collaborators with research, development, regulatory, and commercialization expertise;

● the size and growth potential of the markets for our product candidates and our ability to serve those markets;

● the rate and degree of market acceptance and clinical utility of NYX-783, NYX-458, and any future product candidates we may develop, if approved;

● the pricing and reimbursement of NYX-783, NYX-458, and any future product candidates we may develop, if approved;

● regulatory developments in the United States and foreign countries;

● our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

● the success of competing therapies that are or may become available;

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● our ability to retain the continued service of our key professionals and to identify, hire, and retain additional qualified professionals;

● the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;

●

our financial performance;

● our ~~expectations~~ability ~~related~~ to fund our planned operations for the ~~use~~next oftwelve months and our ~~cash~~ability ~~reserves~~to continue as a going concern;

● ~~the~~our ~~impact~~expectations ofrelated ~~laws~~to ~~and~~the ~~regulations,~~use ~~including,~~of ~~without~~our ~~limitation, recently enacted tax reform legislation~~cash; and

● our expectations regarding ~~the~~our ~~time~~ability ~~during~~to ~~which~~maintain wethe ~~will~~listing beof anour ~~“emerging~~common ~~growth~~stock ~~company”~~on ~~under~~ the ~~Jumpstart Our Business Startups Act;~~

● ~~our~~other ~~use~~risks ofand ~~proceeds~~uncertainties, ~~from~~including ~~our~~those ~~debt~~listed ~~financing~~under ~~and~~“Risk Factors” in our ~~initial~~Annual ~~and~~Report ~~follow-~~on ~~public~~Form ~~offerings;~~10-K ~~and~~for the year ended December 31, 2022, or Annual Report.

●We ~~other~~may ~~risks~~not ~~and~~actually ~~uncertainties,~~achieve ~~including~~the ~~those~~plans, ~~listed~~intentions ~~under~~or ~~“Risk~~expectations ~~Factors”~~disclosed in our ~~Annual~~forward-looking ~~Report~~statements, and you should not place undue reliance on ~~Form~~our 10forward-Klooking ~~for~~statements. ~~the~~Actual ~~year~~results ~~ended~~or ~~December~~events ~~31,~~could ~~2021,~~differ ormaterially ~~Annual~~from ~~Report~~the plans, intentions and expectations disclosed in ~~our~~the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q ~~for~~and our Annual Report filed with the ~~quarter~~Securities ~~ended~~and ~~June~~Exchange Commission, or the SEC, on March 30, ~~2022~~2023, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or into which we may enter.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q and our Annual Report filed with the Securities and Exchange Commission, or the SEC, on March 23, 2022, particularly in the “Risk Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments that we may make or into which we may enter.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein and have filed or incorporated by reference as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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PART I—FINANCIAL INFORMATION

Item 1. Condensed Financial Statements.

Aptinyx Inc.

Condensed Balance Sheets

(unaudited)

(in thousands, except per share data)


	~~September~~March 3031,		December 31,
	~~2022~~2023		~~2021~~2022
Assets
Current assets:
Cash and cash equivalents	$	6644,~~584~~573	$	~~106~~56,~~124~~205
Restricted cash		179		~~197~~179
Prepaid expenses and other current assets		73,~~187~~005		87,~~422~~646
Total current assets		7347,~~950~~757		~~114~~64,~~743~~030
Other assets		~~2,219~~206		—2,622
Property and equipment, net		36—		~~185~~32
Total assets	$	7647,~~205~~963	$	~~114~~66,~~928~~684
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	~~474~~1,374	$	~~622~~724
Accrued expenses and other current liabilities		21,~~220~~157		52,~~064~~772
Total current liabilities		2,694		5,686
Finance lease, current		1,138		—
Term loan, non-current		24,709		14,155
Term loan, current		5,654		2,795
Other long-term liabilities		10		331
Total current liabilities		9,323		6,291
Total liabilities	$	27,413	$	20,172
Finance lease, non-current		940		—
Term loan, non-current		19,444		22,108
Total liabilities	$	29,707	$	28,399
Commitments and contingencies (see Note 12)
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000 shares authorized and no shares issued and outstanding as of September 30, 2022 and December 31, 2021		—		—
Preferred stock, $0.01 par value, 10,000 shares authorized and no shares issued and outstanding as of March 31, 2023 and December 31, 2022		—		—
Common stock, $0.01 par value, 150,000 shares authorized as of September 30, 2022 and December 31, 2021, 67,716 issued and outstanding as of September 30, 2022 and December 31, 2021		677		677
Common stock, $0.01 par value, 150,000 shares authorized as of March 31, 2023 and December 31, 2022, 67,716 issued and outstanding as of March 31, 2023 and December 31, 2022		677		677
Additional paid-in capital		~~388~~391,~~799~~381		~~381~~390,~~966~~344
Accumulated deficit		(~~340~~373,~~684~~802)		(~~287~~352,~~887~~736)
Total stockholders’ equity	$	4818,~~792~~256	$	9438,~~756~~285
Total liabilities and stockholders’ equity	$	7647,~~205~~963	$	~~114~~66,~~928~~684

See accompanying notes to these unaudited condensed financial statements.

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Aptinyx Inc.

Condensed Statements of Operations

(unaudited)

(in thousands, except per share data)


	Three Months Ended ~~September~~March 3031,				~~Nine Months Ended September 30,~~
	~~2022~~2023		~~2021~~2022		~~2022~~		~~2021~~
Revenues:
Operating expenses:
Collaboration revenue	$	—	$	—	$	—	$	1,000
Research and development	$	16,093	$	13,602
Operating expenses:
General and administrative		4,229		5,777
Research and development		10,008		16,278		35,519		41,388
Total operating expenses		20,322		19,379
General and administrative		4,649		4,928		15,622		14,974
Loss from operations		(20,322)		(19,379)
Total operating expenses		14,657		21,206		51,141		56,362
Other (income) expense, net		(286)		(29)
Loss from operations		(14,657)		(21,206)		(51,141)		(55,362)
Interest expense		1,030		477
Other (income) expense, net		(208)		(47)		(432)		(158)
Net loss and comprehensive loss	$	(21,066)	$	(19,827)
Interest expense		854		72		2,088		72
Net loss per share attributable to common stockholders, basic and diluted	$	(0.31)	$	(0.29)
Net loss and comprehensive loss	$	(15,303)	$	(21,231)	$	(52,797)	$	(55,276)
Weighted-average number of common shares outstanding, basic and diluted		67,716		67,716
Net loss per share attributable to common stockholders, basic and diluted	$	(0.23)	$	(0.31)	$	(0.78)	$	(0.82)
Weighted-average number of common shares outstanding, basic and diluted		67,716		67,716		67,716		67,053

See accompanying notes to these unaudited condensed financial statements.

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Aptinyx Inc.

Condensed Statements of Cash Flows

(unaudited)

(in thousands)


	~~Nine~~Three Months Ended
	~~September~~March 3031,
	~~2022~~2023		~~2021~~2022
Cash flows from operating activities:
Net loss	$	(5221,~~797~~066)	$	(5519,~~276~~827)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		~~119~~32		~~488~~38
Change in fair value of derivative liability associated with contingently issuable warrants		~~(115)~~—		—15
Non-cash interest expense related to term loan		~~562~~196		19139
Stock-based compensation expense		6,627		7,395
Impairment of assets related to supply manufacturing agreements		8,199		—
Stock-based compensation expense		1,037		2,350
Changes in operating assets and liabilities:
Prepaid expenses and other assets		~~(754)~~1,202		12,~~258~~375
Accounts receivable		—		257
Accounts payable		664		1,075
Accounts payable		(147)		1,818
Accrued expenses and other liabilities		(1,629)		(2,089)
Accrued expenses and other liabilities		(2,802)		(324)
Net cash used in operating activities		(11,365)		(15,924)
Net cash used in operating activities		(49,307)		(44,365)
Cash flows from investing activities:
Proceeds from sale of property and equipment		—		122
Net cash provided by investing activities		—		122
Cash flows from financing activities:
Proceeds from stock options exercised		—		133
Repayment of principal portion of finance lease liabilities		(265)		—
Repurchase of shares for tax withholdings		—		(912)
Proceeds from issuance of term loan, net of issuance costs paid to lender		—		10,000
Proceeds from issuance of term loan, net of issuance costs paid to lender		10,000		14,638
Payment of debt issuance costs		(2)		(13)
Payment of debt issuance costs		(21)		(38)
Payment of offering costs		—		(27)
Proceeds from at the market offering, net of sales commission		—		14,615
Net cash provided by financing activities		(267)		9,960
Payment of offering costs		(230)		(5)
Net decrease in cash, cash equivalents and restricted cash		(11,632)		(5,964)
Net cash provided by financing activities		9,749		28,431
Cash, cash equivalents and restricted cash, at beginning of period		56,384		106,321
Net decrease in cash, cash equivalents and restricted cash		(39,558)		(15,812)
Cash, cash equivalents and restricted cash, at end of period	$	44,752	$	100,357
Cash, cash equivalents and restricted cash, at beginning of period		106,321		141,299
Cash, cash equivalents and restricted cash, at end of period	$	66,763	$	125,487
Supplemental disclosure of cash flow information:
Cash paid for interest	$	~~1,415~~822	$	—298
Supplemental disclosure of non-cash investing and financing activities:
Deferred offering costs not yet paid	$	—	$	114
Right-of-use asset recognized in exchange for finance lease obligations	$	2,344	$	—
Debt issuance costs not yet paid		—		39
Deferred offering costs not yet paid		—		95
Recognition of derivative liability associated with contingently issuable warrants		—		287
Debt issuance costs not yet paid		—		2
Issuance of warrants in connection with term loan financing		~~206~~—		~~255~~206

See accompanying notes to these unaudited condensed financial statements.

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Aptinyx Inc.

Condensed Statements of Stockholders’ Equity

(unaudited)

(in thousands)


				Additional				Total
	Common stock			paid-in		Accumulated		stockholders’
	Shares	Amount		capital		deficit		equity
Balance at June 30, 2022	67,716	$	677	$	386,803	$	(325,381)	$	62,099
Stock‑based compensation	—		—		1,996		—		1,996
Net loss	—		—		—		(15,303)		(15,303)
Balance at September 30, 2022	67,716	$	677	$	388,799	$	(340,684)	$	48,792

Balance at June 30, 2021	67,716	$	677	$	377,125	$	(247,046)	$	130,756
Issuance of warrants in connection with term loan financing					255				255
Stock-based compensation	—		—		2,262		—		2,262
Net loss	—		—		—		(21,231)		(21,231)
Balance at September 30, 2021	67,716	$	677	$	379,642	$	(268,277)	$	112,042

				Additional				Total
	Common stock			paid-in		Accumulated		stockholders’
	Shares	Amount		capital		deficit		equity
Balance at December 31, 2021	67,716	$	677	$	381,966	$	(287,887)	$	94,756
Stock‑based compensation	—		—		62,~~627~~350		—		62,~~627~~350
Issuance of warrants in connection with term loan financing	—		—		206		—		206
Net loss	—		—		—		(5219,~~797~~827)		(5219,~~797~~827)
Balance at September 30, 2022	67,716	$	677	$	388,799	$	(340,684)	$	48,792
Balance at March 31, 2022	67,716	$	677	$	384,522	$	(307,714)	$	77,485

Balance at December 31, 2020	63,257	$	633	$	358,277	$	(213,001)	$	145,909
Balance at December 31, 2022	67,716	$	677	$	390,344	$	(352,736)	$	38,285
Issuance of common stock upon vesting of restricted stock	1,089		11		(11)		—		—
Stock‑based compensation	—		—		1,037		—		1,037
Repurchase of shares for tax withholdings	(347)		(3)		(909)		—		(912)
Net loss	—		—		—		(21,066)		(21,066)
Issuance of warrants in connection with term loan financing	—		—		255		—		255
Balance at March 31, 2023	67,716	$	677	$	391,381	$	(373,802)	$	18,256
Issuance of common stock upon at the market offering, net of sales commissions and other offering costs of $529	3,630		36		14,502		—		14,538
Stock‑based compensation	—		—		7,395				7,395
Issuance of common stock upon exercise of stock options	87		—		133		—		133
Net loss	—		—		—		(55,276)		(55,276)
Balance at September 30, 2021	67,716	$	677	$	379,642	$	(268,277)	$	112,042

See accompanying notes to the unaudited condensed financial statements.

