Quarterlytics / Healthcare / Biotechnology / Outlook Therapeutics

Outlook Therapeutics

otlk · NASDAQ Healthcare
Claim this profile
Ticker otlk
Exchange NASDAQ
Sector Healthcare
Industry Biotechnology
Employees 11-50
← All annual reports
FY2021 Annual Report · Outlook Therapeutics
Sign in to download
Loading PDF…
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

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

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

For the fiscal year ended September 30, 2021
OR

For the transition period from                  to                  

Commission File Number: 001-37759

OUTLOOK THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

38-3982704
(I.R.S. Employer Identification No.)

485 Route 1 South
Building F, Suite 320
Iselin, New Jersey
(Address of principal executive offices)

(609) 619-3990
(Registrant’s telephone number, including area code)

08852
(Zip Code)

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

Title of each class
Common Stock
Series A Warrants

Trading Symbol(s)
OTLK
OTLKW

Name of each exchange on which registered
The Nasdaq Stock Market LLC
The Nasdaq Stock Market LLC

Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth
 company. See the definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Non-accelerated filer

☐
☒

Accelerated filer
Smaller reporting company
Emerging growth company

☐
☒
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the registrant’s common stock, held by non-affiliates of the registrant as of March 31, 2021 (which is the last business day of registrant’s most recently completed
second fiscal quarter) based upon the closing market price of such stock on The Nasdaq Capital Market on that date, was approximately $199.5 million.
As of December 20, 2021, the registrant had outstanding 224,260,602 shares of common stock, par value $0.01 per share.

DOCUMENTS INCORPORATED BY REFERENCE
Part III of this report incorporates information by reference from the Company's definitive proxy statement, which proxy statement is due to be filed with the Securities and Exchange Commission
not later than 120 days after September 30, 2021.

    
    
    
Table of Contents

OUTLOOK THERAPEUTICS, INC.
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

Cautionary Note Regarding Forward-Looking Statements and Industry Data
Selected Risks Affecting Our Business

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Consolidated Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

Exhibits and Financial Statement Schedules
Form 10-K Summary

PART I
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4.

PART II
ITEM 5.
ITEM 6.
ITEM 7.
ITEM 7A.
ITEM 8.
ITEM 9.
ITEM 9A.
ITEM 9B.

PART III
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.

PART IV
ITEM 15.
ITEM 16.

Page
ii
iii
1
1
21
64
64
64
64

65
65
66
67
80
81
112
112
112

113
113
113
113
113
114

115
115
119

In this report, unless otherwise stated or as the context otherwise requires, references to “Outlook Therapeutics,” “Outlook,” “the Company,”
“we,” “us,” “our” and similar references refer to Outlook Therapeutics, Inc. (formerly known as Oncobiologics, Inc.) and its consolidated
subsidiaries.  The  Outlook  logo,  Oncobiologics  logo,  LYTENAVA  and  other  trademarks  or  service  marks  of  Outlook  Therapeutics,  Inc.
appearing  in  this  report  are  the  property  of  Outlook  Therapeutics,  Inc.  This  report  also  contains  registered  marks,  trademarks  and  trade
names  of  other  companies.  All  other  trademarks,  registered  marks  and  trade  names  appearing  in  this  report  are  the  property  of  their
respective holders.

Convenience translations between Swiss Francs, or CHF, and U.S. dollars provided herein are based on the noon buying rate in New York
City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York on September 30,
2021, or CHF 0.9339 = $1.00. We do not represent that CHF were, could have been, or could be, converted into U.S. dollars at such rate or
at any other rate.

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are based on our management’s
beliefs and assumptions and on information currently available to our management. All statements other than statements of historical facts
are  “forward-looking  statements”  for  purposes  of  these  provisions,  including  those  relating  to  future  events  or  our  future  financial
performance and financial guidance. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,”
“will,” “should,” “expect,” “plan,” “anticipate,” “project,” “believe,” “estimate,” “predict,” “potential,” “intend,” “continue,” the negative of
terms  like  these  or  other  comparable  terminology,  in  connection  with  any  discussion  of  future  operating  or  financial  performance.  These
statements  are  only  predictions.  All  forward-looking  statements  included  in  this  Annual  Report  on  Form  10-K  are  based  on  information
available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Any or all of our forward-
looking  statements  in  this  document  may  turn  out  to  be  wrong.  Actual  events  or  results  may  differ  materially.  Our  forward-looking
statements can be affected by inaccurate assumptions we might make or by known or unknown risks, uncertainties and other factors. We
discuss  many  of  these  risks,  uncertainties  and  other  factors  in  this  Annual  Report  on  Form  10-K  in  greater  detail  in  Item  1A  under  the
heading “Risk Factors.” We caution investors that our business and financial performance are subject to substantial risks and uncertainties.

This Annual Report on Form 10-K also contains estimates, projections and other information concerning our industry, our business, and the
markets  for  certain  diseases,  including  data  regarding  the  estimated  size  of  those  markets,  and  the  incidence  and  prevalence  of  certain
medical  conditions.  Information  that  is  based  on  estimates,  forecasts,  projections,  market  research  or  similar  methodologies  is  inherently
subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information.
Unless  otherwise  expressly  stated,  we  obtained  this  industry,  business,  market  and  other  data  from  reports,  research  surveys,  studies  and
similar  data  prepared  by  market  research  firms  and  other  third  parties,  industry,  medical  and  general  publications,  government  data  and
similar sources.

ii

Table of Contents

SELECTED RISKS AFFECTING OUR BUSINESS

Investing  in  our  common  stock  involves  numerous  risks,  including  the  risks  described  in  “Part  I,  Item  1A.  Risk  Factors”  of  this  Annual
Report  on  Form  10-K,  any  one  of  which  could  materially  adversely  affect  our  business,  financial  condition,  results  of  operations,  and
prospects. These risks include, among others, the following:

●

●
●

●

●

●
●

●

●

●

●

●

●

●

●

We have incurred significant losses and negative cash flows from operations since our inception and expect to continue to
incur significant losses and negative cash flows from operations for at least the next 12 months;
We have never generated any revenue from product sales and may never be profitable;
We  will  need  to  raise  substantial  additional  funding  to  complete  the  development  of  ONS-5010  (LYTENAVA
(bevacizumab-vikg))  and  support  our  operations  after  the  planned  launch  in  early  2023  until  we  are  able  to  generate
sufficient  revenue.  This  additional  funding  may  not  be  available  on  acceptable  terms  or  at  all.  Failure  to  obtain  this
necessary  capital  when  needed  may  force  us  to  delay,  limit  or  terminate  our  product  development  efforts  or  other
operations;
Raising  additional  capital  may  cause  dilution  to  our  securityholders,  restrict  our  operations  or  require  us  to  relinquish
rights to our technologies or product candidates;
We are highly dependent on the success of ONS-5010, our only product candidate in active development, and if ONS-
5010  does  not  successfully  complete  clinical  development  or  receive  regulatory  approval,  or  is  not  successfully
commercialized, our business may be harmed;
We may not be successful in our efforts to enter into a strategic partnership for ONS-5010;
Due to our limited resources and access to capital, we have, and will continue to need to, prioritize development of certain
product  candidates;  and  these  decisions  may  prove  to  have  been  wrong  and  may  harm  our  business.  We  are  currently
repaying our recently received Paycheck Protection Program, or PPP, loan, and our application for the PPP loan could in
the future be determined to have been impermissible or could result in damage to our reputation;
Clinical  drug  development  is  a  lengthy  and  expensive  process  and  we  may  encounter  substantial  delays  in  our  clinical
trials or may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities;
If  product  liability  lawsuits  are  brought  against  us,  we  may  incur  substantial  liabilities  and  may  be  required  to  limit
commercialization of our current or future product candidates, and our existing insurance coverage may not be sufficient
to satisfy any liability that may arise;
The development and commercialization of pharmaceutical products is subject to extensive regulation, and we may not
obtain regulatory approvals for ONS-5010 in any of the indications for which we plan to develop it, or any future product
candidates, on a timely basis or at all;
Any  delays  in  the  commencement  or  completion,  or  termination  or  suspension,  of  our  planned  or  future  clinical  trials
could result in increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial
prospects;
We  face  intense  competition  and  rapid  technological  change  and  the  possibility  that  our  competitors  may  develop
therapies that are similar, more advanced or more effective than ours. Other products may be approved and successfully
commercialized  before  ours,  which  may  adversely  affect  our  financial  condition  and  our  ability  to  successfully
commercialize our product candidates;
We currently have no marketing and sales organization. If we are unable to establish sales and marketing capabilities in
jurisdictions for which we choose to retain commercialization rights, we may be unable to generate any revenue and will
depend on the efforts of our licensing partners, if any;
We rely on third parties to manufacture and test ONS-5010, conduct our preclinical and clinical trials and perform other
tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply
with  regulatory  requirements,  we  may  not  be  able  to  obtain  regulatory  approval  for  or  commercialize  our  product
candidates and our business could be harmed;
We  currently  engage  single  source  suppliers  for  clinical  trial  services  and  multiple  source  suppliers  for  future  drug
substance manufacturing, fill-finish manufacturing and product testing of ONS-5010. The loss of any of these suppliers,
or any future single source suppliers, could harm our business;

