As filed with the Securities and Exchange Commission on September 17, 2021.

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933

AEON BIOPHARMA, INC.

(Exact name of registrant as specified in its charter)

Delaware

2834

45-4777018

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

4040 MacArthur Blvd., Suite 260

Newport Beach, California 92660

Telephone: (949) 354-6499

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

Marc Forth

Chief Executive Officer

4040 MacArthur Blvd., Suite 260

Newport Beach, California 92660

Telephone: (949) 354-6499

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

B. Shayne Kennedy

Drew Capurro

Latham & Watkins LLP

650 Town Center Drive, 20th Floor

Costa Mesa, California 92626

Telephone: (714) 540-1235

Fax: (714) 755-8290

Arthur McGivern

Seo Salimi

Nicole Daley

Goodwin Procter LLP

100 Northern Ave.

Boston, Massachusetts 02210

Telephone: (617) 570-1000

Fax: (617) 523-1231

Approximate date of commencement of proposed sale to the public:

As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☐

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or and “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	X	Smaller reporting company	X

		Emerging growth company	X

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 to Section 7(a)(2)(B) of the Securities Act. X

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be

Registered

Proposed Maximum Aggregate

Offering Price⁽¹⁾⁽²⁾

Amount of

Registration Fee

Common Stock, par value $0.0001 per share

$75,000,000

$8,183

(1)	Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

(2)	The proposed maximum aggregate offering price includes the offering price of additional shares that the underwriters have the option to purchase.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED SEPTEMBER 17, 2021

PRELIMINARY PROSPECTUS

Common Stock

This is an initial public offering of shares of common stock of AEON Biopharma, Inc. All shares of common stock are being sold by the company.

Prior to this offering, there has been no public market for the common stock. The initial public offering price is expected to be between $ and $ per share. We have applied to list our common stock on the Nasdaq Global Market, or Nasdaq, under the symbol “AEON.”

We are an “emerging growth company” and a “smaller reporting company” as defined under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements for future filings.

Investing in our common stock involves a high degree of risk. See the section titled “Risk Factors” beginning on page 14 to read about factors you should consider before buying shares of the common stock.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

	Per Share	Total
Initial public offering price	$	$
Underwriting discounts and commissions⁽¹⁾	$	$
Proceeds, before expenses, to us	$	$

(1) See “Underwriting” for additional information regarding compensation payable to the underwriters.

We have granted the underwriters a 30-day option to purchase up to additional shares of common stock from us at the initial public offering price, less the underwriting discounts and commissions, solely to cover the underwriters’ option to purchase additional shares.

The underwriters expect to deliver the shares against payment in New York, New York on , 2021.

Wells Fargo Securities	Cantor
Mizuho Securities
H.C. Wainwright & Co.

Prospectus dated , 2021.

TABLE OF CONTENTS

Prospectus Summary		1
The Offering		8
Summary Consolidated Financial Data		11
Risk Factors		14
Special Note Regarding Forward-Looking Statements		55
Use of Proceeds		57
Dividend Policy		58
Capitalization		59
Dilution		61
Management’s Discussion and Analysis of Financial Condition and Results of Operations		64
Business		84
Management		110
Executive and Director Compensation		116
Certain Relationships and Related Party Transactions		127
Principal Stockholders		133
Description of Capital Stock		135
Shares Eligible for Future Sale		140
Material U.S. Federal Income Tax Consequences to Non-U.S. Holders		142
Underwriting		146
Legal Matters		151
Experts		151
Additional Information		151
Index to Financial Statements		F-1

We and the underwriters have not authorized anyone to provide any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may provide you. We are offering to sell, and seeking offers to buy, shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is current only as of its date.

Through and including , 2021 (the 25th day after the date of this prospectus) all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.

Trademarks

“AEON BIOPHARMA”, the AEON Biopharma logo and other trademarks, trade names or service marks are the property of AEON Biopharma, Inc. All other service marks, trademarks and trade names appearing in this prospectus are the property of their respective owners. Solely for convenience, the trademarks and tradenames referred to in this prospectus appear without the ^® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to these trademarks and tradenames.

Market And Industry Data

This prospectus contains estimates, projections and other statistical data and information concerning our industry, our business and the markets for our product candidate for our proposed therapeutic indications. Some data and statistical information contained in this prospectus are based on management’s estimates and calculations, which are derived from our review and interpretation of the independent sources, our internal research and knowledge of the industry and market in which we operate.

This information, to the extent it contains estimates or projections, involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates or projections. Industry publications and other reports we have obtained from independent parties generally state that the data contained in these publications or other reports have been obtained in good faith or from sources considered to be reliable, but they do not guarantee the accuracy or completeness of such data. The industry in which we operate is subject to risks and uncertainties due to a variety of factors, including those described in the section titled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in these publications and reports.

Prospectus Summary

This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes thereto and the information set forth under the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in each case included in this prospectus. Some of the statements in this prospectus constitute forward-looking statements that involve risks and uncertainties. See the section titled “Special Note Regarding Forward-Looking Statements.” Unless the context otherwise requires, we use the terms “the Company,” “the company,” “we,” “us” and “our” in this prospectus to refer to AEON Biopharma, Inc. and its consolidated subsidiaries.

Overview

We are a clinical stage biopharmaceutical company focused on developing our proprietary botulinum toxin complex, ABP-450 (prabotulinumtoxinA) injection, or ABP-450, for debilitating medical conditions, with an initial focus on the neurology and gastroenterology markets. We plan to develop ABP-450 to address the estimated $2.2 billion global therapeutic botulinum toxin market, which is projected to grow to $4.4 billion in 2027. ABP-450 is the same botulinum toxin complex that is currently approved and marketed for cosmetic indications by Evolus, Inc., or Evolus, under the name Jeuveau. ABP-450 is manufactured by Daewoong Pharmaceuticals Co., Ltd., or Daewoong, in compliance with current Good Manufacturing Practice, or cGMP, in a facility that has been approved by FDA, Health Canada and EMA to manufacture Jeuveau in the United States and Nuceiva in Canada and the European Union. We have exclusive development and distribution rights for therapeutic indications of ABP-450 in the United States, Canada, the European Union, the United Kingdom, and certain other international territories. We have built a highly experienced management team with specific experience in biopharmaceutical and botulinum toxin development and commercialization.

Botulinum toxins have proven to be a highly versatile therapeutic biologic, with over 230 therapeutic uses documented in published scientific literature and 10 approved therapeutic indications in the United States. Our initial development programs for ABP-450 are directed at migraine, cervical dystonia and gastroparesis. We selected these initial indications based on a comprehensive and proprietary product assessment screen designed to identify indications where we believe ABP-450 can deliver significant value to patients, physicians and payors and where its clinical, regulatory and commercial characteristics suggest viability. We believe that ABP-450 has application in a broad range of indications and we plan to continue to explore additional indications that satisfy our product assessment screens.

Our Investigational New Drug, or IND, application for ABP-450 as a preventative treatment for migraine was accepted by U.S. Food and Drug Administration, or FDA, in the fourth quarter of 2020 and we initiated enrolling patients for our Phase 2 clinical study in the first quarter of 2021. We plan to announce topline data related to our migraine study in the second half of 2022. Our IND application for ABP-450 as a treatment for cervical dystonia was accepted by

FDA in the third quarter of 2020 and we initiated our Phase 2 clinical study in the first quarter of 2021. We plan to announce topline data in early 2022. In December 2020, we initiated a preclinical gastroparesis study. We expect to complete this preclinical study in the third quarter of 2021. Following the preclinical study, we expect to submit an IND to FDA in late 2021 to support the initiation of a Phase 2a clinical study in 2022.

ABP-450 has the same 900 kilodalton, or kDa, complex size as Botox. We believe physicians generally prefer the performance characteristics of the complete 900 kDa botulinum toxin complex for therapeutic uses and that this characteristic will provide ABP-450, if approved, a competitive advantage over other non-Botox therapeutic botulinum toxins currently on the market or in development. ABP-450, if approved, will be the only therapeutic botulinum toxin with significantly similar physiochemical properties as Botox.

We license ABP-450 from Daewoong, a South Korean pharmaceutical manufacturer, and have exclusive development and distribution rights for therapeutic indications in the United States, Canada, the European Union, the United Kingdom, and certain other international territories. Daewoong licenses the same 900 kDa botulinum toxin to Evolus, for cosmetic indications, which it markets and sells under the name Jeuveau. Prior to licensing the botulinum toxin complex to Evolus, Daewoong conducted a broad preclinical development program for ABP-450 that was primarily focused on safety to support any clinical indication. Subsequently, Evolus completed a comprehensive clinical development program of the same botulinum toxin complex and has received approval from regulatory authorities in the United States, the European Union and Canada to market and sell Jeuveau in the United States and Nuceiva in Canada and the European Union for the temporary improvement in the appearance of moderate to severe glabellar, or frown, lines in adults. Over 2,100 adult subjects with moderate to severe glabellar lines at maximum frown participated in Evolus’ clinical development program, and each of Evolus’ Phase 3 clinical studies successfully met their respective primary safety and efficacy endpoints. While none of these preclinical or clinical programs specifically contemplated any therapeutic uses of ABP-450, given that the FDA’s regulatory requirements are generally the same for the cosmetic or therapeutic use of a toxin, we believe that the positive data derived from these preclinical and clinical studies will support the clinical development and anticipated future safety labeling of ABP-450 for migraine and cervical dystonia at all contemplated dose ranges.

We plan to pursue approval of an original Biologics License Application, or BLA, that exclusively contemplates therapeutic indications for ABP-450, which we believe could improve reimbursement amounts for ABP-450, if approved. Existing botulinum toxins, including Botox, are approved under a single BLA for both therapeutic and cosmetic indications. As a result, other botulinum toxins are required to include the sales prices of both therapeutic and cosmetic botulinum toxin sales when calculating the average selling price, or ASP, that is used to determine the reimbursement amount physicians receive for therapeutic usage. The inclusion of a lower cosmetic sales price in the calculation of ASP can cause physicians to lose money when treating patients with existing botulinum toxins and also creates a deterrent to providing payors and/or providers with rebates or other financial incentives. If we are successful in obtaining an original BLA for therapeutic indications of ABP-450, the ASP for ABP-450 would be calculated using only therapeutic sales, which we believe would facilitate consistent and favorable reimbursement to physicians when they choose to use ABP-450 for therapeutic treatments, as well as the ability to provide payors and/or providers with rebates and other financial incentives. This traditional pricing model would be unique to us within the current therapeutic neurotoxin market.

We believe ABP-450 could have therapeutic applications in a broad range of debilitating medical conditions and we intend to continue to leverage our product assessment screening process to identify additional indications for future development. Our management team possesses significant and relevant experience in the botulinum toxin industry in both drug development and commercialization, and we believe they are uniquely qualified to successfully develop and commercialize ABP-450 to enhance the lives of patients that suffer from debilitating medical conditions.

Our Pipeline

Migraine

Migraine is a complex neurological condition characterized by recurrent episodes of headaches. Patients that suffer from migraine headaches experience symptoms including throbbing recurring pain, nausea, vomiting, dizziness and sensitivity to light, sound, touch and smell. Migraine attacks usually last between four and 72 hours.

Industry sources and published research estimate that approximately 15.1% of U.S. adults experience migraine or severe headache. Based on U.S. census data from 2017, this represents approximately 40 million people in the United States. When the U.S. is combined with the estimated 1 billion people worldwide that suffer from migraines, migraine is the third most prevalent illness in the world.

Using prevalence rates from various published sources, we estimate that approximately 4.0 million in the United States suffer from chronic migraines, defined as migraine occurring on 15 or more days per month and headache lasting for four or more hours per day, and 9.4 million people in the United States suffer from episodic migraines, defined as migraine occurring from six to 14 times per month. In 2006, the American Migraine and Prevalence and Prevention Study determined that only approximately 56% of patients are diagnosed with migraine and an even smaller percentage actually receive prophylactic treatment. We believe our target market consists of the combined population of patients experiencing six or more migraines per month in the United States, which represents approximately 13.4 million patients. Based on our proposed treatment protocol and anticipated pricing, we estimate our target market to represent a potential U.S. market opportunity of approximately $65 billion. While the current global therapeutic botulinum toxin market is estimated to be $2.2 billion and projected to grow to $4.4 billion in 2027, we believe these market estimates are constricted due to the significant number of untreated and undiagnosed patients, as well as a lack of approved indications for botulinum toxin. As patients evolve from treating lower to higher frequency episodic migraine and for those patients that develop chronic migraine, preventive treatments become a more important part of the overall approach. We believe that the migraine prevention market will expand as patient and physician awareness and diagnosis rates for migraine increase due in part to market growth of injectable monoclonal antibody therapies that target calcitonin gene-related peptide inhibitors, or CGRPs, as well as the introduction of oral CGRP for migraine prevention into the market.

We are developing ABP-450 for the preventative treatment of migraine, which is inclusive of both chronic migraine and episodic migraine. Migraine treatment is broadly divided into two strategies: acute and prophylactic treatment. The primary goal of acute treatment is to provide relief from the pain and associated symptoms after a migraine attack has started. The primary goal of prophylactic, or preventative, treatment is to preemptively decrease the frequency, severity and duration of future migraine attacks. The use of botulinum toxins is generally a third-line therapy in the prophylactic treatment of migraine patients. As a third-line treatment, Botox is the only botulinum toxin approved by the FDA for prophylaxis of headaches in adult patients with chronic migraine and with a patented treatment protocol that designates a total dose of 155 units into 31 injection sites across seven areas of the head and neck. There is no botulinum toxin approved for prevention of episodic migraine. Another third-line treatment for migraine, referred to as CGRP-targeting medications, has recently been approved. CGRPs, or calcitonin gene-related peptides, are present in many organs in the body and when released around the nerves of the head, they can cause inflammation and result in migraines. CGRP-targeting medications seek to block the peptide itself in an effort to prevent the migraine. FDA-approved CGRPs include Aimovig, Emgality and Ajovy.

Our Phase 2 clinical study utilizes our patent-pending injection protocol. We believe that, if approved, our proprietary injection protocol would differentiate ABP-450 from Botox as a third-line therapy for the prevention of chronic migraine and establish a new treatment option for the prevention of episodic migraine. Our novel injection protocol is also designed to simplify the administration of ABP-450 and mitigate some of the risk of common adverse events associated with Botox’s approved injection regimen, which include eyelid ptosis, commonly known as “drooping eyelid,” neck pain and muscle weakness. We believe our proposed treatment protocol, as combined with our exclusive focus on therapeutic indications and the same 900 kDa property as Botox, would create a compelling pharmacoeconomic opportunity to payors, while enhancing the physician and patient treatment experience.

FDA accepted an IND for our Phase 2 clinical study studying ABP-450 for the prevention of migraine in the fourth quarter of 2020 and we initiated enrolling patients in the first quarter of 2021, and began patient dosing in the second quarter of 2021. We plan to enroll 690 patients into the randomized, double-blind, placebo-controlled study across approximately 60 study sites in the United States, Canada and Australia. This study will include migraine patients that experience six or more migraines per month, which is inclusive of chronic migraine patients that experience 15 or more migraines per month, as well as certain episodic migraine patients that experience six to 14 migraines per month. Patients enrolled in the study will receive two injection cycles using our proprietary injection protocol at a low dose of 150 units utilizing 22 active injection sites and four placebo injection sites, high dose of 195 units utilizing 26 active injection sites, with patients evenly split among the three arms. We plan to announce topline data related to our migraine study in the second half of 2022.

Cervical Dystonia

Cervical dystonia, also known as spasmodic torticollis, is a neurological condition characterized by involuntary muscle contractions of the neck which may present as spasms, contractions or abnormal posture. It is a chronic condition with no cure, causing significant pain and challenges to mobility due to abnormal postures, affecting quality of life and daily activities. Botulinum toxin is the standard of care for the treatment of cervical dystonia, helping to improve pain, posture, and disability. We estimate based on U.S. census data and published clinical studies that there are approximately 50,000 addressable cervical dystonia patients in the United States, of which 30,000 are currently treated. Based on our proposed treatment protocol and anticipated pricing, we estimate that the addressable cervical dystonia patients represent a potential U.S. market opportunity of approximately $360 million.

FDA accepted an IND for our Phase 2 clinical study studying ABP-450 for the treatment of cervical dystonia in the third quarter of 2020 and we initiated enrolling patients and dosing in the first quarter of 2021. This clinical study will include 60 patients across approximately 40 sites in the United States. The clinical study patients will be randomized in a 1:1:1:1 ratio, receiving low dose 150 units of ABP-450, medium dose 250 units of ABP-450, high dose 350 units of ABP-450, or placebo. Due to the nature of the disease, dosing in initial sessions will be tailored to the individual patient based on the patient’s head and neck position, localization of pain, muscle hypertrophy, patient response, and adverse event history. The safety and efficacy of the three dose cohorts of ABP-450 or placebo will be evaluated over a maximum of 20 weeks. At the completion of the Phase 2 clinical study, all patients, irrespective of treatment group, will have the option to receive treatment with ABP-450 by rolling over into a 52 week open-label extension study. We expect to report topline data from this clinical study in early 2022.

Gastroparesis

Gastroparesis is a gastrointestinal disorder characterized by the slowing or stoppage of movement of food and liquid from the stomach to the small intestine. We estimate based on U.S. census data and published clinical studies that there are approximately 400,000 addressable gastroparesis patients in the United States, of which over 200,000 have moderate to severe symptoms and would be eligible for treatment with a botulinum toxin. Based on our proposed treatment protocol and anticipated pricing, we estimate that the addressable gastroparesis patients represent a potential U.S. market opportunity of approximately $900 million.

We believe that an unmet need for the treatment of gastroparesis exists and, if approved, ABP-450 could serve as an effective third-line treatment for patients that do not achieve effective results with first-line diet therapy and second-line medication or discontinue use of medication due to poor tolerability. Metoclopramide is currently the only drug approved by the FDA for the treatment of gastroparesis with limited usage due to significant side effects, including extrapyramidal effects. In a research study report published in February 2017 by the International Foundation of Functional Gastrointestinal Disorders, 60% of gastroparesis patients are not satisfied with current treatments.

In December 2020, we initiated a preclinical study of ABP-450 related to the treatment of gastroparesis. We expect to complete this preclinical study in the third quarter of 2021 and use the data to support an IND submission in late 2021. If our IND is accepted, we expect to initiate a Phase 2a clinical study in 2022 to study the safety and efficacy of injecting a therapeutic dose of ABP-450 through a sclerotherapy needle into the pyloric sphincter.

Our Strategy

Our goal is to change patients’ lives by enhancing the therapeutic botulinum toxin treatment paradigm for patients suffering from debilitating conditions. To achieve this goal, we plan to:

•

Develop and seek regulatory approval for ABP-450 in our initial indications;

•

Expand the field of therapeutic applications for botulinum toxins;

•

Enhance the economics of botulinum toxin treatments to drive value for payors and physicians; and

•

Participate in the growing therapeutic botulinum toxin market by optimizing value of ABP-450.

Our Competitive Strengths

We believe the successful pursuit of our strategy will be driven by the following competitive strengths:

•

Well-Established 900 kDa Botulinum Toxin Complex. ABP-450 is the same botulinum toxin complex that has been approved by regulatory authorities in the United States, the European Union and Canada for a cosmetic indication. To receive these global approvals, Daewoong and Evolus have completed rigorous clinical development programs using Botox as an active comparator and consistently showed that ABP-450 was non-inferior to Botox at doses ranging from 20 units to 360 units. While we have not yet demonstrated non-inferiority of ABP-450 to Botox, we expect to design our studies, if successful, to demonstrate that one unit of ABP-450 will produce a substantially similar effect as one unit of Botox. We believe the similar 900 kDa molecular weighting of the two products will facilitate physician adoption of ABP-450 more rapidly and sustainably than other botulinum toxins that compete with therapeutic uses of Botox.

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ABP-450 Has Potential Application Across a Broad Range of Indications. ABP-450 is a single product candidate that we believe can produce a diverse product development platform spanning a broad spectrum of indications. We believe that our cervical dystonia program has an established regulatory pathway that, if successful, would allow us to participate in an established market. Our migraine program, if successful, represents an important expansion of treatments available in the $17.8 billion episodic migraine market, combined with a streamlined injection protocol for all indicated migraine patients. Our gastroparesis program, if successful, would be a novel indication for botulinum toxins in a market characterized by high unmet need and low competitive intensity. We have identified six additional, undisclosed therapeutic indications that we intend to pursue that offer similar market opportunities.

•

Differentiated Business Model Designed to Deliver Enhanced Value to Payors and Physicians. We believe our exclusive focus on developing ABP-450 for therapeutic indications provides us with a competitive advantage against current and known prospective botulinum toxin competitors. We believe this focus will enable us to pursue an original BLA dedicated to therapeutic uses of ABP-450 that, if obtained, would allow physicians to receive consistent and favorable reimbursement from payors, while also providing us with the flexibility to provide economic incentives, including rebates, to payors and/or providers. Market competitors that receive marketing approval for their botulinum toxin products have traditionally obtained an original BLA for their initial indication, with follow-on supplemental BLAs as they expand their product labels to include cosmetic and therapeutic indications. As a consequence of that structure, the ASPs for therapeutic reimbursement are negatively affected by promotional activity associated with cosmetic pricing. If we receive an original BLA, we believe that we will not have a negative pricing influence from cosmetic indications, which should allow us to uniquely manage our ASP in a manner that enhances value to payors and physicians.

•

Management Team with Significant and Relevant Experience and Expertise in the Therapeutic Use of Botulinum Toxins. Our management team has extensive experience in the botulinum toxin market, in multiple therapeutic areas, in the development, market launch and commercialization of major medical products, execution and integration of business development transactions and understanding of the regulatory environment of the healthcare markets.

Historical Background and Restructuring

We were formed in 2012 and, in our early history, acquired numerous controlling and non-controlling ownership interests in several different businesses that we have since disposed of. We wholly owned Evolus prior to its initial public offering in February 2018. Evolus was included in our consolidated results through May 2019, when we determined that we no longer held control and deconsolidated the entity and recorded the fair value of the retained equity interest in Evolus. Until September 2020, we also operated a business that provides introductory financing services on a limited basis to patients to pay for elective medical procedures and owned a non-controlling interest in a private company. Through the third quarter of 2020, results from the patient financing business are reflected in our results of operations and ownership interest in the private company is reflected on our balance sheet, each of which were immaterial to our financial results.

In September 2018, we exercised a contractual option with Daewoong to obtain exclusive development and distribution rights for ABP-450 for therapeutic indications; our license and supply agreement with Daewoong was subsequently executed in December 2019. Since acquiring those therapeutic rights in 2018, we have devoted substantially all our efforts to identify and recruit personnel, design clinical studies, and seek regulatory approval for our ABP-450 product candidate for therapeutic applications. In May 2019, we hired Marc Forth to be our Chief Executive Officer, and subsequently have devoted significant resources to applying our portfolio planning screening process to construct and execute our development strategy for ABP-450.

In January 2020, we contributed our interest in Evolus to a newly formed entity in exchange for membership units, and then distributed all of the units of said entity to our existing stockholders. In September 2020, we contributed the patient financing business and our non-controlling interest in another private company each to a newly formed entity in exchange for membership units, and then distributed all of the units of said entities to our existing stockholders. We refer to these transactions collectively as the Divestiture Transactions. As such, our business is now exclusively focused on developing ABP-450 for debilitating medical conditions.

Risks Associated with Our Business

Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common stock. These risks are more fully described in the section titled “Risk Factors” immediately following this prospectus summary. These risks include, among others, the following:

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We have a limited operating history and have incurred significant losses since our inception and anticipate that we will continue to incur losses for the foreseeable future. If we ever achieve profitability, we may not be able to sustain it.

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Our future success currently depends entirely on the successful and timely regulatory approval and commercialization of our only product candidate, ABP-450. The development and commercialization of pharmaceutical products is subject to extensive regulation, and we may not obtain regulatory approvals for ABP-450 in any of the indications for which we plan to develop it on a timely basis or at all.

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We currently rely solely on Daewoong to manufacture ABP-450, and any production or other problems with Daewoong or our relationship with Daewoong would materially and adversely affect our development or commercialization of ABP-450.

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Adverse outcomes in litigation to which we or Daewoong are party could have a material adverse effect on our business.

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The COVID-19 pandemic has had, and may continue to have, an adverse effect on our operations, as well as the business or operations of our manufacturers, clinical research organizations or other third parties with whom we conduct business.

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We may not be successful in obtaining an original BLA that contemplates exclusively therapeutic uses of ABP-450.

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Even after this offering, we will require additional financing to fund our future operations, and a failure to obtain additional capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our operations.

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We have concluded that we do not have sufficient cash to fund our operations and to meet our obligations as they become due within one year from the date that our consolidated financial statements are issued, and as a result, there is substantial doubt about our ability to continue as a going concern.

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If we are unable to adequately protect our intellectual property rights, or if we are accused of infringing on the intellectual property rights of others, our competitive position could be harmed or we could be required to incur significant expenses to enforce or defend our rights.

Our Corporate Information

We were incorporated under the laws of the State of Delaware on February 24, 2012 under the name Alphaeon Corporation. On December 18, 2019, we changed our company name to AEON Biopharma, Inc. Our principal executive offices are located at 4040 MacArthur Blvd., Suite 260, Newport Beach, California 92660, and our telephone number is (949) 354-6499. Our corporate website address is www.aeonbiopharma.com. Information contained on, or accessible through, our website shall not be deemed incorporated into and is not a part of this prospectus or the registration statement of which it forms a part.We have included our website in this prospectus solely as an inactive textual reference.

Implications of Being an Emerging Growth Company and Smaller Reporting Company

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012, and we may remain an emerging growth company for up to five years following the completion of this offering. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In particular, in this prospectus, we have provided only two years of audited consolidated financial statements and have not included all of the executive compensation-related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. We may choose to take advantage of some but not all of these reduced reporting burdens.

We would cease to be an “emerging growth company” upon the earliest to occur of: (i) the last day of the fiscal year in which we have $1.07 billion or more in annual revenue; (ii) the date on which we first qualify as a large accelerated filer under the rules of the U.S. Securities and Exchange Commission, or the SEC; (iii) the date on which we have, in any three-year period, issued more than $1.0 billion in non-convertible debt securities; and (iv) the last day of the fiscal year ending after the fifth anniversary of this offering.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

We are also a “smaller reporting company” as defined in the rules promulgated under the Securities Exchange Act of 1934, as amended. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates on the last business day of our second fiscal quarter is less than $250.0 million, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and nonvoting common stock held by non-affiliates on the last business day of our second fiscal quarter in that fiscal year is less than $700.0 million.