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Aptinyx Inc.

Notes to Condensed Financial Statements

(unaudited)

1. Organization

Description of business

Aptinyx Inc. (the “Company” or “Aptinyx”) was incorporated in Delaware on June 24, 2015, and maintains its headquarters in Evanston, Illinois.

Aptinyx is a clinical-stage biopharmaceutical company focused on the discovery, development, and commercialization of novel, proprietary, synthetic small molecules for the treatment of brain and nervous system disorders. Aptinyx has a platform for discovering proprietary compounds that work through a novel mechanism: modulation of N-methyl-D-aspartate receptors (“NMDAr”), which are vital to normal and effective brain and nervous system functions. This mechanism has applicability across numerous nervous system disorders.

Liquidity, ~~and~~ capital resources, and going concern

OnThe ~~July~~financial 1,statements ~~2019,~~are ~~the~~prepared ~~Company~~in ~~entered~~accordance ~~into a Sales Agreement (the “2019 Sales Agreement”)~~ with ~~Cowen and~~ ~~Company,~~generally ~~LLC~~accepted ~~(“Cowen”)~~accounting ~~pursuant~~principles toapplicable ~~which the Company may offer and sell shares of its common stock with an aggregate offering price of up~~ to ~~$50.0~~ ~~million under an “at the market” offering program (the “2019 ATM Offering”). The 2019 Sales Agreement provides that Cowen will be entitled to~~ a ~~sales~~going ~~commission~~concern, ~~equal~~which ~~to 3.0% of~~contemplates the ~~gross~~realization ~~sales price per share~~ of ~~all~~assets ~~shares~~and ~~sold under~~ the ~~2019~~satisfaction ~~ATM Offering. To date, the Company has sold an aggregate~~ of ~~5,120,940~~ ~~shares~~liabilities ~~under~~in the ~~2019~~normal ~~ATM~~course ~~Offering at a weighted-average price~~ of ~~$3.99 per~~ ~~share for net proceeds of $20~~business.~~4 million after deducting sales commission and other offering expenses, including 3,629,458 shares for net proceeds of $14.5 million during the nine months ended September 30, 2021.~~

The Company has incurred operating losses and negative cash flows from operations since inception. As of March 31, 2023, the Company had an accumulated deficit of $373.8 million, cash and cash equivalents of $44.6 million, and total liabilities of $29.7 million.

In February 2023, in light of its financial condition and the results of recent clinical studies that did not support continued development, the Company began implementation of a strategic restructuring plan to preserve capital and reduce operating costs. The Company also began exploration of strategic alternatives to maximize shareholder value. As part of the restructuring plan, the Company eliminated 60% of its workforce, leaving a core team of individuals to lead the strategic alternatives review process. On May 4, 2023, following the completion of the review of strategic alternatives, the Company’s board unanimously approved a plan of liquidation and dissolution of the Company, which plan is subject to stockholder approval.

OnThese ~~September~~conditions ~~15, 2021, the Company entered into a Loan~~ and ~~Security~~events ~~agreement~~raise ~~(the~~substantial ~~“Loan~~doubt ~~Agreement”)~~about ~~with K2 HealthVentures LLC (“Lender”). The Loan Agreement provides up to $50.0 million principal in term loans, $15.0 million of which was funded at~~ the ~~time the~~ Company’s ~~entered~~ability ~~into~~to ~~the~~continue ~~agreement~~as ~~and~~a ~~$10.0~~going ~~million of which was funded on March 14, 2022~~concern. ~~See Note 7 for additional details regarding the Loan Agreement.~~

OnThe ~~September~~Company ~~16,~~does ~~2021,~~not ~~the~~have ~~Company~~plans ~~entered~~to ~~into~~alleviate ~~a Sales Agreement (~~the ~~“2021~~substantial ~~Sales~~doubt ~~Agreement”) with Cowen~~about ~~pursuant to which~~ the Company’s ~~may~~ability ~~offer and sell shares of its common stock with an aggregate offering price of up~~ to ~~$50.0~~ ~~million under~~continue anas “at the market” offering program (the “2021 ATM Offering”) and which supersedes the 2019 Sales Agreement and 2019 ATM Offering. The 2021 Sales Agreement provides that Cowen will be entitled to a ~~sales~~going ~~commission equal to 3~~concern.~~0% of~~ the gross sales price per share of all shares sold under the 2021 ATM Offering. As of the date of these financial statements, no shares of common stock have been issued and sold pursuant to the 2021 Sales Agreement.

OnThe ~~March~~financial ~~24,~~statements ~~2022,~~do ~~the~~not ~~Company~~include ~~entered~~any ~~into~~adjustments anrelating ~~amendment~~ to the ~~2021 Sales~~recoverability ~~Agreement (the “2022 Sales Agreement”) pursuant to which the Company may offer~~ and ~~sell~~classification ~~shares~~ of ~~its~~recorded ~~common~~asset ~~stock~~amounts ~~with~~or ~~an aggregate offering price of up to $75.0 million under an “at~~ the ~~market”~~amounts ~~offering program (the “2022 ATM Offering”)~~ and ~~which~~classification ~~supersedes~~of ~~the~~liabilities ~~2021 Sales Agreement and 2021 ATM Offering. The 2022 Sales Agreement provides~~ that ~~Cowen will~~ bemight ~~entitled~~result tofrom ~~a sales commission equal to 3.0% of~~ the ~~gross~~outcome ~~sales price per share~~ of ~~all~~this ~~shares sold under the 2022 ATM Offering~~uncertainty. ~~As of the date of these financial statements, no shares of common stock have been issued and sold pursuant to the 2022 Sales Agreement.~~

As of September 30, 2022, the Company had cash and cash equivalents of $66.6 million, which the Company believes will be sufficient to funds its planned operations for a period of at least twelve months from the date of issuance of these condensed financial statements.

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2.Summary of significant accounting policies

Basis of presentation

The condensed financial statements of the Company included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations. The accompanying condensed financial statements reflect all adjustments consisting of normal, recurring adjustments that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of results for a full year. Accordingly, these condensed financial statements should be read in conjunction with the financial statements included in the Company’s ~~Annual Report on Form 10-K for the year ended December 31, 2021 (the “Annual Report”) filed with the SEC on March 23, 2022.~~

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Annual Report on Form 10-K for the year ended December 31, 2022 (the “Annual Report”) filed with the SEC on March 30, 2023.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”), or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial statements upon adoption. Under the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), the Company meets the definition of an emerging growth company, and has elected the extended transition period for complying with new or revised accounting standards, which delays the adoption of these accounting standards until they would apply to private companies.

Use of estimates

The condensed financial statements are prepared in conformity with GAAP. This process requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

Risk and uncertainties

The Company’s future results of operations involve a number of risks and uncertainties. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of: ~~the~~plans ~~impact~~and ofexpectations ~~COVID-19~~for onthe ~~future~~plan ~~clinical~~of ~~study~~liquidation ~~results~~and dissolution, and the scope, timing, rate of progress, and expense of the Company’s ongoing as well as any additional ~~preclinical studies, clinical studies, and other~~ research and development activities, clinical study enrollment rate or design, the manufacturing of the Company’s product candidates, significant and changing government regulation, and the timing and receipt of any regulatory approvals.

Significant accounting policies

The Company’s significant accounting policies are described herein and in Note 3, “Summary of significant accounting policies,” in the Annual Report. There have been no material changes to the significant accounting policies during the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023.

Recently issued accounting pronouncement

In February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”), as amended, which requires a lessee to recognize assets and liabilities on the balance sheet for operating leases and changes many key definitions, including the definition of a lease. The new standard includes a short-term lease exception for leases with a term of 12 months or less, as part of which a lessee can make an accounting policy election not to recognize lease assets and lease liabilities. Lessees will continue to differentiate between finance leases (previously referred to as capital leases) and operating leases using classification criteria that are substantially similar to the previous guidance. The new standard became effective for the Company for annual reporting periods beginning after December 15, 2021, and interim periods within

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fiscal years beginning after December 15, 2022, and early adoption is permitted. The Company does not anticipate the adoption of these amendments will have a material impact on the financial statements.

Prior Period Reclassifications

Certain amounts in prior periods may have been reclassified to conform with current period presentation. Interest expense is now presented separately in the condensed statements of operations, and previously was a component of other (income) expense, net. These reclassifications did not affect net loss in any period presented.

3. Supplemental financial information

Cash, cash equivalents and restricted cash

Cash and cash equivalents consist of cash and, if applicable, highly liquid investments with an original maturity of three months or less when purchased. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the balance sheets that sum to the total of the same such amounts shown in the condensed statements of cash flows (in thousands).


	As of		As of
	~~September~~March 3031,		December 31,
	~~2022~~2023		~~2021~~2022
Cash and cash equivalents	$	6644,~~584~~573	$	~~106~~56,~~124~~205
Short-term restricted cash		179		~~197~~179
Total cash, cash equivalents, and restricted cash shown in the statements of cash flows	$	6644,~~763~~752	$	~~106~~56,~~321~~384

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Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of the following (in thousands):


	As of		As of
	~~September~~March 3031,		December 31,
	~~2022~~2023		~~2021~~2022
Prepaid clinical	$	32,~~041~~048	$	43,~~693~~828
Prepaid insurance		~~1,529~~579		1,~~122~~109
Prepaid manufacturing costs		~~2,261~~—		2,~~241~~380
Other prepaid expenses and current assets		~~356~~378		~~366~~329
Total prepaid expenses and other current assets	$	73,~~187~~005	$	87,~~422~~646

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	As of		As of
	~~September~~March 3031,		December 31,
	~~2022~~2023		~~2021~~2022
Employee-related expenses	$	~~867~~256	$	21,~~567~~724
Development costs and sponsored research		~~455~~151		~~1,347~~84
Clinical trials		~~131~~—		~~810~~184
Other		~~767~~750		~~340~~780
Total accrued expenses and other current liabilities	$	21,~~220~~157	$	52,~~064~~772

~~Table~~4. Fair ofvalue ~~Contents~~measurements

4. Research collaboration agreement with Allergan

On July 24, 2015, the Company entered into a Research Collaboration Agreement (“RCA”) with Naurex Inc., a subsidiary of Allergan plc (“Allergan”), which became a wholly owned subsidiary of AbbVie Inc. in May 2020. The RCA was focused on the research and discovery of small molecules that modulate NMDArs. Under the terms of the agreement, the RCA terminated upon the earlier of (i) 180 days after a predetermined anniversary of the effective date of the RCA and (ii) the date on which Allergan exercised the last of three options to acquire molecules from a pool of eligible compounds, in both cases (clauses (i) and (ii)) subject to potential extension if and as required for the Company to transfer to Allergan information and technology related to compounds that were licensed by Allergan. The jointly funded research activities and option exercise period under the RCA, including the associated payments by Allergan to the Company, came to their contractual conclusions in accordance with the agreement in August 2020 and February 2021, respectively. Under the terms of the agreement, Allergan was to pay the Company $1.0 million for each option exercised by Allergan. On February 23, 2021, Allergan exercised its option to acquire exclusive rights to develop and commercialize AGN-281705 within a predefined set of indications. For the nine months ended September 30, 2021, the Company recognized the $1.0 million non-refundable milestone payment within collaboration revenue in the statements of operations as there were no remaining performance obligations associated with the optioned compound.

5. Fair value measurements

ASC 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). ASC 820 identifies fair value as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tier fair value hierarchy that distinguishes between the following:

●

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities;

●

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and

●

Level 3 inputs are unobservable inputs that reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability. Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The carrying values reported in the Company’s balance sheets for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses are reasonable estimates of their fair values due to the short-term nature of these items.10

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~~Assets~~The ~~and~~carrying ~~liabilities~~values ~~measured~~reported atin ~~fair~~the ~~value~~Company’s onbalance asheets ~~recurring~~for ~~basis~~cash asand ofcash ~~September~~equivalents, 30restricted cash, ~~2022~~accounts receivable, accounts payable, and accrued expenses are asreasonable ~~follows~~estimates ~~(in~~of ~~thousands):~~their fair values due to the short-term nature of these items.