iii

Table of Contents

●

●

●

●

●

●

●

●

●

If we infringe or are alleged to infringe intellectual property rights of third parties, our business could be harmed. Third-
party claims of intellectual property infringement may prevent or delay our development and commercialization efforts;
We may become involved in lawsuits to protect or enforce any future patents, which could be expensive, time-consuming
and unsuccessful;
If we are unable to obtain and maintain effective patent rights for our product candidates or any future product candidates,
we may not be able to prevent competitors from using technologies we consider important in our successful development
and commercialization of our product candidates, resulting in loss of any potential competitive advantage our patents may
have otherwise afforded us;
If we are unable to maintain effective proprietary rights for our product candidates or any future product candidates, we
may not be able to compete effectively in our markets;
If we fail to comply with our obligations in the agreements under which we license intellectual property and other rights
from  third  parties  or  otherwise  experience  disruptions  to  our  business  relationships  with  our  licensors,  we  could  lose
license rights that are important to our business;
Our business could be adversely affected by the effects of health pandemics or epidemics, including the ongoing COVID-
19  global  pandemic,  in  regions  where  we  or  third  parties  on  which  we  rely  have  significant  manufacturing  facilities,
concentrations  of  clinical  trial  sites  or  other  business  operations,  or  materially  affect  our  operations,  including  at  our
headquarters  in  New  Jersey  and  at  our  clinical  trial  sites,  as  well  as  the  business  or  operations  of  our  manufacturers,
contract research organizations (“CROs”) or other third parties with whom we conduct business;
We  are  highly  dependent  on  the  services  of  our  key  executives  and  personnel,  and  if  we  are  not  able  to  retain  these
members of our management or recruit additional management, clinical and scientific personnel, our business will suffer;
The trading price of our securities is likely to be volatile, and purchasers of our securities could incur substantial losses;
and
BioLexis  has  beneficial  ownership  of  a  significant  percentage  of  our  common  stock,  together  with  its  affiliates  has  the
right to designate members of our board of directors proportionate to its ownership, and is able to exert significant control
over matters subject to stockholder approval, preventing new investors from influencing significant corporate decisions.

iv

Table of Contents

Item 1. Business

PART I

We  are  a  late  clinical-stage  biopharmaceutical  company  working  to  develop  and  launch  the  first  ophthalmic  formulation  of  bevacizumab
approved by the U.S. Food and Drug Administration, or FDA, for use in retinal indications. Our goal is to launch ONS-5010 (LYTENAVA
(bevacizumab-vikg)) as the first and only approved ophthalmic bevacizumab directly in the United States, and either directly or through a
strategic partner in the United Kingdom, Europe, Japan and other markets for the treatment of wet age-related macular degeneration, or wet
AMD, diabetic macular edema, or DME, and branch retinal vein occlusion, or BRVO.

ONS-5010, our sole product candidate in active clinical development, is an investigational ophthalmic formulation of bevacizumab, which
we are developing to be administered as an intravitreal injection for the treatment of wet AMD and other retinal diseases. Bevacizumab is a
full-length, humanized anti-VEGF (Vascular Endothelial Growth Factor) recombinant monoclonal antibody, or mAb, that inhibits VEGF and
associated angiogenic activity. The study design for our Phase 3 clinical program to evaluate ONS-5010 as an ophthalmic formulation of
bevacizumab was reviewed at an end of Phase 2 meeting with the FDA in April 2018, and we filed our investigational new drug application,
or IND, with the FDA in the first quarter of calendar 2019.

Our initial clinical program for ONS-5010 in wet AMD involves three clinical trials, which we refer to as NORSE ONE, NORSE TWO and
NORSE THREE. All of these clinical trials are now complete. We reported achieving the anticipated safety and efficacy and positive proof-
of-concept topline results from NORSE ONE, a clinical experience study, in August 2020. NORSE TWO is our pivotal Phase 3 clinical trial
comparing ONS-5010 to ranibizumab (LUCENTIS). Positive results for NORSE TWO were reported in August 2021 and November 2021
and showed that ONS-5010 met its primary and secondary endpoints with highly statistically significant results. NORSE THREE is an open-
label  safety  study  we  conducted  to  ensure  the  adequate  number  of  safety  exposures  to  ONS-5010  are  available  for  the  initial  ONS-5010
Biologics  License  Application,  or  BLA,  submission  with  the  FDA.  In  March  2021  we  reported  that  the  results  from  NORSE  THREE
provided a positive safety profile for ONS-5010.

In addition, we have received agreements from the FDA on three Special Protocol Assessments, or SPAs, for three additional registration
clinical trials for our ongoing Phase 3 program for ONS-5010. These SPAs cover the protocols for NORSE FOUR, a registration clinical
trial evaluating ONS-5010 to treat BRVO, and NORSE FIVE and NORSE SIX, two registration clinical trials to evaluate ONS-5010 to treat
DME.  We  currently  intend  to  initiate  these  studies  in  2023  following  submission  and  potential  approval  of  our  BLA  for  wet  AMD.  In
November  2021,  we  began  enrolling  patients  in  our  NORSE  SEVEN  clinical  trial.  The  study  will  compare  the  safety  of  ophthalmic
bevacizumab  in  vials  versus  pre-filled  syringes  in  subjects  diagnosed  with  a  retinal  condition  that  would  benefit  from  treatment  with
intravitreal injection of bevacizumab, including exudative age-related macular degeneration, diabetic macular edema, or branch retinal vein
occlusion. Subjects will be treated for three months and the enrollment of subjects in the arm of the study receiving ONS-5010 in vials has
been completed.

Currently, the cancer drug Avastin (bevacizumab) is used off-label for the treatment of wet AMD and other retinal diseases such as DME
and BRVO even though Avastin has not been approved by regulatory authorities for use in these diseases. If the ONS-5010 clinical program
is successful, it will support our plans to submit for regulatory approval in multiple markets beginning in 2022, beginning with the United
States  and  in  Europe,  to  be  followed  by  submissions  in  other  regions  as  soon  as  practicable.  Because  there  are  no  approved  ophthalmic
bevacizumab products for the treatment of retinal diseases in the major markets, we are developing ONS-5010 as a standard BLA and not
using  the  biosimilar  drug  development  pathway  that  would  be  required  if  Avastin  were  an  approved  ophthalmic  drug  for  the  targeted
diseases. If approved, we believe ONS-5010 has potential to mitigate risks associated with off-label use of unapproved bevacizumab. Off-
label use of unapproved bevacizumab is currently estimated to account for at least 50% of all wet AMD prescriptions in the United States.