The Offering

Common stock offered	shares
Option to purchase additional shares	shares
Common stock to be outstanding immediately after this offering	shares (or shares if the underwriters exercise their option to purchase additional shares in full).
Use of proceeds	We estimate that the net proceeds from this offering will be approximately $ million (or approximately $ million if the underwriters exercise their option to purchase additional shares in full), based upon the assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
	We intend to use the net proceeds from this offering to fund our clinical and regulatory development of ABP-450, including Phase 2 clinical studies and other future clinical studies, and for general corporate purposes, including working capital, operating expenses and capital expenditures. See the section titled “Use of Proceeds.”
Risk factors	You should read the section titled “Risk Factors” in this prospectus for a discussion of factors to consider carefully before deciding to invest in shares of our common stock.
Proposed Nasdaq symbol	“AEON”

The number of shares of our common stock to be outstanding after this offering is based on shares of our common stock outstanding as of June 30, 2021, assuming the Preferred Stock Conversion, the Note Conversions and the Daewoong PIK Issuance, in each case as described below, and excludes:

▪

10,516,525 shares of common stock issuable upon the exercise of options outstanding as of June 30, 2021, with a weighted-average exercise price of $1.51 per share;

▪

shares of common stock issuable upon the exercise of a warrant outstanding as of June 30, 2021 to purchase 342,011 shares of our Series B convertible preferred stock at an exercise price of $7.3097 per share, which will convert into a warrant to purchase shares of common stock immediately prior to the completion of this offering at an exercise price per share equal to the initial public offering price per share;

▪

27,884,000 shares of common stock that were reserved for issuance as of June 30, 2021 under our Amended and Restated 2013 Stock Incentive Plan, or the 2013 Plan;

▪

shares of common stock reserved for future issuance under our 2021 Incentive Award Plan, or the 2021 Plan, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan, which will become effective immediately prior to the completion of this offering; and

▪

shares of common stock reserved for future issuance under our 2021 Employee Stock Purchase Plan, or the ESPP, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan, which will become effective on the day the ESPP is adopted.

Except as otherwise indicated, all information in this prospectus reflects or assumes the following:

▪

the effectiveness of our amended and restated certificate of incorporation and amended and restated bylaws in connection with the completion of this offering;

▪

the conversion of all of our outstanding shares of our convertible preferred stock into an aggregate of shares of common stock immediately prior to completion of this offering, or the Preferred Stock Conversion;

▪

the conversion of (i) our SCH Convertible Note and the 2019 Convertible Notes, into an aggregate of shares of common stock, based upon the assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus and (ii) all outstanding principal under our Daewoong Convertible Notes into an aggregate of shares of common stock, which represents 11.99% of the number of shares outstanding immediately prior to this offering, or the Note Conversions;

▪

the issuance of shares of common stock to Daewoong as payment for the paid-in-kind principal and accrued and unpaid interest under the Daewoong Convertible Note, based upon the assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus, or the Daewoong PIK Issuance;

▪

no exercise of outstanding options or the outstanding warrant after June 30, 2021;

▪

the Divestiture Transactions;

▪

an initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus;

▪

no exercise of the underwriters’ option to purchase additional shares of our common stock in this offering; and

▪

a for reverse split of our common stock effected on , 2021.

Our convertible notes include the SCH Convertible Note, the 2019 Convertible Notes and the Daewoong Convertible Note, each described under “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness—Convertible Notes.” These convertible notes will convert into shares of common stock in connection with this initial public offering. The number of shares of common stock issuable upon conversion of the SCH Convertible Note is equal to 175% of the principal amount of the SCH Convertible Note, divided by the initial public offering price. The number of shares of common stock issuable upon conversion of the 2019 Convertible Notes is equal to 175% of the principal amount of the 2019 Convertible Notes, divided by the initial public offering price. As of June 30, 2021, the aggregate amount that would be converted into shares of our common stock under our SCH Convertible Note and the 2019 Convertible Notes was $ million. At an assumed initial public offering price of $ per share, the midpoint of the price range on the cover page of this prospectus, we will issue shares of common stock upon conversion of the SCH Convertible Note and the 2019 Convertible Notes at the close of this offering. You can estimate the actual number of shares to be issued upon the conversion of these notes at the closing of this offering by dividing $ million by the initial public offering price.

Subject to certain conditions, in connection with an initial public offering, we may elect to pay the paid-in-kind principal plus all accrued and unpaid interest under the Daewoong Convertible Note either in cash or by the issuance of additional shares of our common stock at the initial public offering price. As of June 30, 2021, the outstanding paid-in-kind principal and accrued and unpaid interest under the Daewoong Convertible Note was $ million. You can estimate the number of additional shares to be issued in connection with the payment of paid-in-kind principal and all accrued and unpaid interest under the Daewoong Convertible Note at the closing of this offering by dividing $ million by the initial public offering price.

In connection with a settlement and license agreement we entered into with Medytox, Inc., or Medytox, we initially issued Medytox 26,680,511 shares of our common stock in June 2021. Pursuant to the terms of the agreement, we agreed to deliver Medytox additional shares of our common stock if its ownership of our common stock represented less than 10% of our total outstanding shares immediately following this offering. You can determine the number of additional shares that we might issue to Medytox at the closing of this offering by calculating the number of additional shares Medytox would need to acquire to own 10% of our total outstanding shares after this offering.

Summary CONSOLIDATED Financial Data

The following tables set forth a summary of our historical consolidated statements of operations and comprehensive income (loss) for the periods indicated and our consolidated balance sheet data on the dates indicated. The summary consolidated statements of operations and comprehensive income (loss) data for the years ended December 31, 2019 and 2020 (except for the pro forma net income (loss) per share and the pro forma share information) are derived from our audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated statements of operations and comprehensive (loss) income data for the six months ended June 30, 2020 and 2021 and the summary consolidated balance sheet data as of June 30, 2021 are derived from our unaudited interim consolidated financial statements included elsewhere in this prospectus. We have prepared the unaudited interim financial statements in accordance with U.S. generally accepted accounting principles on the same basis as the audited financial statements and, in the opinion of management, reflected all adjustments, which only include normal recurring adjustments, necessary for the fair presentation of our financial position as of June 30, 2021 and our results of operations and comprehensive (loss) income for the six months ended June 30, 2020 and 2021. The following summary financial data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected in any future period, and our interim results are not necessarily indicative of the expected results for future interim periods or the full year. The summary financial data in this section are not intended to replace the financial statements and are qualified in their entirety by the financial statements and related notes included elsewhere in this prospectus.

	Year Ended December 31,						Six Months Ended June 30,
	2019			2020			2020			2021
							(Unaudited)
Consolidated Statements of Operations and Comprehensive Income (Loss) Data
(in thousands, except share and per share data)

Revenue:
Services	$	3,342		$	2,518		$	1,391		$	—
Other revenue		15			—			—			—
Total revenue		3,357			2,518			1,391			—
Operating costs and expenses:
Cost of revenue		1			—			—			—
Selling, general and administrative		46,037			11,587			5,474			4,552
Research and development		4,814			7,319			1,558			10,203
Litigation settlement and license expense		—			—			—			28,966
Change in fair value of contingent royalty obligation to Evolus Founders		5,596			—			—			—
Depreciation and amortization		875			—			—			—
Total operating costs and expenses		57,323			18,906			7,032			43,721
Loss from operations		(53,966	)		(16,388	)		(5,641	)		(43,721	)
Other income (loss):
Interest income		720			—			—			—
Interest expense		(5,177	)		(1	)		—			—
Interest expense on related party borrowings		(2,293	)		(14	)		(14	)		—
Gain on deconsolidation of Evolus, Inc.		254,106			—			—			—
Gain on transfer of equity investment at fair value		6,597			—			—			—
Change in fair value of equity investment		(49,299	)		346			346			—
Change in fair value of convertible notes		(5,161	)		(5,498	)		680			(2,182	)
Loss on extinguishment of related party borrowings		—			(11,241	)		(11,241	)		—
Gain on cancellation of unwind fee		—			—			—			9,550
Gain on PPP loan forgiveness		—			139			—			—
Gain (loss) on equity-method investment		136			(140	)		(107	)		—
Other income (loss), net		7			(116	)		18			(100	)
Total other income (loss)		199,636			(16,525	)		(10,318	)		7,268
Income (loss) before taxes		145,670			(32,913	)		(15,959	)		(36,453	)
Income tax benefit		(14,645	)		—			—			—
Net income (loss) and comprehensive income (loss)		160,315			(32,913	)		(15,959	)		(36,453	)
Net loss and comprehensive loss attributable to noncontrolling interest		(12,605	)		—			—			—
Net income (loss) and comprehensive income (loss) attributable to AEON Biopharma, Inc. common stockholders	$	172,920		$	(32,913	)	$	(15,959	)	$	(36,453	)
Basic net income (loss) per share attributable to AEON Biopharma, Inc. common stockholders	$	1.22		$	(0.45	)	$	(0.29	)	$	(0.32	)
Diluted net income (loss) per share attributable to AEON Biopharma, Inc. common stockholders	$	1.21		$	(0.45	)	$	(0.29	)	$	(0.32	)
Weighted average shares of common stock outstanding used to compute basic net income (loss) per share attributable to AEON Biopharma, Inc. common stockholders		112,159,913			112,144,845			112,144,845			113,471,500
Weighted average shares of common stock outstanding used to compute diluted net income (loss) per share attributable to AEON Biopharma, Inc. common stockholders		112,976,436			112,144,845			112,144,845			113,471,500
Proforma basic net (loss) income per share attributable to AEON Biopharma, Inc. common stockholders (unaudited)				$						$
Proforma diluted net (loss) income per share attributable to AEON Biopharma, Inc. common stockholders (unaudited)				$						$
Proforma weighted average shares of common stock outstanding used to compute basic net (loss) income per share attributable to AEON Biopharma, Inc. common stockholders (unaudited)
Proforma weighted average shares of common stock outstanding used to compute diluted net (loss) income per share attributable to AEON Biopharma, Inc. common stockholders (unaudited)

__________

(1)

See Note 2 to our consolidated financial statements included elsewhere in this prospectus for an explanation of the method used to calculate basic and diluted net income (loss) per share and weighted average shares of common stock outstanding and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Unaudited Pro Forma Information” for an explanation of the calculations of our pro forma net (loss) income per share, basic and diluted and the number of shares used in the computation of the per share amounts.

	As of June 30, 2021
	Actual			Pro Forma⁽¹⁾	Pro Forma As Adjusted⁽²⁾⁽³⁾
				(Unaudited)
Consolidated Balance Sheet Data:
(in thousands)
Cash	$	10,605
Working capital⁽⁴⁾		8,616
Total assets		18,796
Convertible notes at fair value		79,342
Convertible preferred stock		137,949
Accumulated deficit		(403,099	)
Total AEON Biopharma, Inc. stockholders’ (deficit) equity		(215,760	)

(1)

Gives effect to (i) the Preferred Stock Conversion, (ii) the Note Conversions and (iii) the Daewoong PIK Issuance. The number of shares of common stock issuable upon conversion of our convertible notes, and the number of additional shares we may issue to Medytox upon the closing of this offering, are subject to adjustment as described in “Prospectus summary—The offering.”

(2)

Gives effect to: (i) the pro forma adjustments described above in footnote (1) and (ii) the sale by us of shares of common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

(3)

Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus, would increase (decrease) each of our pro forma as adjusted cash, working capital, total assets and total AEON Biopharma, Inc. stockholders’ equity by $ million, assuming that the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million in the number of shares offered by us in this offering would increase (decrease) each of our pro forma as adjusted amount of each of cash, working capital, total assets and total AEON Biopharma, Inc. stockholders’ equity by $ million, assuming the initial public offering price remains the same and after deducting the estimated underwriting discounts commissions and estimated offering expenses payable by us.

(4)	We define working capital as current assets less current liabilities. See our consolidated financial statements and related notes included elsewhere in this prospectus for further details regarding our current assets and current liabilities.

Risk Factors

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could have a material adverse effect on our business, results of operations, financial condition, prospects and stock price. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. As used in these risk factors, the terms “we,” “us,” “our,” and the “Company” refer to AEON Biopharma, Inc.

Risks Related to Our Business Operations and Financial Position

We are a clinical stage biopharmaceutical company with a limited operating history. Pharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We were originally incorporated in 2012, but did not begin focusing our efforts and financial resources on the clinical development and regulatory approval of ABP-450 for therapeutic indications until 2019. The operating history upon which investors must evaluate our business and prospects is extremely limited. Consequently, any predictions about our future success, performance or viability may not be as accurate as they could be if we had a longer operating history or a history of commercial operations. In addition, as an organization, we have limited experience and have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in the biopharmaceutical market. To date, we have not obtained any regulatory approvals for ABP-450 or generated any revenue from product sales relating to therapeutic uses of ABP-450.

We are not permitted to market ABP-450 for therapeutic use in the United States or in any other territory, and as such, we have not generated any revenue from sales of ABP-450 to date. We have recorded losses from operations of $54.0 million and $16.4 million for the years ended December 31, 2019 and 2020, respectively, and $5.6 million and $43.7 million for the six months ended June 30, 2020 and 2021, respectively, and had an accumulated deficit of $403.1 million as of June 30, 2021. We expect to continue to incur losses for the foreseeable future, and we anticipate these losses will increase as we continue to seek regulatory approval for, and begin to commercialize, ABP-450, if approved. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues. Our prior losses and expected future losses have had and will continue to have an adverse effect on our stockholders’ equity (deficit) and working capital. Because of the numerous risks and uncertainties associated with drug development, we are unable to accurately predict the timing or amount of increased expenses, or when, if at all, we will be able to achieve profitability. Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods. Our prior losses, combined with expected future losses, may adversely affect the market price of our common stock and our ability to raise capital and continue operations.

Marketing approval of biologics in the United States requires the submission of a biologics license application, or BLA, to the U.S. Food and Drug Administration, or the FDA, and we are not permitted to market any product candidate in the United States until we obtain approval from the FDA of the BLA for that product. A BLA must be supported by extensive clinical and preclinical data, as well as extensive information regarding pharmacology, chemistry, manufacturing and controls. FDA approval of a BLA is not guaranteed, and the review and approval process is an expensive and uncertain process that may take several years. The FDA also has substantial discretion in the approval process. The number and types of preclinical studies and clinical studies that will be required for BLA approval varies depending on the product candidate, the disease or the condition that the product candidate is designed to treat and the regulations applicable to any particular product candidate.

The FDA, the European Medicines Agency, or the EMA, and other regulatory authorities can delay, limit or deny approval of a product candidate for many reasons, including the following:

•

a product candidate may not be deemed safe, effective, pure or potent;

•

the data from preclinical studies and clinical studies may not be deemed sufficient;

•

the FDA, the EMA and other regulatory agencies might not approve our third-party manufacturers’ processes or facilities;

•

deficiencies in the formulation, quality control, labeling, or specifications of a product candidate or in response to citizen petitions or similar documents filed in connection with the product candidate;

•

a general requirement intended to address risks associated with a class of drugs, such as a new risk evaluation and mitigation strategy, or REMS, requirement for botulinum toxins;

•

the enactment of new laws or promulgation of new regulations that change the approval requirements; or

•

the FDA, the EMA and other regulatory agencies may change their approval policies or adopt new regulations.

If ABP-450 fails to demonstrate safety and efficacy in our clinical studies or does not gain approval in any of our proposed therapeutic indications, our business and results of operations will be materially and adversely harmed.

We currently have plans to pursue three therapeutic indications that are associated with one product candidate, ABP-450, and our business presently depends entirely on our ability to obtain regulatory approvals for ABP-450 for our planned indications and to successfully commercialize it in a timely manner. As an organization, we have never completed a clinical study related to the therapeutic uses of ABP-450. We have no biological products currently approved for sale and we may never be able to develop marketable products. We are not permitted to market ABP-450 in the United States until we receive approval of a BLA from the FDA, in the European Union until we receive approval of a marketing authorization application, or MAA, from the EMA, in Canada until we receive approval of a new drug submission, or NDS, from Health Canada or in any other countries permitted under our license and supply agreement, or the Daewoong Agreement, with Daewoong Pharmaceuticals Co., Ltd., or Daewoong, until we receive the requisite approval from the applicable regulatory authorities in such countries. We will need to conduct a significant amount of clinical testing before we receive regulatory approval for any of our planned indications, and do not know if or when we will receive any such approvals or whether we will need to make modifications or significant additional expenditures to obtain any such approvals. We can provide no assurances that ABP-450 will be successful in clinical studies or will ultimately receive regulatory approval in any therapeutic indication. Even if ABP-450 demonstrates efficacy, our injection protocols, including the selection of injection sites and amount of product injected at each injection site, may produce negative or inconclusive results or may result in the occurrence of serious adverse events. In addition, if we receive approval in one country for an indication, we may not receive a similar approval in any other jurisdiction, or in the same country for a different indication.

Even if regulatory approvals for one or more of our therapeutic indications are obtained, we may never be able to successfully commercialize ABP-450. We will need to transition at some point from a company with a development focus to a company capable of supporting commercial activities, including by obtaining approval for coverage and adequate reimbursement from third-party and government payors, but we may not be successful in such a transition. Accordingly, we may not be able to generate sufficient revenue through the sale of ABP-450 in each of our therapeutic indications to continue our business.

The COVID-19 pandemic has had, and may continue to have, an adverse effect on our operations, as well as the business or operations of our manufacturers, clinical research organizations, or CROs, or other third parties with whom we conduct business.

Our business has been and could continue to be adversely affected by the evolving COVID-19 pandemic, which was declared by the World Health Organization as a global pandemic. As a result of COVID-19, we may experience ongoing disruptions that could severely impact our business, preclinical studies and clinical studies, including:

•

delays or difficulties in enrolling and retaining an adequate number of patients in our clinical studies;

•

delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

•

delays in receiving authorizations from regulatory authorities to initiate future clinical trials;

•

diversion of healthcare resources away from the conduct of clinical studies, including the diversion of healthcare facilities serving as our clinical study sites and staff supporting the conduct of our clinical studies;

•

interruption of key clinical study activities, such as clinical study site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others or interruption of clinical study subject visits and study procedures, which may impact the integrity of subject data and clinical study endpoints;

•

risk that participants enrolled in our clinical studies will contract COVID-19 while the clinical study is ongoing, which could impact the results of the clinical study, including by increasing the number of observed adverse events;

•

interruptions in preclinical studies due to restricted or limited operations at our laboratory facility;

•

interruption of or delay in receiving supply of ABP-450 for our preclinical studies and clinical studies, including due to potential disruptions in the manufacturing of ABP-450 and the ability to import supply of ABP-450 from South Korea;

•

delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees;

•

interruption or delays in the operations of the FDA or other regulatory authorities, which may impact review and approval timelines;

•

changes in local regulations as part of a response to the evolving COVID-19 pandemic, which may require us to change the ways in which our clinical studies are conducted, which may result in unexpected costs, or to discontinue such clinical studies altogether; and

•

limitations in employee or consultant resources that would otherwise be focused on the conduct of our preclinical studies and clinical studies, including because of sickness of employees or consultants, or their families, or the desire of employees or consultants to avoid contact with large groups of people.

Our clinical studies have been, and may in the future be, affected by the COVID-19 pandemic. For example, the COVID-19 pandemic caused us to delay enrollment to institute new procedures for the safety of patients and investigators may in the future further impact patient enrollment in our two ongoing clinical studies. If patient enrollment is delayed for an extended period of time, our ongoing and planned clinical studies could be delayed or otherwise adversely affected. Similarly, our ability to recruit and retain principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may be adversely impacted.

In addition, there may be changes in local regulations or guidance as part of a response to the evolving COVID-19 pandemic, which may require us to change the ways in which our clinical studies are conducted. For example, we and our CROs have made certain adjustments to the operation of our studies in an effort to ensure the monitoring and safety of patients and minimize risks to study integrity during the pandemic in accordance with the guidance issued by the FDA, and may need to make further adjustments in the future. Additionally, we have amended our clinical study protocols to enable remote visits to mitigate any potential impacts as a result of the COVID-19 pandemic. As a result of this home health component, the overall costs of our clinical studies have increased and may continue to increase in the future. Many of these adjustments are new and untested, may not be effective, may affect the integrity of data collected, and may have unforeseen effects on the progress and completion of our clinical studies and the findings from such clinical studies.

In addition, we may encounter a shortage in supplies of, or in delays in shipping, our study drug or other components of the clinical study vital for successful conduct of the study. Three vaccines for COVID-19 were granted Emergency Use Authorization by the FDA in late 2020 and early 2021, and more are likely to be authorized in the coming months. The resultant demand for vaccines and potential for manufacturing facilities and materials to be commandeered under the Defense Production Act of 1950, or equivalent foreign legislation, may make it more difficult to obtain materials or manufacturing slots for the products needed for our clinical studies, which could lead to delays in these studies.

In addition, quarantines, shelter-in-place, and similar government orders, or the perception that such orders, shutdowns, or other restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact personnel at our CROs or third-party manufacturing facilities upon which we rely, or the availability or cost of materials, which could disrupt the supply chain for ABP-450. To the extent our suppliers and service providers are unable to comply with their obligations under our agreements with them or they are otherwise unable to deliver or are delayed in delivering goods and services to us due to the COVID-19 pandemic, our ability to continue meeting clinical supply demand for ABP-450 or otherwise advancing development of ABP-450 may become impaired.

The global outbreak of the COVID-19 coronavirus continues to rapidly evolve including with the identification of new variants of the virus around the world. The extent to which the COVID-19 coronavirus may impact our business, preclinical studies and clinical studies will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

The spread of COVID-19 and actions taken to reduce its spread may also materially affect us economically. While the potential economic impact brought by, and the duration of, the COVID-19 pandemic may be difficult to assess or predict, there could be a significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity and financial position. In addition, the trading prices for other companies have been highly volatile as a result of the COVID-19 pandemic. As a result, we may face difficulties raising capital through sales of our common stock or such sales may be on unfavorable terms.

In addition, to the extent the ongoing COVID-19 pandemic adversely affects our business and results of operations, it may also have the effect of heightening many of the other risks and uncertainties described in this “Risk Factors” section.

Clinical product development involves a lengthy, expensive and uncertain process. We may incur greater costs than we anticipate or encounter substantial delays or difficulties in our clinical studies.

We may not commercialize, market, promote or sell any product candidate without obtaining marketing approval from the FDA, the EMA or other regulatory agencies, and we may never receive such approvals. Clinical testing is expensive, is difficult to design and implement, can take many years to complete and is uncertain as to outcome. As a company, we are conducting and overseeing the conduct of preclinical and clinical studies of ABP-450 through contracts with CROs. We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical studies can occur at any stage of testing. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical studies have nonetheless failed to obtain marketing approval of their products.

We may experience numerous unforeseen events prior to, during, or as a result of, clinical studies that could delay or prevent our ability to receive marketing approval or commercialize ABP-450 in our proposed therapeutic indications, including the following:

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delays in reaching a consensus with regulatory authorities on the design or implementation of our clinical studies;

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regulators or institutional review boards and ethics committees may not authorize us or our investigators to commence a clinical study or conduct a clinical study at a prospective study site;

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delays in reaching agreement on acceptable terms with prospective CROs and clinical study sites;

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delays or failures by Daewoong to comply with current good manufacturing practices, or cGMPs, or other applicable requirements, or to provide sufficient supply of ABP-450 for use in our clinical studies;

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the number of patients required for clinical studies of ABP-450 in our proposed therapeutic indications may be larger than we anticipate, enrollment in these clinical studies may be slower than we anticipate, participants may drop out of these clinical studies at a higher rate than we anticipate or fail to return for post-treatment follow-up or we may fail to recruit suitable patients to participate in a study;

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clinical studies of ABP-450 in our proposed therapeutic indications may produce negative or inconclusive results;

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imposition of a clinical hold by regulatory authorities as a result of a serious adverse event, concerns with a class of product candidates or after an inspection of our clinical study operations, study sites or manufacturing facilities;

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occurrence of serious adverse events associated with ABP-450 in any of our proposed therapeutic indications that are viewed to outweigh its potential benefits;

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changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;

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we may decide, or regulators may require us, to conduct additional clinical studies or abandon product development programs; or

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the impacts of the COVID-19 pandemic on our ongoing and planned clinical studies.

Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenue from future product sales or other sources. In addition, if we make manufacturing or formulation changes to ABP-450, we may need to conduct additional testing to bridge our modified product candidate to earlier versions. Clinical study delays could also shorten any periods during which we may have the exclusive right to commercialize ABP-450, if approved in any currently proposed or future therapeutic indications, or allow our competitors to bring competing products to market before we do, which could impair our ability to successfully commercialize ABP-450 and may harm our business, financial condition, results of operations and prospects.

Additionally, if the results of our clinical studies are inconclusive or if there are safety concerns or serious adverse events associated with ABP-450 in any of our proposed therapeutic indications, we may:

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be delayed in obtaining marketing approval, or not obtain marketing approval at all;

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obtain approval for indications or patient populations that are not as broad as intended or desired;

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obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;

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be subject to additional post-marketing testing requirements;

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be required to perform additional clinical studies to support approval or be subject to additional post-marketing testing requirements;

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have regulatory authorities withdraw, or suspend, their approval of the product or impose restrictions on its distribution in the form of a REMS;

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be subject to the addition of labeling statements, such as warnings or contraindications;

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be sued; or

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experience damage to our reputation.

Our product development costs will also increase if we experience delays in testing or obtaining marketing approvals. We do not know whether any of our preclinical studies or clinical studies will begin as planned, need to be restructured or be completed on schedule, if at all. Additionally, the COVID-19 pandemic continues to evolve and any impacts on our projected milestones are highly uncertain and cannot be predicted with confidence.

Further, we, the FDA, a foreign regulatory authority, an ethics committee or an institutional review board may suspend our clinical studies at any time if it appears that we or our collaborators are failing to conduct a study in accordance with regulatory requirements, including the FDA’s current Good Clinical Practice, or GCP, regulations, that we are exposing participants to unacceptable health risks, or if the FDA, the EMA or other regulatory agencies finds deficiencies in our investigational new drug applications, or INDs, or clinical study applications, respectively, or the conduct of these studies. Moreover, to the extent our filing schedule for a new IND is dependent on further preclinical or manufacturing progress, we may not be able to file such INDs on the timelines we expect. Therefore, we cannot predict with any certainty the schedule for commencement and completion of future clinical studies. If we experience delays in the commencement or completion of our clinical studies, or if we terminate a clinical study prior to completion, the commercial prospects of ABP-450 could be negatively impacted, and our ability to generate revenue from ABP-450 may be delayed.

Additionally, certain of our scientific advisors or consultants who receive compensation from us are likely to be investigators for our future clinical studies. Under certain circumstances, we may be required to report some of these relationships to the FDA. The FDA may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA may therefore question the integrity of the data generated at the applicable clinical study site and the utility of the clinical study itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of marketing approval of ABP-450 in one or more indications. If we experience delays in the completion of, or termination of, any clinical study of ABP-450, the commercial prospects of ABP-450 will be harmed, and our ability to generate product revenue will be delayed. Moreover, any delays in completing our clinical studies will increase our costs, slow down our development and approval process and jeopardize our ability to commence product sales and generate revenues which may harm our business, financial condition and prospects significantly.

Enrollment and retention of patients in clinical studies is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control. If we experience delays or difficulties in enrolling patients in clinical studies, our receipt of necessary regulatory approval could be delayed or prevented.

Identifying and qualifying patients to participate in our clinical studies is critical to our success. The number of patients suffering from cervical dystonia is small and other indications we may pursue may have similarly small patient populations. We may encounter difficulties in enrolling patients in our clinical studies and may compete against other clinical studies for the same pool of potential patients, thereby delaying or preventing development and approval of ABP-450 in any of our proposed therapeutic indications. For example, the activation of investigators and sites for our migraine prevention Phase 2 clinical study was initially slower than we expected. Even once enrolled, we may be

unable to retain a sufficient number of patients to complete any of our studies on a timely basis or at all. Patient enrollment and retention in clinical studies depends on many factors, including the size of the patient population, the nature of the study protocol, the existing body of safety and efficacy data, the number and nature of competing treatments and ongoing clinical studies of competing therapies for the same indication, the proximity of patients to clinical study sites, the eligibility criteria for the study and other factors we may not be able to control that may limit patients, principal investigators or staff or clinical site availability, including the COVID-19 pandemic.