	September 30,
	2022		Level 1		Level 2		Level 3
Assets
Money market funds, included in cash and cash equivalents	$	65,991	$	65,991	$	—	$	—
Money market funds, included in restricted cash		179		179		—		—
Total Assets	$	66,170	$	66,170	$	—	$	—
Liabilities
Derivative liability, included in other long-term liabilities	$	10	$	—	$	—	$	10
Total Liabilities	$	10	$	—	$	—	$	10

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2023, are as follows (in thousands):


	March 31,
	2023		Level 1		Level 2		Level 3
Assets
Money market funds, included in cash and cash equivalents	$	42,071	$	42,071	$	—	$	—
Money market funds, included in restricted cash		179		179		—		—
Total Assets	$	42,250	$	42,250	$	—	$	—

Assets measured at fair value on a recurring basis as of December 31, ~~2021~~2022, are as follows (in thousands):


	December 31,
	~~2021~~2022		Level 1		Level 2		Level 3
Assets
Money market funds, included in cash and cash equivalents	$	~~103~~55,~~859~~686	$	~~103~~55,~~859~~686	$	—	$	—
Money market funds, included in restricted cash		~~197~~179		~~197~~179		—		—
Total Assets	$	~~104~~55,~~056~~865	$	~~104~~55,~~056~~865	$	—	$	—
Liabilities
Derivative liability, included in other long-term liabilities	$	331	$	—	$	—	$	331
Total Liabilities	$	331	$	—	$	—	$	331

65. Property and equipment, net

Property and equipment are as follows (in thousands):


	As of		As of
	~~September~~March 3031,		December 31,
	~~2022~~2023		~~2021~~2022
Office equipment and furniture		152		152
Laboratory equipment		~~401~~—		401
Leasehold improvements		979		979
Less accumulated depreciation		(1,~~496~~131)		(1,~~347~~500)
Property and equipment, net	$	36—	$	~~185~~32

Depreciation expense was less than $0.1 million ~~and $0.1 million~~ for each of the three months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021, respectively, and $0.1 million and $0.5 million for the nine months ended September 30,~~ 2022 ~~and 2021, respectively~~. The Company disposed of certain laboratory equipment ~~during the nine months ended September 30, 2021,~~ that were fully depreciated at the time of disposal.

76. Debt

On September 15, 2021, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with K2 HealthVentures LLC (the “Lender”). The Lender ~~has~~ agreed to make available to the Company term loans in an aggregate principal amount of up to $50.0 million under the Loan Agreement. The Company ~~plans~~planned to use the proceeds of the term loans to support clinical development as well as for working capital and general corporate purposes. The Loan Agreement ~~provides~~provided a term loan commitment of $50.0 million in four potential tranches: (i) a $15.0 million term loan facility funded on September 15, 2021 (the “First Tranche Term Loan”); (ii) a $10.0 million term loan facility (the “Second Tranche Term Loan”) funded on March 14, 2022; (iii) a $10.0 million term loan facility (the “Third Tranche Term Loan”) available at the Company’s option between July 1, 2022, and December 1, 2022, subject to the draw of the Second Tranche Term Loan and positive Phase 2 clinical data from NYX-2925 or NYX-458 and progression of another clinical asset; and (iv) a $15.0 million term loan facility (the “Fourth Tranche Term Loan”) available through July 1, 2023, at the Company’s option but subject to review of financial and clinical plans and Lender’s Investment Committee approval. All four of these term loans had a maturity date of September 1, 2025.

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~~clinical~~Borrowings ~~asset;~~under all four term loan facilities bore interest at a floating per annum rate equal to the greater of (i) 7.95% and (ivii) athe ~~$15~~Prime Rate plus 4.070%. ~~million~~The ~~term~~Company ~~loan~~was ~~facility~~permitted (to make interest-only payments on the ~~“Fourth~~First Tranche Term Loan”) ~~available~~for ~~through~~the ~~July~~first 1,24 ~~2023,~~months atfollowing the ~~Company’s~~funding ~~option~~date. ~~but~~The interest-only period could be extended by an additional 12 months, subject to ~~review~~the funding of ~~financial~~the ~~and~~Second ~~clinical~~Tranche ~~plans~~Term Loan and ~~Lender’s~~the ~~Investment~~funding ~~Committee~~of ~~approval~~the Third Tranche Term Loan. ~~All~~The ~~four~~term of ~~these~~the ~~term~~combined ~~loans~~facility would have abeen ~~maturity~~48 ~~date~~months, with repayment in monthly installments commencing at the end of ~~September~~the 1,resulting ~~2025~~interest-only period as outlined above through the end of the 48-month term.

~~Borrowings~~The ~~under~~Company ~~all~~was ~~four~~obligated ~~term~~to ~~loan~~pay ~~facilities~~a ~~bear~~final ~~interest~~fee atequal ato ~~floating~~6.45% ~~per~~of ~~annum~~the ~~rate~~aggregate ~~equal~~amount of the term loans funded (“Exit Fee”), to occur upon the ~~greater~~earliest of (i) ~~7.95%~~the ~~and~~maturity date, (ii) the ~~Prime~~acceleration ~~Rate~~of ~~plus~~the 4term loans, and (iii) the prepayment of the term loans.~~70%.~~ The Company ishad ~~permitted~~the option to ~~make~~prepay ~~interest-only~~all, ~~payments~~but onnot less than all, of the ~~First~~outstanding ~~Tranche~~principal ~~Term~~balance of the term loans under the Loan ~~for~~Agreement. If the ~~first~~Company 24prepaid ~~months~~all ~~following~~of the ~~funding~~term loans prior to the maturity date., ~~The~~it ~~interest-only~~would ~~period~~pay ~~can~~the beLender ~~extended~~a byprepayment anpenalty ~~additional~~fee 12based ~~months~~on a percentage of the outstanding principal balance, ~~subject~~equal to 3% if the ~~funding~~payment ofoccurred ~~the~~on ~~Second~~or ~~Tranche~~before ~~Term~~24 ~~Loan~~months ~~and~~after the initial funding ofdate, ~~the~~2% ~~Third~~if ~~Tranche~~the ~~Term~~prepayment ~~Loan.~~occurred ~~The~~more ~~term~~than of24 ~~the~~months ~~combined~~after, ~~facility~~but ~~will~~on beor 48before 36 months, ~~with~~after ~~repayment~~the ininitial ~~monthly~~funding ~~installments~~date, ~~commencing~~or at1% if the ~~end~~prepayment ofoccurred more than 36 months after the ~~resulting~~initial ~~interest-only~~funding ~~period~~date. asThe ~~outlined~~Company ~~above~~also ~~through~~is obligated to pay the ~~end~~Lender an origination fee of ~~the~~0.8% ~~48-month~~of all term loans funded at the time of funding.

The ~~Company~~Lender iscould, ~~obligated~~at toits ~~pay~~option, aelect ~~final fee equal~~ to ~~6.45%~~convert ofany ~~the~~portion ~~aggregate amount~~ of ~~the~~no ~~term~~more ~~loans~~than ~~funded~~$4 ~~(“Exit~~million ~~Fee”), to occur upon the earliest~~ of ~~(i)~~ the ~~maturity~~then ~~date,~~outstanding ~~(ii)~~term ~~the~~loan ~~acceleration~~amount ofand ~~the~~all ~~term~~accrued ~~loans,~~ and ~~(iii)~~unpaid ~~the~~interest ~~prepayment~~thereon into shares of the ~~term loans. The~~ Company’s ~~has~~common ~~the~~stock ~~option~~at toa ~~prepay~~conversion ~~all,~~price ~~but not less than all,~~ of the ~~outstanding~~lesser ~~principal balance~~ of ~~the~~$4.25 ~~term~~per ~~loans~~share ~~under~~and the ~~Loan~~price ~~Agreement.~~per Ifshare ~~the Company prepays all~~ of the ~~term~~common ~~loans~~stock ~~prior~~in to the ~~maturity~~Company’s ~~date,~~next itequity ~~will~~offering ~~pay~~in which the ~~Lender~~Company areceives ~~prepayment~~at ~~penalty~~least ~~fee~~$20.0 ~~based~~million ~~on a percentage~~ of ~~the~~gross ~~outstanding~~proceeds. ~~principal~~The ~~balance,~~Company ~~equal~~determined tothat ~~3% if~~ the ~~payment~~embedded ~~occurs~~conversion onoption oris ~~before~~not 24required ~~months~~to ~~after~~be ~~the~~separated ~~initial~~from ~~funding date, 2% if~~ the ~~prepayment~~term ~~occurs~~loan. ~~more~~The ~~than~~embedded 24conversion ~~months~~option ~~after,~~meets ~~but on or before 36 months after~~ the ~~initial~~derivative ~~funding~~accounting ~~date,~~scope orexception 1%since if the ~~prepayment~~embedded ~~occurs~~conversion ~~more~~option ~~than 36 months after the initial funding date. The Company also~~ is ~~obligated~~indexed to ~~pay~~ the ~~Lender~~Company’s anown ~~origination~~common ~~fee~~stock ofand ~~0.8%~~qualifies offor ~~all~~classification ~~term~~within ~~loans~~stockholders’ ~~funded at the time of funding~~equity.

The ~~Lender~~Company’s ~~may,~~obligations atunder ~~its~~the ~~option,~~Loan ~~elect~~Agreement towere ~~convert~~secured ~~any~~by ~~portion~~a offirst nopriority ~~more~~security ~~than~~interest $4in ~~million~~substantially all of ~~the~~its ~~then~~assets. ~~outstanding~~The ~~term~~Loan ~~loan~~Agreement ~~amount~~contained ~~and~~customary ~~all~~representations ~~accrued~~ and ~~unpaid~~warranties, ~~interest~~and ~~thereon~~also ~~into~~includes ~~shares~~customary events of ~~the~~default, ~~Company’s~~including ~~common~~payment ~~stock~~default, atbreach aof ~~conversion~~covenants, ~~price~~change of ~~the~~control, ~~lesser~~and ofmaterial $4adverse effects.25 ~~per~~The ~~share~~Loan ~~and~~Agreement ~~the~~restricted ~~price~~certain ~~per~~activities, ~~share~~such ofas ~~the~~disposing ~~common~~of ~~stock in~~ the Company’s ~~next~~business ~~equity~~or ~~offering~~certain inassets, ~~which~~incurring ~~the~~additional ~~Company~~debt ~~receives~~or atliens ~~least~~or ~~$20.0~~making ~~million~~payments ofon ~~gross~~other ~~proceeds.~~debt, ~~The~~making ~~Company~~certain ~~determined~~investments ~~that~~and ~~the~~declaring ~~embedded~~dividends, ~~conversion~~acquiring ~~option~~or ismerging ~~not~~with ~~required~~another toentity, beengaging ~~separated~~in ~~from~~transactions ~~the~~with ~~term~~affiliates ~~loan.~~or ~~The~~encumbering ~~embedded~~intellectual ~~conversion~~property, ~~option~~among ~~meets~~others. ~~the~~There ~~derivative~~were ~~accounting~~no ~~scope~~financial ~~exception~~covenants ~~since~~associated with the ~~embedded~~Loan ~~conversion~~Agreement. ~~option~~The isCompany ~~indexed~~was toin ~~the~~compliance ~~Company’s~~with ~~own~~all ~~common~~non-financial ~~stock~~covenants ~~and~~under ~~qualifies~~the ~~for~~Loan ~~classification~~Agreement ~~within~~as ~~stockholders’~~of ~~equity~~March 31, 2023.

~~The~~Upon ~~Company’s obligations under~~ the ~~Loan~~occurrence ~~Agreement are secured by a first priority security interest in substantially all~~ of ~~its~~an ~~assets.~~event ~~The Loan Agreement contains customary representations and warranties, and also includes customary events~~ of default, ~~including~~a ~~payment~~ default, ~~breach~~interest ofrate ~~covenants, change~~ of ~~control,~~an ~~and~~additional ~~material~~5% ~~adverse~~per ~~effects.~~annum ~~The~~could ~~Loan~~have ~~Agreement~~been ~~restricts~~applied ~~certain~~to ~~activities, such as disposing of~~ the ~~Company’s~~outstanding ~~business~~loan ~~or certain assets~~balances, ~~incurring~~and ~~additional~~the ~~debt~~Lender ormay ~~liens~~declare orall ~~making~~outstanding ~~payments~~obligations onimmediately ~~other~~due ~~debt,~~and ~~making~~payable ~~certain investments~~ and ~~declaring~~exercise ~~dividends,~~all ~~acquiring~~of orits ~~merging~~rights ~~with~~and ~~another~~remedies ~~entity,~~as ~~engaging~~set forth in ~~transactions with affiliates or encumbering intellectual property, among others. There are no financial covenants associated with~~ the Loan Agreement. ~~The~~and ~~Company was in compliance with all non-financial covenants~~ under ~~the~~applicable ~~Loan Agreement as of September 30, 2022~~law.