1

Table of Contents

Our Strategy

Our goal is to launch ONS-5010 as the first, and only, approved bevacizumab for ophthalmic use in the United States, United Kingdom,
Europe, and other markets. We plan to do this directly in the United States and either directly or through a strategic partner outside of the
United  States.  In  order  to  achieve  this  goal,  we  have  adopted  a  streamlined  clinical  and  regulatory  strategy  to  quickly  and  efficiently
complete the process required to submit a BLA with the FDA at the earliest opportunity. The key elements of our strategy include:

● Leveraging  the  ophthalmic  drug  development  and  commercialization  expertise  of  our  leadership  team.  Members  of  our
executive team have extensive expertise in developing and commercializing treatments for retinal diseases, such as wet AMD. We
intend to leverage their collective experience to further the development of, and execute an optimal commercial strategy for, ONS-
5010, including potentially licensing rights to ONS-5010 to a strategic partner outside the United States.

● Engaging with regulatory agencies to establish clear guidelines for potential approval. We have continued our approach to work
closely with regulatory authorities to develop and conduct clinical trials that we believe will appropriately support approval of our
product candidates if our clinical trials are successful. As an ophthalmic formulation of bevacizumab, we believe ONS-5010 has a
well-defined regulatory pathway.

● Conducting  and  efficiently  executing  clinical  trials  inside  and  outside  of  the  United  States  to  support  potential  approval.  We
have designed our ONS-5010 clinical program to take advantage of reduced costs for clinical trials conducted outside of the United
States,  as  appropriate,  such  as  our  NORSE  ONE  study.  We  intend  to  further  this  strategy,  in  a  manner  that  will  support  a  BLA
submission in the United States at the earliest opportunity for ONS-5010.

● Reducing  and  managing  costs  to  minimize  additional  investment  to  complete  our  development  programs  and  plan  for  a
potential commercial launch. We have made the strategic decision to outsource the commercial manufacturing and future clinical
trial supply manufacturing for our product candidates. We believe this will significantly reduce future overhead costs not directly
related to our ONS-5010 program.

Our Product Candidate Portfolio

We  are  actively  developing  ONS-5010  (LYTENAVA  (bevacizumab-vikg))  for  use  in  the  treatment  of  retina  diseases  such  as  wet  AMD,
DME  and  BRVO.  We  continue  to  hold  the  developed  market  commercialization  rights  for  two  legacy  biosimilar  product  candidates,  but
currently have no plans to further develop these assets.

ONS-5010 — Bevacizumab for Ophthalmic Use

ONS-5010 is an investigational ophthalmic formulation of bevacizumab under development to be administered as an intravitreal injection
for  the  treatment  of  wet  AMD  and  other  retinal  diseases.  We  currently  intend  to  commercialize  in  both  vials  and  pre-filled  syringes,  if
approved.

Bevacizumab is a full-length, humanized anti-VEGF recombinant mAb that inhibits VEGF and associated angiogenic (the growth of new
blood vessels) activity. With wet AMD, abnormally high levels of VEGF are secreted in the eye. VEGF is a protein that promotes the growth
of new abnormal blood vessels. Anti-VEGF injection therapy blocks this growth. Since the advent of anti-VEGF therapy, it has become the
standard of care treatment option within the retina community, globally.

Previously, we were developing ONS-5010 as a biosimilar of the cancer drug Avastin for use in oncology indications (ONS-1045). In the
ONS-1045 program, our bevacizumab met the primary and secondary endpoints in a three-arm single-dose pharmacokinetic, or PK, Phase 1
clinical trial. All the PK endpoints met the bioequivalency criteria of the geometric mean ratios within 90% confidence interval of 80-125%
when compared to both U.S.- and E.U.-sourced Avastin reference products. We are developing ONS-5010 as an ophthalmic formulation of
bevacizumab  for  a  BLA  submission  and  not  using  the  biosimilar  drug  development  pathway.  The  following  figure  demonstrates  the
concentration-time profile of ONS-

2

Table of Contents

1045, U.S.-licensed Avastin, and E.U.-licensed Avastin as the mean. The vertical line at time zero denotes dosing. These results suggest a
high degree of similarity among the three products.

Comparative Potency of ONS-1045 versus Avastin (U.S. and E.U.)

Market Opportunity

Age-related macular degeneration, or AMD, is a common eye condition and a leading cause of vision loss among people age 50 and older.
Wet AMD is a form of “late stage” AMD and is also called neovascular AMD. In wet AMD, abnormal blood vessels grow underneath the
retina. These vessels can leak fluid and blood, which may lead to swelling and damage of the macula causing vision loss. With wet AMD,
abnormally high levels of VEGF are secreted in the eyes. VEGF is a protein that promotes the growth of new abnormal blood vessels. Anti-
VEGF  injection  therapy  blocks  this  growth.  Since  the  advent  of  anti-VEGF  therapy,  it  has  become  the  standard  of  care  treatment  option
within  the  retina  community,  globally.  Wet  AMD  is  a  significant  disease  worldwide,  with  an  estimated  prevalence  of  over  2.9  million
patients diagnosed in the United States, European countries and Japan alone in 2020 (GlobalData). Although bevacizumab is not currently
FDA-approved for use in treating wet AMD, it is believed that bevacizumab currently accounts for at least 50% of all wet AMD intravitreal
injections  in  the  United  States,  where  Avastin  is  repackaged  through  compounding  pharmacies  and  prescribed  off-label.  If  approved,  we
believe  ONS-5010  has  potential  to  mitigate  risks  associated  with  off-label  repackaging  of  bevacizumab  including,  but  not  limited  to,
variability in potency, safety and sterility adverse events and syringe-related adverse events.

DME is caused by a complication of diabetes called diabetic retinopathy. Diabetic retinopathy is the most common diabetic eye disease and
the  leading  cause  of  irreversible  blindness  in  working  age  Americans.  Diabetic  retinopathy  usually  affects  both  eyes  and  is  caused  by
ongoing damage to the small blood vessels of the retina. The leakage of fluid into the retina may lead to swelling of the surrounding tissue,
including the macula. DME is the most common cause of vision loss in people with diabetic retinopathy. DME can occur at any stage of
diabetic retinopathy, although it is more likely to occur in later stages of the disease. There were approximately 8.6 million patients with
DME in the United States, European countries and Japan alone in 2020 (GlobalData).

In BRVO, retinal vein occlusions occur when there is a blockage of veins carrying blood with needed oxygen and nutrients away from the
nerve  cells  in  the  retina.  A  blockage  in  the  main  vein  of  the  retina  is  referred  to  as  a  central  retinal  vein  occlusion,  or  CRVO,  while  a
blockage in a smaller vein is called a branch retinal vein occlusion, or BRVO. Per the American Academy of Ophthalmology, retinal vein
occlusions are the second most common retinal vascular disorder after

3

Table of Contents

diabetic retinopathy. There were an estimated 0.3 million patients with BRVO in the United States, European countries and Japan alone in
2020 (Guidehouse Triangulation of Global Data, Market Scope and Investor Forecasts (2020)).

Annual revenue (worldwide) for anti-VEGF therapies was estimated to be $13.1 billion in 2020 (GlobalData).

Clinical Development Status

The study design for our Phase 3 clinical program to evaluate ONS-5010 as an ophthalmic formulation of bevacizumab was reviewed with
the  FDA  at  an  end  of  Phase  2  meeting  in  April  2018,  and  we  filed  our  IND  with  the  FDA  in  the  first  quarter  of  calendar  2019.  Our
registration plans for wet AMD, the initial indication planned for ONS-5010, consists of three clinical trials which we refer to as NORSE
ONE, NORSE TWO and NORSE THREE. All three clinical trials have been completed. We reported achieving the anticipated safety and
efficacy and positive proof-of-concept topline results from NORSE ONE, a clinical experience study, in August 2020. NORSE TWO is our
pivotal Phase 3 clinical trial comparing ONS-5010 to ranibizumab (LUCENTIS) that reported highly statistically significant topline results
in August 2021. NORSE THREE is an open-label safety study conducted to ensure the adequate number of safety exposures to ONS-5010
are available for the initial ONS-5010 BLA submission with the FDA.