Our clinical studies have been, and may in the future be, affected by the COVID-19 pandemic. For example, the COVID-19 pandemic caused us to delay enrollment to institute new procedures for the safety of patients and investigators and may in the future further impact patient enrollment in our ongoing clinical studies. In particular, some sites may pause enrollment to focus on, and direct resources to, COVID-19, while at other sites, patients may choose not to enroll or continue participating in the clinical study as a result of the pandemic. As a result, current or potential patients in our ongoing and planned clinical studies may choose to not enroll, not participate in follow-up clinical visits, or drop out of the study as a precaution against contracting COVID-19. Further, some patients may not be able or willing to comply with clinical study protocols if quarantines impede patient movement or interrupt healthcare services.

Further, if patients drop out of our clinical studies, miss scheduled doses or follow-up visits, or otherwise fail to follow clinical study protocols, whether as a result of the COVID-19 pandemic, actions taken to slow the spread of COVID-19 or otherwise, the integrity of data from our clinical studies may be compromised or not accepted by the FDA or other regulatory authorities, which would represent a significant setback for the applicable program.

Our efforts to build relationships with patient communities may not succeed, which could result in delays in patient enrollment in our clinical studies. Any negative results we may report in clinical studies of ABP-450 in any of our proposed therapeutic indications may make it difficult or impossible to recruit and retain patients in other clinical studies of that same product candidate. Delays or failures in planned patient enrollment or retention, whether as a result of the COVID-19 pandemic, actions taken to slow the spread of the COVID-19 or otherwise, may result in increased costs, program delays or both, which could have a harmful effect on our ability to develop ABP-450 in any of our proposed therapeutic indications or could render further development impossible. In addition, we may rely on CROs and clinical study sites to ensure proper and timely conduct of our future clinical studies and, while we intend to enter into agreements governing their services, we will be limited in our ability to ensure their actual performance.

We expect that we will continue to expend substantial resources for the foreseeable future in order to complete development and seek regulatory approval for ABP-450 for the treatment of migraine, cervical dystonia and gastroparesis, identify future potential therapeutic applications for ABP-450 and establish sales and marketing capabilities to commercialize ABP-450 across approved indications.

We anticipate that the net proceeds from this offering, along with our cash, will be sufficient to fund our operating plan through at least the next 12 months. We have based these estimates, however, on assumptions that may prove to be wrong, and we could spend our available capital resources much faster than we currently expect or require more capital to fund our operations than we currently expect. Our future capital requirements depend on many factors, including:

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the timing of, and the costs involved in, obtaining regulatory approvals for ABP-450 in our proposed therapeutic indications;

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the scope, progress, results and costs of researching and developing ABP-450, and conducting preclinical and clinical studies;

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the cost of commercialization activities if ABP-450 is approved in any of our proposed therapeutic indications for sale, including marketing, sales and distribution costs;

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costs under our third-party manufacturing and supply arrangements for ABP-450 and any products we commercialize;

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the degree and rate of market acceptance of ABP-450 or any future approved products;

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the emergence, approval, availability, perceived advantages, relative cost, relative safety and relative efficacy of alternative and competing products;

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costs associated with any acquisition or in-license of products and product candidates, technologies or businesses, and the terms and timing of any strategic collaboration or other arrangement; and

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costs of operating as a public company.

If we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish certain valuable rights to our product candidate, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings or offerings of securities convertible into our equity, the ownership interest of our existing stockholders will be diluted and the terms of any such securities may have a preference over our common stock. Debt financing, receivables financing and royalty financing may also be coupled with an equity component, such as warrants to purchase our capital stock, which could also result in dilution of our existing stockholders’ ownership, and such dilution may be material. Additionally, if we raise additional capital through debt financing, we will have increased fixed payment obligations and may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt or making capital expenditures to meet specified financial ratios, and other operational restrictions, any of which could restrict our ability to commercialize ABP-450 in our proposed therapeutic indications or operate as a business and may result in liens being placed on our assets. If we were to default on any of our indebtedness, we could lose such assets. Additional funding may not be available on acceptable terms, or at all. As a result of the COVID-19 pandemic and actions taken to slow its spread, the global credit and financial markets have experienced volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly or more dilutive. If we do not raise capital, whether in this offering or otherwise, there will remain substantial doubt about our ability to continue as a going concern.

We have concluded that we do not have sufficient cash to fund our operations and to meet our obligations as they become due within through one year from the date that our consolidated financial statements are issued and as a result, there is substantial doubt about our ability to continue as a going concern.

Our ability to continue as a going concern is an issue raised as a result of ongoing operating losses and a lack of financing commitments to meet cash requirements, and is subject to our ability to generate a profit or obtain appropriate financing from outside sources, including obtaining additional funding from the sale of our securities or obtaining loans from third parties where possible. If we cannot continue as a going concern, we may have to liquidate our assets and may receive less than the value at which those assets are carried on our financial statements, and it is likely that our stockholders may lose some or all of their investment in us. After this offering, we may not raise the funding we require such that substantial doubt about our ability to continue as a going concern continues. If we seek additional financing to fund our business activities in the future and there remains substantial doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all.

ABP-450 may cause undesirable side effects or have other properties that could delay or prevent its regulatory approval in any of our proposed therapeutic indications, limit its commercial potential or result in significant negative consequences following any potential marketing approval.

During the conduct of clinical studies, patients report changes in their health, including illnesses, injuries and discomforts, to their doctor. Often, it is not possible to determine whether or not the product candidate being studied

caused or contributed to these conditions and regulatory authorities may draw different conclusions from us and require additional testing to confirm these determinations, if they occur. We are collecting data about ABP-450 from ongoing clinical and toxicology studies and any adverse events or undesirable side effects caused by, or other unexpected properties of, ABP-450 could cause us, any future collaborators, an IRB or ethics committee or regulatory authorities to interrupt, delay or halt clinical studies of ABP-450 and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities.

In addition, it is possible that as we test ABP-450 in larger, longer and more extensive clinical studies, or as use of ABP-450 becomes more widespread if it receives regulatory approval for any of our proposed indications, illnesses, injuries, discomforts and other adverse events that were not observed in earlier studies conducted by us, or, in the case of ABP-450, by others using the same botulinum toxin, as well as conditions that did not occur or went undetected in previous studies, will be reported by subjects or patients. Many times, side effects are only detectable after investigational products are tested in large-scale pivotal studies or, in some cases, after they are made available to patients on a commercial scale after approval. If additional clinical experience indicates that ABP-450 has side effects or causes serious or life-threatening side effects in any of our proposed therapeutic indications, the development of ABP-450 in that indication may fail or be delayed. Additionally, there is the risk that as botulinum toxins other than ABP-450 are approved for and studied in connection with a broader range of diseases and conditions and across a more diverse population, additional safety signals and other adverse events may be identified. All botulinum toxin products are required to include a class labeling that contains a boxed warning related to safety and we could be required to include additional warnings on our product labeling, if approved.

If ABP-450 receives regulatory approval, and we or others identify undesirable side effects of ABP-450, a number of potentially significant negative consequences could result, such as regulatory authorities revoking such approval or imposing additional restrictions on the marketing and promotion of the product, or we may be required to recall the product or implement changes to the way the product is administered. We could also be sued and held liable for harm caused to patients, which could hinder commercial acceptance of ABP-450 and adversely affect our business, financial condition, results of operations and prospects.

Results of other parties’ clinical studies involving the same or a nearly identical botulinum toxin complex as ABP-450, or results in any preclinical studies we conduct, may not be predictive of future results of our clinical studies.

Success in clinical studies conducted by Daewoong and Evolus, Inc., or Evolus, involving a botulinum toxin that is identical or nearly identical to ABP-450 does not ensure that any clinical studies we conduct using ABP-450 will be successful and we will still need to submit our independently generated data to applicable regulatory agencies to support regulatory approval of ABP-450 in any of our proposed therapeutic indications. Similarly, success in any preclinical studies or clinical studies that we conduct will not ensure that later clinical studies will be successful. A number of companies in the biotechnology and pharmaceutical industries have suffered significant setbacks in clinical studies, even after positive results in earlier preclinical studies and earlier clinical studies. These setbacks have been caused by, among other things, preclinical findings made while clinical studies were underway and safety or efficacy observations made in clinical studies, including previously unreported adverse events. Notwithstanding any potential promising results in earlier studies, we cannot be certain that we will not face similar setbacks.

Additionally, our clinical studies may utilize an “open-label” trial design. An “open-label” clinical trial is one where both the patient and investigator know whether the patient is receiving the investigational product candidate for either an existing approved drug or placebo. Most typically, open-label clinical studies test only the investigational product candidate and may do so at different dose levels. Open-label clinical studies are subject to various limitations that may exaggerate any therapeutic effect as patients in open-label clinical studies are aware when they are receiving treatment. Open-label clinical studies may be subject to a “patient bias” where patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment. In addition, open-label clinical studies may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical studies are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this knowledge. The results from an open-label trial may not be predictive of future clinical trial results with any of our product candidates when studied in a controlled environment with a placebo or active control.

Interim or preliminary data from our clinical studies that we may announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publish interim or preliminary data from our clinical studies. Interim and preliminary data for the studies we may complete are subject to the risk that one or more clinical outcomes may materially change as patient enrollment continues or more patient data become available. Interim and preliminary data also remains subject to audit and verification procedures that may result in the final data being materially different from the preliminary data previously published. As a result, any interim or preliminary data should be viewed with caution until final data is available. Material adverse changes in the final data could result in significant harm to our business prospects.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of our product candidate or product and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical study is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular pharmaceutical or biological product, pharmaceutical or biological product candidate or our business. If the interim or preliminary data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidate in any currently proposed or future therapeutic indications may be harmed, which could harm our business, operating results, prospects or financial condition.

Due to our limited resources and access to capital, we must prioritize development of certain therapeutic uses of ABP-450; these decisions may prove to be wrong and may adversely affect our business.

While our initial focus is on the development and approval of ABP-450 for the treatment of migraine, cervical dystonia and gastroparesis, a key element of our strategy is to identify additional conditions for which ABP-450 may be an effective therapy. However, there can be no assurances that we will be successful in identifying such conditions. Even if we are successful in identifying such conditions, we may experience difficulties in identifying a proper treatment regimen, or we may fail to secure regulatory approval for a particular indication. If we are unable to gain regulatory approval for indications in addition to the indications for the treatment of migraine, cervical dystonia and gastroparesis on which we are currently focused, or if FDA or other regulatory agencies require us to pursue a narrower indication than we have currently identified, we may be limited in our ability to grow our business.

Efforts to identify and pursue additional therapeutic uses of ABP-450 require substantial technical, financial and human resources, regardless of whether they are ultimately successful. Because we have limited financial and personnel resources, we may forgo or delay pursuit of opportunities with potential target indications that later prove to have greater commercial potential or a greater likelihood of success. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. We may focus our efforts and resources on potential therapeutic uses of ABP-450 that ultimately prove to be unsuccessful.

We may not be successful in obtaining an original BLA that contemplates exclusively therapeutic uses of ABP-450.

Part of our regulatory strategy includes initially pursuing an original BLA that contemplates exclusively therapeutic uses of ABP-450, as opposed to a BLA supplement to the Jeuveau BLA. We believe that such a BLA, if approved, would provide us a competitive advantage over other companies that sell botulinum toxins for both therapeutic and aesthetic indications. In particular, if an original BLA were approved, we believe we would be able to offer consistent, favorable reimbursement to physicians and have the pricing flexibility to enhance the rebates to payors and/or providers, since reimbursement would not be influenced by pricing dynamics that affect the aesthetic market. However, there can be no assurance that we will be able to obtain such a BLA, and other companies that sell botulinum toxins for both therapeutic and aesthetic indications have experienced regulatory issues and denials by the FDA that led them to abandon the approach of applying for separate original BLAs that would cover the separate markets. There can be no assurance that, even if we successfully obtain an original BLA, that we will be able to realize the economic

advantages that are predicated on the separation of therapeutic sales of ABP-450 and cosmetic sales of Jeuveau to calculate the average selling price, or ASP, for purposes of reimbursement. In the event we are not able to obtain an original BLA, we may not be able to ensure the consistent pricing that we believe an original BLA would offer, and the ASP of our products could be adversely affected.

Even if ABP-450 receives regulatory approval for any of our proposed indications, it may fail to achieve the broad degree of market acceptance by physicians, patients, third-party payors and others in the medical community necessary for commercial success.

Even if ABP-450 receives marketing approval for one or more therapeutic indications, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community for those indications. The commercial success of ABP-450, if approved in any currently proposed or future therapeutic indications, will depend significantly on the broad adoption and use of the resulting product by physicians for approved indications. The degree of market acceptance of any product candidate, if approved for commercial sale, will depend on a number of factors, including but not limited to:

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the convenience and ease of administration compared to alternative treatments and therapies;

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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

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the efficacy and potential advantages compared to alternative treatments and therapies;

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the availability of third-party coverage and adequate reimbursement, and patients’ willingness to pay out-of-pocket in the absence of third-party coverage or adequate reimbursement;

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the effectiveness of sales and marketing efforts;

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the strength of our relationships with patient communities;

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the timing of market introduction of our product candidate in relation to other potentially competitive products;

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the cost of treatment in relation to alternative treatments and therapies;

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the amount of upfront costs or training required for physicians to administer our product candidate;

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our ability to offer such product for sale at competitive prices;

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the strength of marketing and distribution support;

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the presence or perceived risk of potential product liability claims;

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the prevalence and severity of any side effects; and

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any restrictions on the use of the product together with other medications.

Our efforts to educate physicians, patients, third party payors and others in the medical community on the benefits of our products, if approved, may require significant resources and may never be successful.

If ABP-450 fails to gain market acceptance, this will have a material adverse impact on our ability to generate revenues to provide a satisfactory, or any, return on our investments. Even if some therapeutic indications achieve market acceptance, the market may prove not to be large enough to allow us to generate significant revenues.

ABP-450, if approved in any currently proposed or future therapeutic indications, will face significant competition and our failure to effectively compete may prevent us from achieving significant market penetration and expansion.

The pharmaceutical industry is highly competitive and requires an ongoing, extensive search for technological innovation. It also requires, among other things, the ability to effectively discover, develop, test and obtain regulatory approvals for novel products, as well as the ability to effectively commercialize, market and promote approved products, including communicating the effectiveness, safety and value of products to actual and prospective customers and medical professionals. Numerous companies are engaged in the development, manufacture and marketing of products competitive with those that we are developing. Our primary competitors for ABP-450 in the injectable botulinum toxin pharmaceutical market for therapeutic use are:

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Botox, which is marketed by Allergan, and since its original approval by the FDA in 1989 has been approved for multiple therapeutic indications, including migraine, cervical dystonia, upper and lower limb spasticity, strabismus, blepharospasm, incontinence, axillary hyperhidrosis, and overactive bladder;

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Dysport, which is marketed by Ipsen Ltd. as an injectable botulinum toxin for the therapeutic indications of cervical dystonia and upper and lower limb spasticity;

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Xeomin, which is marketed by Merz Pharmaceuticals, LLC as an injectable botulinum toxin for the therapeutic indications of cervical dystonia, blepharospasm, and upper limb spasticity; and

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Revance Therapeutics, Inc., or Revance, which is currently studying its injectable botulinum toxin, daxibotulinumtoxinA for the therapeutic indications of cervical dystonia, plantar fasciitis, adult upper limb spasticity and migraine, and has also entered into a collaboration and license agreement with Viatris Inc. to develop and commercialize a biosimilar to Botox.

We are also aware of competing botulinum toxins currently being developed or commercialized in the United States, European Union, Asia, South America and other markets. While some of these products may not meet U.S. regulatory standards, the companies operating in these markets may be able to produce products at a lower cost than U.S. and European manufacturers. In addition to the injectable botulinum toxin dose forms, we are aware that other companies are developing topical botulinum toxins for therapeutics indications.

We will also face competition in our target therapeutic markets from other pharmaceutical products. For the treatment of cervical dystonia, in addition to other injectable botulinum toxins, we will face competition from orally administered anticholinergic, GABA receptor agonist, benzodiazepine, dopaminergic and anticonvulsant pharmaceuticals. For the treatment of migraine, we will face competition from calcitonin gene-related peptide agonists, or CGRPs, including Aimovig (erenumab) marketed by Amgen Inc., Ajovy (fremenezumab) marketed by Teva Pharmaceutical Industries Ltd., and Emgality (galcenezumab) marketed by Eli Lilly and Company, as well as certain orally administered anti-epileptic, beta-blocker and triptan pharmaceuticals. For the treatment of gastroparesis, we will face competition from prokinetic agents, including REGLAN (metoclopramide), which is the only medication currently approved by FDA for the treatment of gastroparesis.

Many of our competitors have greater financial and other resources than we have. This enables them, among other things, to leverage their financial resources to make greater research and development, marketing and promotion investments than us. Our competitors may also have more experience and expertise in obtaining marketing approvals from the FDA and other regulatory authorities. Our technologies and products may be rendered obsolete or uneconomical by technological advances or entirely different approaches developed by one or more of our competitors. For example, Revance has published data related to the treatment of cervical dystonia that indicates that its botulinum toxin may have a duration of effect of at least 24 weeks, which may compare favorably to the duration of effect of ABP-450. As more companies develop new intellectual property in our markets, the possibility of a competitor acquiring patent or other rights that may limit our products or potential products increases, which could lead to litigation. In addition to product development, testing, approval and promotion, other competitive factors in the pharmaceutical industry includes industry consolidation, product quality and price, product technology, reputation, customer service and access to technical information.

If approved, ABP-450 may face competition sooner than anticipated.

With the enactment of the Biologics Price Competition and Innovation Act of 2009, or the BPCIA, as part of the Patient Protection and Affordable Care Act, an abbreviated pathway for the approval of biological products that are biosimilar to or interchangeable with an FDA-licensed reference biological product was created. The abbreviated regulatory pathway establishes legal authority for the FDA to review and approve biosimilar biologics. Under the BPCIA, an application for a biosimilar product may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA. In addition, the approval of a biosimilar product may not be made effective by the FDA until twelve years from the date on which the reference product was first licensed. During this twelve-year period of exclusivity, another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing the sponsor’s own preclinical data and data from adequate and well-controlled clinical studies to demonstrate the safety, purity and potency of their product. The law is complex and is still being interpreted and implemented by the FDA. As a result, its ultimate impact, implementation, and meaning are subject to uncertainty. While it is uncertain when such processes intended to implement the BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for our biological products.

We have not determined whether ABP-450 would qualify for the twelve-year period of exclusivity based on submission of an original BLA, a shorter period or any exclusivity at all. Even if we are able to obtain separate twelve-year exclusivity, or a shorter exclusivity period, there is a risk that any exclusivity could be shortened due to congressional action or otherwise, that the FDA attempts to adopt an alternate interpretation of law that precludes exclusivity, or that the FDA will not consider ABP-450 to be a reference product for competing products, potentially creating the opportunity for competition sooner than anticipated. Moreover, the extent to which a biosimilar product, once approved, will be substituted for any one of our reference products in a way that is similar to traditional generic substitution for non-biological products is not yet clear and will depend on a number of marketplace and regulatory factors that are still developing. If we are unable to obtain an original BLA, and ABP-450 receives a supplemental BLA, we would not qualify for the exclusivity period.

If we are unable to establish sales and marketing capabilities on our own or through third parties, we will be unable to successfully commercialize ABP-450, if approved in any proposed therapeutic indication, or generate product revenue.

We do not have a sales or marketing infrastructure and have little experience in the sale, marketing, or distribution of pharmaceutical products. To successfully commercialize ABP-450, if approved in any proposed therapeutic indication, in the United States, the European Union, Canada and other jurisdictions we may seek to enter, we will need to build out our sales and marketing capabilities, either on our own or with others. The establishment and development of our own commercial team or the establishment of a contract sales force to market ABP-450 will be expensive and time-consuming and may divert significant management focus and resources, potentially delaying any product launch. Moreover, we cannot be certain that we will be able to successfully develop this capability, and have no experience as a company in commercializing products. We may seek to enter into collaborations with other entities to utilize their established marketing and distribution capabilities, but we may be unable to enter into or maintain such agreements on favorable terms or at all. We can provide no assurance that any future collaborators will provide effective sales forces or marketing and distribution capabilities. We compete with many companies that currently have extensive, experienced and well-funded marketing and sales operations to recruit, hire, train and retain marketing and sales personnel, and will have to compete with those companies to recruit, hire, train and retain any of our own marketing and sales personnel. We will likely also face competition if we seek third parties to assist us with the sales and marketing efforts of ABP-450 in our proposed therapeutic indications. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.

We will need to grow the size of our organization, and we may experience difficulties in managing this growth.

As of September 17, 2021, we had six employees. As the clinical development of ABP-450 progresses, we also expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of research, development, regulatory affairs and, if ABP-450 receives marketing approval for any of our proposed indications, sales, marketing and distribution. In addition, we also expect to hire additional personnel in

order to operate as a public company. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel. In addition, we must effectively integrate, develop and motivate a growing number of new employees, and maintain the beneficial aspects of our corporate culture. The expansion of our operations may lead to significant costs and may divert our management and business development resources. We may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. Any inability to manage growth could delay the execution of our development and strategic objectives or disrupt our operations.

We currently rely, and for the foreseeable future will continue to rely, in substantial part on third parties, including independent organizations, advisors and consultants, such as Strathspey Crown Holdings Group, LLC, or SCH, and CROs to provide certain services to support and perform our operations. There can be no assurance that the services of these third parties will continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In addition, if we are unable to effectively manage our outsourced activities or if the quality, accuracy or quantity of the services provided, in particular the services provided by our CROs, is compromised for any reason, our clinical studies may be delayed or terminated, and we may not be able to obtain, or may be substantially delayed in obtaining, regulatory approval of ABP-450 in any of our proposed therapeutic indications or otherwise advance our business. There can be no assurance that we will be able to manage our existing consultants or find other suitable outside contractors and consultants on economically reasonable terms, or at all.

Our employees, independent contractors, consultants, commercial collaborators, principal investigators, vendors and other agents may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements.

We are exposed to the risk that our employees, independent contractors, consultants, commercial collaborators, principal investigators, vendors and other agents may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or disclosure of unauthorized activities to us that violates applicable regulations, including those laws requiring the reporting of true, complete and accurate information to regulatory agencies, manufacturing standards, and federal and state healthcare laws and regulations. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. We could face liability under the federal Anti-Kickback Statute and similar state laws. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, referrals, customer incentive programs and other business arrangements. Misconduct by these parties could also involve the improper use of individually identifiable information, including, without limitation, information obtained in the course of clinical studies, which could result in significant regulatory sanctions and serious harm to our reputation. Further, should violations include promotion of unapproved (off-label) uses one or more of our products, we could face significant regulatory sanctions for unlawful promotion, as well as substantial penalties under the federal False Claims Act, or FCA, and similar state laws. Similar concerns could exist in jurisdictions outside of the United States as well. We intend to adopt, prior to the completion of this offering, a code of conduct applicable to all of our employees, but it is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. The precautions we take to detect and prevent misconduct may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to operate our business, financial condition and results of operations.

Our proposed international operations will expose us to risks, and failure to manage these risks may adversely affect our operating results and financial condition.

We expect to have operations both inside and outside the United States if ABP-450 is approved for commercial sale in multiple jurisdictions. International operations are subject to a number of inherent risks, and our future results could be adversely affected by a number of factors if we seek and obtain the necessary approvals, including:

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requirements or preferences for domestic products, which could reduce demand for our products;

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differing existing or future regulatory and certification requirements;

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management communication and integration problems resulting from cultural and geographic dispersion;

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greater difficulty in collecting accounts receivable and longer collection periods;

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difficulties in enforcing contracts;

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difficulties and costs of staffing and managing non-U.S. operations;

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the uncertainty of protection for intellectual property rights in some countries;

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tariffs and trade barriers, export regulations and other regulatory and contractual limitations on our ability to sell our products;

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more stringent data protection standards in some countries;

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regulatory concerns limiting ability to import or export products;

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greater risk of a failure of foreign employees to comply with both U.S. and foreign laws, including export and antitrust regulations, the U.S. Foreign Corrupt Practices Act, or the FCPA, quality assurance and other healthcare regulatory requirements and any trade regulations ensuring fair trade practices;

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heightened risk of unfair or corrupt business practices in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial statements;

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foreign currency exchange rates;

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potentially adverse tax consequences, including multiple and possibly overlapping tax structures and difficulties relating to repatriation of cash; and

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political and economic instability, political unrest and terrorism.

These and other factors associated with international operations could harm our ability to gain future revenue and, consequently, materially impact our business, operations results and financial condition.

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of ABP-450.

We face an inherent risk of product liability as a result of the clinical testing of ABP-450 and will face an even greater risk if we commercialize any products. For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties. Claims could also be asserted

under state consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our products. Even a successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

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decreased demand for ABP-450;

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termination of clinical study sites or entire study programs;

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injury to our reputation and significant negative media attention;

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withdrawal of clinical study participants or cancellation of clinical studies;

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significant costs to defend the related litigation;

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a diversion of management’s time and our resources;

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substantial monetary awards to study participants or patients;

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regulatory investigations, product recalls, withdrawals or labeling, marketing or promotional restrictions;

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loss of revenue;

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the inability to commercialize any products we develop; and

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a decline in our share price.

Our inability to obtain and maintain sufficient product liability insurance at an acceptable cost and scope of coverage to protect against potential product liability claims could prevent or inhibit the commercialization of ABP-450 in any current or future proposed therapeutic indication. We currently carry product liability insurance covering our clinical studies. Although we maintain such insurance, any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. Our insurance policies also have various exclusions and deductibles, and we may be subject to a product liability claim for which we have no coverage. We will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. Moreover, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses. If and when we obtain approval for marketing ABP-450, we intend to expand our insurance coverage to include the sale of ABP-450, however, we may be unable to obtain this liability insurance on commercially reasonable terms.

If we fail to attract and keep senior management and key scientific personnel, we may be unable to successfully develop ABP-450 in any of our proposed therapeutic indications, conduct our clinical studies and commercialize ABP-450.

Our success depends in part on our continued ability to attract, retain and motivate highly qualified management. We believe that our future success is highly dependent upon the contributions of our senior management, particularly Marc Forth, our Chief Executive Officer, as well as other members of our senior management team. The loss of services of any of these individuals could delay or prevent the successful development of our product pipeline, completion of our planned clinical studies or the commercialization of ABP-450 in each of our therapeutic indications or any future products we develop.

In addition, we could experience difficulties attracting and retaining qualified employees in the future. For example, competition for qualified personnel in the pharmaceuticals field is intense due to the limited number of individuals who possess the skills and experience required by our industry. We may not be able to attract and retain quality

personnel on acceptable terms, or at all. In addition, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or that they have divulged proprietary or other confidential information or that their former employers own their research output.

Our business involves the use of hazardous materials, and we and our third-party manufacturer and supplier must comply with environmental laws and regulations, which can be expensive and restrict how we do business.