~~Upon~~On ~~the~~April ~~occurrence~~21, ~~of an event of default~~2023, athe ~~default~~Company ~~interest~~completed ~~rate~~voluntary ofprepayment anunder ~~additional 5% per annum may be applied to~~ the ~~outstanding~~Loan ~~loan balances~~Agreement, and the ~~Lender~~Loan ~~may~~Agreement ~~declare~~and all ~~outstanding~~other ~~obligations~~documents ~~immediately~~entered ~~due~~into ~~and~~in ~~payable~~connection ~~and~~with ~~exercise~~the ~~all~~Loan ofAgreement ~~its~~were ~~rights~~terminated, ~~and remedies~~ as ~~set~~described ~~forth~~ in ~~the~~Note ~~Loan Agreement and under applicable law~~12.

The Company recorded interest expense related to the Loan Agreement of $01.90 million ~~for the three months ended September 30, 2022,~~ and $20.15 million for the ~~nine~~three months ended ~~September~~March 3031, 2023 and 2022, respectively.

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Future principal debt payments of the term loans funded as of ~~September~~March 3031, ~~2022~~2023, are as follows (in thousands):



2023	$	2,~~828~~782
2024		12,~~112~~048
2025		10,~~060~~170
2026		—
Total principal payments		25,000
Exit Fee		1,613
Total principal payments and Exit Fee		26,613
Less: Unamortized debt discount related to warrants		(~~378~~300)
Less: Unamortized debt discount related to Exit Fee		(~~1,201~~954)
Less: Unamortized debt issuance costs		(~~325~~261)
Term loan, non-current	$	24,709
Term loan, net		25,098
Less: current portion of term loan		(5,654)
Term loan, non-current	$	19,444

87. Stock incentive plans

On June 5, 2018, the Company’s stockholders approved the 2018 Stock Option and Incentive Plan (the “2018 Plan”), which became effective on June 20, 2018.

Stock-based compensation expense

Non-cash stock-based compensation expense recognized in the accompanying condensed statements of operations relating to stock options, restricted stock awards, and restricted stock units for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022, was as follows (in thousands):

Three months ended

~~Nine months ended~~

~~September~~March 3031,

~~September 30,~~

~~2022~~2023

~~2021~~2022

~~2022~~

~~2021~~

Research and development

~~277~~165

~~634~~375

~~1,096~~

~~2,047~~

General and administrative

~~1,719~~872

1,~~628~~975

~~5,531~~

~~5,348~~

Total stock‑based compensation expense

1,~~996~~037

2,~~262~~350

~~6,627~~

~~7,395~~

Stock options

The table below summarizes activity related to stock options (in thousands, except per share amounts):


				Weighted‑
		Weighted‑		average
		average		remaining	Aggregate
		exercise		contractual	intrinsic
Options	Shares	price		term	value
Outstanding, December 31, 2021	10,713	$	5.36	8.07	$	718
Outstanding, December 31, 2022	11,836	$	4.96	7.31	$	—
Granted	2,~~307~~533		20.9636
Exercised	—		—
Forfeited and canceled	(1,~~099~~061)		32.9409
Outstanding, September 30, 2022	11,921	$	5.03	7.52	$	—
Outstanding, March 31, 2023	13,308	$	4.31	7.10	$	—
Vested and expected to vest at September 30, 2022	11,921	$	5.03	7.52	$	—
Vested and expected to vest at March 31, 2023	13,308	$	4.31	7.10	$	—
Exercisable at September 30, 2022	6,541	$	6.61	6.45	$	—
Exercisable at March 31, 2023	8,002	$	5.87	5.90	$	—

During the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022, the Company granted 2.35 million and 31.27 million stock options, respectively, and these options had a weighted-average grant-date fair value of $20.2629 and $2.7174 per share, respectively. The weighted-average grant-date fair value of options was determined using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model for options granted during the nine months ended September 30, 2022, were similar to those as described in the Annual Report, except for the manner in

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respectively. The weighted-average grant-date fair value of options was determined using the Black-Scholes option-pricing model. The assumptions used in the Black-Scholes option-pricing model for options granted during the three months ended March 31, 2023, were similar to those as described in the Annual Report, except for the manner in which the expected volatility was determined. The expected volatility for the Company’s options granted during the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, is based on a weighted-average of the historical volatility of share values of publicly traded companies within the biotechnology industry, which includes the historical volatility of the Company’s stock since the Company’s initial public offering. As of ~~September~~March 3031, ~~2022~~2023, there was $117.37 million of total unrecognized stock-based compensation expense related to non-vested stock options, which is expected to be recognized over a weighted-average period of 2.63 years. The options have a ten-year life and generally vest over a period of four years, subject to continuous employment.

Restricted stock units

In June 2020, the Company issued an aggregate of 205,200 restricted stock units to employees. The restricted stock units issued in 2020 vested ten months from the date of grant. Such shares were not accounted for as outstanding until they vested. Non-cash restricted stock unit award expense recognized in the accompanying condensed statements of operations was $0.0 million and $0.0 million for the three months ended September 30, 2022 and 2021, respectively, and $0.0 million and $0.8 ~~million for the nine months ended September 30, 2022 and 2021, respectively~~. ~~There were no unvested restricted stock units as of September 30, 2022.~~ Warrants

9. Warrants and derivative liability

Warrants

On September 15, 2021, the Company entered into the Loan Agreement with the Lender pursuant to which the Lender may provide the Company with term loans in an aggregate principal amount of up to $50.0 million.

On September 15, 2021, in connection with the funding of the First Tranche Term Loan, the Company issued a warrant exercisable for 147,600 shares of the Company’s common stock at an exercise price of $2.29 per share. The warrant is immediately exercisable for 147,600 shares and expires on September 15, 2031.

On March 14, 2022, in connection with the funding of the Second Tranche Term Loan, the Company issued a warrant exercisable for 98,399 shares of the Company’s common stock at an exercise price of $2.29 per share. The warrant is immediately exercisable for 98,399 shares and expires on September 15, 2031.

No warrants had been exercised as of ~~September~~March 3031, ~~2022~~2023. Any shares of the Company’s common stock issued upon exercise of the warrants are permitted to be settled in unregistered shares. The warrants are classified as equity as they meet all of the conditions under GAAP for equity classification. The Company has calculated the fair value of the warrants for initial measurement and date of funding of the Second Tranche Term Loan, and reassesses whether equity classification for the warrants is appropriate upon any changes to the warrants or capital structure, at each balance sheet date.

The Company determined that the fair value of the warrants issued in connection with the First Tranche Term Loan and Second Tranche Term Loan was $0.3 million and $0.2 million, respectively. The specific assumptions used to determine the initial measurement of fair value of the warrants were as follows:


	First Tranche		Second Tranche
	Term Loan		Term Loan

Expected volatility	95	%	93	%
Expected dividends	None		None
Expected term	5.00 Years		5.00 Years
Risk-free rate	0.81	%	2.10	%

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Derivative Liability

The Additional Warrants’ (as defined below) derivative liability will be remeasured each reporting period until settled or extinguished with subsequent changes in fair value recorded through other income (expense), net in the condensed statements of operations. The fair value of the Additional Warrants derivative liability was determined using a Black-Scholes option pricing model based on the same input assumptions above, with an additional assessment required for the probability that the Additional Tranche Term Loans will be funded which would trigger the issuance of the Additional Warrants.

The Company is conditionally obligated to issue a fixed number of additional warrants (“Additional Warrants”) in the amount of 344,398 shares of the Company’s common stock upon the funding of the Second, Third and Fourth Tranche Term Loans with the same exercise price and contractual term. The contingent obligation to issue the Additional Warrants did not meet the derivative scope exception or equity classification criteria and were accounted for as a derivative liability. The contingently issuable Additional Warrants derivative liability had an initial fair value of $0.3 million and was recorded as additional debt discount and as a separate derivative liability within other long-term liabilities in the condensed balance sheet. 14

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9. Net loss per share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows for the three months ended March 31, 2023 and 2022 (in thousands, except per share data):


	Three months ended
	March 31,
	2023		2022
Numerator:
Net loss attributable to common stockholders	$	(21,066)	$	(19,827)
Denominator:
Weighted-average common shares outstanding—basic and diluted		67,716		67,716
Net loss per share attributable to common stockholders—basic and diluted	$	(0.31)	$	(0.29)

AsThe afollowing ~~result~~common ofstock ~~the~~equivalents ~~funding~~outstanding as of ~~the~~March ~~Second~~31, ~~Tranche~~2023 ~~Term~~and ~~Loan~~2022, ~~the~~were ~~Company~~excluded ~~issued~~from athe ~~warrant~~computation ~~exercisable for 98,399 shares~~ of ~~the~~diluted ~~Company’s~~net ~~common~~loss ~~stock at $2.29~~ per share. ~~Upon~~attributable ~~issuing~~to ~~the~~common ~~warrants,~~stockholders ~~the~~for ~~Company reclassified~~ the ~~related~~periods ~~portion~~presented ofbecause ~~its~~including ~~Additional~~them ~~Warrants~~would ~~derivative~~have ~~liability~~been ~~into~~anti-dilutive ~~equity. The remaining Additional Warrant Liability that remains outstanding was remeasured as of period end. The Company recorded a $0.1 million loss on change in fair value through other~~ (~~income) expense, net~~ in ~~the condensed statement of operations.~~thousands):


	As of
	March 31,
	2023	2022
Stock options issued and outstanding	13,308	12,428
Warrants	246	246
Total	13,554	12,674

The following table provides a reconciliation of the beginning and ending balances for the Company’s Additional Warrants derivative liability recognized in connection with the term loan measured at fair value using significant unobservable inputs (Level 3):


	Additional
	Warrants
Balance at December 31, 2021	$	331
Fair value of Additional Warrant Derivative Liability issued during the period		—
Change in fair value		(115)
Derecognition		(206)
Balance at September 30, 2022	$	10

~~The~~10. Income ~~specific assumptions used to determine the fair value of the warrants as of September 30, 2022, and December 31, 2021 were as follows:~~taxes

Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are provided if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, including its net operating losses. Based on its history of operating losses, the Company believes that it is more likely than not that the benefit of its deferred tax assets will not be realized. Accordingly, the Company has provided a full valuation allowance for deferred tax assets as of March 31, 2023, and December 31, 2022.


	September 30,		December 31,
	2022		2021

Expected volatility	98	%	95	%
Expected dividends	None		None
Expected term	5.00 Years		5.00 Years
Risk-free rate	4.06	%	1.26	%

11. Commitments and contingencies

Contingencies

From time to time, the Company may be subject to occasional lawsuits, investigations, and claims arising out of the normal conduct of business. The Company has no significant pending or threatened litigation as of March 31, 2023.

Indemnifications

In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. Further, the Company indemnifies its directors and officers who are, or were, serving at the Company’s request in such capacities. The Company’s maximum exposure under these arrangements is unknown as of March 31, 2023. The Company does not anticipate recognizing any significant losses relating to these arrangements.

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Operating Leases

The Company enters into various non-cancelable, operating lease agreements for its facilities and equipment in order to conduct its operations. The Company expenses rent on a straight-line basis over the life of the lease and has recorded the related right of use lease asset and lease liability on the Company’s balance sheets.

In 2021, the Company entered into an agreement with a contract manufacturing organization for manufacturing of materials for research and development purposes, including manufacturing of clinical trial materials. This agreement is valid for a period of five years, unless terminated earlier by the Company. The Company has determined that the agreement includes an embedded lease. There are no contractual minimum purchase obligations associated with this agreement. All payments associated with this agreement are variable.

Total rent expense under all the operating lease agreements amounted to $0.3 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively.