We  have  also  received  agreement  from  the  FDA  on  three  SPAs  for  three  additional  registration  clinical  trials  for  our  ongoing  Phase  3
program for ONS-5010. The agreements reached with the FDA on these SPAs cover the protocols for NORSE FOUR, a registration clinical
trial to treat BRVO, and NORSE FIVE and NORSE SIX, two registration clinical trials to treat DME. We intend to initiate these studies in
2023 after planned approval of ONS-5010 for wet AMD.

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

NORSE ONE

NORSE ONE is designed as a randomized, masked clinical experience trial and serves as the first of our two required registration clinical
trials to support our planned BLA submission with the FDA for ONS-5010 for the treatment of wet AMD. A total of 61 treatment naïve and
previously  treated  patients  were  enrolled  in  the  study  at  nine  sites  in  Australia  and  randomized  onto  treatment  arms  of  ONS-5010  or
ranibizumab. The primary endpoint for the study is the difference in proportion of subjects gaining 15 letters of BCVA at Day 330 for ONS-
5010 dosed on a monthly basis compared to ranibizumab dosed using the PIER alternative dosing regimen of three monthly doses followed
by quarterly dosing.

In  August  2020,  we  reported  positive  proof-of-concept  topline  results  for  ONS-5010  as  it  achieved  anticipated  safety  and  efficacy
expectations. In the analysis of treatment naïve patients who had a baseline visual acuity of < 67 letters (20/50 or worse) at study entry, 2 of
4 (50%) patients in the ONS-5010 arm and 4 of 9 (44%) patients in the ranibizumab arm achieved > 15 letters at Day 330. This subgroup is
the relevant patient population for our ongoing pivotal clinical trial of ONS-5010. Additionally, in a key secondary endpoint for the relevant
patient population, the ONS-5010 patients achieved a mean improvement in BCVA of 8.3 letters.

NORSE TWO

NORSE TWO is a masked, randomized, pivotal Phase 3 clinical trial that serves as the second of our two required clinical trials evaluating
ONS-5010 against ranibizumab for wet AMD. A total of 227 primarily treatment naïve patients were enrolled at 39 clinical trial sites in the
United States. Patients enrolled in the study were randomized to either ONS-5010 or ranibizumab arms and were treated for 11 months. The
primary endpoint for the study is the difference in proportion of subjects gaining 15 letters of BCVA at Day 330 for ONS-5010 dosed on a
monthly basis compared to ranibizumab dosed using the PIER alternative dosing regimen. We reported topline results for NORSE TWO in
August 2021.

4

Table of Contents

The  topline  results  reported  from  NORSE  TWO  in  August  2021,  in  addition  to  the  full  results  reported  in  November  2021,  showed  that
ONS-5010  met  the  primary  and  key  secondary  endpoint  for  efficacy  with  clinically  impactful  change  observed  for  treated  patients.  The
NORSE TWO primary endpoint difference in proportion of subjects gaining at least 15 letters BCVA was met and was highly statistically
significant and clinically relevant. In the intent-to-treat (ITT) primary dataset, the percentage of patients who gained at least 15 letters who
were treated with ranibizumab was 23.1%, and the percentage of patients who gained at least 15 letters who were treated with ONS-5010
was 41.7% (p = 0.0052). The primary endpoint was also statistically significant and clinically relevant in the secondary per-protocol (PP)
dataset (p = 0.04) where the percentages were almost identical, at 24.7% with ranibizumab and 41.0% with ONS-5010. The key secondary
endpoint BCVA score change from baseline to month 11 in the primary ITT dataset was also highly statistically significant and clinically
relevant (p = 0.0043). A mean change in BCVA was observed with ranibizumab of 5.8 letters and the mean change with bevacizumab-vikg
was  11.2  letters.  The  results  were  also  statistically  significant  in  the  secondary  PP  dataset  (p  =  0.05)  with  a  mean  change  in  letters  with
ranibizumab of 7.0 letters and with bevacizumab-vikg 11.1 letters. Results were also positive for the remaining secondary endpoints with
56.5% (p = 0.0016) of ONS-5010 subjects gaining ≥ 10 letters of vision and 68.5% (p = 0.0116) of ONS-5010 subjects gaining ≥ 5 letters of
vision.

5

Table of Contents

NORSE THREE

NORSE THREE is an open-label safety study we conducted to ensure the adequate number of safety exposures to ONS-5010 are available
for  the  initial  ONS-5010  BLA  submission  with  the  FDA.  In  March  2021  we  reported  that  the  results  from  NORSE  THREE  provided  a
positive safety profile for ONS-5010.

NORSE SEVEN

NORSE SEVEN was initiated to support our ongoing development program for delivering ONS-5010 using a pre-filled syringe. It is a three
month  study  designed  to  compare  the  safety  of  ophthalmic  bevacizumab  in  vials  versus  pre-filled  syringes  in  subjects  diagnosed  with  a
retinal  condition  that  would  benefit  from  treatment  with  intravitreal  injection  of  bevacizumab,  including  exudative  age-related  macular
degeneration, diabetic macular edema, or branch retinal vein occlusion. A total of 120 patients are expected to be enrolled in the study with
60 patients receiving ONS-5010 packaged in vials and 60 patients receiving ONS packaged in a pre-filled syringe. Subjects will be treated
for  three  months  and  the  enrollment  of  subjects  in  the  arm  of  the  study  receiving  ONS-5010  in  vials  has  been  completed.  The  study  is
expected to be completed in December 2022.

Commercialization, Sales and Marketing

Our commercialization strategy is to maximize the revenue potential of ONS-5010. If approved, we currently intend to launch and market
LYTENAVA  (bevacizumab-vikg)  ourselves  in  the  United  States.  Outside  of  the  United  States,  we  intend  to  either  market  and  launch
ourselves or work through a strategic partner. We currently own all of the development and commercialization rights to ONS-5010 and have
licensed rights only to our joint venture in the People’s Republic of China, or PRC, for the greater China market (see “—Collaboration and
License Agreements—Syntone-Private Placement and PRC Joint Venture”). If approved, we believe that LYTENAVA (bevacizumab-vikg)
will be entitled to 12 years regulatory exclusivity granted in the United States against biosimilar competition, and up to 10 years in Europe.

For many years, anti-VEGF therapy has been the standard of care for many ophthalmic diseases, including wet AMD, DME and BRVO.
However, although multiple branded drugs have been approved for these indications (e.g., LUCENTIS, EYLEA and BEOVU), they are very
expensive. Doctors who wish to treat their retinal patients with a less expensive anti-VEGF drug often use bevacizumab. But because there
is  no  FDA-approved  ophthalmic  formulation  of  bevacizumab,  doctors  must  use  repackaged  bevacizumab  (Avastin)  provided  by
compounding  pharmacists  that  is  not  required  to  meet  the  standards  for  ophthalmic  use  necessary  for  an  approved  product.  Despite
clinicians’  widespread  acceptance  and  use  of  bevacizumab  to  treat  ophthalmic  diseases  such  as  wet  AMD,  DME  and  BRVO,  no
manufacturer has previously sought approval of bevacizumab for these diseases from the FDA.

The repackaged bevacizumab that is provided by compounding pharmacies is not required to meet ophthalmic drug standards and can carry
known risks of contamination (including silicone oil droplet contamination from syringes) and inconsistent potency, with potentially severe
consequences,  as  leading  retinal  societies  have  reported.  For  these  reasons,  the  retina  community  and  payors  have  shown  interest  in  the
development  of  an  ophthalmic  formulation  of  bevacizumab  that  could  be  an  on-label  alternative  to  repackaged  bevacizumab  from
compounding pharmacists.