Our research and development and manufacturing activities in the future may, and Daewoong’s manufacturing and supplying activities presently do, involve the controlled storage, use and disposal of hazardous materials, including botulinum toxin type-A, a key component of ABP-450, and other hazardous compounds. We and Daewoong are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at Daewoong’s facilities pending their use and disposal. We and Daewoong cannot eliminate the risk of contamination, which could cause an interruption of Daewoong’s manufacturing processes, our commercialization efforts, business operations and environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. Although we believe that the safety procedures utilized by Daewoong for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, this may not eliminate the risk of accidental contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability could exceed our resources, and state or federal or other applicable authorities may curtail our use of certain materials and interrupt our business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation undergoes an “ownership change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards, or NOLs, and other pre-change tax attributes, such as research tax credits, to offset its post-change taxable income or income tax liabilities, as applicable, may be limited. As of December 31, 2020, we had $50.4 million of federal NOLs available to offset our future federal taxable income, if any, and federal research and development tax credit carryforwards of $0.4 million. These federal research and development tax credit carryforwards and $48.9 million of our federal NOLs expire at various dates beginning in 2036. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership. As a result, if we earn net taxable income, our ability to use our pre-change NOLs to offset federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. Similar rules may apply under state tax laws. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. We had no state NOLs as of December 31, 2020.

Changes in tax laws, including as a result of the 2020 United States presidential and congressional elections, may impact our future financial position and results of operations.

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, or interpreted, changed, modified or applied adversely to us, any of which could adversely affect our business operations and financial performance. In particular, the recent presidential and congressional elections in the United States could result in significant changes in, and uncertainty with respect to, tax legislation, regulation and government policy directly affecting our business or indirectly affecting us because of impacts on suppliers. For example, United States tax legislation has been proposed that, if enacted, would make significant changes to the taxation of business entities including, among others, a permanent increase in the corporate income tax rate, an increase in the tax rate applicable to the global intangible low-taxed income and elimination of certain exemptions, and the imposition of minimum taxes or surtaxes on certain types of income. The likelihood of these changes being enacted or implemented in their proposed form is unclear. We are currently unable to predict whether such changes will occur and, if so, the ultimate impact on our business. To the extent that such changes have a negative impact on us or our suppliers, including as a result of related uncertainty, these changes may materially and adversely impact our business, financial condition, results of operations and cash flows.

Risks Related to our Reliance on Third Parties

We rely on the Daewoong Agreement to provide us exclusive rights to commercialize and distribute ABP-450 in certain territories. Any termination or loss of significant rights, including exclusivity, under the Daewoong Agreement would materially and adversely affect our development or commercialization of ABP-450.

Pursuant to our license and supply agreement, or the Daewoong Agreement, we have secured an exclusive license from Daewoong, a South Korean pharmaceutical manufacturer, to import, distribute, promote, market, develop, offer for sale and otherwise commercialize and exploit ABP-450 for therapeutic indications in the United States, European Union, the United Kingdom, Canada, Australia, Russia, Commonwealth of Independent States and South Africa. The Daewoong Agreement imposes on us obligations relating to exclusivity, territorial rights, development, commercialization, funding, payment, diligence, sublicensing, intellectual property protection and other matters. We are obligated to conduct development activities, obtain regulatory approval of ABP-450 and obtain from Daewoong all of our product supply requirements for ABP-450. In addition, under the Daewoong Agreement, we are required to submit our commercialization plan to a Joint Steering Committee, or JSC, comprised of an equal number of development and commercial representatives from Daewoong and us, for review and input. Although the Daewoong Agreement provides us with final decision-making power regarding the marketing, promotion, sale and/or distribution of ABP-450, any disagreement among the JSC would be referred to Daewoong’s and our respective senior management for resolution if the JSC is unable to reach a decision within thirty days, which may result in a delay in our ability to implement our commercialization plan or harm our working relationship with Daewoong.

The initial term of the Daewoong Agreement will expire on the later of December 20, 2029 or the fifth anniversary of our receipt of marketing approval in any of the aforementioned territories. The Daewoong Agreement will renew for unlimited additional three year terms after the expiration of the initial term. We or Daewoong may terminate the Daewoong Agreement if the other party breaches any of its duties or obligations and such breach continues without cure for ninety days, or thirty days in the case of a payment breach, or if we declare bankruptcy or assign our business for the benefit of creditors.

We will be the sole owner of any marketing authorization we pursue and clinical study results from our current or future studies related to therapeutic indications of ABP-450 in a covered territory. This will include ownership of any BLA that we may submit to the FDA, MAA that we may submit to the EMA, NDS that we may submit to Health Canada, and any other approvals that we may receive in a covered territory. However, if we do not renew the Daewoong Agreement or upon termination of the Daewoong Agreement due to a breach by us, we are obligated to transfer our rights to Daewoong.

If we breach any material obligations, or use the intellectual property licensed to us in an unauthorized manner, we may be required to pay damages to Daewoong and Daewoong may have the right to terminate our license. Any termination or loss of rights under the Daewoong Agreement would materially and adversely affect our ability to develop and commercialize ABP-450, which in turn would have a material adverse effect on our business, operating results and prospects. If we were to lose our rights under the Daewoong Agreement, we believe it would be difficult or impossible for us to find an alternative supplier of a botulinum toxin type-A complex. In addition, to the extent the alternative supplier has not secured regulatory approvals in a jurisdiction, we would have to expend significant resources, including performing additional clinical studies, to obtain regulatory approvals that may never be obtained or require several years to obtain, which could significantly delay commercialization. We may be unable to raise additional capital to fund our operations during this extended time on terms acceptable to us or at all. If we were to commercialize ABP-450 and later experienced delays as a result of a dispute with Daewoong, the demand for ABP-450 could be materially and adversely affected.

We currently rely solely on Daewoong to manufacture ABP-450, and as such, any production or other problems with Daewoong could adversely affect us. The manufacture of biologics is complex and Daewoong may encounter difficulties in production that may impact our ability to provide supply of ABP-450 for clinical studies, our ability to obtain marketing approval, or our ability to obtain commercial supply of our products, if approved, could be delayed or stopped.

We have no experience in biologic manufacturing and do not own or operate, and we do not expect to own or operate, facilities for product manufacturing, storage and distribution, or testing. We depend solely upon Daewoong to manufacture ABP-450. Any failure or refusal by Daewoong to supply ABP-450 could delay, prevent or impair our

clinical development or commercialization efforts. Although alternative sources of supply may exist, the number of third-party suppliers with the necessary manufacturing and regulatory expertise and facilities is limited, and it could be expensive and take a significant amount of time to arrange for alternative suppliers, which could have a material adverse effect on our business. New suppliers of any product candidate would be required to qualify under applicable regulatory requirements and would need to have sufficient rights under applicable intellectual property laws to the method of manufacturing the product candidate. Obtaining the necessary FDA approvals or other qualifications under applicable regulatory requirements and ensuring non-infringement of third-party intellectual property rights could result in a significant interruption of supply and could require the new manufacturer to bear significant additional costs which may be passed on to us. We will also need to verify, such as through a manufacturing comparability study, that any new CMO or manufacturing process will produce our product candidate according to the specifications previously submitted to the FDA or another regulatory authority. We may be unsuccessful in demonstrating the comparability of clinical supplies which could require conducting additional clinical studies.

In addition, there are risks associated with large scale manufacturing for clinical studies or commercial scale including, among others, cost overruns, potential problems with process scale-up, process reproducibility, stability issues, compliance with good manufacturing practices, lot consistency and timely availability of raw materials. Even if we obtain marketing approval for ABP-450, there is no assurance that Daewoong will be able to manufacture the approved product to specifications acceptable to the FDA or other comparable foreign regulatory authorities, to produce it in sufficient quantities to meet the requirements for the potential commercial launch of the product or to meet potential future demand. If Daewoong is unable to produce sufficient quantities for clinical studies or for commercialization, our development and commercialization efforts would be impaired, which would have an adverse effect on our business, financial condition, results of operations and growth prospects.

Our reliance on Daewoong entails additional risks, including reliance on Daewoong for regulatory compliance and quality assurance, the possible breach of the Daewoong Agreement by Daewoong, and the possible termination or nonrenewal of the Daewoong Agreement at a time that is costly or inconvenient for us. Our failure, or the failure of Daewoong, to comply with applicable regulations, such as cGMP, which includes, among other things, quality control, quality assurance and the maintenance of records and documentation, could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of the product candidate or drugs, import alerts or detentions preventing import of product into the United States or other territories, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of ABP-450. Our dependence on Daewoong also subjects us to all of the risks related to Daewoong’s business, which are all generally beyond our control. Daewoong’s ability to perform its obligations under the Daewoong Agreement is dependent on its operational and financial health, which could be negatively impacted by several factors, including changes in the economic, political and legislative conditions in South Korea and the broader region in general and the ability of Daewoong to continue to successfully attract customers and compete in its market. Furthermore, Daewoong’s recently constructed manufacturing facility is Daewoong’s directly owned facility meeting FDA and EMA cGMP requirements. Daewoong’s lack of familiarity with, or inability to effectively operate, the facility and produce products of consistent quality, may harm our ability to compete in our market.

In addition, we are ultimately responsible for distribution of products under any authorization or approval we hold to investigate or market ABP-450. We do not own a manufacturing facility and we have never supervised manufacturing operations, but we have regulatory obligations to review batch records and release of the investigational product for our clinical studies. Further, we will have similar regulatory obligations if the product is marketed and could be held responsible for any distribution of adulterated or misbranded ABP-450, even if caused by Daewoong’s noncompliance.

The FDA conducted a cGMP and pre-approval inspection of Daewoong’s manufacturing facility in South Korea related to Evolus’ BLA for Jeuveau from November 8, 2017 to November 17, 2017. At the end of the inspection, the FDA issued an FDA Form 483 with ten inspectional observations of regulatory noncompliance to Daewoong. The Form 483 includes observations relating to the need for adherence to and improved procedures, processes and documentation relating to investigations of and corrective actions for non-compliance with specifications for batches and components, environmental monitoring, drug substance testing, computer system access, material handling and staff training. Daewoong timely responded to the FDA with a plan for implementing corrective actions related to these observations. Daewoong provided complete responses to the Form 483; however, the time to correct the observations,

submit the complete response and FDA review and acceptance of the responses delayed approval of Evolus’ BLA. Neither the FDA, Health Canada nor the EMA have conducted a repeat inspection of Daewoong manufacturing facility per usual FDA Quality Review Practices to confirm continued compliance with cGMP regulations. A separate pre-licensure inspection may be required for any BLA we submit for any of our product candidates. Should the repeat inspection find serious deviation from cGMP manufacturing regulations, or repeated observations, Daewoong may be required to expend significant time and resources to correct any observations, which could cause delays and adversely affect availability of drug product to support our research and development operations. For example, the FDA is permitted to deny entry of any imported product that “appears” to be adulterated or misbranded, meaning it does not actually need to be violative to be prohibited from entry, just that the FDA believes it might be violative. FDA-483 observations, particularly if eventually escalated into an FDA untitled or warning letter, could result in an import alerts which ban entry of a product into the United States until issues are resolved to the FDA’s satisfaction, and they have reinspected the facility to confirm all corrections have been implemented, which could potentially take a considerable amount of time. In addition, failure to have an observation-free inspection during a pre-approval inspection can result in delay or denial or FDA approval. Similar issues could occur in other jurisdictions as well.

Additionally, if Daewoong’s facility were to be damaged, destroyed or otherwise unable to operate or comply with regulatory requirements, whether due to earthquakes, fire, floods, hurricanes, storms, tornadoes, other natural disasters, employee malfeasance, terrorist acts, political unrest, power outages or otherwise, or if operations at the facility were disrupted for any other reason, such an event could negatively affect our ongoing preclinical studies and clinical studies and, if ABP-450 is approved, jeopardize Daewoong’s ability to manufacture ABP-450 as promptly as we or our customers expect or possibly at all. If such an event occurred that prevented Daewoong from using all or a significant portion of its manufacturing facility that damaged critical infrastructure, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for Daewoong to supply enough ABP-450 to continue our business for a substantial period of time.

A material breach by us of the terms of our license and settlement agreement with Medytox, Inc. could have a material adverse effect on our business.

In May 2021, Medytox, Inc., or Medytox, brought a case in the United States District Court for the Central District of California in May 2021, or the Medytox Litigation, alleging, among other things, that Daewoong stole Medytox’s botulinum toxin bacterial strain, or the BTX strain, and misappropriated certain trade secrets of Medytox, including the process used to manufacture ABP-450 using the BTX strain, and that our and Daewoong’s activities conducted in the United States give rise to liability for misappropriation of trade secrets. Medytox seeks, among other things, (i) actual, consequential and punitive damages, (ii) a reasonable royalty, as appropriate, (iii) disgorgement of any proceeds or profits, (iv) injunctive relief prohibiting us from using Medytox’s trade secrets to manufacture, offer to sell, or sell therapeutic BTX products, including ABP-450, and (v) attorneys’ fees and costs.

The Medytox Litigation was another step in an ongoing dispute involving Medytox and Allergan, on the one side, and Evolus, Daewoong and us on the other side. In June 2017, Medytox brought a civil lawsuit of a similar nature against Evolus, Daewoong and us in the Superior Court of the State of California, which we refer to as the Superior Court Litigation, and a separate lawsuit in October 2017 against Daewoong in South Korea, which we refer to as the Korea Litigation. The lawsuit filed in the Superior Court of the State of California alleged claims substantially similar to the Medytox Litigation and was subsequently stayed on grounds of forum non conveniens, because the underlying facts that gave rise to the complaint occurred in South Korea, among other reasons. In October 2017, Medytox initiated the Korea Litigation against Daewoong, and its parent company, Daewoong Co. Ltd., in the Seoul Central District Court in Seoul, South Korea, related to the same subject matter, and is seeking, among other things, money damages, injunctive relief and destruction of related documents and products. We are not a party to the Korea Litigation. In April 2018, the Superior Court of the State of California dismissed Medytox’s suit against Daewoong without prejudice on the basis that Medytox had brought a substantially similar proceeding against Daewoong in South Korea, and continued a stay of the case as to us and Evolus. In February 2021, the Superior Court of the State of California dismissed Medytox’s suit against us without prejudice, following Medytox’s filing of a notice of settlement of the case based on a settlement it entered with Evolus.

Additionally, in January 2019, Allergan and Medytox filed a complaint against Daewoong and Evolus in the U.S. International Trade Commission, or the ITC, alleging that the BTX strain used in Evolus’ Jeuveau product is manufactured based on misappropriated trade secrets of Medytox and therefore its importation is an unfair act. The

Administrative Law Judge issued a final determination in December 2020. The final determination concluded that a violation of Section 337 of the Tariff Act of 1930 had occurred, and the ITC issued a limited exclusion order forbidding entry of Jeuveau into the United States for 21 months and a cease and desist order prohibiting Daewoong and Evolus from engaging in the importations, sale for importation, marketing, distribution, offering for sale, the sale after the importation of, or otherwise transferring Jeuveau within the United States for 21 months. The 21 month ban was stayed as a result of a settlement agreement between Evolus and Medytox in February 2021.

Medytox can terminate the license and settlement agreement if we materially breach any material provision of the agreement. If the license and settlement agreement were terminated, Medytox would be able to revive the Medytox Litigation, the Superior Court Litigation and the Korea Litigation, any one of which could result in us losing access to ABP-450 and the manufacturing process and require us to negotiate a new license with Medytox for continued access to ABP-450. We may not be able to successfully negotiate such license on terms acceptable to us or at all. If we are unable to license ABP-450, we may not be able to find a replacement product, if at all, without expending significant resources and being required to seek additional regulatory approvals, which would be uncertain, time consuming and costly.

SCH currently performs or supports many of our general and administrative corporate functions and will continue to do so after the completion of this offering pursuant to a services agreement, and if we are unable to replicate or replace these functions if the services agreement is terminated, our operations could be adversely affected.

SCH currently performs or supports many general and administrative corporate functions for our company. For example, SCH provides certain general management, communication, human resources, office, rent and information technology services. Our financial statements reflect charges for these services on an allocation basis.

In August 2019, we entered into a services agreement with Strathspey Crown Limited, LLC, an affiliate of SCH, or Strathspey Crown Limited, with an effective date of January 2019. The services agreement sets forth certain agreements between Strathspey Crown Limited and us that will continue to govern the respective responsibilities and obligations between Strathspey Crown Limited and us following this offering.

Pursuant to the services agreement, Strathspey Crown Limited provides us certain administrative and development support services, including certain general management, communication, human resources, office, rent and information technology services. We have agreed to pay Strathspey Crown Limited our allocable share of the actual cost incurred by Strathspey Crown Limited in providing such services, plus a 10% markup, as well as our allocable share of Strathspey Crown Limited’s overhead expenses, including office rent, depreciation, maintenance, utilities and supplies. We do not anticipate that receiving such services will contribute significantly to the fundamental risks of business success or failure of us or Strathspey Crown Limited.

The services agreement has a one-year term and will renew for successive one year terms unless sooner terminated by either party. We or Strathspey Crown Limited may terminate the services agreement upon sixty days’ notice to the other party.

In the event the services agreement is terminated by us or Strathspey Crown Limited, we will need to replicate or replace certain functions, systems and infrastructure to which we will no longer have the same access. We may also need to make investments or hire additional employees to operate without the same access to Strathspey Crown Limited’s existing operational and administrative infrastructure. These initiatives may be costly to implement. Due to the scope and complexity of the underlying projects relative to these efforts, the amount of total costs could be materially higher than our estimate, and the timing of the incurrence of these costs is subject to change.

In addition, we may not be able to replace these services or enter into appropriate third-party agreements on terms and conditions, including cost, comparable to those that we will receive from Strathspey Crown Limited under the services agreement. When we begin to operate these functions separately, if we do not have our own adequate systems and business functions in place, or are unable to obtain them from other providers, we may not be able to operate our business effectively or at comparable costs, and our profitability may decline.

We rely, and will continue to rely, on third parties and consultants to conduct all of our preclinical studies and clinical studies. If these third parties or consultants do not successfully carry out their contractual duties or meet expected deadlines, we may be unable to obtain regulatory approval for ABP-450.

We do not currently have the ability to independently conduct any preclinical studies or clinical studies. We rely, and will continue to rely, on medical institutions, clinical investigators, contract laboratories, collaborative partners and other third parties, such as CROs, to conduct preclinical studies and clinical studies on ABP-450. The third parties with whom we currently or may in the future contract for execution of any of our preclinical studies and clinical studies play a significant role in the conduct of these studies and studies and the subsequent collection and analysis of data. However, these third parties are not our employees, and except for contractual duties and obligations, we have limited ability to control the amount or timing of resources that they devote to any of our current or future programs. Although we rely on these third parties to conduct our preclinical studies and clinical studies, we remain responsible for ensuring that each of our preclinical studies and clinical studies is conducted in accordance with the investigational plan and protocol. Moreover, the FDA and other similar regulatory authorities require us to observe both good laboratory practices, or GLP, and animal welfare requirements for preclinical studies, and to comply with GCPs for conducting, monitoring, recording and reporting the results of clinical studies to ensure that the data and results are scientifically credible and accurate, and that the study subjects are adequately informed of the potential risks of participating in clinical studies. We also rely, and will continue to rely, on consultants to assist in the execution, including data collection and analysis, of any of our future clinical studies.

In addition, the execution of preclinical studies and clinical studies, and the subsequent compilation and analysis of the data produced, requires coordination among various parties. In order for these functions to be carried out effectively and efficiently, it is imperative that these parties communicate and coordinate with one another. Moreover, these third parties may also have relationships with other commercial entities, some of which may compete with us. If the third parties or consultants conducting our clinical studies do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines, terminate their agreements with us or need to be replaced, or if the quality or accuracy of the preclinical or clinical data they obtain is compromised due to the failure to adhere to GLPs, or our clinical study protocols or GCPs, or for any other reason, we may need to conduct additional clinical studies or enter into new arrangements with alternative third parties, which could be difficult, costly or impossible, and our preclinical studies and clinical studies may be extended, delayed or terminated or may need to be repeated. Further, any noncompliance that results in data integrity issues could put any regulatory approval we receive at risk of withdrawal, and could subject us to regulatory sanctions due to failure to adequately oversee the third parties we rely upon. If any of the foregoing were to occur, we may not be able to obtain, or may be delayed in obtaining, regulatory approval for and will not be able to, or may be delayed in our efforts to, successfully commercialize ABP-450 in any of our proposed therapeutic indications.

We may use third-party collaborators to help us develop, validate or commercialize any new products, and our ability to commercialize such products could be impaired or delayed if these collaborations are unsuccessful.

We may license or selectively pursue strategic collaborations for the development, validation and commercialization of ABP-450 in any current or future proposed therapeutic indications. In any third-party collaboration, we would be dependent upon the success of the collaborators in performing their responsibilities and their continued cooperation. Our collaborators may not cooperate with us or perform their obligations under our agreements with them. Our

collaborators may choose to pursue alternative technologies in preference to those being developed in collaboration with us. The development, validation and commercialization of ABP-450 will be delayed if collaborators fail to conduct their responsibilities in a timely manner or in accordance with applicable regulatory requirements or if they breach or terminate their collaboration agreements with us. Disputes with our collaborators could also impair our reputation or result in development delays, decreased revenues and litigation expenses.

In addition, we may face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator's evaluation of a number of factors. Those factors may include the design or results of clinical studies, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for ABP-450 in our proposed therapeutic indications, the costs and complexities of manufacturing and delivering ABP-450 to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. Collaborations are complex and time-consuming to negotiate and document.

We may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of ABP-450 in any of our proposed therapeutic indications, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop ABP-450 in any of our proposed therapeutic indications or bring it to market and generate revenue.

Risks Related to Intellectual Property

If we or any of our current or future licensors, including Daewoong, are unable to maintain, obtain or protect intellectual property rights related to ABP-450, we may not be able to compete effectively in our market.

We and Daewoong currently rely upon a combination of trademarks, trade secret protection, confidentiality agreements and proprietary know-how. We also intend to protect our proprietary technology and methods by, among other methods, filing U.S. and foreign patent applications related to our proprietary technology, inventions, methods of use, and improvements that are important to the development and implementation of our business. However, the composition of matter for botulinum toxin cannot be patented, as it is produced by Clostridium botulinum, a gram-positive, rod-shaped, anaerobic, spore-forming, motile bacterium with the ability to produce the botulinum toxin. Daewoong has obtained a U.S. patent related to its proprietary botulinum toxin manufacturing process. In addition, we have filed certain provisional patent applications with the U.S. Patent and Trademark Office, or USPTO, related to certain novel and proprietary methods of utilizing ABP-450 for therapeutic purposes. These patent applications may fail to result in issued patents with claims that cover ABP-450 in any currently proposed or future therapeutic indications, in the United States or in other foreign countries, and the issued patents may be declared invalid or unenforceable. Under the Daewoong Agreement, we license the trademark associated with ABP-450. Our trade secrets and other confidential proprietary information and those of our licensors could be disclosed or competitors could otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we or any of our current or future licensors may encounter significant problems in protecting and defending our or their intellectual property both in the United States and internationally. If we or any of our current or future licensors are unable to prevent material disclosure of the non-patented intellectual property related to ABP-450 to third parties, we may not be able to establish or maintain a competitive advantage in our market, which could adversely affect our business.

In addition to the protection afforded by patents, trademarks, confidentiality agreements and proprietary know-how, we may in the future rely upon in-licensed patents or proprietary technology for the development of ABP-450 in any currently proposed or future therapeutic indications. We may not be able to in-license third party patents necessary to commercialize ABP-450 on commercially reasonable terms, or at all, which could materially harm our business. The strength of patents we may in-license in the technology and healthcare fields involves complex legal and scientific

questions and can be uncertain. The patent applications that we may in-license may fail to result in issued patents with claims that cover ABP-450 in any currently proposed or future therapeutic indications, in the United States or in other foreign countries, and the issued patents that we may in-license may be declared invalid or unenforceable.

We are reliant on the ability of Daewoong, as the licensor of our only product candidate, to maintain its intellectual property and protect its intellectual property against misappropriation, infringement or other violation. We may not have primary control over Daewoong’s or our future licensors’ patent prosecution activities. Furthermore, we may not be allowed to comment on prosecution strategies, and patent applications currently being prosecuted may be abandoned by the patent owner without our knowledge or consent. With respect to patents that are issued to our licensors, or patents that may issue on patent applications, third parties may challenge their validity, enforceability or scope, which may result in such patents being narrowed or invalidated. As a licensee, we are reliant on Daewoong and our future licensors to defend any third-party claims. Our licensors may not defend or prosecute such actions as vigorously or in the manner that we would have if entitled to do so, and we may be impacted by any judgment or settlement resulting from such actions. Also, a third-party may challenge the validity of our in-licensing transactions. Furthermore, even if they are unchallenged, any of our future in-licensed patents and patent applications may not adequately protect the licensors or our intellectual property or prevent others from designing around their or our claims.

Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts or otherwise adversely affect our results of operations.

Our commercial success depends in part on our avoiding infringement of the proprietary rights of third parties. Competitors and other entities that possess intellectual property rights related to the use of botulinum toxins in the fields of neurology and gastroenterology have developed large portfolios of patents and patent applications in fields relating to our business. In particular, there are patents held by third parties that relate to the treatment with botulinum toxin-based products. There may also be patent applications that have been filed but not published that, when issued as patents, could be asserted against us. There is a substantial amount of litigation, both within and outside the United States, involving patent and other intellectual property rights in the technology, medical device and pharmaceutical industries, including patent infringement lawsuits, interferences, oppositions and inter-party reexamination proceedings before the USPTO. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we plan to develop ABP-450. As the technology, medical device and pharmaceutical industries expand and more patents are issued, the risk increases that our product candidate may be subject to claims of infringement of the patent rights of third parties.

In the past, Medytox asserted that we and Daewoong were employing their proprietary technology without authorization, and other third parties may make similar assertions about us or any of our current or future licensors, including Daewoong, in the future. There may be third-party patents or patent applications with claims to materials, methods of manufacture or methods for treatment related to the use or manufacture of ABP-450. Because patent applications can take many years to issue, there may be currently pending patent applications that may later result in issued patents that ABP-450 may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patents were held by a court of competent jurisdiction to cover the manufacturing process of ABP-450, the holders of any such patents may be able to block our ability to commercialize ABP-450 in any proposed therapeutic indication unless we obtain a license under the applicable patents or until such patents expire. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover aspects of our methods of use, the holders of any such patent may be able to block our ability to develop and commercialize ABP-450 unless we obtain a license or until such patent expires. In either case, such a license may not be available on commercially reasonable terms or at all.

In addition to claims of patent infringement, third parties may bring claims against us asserting misappropriation of proprietary technology or other information in the development, manufacture and commercialization of ABP-450. Defense of such a claim would require dedicated time and resources, which time and resources could otherwise be used by us toward the maintenance of our own intellectual property and the development and commercialization of ABP-450 in any current or future proposed therapeutic indication or by any of our current or future licensors for operational upkeep and manufacturing of our product.

Parties making claims against us or any of our current or future licensors may request and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize ABP-450. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement, we or any of our current or future licensors may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties which may not be commercially or more available, pay royalties or redesign our infringing products or manufacturing processes, which may be impossible or require substantial time and monetary expenditure. Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research, manufacture clinical study supplies or allow commercialization of ABP-450 in any current or future proposed therapeutic indication. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable to further develop and commercialize ABP-450 in one or more of our proposed therapeutic indications, which could harm our business significantly. Similarly, third-party patents could exist that might be enforced against our products, resulting in either an injunction prohibiting our sales, or with respect to our sales, an obligation on our part to pay royalties and/or other forms of compensation to third parties.