Finance lease

On January 1, 2023, a clinical supply manufacturing agreement commenced with a minimum order commitment of $2.6 million and a minimum lease term of two years.

12. Restructuring and impairment charges

Employee termination benefits

Employees affected by the reduction in workforce (footnote 1) received involuntary termination benefits that provided a one-time benefit arrangement and have no requirements to provide future service. Costs associated with the reduction in workforce amounted to $1.4 million for the three months ended March 31, 2023 of which $1.3 million were recognized within research and development and $0.1 million were recognized within general and administrative in the condensed statement of operations.

Impairment of long-lived clinical supply manufacturing prepayments

The Company determined that its inability to advance its development programs indicated impairment on its clinical supply manufacturing prepayments and right of use assets in the amount of $8.2 million for the three months ended March 31, 2023, and recognized within research and development in the condensed statement of operations.

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10. Net loss per share

Basic and diluted net loss per share attributable to common stockholders was calculated as follows for the three and nine months ended September 30, 2022 and 2021 (in thousands, except per share data):


	Three months ended				Nine months ended
	September 30,				September 30,
	2022		2021		2022		2021
Numerator:
Net loss attributable to common stockholders	$	(15,303)	$	(21,231)	$	(52,797)	$	(55,276)
Denominator:
Weighted-average common shares outstanding—basic and diluted		67,716		67,716		67,716		67,053
Net loss per share attributable to common stockholders—basic and diluted	$	(0.23)	$	(0.31)	$	(0.78)	$	(0.82)

~~The~~13. Subsequent following common stock equivalents outstanding as of September 30, 2022 and 2021, were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive (in thousands):events


	As of
	September 30,
	2022	2021
Stock options issued and outstanding	11,921	9,392
Warrants	246	148
Total	12,167	9,540

Debt prepayment

On April 21, 2023, the Company completed voluntary prepayment of all outstanding principal, accrued and unpaid interest, fees, costs and expenses, equal to $27.5 million in the aggregate under the Loan and Security Agreement dated as of September 15, 2021. Upon receipt by the Lender, all obligations, covenants, debts and liabilities of the Company under the Loan Agreement were satisfied and discharged in full, and the Loan Agreement and all other documents entered into in connection with the Loan Agreement were terminated.

~~11. Income~~Dissolution ~~taxes~~

On May 4, 2023, following the conclusion of the Company's review of strategic alternatives, the Company's Board of Directors unanimously approved the dissolution and liquidation of the Company pursuant to a plan of complete liquidation and dissolution, which plan is subject to stockholder approval.

~~12. Commitments and contingencies~~16

Contingencies

Indemnifications

In the normal course of business, the Company enters into contracts that contain a variety of indemnifications with its employees, licensors, suppliers and service providers. Further, the Company indemnifies its directors and officers who are, or were, serving at the Company’s request in such capacities. The Company’s maximum exposure under these arrangements is unknown as of September 30, 2022. The Company does not anticipate recognizing any significant losses relating to these arrangements.

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Leases

The Company enters into various non-cancelable, operating lease agreements for its facilities and equipment in order to conduct its operations. The Company expenses rent on a straight-line basis over the life of the lease and has recorded deferred rent on the Company’s balance sheets within both accrued expenses and other current liabilities and other long-term liabilities.

Total rent expense, inclusive of lease incentives, under all the operating lease agreements amounted to $0.2 million for each of the three months ended September 30, 2022 and 2021, and $0.7 million and $0.6 million for the nine months ended September 30, 2022 and 2021.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our condensed financial statements and accompanying footnotes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited financial statements and related footnotes included in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022, or Annual Report, filed with the Securities and Exchange Commission, or the SEC, on March 2330, ~~2022~~2023.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Because of many factors, including those factors set forth in the “Risk Factors” section of our Annual Report, and ~~Form 10-Q for the quarter ended June 30, 2022 and~~ in section Part II, Item 1A of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Overview

WeUntil ~~are~~recently, we were a clinical-stage biopharmaceutical company focused on the discovery, development, and commercialization of novel, proprietary, synthetic small molecules for the treatment of nervous system disorders. We ~~focus~~had focused our efforts on targeting and modulating N-methyl-D-aspartate receptors, or NMDArs, which are vital to normal and effective function of the brain and nervous system. We believe leveraging the therapeutic advantages of the differentiated modulatory mechanism of our compounds will drive a paradigm shift in the treatment of disorders of the brain and nervous system. We are advancing a pipeline of distinct product candidates derived from our NMDAr modulator discovery platform, or the discovery platform. The following table summarizes the current status of our development programs as of the date of this quarterly report.

19In February 2023, we discontinued the development of our product candidate, NYX-458, in cognitive impairment associated with Parkinson’s disease and dementia with Lewy bodies, following results from an exploratory Phase 2 clinical study in which NYX-458 did not demonstrate clinically meaningful improvements over placebo on the study’s efficacy endpoints. Subsequently, we implemented a strategic restructuring plan to preserve capital and reduce operating costs. We also began exploration of strategic alternatives to maximize shareholder value and engaged Ladenburg Thalmann & Co. as our exclusive financial advisor to assist in that process. As part of the restructuring plan, we eliminated approximately 60% of our workforce and took other actions, including early termination of our then-ongoing Phase 2b study of our product candidate, NYX-783, in post-traumatic stress disorder, or PTSD, to analyze the data to date. In March 2023, we discontinued the development of NYX-783 in PTSD following an analysis of the available data that indicated NYX-783 did not demonstrate sufficient improvements on the study’s primary endpoint to support continued development of the program by the Company.

On May 4, 2023, following the completion of our review of strategic alternatives, our board of directors unanimously approved a plan of liquidation and dissolution of the Company, which plan is subject to stockholder approval.

In light of our planned dissolution, on May 10, 2023, we received written notice from The Nasdaq Stock Market LLC (“Nasdaq”) that, based upon the Staff’s determination that the Company is a “public shell” as that term is defined in Nasdaq Listing Rule 5101, and the Company’s non-compliance with certain board and committee composition listing requirements, the Company would be delisted at the opening of business on May 19, 2023 unless the Company timely requests a hearing before a Nasdaq Hearings Panel to address the deficiencies and present a plan to regain compliance. The Company does not plan to request a hearing, and expects that trading in the Company's stock will be suspended upon the opening of business on May 19, 2023. Thereafter, Nasdaq will file a Form 25-NSE with the SEC to formally delist the Company's stock. Nasdaq has not specified the exact date on which the Form 25-NSE will be filed.

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NYX-783 is in Phase 2b clinical development for the treatment of post-traumatic stress disorder, or PTSD. We are currently enrolling a Phase 2b study evaluating the efficacy and safety of a 50 mg dose of NYX-783 in approximately 300 patients with PTSD. In June 2022, the U.S. Food and Drug Administration indicated our Investigational New Drug application to evaluate NYX-783 in opioid use disorder, or OUD, was cleared to proceed. Preclinical research and expected clinical development of NYX-783 in OUD is funded by a $5.6 million grant under the National Institutes of Health Helping to End Addiction Long-term, or HEAL, Initiative, administered by the National Institute on Drug Abuse (NIDA) and awarded to researchers at Yale University School of Medicine, who are conducting the studies.

NYX-458 is in clinical development for the treatment of cognitive impairment associated with neurodegenerative conditions. On August 25, 2022, we announced the completion of enrollment of 99 patients in our ongoing Phase 2 study of NYX-458 in cognitive impairment associated with Parkinson’s disease and dementia with Lewy bodies.

NYX-2925 is our product candidate previously in clinical development for the treatment of fibromyalgia. On August 12, 2022, we announced that statistically significant separation from placebo was not observed on the primary endpoint of a Phase 2b study of NYX-2925 in fibromyalgia patients. Patients receiving NYX-2925 showed a trend toward clinically meaningful improvement in pain, as well as in some secondary endpoints, versus placebo by week 4. However, by week 12, the placebo group had improved such that, although NYX-2925 remained numerically better, the separation was not clinically meaningful. Going forward, we will focus our existing resources on our other ongoing clinical development programs and will not be allocating additional resources to the development of NYX-2925.

The COVID-19 pandemic has and could further adversely impact our clinical and/or preclinical studies, as well as our business operations. We continue to evaluate the impact of the COVID-19 pandemic on patients and our employees, as well as our operations and the operations of our business partners and healthcare communities. In response to the COVID-19 pandemic, we have implemented policies to mitigate the risk of exposure to COVID-19 by our personnel, including a work-from-home policy applicable to the majority of our personnel and a phased approach to bringing personnel back to our locations over time. However, the ultimate impact of the COVID-19 pandemic on our business operations is highly uncertain and subject to change and will depend on future developments which are difficult to predict.

Since our inception in June 2015, we have never generated revenue from the sale of our products and have incurred significant net losses. Our nominal revenues have been primarily derived from a research collaboration agreement with Allergan plc, or Allergan, a development services agreement with Allergan, and research and development grants from the U.S. government. While these revenues offset a small portion of the costs associated with our early-stage research and discovery efforts, we do not rely on these revenues to fund our operations. In connection with the contractual

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conclusion of our research collaboration with Allergan in February 2021, we do not expect to receive further revenues from this collaboration.

From our inception through September 30, 2022, we have raised an aggregate of $135.0 million of gross proceeds from sales of our convertible preferred stock, $117.8 million of gross proceeds from our initial public offering, or IPO, $104.4 million of gross proceeds from our follow-on public offerings and our “at the market” offering program, or the ATM Offering, and $25.0 million of gross proceeds from our Loan Agreement. See “Liquidity and capital resources.” Our net losses were $74.9 million and $50.1 million for the years ended December 31, 2021 and 2020, respectively, and $52.8 million and $55.3 million for the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, we had an accumulated deficit of $340.7 million. Our net losses may fluctuate significantly from quarter to quarter and year to year. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will continue to increase in connection with our ongoing activities.

We believe that our available funds will be sufficient to fund our operations for at least the next twelve months. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. We do not expect to generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a product candidate, which we expect will take a number of years and the outcome of which is uncertain, or enter into collaborative agreements with third parties, the timing of which is largely beyond our control and may never occur. To fund our current and future operating plans, we will need additional capital, which we may obtain through one or more equity offerings, debt financings, or other third-party funding, including potential strategic alliances and licensing or collaboration arrangements. We may, however, be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all, including as a result of COVID-19. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop our current product candidates, or any additional product candidates, if developed. The amount and timing of our future funding requirements will depend on many factors, including the impacts of COVID-19, our ability to timely and successfully enroll subjects in our clinical studies, and the pace and results of our preclinical and clinical development efforts. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Financial operations overview

Revenues

We have not generated any revenue from product sales. We are unable to predict when, if ever, material net cash inflows will commence from sales of our products, if approved. Our revenue to date has been primarily derived from a research collaboration agreement with Allergan (now a subsidiary of AbbVie), under which the jointly funded research activities and option exercise period, including the associated payments by Allergan, came to their contractual conclusion in August 2020 and February 2021, respectively; a development services agreement with Allergan, which was put in place to continue certain development activities for a pre-determined period of time following Allergan's acquisition of Naurex Inc.; and research and development grants from the U.S. government that have no repayment or royalty obligations and none of which are currently outstanding.

Operating expenses

Research and development expenses

Research and development activities account for a significant portion of our operating expenses. We expense research and development costs as incurred. Research and development expenses consist of costs incurred in connection with the development of our product candidates, including:

●

fees paid to consultants, sponsored researchers, contract manufacturing organizations, or CMOs, and contract research organizations, or CROs, including in connection with our preclinical and clinical studies, and other related clinical study fees, such as for investigator grants, patient screening, laboratory work, clinical study database management, and statistical compilation and analysis;

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●

costs related to acquiring and maintaining preclinical and clinical study materials and facilities;

●

costs related to compliance with regulatory requirements; and

●

costs related to salaries, bonuses, and other compensation, including stock-based compensation, for employees in research and development functions.