To meet this retinal market need, we are developing ONS-5010 as an investigational ophthalmic formulation of bevacizumab. If approved, it
will provide an FDA-approved and European Agency-approved, viable treatment option across the spectrum of anti-VEGF ophthalmic drugs
that  treat  wet  AMD,  DME  and  BRVO.  Additionally,  if  approved,  it  would  avoid  the  safety,  sterility,  potency,  availability  and  syringe
drawbacks that can occur with repackaged bevacizumab from compounding pharmacies.

Furthermore, if ONS-5010 is approved and commercialized, we expect that it will be able to help mitigate the high cost of treatment for
retinal diseases. Both in the United States and globally, the high cost of treating retinal diseases such as wet AMD, DME and BRVO can
result in patients receiving an insufficient number of treatments, or potentially no treatment at all. Our commercial strategy for ONS-5010
includes providing an option as a first-line therapy for retinal diseases including step therapy where an anti-VEGF therapy is indicated. Step
therapy is a type of prior authorization for drugs that

6

Table of Contents

begins treatment for a medical condition with the most preferred drug therapy and progresses to other therapies only if necessary.

By ensuring the consistent availability of safe, sterile and fully potent on-label bevacizumab for intravitreal injection, at a responsible price,
ONS-5010, if approved, has the potential to become the anti-VEGF cornerstone of care for retinal diseases. It may also provide synergies
with future long-acting agents and adjunct therapies for advanced treatment of wet AMD, DME and BRVO. ONS-5010 has the potential, if
approved and commercialized, to help lower the aggregate costs of treating retinal diseases for the overall healthcare system.

Collaboration and License Agreements

We  enter  into  collaboration  and  license  agreements  in  the  ordinary  course  of  our  business.  We  have  in-licensed  certain  technology  from
Selexis SA, or Selexis, that we used to research and develop our product candidates. For product candidates developed using the Selexis
technology, we enter into commercial license agreements with Selexis that give us rights to commercialize, file investigational new drugs, or
INDs  and  enter  into  collaborative  arrangements  with  third  parties  for  the  further  development  and  commercialization  of  such  biosimilar
product candidates. Although we are no longer working on our biosimilar development program, we have licensed rights to these biosimilar
product candidates (ONS-3010, ONS-1045 and ONS-1050) in other markets.

MTTR — Strategic Partnership Agreement (ONS-5010)

In  February  2018,  we  entered  into  a  strategic  partnership  agreement  with  MTTR  LLC,  or  MTTR,  to  advise  on  regulatory,  clinical  and
commercial  strategy  and  assist  in  obtaining  approval  of  ONS-5010.  In  January  2020,  we  agreed  to  terminate  this  arrangement  and  in
connection therewith, following receipt of necessary stockholder approval, in March 2020, we issued an aggregate of 7,244,739 shares of
our  common  stock  to  the  four  principals  of  MTTR  (who  include  two  of  our  named  executive  officers,  Mr.  Dagnon  and  Mr.  Evanson)
pursuant to individual consulting agreements we entered into with each of them, and paid MTTR a one-time settlement fee of $110,000. The
consulting  agreements  also  include  terms  setting  the  respective  compensation  arrangements  of  each  of  the  principals,  including  for  Mr.
Dagnon and Mr. Evanson, who have been serving as executive officers since November 2018.

We did not pay Mr. Dagnon or Mr. Evanson any direct compensation as consultants or as employees during the year ended September 30,
2019  nor  during  the  period  from  October  1,  2019  through  March  19,  2020.  During  this  time,  Mr.  Dagnon  and  Mr.  Evanson  were
compensated directly by MTTR for services provided to us, including as executive officers. We began compensating Mr. Dagnon and Mr.
Evanson directly as consultants effective March 19, 2020. Mr. Dagnon and Mr. Evanson have also agreed to provide consulting services to
an  affiliate  of  BioLexis  Pte.  Ltd.  (“BioLexis”)  pursuant  to  a  separate  arrangement.  MTTR  and  its  four  principals  under  the  strategic
partnership agreement and the subsequent individual consulting agreements earned an aggregate $1,089,408 and $1,294,089 during the year
ended September 30, 2021 and 2020, respectively, which includes monthly consulting fees and expense reimbursement, but excludes stock-
based compensation related to restricted stock.

Syntone – Private Placement and PRC Joint Venture

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

We used approximately $0.9 million of the proceeds from the May 2020 private placement to Syntone Ventures to fund our initial capital
contribution  to  the  PRC  joint  venture,  and  expect  to  be  required  to  make  an  additional  capital  contribution  to  the  PRC  joint  venture  of
approximately $2.1 million within the next four years.

7

Table of Contents

Selexis — Humira (ONS-3010), Avastin (ONS-5010 and ONS-1045) and Herceptin (ONS-1050)

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

Selexis  also  granted  us  a  non-transferrable  option  to  obtain  a  perpetual,  non-exclusive,  worldwide  commercial  license  under  the  Selexis
Technology to manufacture, or have manufactured, a recombinant protein produced by a cell line developed using the Selexis Technology
for clinical testing and commercial sale. We exercised this option in April 2013 and entered into three commercial license agreements with
Selexis for ONS-1045 (which covers ONS-5010), and two of our biosimilar product candidates, ONS-3010 and ONS-1050 (which are no
longer  in  active  clinical  development).  We  paid  an  upfront  licensing  fee  to  Selexis  for  each  commercial  license  and  also  agreed  to  pay  a
fixed  milestone  payment  for  each  licensed  product.  In  addition,  we  are  required  to  pay  a  single-digit  royalty  on  a  final  product-by-final
product and country-by-country basis, based on worldwide net sales of such final products by us or any of our affiliates or sub-licensees
during the royalty term. At any time during the term, we have the right to terminate our royalty payment obligation by providing written
notice to Selexis and paying Selexis a royalty termination fee.

Commercial License Agreements

On April 11, 2013, following the exercise of our option to enter a commercial license under the Selexis research license, we entered into
commercial license agreements with Selexis for each of ONS-1045, ONS-3010 and ONS-1050. Under the terms of each commercial license
agreement, we acquired a non-exclusive worldwide license under the Selexis Technology to use the cell lines developed under the research
license and related materials, to manufacture and commercialize licensed and final products, with a limited right to sublicense.

We were required to pay an upfront licensing fee of CHF 65,000 (approximately $0.1 million) to Selexis for each commercial license and
also agreed to pay up to CHF 365,000 (approximately $0.4 million) in milestone payments for each licensed product. In addition, we are
required to pay a single-digit royalty on a final product-by-final product and country-by-country basis, based on worldwide net sales of such
final products by us or any of our affiliates or sublicensees during the royalty term. The royalty term for each final product in each country is
the period commencing from the first commercial sale of the applicable final product in the applicable country and ending on the expiration
of the specified patent coverage. At any time during the term, we have the right to terminate our royalty payment obligation by providing
written notice to Selexis and paying Selexis a royalty termination fee of CHF 1,750,000 (approximately $1.8 million). The initiation of our
Phase 3 clinical program for ONS-5010 in fiscal 2019 triggered a CHF 65,000 (approximately $0.1 million) milestone payment to Selexis
under the commercial license agreement, which we paid in November 2019. As of September 30, 2021, we have paid Selexis an aggregate
of approximately $0.4 million under the commercial license agreements.

Each of our commercial agreements with Selexis will expire in its entirety upon the expiration of all applicable Selexis patent rights. The
licensed patent rights consist of two patent families. The first patent family relates to methods of transferring cells, and is filed in the United
States,  Australia,  Canada,  Europe,  Japan  and  Singapore.  This  patent  family  will  begin  to  expire  worldwide  in  2022.  The  second  patent
family claims DNA compositions of matter useful for having protein production increasing activity. This patent family is filed in the United
States, Australia, Canada, China, Europe, Hong Kong, Israel, India, Japan, South Korea, Russia, Singapore and South Africa. This patent
family will begin to expire worldwide in 2025. Either party may terminate the related agreement in the event of an uncured material breach
by the other party or in the event the other party becomes subject to specified bankruptcy, winding up or similar circumstances.