We may become involved in lawsuits to protect or enforce our intellectual property or the patents and other intellectual property of our licensors, which could be expensive and time-consuming.

Competitors may infringe our intellectual property, including any future patents we may acquire, or the patents and other intellectual property licensed to us by our licensors, including Daewoong. As a result, we or any of our current or future licensors may be required to file infringement claims to stop third-party infringement or unauthorized use. This can be expensive, particularly for a company of our size, and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours or any of our current or future licensors is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patent claims do not cover its technology or that the factors necessary to grant an injunction against an infringer are not satisfied.

An adverse determination of any litigation or other proceedings could put one or more of such patents at risk of being invalidated or interpreted narrowly. Interference, derivation or other proceedings brought at the USPTO may be necessary to determine the priority or patentability of inventions with respect to any of our future patent applications or those of our licensors or collaborators. Litigation or USPTO proceedings brought by us or any of our current or future licensors may fail or may be invoked against us or our licensors by third parties. Even if we are successful, domestic or foreign litigation or USPTO or foreign patent office proceedings may result in substantial costs and distraction to our management or the management of any of our current or future licensors, including Daewoong. We may not be able, alone or with any of our current or future licensors or collaborators, to prevent misappropriation of our proprietary rights, particularly in countries where the laws may not protect such rights as fully as in the United States.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or other proceedings, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation or proceedings. In addition, during the course of this kind of litigation or proceedings, there could be public announcements of the results of hearings, motions or other interim proceedings or developments or public access to related documents. If investors perceive these results to be negative, the market price for our common stock could be significantly harmed.

Most of our competitors are larger than we are and have substantially greater resources. They are, therefore, likely to be able to sustain the costs of complex patent litigation longer than we could. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property. In addition, the uncertainties associated with litigation could compromise our ability to raise the funds necessary to continue our clinical studies, continue our internal research programs, or in-license needed technology. There could also be public announcements of the results of the hearing, motions, or other interim proceedings or developments. If securities analysts or investors perceive those results to be negative, it could cause the price of shares of our common stock to decline.

We may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States and in some cases may even force us to grant a compulsory license to competitors or other third parties. Consequently, we may not be able to prevent third parties from using our inventions in all countries outside the United States or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

In addition, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in domestic and foreign intellectual property laws.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

In addition to seeking patents for our product candidate, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position.

We seek to protect our trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them, such as our employees, collaborators, consultants, advisors and other third parties. We expect to enter into confidentiality and invention assignment agreements with our employees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.

We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties.

We employ individuals who were previously employed at other pharmaceutical companies including certain of our anticipated competitors. We may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’ former employers or other third parties. We may also be subject to claims that former employers or other third parties have an ownership interest in our patents. Litigation may be necessary to defend against these claims. We may not be successful in defending these claims, and even if we are successful, litigation could result in substantial cost and be a distraction to

our management and other employees. Any litigation or the threat thereof may adversely affect our ability to hire employees. A loss of key personnel or their work product could diminish or prevent our ability to commercialize ABP-450, which could have an adverse effect on our business, results of operations and financial condition.

If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected.

Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. We may not be able to protect our rights to these trademarks and trade names, which we need to build name recognition by potential partners or customers in our markets of interest. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business may be adversely affected.

Third parties may assert that we are using trademarks or trade names that are confusingly similar to their marks. If any third-party were able to establish that our trademarks or trade names were infringing their marks, that third-party may be able to block our ability to use the infringing trademark or trade name. In addition, if a third-party were to bring such a claim, we would be required to dedicate time and resources to fight the claim, which time and resources could otherwise be used toward the maintenance of our own intellectual property.

Parties making claims against us may request and obtain injunctive or other equitable relief, which could prevent our ability to use the subject trademarks or trade names. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement. We may be required to re-brand one or more of our products or services offered under the infringing trademark or trade name, which may require substantial time and monetary expenditure. Third parties could claim senior rights in marks which might be enforced against our use of trademarks or trade names, resulting in either an injunction prohibiting our sales under those trademarks or trade names.

Risks Related to Government Regulation

Our business and products are subject to extensive government regulation.

We are subject to extensive, complex, costly and evolving regulation by federal and state governmental authorities in the United States, the European Union, Canada and other countries, principally by the FDA, the EMA, Health Canada and other similar regulatory authorities. Daewoong is also subject to extensive regulation by the FDA and the South Korean regulatory authorities as well as other regulatory authorities. Our failure to comply with all applicable regulatory requirements, or Daewoong’s failure to comply with applicable regulatory requirements, including those promulgated under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act, and the Controlled Substances Act, may subject us to operating restrictions and criminal prosecution, monetary penalties and other enforcement or administrative actions, including, sanctions, warning letters, import alerts, product seizures, recalls, fines, injunctions, suspension, revocation of approvals, or exclusion from future participation in the Medicare and Medicaid programs.

In the event our products receive regulatory approval, we, and our direct and indirect suppliers, including Daewoong, will remain subject to the periodic inspection of our plants and facilities, review of production processes, and testing of our products to confirm that we are in compliance with all applicable regulations. Adverse findings during regulatory inspections may result in requirements that we implement REMS programs, requirements that we complete government mandated clinical studies, and government enforcement actions including those relating to labeling, advertising, marketing and promotion, as well as regulations governing manufacturing controls.

If we experience delays in obtaining approval or if we fail to obtain approval of ABP-450 in any of our proposed therapeutic indications, the commercial prospects for ABP-450 may be harmed and our ability to generate revenue will be materially impaired.

In addition, in the course of our activities we may collect information from clinical study subjects or other individuals that subjects us to a variety of rapidly evolving laws regarding privacy, data protection and data security, including those related to the collection, storage, handling, use, disclosure, transfer and security of personal data. Data breaches or other violations of these laws could subject our business to significant penalties and reputational harm.

Even if we receive regulatory approval for ABP-450 in any therapeutic indication, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in significant additional expense, limit or delay regulatory approval and subject us to penalties if we fail to comply with applicable regulatory requirements. Additionally, ABP-450, if approved in any therapeutic indication, could be subject to labeling and other restrictions and market withdrawal and we may be subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with our products.

If regulatory approval is granted, ABP-450 will be subject to continual regulatory review by the FDA, the EMA and other similar regulatory authorities. Any regulatory approvals that we or our collaborators receive for ABP-450 in any currently proposed or future therapeutic indication may also be subject to limitations on the approved indications for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase IV clinical studies, and surveillance to monitor the safety and efficacy of the product. In addition, if the applicable regulatory agency approves ABP-450 in any therapeutic indication, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMP requirements and GCPs, for any clinical studies that we conduct post-approval. Later discovery of previously unknown problems with ABP-450, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things:

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impose restrictions on the marketing or manufacturing of the product, suspend or withdraw product approvals or revoke necessary licenses;

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issue warning letters, show cause notices or untitled letters describing alleged violations, which may be publicly available;

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mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners;

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require revisions to the labeling, including limitation on approved uses or the addition of additional warnings, contraindications or other safety information;

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require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;

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commence criminal investigations and prosecutions;

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impose injunctions;

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impose other civil or criminal penalties;

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suspend any ongoing clinical studies;

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delay or refuse to approve pending applications or supplements to approved applications filed by us;

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refuse to permit products or active ingredients to be imported or exported to or from the United States;

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suspend or impose restrictions on operations, including costly new manufacturing requirements; or

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seize or detain products or require us to initiate a product recall; and

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injunctions or the imposition of civil or criminal penalties.

Additionally if ABP-450 receives marketing approval for any of our proposed indications, the FDA could require us to adopt a REMS to ensure that the benefits of the therapy outweigh its risks, which may include, among other things, a medication guide outlining the risks for distribution to patients and a communication plan to health care practitioners. Any of these events could prevent us from achieving or maintaining market acceptance of ABP-450 in the proposed therapeutic indication and could significantly harm our business, prospects, financial condition and results of operations.

The FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of ABP-450 in any of our proposed therapeutic indications. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations.

In addition, given the similarity of ABP-450 to Jeuveau, any adverse developments with respect to Jeuveau, including adverse events or changes in regulatory status, may also directly impact the development, commercialization or regulation of ABP-450, if approved.

If we fail to obtain regulatory approvals in foreign jurisdictions for ABP-450, we will be unable to market our products outside of the United States.

In addition to regulations in the United States, we are and will be subject to a variety of foreign regulations governing manufacturing, clinical studies, commercial sales and distribution of our future products. Whether or not we obtain FDA approval for a product candidate, we must obtain approval of the product by the comparable regulatory authorities of foreign countries before commencing clinical studies or marketing in those countries. The approval procedures vary among countries and can involve additional clinical testing, and the time required to obtain approval may differ from that required to obtain FDA approval. Clinical studies conducted in one country may not be accepted by regulatory authorities in other countries. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries or by the FDA. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may not be able to file for regulatory approvals or to do so on a timely basis, and even if we do file, we may not receive necessary approvals to commercialize our products in markets outside of the United States.

The misuse or off‑label use of our approved products, if any, may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.

The FDA and other regulatory agencies strictly regulate the marketing and promotional claims that are made about pharmaceutical products. In particular, a product may not be promoted for uses or indications that are not specifically approved by the FDA, the EMA or other regulatory agencies as reflected in the product’s approved labeling. For example, if we receive marketing approval for ABP-450 in any therapeutic indication, physicians could use ABP-450 on their patients in a manner that is inconsistent with the approved label, such as for the treatment of other aesthetic or therapeutic indications for which other similar botulinum toxins are approved. Although ABP-450, if approved, will be similar to Jeuveau, we will not be able to market ABP-450 as being interchangeable with Jeuveau. If we are found to have promoted such uses that are not part of ABP-450’s approved labeling, we may be subject to enforcement action from the FDA, the EMA and other regulatory agencies, and become subject to significant liability, which would materially harm our business. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. If we become

the target of such an investigation or prosecution based on our marketing and promotional practices, we could face similar sanctions, which would materially harm our business. In addition, management’s attention could be diverted from our business operations, significant legal expenses could be incurred, and our reputation could be damaged. The FDA has also required that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed in order to resolve FDA enforcement actions. If we are deemed by the FDA to have engaged in the promotion of our products for off-label use, we could be subject to FDA prohibitions or other restrictions on the sale or marketing of our products and other operations or significant fines and penalties, and the imposition of these sanctions could also affect our reputation and position within the industry. In addition, off-label promotion could expose us to liability under the FCA, as well as similar state laws.

Physicians may also misuse ABP-450, if approved, or use improper techniques, potentially leading to adverse results, side effects or injury, which may lead to product liability claims. If ABP-450 is misused or used with improper techniques or is determined to cause or contribute to patient harm, we may become subject to costly litigation by our customers or their patients. Product liability claims could divert management’s attention from our core business, be expensive to defend, result in sizable damage awards against us that may not be covered by insurance and subject us to negative publicity resulting in reduced sales of our products. Furthermore, the use of ABP-450, if approved, for indications other than those cleared by the FDA may not effectively treat such conditions, which could harm our reputation in the marketplace among physicians and patients. Any of these events could harm our business and results of operations and cause our stock price to decline.

Our relationships with healthcare providers and physicians and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.

We are subject to applicable fraud and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the FCA, which may constrain the business or financial arrangements and relationships through which we sell, market and distribute our products. In particular, the promotion, sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare industry (e.g., healthcare providers, physicians and third party payors), are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally. We also may be subject to patient information and privacy and security regulation by both the federal government and the states and foreign jurisdictions in which we conduct our business. The applicable federal, state and foreign healthcare laws and regulations that may affect our ability to operate include, but are not limited to:

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The Anti-Kickback Statute prohibits the knowing and willful offer, receipt, or payment of remuneration in exchange for or to induce the referral of patients or the use of products or services that would be paid for in whole or part by Medicare, Medicaid or other federal health care programs. Remuneration has been broadly defined to include anything of value, including but not limited to cash, improper discounts, and free or reduced price items and services. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. Further, courts have found that if “one purpose” of remuneration is to induce referrals, the federal Anti-Kickback Statute is violated. The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers, and formulary managers on the other. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution; but the exceptions and safe harbors are drawn narrowly and require strict compliance in order to offer protection. A claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the FCA. Many states have similar laws that apply to their state health care programs as well as private payors. Violations of anti-kickback and other applicable laws can result in exclusion from federal health care programs and substantial civil and criminal penalties.

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The federal civil and criminal false claims laws and civil monetary penalty laws, including the FCA, prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment to, or approval by Medicare, Medicaid, or other federal healthcare programs,

knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim or an obligation to pay or transmit money to the federal government, or knowingly concealing or knowingly and improperly avoiding or decreasing or concealing an obligation to pay money to the federal government. The FCA has been used to prosecute persons submitting claims for payment that are inaccurate or fraudulent, that are for services not provided as claimed, or for services that are not medically necessary. The FCA includes a whistleblower provision that allows individuals to bring actions on behalf of the federal government and share a portion of the recovery of successful claims. Some state law equivalents of the above federal laws, such as the Anti-Kickback Statute and FCA, apply to items or services regardless of whether the good or service was reimbursed by a government program, so called all-payor laws. These all-payor laws could apply to our sales and marketing activities even if the Anti-Kickback Statute and FCA laws are inapplicable.

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The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA without actual knowledge of the statute or specific intent to violate it.

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their implementing regulations, and as amended again by the Final HIPAA Omnibus Rule, published in January 2013, which imposes certain obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information without appropriate authorization by covered entities subject to the rule, such as health plans, healthcare clearinghouses and certain healthcare providers, as well as their business associates that perform certain services involving the use or disclosure of individually identifiable health information also implicate our business. HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.

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The federal Physician Payment Sunshine Act, created under the Patient Protection and Affordable Care Act, or the ACA, and its implementing regulations, which require manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to the United States Department of Health and Human Services, or HHS, information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members. Effective January 1, 2022, these reporting obligations will extend to include transfers of value made to certain non-physician providers such as physician assistants and nurse practitioners.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulatory guidance. Federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies, healthcare providers and other third parties, including charitable foundations, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry. Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.

If our marketing or other arrangements were determined to violate anti-kickback or related laws, including the FCA or an all-payor law, then we could be subject to penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, the exclusion from participation in federal and state healthcare programs, individual

imprisonment, reputational harm and the curtailment or restructuring of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws. Any action for violation of these laws, even if successfully defended, could cause us to incur significant legal expenses and divert management’s attention from the operation of the business. Prohibitions or restrictions on sales or withdrawal of future marketed products could materially affect our business in an adverse way. Efforts to ensure that our business arrangements will comply with applicable healthcare laws may involve substantial costs.

State and federal authorities have aggressively targeted pharmaceutical companies for alleged violations of these anti-fraud statutes, based on improper research or consulting contracts with doctors, certain marketing arrangements with pharmacies and other healthcare providers that rely on volume-based pricing, off-label marketing schemes, and other improper promotional practices. Companies targeted in such prosecutions have paid substantial fines, have been ordered to implement extensive corrective action plans, and have in many cases become subject to consent decrees severely restricting the manner in which they conduct their business, among other consequences. Additionally, federal and state regulators have brought criminal actions against individual employees responsible for alleged violations. If we become the target of such an investigation or prosecution based on our contractual relationships with providers or institutions, or our marketing and promotional practices, we could face similar sanctions, which would materially harm our business.

Also, the FCPA and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Our internal control policies and procedures may not protect us from reckless or negligent acts committed by our employees, future distributors, partners, collaborators or agents. Violations of these laws, or allegations of such violations, could result in fines, penalties or prosecution and have a negative impact on our business, results of operations and reputation.

Even if we receive marketing approval, coverage and adequate reimbursement may not be available for ABP-450 in any currently proposed or future therapeutic indications, which could make it difficult for us to sell the product profitably, if approved.

Market acceptance and sales of ABP-450, if approved, will depend in part on the extent to which reimbursement for these product and related treatments will be available from third-party payors, including government health administration authorities, managed care organizations and other private health insurers. Obtaining coverage and adequate reimbursement approval for a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide supporting scientific, clinical and cost effectiveness data for the use of our products to the payor.

Third-party payors decide which therapies they will pay for and establish reimbursement levels. While no uniform policy for coverage and reimbursement exists in the United States, third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies. However, decisions regarding the extent of coverage and amount of reimbursement to be provided for ABP-450 will be made on a payor-by-payor basis. Therefore, one payor’s determination to provide coverage for a product does not assure that other payors will also provide coverage, and adequate reimbursement, for the product. Additionally, a third-party payor’s decision to provide coverage for a therapy does not imply that an adequate reimbursement rate will be approved. Each payor determines whether or not it will provide coverage for a therapy, what amount it will pay the manufacturer for the therapy and on what tier of its formulary it will be placed. The position on a payor’s list of covered drugs and biological products, or formulary, generally determines the co-payment that a patient will need to make to obtain the therapy and can strongly influence the adoption of such therapy by patients and physicians. Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our products unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products. In addition, because certain of our proposed indications of ABP-450 will require the product to be physician-administered, separate reimbursement for the product itself may or may not be available. Instead, the administering physician may only be reimbursed for providing the treatment or procedure in which our product is used.

There may be significant delays in obtaining such coverage and reimbursement for newly approved products, and coverage may be more limited than the purposes for which the product is approved by the FDA. Moreover, eligibility for coverage and reimbursement does not imply that a product will be paid for in all cases or at a rate that covers our costs, including research, development, intellectual property, manufacture, sale and distribution expenses. Interim reimbursement levels for new products, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary according to the use of the product and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost products and may be incorporated into existing payments for other services. Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors, by any future laws limiting pharmaceutical prices and by any future relaxation of laws that presently restrict imports of product from countries where they may be sold at lower prices than in the United States.

Third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Inadequate coverage and reimbursement may impact the demand for, or the price of, any product for which we obtain marketing approval. If coverage and adequate reimbursement are not available, or are available only at limited levels, we may not be able to successfully commercialize ABP-450.

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe a continued emphasis on cost containment initiatives in Europe, Canada and other countries could continue to put pressure on the pricing and usage of our product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. Other countries allow companies to fix their own prices for medical products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

The delivery of health care in the European Union, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a matter for national, rather than European Union, law and policy. National governments and health service providers have different priorities and approaches to the delivery of healthcare and the pricing and reimbursement of products in that context. In general, however, the health care budgetary constraints in most European Union member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever increasing European Union and national regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval of our product candidates, restrict or regulate post approval activities and affect our ability to commercialize any products for which we obtain marketing approval.

Moreover, increasing efforts by governmental and third party payors in the European Union, the United States and other jurisdictions to cap or reduce health care costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our product candidates. We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed health care, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on health care costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.

Legislative or regulatory healthcare reforms in the United States and other countries may make it more difficult and costly for us to obtain regulatory clearance or approval of ABP-450 and to produce, market, and distribute our products after clearance or approval is obtained.

From time to time, legislation is drafted and introduced in the U.S. Congress or other countries that could significantly change the statutory provisions governing the regulatory clearance or approval, manufacture, and marketing of regulated products or the reimbursement thereof. In addition, regulations and guidance are often revised or reinterpreted by the FDA and other regulatory authorities in ways that may significantly affect our business and our

products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of ABP-450. Such changes could, among other things, require:

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changes to manufacturing or marketing methods;

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changes to product labeling or promotional materials;

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recall, replacement, or discontinuance of one or more of our products; and

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additional recordkeeping.

Each of these would likely entail substantial time and cost and could materially harm our business and our financial results. In addition, delays in receipt of or failure to receive regulatory clearances or approvals for any future products would harm our business, financial condition, and results of operations.

Inadequate funding for the FDA, the SEC and other government agencies, including from government shut downs, or other disruptions to these agencies’ operations, could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for new product candidates to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years the U.S. government has shut down several times and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC and other government employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Since March 2020 when foreign and domestic inspections of facilities were largely placed on hold, the FDA has been working to resume routine surveillance, bioresearch monitoring and pre-approval inspections on a prioritized basis. The FDA has developed a rating system to assist in determining when and where it is safest to conduct prioritized domestic inspections. As of May 2021, certain inspections, such as foreign preapproval, surveillance, and for-cause inspections that are not deemed mission-critical, remain temporarily postponed. In April 2021, the FDA issued guidance for industry formally announcing plans to employ remote interactive evaluations, using risk management methods, to meet user fee commitments and goal dates and in May 2021 announced plans to continue progress toward resuming standard operational levels. Should FDA determine that an inspection is necessary for approval and an inspection cannot be completed during the review cycle due to restrictions on travel, and the FDA does not determine a remote interactive evaluation to be adequate, the agency has stated that it generally intends to issue a complete response letter or defer action on the application until an inspection can be completed. In 2020 and 2021, a number of companies announced receipt of complete response letters due to the FDA's inability to complete required inspections for their applications. Regulatory authorities outside the U.S. may adopt similar restrictions or other policy measures in response to the COVID-19 pandemic and may experience delays in their regulatory activities. If a prolonged government shutdown or other disruption occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Future shutdowns or other disruptions could also affect other government agencies such as the SEC, which may also impact our business by delaying review of our public filings, to the extent such review is necessary, and our ability to access the public markets.

Risks Related to This Offering and Our Common Stock

An active trading market for our common stock may not develop or, if one develops, be sustained.

Prior to this offering, there has been no public market for our common stock. The initial public offering price for our common stock was determined through negotiations between us and the underwriters and may bear no relationship to the price at which the common stock will trade upon the closing of this offering. An active trading market for our shares may never develop or be sustained following this offering. If an active trading market for our common stock does not develop, it may be difficult for you to sell the shares that you purchase in this offering without depressing the market price for the common stock or to sell your shares at all.

Our stock price is likely to be volatile. The stock market in general and the market for biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may not be able to sell their common stock at or above the initial public offering price. The market price for our common stock may be influenced by many factors, some of which are beyond our control, including:

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announcements of regulatory approval or disapproval of ABP-450 in any of our proposed therapeutic indications;

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adverse results from or delays in clinical studies of ABP-450 in our proposed therapeutic indications, including unanticipated safety concerns;

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any termination or loss of rights under the Daewoong Agreement;

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FDA or other U.S. or foreign regulatory or legal actions or changes affecting us or our industry;

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general economic, industry and market conditions, including the COVID-19 pandemic,

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the size and growth, if any, of the therapeutic botulinum toxin market or the pharmaceutical industry more generally;

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introductions and announcements of new technologies and products by us or our competitors, and the timing of these introductions and announcements;

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announcements by us or our competitors of significant acquisitions, licenses, strategic partnerships, joint ventures or capital commitments;

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variations in our financial results or those of companies that are perceived to be similar to us;

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changes in financial estimates or guidance, including our ability to meet our future revenue and operating profit or loss estimates or guidance;

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rumors and market speculation involving us or other companies in our industry;

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operating and stock performance of other companies that investors deem comparable to us and overall performance of the equity markets;

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sales of substantial amounts of our stock by our significant stockholders or our insiders, or the expectation that such sales might occur;

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additions or departures of key personnel;

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intellectual property, product liability or other litigation against us, our manufacturer or other parties on which we rely or litigation against our general industry;

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changes in our capital structure, such as future issuances of securities and the incurrence of additional debt;

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changes in accounting standards, policies, guidelines, interpretations or principles; and

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other factors described in this “Risk Factors” section.

In addition, in the past, stockholders have initiated class action lawsuits against pharmaceutical companies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted against us, could cause us to incur substantial costs and divert management’s attention and resources.

Our historical financial data included in this prospectus may not be a reliable indicator of our future results.

Our financial results for historical periods reflect the results of operations that are unrelated to the development of ABP-450. We were formed in 2012 and, in our early history, acquired numerous controlling and non-controlling ownership interests in several different businesses that we have since disposed of. We wholly owned Evolus prior to its initial public offering in February 2018. Evolus was included in our consolidated results through May 2019, when we determined that we no longer held control and deconsolidated the entity and recorded the fair value of the retained equity interest in Evolus. Until September 2020, we also operated a business that provides introductory financing services on a limited basis to patients to pay for elective medical procedures and owned a non-controlling interest in a private company. Through the third quarter of 2020, results from the patient financing business are reflected in our results of operations and ownership interest in the private company is reflected on our balance sheet, each of which were immaterial to our financial results.

In January 2020, we contributed our interest in Evolus to a newly formed entity in exchange for membership units, and then distributed all of the units of said entity to our existing stockholders. In September 2020, we contributed the patient financing business and our non-controlling interest in the private company each to a newly formed entity in exchange for membership units, and then distributed all of the units of said entities to our existing stockholders. We refer to these transactions collectively as the Divestiture Transactions. As such, our business is now exclusively focused on developing ABP-450 for debilitating medical conditions. The results of operations and related financial data for the periods presented in this prospectus are not indicative of our future results associated with the development of ABP-450.

In addition, SCH currently performs or supports many general and administrative corporate functions for our company, and pursuant to the services agreement will continue to do so after this offering for a period of time. Our historical financial data included in this prospectus does not reflect the financial condition, results of operations or cash flows that we would have achieved as a stand-alone company during the periods presented or those we will achieve in the future. This is primarily the result of the following factors:

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our historical financial data reflects expense allocations for certain support functions that are provided on a centralized basis within SCH, such as expenses for business technology, facilities, legal, finance, human resources and business development that may be higher or lower than the comparable expenses that we would have actually incurred, or will incur in the future, as a stand-alone company following termination of the services agreement; and

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we anticipate significant increases will occur in our cost structure as a result of this offering, including costs related to public company reporting, investor relations and compliance with the Sarbanes-Oxley Act.

Our directors, officers and principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders.

After this offering, our officers, directors and principal stockholders each holding more than 5% of our common stock will collectively control approximately % of our outstanding common stock. As a result, these stockholders, if they act together, will be able to control the management and affairs of our company and most matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change of control and might adversely affect the market price of our common stock. This concentration of ownership may not be in the best interests of our other stockholders.

A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell their shares, could result in a decrease in the market price of our common stock. Immediately after this offering, we will have outstanding shares of common stock based on the number of shares outstanding as of June 30, 2021. This includes the shares that we are selling in this offering, which may be resold in the public market immediately without restriction, unless purchased by our affiliates. Of the remaining shares, substantially all are currently restricted as a result of securities laws or 180-day lock-up agreements but will be able to be sold after the offering as described in the section of this prospectus titled “Shares Eligible for Future Sale.” Moreover, after this offering, holders of an aggregate of up to shares of our common stock, including shares of our common stock issuable upon the conversion of the shares of our convertible preferred stock that will be outstanding immediately prior to the consummation of this offering, will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders as described in the section of this prospectus titled “Description of Capital Stock—Registration Rights” and “Medytox Registration Rights.” We also intend to register all shares of common stock that we may issue under our equity compensation plans. Once we register these shares, they can be freely sold in the public market, subject to volume limitations applicable to affiliates and the lock-up agreements described in the section of this prospectus titled “Underwriting.”

Because the initial public offering price of our common stock will be substantially higher than the net tangible book value per share of our outstanding common stock following this offering, new investors will experience immediate and substantial dilution.

The initial public offering price will be substantially higher than the net tangible book value per share of our common stock immediately following this offering based on the total value of our tangible assets less our total liabilities. Therefore, if you purchase shares of our common stock in this offering, you will experience immediate dilution of $ per share, based on an assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, and our pro forma as adjusted net tangible book value per share as of June 30, 2021.