At this time, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the development of our product candidates. This is due to the numerous risks and uncertainties associated with developing such product candidates, including the uncertainty related to:

● the impacts of COVID-19 and future health epidemics;

● future clinical study results;

● the scope, rate of progress, and expense of our ongoing as well as any additional preclinical studies, clinical studies and other research and development activities;

● clinical study enrollment rate or design;

● the manufacturing of our product candidates;

● our ability to obtain and maintain intellectual property protection for our product candidates;

● our ability to obtain funding for our operations, including funding necessary to complete further development and commercialization of our product candidates;

● significant and changing government regulation;

● establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers, developing and timely delivery of commercial-grade drug formulations that can be used in our clinical trials and for commercial launch;

● the timing and receipt of regulatory approvals, if any; and

● the risks disclosed in the section entitled “Risk Factors” of our Annual Report, and Form 10-Q for the quarter ended June 30, 2022.

A change in the outcome of any of these variables with respect to the development of any of our product candidates could significantly change the costs, timing, and viability associated with the development of that product candidate.

We expect our research and development expenses to increase over the next several years as we continue to implement our business strategy, which includes advancing our product candidates into and through clinical development, expanding our research and development efforts, seeking regulatory approvals for any product candidates for which we successfully complete clinical studies, accessing and developing additional product candidates, and hiring additional personnel to support our research and development efforts. In addition, product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical studies. As such, we expect our research and development expenses to increase as our product candidates advance into later stages of clinical development.

General and administrative expenses

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation. General and administrative expenses also include rent as well as professional fees for legal, consulting, accounting, and audit services.

InRestructuring ~~the future, we expect that our general~~ and ~~administrative~~Impairment ~~expenses will increase as we continue to support our research and development and the potential commercialization of our product candidates, if approved.~~ Charges

During the three months ended March 31, 2023, we undertook certain operational and organizational steps in connection with a strategic reorganization plan and strategic alternatives, along with related cost-saving measures that we initiated in the quarter. These measures included discontinuing the ongoing clinical trials of NYX-783 for the treatment of PTSD, NYX-458 for the treatment of Parkinson’s disease and dementia with Lewy bodies and reducing our overall workforce.

Other (income) expense, net, and interest expense

Other (income) expense, net and interest expense consists primarily of the interest income earned on our cash and cash equivalents and interest expense on our Loan Agreement~~, and includes changes in fair value of the derivative liability associated with our obligation to issue additional warrants in connection with subsequent draws under our Loan Agreement~~.

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Results of operations

Comparison of the three months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022

The following table summarizes our results of operations for the three months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022 (in thousands):


	~~Three months~~Year
	ended ~~September~~March 3031,				Increase
	~~2022~~2023		~~2021~~2022		(Decrease)
Operating expenses:
Research and development	$	1016,~~008~~093	$	1613,~~278~~602	$	(62,~~270)~~491
General and administrative		4,~~649~~229		45,~~928~~777		(~~279~~1,548)
Total operating expenses		1420,~~657~~322		2119,~~206~~379		~~(6,549)~~943
Loss from operations		(1420,~~657~~322)		(2119,~~206~~379)		~~(6,549)~~943
Other (income) expense, net		(~~208~~286)		(4729)		~~(161)~~257
Interest expense		~~854~~1,030		72477		~~782~~553
Net loss and comprehensive loss	$	(1521,~~303~~066)	$	(2119,~~231~~827)	$	(51,~~928)~~239

Research and development expenses

The following table summarizes our research and development expenses incurred during the three months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022 (in thousands):


	~~Three months~~Year
	ended ~~September~~March 3031,				Increase
	~~2022~~2023		~~2021~~2022		(Decrease)
NYX-2925	$	~~2,674~~472	$	84,~~946~~529	$	(64,~~272~~057)
NYX-783		23,~~815~~126		14,~~524~~551		(1,~~291~~425)
NYX-458		21,~~271~~197		21,~~493~~460		(~~222~~263)
Preclinical research and discovery programs		547		815		(268)
Impairment charges		8,199		—		8,199
Personnel and related costs		1,701		2,500		(799)
Preclinical research and discovery programs		444		860		(416)
Total research and development expenses	$	10,008	$	16,278	$	(6,270)
Personnel and related costs		2,655		2,202		453
Total research and development expenses	$	16,093	$	13,602	$	2,491

Research and development expenses were $1016.01 million for the three months ended ~~September~~March 3031, ~~2022~~2023, compared to $1613.36 million for the three months ended ~~September~~March 3031, ~~2021~~2022. The net ~~decrease~~increase of approximately $62.35 million was primarily due to the following:

● a decrease of approximately $64.31 million ~~related to the completion of enrollment~~ in ~~our Phase 2b~~ clinical, ~~studies~~regulatory, ofand ~~NYX-2925~~drug inproduct ~~patients~~costs ~~with~~related ~~painful~~to ~~DPN~~the ~~and~~completion inof ~~patients~~Phase ~~with~~2 ~~fibromyalgia~~studies in ~~October 2021 and February 2022, respectively~~NYX-2925;

● a decrease of approximately $0.83 million ~~due~~in toclinical, ~~employee~~regulatory, ~~compensation~~ and ~~related~~drug ~~support~~product costs ~~associated~~related ~~with~~to ~~reduction~~the inconduct ~~headcount~~of ~~and~~Phase ~~lower~~2 ~~grant~~study ~~date~~of ~~fair~~NYX-458 ~~market~~in ~~values~~Parkinson’s ~~for~~disease ~~equity~~and ~~awards~~dementia with Lewy bodies; and

● a decrease of approximately $01.24 million in clinical, regulatory, and drug product costs related to the ~~completion~~conduct of ~~enrollment in our~~ Phase 22b study of NYX-~~458~~783 in ~~patients with cognitive impairment associated with Parkinson’s disease and dementia with Lewy bodies~~PTSD; offset ~~in part~~ by

● anand increase of approximately $18.32 million ~~in clinical, regulatory, and drug product costs~~ related to ~~the~~impairment ~~conduct~~charges ofassociated ~~Phase~~with 2bour ~~development~~clinical ofsupply ~~NYX-783 in patients with PTSD~~agreements.

General and administrative expense

General and administrative expenses were $4.62 million and $45.98 million for the three months ended ~~September~~March 3031, ~~2022,~~2023 and ~~September~~March 3031, ~~2021~~2022, respectively.

2319

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Other (income) expense, net

We recorded $0.23 million of other income for the three months ended ~~September~~March 3031, ~~2022~~2023, compared to less than $0.1 million of other income for the three months ended ~~September~~March 3031, ~~2021~~2022. This was primarily driven by a change in fair value of the derivative liability.

Interest expense

Interest expense was $01.90 million for the three months ended ~~September~~March 3031, ~~2022~~2023, compared to $0.15 million for the three months ended ~~September~~March 3031, ~~2021~~2022. This was driven by interest expense associated with our Loan Agreement and our finance lease.

Comparison of the nine months ended September 30, 2022 and 2021

The following table summarizes our results of operations for the nine months ended September 30, 2022 and 2021 (in thousands):


	Nine months
	ended September 30,				Increase
	2022		2021		(Decrease)
Collaboration revenue	$	—	$	1,000	$	(1,000)
Operating expenses:
Research and development		35,519		41,388		(5,869)
General and administrative		15,622		14,974		648
Total operating expenses		51,141		56,362		(5,221)
Loss from operations		(51,141)		(55,362)		(4,221)
Other (income) expense, net		(432)		(158)		(274)
Interest expense		2,088		72		2,016
Net loss and comprehensive loss	$	(52,797)	$	(55,276)	$	(2,479)

Collaboration revenue

Collaboration revenue was $0.0 million and $1.0 million for the nine months ended September 30, 2022 and 2021, respectively, and was attributable to the research collaboration with Allergan. The payments by Allergan associated with the jointly funded research activities and option exercise period under the research collaboration came to their contractual conclusion in August 2020 and February 2021, respectively.

Research and development expenses

The following table summarizes our research and development expenses incurred during the nine months ended September 30, 2022 and 2021 (in thousands):


	Nine months
	ended September 30,				Increase
	2022		2021		(Decrease)
NYX-2925	$	9,560	$	24,973	$	(15,413)
NYX-783		11,520		2,692		8,828
NYX-458		5,654		4,181		1,473
Preclinical research and discovery programs		2,555		2,158		397
Personnel and related costs		6,230		7,384		(1,154)
Total research and development expenses	$	35,519	$	41,388	$	(5,869)

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Research and development expenses were $35.5 million for the nine months ended September 30, 2022, compared to $41.4 million for the nine months ended September 30, 2021. The net decrease of approximately $5.9 million was primarily due to the following:

● a decrease of approximately $15.4 million related to the completion of enrollment in our Phase 2b clinical studies of NYX-2925 in patients with painful DPN and in patients with fibromyalgia in October 2021 and February 2022, respectively;

● a decrease of approximately $1.2 million due to employee compensation and related support costs associated with reduction in headcount and lower grant date fair market values for equity awards; offset by

● an increase of approximately $8.8 million in clinical, regulatory, and drug product costs related to Phase 2b development of NYX-783 in patients with PTSD; and

● an increase of approximately $1.5 million related to enrollment in our Phase 2 study of NYX-458 in patients with cognitive impairment associated with Parkinson’s disease and dementia with Lewy bodies, which had been temporarily suspended from March 2020 to April 2021 due to challenges associated with the COVID-19 pandemic.

General and administrative expenses

General and administrative expenses were $15.6 million for the nine months ended September 30, 2022, compared to $15.0 million for the nine months ended September 30, 2021.

Other (income) expense, net

We recorded $0.4 million of other income for the nine months ended September 30, 2022, compared to $0.2 million of other income for the nine months ended September 30, 2021. This was primarily driven by a change in fair value of the derivative liability.

Interest expense

Interest expense was $2.0 million for the nine months ended September 30, 2022, compared to $0.1 million for the nine months ended September 30, 2021. This was driven by interest expense associated with our Loan Agreement.

Liquidity and capital resources

From our inception through ~~September~~March 3031, ~~2022~~2023, we have incurred significant operating losses and have funded our operations to date through proceeds from collaborations, grants, sales of convertible preferred stock, IPO and follow-on public offerings, our ATM Offerings, and our debt financing. We have generated limited revenue to date from a research collaboration agreement with Allergan, a development services agreement with Allergan, and research and development grants from the U.S. government. The jointly funded research activities and option exercise period under the research collaboration agreement with Allergan, as well as associated payments by Allergan to us, came to their contractual conclusion in August 2020 and February 2021, respectively. We expect to continue to generate operating losses and negative operating cash flows for the foreseeable future, including through the execution of the Plan of Dissolution if approved by our stockholders.

On March 24, 2022, we entered into an amendment to the 2021 Sales Agreement (the “2022 Sales Agreement”) with Cowen pursuant to which the Company may offer and sell shares of its common stock with an aggregate offering price of up to $75.0 million under an “at the market” offering program (the “2022 ATM Offering”) and which supersedes the 2021 Sales Agreement and 2021 ATM Offering. The 2022 Sales Agreement provides that Cowen will be entitled to a sales commission equal to 3.0% of the gross sales price per share of all shares sold under the 2022 ATM Offering. To date, no shares of common stock have been issued and sold pursuant to the 2022 Sales Agreement.

On September 15, 2021, we entered into a loan and security agreement with K2 HealthVentures LLC (the “Loan Agreement”). The Loan Agreement ~~provides~~provided up to $50.0 million principal in term loans, $15.0 million of which was funded at the time we entered into the agreement and $10.0 million of which was funded on March 14, 2022. Interest on the outstanding loan balance ~~will~~accrued ~~accrue~~ at a variable rate equal to the greater of (i) 7.95% and (ii) the prime rate as published in the Wall Street Journal plus 4.70%. We ~~are~~were required to make monthly interest-only payments through September 2023. If we drew the third tranche, the interest-only period would have been extended through October 2024. Subsequent to the interest-only period, we were required to make equal monthly principal payments plus any accrued interest until the loans mature in September 2025. Upon final payment or prepayment of the loans, we were required to pay a final payment equal to 6.45% of the loans borrowed. We had the option to prepay the loans in whole, subject to a prepayment fee of 3% if the payment occurred on or before 24 months after the initial funding date, 2% if the prepayment occurred more than 24 months after, but on or before 36 months after the initial funding date, or 1% if the prepayment occurred more than 36 months after the initial funding date. We were obligated to pay a loan origination fee of 0.8% of each term loan that is funded under the Loan Agreement. The Loan Agreement also restricted certain activities, such as disposing of our business or certain assets, incurring additional debt or liens or making payments on other debt, making certain investments and declaring dividends, acquiring or merging with another entity, engaging in transactions with affiliates or encumbering intellectual property, among others. On April 21, 2023, the Company completed voluntary prepayment under the Loan Agreement, and the Loan Agreement and all other documents entered into in connection with the Loan Agreement were terminated.