Either  party  may  also  terminate  the  related  agreement  under  designated  circumstances  if  the  Selexis  Technology  infringes  third-party
intellectual property rights. In addition, we have the right to terminate each of the commercial agreements at any time for our convenience;
however, with respect to the agreements relating to ONS-3010 and ONS-1045, this right is subject to the consent of Laboratories Liomont,
S.A. de C.V., or Liomont (a licensing partner in Mexico for ONS-3010 and ONS-1045) pursuant to a corresponding letter we executed in
conjunction with the standby agreement entered into between Selexis and Liomont on November 11, 2014. The standby agreement permits
Liomont to assume the license under

8

Table of Contents

the  applicable  commercial  agreement  for  Mexico  upon  specified  triggering  events  involving  our  bankruptcy,  insolvency  or  similar
circumstances.

Ex-U.S. Collaboration and License Agreements

In addition to pursuing potential strategic collaborations and partnerships for ONS-5010, we have entered into strategic collaborations for
our  legacy  biosimilar  drug  product  candidates  that  are  no  longer  in  active  clinical  development.  Currently,  we  have  a  joint  participation
agreement in place for ONS-3010 with Zhejiang Huahai Pharmaceutical Co., Ltd., or Huahai, whereby we share any future post-Phase 1
development costs with Huahai, and proportionately share the revenues from commercialization of ONS-3010 in the United States, Canada,
European  Union,  or  E.U.,  Japan,  Australia  and  New  Zealand.  We  could  also  be  required  to  form  a  joint  venture  to  further  develop  and
commercialize ONS-3010 with Huahai in the agreed countries, if so, requested by Huahai. However, we do not have any other development
and commercialization agreements for the United States or for major ex-U.S. markets, such as the E.U. and Japan.

For emerging markets opportunities, in 2012 and 2013, we established early country-specific partnerships for ONS-3010 and ONS-1045 in
China with Huahai, in India with IPCA Laboratories Limited, or IPCA, and in Mexico with Liomont, and in September 2017 we entered into
an agreement with BioLexis Pte. Ltd., or BioLexis, our controlling stockholder, providing for the license of rights to ONS-3010 and ONS-
1045  in  emerging  markets  excluding  China,  India  and  Mexico.  The  Liomont  agreement  was  terminated  in  April  2021.  To  date,  these
agreements have collectively provided an aggregate of $29.0 million in payments as of September 30, 2021.

Until such time as we may enter into a strategic partnership for ONS-5010, aside from our joint participation agreement in place for ONS-
3010  with  Huahai,  whereby  we  agreed  to  share  post-Phase  1  clinical  development  costs,  and  proportionately  share  the  revenues  from
commercialization of ONS-3010 in the United States, Canada, E.U. and Japan, among other markets, and under which we could be required
to  form  a  joint  venture  with  Huahai  for  ONS-3010  if  so  requested  by  Huahai,  we  do  not  have  any  commercial  license  or  development
agreements  for  the  United  States  or  for  major  ex-U.S.  markets,  such  as  the  E.U.  or  Japan.  We  currently  have  collaboration  and  license
agreements for smaller ex-U.S. markets and, collectively, such agreements have provided an aggregate of $29.0 million in payments as of
September  30,  2021  for  our  most  advanced  biosimilar  product  candidates.  Our  contracts  include  agreements  with  IPCA  (for  ONS-3010,
ONS-1045 and ONS-1050 in India and other regional markets), Liomont (for ONS-3010 and ONS-1045 in Mexico), Huahai (for ONS-3010
and ONS-1045 in China) and BioLexis (for ONS-3010 and ONS-1045 in emerging markets excluding China, India and Mexico). We have
also agreed to license ONS-5010 to our PRC-joint venture with Syntone when formed, which is discussed above. Our arrangements with
these partners for our biosimilar product candidates generally include a strategic license for a defined territory for agreed biosimilar product
candidates and may also include agreements to assist with research and development to assist our contract counterparty in establishing their
own mAb research, development and manufacturing capabilities. Under our existing strategic licensing agreements, we generally received
an  upfront  payment  upon  execution,  and  have  the  ability  to  earn  additional  regular  milestone  payments  and  the  right  to  receive  royalties
(generally a mid-single digit to low-teens percentage rate) based on net sales in the agreed territory. Our existing agreements to assist with
research and development also included an upfront payment upon execution, and we have the ability to earn additional regular milestone
payments,  and  the  right  to  receive  royalties  (generally  a  mid-single  digit  to  low-teens  percentage  rate)  based  on  net  sales  in  the  agreed
territory.

Generally, our agreements expire on a product-by-product basis on the date of the expiration of the royalty revenue term for all products in
the territory. The royalty revenue term is 10 years from the date of first commercial sale and any renewal is subject to good faith negotiation.
The license term for the agreed territory is perpetual. Either party may terminate the agreement in its entirety or with respect to a particular
product if the other party materially breaches the agreement, subject to specified notice and cure periods. In addition, we have the right to
terminate the agreement in connection with any interference, opposition or challenge of our patent rights. If the agreement is terminated due
to our breach, our contract counterparty is generally free to use all applicable technology and know-how that we have provided under the
agreement.

As noted above, our collaboration agreements with Huahai also includes a joint participation agreement, which provides for the co-funding
of development of ONS-3010 in the United States, Canada, E.U., Japan, Australia and New Zealand and the proportionate sharing of the
revenues from commercialization of ONS-3010 in the agreed countries, and also

9

Table of Contents

provides  for  the  formation  of  a  joint  venture  with  Huahai  to  further  develop  and  commercialize  ONS-3010  with  Huahai  in  the  agreed
countries, if so requested by Huahai.

In the event Huahai funds its proportionate share of development costs incurred after completion of the “Phase-3 Ready Package,” Huahai
would  be  entitled  to  retain  its  51%  value  ownership,  with  us  entitled  to  retain  our  49%  value  ownership,  of  ONS-3010  in  the  agreed
countries. Similarly, revenues from the commercialization of ONS-3010 in the agreed countries (including major markets such as the United
States and the E.U., among others), would also be shared based on such proportional ownership interests. In the event that Huahai does not
fund  its  proportionate  share  of  such  development  costs,  the  joint  participation  agreement  provides  for  a  proportionate  adjustment  to  our
respective  value  ownership  interests  based  on  our  respective  investments  in  such  development  costs,  which  would  increase  our  value
ownership interest in ONS-3010.

Throughout  the  term  of  the  joint  participation  agreement,  we  and  our  affiliates  are  prohibited  from,  directly  or  indirectly,  conducting  or
having  conducted  or  funding  any  discovery,  research,  development,  regulatory,  manufacturing  or  commercialization  activity,  alone  or  in
collaboration with a third party, of any biosimilar product having the same reference product as the ONS-3010 compound or corresponding
products, for use in the United States, Canada, E.U., Japan, Australia and New Zealand, other than ONS-3010 with Huahai pursuant to the
joint participation agreement.

Unless  terminated  early  upon  mutual  agreement  of  the  parties,  or  due  to  a  material  breach  of  either  party  that  is  uncured,  the  joint
participation agreement will terminate upon entry into a mutually acceptable collaboration agreement between us and Huahai for ongoing
development and commercialization of ONS-3010 in the agreed countries, or we and Huahai enter into an agreed license with a third party
for such ongoing development and commercialization of ONS-3010 in the agreed countries. If the joint participation agreement is terminated
for cause due to our breach, we could be required to refund Huahai any amounts funded by Huahai to develop ONS-3010, as well as pay
Huahai a 6% royalty on net sales made by us or an affiliate, as well as 25% of revenues we receive from a sublicensee for commercial sales
of ONS-3010 until the aggregate of such payments is equal to 10 times the amount Huahai funded for the development of ONS-3010.

Furthermore, if we were to file a voluntary petition in bankruptcy, or have an involuntary petition filed that we could not dismiss within 120
days, then Huahai would be granted an exclusive license to continue the development and commercialization of ONS-3010 in the agreed
countries.