Anti-takeover provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as well as Delaware law, could discourage a takeover.

Our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law contain provisions or will contain provisions that might enable our management to resist a takeover and might make it more difficult for an investor to acquire a substantial block of our common stock. These include the following provisions:

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permitting our board of directors to issue shares of preferred stock, with any rights, preferences and privileges as they may designate, without stockholder approval, which could be used to dilute significantly the ownership of a hostile bidder;

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providing that the authorized number of directors may be changed only by resolution of our board of directors and that a director may only be removed for cause by the affirmative vote of the holders of at least 66 2/3% of our voting stock;

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providing that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;

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dividing our board of directors into three classes, with each class serving staggered three-year terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;

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requiring that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and not be taken by written consent;

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providing that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner and also specifying requirements as to the form and content of a stockholder’s notice, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company;

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prohibiting cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; and

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providing that special meetings of our stockholders may be called only by the chairman of the board, our Chief Executive Officer or by our board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors, which may delay the ability of our stockholders to force consideration by our company of a take-over proposal or to take certain corporate actions, including the removal of directors.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, we are subject to Section 203 of the General Corporation Law of the State of Delaware, or the DGCL, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested stockholder who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. This provision could have the effect of delaying or preventing a change-of-control, whether or not it is desired by or beneficial to our stockholders.

Furthermore, our amended and restated certificate of incorporation specifies that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for most legal actions involving actions brought against us by stockholders; provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended, or the Exchange Act, or by any other claim for which the federal courts have exclusive jurisdiction; and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware. Our amended and restated certificate of incorporation will also provide that the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action against us or any of our directors, officers, employees or agents and arising under the Securities Act of 1933, as amended, or the Securities Act. We believe these provisions may benefit us by providing increased consistency in the application of Delaware law and federal securities laws by chancellors and judges, as applicable, particularly experienced in resolving corporate disputes, efficient administration of cases on a more expedited schedule relative to other forums and protection against the burdens of multi-forum litigation. However, these provisions may have the effect of discouraging lawsuits against our directors and officers. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in

other jurisdictions, which could harm our business, financial condition, and operating results. For example, under the Securities Act, federal courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act, and investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Any person or entity purchasing or otherwise acquiring any interest in our shares of capital stock shall be deemed to have notice of and consented to this exclusive forum provision, but will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

Our management will have broad discretion over the actual amounts and timing of the expenditure of the proceeds of this offering and might not apply the proceeds in ways that enhance our operating results or increase the value of your investment.

We intend to allocate a significant amount of the net proceeds from this offering to fund our clinical and regulatory development of ABP-450, including our Phase 2 clinical studies and other future clinical studies, and for general corporate purposes, including working capital, operating expenses and capital expenditures Our management will have broad discretion over the actual amounts and timing of the expenditure of the net proceeds from this offering within those categories, and accordingly, investors in this offering will need to rely upon the judgment of our management with respect to the use of proceeds, with only limited information concerning management’s specific intentions. Our management might not apply the proceeds in ways that enhance our operating results or increase the value of your investment. Pending our use of the net proceeds from this offering, we plan to invest the net proceeds in a variety of capital preservation investments, including short and intermediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.

We have not paid dividends in the past and do not expect to pay dividends in the future, and any return on investment may be limited to the value of our stock.

We have never paid cash dividends on our common stock and do not anticipate paying cash dividends on our common stock in the foreseeable future. The payment of dividends on our common stock will depend on our earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant. Additionally, our ability to pay cash dividends or other distributions on our common stock may be restricted by the terms of any future debt or preferred securities or future credit facility. If we do not pay dividends, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future.

General Risks

Our business and operations would suffer in the event of computer system failures.

Despite the implementation of security measures, our internal computer systems, and those of third parties on which we rely, are vulnerable to damage from computer viruses, malware, natural disasters, terrorism, war, telecommunication and electrical failures, cyber-attacks or cyber-intrusions over the internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization. The risk of a security breach or disruption, particularly through cyber-attacks or cyber-intrusions, including by computer hackers, foreign governments, and cyber-terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our current or future product development programs. For example, the loss of clinical study data from completed or any future ongoing or planned clinical studies could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach was to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur material legal claims and liability, damage to our reputation, and the further development of our product candidate could be delayed.

If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock will rely in part on the research and reports that equity research analysts publish about us and our business. We do not currently have and may never obtain research coverage by equity research analysts. Equity research analysts may elect not to provide research coverage of our common stock after the

closing of this offering, and such lack of research coverage may adversely affect the market price of our common stock. In the event we obtain equity research analyst coverage, we will not have any control of the analysts or the content and opinions included in their reports. The price of our common stock could decline if one or more equity research analysts downgrade our common stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause the trading price or trading volume of our common stock to decline.

We will incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.

We will incur significant legal, accounting and other expenses as a public company, including costs resulting from public company reporting obligations under the Exchange Act and regulations regarding corporate governance practices. The listing requirements of Nasdaq and the rules of the Securities and Exchange Commission, or SEC, require that we satisfy certain corporate governance requirements. Our management and other personnel will need to devote a substantial amount of time to ensure that we comply with all of these requirements. Moreover, the reporting requirements, rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. Any changes we make to comply with these obligations may not be sufficient to allow us to satisfy our obligations as a public company on a timely basis, or at all. These reporting requirements, rules and regulations, coupled with the increase in potential litigation exposure associated with being a public company, could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors or board committees or to serve as executive officers, or to obtain certain types of insurance, including directors’ and officers’ insurance, on acceptable terms.

If these requirements divert the attention of our management and personnel from other business concerns, they could have a material adverse effect on our business, financial condition and results of operations. The increased costs will decrease our net income or increase our consolidated net loss, and may require us to reduce costs in other areas of our business or increase the prices of our products or services. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to incur substantial costs to maintain the same or similar coverage. We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements.

We may fail to comply with the rules that apply to public companies, including Section 404 of the Sarbanes-Oxley Act of 2002, as amended, or the Sarbanes-Oxley Act, which could result in sanctions or other penalties that would harm our business.

After this offering, we will be subject to Section 404 of the Sarbanes-Oxley Act, or Section 404, and the related rules of the SEC, which generally require our management and independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting. In order to maintain effective internal controls, we will need to assume certain functions that have historically been provided by SCH and we will need additional financial personnel, systems and resources. Beginning with the second annual report on Form 10-K that we will be required to file with the SEC, Section 404 requires an annual management assessment of the effectiveness of our internal control over financial reporting. However, for so long as we remain an emerging growth company as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404. Once we are no longer an emerging growth company or, if prior to such date, we opt to no longer take advantage of the applicable exemption, we will be required to include an opinion from our independent registered public accounting firm on the effectiveness of our internal control over financial reporting. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (i) following the fifth anniversary of the completion of this offering, (ii) in which we have total annual gross revenue of at least $1.07 billion, or (iii) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.

To date, we have never conducted a review of our internal controls for the purpose of providing the reports required by these rules. During the course of our review and testing, we may identify deficiencies and be unable to remediate

them before we must provide the required reports. Furthermore, if we have a material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We or our independent registered public accounting firm may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting, which could harm our operating results, cause investors to lose confidence in our reported financial information and cause the trading price of our stock to fall. In addition, as a public company we will be required to file accurate and timely quarterly and annual reports with the SEC under the Exchange Act. Any failure to report our financial results on an accurate and timely basis could result in sanctions, lawsuits, delisting of our shares from Nasdaq or other adverse consequences that would materially harm our business and reputation.

We are an “emerging growth company,” and the reduced reporting requirements available to emerging growth companies could make our common stock less attractive to investors.

We qualify as an “emerging growth company,” as defined in the JOBS Act. For as long as we remain an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies. These provisions include, but are not limited to:

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being permitted to have only two years of audited financial statements and only two years of related selected financial data and management’s discussion and analysis of financial condition and results of operations disclosure;

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an exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act;

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reduced disclosure about executive compensation arrangements in our periodic reports, registration statements and proxy statements; and

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exemptions from the requirements to seek non-binding advisory votes on executive compensation or golden parachute arrangements.

To the extent we take advantage of any of these exemptions, the information that we provide stockholders may be different than what is available with respect to other public companies.

We are also a “smaller reporting company” as defined in the rules promulgated under the Exchange Act. Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements, including exemption from compliance with the auditor attestation requirements of Section 404 and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates on the last business day of our second fiscal quarter is less than $250.0 million, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates on the last business day of the second quarter of that fiscal year is less than $700.0 million. Investors could find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our trading price may be more volatile.

Special Note Regarding Forward-Looking Statements

This prospectus, including the sections titled “Prospectus Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business,” contains forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this prospectus include, among other things, statements about:

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estimates of our addressable market, future revenue, expenses, capital requirements and our needs for additional financing;

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our research and development plans, including our plans to explore the therapeutic potential of ABP-450 in additional indications;

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the timing, progress and results of clinical studies for ABP-450, including statements regarding the timing of initiation and completion of studies or studies and related preparatory work, the period during which the results of the studies will become available and our research and development programs;

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the timing of and our ability to obtain and maintain marketing approvals for our product candidate;

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the rate and degree of market acceptance and clinical utility of our product candidate in any of our proposed therapeutic indications for which we receive marketing approval;

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competitive companies and technologies and our industry;

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regulatory developments in the United States and foreign countries;

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the performance of our third-party manufacturer;

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our ability to develop sales and marketing capabilities;

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our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidate in any of our proposed therapeutic indications and our ability to operate our business without infringing on the intellectual property rights of others;

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our ability to hire and retain key personnel;

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the impacts of the ongoing COVID-19 pandmic on our clinical studies and business;

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our ability to obtain additional financing, when needed;

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the volatility of the trading price of our common stock;

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our expectations regarding use of proceeds from this offering; and

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our expectations about market trends.

These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors” and elsewhere in this prospectus. Moreover, we operate in a competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of

factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus to conform these statements to actual results or to changes in our expectations, except as required by law.

You should read this prospectus and the documents that we reference in this prospectus and have filed with the Securities and Exchange Commission as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

Use of Proceeds

We estimate that we will receive net proceeds of approximately $ from the sale of shares of common stock in this offering, or approximately $ if the underwriters exercise their option to purchase additional shares in full, based on an assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus, would increase (decrease) the net proceeds to us from this offering by $ million, assuming that the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million in the number of shares offered by us in this offering would increase (decrease) the net proceeds that we receive from this offering by $ million, assuming the initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We currently intend to use the net proceeds we receive from this offering, along with our cash, as follows:

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approximately $ million to $ million to fund the ongoing clinical development of ABP-450 for the treatment of migraine, which we anticipate should enable us to complete a Phase 2 study in this indication;

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approximately $ million to $ million to fund the ongoing clinical development of ABP-450 for the treatment of cervical dystonia, which we anticipate should enable us to complete a Phase 2 study in this indication;

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approximately $ million to $ million to engage in preclinical development of ABP-450 for the treatment of gastroparesis; and

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the remainder for general corporate purposes, including working capital, operating expenses and capital expenditures.

We believe that the net proceeds from this offering, along with our cash, will be sufficient to fund our operating plan through at least the next months.

The expected use of the net proceeds from the offering represents our intentions based upon our current plans and business conditions. The amounts we actually expend in these areas, and the timing thereof, may vary significantly from our current intentions and will depend on a number of factors, including the success of our clinical development efforts, cash generated from future financings and actual expenses to operate our business. We may use a portion of the net proceeds for the acquisition of, or investment in, businesses, assets or technologies that we believe complement our business, although we have no present commitments or agreements.

We will have broad discretion over the actual amounts and timing of the expenditure of the net proceeds from this offering. Pending the uses described above, we intend to invest the net proceeds from this offering in a variety of capital preservation investments, including short and intermediate-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government.

Dividend Policy

We have never declared or paid cash dividends on our common stock. We currently intend to retain all available funds and any future earnings for use in the operation of our business and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant. Our ability to pay cash dividends or other distributions on our common stock may be restricted by the terms of any future debt or preferred securities or future credit facility.

Capitalization

The following table sets forth our cash and capitalization as of June 30, 2021 on:

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on an actual basis;

▪

on a pro forma basis to give effect to: (i) the Preferred Stock Conversion, (ii) the Note Conversions, (iii) the Daewoong PIK Issuance, and (iv) the filing and effectiveness of our restated certificate of incorporation immediately prior to the completion of this offering; and

▪

on a pro forma as adjusted basis, giving effect to: (i) the pro forma adjustments set forth above; and (ii) the sale by us of shares of common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The number of shares of common stock issuable upon conversion of our convertible notes, and the number of additional shares we may issue to Medytox upon the closing of this offering, are subject to adjustment as described in “Prospectus summary—The offering.” The pro forma and pro forma as adjusted information set forth in the table below is illustrative only and will be adjusted based on the actual initial public offering price and other terms of this offering as determined at pricing. You should read this table together with “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus.

	As of June 30, 2021
	Actual			Pro Forma	Pro Forma As Adjusted ⁽¹⁾
				(unaudited)
	(in thousands, except share and per-share data)
Cash	$	10,605		$	$
Convertible notes at fair value		79,342
Convertible preferred stock, $0.0001 par value; 44,666,035 shares authorized, 21,257,708 shares issued and outstanding, actual; no shares issued or outstanding, pro forma or pro forma as adjusted		137,949
Stockholders’ equity (deficit):
Preferred stock, $0.0001 par value: no shares authorized, issued or outstanding, actual; no shares authorized, no shares issued or outstanding pro forma and pro forma as adjusted		—
Common stock, $0.0001 par value; 207,450,050 shares authorized, 138,848,177 shares issued and 138,825,356 shares outstanding, actual; shares authorized, pro forma and pro forma as adjusted; shares issued and outstanding, pro forma; shares issued and outstanding, pro forma as adjusted	14
Additional paid-in capital		187,348
Accumulated deficit		(403,099	)
Treasury stock, at cost, 22,821 shares		(23	)
Total AEON Biopharma, Inc. stockholders’ (deficit) equity		(215,760	)
Total capitalization	$	1,531		$	$

(1)	Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus, would increase (decrease) each of our pro

forma as adjusted cash, additional paid-in-capital, total AEON Biopharma, Inc. stockholders’ equity and total capitalization by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million in the number of shares offered by us in this offering would increase (decrease) each of our pro forma as adjusted cash, additional paid-in-capital, total AEON Biopharma, Inc. stockholders’ equity and total capitalization by approximately $ million, assuming the initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The number of shares of our common stock to be outstanding after this offering is based on shares of our common stock outstanding as of June 30, 2021, assuming (i) the Preferred Stock Conversion, (ii) the Note Conversions and (iii) the Daewoong PIK Issuance, and excludes:

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10,516,525 shares of common stock issuable upon the exercise of options outstanding as of June 30, 2021, with a weighted-average exercise price of $1.51 per share;

▪

27,884,000 shares of common stock that were reserved for issuance as of June 30, 2021 under our 2013 Plan;

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shares of common stock reserved for future issuance under our 2021 Plan, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan, which will become effective immediately prior to the completion of this offering; and

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shares of common stock reserved for future issuance under our ESPP, as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan, which will become effective on the day the ESPP is adopted.

Dilution

If you invest in our common stock in this offering, your ownership interest will be immediately diluted to the extent of the difference between the amount per share paid by purchasers of shares of common stock in this offering and the pro forma as adjusted net tangible book value per share of common stock immediately after this offering.

Net tangible book value (deficit) per share is determined by dividing our total tangible assets (which excludes deferred offering costs) less our total liabilities and convertible preferred stock by the number of shares of common stock outstanding. Our historical net tangible book value (deficit) as of June 30, 2021 was $(209.0) million, or $(1.51) per share of our common stock, based on 138,825,356 shares of common stock outstanding as of June 30, 2021.

Our pro forma net tangible book value as of June 30, 2021 was approximately $ million, or $ per share of common stock. Our pro forma net tangible book value per share represents the amount of our total tangible assets (which excludes deferred offering costs) reduced by the amount of our total liabilities and divided by the total number of shares of our common stock outstanding as of June 30, 2021, after giving effect to (i) the Preferred Stock Conversion, (ii) the Note Conversions and (iii) the Daewoong PIK Issuance. The number of shares of common stock issuable upon conversion of our convertible notes, and the number of additional shares we may issue to Medytox upon the closing of this offering, are subject to adjustment as described in “Prospectus summary—The offering.”

After giving effect to (i) the pro forma adjustments set forth above; and (ii) our sale in this offering of shares of our common stock at an assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of June 30, 2021 would have been approximately $ million, or $ per share of common stock. This represents an immediate increase in pro forma net tangible book value of $ per share to our existing stockholders and an immediate dilution of $ per share to investors in this offering. Net tangible book value dilution per share to new investors in this offering represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the pro forma as adjusted net tangible book value per share of common stock immediately after completion of this offering. The following table illustrates this dilution on a per share basis:

Assumed initial public offering price, per share				$
Historical net tangible book value (deficit) per share as of June 30, 2021	$	(1.51	)
Increase attributable to pro forma adjustments
Pro forma net tangible book value per share as of June 30, 2021
Increase in pro forma net tangible book value per share attributable to new investors in this offering
Pro forma as adjusted net tangible book value per share after this offering
Dilution per share to new investors in this offering				$

The dilution information discussed above is illustrative only and may change based on the actual initial public offering price and other terms of this offering.

Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus, would increase (decrease) our pro forma as adjusted net tangible book value by $ million, or $ per share and the dilution in pro forma as adjusted net tangible book value per share to new investors in this offering by $ per share, assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase of 1.0 million in the number of shares offered by us in this offering would increase our pro forma as adjusted net tangible book value by approximately $ million, or approximately $ per share, and would decrease dilution per share to new investors

in this offering by approximately $ per share, and each decrease of 1.0 million in the number of shares offered by us in this offering would decrease our pro forma as adjusted net tangible book value by approximately $ million, or approximately $ per share, and would increase dilution per share to new investors in this offering by approximately $ per share, in each case assuming the initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

If the underwriters exercise their option in full to purchase additional shares, the pro forma as adjusted net tangible book value per share after this offering would be $ per share, the increase in pro forma as adjusted net tangible book value per share to existing stockholders would be $ per share and the dilution to new investors in this offering would be $ per share.

The following table shows, as of June 30, 2021, on a pro forma as adjusted basis described above, the number of shares of our common stock, the total consideration and the average price per share (i) paid to us by existing stockholders; and (ii) to be paid by new investors acquiring our common stock in this offering at an assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the over page of this prospectus, before deducting underwriting discounts and commission and estimated offering expenses payable by us:

	Shares Purchased				Total Consideration				Average Price
	Number	Percent			Amount	Percent			Per Share
Existing stockholders				%	$			%	$
New investors									$
Total			100.0	%	$		100.0	%

The information discussed above is illustrative only and may change based on the actual initial public offering price and other terms of this offering.

Each $1.00 increase (decrease) in the assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover of this prospectus, would increase (decrease) total consideration paid by new investors by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us. Similarly, each increase (decrease) of 1.0 million in the number of shares offered by us in this offering would increase (decrease) total consideration paid by new investors by approximately $ million, assuming the initial public offering price remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters’ option to purchase additional shares. If the underwriters exercise their option to purchase additional shares in full, our existing stockholders would own % and our new investors would own % of the total number of shares of our common stock outstanding upon the completion of this offering.

The foregoing tables and calculations exclude:

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10,516,525 shares of common stock issuable upon the exercise of options outstanding as of June 30, 2021, with a weighted-average exercise price of $1.51 per share;

▪

27,884,000 shares of common stock that were reserved for issuance as of June 30, 2021 under our 2013 Plan;

▪

shares of common stock reserved for future issuance under our ESPP as well as any automatic increases in the number of shares of our common stock reserved for future issuance under this plan, which will become effective on the day the ESPP is adopted.

We may choose to raise additional capital through the sale of equity or convertible debt securities due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. In addition, to the extent that any outstanding options or the outstanding warrant are exercised or new options are issued under our stock-based compensation plans, or we issue additional shares of common stock in the future, investors in this offering will experience further dilution.

Management’s Discussion and Analysis of

Financial Condition And Results of Operations

The following discussion and analysis of our consolidated financial condition and results of operations should be read together with our audited and unaudited consolidated financial statements and related notes appearing elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans, objectives, expectations, projections and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors identified below and those set forth in the “Risk Factors” section of this prospectus, our actual results and the timing of selected events could differ materially from the forward-looking statements contained in the following discussion and analysis. Please also see the section titled “Special Note Regarding Forward-Looking Statements.”

Overview

We are a clinical stage biopharmaceutical company focused on developing our proprietary botulinum toxin complex, ABP-450 (prabotulinumtoxinA) injection, or ABP-450, for debilitating medical conditions, with an initial focus on the neurology and gastroenterology markets. We plan to develop ABP-450 to address the estimated $2.2 billion global therapeutic botulinum toxin market, which is projected to grow to $4.4 billion in 2027. ABP-450 is the same botulinum toxin complex that is currently approved and marketed for cosmetic indications by Evolus under the name Jeuveau. ABP-450 is manufactured by Daewoong in compliance with current Good Manufacturing Practice, or cGMP, in a facility that has been approved by FDA, Health Canada and EMA to manufacture Jeuveau in the United States and Nuceiva in Canada and the European Union. We have exclusive development and distribution rights for therapeutic indications of ABP-450 in the United States, Canada, the European Union, the United Kingdom, and certain other international territories. We have built a highly experienced management team with specific experience in biopharmaceutical and botulinum toxin development and commercialization.

Our IND application for ABP-450 as a preventative treatment of migraine was accepted by FDA in the fourth quarter of 2020 and we initiated enrolling patients for our Phase 2 clinical study in the first quarter of 2021. We plan to announce topline data in the second half of 2022.

Our IND application for ABP-450 as a treatment for cervical dystonia was accepted by FDA in the third quarter of 2020 and we initiated our Phase 2 clinical study in the first quarter of 2021. We plan to announce topline data in early 2022.

In December 2020, we initiated a preclinical gastroparesis study. We expect to complete this preclinical study in the third quarter of 2021. Following the preclinical study, we expect to submit an IND to FDA in late 2021 to support the initiation of a Phase 2a clinical study in 2022.

ABP-450 has the same 900 kDa complex size as Botox. We believe physicians generally prefer the performance characteristics of the complete 900 kDa botulinum toxin complex for therapeutic uses and that this characteristic will provide ABP-450, if approved, a competitive advantage over other non-Botox therapeutic botulinum toxins currently on the market or in development. ABP-450, if approved, will be the only therapeutic botulinum toxin with significantly similar physiochemical properties as Botox.

Kingdom, and certain other international territories. Daewoong licenses the same 900 kDa botulinum toxin to Evolus, for cosmetic indications, which it markets and sells under the name Jeuveau. Prior to licensing the botulinum toxin complex to Evolus, Daewoong conducted a broad preclinical development program for ABP-450 that was primarily focused on safety to support any clinical indication. Subsequently, Evolus completed a comprehensive clinical development program of the same botulinum toxin complex and has received approval from regulatory authorities in the United States, the European Union and Canada to market and sell Jeuveau in the United States and Nuceiva in Canada and the European Union for the temporary improvement in the appearance of moderate to severe glabellar, or frown, lines in adults. Over 2,100 adult subjects with moderate to severe glabellar lines at maximum frown participated in Evolus’ clinical development program, and each of Evolus’ Phase 3 clinical studies successfully met their respective primary safety and efficacy endpoints. While none of these preclinical or clinical programs specifically contemplated any therapeutic uses of ABP-450, given that the FDA’s regulatory requirements are generally the same for the cosmetic or therapeutic use of a toxin, we believe that the positive data derived from these preclinical and clinical studies will support the clinical development and anticipated future safety labeling of ABP-450 for migraine and cervical dystonia at all contemplated dose ranges.

We have never been profitable from operations and, as of December 31, 2019 and 2020 and June 30, 2021, we had a consolidated accumulated deficit of $333.7 million, $366.6 million, and $403.1 million respectively. We have never generated revenue from ABP-450. Losses from operations were $54.0 million, $16.4 million, and $43.7 million for the years ended December 31, 2019 and 2020, and the six months ended June 30, 2021 respectively. Consolidated net income attributable to our common stockholders was $172.9 million for the year ended December 31, 2019, primarily as a result of a non-cash gain recognized upon deconsolidation of our subsidiary, Evolus in May 2019, following our assessment that we no longer held a controlling financial interest. Consolidated net losses attributable to our common stockholders were $32.9 million for the year ended December 31, 2020 and $36.5 million for the six months ended June 30, 2021. As of June 30, 2020, we had $10.6 million in cash. We have concluded that we do not have sufficient cash to fund our operations 12 months from the date of our financial statements included within this registration statement, without additional financing, and as a result, there is substantial doubt about our ability to continue as a going concern.

We do not expect to receive any revenue from ABP-450 or any future product candidates that we develop unless and until we obtain regulatory approval and commercialize ABP-450 or any future product candidates. We expect to continue to incur significant expenses and increasing NOLs for the foreseeable future as we seek regulatory approval, prepare for and, if approved, proceed to commercialization of ABP-450. We utilize clinical research organizations, or CROs, to carry out our clinical development and we do not yet have a sales organization. We expect to incur significant expenses related to building our commercialization infrastructure, including marketing, sales and distribution functions, inventory build prior to commercial launch and training and deploying a specialty sales force and implementing a targeted marketing campaign. Based on our estimated use of proceeds, we anticipate that the net proceeds from this offering will not be sufficient to fund our operating plan through the launch and initial commercialization of ABP-450.

Historical Background

We were formed in 2012 and, in our early history, acquired numerous controlling and non-controlling ownership interests in several different businesses that we have since disposed of and now have no interest in. We wholly owned Evolus prior to its initial public offering in February 2018. Evolus was included in our consolidated results of operations through May 2019, when we determined that we no longer held control and deconsolidated the entity and recorded the fair value of the retained equity interest in Evolus. Until September 2020, we also operated a business that provides introductory financing services on a limited basis to patients to pay for elective medical procedures and owned a non-controlling interest in a private company. Through the third quarter of 2020, results from the patient financing business are reflected in our results of operations and ownership interest in the private company is reflected on our balance sheet, each of which were immaterial to our financial results.

In January 2020, we contributed our interest in Evolus to Alphaeon 1 LLC, a newly formed entity in exchange for member units, and then distributed all of the units of Alphaeon 1 LLC to our existing stockholders. In September 2020, we contributed Alphaeon Credit, Inc., or Alphaeon Credit, the patient financing business, and our investment interest in Zelegent, a private company, each to a newly formed entity, and then distributed all of the units in said entities to our existing stockholders. We refer to these transactions collectively as the Divestiture Transactions. As a result, our business is now exclusively focused on developing ABP-450 for debilitating medical conditions.

Business Segments

During 2018, we operated in three operating and reportable segments – AEON Biopharma Core, Alphaeon Credit and Evolus, which was then our majority-owned subsidiary. On May 20, 2019, our ownership percentage in Evolus’ common stock was reduced to approximately 36% and we no longer held a controlling financial interest in Evolus. As a result, subsequent to May 20, 2019, we operated in two operating and reportable segments - AEON Biopharma Core and Alphaeon Credit. On September 30, 2020, we contributed our interest in Alphaeon Credit to a newly-formed entity and distributed all of the units of that entity to our stockholders. As a result, we now have one operating and reportable segment.