As of March 31, 2023, we had cash and cash equivalents of $44.6 million. We invest our cash equivalents in liquid money market accounts.

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~~September~~In February 2023., If we ~~draw~~began ~~the~~implementation ~~third~~of ~~tranche,~~a ~~the~~strategic ~~interest-only~~restructuring ~~period~~plan ~~will~~to bepreserve ~~extended~~capital ~~through~~and ~~October~~reduce ~~2024~~operating costs. ~~Subsequent~~On toMay ~~the~~4, ~~interest-only period~~2023, wefollowing ~~are~~the ~~required~~completion toof ~~make~~our ~~equal~~review ~~monthly~~of ~~principal~~strategic ~~payments~~alternatives, ~~plus~~our ~~any~~board ~~accrued~~of ~~interest~~directors ~~until~~unanimously ~~the~~approved ~~loans~~a ~~mature~~plan inof ~~September~~liquidation ~~2025.~~and ~~Upon~~dissolution ~~final payment or prepayment~~ of the ~~loans~~Company, wewhich ~~are~~plan ~~required~~is tosubject ~~pay a final payment equal~~ to 6stockholder approval.~~45%~~ ofIn ~~the~~connection ~~loans~~with ~~borrowed.~~its Werestructuring ~~have~~plan ~~the~~and ~~option~~plan toof ~~prepay~~dissolution, ~~the~~in ~~loans~~April inand ~~whole~~May 2023, ~~subject~~we tomade apayments ~~prepayment~~of ~~fee~~approximately of$5.0 3%million ifin the ~~payment~~aggregate ~~occurs~~to onfulfill and/or ~~before~~settle 24certain ~~months~~known ~~after~~financial ~~the~~obligations ~~initial~~to ~~funding~~terminated ~~date~~employees, 2%vendors, ifauditors, ~~the~~and ~~prepayment~~other ~~occurs~~creditors. ~~more~~These ~~than~~payments 24were ~~months~~incremental ~~after,~~to ~~but~~our on$27.5 ormillion ~~before~~voluntary 36prepayment ~~months~~on ~~after~~April ~~the~~21, ~~initial~~2023, ~~funding~~of ~~date,~~all oroutstanding 1%principal, ifaccrued ~~the~~and ~~prepayment~~unpaid ~~occurs~~interest, ~~more~~fees, ~~than~~costs 36and ~~months~~expenses ~~after~~under the ~~initial~~loan ~~funding~~and ~~date.~~security Weagreement ~~are~~with ~~obligated~~K2 toHealthVentures. ~~pay~~In aaddition, ~~loan~~we ~~origination~~expect ~~fee~~to ofincur ~~0.8%~~additional ofexpenses ~~each~~and ~~term~~make ~~loan~~additional ~~that~~payments isassociated ~~funded~~with ~~under~~ the ~~Loan~~plan ~~Agreement.~~of ~~The~~dissolution ~~Loan~~in ~~Agreement~~the ~~also~~future, ~~restricts certain activities~~including, ~~such~~but asnot ~~disposing~~limited ofto, ~~our~~legal ~~business~~fees; orinsurance ~~certain~~premiums; ~~assets,~~taxes; ~~incurring~~expenses ~~additional~~incurred ~~debt~~by orthe ~~liens~~accounting orfirm ~~making~~of ~~payments~~Verdolino on& ~~other~~Lowey, ~~debt~~P.C., ~~making~~which ~~certain~~we ~~investments~~have ~~and~~engaged ~~declaring~~to ~~dividends,~~assist ~~acquiring~~in orthe ~~merging~~dissolution ~~with~~process; ~~another~~and ~~entity,~~other ~~engaging~~expenses inrelated ~~transactions~~to ~~with~~the ~~affiliates~~wind-down orof ~~encumbering~~the ~~intellectual~~Company’s ~~property, among others~~operations.

AsWe cannot predict the ultimate amount of ~~September~~our 30liabilities, ~~2022~~as uncertainties as to the ultimate amount of our operating costs and amounts to be reserved for claims, weobligations ~~had~~and ~~cash~~provisions during the liquidation and winding-up process, and the related timing to complete such transactions make it impossible to predict with certainty the actual net cash ~~equivalents~~amount, if any, that will ultimately be available if the stockholders approve the plan of ~~$66~~liquidation and dissolution, which they may not.6 ~~million.~~Examples Weof ~~invest~~uncertainties that could reduce our cash ~~equivalents~~include unanticipated costs relating to the defense, satisfaction or settlement of lawsuits or other claims threatened against us or our directors or officers; amounts necessary to resolve claims of any creditors or other third parties; and delays in ~~liquid~~the ~~money~~liquidation ~~market~~and ~~accounts~~dissolution or other winding up process.

Funding requirements

Our primary uses of capital ~~are,~~have ~~and~~been ~~we expect will continue to be,~~ research and development activities, compensation and related expenses, product manufacturing, laboratory and related supplies, legal, and other regulatory expenses, patent prosecution filing and maintenance costs for our licensed intellectual property, and general overhead costs. We expect to continue ~~incurring~~to ~~significant~~incur ~~expenses~~certain compensation and ~~operating~~related ~~losses for the foreseeable future. In addition~~expenses, ~~since~~insurance ~~the closing of our IPO~~expenses, wegeneral ~~have~~overhead ~~incurred~~costs, and ~~expect~~additional toadministrative ~~continue to incur,~~ costs ~~associated with operating as a public company. We anticipate that our expenses will increase~~ in connection with ~~our~~the ~~ongoing~~plan ~~activities~~of asliquidation ~~we:~~and dissolution.

● seek to address and recover from impacts of the COVID-19 pandemic, including delays to our product development timelines;

● advance the clinical development of our lead product candidates;

● continue to improve the manufacturing process for our product candidates and manufacture clinical supplies as our development progresses;

● continue the research and development of our preclinical product candidates;

● seek to identify and develop additional product candidates;

● maintain, expand, and protect our intellectual property portfolio; and

● improve our operational, financial, and management systems to support our clinical development and other operations.

Outlook

~~Based~~We onare ~~our~~not ~~research~~able ~~and~~to ~~development~~perform ~~plans~~meaningful ~~and~~research ~~our~~or ~~timing~~development ~~expectations~~without ~~related~~obtaining toadditional ~~the~~sources ~~progress~~ of ~~our~~financing. ~~programs,~~On weMay ~~expect~~4, ~~that~~2023, ~~our~~following ~~cash~~the ~~and~~completion ~~cash~~of ~~equivalents~~our asreview of ~~September~~strategic 30alternatives, ~~2022~~our ~~will~~board beof ~~sufficient~~directors tounanimously ~~fund~~approved ~~our~~a ~~operations~~plan ~~for~~of atliquidation ~~least~~and ~~the~~dissolution ~~next~~of 12the ~~months.~~Company, Wewhich ~~have~~plan ~~based~~is ~~this~~subject ~~estimate~~to onstockholder ~~assumptions~~approval. ~~that~~These ~~may~~conditions ~~prove~~and toevents beraise ~~wrong,~~substantial ~~and~~doubt weabout ~~could utilize~~ our ~~available~~ability ~~capital~~to ~~resources~~continue ~~sooner~~as ~~than~~a wegoing ~~currently expect~~concern.

WeIn doFebruary ~~not expect to generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for a product candidate~~2023, ~~which~~in weconnection ~~expect will take a number of years and the outcome of which is uncertain, or enter into collaborative agreements~~ with ~~third parties, the timing of which is largely beyond~~ our ~~control~~strategic ~~and~~restructuring ~~may never occur. We will continue to require additional capital to develop our product candidates and fund operations for the foreseeable future~~plan, ~~which~~ we ~~may~~began ~~obtain~~discontinuing ~~through~~all ~~one~~clinical ~~or more equity offerings, debt financings, or other third-party funding, including potential strategic alliances and licensing or collaboration arrangements~~programs. We ~~may,~~do ~~however,~~not beexpect ~~unable~~ to ~~raise~~generate ~~additional~~revenue ~~funds~~from or enter into such other arrangements when needed on favorable terms or at all, including as a result of the COVID-19 pandemic. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop our current product ~~candidates, or any additional product candidates, if developed~~sales. ~~The~~We ~~amount~~cannot ~~and~~assure ~~timing~~you ofthat ~~our~~we ~~future funding requirements~~ will ~~depend~~ever onbe ~~many~~profitable ~~factors,~~or ~~including~~generate ~~the~~positive ~~effects~~cash offlow ~~the~~from ~~COVID-19~~operating ~~pandemic, our ability to timely and~~ activities.

2621

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successfully enroll subjects in our clinical studies and the pace and results of our preclinical and clinical development efforts. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

Cash flows

The following table summarizes our sources and uses of cash for each of the three months ended ~~September~~March 3031, ~~2022~~2023 and ~~2021~~2022 (in thousands):


	~~Nine~~Three months ended
	~~September~~March 3031,
	~~2022~~2023		~~2021~~2022
Net cash provided by (used in):
Operating activities	$	(4911,~~307~~365)	$	(4415,~~365~~924)
Investing activities		—		~~122~~—
Financing activities		~~9,749~~(267)		289,~~431~~960
Net decrease in cash, cash equivalents and restricted cash	$	(3911,~~558~~632)	$	(155,~~812~~964)

Operating activities

For the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, compared to the same period in ~~2021~~2022, the $4.96 million ~~increase~~decrease in net cash used in operating activities was primarily due toour aincrease ~~$6.7~~in ~~million~~net ~~increase~~loss ~~due~~and to changes in working capital ~~largely driven by the timing~~ of ~~cash~~$2.4 ~~paid~~million tooffset ~~support~~by ~~our clinical research programs and~~ non-cash ~~expenses~~charges of $06.78 million related ~~primarily~~ to ~~stock-based~~impairment ~~compensation,~~charges ~~offset by a $2.5 million decrease~~ in ~~our~~clinical ~~net~~supply ~~loss~~agreements ~~year over year driven mostly by lower research~~ and ~~development~~stock-based ~~expenses and collaboration revenue~~compensation.

Investing activities

For the nine months ended September 30, 2022, compared to the same period in 2021, the $0.1 million decrease in net cash provided by investing activities was primarily due to proceeds from disposal of laboratory equipment in 2021.

Financing activities

For the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, compared to the same period in ~~2021~~2022, the $1810.72 million decrease in net cash provided by financing activities was primarily due to $149.68 million of net proceeds received from our ~~at the market offering, $14.6 million of net proceeds received from our~~ Loan Agreement, ~~and $0.9 million repurchase of shares for tax withholding obligations associated with restricted stock units~~ in the ~~2021~~2022 period compared to $90.83 million principal payment of ~~net~~finance ~~proceeds~~lease ~~received~~liability ~~from~~in ~~our~~the ~~Loan~~three ~~Agreement~~months inended ~~the~~March ~~2022~~31, ~~period~~2023.

Critical accounting policies and significant judgments and estimates

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with United States generally accepted accounting principles. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. Our critical accounting policies are described in the notes of our condensed financial statements included herein and our critical accounting estimates are discussed under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies and Significant Judgments and Estimates” in our Annual Report. There were no material changes to our critical accounting policies or critical accounting estimates through ~~September~~March 3031, ~~2022~~2023, from those discussed in our Annual Report.

Recent accounting pronouncements

See Note 2 to our condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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JOBS Act accounting election

Under Section 107(b) of the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act, an “emerging growth company” can delay the adoption of new or revised accounting standards until such time as those standards would apply to private companies. We intend to rely on this exemption. There are other exemptions and reduced reporting requirements provided by the JOBS Act that we are currently evaluating. For example, as an “emerging growth company,” we are exempt from Sections 14A(a) and (b) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would otherwise require us to (1) submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay,” “say-on-frequency,” and “golden parachutes;” and (2) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of our chief executive officer’s compensation to our median employee compensation. We also intend to rely on an exemption from the rule requiring us to provide an auditor’s attestation report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002. We will continue to remain an “emerging growth company” until the earliest of the following: (1) December 31, 2023; (2) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.235 billion; (3) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

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reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002. We will continue to remain an “emerging growth company” until the earliest of the following: (1) December 31, 2023; (2) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.235 billion; (3) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Information requested by this Item 3. Quantitative and Qualitative Disclosures about Market Risk is not applicable as we are electing scaled disclosure requirements available to smaller reporting companies with respect to this Item.