As  of  September  30,  2021,  we  have  received  an  aggregate  of  $5.0  million  of  payments  from  IPCA  under  our  various  agreements,  an
aggregate of $3.0 million of payments from Liomont under our various agreements, an aggregate of $16.0 million of payments from Huahai
under our various agreements, $10.0 million of which were pursuant to the joint participation agreement, and an aggregate of $5.0 million
from BioLexis under our joint development and licensing agreement.

Manufacturing

We  are  working  with  FujiFilm  Diosynth  Biotechnologies,  or  Fuji,  and  Ajinomoto  Bio-pharma  Services,  or  AjiBio,  to  provide  product
manufacturing in current Good Manufacturing Practices, or cGMP, manufacturing facilities. We have also executed a supply agreement for a
best-in-class  pre-filled  ophthalmic  syringe,  which  we  believe  will  provide  both  ease-of-use  for  clinicians  and  add  to  ONS-5010’s  safety
profile over the current unapproved therapies that have caused problems related to syringe malfunction, contamination, etc. We will screen
other  contract  manufacturers  to  meet  our  clinical,  commercial  and  regulatory  supply  requirements  as  needed.  For  a  discussion  of  risks
related  to  our  sources  and  availability  of  supplies,  please  see  “Risk  Factors—Previously,  we  manufactured  bulk  drug  substance  for
preclinical  and  clinical  supplies  of  our  product  candidates  in  our  in-house  facility.  Our  business  could  be  harmed  if  our  new  contract
manufacturer is unable to manufacture our product candidates at the necessary quantity or quality levels,.” and “Risk Factors—We currently
engage single source suppliers for clinical trial services and multiple source suppliers for future drug substance manufacturing, fill-finish
manufacturing and product testing of ONS-5010. The loss of any of these suppliers, or any future single source suppliers, could harm our
business.”

10

Table of Contents

Competition

Competition  in  the  area  of  pharmaceutical  research  and  development  is  intense  and  significantly  depends  on  scientific  and  technological
factors.  These  factors  include  the  availability  of  patent  and  other  protection  for  technology  and  products,  the  ability  to  commercialize
technological developments and the ability to obtain regulatory approval for testing, manufacturing and marketing. Our competitors include
major  pharmaceutical  and  specialized  biotechnology  companies,  many  of  which  have  financial,  technical  and  marketing  resources
significantly greater than ours. In addition, many biotechnology companies have formed collaborations with large, established companies to
support  research,  development  and  commercialization  of  products  that  may  be  competitive  with  ours,  and  we  may  also  compete  against
other  biotechnology  companies  in  our  efforts  to  find  a  potential  strategic  partner  for  ONS-5010.  Academic  institutions,  governmental
agencies and other public and private research organizations are also conducting research activities and seeking patent protection and may
commercialize products on their own or through joint ventures. We are aware of certain other products manufactured or under development
by competitors that are used for the treatment of the health conditions that we have targeted for product development. We can provide no
assurance that developments by others will not render our technology obsolete, noncompetitive or harm our development strategy, that we
will  be  able  to  keep  pace  with  new  technological  developments,  that  our  technology  will  be  able  to  supplant  established  products  and
methodologies in the therapeutic areas that are targeted by us or that we will be able to enter into a strategic partnership arrangement for
ONS-5010.  The  foregoing  factors  could  have  a  material  adverse  effect  on  our  business,  prospects,  financial  condition  and  results  of
operations. These companies, as well as academic institutions, governmental agencies and private research organizations, also compete with
us in recruiting and retaining highly qualified scientific personnel and consultants.

We will encounter competition from existing firms that offer competitive solutions in ocular diseases. These competitive companies could
develop products that are superior to, or have greater market acceptance, than the products being developed by us. We will have to compete
against  other  biotechnology  and  pharmaceutical  companies  with  greater  market  recognition  and  greater  financial,  marketing  and  other
resources.

Wet-AMD Market

AMD is a medical condition that usually affects older adults and generally results in a loss of vision. AMD occurs in “dry” (non-exudative)
and “wet” (exudative) forms. Wet AMD is the advanced form of macular degeneration that involves the formation of abnormal and leaky
blood  vessels  in  the  back  of  the  eye  behind  the  retina,  through  a  process  known  as  choroidal  neovascularization.  While  the  wet  form
accounts for approximately 15% of all AMD cases, according to the National Eye Institute, it is responsible for 90% of severe vision loss
associated  with  AMD.  The  National  Eye  Institute  also  estimates  that  the  prevalence  of  wet  AMD  among  adults  40  years  or  older  in  the
United States is approximately 1.75 million people. In addition, more than 200,000 new cases are diagnosed annually in North America.

Competitive Landscape

Off-label use of bevacizumab (Avastin) is estimated to be at least 50% of the overall market in the United States. The current FDA approved
market  leaders  for  the  treatment  of  wet  AMD  are  VEGF  inhibitors,  including  LUCENTIS,  EYLEA  and  BEOVU.  Annual  revenue
(worldwide) for anti-VEGF therapies was estimated to be $13.1 billion in 2020 (Guidehouse Triangulation of Global Data, Market Scope
and  Investor  Forecasts  (2020)).  Bevacizumab,  LUCENTIS,  EYLEA  and  BEOVU  are  all  administered  via  frequent  intravitreal  injections
directly into the eye. We are developing ONS-5010 as an approved ophthalmic formulation of bevacizumab for the treatment of wet AMD,
as well as DME and BRVO.

In addition to the other treatments used in patients with wet AMD, there are various other companies with product candidates in Phase 1, 2
and 3 clinical trials for the treatment of wet AMD. Programs currently in Phase 2 or Phase 3 clinical trials include, but are not limited to:

● RG7716, a bispecific antibody to both VEGF-A and Ang2 being developed by Hoffman-La Roche AG;

● SB-11, BYOOVI, ranibizumab biosimlar being developed by Samsung Bioepis Co., Ltd. and Biogen Inc.;

● FYB-201j, ranibizumab biosimilar being developed by Formycon AG and Bioeq GmbH;

11

Table of Contents

● Xlucanej, ranibizumab biosimilar being developed by Bausch & Lomb and Xbrane Biopharma AB; and

● Ranibizumab PDS GR40548, ranibizumab port delivery system being developed by Hoffmann-La Roche AG.

All of these product candidates in clinical development, with the exception of PDS GR40548 which is a refillable port delivery system, use
an  intravitreal  route  of  administration  much  like  the  current  standards  of  care.  We  believe  that  ONS-5010  has  potential  competitive
advantages through the familiarity of patients and physicians in using off-label Avastin. We also believe we have reduced the risk in our
clinical  program  by  leveraging  our  prior  work  in  developing  a  biosmilar  drug  product  candidate  for  Avastin  as  a  treatment  for  cancer.
However,  clinical  trial  data  from  other  clinical  programs  may  negatively  impact  our  ability  to  garner  future  financing  or  business
collaborations, combinations or transactions with other pharmaceutical and biotechnology companies.