Components of Our Results of Operations

Revenue

Our revenue primarily relates to introductory financing services provided on a limited basis to patients. We have divested all businesses and equity interests that are not related to the development of ABP-450, and thus do not anticipate deriving any product revenue unless and until we receive regulatory approval for, and are able to successfully commercialize, ABP-450.

Operating Expenses

Research and Development Expenses

Our research and development, or R&D, expenses to date have been primarily attributed to consolidated Evolus results, the license of the rights to ABP-450, the development of ABP-450 for migraine, cervical dystonia and gastroparesis, and the consolidated expenses of Evolus. Due to the stage of development and our ability to use resources across all of our programs, most of our research and development costs are not recorded on a program-specific basis. For the period from January 1, 2019 through May 20, 2019, Evolus results accounted for a material portion of our reported R&D expenses. We expect to increase our R&D expenses related to our core operations as we initiate Phase 2 clinical studies for ABP-450 to treat migraine, cervical dystonia and gastroparesis. R&D expenses associated with these studies will include third-party costs such as expenses incurred under agreements with Contact Research Organizations, or CROs, the cost of consultants who assist with the development of ABP-450 on a program-specific basis, investigator grants, sponsored research, product costs in connection with acquiring ABP-450 from Daewoong for use in conducting nonclinical studies and clinical studies, and other third-party expenses attributable to the development of our product candidates.

R&D activities will be critical to achieving our business strategy. As our pipeline programs enter the later stages of clinical development, we will generally incur greater development costs than those programs in the earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical studies. We expect our R&D expenses to be significant over the next several years as we advance the clinical development of ABP-450 and prepare to seek regulatory approval.

It is difficult to determine with certainty the duration and completion costs of any clinical study we may conduct. The duration, costs and timing of clinical studies of our current and future product candidates will depend on a variety of factors that include:

•

the number of studies required for approval;

•

the per patient study costs;

•

the number of patients that participate in the studies;

•

the number of sites included in the studies;

•

the countries in which the study is conducted;

•

the length of time required to enroll eligible patients;

•

the number of doses that patients receive;

•

the drop-out or discontinuation rates of patients;

•

the potential additional safety monitoring or other studies requested by regulatory agencies;

•

the duration of patient follow-up; the timing and receipt of regulatory approvals;

•

the costs of clinical study material; and

•

the efficacy and safety profile of the product candidate.

As a result, we are unable to determine the duration and completion costs of our programs or when and to what extent we will generate revenue from commercialization and sale of any of our product candidates. Our research and development activities may be subject to change from time to time as we evaluate our priorities and available resources.

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A, expenses to date consist primarily of consolidated Evolus results, compensation for personnel, including stock-based compensation, management, finance, legal, and regulatory functions. Other SG&A expenses include travel expenses, market research and analysis, conferences and trade shows, professional services fees, including legal, audit and tax fees, insurance costs, general corporate expenses, and allocated facilities-related expenses. For the period from January 1, 2019 through May 20, 2019, consolidated Evolus results accounted for a material portion of our SG&A expenses. We anticipate that our SG&A expenses related to our core operations will increase in the future to support our continued R&D activities, potential commercialization efforts and increased costs of operating as a public company. These increases will likely include increased costs related to the hiring of additional personnel, professional fees and additional rent and other facilities related costs, among other expenses. Additionally, we anticipate increased costs associated with being a public company, including expenses related to services associated with maintaining compliance with the requirements of The Nasdaq Global Market, or Nasdaq, and the SEC, insurance, and investor relations costs. We expect to incur increased costs associated with establishing sales, marketing, and commercialization functions in advance of potential future regulatory approvals and commercialization of our product candidates. If ABP-450 obtains U.S. regulatory approval for any indication, we expect that we would incur significantly increased expenses associated with building a sales and marketing team and funding commercial activities.

Litigation settlement and license expense

Litigation settlement and license expense primarily consists of the fair value of common stock issued by us in June 2021 in a settlement and license agreement with Medytox, Inc. The shares of common stock issued to Medytox were valued at the date of the agreement, which was the issuance date, by management with input from an independent third-party valuation specialist, using a Monte Carlo simulation, or MCS. The analysis considered a scenario analysis (probability-weighted expected return model, or PWRM), considering two IPO scenarios with a combined 83% weighting and a delayed exit scenario with 17% weighting. The MCS then simulated the future equity value within each scenario to estimate the payoff for each simulation path, given the potential requirement to issue additional shares depending on the dilution impact from the IPO or other future financings. Key inputs included (1) our equity value in each scenario, (2) the fair value of Divestiture Transactions, (3) our capital structure, (4) the weighting on each scenario, (5) the expected time to exit in each scenario, (6) the volatility in each scenario, (7) the risk-free interest rate over the period to exit in each scenario, and (8) the discount for lack of marketability of the common stock in each

scenario. The equity value was estimated based on the total invested capital value less the fair value of the outstanding debt. Our total invested capital value was estimated using a risk-adjusted and probability-adjusted discounted cash flow (DCF) method based upon future cash flow generation. Inputs for the DCF analysis included (1) forecasted financial projections for the next nine years developed by management, (2) a terminal value assigned using an exit multiple method, (3) a discount rate based on the weighted average cost of capital, and (4) the probability of success. We also considered the expected IPO pricing based on input from and discussions with underwriters.

Interest Income (Expense) including from Related Party Borrowings

Interest income (expense) consists primarily of interest incurred on our outstanding indebtedness and non-cash interest related to the accretion to principle premium, debt discount and issuance costs associated with our convertible and promissory note agreements. Accretion of the discount related to the contingent promissory notes and convertible notes is recorded in interest expense in the consolidated statement of operations and comprehensive income (loss) with a corresponding increase to contingent promissory and convertible note payable balances, respectively, in the consolidated balance sheets.

Gain on Deconsolidation and Sale of Evolus and Changes in Fair Value

On May 20, 2019, following the sale for cash proceeds and distribution to convertible noteholders of Evolus stock, we determined we no longer had a controlling financial interest in Evolus. We deconsolidated the assets and liabilities of Evolus effective May 20, 2019 and recognized a pre-tax gain.

We elected to account for our remaining retained equity investment in Evolus’ common stock subsequent to the deconsolidation of Evolus on May 20, 2019 at fair value. We recorded the equity investment in Evolus’ common stock at fair value on May 20, 2019 and subsequent changes in fair value were recorded in the consolidated statement of operations and comprehensive (loss) income. In January 2020, we contributed our equity investment in Evolus common stock to Alphaeon 1 LLC in exchange for member units and then distributed all of the member units of Alphaeon 1 LLC to our stockholders.

Change in Fair Value of Convertible Notes

We elected to account for the 2019 Convertible Notes and the SCH Convertible Note, each described below under the heading “—Liquidity and Capital Resources—Indebtedness,” at fair value. We recorded the 2019 Convertible Notes and the SCH Convertible Note at fair value at inception with subsequent changes in fair value recorded as a component of other income (loss) in the consolidated statements of operations and comprehensive income (loss) or other comprehensive income (loss) for changes related to instrument-specific credit risk.

Loss on Extinguishment of Related Party Borrowing

Effective as of January 2, 2020, we and SCH cancelled all obligations under our intercompany credit line promissory note, or the Strathspey Crown Note, and in exchange we issued the SCH Convertible Note with a principal amount of $17.5 million. We accounted for the debt exchange as an extinguishment of the Strathspey Crown Note and recognized a loss on debt extinguishment of $11.2 million, representing the difference between the fair value of the SCH Convertible Note of $26.5 million on January 2, 2020 and total obligations outstanding under the Strathspey Crown Note of $15.8 million less the unamortized borrowing cost of $0.5 million.

Other Income (Loss), Net

Other income (loss), net primarily consists of gains and losses resulting from the remeasurement of the fair value of our preferred stock warrant liability at each balance sheet date. We will continue to record adjustments to the estimated fair value of the preferred stock warrants until they are exercised or expire, which we expect to occur in connection with this offering. At that time, the final fair value of the warrant liability will be reclassified to stockholders’ deficit and we will no longer record any related periodic fair value adjustments.

Clarion Unwind Fee

In 2014, we acquired all outstanding voting equity interests of Clarion pursuant to a shareholders’ agreement. The shareholders’ agreement provided the previous equity holders of Clarion the right to an unwind fee of approximately $9.55 million to unwind our acquisition of Clarion. In 2016, the previous equity holders of Clarion exercised the unwind right and the unwind fee became a joint and several obligation of the us and SCH, our majority stockholder.

In November 2017, we and SCH entered into a side letter and guarantee agreement with Clarion and the previous equity holders of Clarion in which we agreed to cause Evolus to enter into an exclusive distribution and supply agreement, dated as of November 30, 2017, or the Distribution Agreement, with Clarion. The Distribution Agreement provided terms pursuant to which Evolus would exclusively supply DWP-450 to Clarion in Canada, if Evolus obtained the necessary regulatory approval from Health Canada. Evolus received approval from Health Canada in August 2018 for the temporary improvement in the appearance of moderate to severe glabellar lines in adult patients under 65 years of age. The Distribution Agreement also sets forth that a portion of the proceeds received by Evolus from each unit of DWP-450 purchased by Clarion shall be paid directly to the previous equity holders of Clarion, and will reduce, on a dollar-for-dollar basis, the amount of the unwind fee owed by us until paid in full.

Pursuant to the Side Letter, we and SCH were obligated to pay the unwind fee upon an acceleration event within 30 days of such event. For purposes of the Side Letter, each of the following events constitutes an acceleration event: (i) the unwind fee is not paid in full by December 31, 2022, (ii) there is a material default of obligations by Evolus under the Distribution Agreement, (iii) a claim or interruption of more than 60 days occurs under the Distribution Agreement that impairs Clarion’s ability to sell DWP-450 in Canada as the sole distributor, (iv) an initial public offering or any change in control involving us or Evolus that results in either company receiving net proceeds of $700 million, (v) the bankruptcy or assignment for the benefit of creditors of us or Evolus, or (vi) the termination of the License and Supply Agreement, dated as of September 30, 2013, as amended, by and between Evolus and Daewoong.

In addition, pursuant to the Side Letter, we and SCH re-affirmed to the previous equity holders of Clarion the obligation of us and SCH to pay the unwind fee should Evolus fail to supply DWP-450 to Clarion or cause the Distribution Agreement to terminate. We and SCH further agreed to pay the unpaid amount of the unwind fee on December 31, 2022, if demanded by the previous equity holders of Clarion.

As of December 31, 2020, no amounts were paid towards the unwind fee, which was included in other liabilities in the consolidated balance sheets.

On March 23, 2021, Evolus, Clarion, and Daewoong entered into an addendum to the Distribution Agreement to provide for Clarion to purchase Jeuveau directly from Daewoong. Our obligation under the Distribution Agreement to pay the unwind fee to the previous equity holders of Clarion was therefore cancelled. We recognized a gain on cancellation of the unwind fee of $9.55 million during the six months ended June 30, 2021 with a corresponding decrease in other liabilities in the consolidated financial statements.

Income Taxes (Benefit) Provision

Our tax provision is comprised of U.S. and state income taxes. We currently record a full valuation allowance against our net deferred tax assets. We have provided for the tax effects of uncertain tax positions in our tax provision.

Results of Operations

The following table summarizes our results of operations for the periods indicated (in thousands):

	Year Ended December 31,						Six Months Ended June 30,
	2019			2020			2020			2021
Revenue:
Services	$	3,342		$	2,518		$	1,391		$	-
Other revenue		15			—			—			—
Total revenue		3,357			2,518			1,391			—
Operating costs and expenses:
Cost of revenue		1			—			—			—
Selling, general and administrative		46,037			11,587			5,474			4,552
Research and development		4,814			7,319			1,558			10,203
Litigation settlement and license expense		—			—			—			28,966
Change in fair value of contingent royalty obligation to Evolus Founders		5,596			—			—			—
Depreciation and amortization expense		875			—			—			—
Total operating costs and expenses		57,323			18,906			7,032			43,721
Loss from operations		(53,966	)		(16,388	)		(5,641	)		(43,721	)
Other income (loss):
Interest income		720			—			—			—
Interest expense		(5,177	)		(1	)		—			—
Interest expense on related party borrowings		(2,293	)		(14	)		(14	)		—
Gain on deconsolidation of Evolus, Inc.		254,106			—			—			—
Gain on transfer of equity investment at fair value		6,597			—			—			—
Change in fair value of equity investment		(49,299	)		346			346			—
Change in fair value of convertible notes		(5,161	)		(5,498	)		680			(2,182	)
Loss on extinguishment of related party borrowings		—			(11,241	)		(11,241	)		—
Gain on cancellation of Clarion unwind fee		—			—			—			9,550
Gain on PPP loan forgiveness		—			139			—			—
(Loss) gain on equity-method investment		136			(140	)		(107	)		—
Other income, net		7			(116	)		18			(100	)
Total non-operating expenses		199,636			(16,525	)		(10,318	)		7,268
(Loss) income before taxes	$	145,670		$	(32,913	)	$	(15,959	)	$	(36,453	)

Comparison of Years Ended December 31, 2020 and 2019 and Six Months Ended June 30, 2020 and 2021

Revenue

Revenue was $3.4 million and $2.5 million during the years ended December 31, 2019 and 2020, respectively. Revenue for years ended December 31, 2019 and 2020 were primarily derived from our introductory financing services, which we disposed of in September 2020.

Revenue was $1.4 million and $0.0 million during the six months ended June 30, 2020 and 2021, respectively. Revenue for the six months ended June 30, 2020 was primarily derived from our introductory financing services, which we disposed of in September 2020.

Operating Expenses

Selling, General and Administrative Expenses

SG&A expenses were $11.6 million during the year ended December 31, 2020, a decrease of $34.5 million, or 75%, compared to $46.0 million during the year ended December 31, 2019. SG&A expenses in the year ended December 31, 2019 were primarily attributable to $36.3 million of consolidated Evolus SG&A expenses. We deconsolidated Evolus

in May 2019 and subsequent to that date, and for the year ended December 31, 2020 we did not record any SG&A expenses for the entity. This decrease was offset partly with increases attributable to employees, legal expenses, and third-party consulting fees during the year ended December 31, 2020.

SG&A expenses were $4.6 million during the six months ended June 30, 2021, a decrease of $0.9 million, or 17%, compared to $5.5 million during the six months ended June 30, 2020. The decrease was primarily related to operating expenses included in our divesting of the Alphaeon Credit business in September 2020. SG&A expenses in the six months ended June 30, 2021 were attributable to employees, legal expenses, and third-party consulting fees.

Research and Development Expenses

R&D expenses were $7.3 million during the year ended December 31, 2020, an increase of $2.5 million, or 52%, compared to $4.8 million during the year ended December 31, 2019. The increase was primarily attributable to a $3.8 million increase in clinical expenses associated with the development of ABP-450, stock based compensation for employees and consultants of $1.3 million, which were partially offset by a $2.6 million decrease as we deconsolidated Evolus in May 2019 and no longer recorded expenses for that entity.

R&D expenses were $10.2 million during the six months ended June 30, 2021, an increase of $8.7 million or, 555%, compared to $1.6 million during the six months ended June 30, 2020. The increase was primarily attributed to a $8.2 million increase in clinical expense related to the commencement and ongoing development of our two Phase 2 clinical studies of ABP-450 in both migraine and cervical dystonia as well as initiation of preclinical studies in gastroparesis and $0.4 million in stock-based compensation.

Litigation Settlement and License Expense

As a result of a settlement and license agreement executed with Medytox, Inc. in June 2021, and corresponding share issuance agreement, we issued 26,680,511 shares of our common stock, which was valued at $29.0 million.

Contingent Royalty Obligation to Evolus Founders, a related party

Revaluation of the contingent royalty obligation to the former stockholders of Evolus, or the Evolus Founders, was $5.6 million for the year ended December 31, 2019. Such change of the fair value is recorded in operating expenses. As a result of the deconsolidation of Evolus in our financial statements subsequent to May 20, 2019, we have not recorded a revaluation of such contingent royalty obligation since that date, and any subsequent revaluation of the contingent royalty obligation will not impact our results of operations. Evolus is solely responsible for the contingent royalty obligations to Evolus Founders.

There was no revaluation of the contingent royalty obligation to the Evolus Founders in the six months ended June 30, 2021 and 2020.

Other Income (Loss)

Other income (expense) was $(16.5) million for the year ended December 31, 2020, compared to $199.6 million for the year ended December 31, 2019, and included loss on extinguishment of related party borrowing, gain on deconsolidation and sale of Evolus and changes in fair value, all items described below in more detail, as well as other income (loss) of $(5.6) million for the year ended December 31, 2020, compared to $(11.8) million for the year ended December 31, 2019. Interest expense for the year ended December 31, 2020 consisted primarily of $5.5 million related to the change in fair value for the Notes described below under the heading “—Liquidity and Capital Resources—Indebtedness”. Interest expense for the year ended December 31, 2019 consisted primarily interest income of $0.7 million offset by $5.2 million related to the change in fair value of the 2019 Convertible Notes, $2.3 million related to interest expense related to the SCH Convertible Note, $3.3 million related to the accretion of a redemption premium recorded for the Notes and $1.9 million of consolidated Evolus interest expense.

Other income (loss) was income of $7.3 million for the six months ended June 30, 2021, compared to loss of $(10.3) million for the six months ended June 30, 2020. Other income for the six months ended June 30, 2021 consisted

primarily of a non-cash gain of $9.6 million recognized upon the cancellation of an unwind fee to Clarion that was previously recorded as a liability and $(2.2) million related to the fair value change in convertible notes. Other income (loss) for the six months ended June 30, 2020 primarily included $(11.2) million on the loss on extinguishment of related party borrowing, $0.4 million change in fair value of an equity investment and loss on equity-method investment and $0.7 million of changes in fair value of convertible notes.

Loss on Extinguishment of Related Party Borrowing

For the quarter ended June 30, 2020 and year ended December 31, 2020 we accounted for the debt exchange of the Strathspey Crown Note for the SCH Convertible Note as an extinguishment and recognized a loss on debt extinguishment of $11.2 million, representing the difference between the fair value of the SCH Convertible Note of $26.5 million at January 2, 2020 and total obligations outstanding under the Strathspey Crown Note of $15.8 million less the unamortized borrowing cost of $0.5 million. See below for a discussion of the SCH Convertible Notes.

Gain on Deconsolidation and Sale of Evolus and Changes in Fair Value

Gain on deconsolidation of Evolus as of May 20, 2019 was $254.1 million. We recorded the fair value of the retained interest in Evolus on the balance sheet of $173.1 million and recorded a revaluation loss of $49.3 million in the year ended December 31, 2019, and $0.3 million revaluation gain in the year ended December 31, 2020, reflecting the change in price of the underlying shares of Evolus. We also recorded $6.6 million in the year ended December 31, 2019 related to a gain on the sale of shares of Evolus held by us.

Unaudited Pro Forma Information

Upon the closing of this offering, all of our outstanding shares of convertible preferred stock and outstanding convertible notes will automatically convert into an aggregate of shares of our common stock assuming the sale of shares in this offering at the assumed public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus. The pro forma net (loss) income per share attributable to AEON common stockholders, basic and diluted for the year ended December 31, 2020 and the six months ended June 30, 2021, were computed using the weighted average shares of common stock outstanding, basic and diluted including the pro forma effect of the conversion of all outstanding shares of convertible preferred stock and outstanding convertible notes into shares of common stock, as if such conversion had occurred at the beginning of the period, or their issuance dates if later. Pro forma net (loss) income per share attributable to AEON common stockholders does not include the shares expected to be sold in this offering.

The following table sets forth the computation of the pro forma net (loss) income per share attributable to common stockholders, basic and diluted for the period presented (in thousands, except per share amount):

	Year Ended December 31, 2020			Six Months Ended June 30, 2021
Numerator:
Net (loss) income	$	(32,913	)	$	(36,453	)
Change in fair value of convertible notes¹		5,498			2,182
Change in fair value of preferred stock warrant liabilities		(29	)		(23	)
Pro forma net (loss) income available to AEON common stockholders	$	(27,444	)	$	(34,294	)
Denominator:
Weighted average shares of common stock outstanding, basic		112,145			113,471
Pro forma adjustments to reflect assumed weighted average effect of conversion of convertible preferred stock
Pro forma adjustments to reflect assumed weighted average effect of conversion of convertible preferred stock warrants
Pro forma adjustments to reflect assumed weighted average effect of conversion of convertible notes
Pro forma weighted average shares of common stock outstanding, basic
Weighted average shares of common stock outstanding, diluted		112,145			113,471
Pro forma adjustments to reflect assumed weighted average effect of conversion of convertible preferred stock
Pro forma adjustments to reflect assumed weighted average effect of conversion of convertible preferred stock warrants
Pro forma adjustments to reflect assumed weighted average effect of conversion of convertible notes
Pro forma weighted average shares of common stock outstanding, diluted
Pro forma basic net (loss) income per share attributable to AEON common stockholders	$			$
Pro forma diluted net (loss) income per share attributable to AEON common stockholders	$			$

(1)	Includes the assumed issuance of shares of our common stock to Daewoong to settle the paid-in-kind principal and interest on Daewoong Convertible Notes.

Liquidity and Capital Resources

To date, our primary sources of capital have been private placements of preferred stock, sales of shares of Evolus, debt financing agreements and revenue from introductory financing services. As of June 30, 2021, we had $10.6 million of cash and we had a consolidated accumulated deficit of $403.1 million, including an aggregate of $79.3 million in the 2019 Convertible Notes, the Strathspey Crown Note and the Daewoong Note.

We incurred operating losses and negative cash flows from operating activities since inception and expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. We expect to continue to incur substantial costs in order to conduct research and development activities necessary to develop and commercialize our product candidates. Until such time, if ever, as we can generate substantial product revenue from sales of ABP-450, we will need additional capital to undertake these activities and commercialization efforts, and, therefore, we intend to raise such capital through the issuance of additional equity, borrowings, and potentially strategic alliances with other companies. However, if such financing is not available at adequate levels or on acceptable terms, we could be required to significantly reduce operating expenses and delay, reduce the scope of or eliminate some of the development programs or commercialization efforts, out-license intellectual property rights to our product candidates and sell unsecured assets, or a combination of the above, any of which may have a material adverse effect

on our business, results of operations, financial condition and/or our ability to fund our scheduled obligations on a timely basis or at all. Our ability to continue as a going concern is dependent upon our ability to successfully accomplish these plans and secure sources of financing and ultimately attain profitable operations.

Our primary use of cash is to fund operating expenses, which consist of R&D expenditures as well as SG&A expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay or prepay these expenses.

To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. If these sources are insufficient to satisfy our liquidity requirements, we will seek to raise additional funds through future equity or debt financings. If we raise additional funds by issuing equity securities, our stockholders would experience dilution. Additional debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. There can be no assurance that our efforts to procure additional financing will be successful or that, if they are successful, the terms and conditions of such financing will be favorable to us or our stockholders. If we are unable to raise additional financing when needed, we may be required to delay, reduce, or terminate the development, commercialization and marketing of our products and scale back our business and operations.

As a result of these conditions, management has concluded that substantial doubt about our ability to continue as a going concern exists as conditions and events, considered in the aggregate, indicate that it is probable that we will be unable to meet our obligations as they become due within one year after the date that the financial statements are issued. The financial information throughout this prospectus and the financial statements included elsewhere in this prospectus have been prepared on a basis that assumes that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. This financial information and our consolidated financial statements do not include any adjustments that may result from an unfavorable outcome of this uncertainty. Our ability to continue as a going concern is dependent upon our ability to successfully accomplish our business plans and secure sources of financing and ultimately attain profitable operations.

Net Cash Used in Operating Activities

Net cash used in operating activities for the year ended December 31, 2020 was $9.5 million, consisting primarily of a net loss of $32.9 million and non-cash charges of $23.5 million. Non-cash increases of $5.5 million and $4.8 million were related to the change in fair value of the Notes and stock-based compensation for our executives and directors, respectively. In addition, non-cash increases of $11.2 million and $1.5 million were related to a loss on the extinguishment of debt for the SCH Note and the change in assets and liabilities, respectively.

Net cash used in operating activities for the year ended December 31, 2019 was $44.7 million, consisting primarily of a net income of $160.3 million and non-cash charges of $205.0 million. Non-cash charges of $211.4 million were related to deconsolidation of Evolus on May 20, 2019 and subsequent changes in fair value of our retained equity interest in Evolus. In addition, non-cash increases of $5.2 million and $5.3 million were related to the change in fair value of the 2019 Convertible Notes and stock-based compensation for our executives and directors, respectively. Non-cash increases of $5.6 million reflected the change in fair value of the Evolus contingent royalty obligation prior to deconsolidation in May 2019 and a $14.6 million release of a deferred tax asset by Evolus upon regulatory approval to commercialize its product.

Net cash used in operating activities for the six months ended June 30, 2021 was $14.4 million, consisting primarily of a net loss of $36.5 million and non-cash charges of $22.0 million consisting primarily of a non-cash legal settlement and license expense of $29.0 million, a non-cash gain of $9.6 million recognized upon the cancellation of the Clarion unwind fee previously recorded as a liability and $2.3 million expense related to stock-based compensation for our executives and directors. Net cash used in operating activities for the six months ended June 30, 2020 was $3.9 million, consisting primarily of a net loss of $16.0 million and non-cash charges of $12.0 million primarily related to a loss of $11.2 million on the extinguishment of debt for the SCH Note.

Net Cash Provided by Investing Activities

Net cash used in investing activities in the year ended December 31, 2020 was $1.3 million related to the deconsolidation of Alphaeon Credit upon its spin-off in September 2020.

Net cash used in investing activities in the year ended December 31, 2019 was $117.3 million and related primarily to the deconsolidation of Evolus. Specifically, cash of $36.5 million held by Evolus was not consolidated by us subsequent to May 20, 2019, and purchases of short-term investments of $89.0 million by Evolus prior to deconsolidation.

There was no net cash provided by or used in investing activities for the six months ended June 30, 2021 and 2020.

Net Cash Provided by Financing Activities

Net cash provided by financing activities in the year ended December 31, 2020 was $24.6 million primarily related to a $25.0 million issuance of the Daewoong Convertible Notes in August and September 2020. In addition, financing activities included $0.3 million and $0.5 million for payment on a note payable and for offering costs incurred related to our initial public offering. We also received $0.4 million in a loan provided from the Paycheck Protection Program (PPP) keeping our workforce employed during the Coronavirus (COVID-19) crisis.

Net cash provided by financing activities in the year ended December 31, 2019 was $73.2 million, of which $10.0 million related to proceeds from the issuance of the 2019 Convertible Notes. The remaining amounts relate to proceeds of $77.0 million from the sale of Evolus shares used to make principal payments of $74.2 million on our previously outstanding convertible notes and related party borrowing, as well as other Evolus-related cash flows prior to deconsolidation that provided net proceeds of $60.4 million.

Net cash provided by financing activities for the six months ended June 30, 2021 of $4.9 million related to proceeds from the issuance of convertible notes. For the six months ended June 30, 2020 there was $0.3 million of notes payable and offering costs.