Item 4. Controls and Procedures.

The Company has established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including the principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), to allow timely decisions regarding required disclosure. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of disclosure controls and procedures

Our management, with the participation of our Chief Executive Officer ~~and Chief Financial Officer~~, evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective at the reasonable assurance level as of ~~September~~March 3031, ~~2022~~2023.

Changes in internal control over financial reporting

~~There~~In ~~were~~the nofirst ~~changes~~quarter inof ~~our~~2023, ~~internal~~we ~~control~~executed ~~over~~a ~~financial~~significant ~~reporting~~separation ~~(as~~of ~~defined~~workforce inand ~~Rules~~obtained ~~13a-15(f)~~written ~~and~~resignations ~~15d-15(f)~~of ~~under~~board of directors and the ~~Exchange~~executive ~~Act)~~management team. The control procedures which are normally in place with separate individuals have necessarily been combined across a significantly reduced staff. While we believe that ~~occurred~~internal ~~during~~controls are intact and carefully monitored, the ~~nine~~absence ~~months~~of ~~ended~~an ~~September~~external 30members of the audit committee, ~~2022~~the ~~that~~absence ~~have~~of ~~materially~~independent ~~affected~~board members, orand ~~are~~the ~~reasonably~~combination ~~likely~~of tostaff ~~materially~~functions ~~affect,~~does ~~our~~expose ~~internal~~us ~~control~~to ~~over~~risk ~~financial~~associated ~~reporting~~with internal controls.

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As of September 30, 2022, we have not experienced any material impact to our internal control over financial reporting due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 pandemic on our internal controls to minimize the impact on their design and operating effectiveness.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be involved in lawsuits, claims, investigations and proceedings, consisting of intellectual property, commercial, employment and other matters which arise in the ordinary course of business. While the outcome of any such proceedings cannot be predicted with certainty, as of ~~September~~March 3031, ~~2022~~2023, we were not party to any legal proceedings that we would expect to have a material adverse impact on our financial position, results of operations, or cash flow.

Item 1A. Risk Factors.

The discussion of our business and operations in this report should be read together with the risk factors contained below, in Item 1A of our Annual Report, and in our other filings with the SEC, which describe various risks and uncertainties to which we are or may become subject. These risks and uncertainties have the potential to affect our business, financial condition, results of operations, cash flows, strategies, or prospects in a material and adverse manner. ~~Except~~There ~~as noted below, there~~ are no material changes from the risk factors as previously disclosed in our Annual Report, other than the risk factors set forth below.

We ~~may~~cannot ~~fail~~predict ~~to continue to meet~~ the ~~listing~~timing ~~standards~~ of ~~Nasdaq and, as~~ a ~~result,~~distribution ~~our~~to ~~common stock may be delisted, which could have a material adverse effect on the liquidity of our common stock~~stockholders.

Our ~~common~~current ~~stock~~intention ~~currently~~is ~~trades on The Nasdaq Global Select Market. The Nasdaq Stock Market LLC has requirements~~ that, aif ~~company~~approved ~~must~~by ~~meet~~our ~~in order to remain listed on Nasdaq. In particular~~stockholders, ~~Nasdaq rules require us to maintain~~ a ~~minimum~~certificate ~~closing bid price~~ of ~~$1.00~~dissolution ~~per share of our common stock. If the closing bid price of our common stock were to remain below $1.00 per share for 30 consecutive trading days, or we do not meet other listing requirements, we~~ would ~~fail to~~ be infiled ~~compliance~~ with ~~Nasdaq’s listing standards. The Nasdaq Stock Market LLC initiated~~ the ~~delisting~~State ~~process~~of byDelaware ~~issuing~~promptly aafter ~~deficiency~~such ~~letter~~approval; ~~on June 9~~however, ~~2022, notifying us that~~ the ~~bid~~decision ~~price for our common stock had closed below the $1.00 per share minimum for 30 consecutive trading days, and providing us a period~~ of ~~180~~whether ~~calendar~~or ~~days~~not to ~~regain~~proceed ~~compliance~~ with the ~~minimum~~plan ~~bid price requirement. In order to regain compliance, shares~~ of ~~our~~dissolution ~~common~~and ~~stock~~liquidation ~~would~~(the ~~need~~“Dissolution”) towill ~~maintain~~be amade ~~minimum~~by ~~closing~~the ~~bid~~Board ~~price~~in ofits atsole ~~least $1~~discretion.00 ~~per~~No ~~share~~further ~~for~~stockholder aapproval ~~minimum~~would ofbe 10required ~~consecutive trading days prior~~ to ~~December~~effect 9,the ~~2022~~Dissolution. ~~In the event we have not regained compliance by that date~~However, weif ~~expect to transfer~~ the ~~listing~~Board ofdetermines ~~our~~that ~~common stock to~~ the ~~Nasdaq~~Dissolution ~~Capital~~is ~~Market~~not in ~~order~~our tobest ~~become~~interest ~~eligible~~or ~~for an additional 180-day compliance period provided with respect to~~ the ~~minimum~~best ~~bid~~interest ~~price requirement. To be eligible for the extension, we also intend to provide written notice~~ of our ~~intention to cure the deficiency during the additional compliance period by effecting a reverse stock split~~stockholders, ~~if necessary. However, even if we receive~~ the ~~additional~~Board ~~compliance period, we~~ may ~~still be unable to meet the minimum bid price requirement within that additional 180-day period~~, wein ~~may~~its besole ~~unable to complete a reverse stock split~~discretion, ifabandon ~~necessary,~~the ~~and~~Dissolution weor may beamend ~~unable~~or tomodify ~~meet~~the ~~other~~Plan ~~applicable Nasdaq listing requirements, including maintaining minimum levels~~ of ~~stockholders’~~Dissolution ~~equity or market values of our common stock, in which case our common stock could be delisted. If our common stock were~~ to ~~be delisted,~~ the ~~liquidity~~extent ofpermitted ~~our~~by ~~common~~Delaware ~~stock~~law ~~would~~without ~~be adversely affected, and~~ the ~~market~~necessity ~~price~~ of ~~our~~further ~~common~~stockholder ~~stock could decrease~~approval. InAfter ~~addition,~~ the ~~delisting~~Certificate of ~~our~~Dissolution ~~common~~has ~~stock~~been ~~from a national exchange would have a material adverse effect on our access to capital markets~~filed, ~~and~~revocation ~~any limitation on market liquidity or reduction in the price~~ of ~~our common stock as a result of that delisting could materially adversely affect~~ the ~~Company’s~~Dissolution ~~ability~~would torequire ~~raise~~stockholder ~~capital~~approval onunder ~~terms~~Delaware ~~acceptable to the Company, or at all~~law.

Under Delaware law, before a dissolved corporation may make any distribution to its stockholders, it must pay or make reasonable provision to pay all of its claims and obligations, including all contingent, conditional or unmatured contractual claims known to the corporation. Furthermore, we may be subject to potential liabilities relating to indemnification obligations, if any, to third parties or to our current and former officers and directors. It might take significant time to resolve these matters, and as a result we are unable to predict the timing of distributions, if any are made, to our stockholders.

We cannot assure you as to the amount of distributions, if any, to be made to our stockholders.

We cannot predict with certainty the amount of distributions, if any, to our stockholders. Such distributions will not occur until after a certificate of dissolution is filed, and we cannot predict the timing or amount of any such distributions, as uncertainties as to the ultimate amount of our liabilities, the operating costs and amounts to be set aside for claims, obligations and provisions during the liquidation and winding-up process, and the related timing to complete such transactions make it impossible to predict with certainty the actual net cash amount that will ultimately be available for distribution to stockholders or the timing of any such distributions. Examples of uncertainties that could reduce the value of distributions to our stockholders include: unanticipated costs relating to the defense, satisfaction or settlement of lawsuits or other claims threatened against us or our directors or officers; amounts necessary to resolve claims of any creditors or other third parties; and delays in the liquidation and dissolution or other winding up process.

In addition, as we wind down, we will continue to incur expenses from operations, including directors’ and officers’ insurance; payments to service providers and any continuing employees or consultants; taxes; legal, accounting and consulting fees and expenses related to our filing obligations with the SEC, which will reduce any amounts available for distribution to our stockholders. As a result, we cannot assure you as to any amounts to be distributed to our stockholders

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if the Board proceeds with the Dissolution. If our stockholders do not approve the Dissolution Proposal, we will not be able to proceed with the Dissolution and no liquidating distributions will be made in connection therewith.

It is the current intent of the Board, assuming approval of the Dissolution, that any cash will first be used to pay our outstanding current liabilities and then will be retained to pay ongoing corporate and administrative costs and expenses associated with winding down the company, liabilities and potential liabilities relating to or arising out of any litigation matters and potential liabilities relating to our indemnification obligations, if any, to our service providers, or to our current and former officers and directors.

The Board will determine, in its sole discretion, the timing of the distribution of the remaining amounts, if any, to our stockholders in the Dissolution. We can provide no assurance as to if or when any such distribution will be made, and we cannot provide any assurance as to the amount to be paid to stockholders in any such distribution, if one is made. Stockholders may receive substantially less than the amount that we currently estimate that they may receive, or they may receive no distribution at all. To the extent funds are available for distribution to stockholders, the Board intends to seek to distribute such funds to our stockholders as quickly as possible, as permitted by the DGCL, and intends to take all reasonable actions to optimize the distributable value to our stockholders.

If our stockholders do not approve the Dissolution, we would not be able to continue our business operations.

On March 30, 2023, we announced that, in light of our financial condition and negative results from our clinical trials, our Board had approved a plan to review strategic alternatives, including a sale or merger of the Company or one or more sales of our assets, and to significantly and immediately reduce our operations (the “Strategic Plan”). In connection with the Strategic Plan, we terminated all but a core team of individuals to lead the strategic review process, and most individuals that remain are doing so on a part-time and consulting basis. After an extensive review of strategic alternatives, we have been unable to identify a merger partner or purchaser of our Company or our assets. If our stockholders do not approve the Dissolution, the Board will continue to explore what, if any, alternatives are available for the future of the Company in light of its discontinued business activities; however, those alternatives are likely limited to seeking voluntary dissolution at a later time with potentially diminished assets, seeking bankruptcy protection (should our net assets decline to levels that would require such action) or investing our cash in another operating business. It is unlikely that these alternatives would result in greater stockholder value than the Dissolution.

The Board may determine not to proceed with the Dissolution.

Even if the Dissolution is approved by our stockholders, the Board may determine in its sole discretion not to proceed with the Dissolution. If our Board elects to pursue any alternative to the Dissolution, our stockholders may not receive any of the funds that might otherwise be available for distribution to our stockholders. After a certificate of dissolution has been filed, revocation of the Dissolution would require stockholder approval under Delaware law.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

Not applicable.

Use of Proceeds

Not applicable.

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Item 3. Defaults Upon Senior Securities.

Not applicable.

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Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

EXHIBIT INDEX


ExhibitNumber		Description
2.1		Plan of Dissolution of the Registrant, incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (File No. 001-38535 filed with the SEC on May 5, 2023).
3.1		Amended and Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-38535 filed with the SEC on June 25, 2018).
3.2		Amended and Restated Bylaws of the Registrant, incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-38535 filed with the SEC on June 25, 2018).
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amended
32.1*		Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

* Filed herewith.

+ The certifications furnished in Exhibit 32.1 hereto are deemed to be furnished with this Quarterly Report on Form 10-Q and will not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.

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Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	APTINYX INC.

Date: November 8, 2022	By:	/s/ Andrew Kidd
Date: May 18, 2023	By:	/s/ Andrew Kidd
		Andrew Kidd
		Chief Executive Officer(~~Principal~~Interim principal executive officer and interim principal financial officer)

Date: November 8, 2022	By:	/s/ Ashish Khanna

		~~Ashish Khanna~~
		~~Chief Financial Officer and Chief Business Officer(Principal financial and accounting officer)~~

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