Indebtedness

Bridge Note and Warrants In 2016, we entered into two separate debt transactions: (i) a Secured Convertible Bridge Note and Warrant Agreement, or the Bridge Note with one of our stockholders, Longitude Venture Partners II, L.P., or Longitude, with a principal amount of $2.5 million and (ii) a Secured Convertible Note Purchase Agreement with one of our stockholders, Dental Innovations BVBA, or Dental Innovations, as collateral agent, pursuant to which we could issue up to an aggregate of $55.0 million, which we refer to as the Note Facility and together with the Bridge Note, as the Notes. In April 2017, the purchase agreement was amended and restated to, among other things, set forth the terms for the issuance of up to $30.0 million in principal amount of Notes contemplated but not yet issued under the Note Facility.

The Notes, as amended from time to time, have substantially similar terms and pay interest monthly in arrears at a rate of ten percent (10%) per annum, subject to adjustment pursuant to the terms of the Notes. The Notes could be paid at a redemption price equal to 2.5 times the face amount of the Notes less any prepayment of principal and any principal amount of the Notes that could convert into shares of our capital stock on (i) maturity on December 23, 2018 or, if an extension event occurs, on June 23, 2019, (ii) a required prepayment event, or (iii) prepayment at any time at our election. Upon the occurrence of certain corporate events at the company, at the election of the holder, the Notes would convert into a variable number of shares of our capital stock with an aggregate fair value equaling the principal value of the Notes or such Notes will continue to maturity as unsecured promissory notes with a reduced interest rate. Our obligations under the Notes were secured by a first priority lien and security interest in substantially all of our assets.

In addition, pursuant to the terms of the Bridge Note, in 2016 we issued Longitude warrants to purchase 342,011 shares of our Series B convertible preferred stock at an exercise price of $7.3097 per share. The warrants are exercisable, in whole or in part, from the date of issuance and expire on May 31, 2023. We account for the warrants as a liability, which were initially recorded at their fair value of $0.8 million on the date of issuance and are subject to

remeasurement at each subsequent balance sheet date. Any change in fair value of the warrants as a result of the remeasurement is recognized as a component of other income (loss), net in our consolidated statements of operations and comprehensive income (loss). As of December 31, 2019 and 2020, and June 30 2021 the estimated fair value of the warrants was $66,000, $37,000 and $14,000 respectively, which was included in other liabilities in the consolidated balance sheets. During the years ended December 31, 2019 and 2020, and the six months ended June 30, 2021 and 2020, we recognized $(4,000), $29,000, $24,000, and $19,000 of income (expense), respectively, related to the change in the estimated fair value of the warrants.

The redemption premium, representing 1.5 times the principal amount of the Notes, was being accreted using the effective interest method over the term of the Notes and was recognized as interest expense in our consolidated statements of operations and comprehensive (loss) income. As of January 1, 2018, the carrying amount of the Notes was $86.6 million and total note obligations outstanding were $138.7 million (2.5 times the total outstanding principal amount of $55.5 million). In early 2018, we issued additional $0.8 million in principal amount of the secured convertible promissory note, which increased the total note obligations outstanding to $140.7 million (2.5 times the total outstanding principal amount of $56.3 million). During 2018, we recorded $57.8 million as interest expense associated with the Notes, including the accretion of the redemption premium of $53.3 million.

During 2018, we settled $56.3 million of the total outstanding principal amount of the Notes, of which $48.3 million was paid in cash and $8.0 million was settled by us distributing to the holders of the Notes 573,888 shares of Evolus common stock previously held by us. As of December 31, 2018, total remaining note obligations outstanding were $84.4 million, representing the redemption premium of the Notes. In 2019, we settled the remaining outstanding note obligations of $84.4 million plus accrued interest of $3.5 million, of which $62.7 million was paid in cash and $25.2 million was settled by us distributing to the holders of the Notes 1,307,940 shares of Evolus common stock previously held by us.

Convertible Notes

Our convertible notes include the Strathspey Crown Note, the 2019 Convertible Notes and the Daewoong Convertible Note, each described in more detail below.

Strathspey Crown Note and SCH Convertible Note. Since December 2013, we had been party to the Strathspey Crown Note, pursuant to which SCH, our majority stockholder, had advanced borrowings to us to fund our capital requirements. The Strathspey Crown Note, as amended from time to time, allowed us to borrow up to $150.0 million and matured on June 30, 2019. Borrowings against the Strathspey Crown Note bear interest monthly at a rate per annum equal to the applicable federal rate published by the Internal Revenue Service, or the IRS, for such month for debt with semiannual compounding, compounded every six months.

As of January 1, 2019, the aggregate principal amount outstanding under the Strathspey Crown Note was $50.0 million with accrued interest of $2.0 million. During the second quarter of 2019, we paid $39.0 million of the outstanding principal amount of the Strathspey Crown Note, of which $14.0 million was paid in cash and $25.0 million was settled by us distributing to SCH 1,298,701 shares of Evolus common stock previously held by us. We recognized a gain of $6.6 million on this transaction, which was recorded as a component of non-operating income (loss) in our consolidated statements of operations and comprehensive income (loss).

On June 30, 2019, the Strathspey Crown Note was amended, which set forth the total remaining outstanding balance to be $15.0 million with an interest rate of 10% per annum from July 1, 2019 to December 31, 2019 and 20% per annum from January 1, 2020 until cancelled and exchanged in January 2020 (see discussion below). All unpaid outstanding principal balance and accrued and unpaid interest were due and payable on June 30, 2020. Prior to the amendment, the outstanding principal amount of the Strathspey Crown Note was $11.0 million plus accrued interest of $2.5 million.

We accounted for the amendment as a debt modification and accreted the incremental borrowing cost of $1.5 million using the effective interest method over the remaining term of the Strathspey Crown Note as interest expense recorded in our consolidated statements of operations and comprehensive (loss) income. The incremental borrowing cost represents the difference between the outstanding principal amount of $15.0 million upon the amendment and the outstanding principal amount of $11.0 million plus accrued interest of $2.5 million prior to the amendment. For the

year ended December 31, 2019, we recognized $2.3 million of interest expense, including $1.0 million of accretion for the incremental borrowing cost. As of December 31, 2019, the principal amount outstanding under the Strathspey Crown Note was $15.0 million with accrued interest of $0.8 million. As of December 31, 2019, the unamortized borrowing cost was $0.5 million, which is presented as a deduction to the note balance.

Effective as of January 2, 2020, we and SCH cancelled all obligations under the Strathspey Crown Note and in exchange we issued the SCH Convertible Note with a principal amount of $17.5 million. We accounted for the debt exchange as an extinguishment of the Strathspey Crown Note and recognized a loss on debt extinguishment of $11.2 million, representing the difference between the fair value of the SCH Convertible Note of $26.5 million at January 2, 2020 and total obligations outstanding under the Strathspey Crown Note of $15.8 million less the unamortized borrowing cost of $0.5 million.

Our payment and performance under the SCH Convertible Note are guaranteed by ABP Sub Inc., our wholly owned subsidiary. Pursuant to the terms of the SCH Convertible Note, we are required to repay 175% of the principal amount to SCH on the third anniversary of its issuance. In the event of an underwritten public offering of our common stock, the SCH Convertible Note will automatically convert into a number of shares of our common stock equal to 175% of the principal amount of the SCH Convertible Note, divided by the per share price at which shares are offered to the public in such offering.

Due to certain embedded features within the SCH Convertible Note, we elected to account for the SCH Convertible Note and all their embedded features at fair value at inception. Subsequent changes in fair value are recorded as a component of non-operating income (loss) in the consolidated statements of operations and comprehensive (loss) income or other comprehensive (loss) income for changes to instrument-specific credit risk. During the six months ended June 30, 2020 and year ended December 31, 2020, we recognized $0.6 and $0.8 million of expense, respectively, related to the increase in the fair value of the SCH Convertible Note. As a result of electing the fair value option, any direct costs and fees related to the SCH Convertible Note were expensed as incurred. As of June 30, 2021, the principal amount outstanding under the SCH Convertible Note was $17.5 million with an estimated fair value of $27.7 million.

2019 Debt Financings. In June 2019, we entered into a senior unsecured note purchase agreement with Dental Innovations, which we refer to as the Original 2019 Note Purchase Agreement, pursuant to which we issued Dental Innovations a promissory note, or the Original 2019 Note, with a principal amount of $5.0 million. Pursuant to the terms of the Original 2019 Note, we were required to repay a total of $8.75 million, representing all principal and interest owed, upon the earliest to occur of (i) June 19, 2022, (ii) Dental Innovations’ demand for repayment following our completion of an initial public offering and (iii) our election to repay the Original 2019 Note in full.

Under the Original 2019 Note Purchase Agreement, Dental Innovations committed to purchase from us an additional promissory note with a principal amount of $5.0 million, subject to us issuing and selling an additional promissory note with a principal amount of $5.0 million to a lender not affiliated with Dental Innovations. Any such additional promissory notes would have the same payment terms as the Original 2019 Notes.

In December 2019, we entered into an amendment to the Original 2019 Note Purchase Agreement that provided for the exchange of the Original 2019 Note for a convertible promissory note with a principal amount of $5.0 million. In addition, Dental Innovations was no longer committed to purchase from us the additional promissory note. In December 2019, we issued and sold five additional convertible promissory notes, each with a principal amount of $1.0 million, including one to SCH and one to a member of our board of directors. We refer to these convertible notes as the 2019 Convertible Notes.

Due to certain embedded features within the 2019 Convertible Notes, we elected to account for the 2019 Convertible Notes and all their embedded features at fair value at inception. Subsequent changes in fair value are recorded as a component of non-operating income (loss) in the consolidated statements of operations and comprehensive (loss) income or other comprehensive (loss) income for changes to instrument-specific credit risk.

In January 2020, in connection with the distribution of the units of Alphaeon 1 LLC to our stockholders, each of the holders of our 2019 Convertible Notes were granted contingent warrants by Alphaeon 1 LLC to purchase shares of Evolus from Alphaeon 1 LLC. The contingent warrants are exercisable at the option of the holders only prior to our first underwritten public offering of common stock under the Securities Act, or upon an event of default under the

2019 Convertible Notes. The 2019 Convertible Notes were concurrently amended to provide the noteholders the option, prior to the notes’ conversion, to cancel a portion of the indebtedness represented by such noteholder’s 2019 Convertible Note and receive a number of shares of Evolus from Alphaeon 1 LLC having a market value equal to the value of such cancelled indebtedness, in lieu of automatic conversion of all of the noteholder’s 2019 Convertible Note into shares of our common stock. The amount of cancelled indebtedness that can be so applied in exercise of the contingent warrant is capped as the ratio that the value of Evolus shares held by Alphaeon 1 LLC bears to the combined value of (i) the Evolus shares held by Alphaeon 1 LLC and (ii) our value immediately prior to consummation of our first underwritten public offering of common stock under the Securities Act.

During the six months ended June 30, 2021 and the years ended December 31, 2019 and 2020, we recognized $0.1 million, $5.2 million and $0.5 million, respectively, of expense related to the increase in the fair value of the 2019 Convertible Notes. As a result of electing the fair value option, direct costs and fees related to the 2019 Convertible Notes were expensed as incurred. As of June 30, 2021, the principal amount outstanding under the 2019 Convertible Notes was $10.0 million with an estimated fair value of $15.9 million.

Daewoong Convertible Notes. In August 2020, we entered into a convertible promissory note purchase agreement with Daewoong, or the Daewoong Purchase Agreement, pursuant to which we issued Daewoong two subordinated convertible promissory notes with an aggregate principal amount of $25.0 million, which we refer to as the Daewoong Convertible Notes. The Daewoong Convertible Notes are unsecured and subordinated to our 2019 Convertible Notes. Our payment and performance under the Daewoong Convertible Notes are guaranteed by ABP Sub Inc., our wholly owned subsidiary.

The Daewoong Convertible Notes bear interest daily at 3% per annum with semiannual compounding. Interest is paid in-kind by adding the accrued amount thereof to the principal amount on a semi-annual basis on June 30th and December 31st of each calendar year for so long as any principal amount remains outstanding (such paid in-kind interest, in the aggregate at any time, the PIK Principal). The Daewoong Convertible Notes mature on September 18, 2025.

In May 2021, the Daewoong Purchase Agreement was amended to provide for the issuance of an additional subordinated convertible promissory note by us to Daewoong at an initial principal amount of $5.0 million. The subordinated convertible promissory note was issued with terms similar to the two subordinated convertible promissory notes issued in 2020 and matures on May 12, 2026.

Pursuant to the terms of the amended Daewoong Purchase Agreement, Daewoong may elect to convert all of the then outstanding principal amount and all accrued and unpaid interest into our common stock at any time following the date that is twelve months after September 18, 2020, provided, that such election shall be made at the same time with respect to all Daewoong Convertible Notes. The number of shares of common stock issuable upon conversion is equal to (i) the outstanding principal amount (excluding PIK Principal) divided by $30.0 million and (ii) multiplied by 11.99% of the aggregate of all of our shares of common stock then outstanding, common stock issuable upon conversion or exercise of all of the outstanding convertible or exercisable securities, all outstanding vested or unvested options or warrants to purchase shares of our capital stock, but excluding all out-of-the-money options, and all shares of common stock issuable upon conversion of any convertible debt (whether or not such debt is convertible at such time).

In addition, immediately prior to an initial public offering, all of the then outstanding principal amount and accrued and unpaid interest under the Daewoong Convertible Notes will automatically convert into shares of our common stock. The number of shares of common stock issuable upon conversion of the Daewoong Convertible Notes is equal to (i) the outstanding principal amount (excluding PIK Principal) divided by $30.0 million and (ii) multiplied by the greater of (A) 11.99% of our pre-IPO shares, and (B) that number of shares having an aggregate value of $24.0 million immediately prior to the IPO based upon a price per share of such common stock issued to the public in the IPO; provided, however, that in no event shall Daewoong’s ownership exceed 18% of our pre-IPO shares after taking into account conversion of the Daewoong Convertible Notes. Subject to certain conditions, in connection with an initial public offering, we may elect to pay the PIK Principal plus all accrued and unpaid interest either in cash or by the issuance of additional shares of our common stock at the price per share in the initial public offering.

Due to certain embedded features within the Daewoong Convertible Note, we elected to account for the Daewoong Convertible Note and the embedded features at fair value at inception. Subsequent changes in fair value are recorded as a component of non-operating income (loss) in our consolidated statements of operations and comprehensive income (loss) or as a component of other comprehensive income (loss) for changes to instrument-specific credit risk. During the twelve months ended December 31, 2020 and the six months ended June 30, 2021, we recognized $4.2 million and $(20,000) of expense (income), respectively, related to the increase (decrease) in the fair value of the Daewoong Convertible Note. As a result of electing the fair value option, any direct costs and fees related to the Daewoong Convertible Note were expensed as incurred. As of December 31, 2020 and June 30, 2021, the principal amount outstanding (excluding the PIK Principal) under the Daewoong Convertible Note was $25.0 million and $30.0 million, respectively with an estimated fair value of $29.2 million and $35.7 million, respectively.

Contribution of Evolus Shares

In January 2020, our board of directors approved the contribution of our interest in Evolus’ common stock to Alphaeon 1 LLC in exchange for member units. At the time of this contribution, we owned 8,662,346 shares of Evolus with a fair value of $105.8 million, representing approximately 26% of the outstanding shares of Evolus. We then distributed all of the units of Alphaeon 1 LLC to our current stockholders, with each of our stockholders receiving a number of common units or preferred units, as applicable, of Alphaeon 1 LLC for each share of our common stock or preferred stock, as applicable, that such stockholders held at such time. As a result of the distribution, we no longer hold any member interests in Alphaeon 1 LLC nor any equity investment in Evolus’ common stock. We accounted for the transaction as a dividend-in-kind to our stockholders and derecognized the equity investment of $105.8 million in the consolidated balance sheet with a corresponding decrease to equity during the six months ended June 30, 2020.

Contingent Obligations Related to the Acquisition of Evolus

In connection with the acquisition of Evolus in 2013, we and SCH entered into a stock purchase agreement with the Evolus Founders, pursuant to which we and SCH were obligated to make certain contingent payments to the Evolus Founders. In December 2017, we and SCH entered into an amended purchase agreement with the Evolus Founders, whereby Evolus also joined as a contractual party. Under the amended purchase agreement, the contingent payment obligations were assumed by Evolus upon the completion of its initial public offering and were revised to consist of (i) an approximately $9.2 million up-front payment upon obtaining FDA approval for DWP-450, Evolus’ product candidate, for the treatment of glabellar lines, (ii) quarterly royalty payments of a low single-digit percentage of net sales of DWP-450 within the United States, (iii) quarterly royalty payments of a low single-digit percentage of net sales of DWP-450 outside of the United States, and (iv) a $20.0 million promissory note that will mature on the two and one-half year anniversary of the first commercial sale of DWP-450 in the United States. The $9.2 million up-front payment was paid in full in February 2019 by Evolus.

Under the amended purchase agreement, Evolus paid one-time bonuses of $1.6 million to certain current and former employees upon FDA approval of Jeuveau in February 2019. The payment is included in R&D expenses in our statements of operations and comprehensive (loss) income for the year ended December 31, 2019.

During 2019, we recognized $5.6 million in operating expenses related to the change in the fair value of the contingent royalty obligation and $0.4 million in interest expense related to the contingent promissory note. Evolus is solely responsible for the contingent obligations related to the acquisition of Evolus.

Effective May 20, 2019, we deconsolidated the contingent royalty obligation payable to the Evolus Founders and the contingent promissory note payable to the Evolus Founders in our consolidated balance sheets.

Evolus Founders

Certain of the Evolus Founders from whom SCH purchased its equity interests include individuals who were previously employed by Evolus in operational roles, including Evolus’ former chief operating officer and consultant through December 31, 2018. In 2019, the Evolus Founders ceased to be related parties. Evolus is solely responsible for the contingent obligations to the Evolus Founders.

Clarion Unwind Fee

In 2014, we acquired all outstanding voting equity interests of Clarion pursuant to a shareholders’ agreement. The shareholders’ agreement provided the previous equity holders of Clarion the right to an unwind fee of approximately $9.6 million to unwind our acquisition of Clarion. In 2016, the previous equity holders of Clarion exercised their right and the unwind fee became a joint and several obligation of us and SCH.

Effective March 21, 2021, this obligation was settled resulting in the cancellation of the Clarion unwind fee previously recorded as a liability.

Shared Services Agreements with Strathspey Crown Limited, LLC

In August 2019, we and Alphaeon Credit, our wholly owned subsidiary, entered into services agreements with Strathspey Crown Limited, an affiliate of SCH with an effective date of January 2019. Pursuant to the services agreements, Strathspey Crown Limited provides us and Alphaeon Credit certain administrative and development support services, including certain general management, communication, human resources, office, rent and information technology services. We and Alphaeon Credit pay Strathspey Crown Limited an allocable share of the actual cost incurred by Strathspey Crown Limited in providing such services, plus a 10% markup, as well as an allocable share of Strathspey Crown Limited’s overhead expenses, including office rent, depreciation, maintenance, utilities, and supplies. The services agreements have a one-year term and will renew for successive one-year terms unless sooner terminated by either party. We and Alphaeon Credit or Strathspey Crown Limited may terminate the services agreements upon sixty days’ notice to the other party. For the six months ended June 30, 2021 and 2020 and year ended December 31, 2019 and 2020, $0.0, $0.3 million, $0.3 million, and $0.5 million, respectively, of costs related to the shared services agreements were included in selling, general and administrative expenses in our consolidated statements of operations and comprehensive (loss) income.

Medytox Settlement and License Agreement

Effective June 21, 2021, we entered into a settlement and license agreement with Medytox, pursuant to which, among other things, Medytox agreed (a) to dismiss all claims against us in the Medytox Litigation, (b) to pursue dismissal of the appeals related to the December 2020 final determination of the United States International Trade Commission and agreed that as a result of such dismissal the final determination would be vacated, (c) to file appropriate documents in the Korean Litigation and related actions in support of the terms of the settlement, and (d) not to revive or otherwise pursue the Superior Court Litigation with respect to us. In addition, Medytox granted us a non-exclusive, royalty bearing, irrevocable license to commercialize and manufacture ABP-450. In exchange for the settlement and license agreement, we issued Medytox 26,680,511 shares of our common stock, par value $0.0001 per share and valued at $29.0 million. We also agreed to pay Medytox single-digit royalties on the net sales of licensed products for 15 years, which will be recognized as related sales levels are obtained in the future as cost of sales. Moreover, in the event the shares of common stock we issued to Medytox represent less than 10% of our total outstanding shares immediately following the closing of our initial public offering, or the Target Ownership, we will issue additional shares of our common stock to Medytox sufficient to cause Medytox to achieve the Target Ownership. We concluded that the obligation to potentially issue additional shares was not legally detachable and separately exercisable and was therefore embedded within the obligation to issue 26,680,511 shares of our common stock. On June 28, 2021, the claims against us in the Medytox Litigation were dismissed with prejudice. For a further discussion of the Medytox Litigation, the Superior Court Litigation and the Korea Litigation, please see the section entitled “Risk Factors—Risks Related to Third Parties—A material breach by us of the terms of our license and settlement agreement with Medytox could have a material adverse effect on our business.”

Off-Balance Sheet Arrangements

Since our inception, we have not engaged in any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Contractual Obligations and Commitments

As a smaller reporting company, we are not required to disclose information under this section.

Quantitative and Qualitative Disclosures about Market Risk

As a smaller reporting company, we are not required to disclose information under this section.

Critical Accounting Policies

Management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue and expenses at the date of the financial statements as well as the expenses incurred during the reporting period. Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions and such differences could be material to the financial position and results of operations. On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts and experience.

While our significant accounting policies are more fully described in the notes to our financial statements appearing elsewhere in this prospectus, we believe the following accounting policies to be most critical for fully understanding and evaluating our financial condition and results of operations, as these policies relate to the more significant areas involving management’s judgments and estimates.

The following critical accounting policies are applicable to our operations and accounting policies associated with the previous consolidation of Evolus prior to May 2019 have been omitted and can be found in Note 2 of the financial statements:

Fair Value of Convertible Promissory Notes

We elected to account for the 2019 Convertible Notes, SCH Convertible Note and Daewoong Convertible Note at fair value at inception and record changes in fair value in the consolidated statements of operations and comprehensive income (loss) or other comprehensive income (loss) for changes related to instrument-specific credit risk. We adjust the carrying value of our convertible promissory notes to their estimated fair value at each reporting date. All outstanding convertible promissory notes and related accrued interest will convert to shares of our common stock upon the closing of this offering.

The fair value of the convertible notes issued in December 2019, January 2020, August 2020 and May 2021 are estimated using a scenario-based analysis that estimates the fair value of the convertible notes based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to the noteholders, including various initial public offering, settlement, equity financing, corporate transaction and dissolution scenarios. There are significant judgments and estimates inherent in the determination of the fair value of these liabilities. If we had made different assumptions including, among others, those related to the timing and probability of various corporate scenarios, discount rates, volatilities and exit valuations, the carrying values of our convertible notes, and our net income (loss) and net income (loss) per common share could have been significantly different.

Stock-Based Compensation

We measure and recognize compensation expense for all options based on the estimated fair value of the award on the grant date. We use the Black-Scholes option-pricing model to estimate the fair value of option awards. The fair value is recognized as expense on a straight-line basis over the requisite service period.

The determination of the grant date fair value of options using an option pricing model is affected principally by our estimated fair value of shares of our common stock and requires management to make a number of other assumptions, including the expected life of the option, the volatility of the underlying shares, the risk-free interest rate and expected dividends. The assumptions used in our Black-Scholes option-pricing model represent management’s best estimates at the time of measurement. These estimates are complex, involve a number of variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective. If any assumptions change, our stock-based compensation expense could be materially different in the future.

For valuations after the consummation of this offering, our board of directors will determine the fair value of each share of underlying common stock based on the closing price of our common stock on the date of grant. The intrinsic value of all outstanding stock options as of June 30, 2021 was approximately $ based on an assumed public offering price of $ per share, which is the midpoint of the price range set forth on the cover of this prospectus.

Determination of Fair Value of Common Stock

As a privately held company, there has been no public market for shares of our common stock to date. We are required to estimate the fair value of the common stock underlying our stock-based awards when performing fair value calculations, which is the most subjective input into the Black-Scholes option pricing model. The fair value of the common stock underlying our stock-based awards was determined on each grant date by our board of directors or by a committee of our board of directors acting under delegated authority. All options to purchase shares of our common stock are intended to be granted with an exercise price per share no less than the fair value per share of our common stock underlying those options on the date of grant, based on the information known to us on the date of grant. Third-party valuations, or valuation reports, were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or the Practice Aid.

We considered various objective and subjective factors to determine the fair value of our common stock, including:

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valuations of our common stock performed with the assistance of independent third-party valuation specialists;

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our stage of development and business strategy, including the status of research and development efforts of ABP-450, and the material risks related to our business and industry;

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our results of operations and financial position, including our levels of available capital resources;

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the valuation of publicly-traded companies in the life sciences and biotechnology sectors;

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the lack of marketability of our common stock as a private company;

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the likelihood of achieving a liquidity event for the holders of our common stock, such as an initial public offering or a sale of our company, given prevailing market conditions;

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trends and developments in our industry; and

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external market conditions affecting the life sciences and biotechnology industry sectors.

The shares of common stock issued to Medytox were valued at the date of the agreement, which was the issuance date, by management with input from an independent third-party valuation specialist, using a Monte Carlo simulation (MCS). The analysis considered a scenario analysis (probability-weighted expected return model, or PWRM), considering two IPO scenarios with a combined 83% weighting and a delayed exit scenario with 17% weighting. The MCS then simulated the future equity value within each scenario to estimate the payoff for each simulation path, given the potential requirement to issue additional shares depending on the dilution impact from the IPO or other future financings. Key inputs included (1) the equity value of the Company in each scenario, (2) the fair value of Divestiture Transactions, (3) the Company’s capital structure, (4) the weighting on each scenario, (5) the expected time to exit in each scenario, (6) the volatility in each scenario, (7) the risk-free interest rate over the period to exit in each scenario, and (8) the discount for lack of marketability of the common stock in each scenario. The equity value was estimated based on the total invested capital value less the fair value of the outstanding debt. The total invested capital value of the Company was estimated using a risk-adjusted and probability-adjusted discounted cash flow (DCF) method based upon future cash flow generation. Inputs for the DCF analysis included (1) forecasted financial projections for the next nine years developed by management, (2) a terminal value assigned using an exit multiple method, (3) a discount rate based on the weighted average cost of capital, and (4) the probability of success. We also considered the expected IPO pricing based on input from and discussions with underwriters.

There are significant judgments and estimates inherent in the determination of the fair value of our common stock. These judgments and estimates include assumptions regarding our future operating performance, the time to complete an initial public offering or other liquidity event and the determination of the appropriate valuation methods. If we had made different assumptions, our net loss and net loss per common share and the fair value of our common stock and our stock-based compensation expense could have been materially different.

Following the completion of this offering, the fair value of our common stock will be based on the closing price as reported on the date of grant on the primary stock exchange on which our common stock is traded.

JOBS Act

We are an emerging growth company, as defined in the JOBS Act, and we may remain an emerging growth company for up to five years following the completion of this offering. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and any golden parachute payments not previously approved. In particular, in this prospectus, we have provided only two years of audited financial statements and unaudited financial statements and have not included all of the executive compensation-related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the consummation of this offering, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

We are also a “smaller reporting company,” as such term is defined in Rule 12b-2 of the Exchange Act, meaning that the market value of our common stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700 million and our annual revenue is less than $100 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our common stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our common stock held by non-affiliates is less than $700 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certa

AEON Biopharma, Inc. S-1