Intellectual Property

Our commercial success depends in part on our ability to avoid infringing the proprietary rights of third parties, our ability to obtain and
maintain proprietary protection for our technologies where applicable and to prevent others from infringing our proprietary rights. We seek
to protect our proprietary technologies by, among other methods, evaluating relevant patents, establishing defensive positions, monitoring
E.U. oppositions and pending intellectual property rights, preparing litigation strategies in view of the U.S. legislative framework and filing
U.S. and international patent applications on technologies, inventions and improvements that are important to our business. As of December
1,  2021,  we  own  two  U.S.  patents,  ten  foreign  patents,  five  pending  U.S.  non-provisional  applications,  and  41  pending  international
applications that were nationalized from seven Patent Cooperation Treaty, or PCT, applications, which relate to formulations developed for
ONS-3010 and ONS-5010/ONS-1045, methods of antibody purification, methods for purifying antibodies to separate isoforms, methods of
use, methods of reducing high molecular weight species, and modulating afucosylated species as well as efficiently determining the amino
acid  sequence  of  antibodies.  Our  first  PCT  application  was  nationalized  in  April  2016  in  Australia,  Canada,  China,  Europe,  Hong  Kong,
India, Japan, Mexico and the United States. If granted, patents issuing from these nine applications are expected to expire in 2034, absent
any  adjustments  or  extensions.  Our  second  PCT  application  was  nationalized  in  July  2017  in  Europe  and  the  United  States.  If  granted,
patents issuing from these two applications are expected to expire in 2036, absent any adjustments or extensions. Our third PCT application
was nationalized in June 2018 in Australia, Canada, China, Europe, India, Japan, Mexico and the United States. If granted, patents issuing
from  these  eight  applications  are  expected  to  expire  in  2036,  absent  any  adjustments  or  extensions.  Our  fourth  PCT  application  was
nationalized in July 2018 in Australia, Canada, China, Europe, India, Japan, Mexico and the United States. If granted, patents issuing from
these eight applications are expected to expire in 2037, absent any adjustments or extensions. Our fifth PCT application was nationalized in
August 2018 in Australia, Canada, China, Europe, India, Japan, Mexico and the United States. If granted, patents issuing from these eight
applications are expected to expire in 2037, absent any adjustments or extensions. Our sixth PCT application was nationalized in August
2018  in  Australia,  Canada,  China,  Europe,  India,  Japan,  Mexico  and  the  United  States.  If  granted,  patents  issuing  from  these  eight
applications are expected to expire in 2037, absent any adjustments or extensions. Our seventh PCT application was nationalized in October
2020 in Australia, Brazil, Canada, China, Europe, Israel, Japan, Korea, Mexico, New Zealand, Russian Federation, Singapore, South Africa
and the United States. If granted, patents issuing from these fourteen applications are expected to expire in 2039, absent any adjustments or
extensions.  We  also  rely  on  trade  secrets,  know-how  and  continuing  technological  innovation  to  develop  and  maintain  our  proprietary
position.

The  term  of  individual  patents  depends  upon  the  legal  term  of  the  patents  in  countries  in  which  they  are  obtained.  In  most  countries,
including the United States, the patent term is generally 20 years from the earliest date of filing a non-provisional patent application in the
applicable country. In the United States, a patent’s term may, in certain cases, be lengthened by patent term adjustment, which compensates a
patentee for administrative delays by the United States Patent and Trademark Office in examining and granting a patent or may be shortened
if a patent is terminally disclaimed over a commonly owned patent or a patent naming a common inventor and having an earlier expiration
date.

12

Table of Contents

Regulatory

Government Regulation and Product Approval

The FDA and other regulatory authorities at federal, state, and local levels, as well as in foreign countries, extensively regulate, among other
things, the research, development, testing, manufacture, quality control, import, export, safety, effectiveness, labeling, packaging, storage,
distribution,  record  keeping,  approval,  advertising,  promotion,  marketing,  post-approval  monitoring,  and  post-approval  reporting  of
biologics  such  as  those  we  are  developing.  We,  along  with  third-party  contractors,  will  be  required  to  navigate  the  various  preclinical,
clinical and commercial approval requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or
seek approval or licensure of our product candidates.

The process required by the FDA before biologic product candidates may be marketed in the United States generally involves the following:

● completion  of  preclinical  laboratory  tests  and  animal  studies  performed  in  accordance  with  the  FDA’s  current  Good  Laboratory

Practices, or GLP, regulation;

● submission to the FDA of an IND, which must become effective before clinical trials may begin and must be updated annually or

when significant changes are made;

● approval  by  an  independent  Institutional  Review  Board,  or  IRB,  or  ethics  committee  at  each  clinical  site  before  the  trial  is

commenced;

● performance  of  adequate  and  well-controlled  human  clinical  trials  to  establish  the  safety,  purity  and  potency  of  the  proposed

biologic product candidate for its intended purpose;

● preparation of and submission to the FDA of a BLA after completion of all pivotal clinical trials;

● a determination by the FDA within 60 days of its receipt of a BLA to file the application for review;

● satisfactory completion of an FDA Advisory Committee review, if applicable;

● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product
is produced to assess compliance with cGMP and to assure that the facilities, methods and controls are adequate to preserve the
biological  product’s  continued  safety,  purity  and  potency,  and  of  selected  clinical  investigation  sites  to  assess  compliance  with
Good Clinical Practices, or GCP; and

● FDA  review  and  approval  of  the  BLA  to  permit  commercial  marketing  of  the  product  for  particular  indications  for  use  in  the

United States.

Preclinical and Clinical Development

Prior to beginning the first clinical trial with a product candidate in the United States, we must submit an IND to the FDA. An IND is a
request  for  authorization  from  the  FDA  to  administer  an  investigational  new  drug  product  to  humans.  The  central  focus  of  an  IND
submission is on the general investigational plan and the protocol(s) for clinical studies. The IND also includes results of animal and in vitro
studies  assessing  the  toxicology,  pharmacokinetics,  pharmacology,  and  pharmacodynamic  characteristics  of  the  product;  chemistry,
manufacturing, and controls information; and any available human data or literature to support the use of the investigational product. An
IND must become effective before human clinical trials may begin. The IND automatically becomes effective 30 days after receipt by the
FDA, unless the FDA, within the 30-day time period, raises safety concerns or questions about the proposed clinical trial. In such a case, the
IND may be placed on clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or questions

13

Table of Contents

before the clinical trial can begin. Submission of an IND therefore may or may not result in FDA authorization to begin a clinical trial.

Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in
accordance with GCPs, which include the requirement that all research subjects provide their informed consent for their participation in any
clinical study. Clinical trials are conducted under protocols detailing, among other things, the objectives of the study, the parameters to be
used in monitoring safety and the effectiveness criteria to be evaluated. A separate submission to the existing IND must be made for each
successive clinical trial conducted during product development and for any subsequent protocol amendments. Furthermore, an independent
IRB for each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial and its informed consent form
before the clinical trial begins at that site and must monitor the study until completed. Regulatory authorities, the IRB or the sponsor may
suspend a clinical trial at any time on various grounds, including a finding that the subjects are being exposed to an unacceptable health risk
or that the trial is unlikely to meet its stated objectives. Some studies also include oversight by an independent group of qualified experts
organized by the clinical study sponsor, known as a data safety monitoring board, which provides authorization for whether or not a study
may move forward at designated check points based on access to certain data from the study and may halt the clinical trial if it determines
that  there  is  an  unacceptable  safety  risk  for  subjects  or  other  grounds,  such  as  no  demonstration  of  efficacy.  There  are  also  requirements
governing the reporting of ongoing clinical studies and clinical study results to public registries.

For purposes of BLA approval, human clinical trials are typically conducted in three sequential phases that may overlap.

● Phase  1  —  The  investigational  product  is  initially  introduced  into  healthy  human  subjects  or  patients  with  the  target  disease  or
condition.  These  studies  are  designed  to  test  the  safety,  dosage  tolerance,  absorption,  metabolism  and  distribution  of  the
investigational  product  in  humans,  the  side  effects  associated  with  increasing  doses,  and,  if  possible,  to  gain  early  evidence  on
effectiveness.

● Phase  2  —  The  investigational  product  is  administered  to  a  limited  patient  population  with  a  specified  disease  or  condition  to
evaluate  the  preliminary  efficacy,  optimal  dosages  and  dosing  schedule  and  to  identify  possible  adverse  side  effects  and  safety
risks. Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3
clinical trials.

● Phase 3 — The investigational product is administered to an expanded patient population to further evaluate dosage, to provide
statistically  significant  evidence  of  clinical  efficacy  and  to  further  test  for  safety,  generally  at  multiple  geographically  dispersed
clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to
provide an adequate basis for product approval.

In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a product is approved to gain more
information about the product. These so- called Phase 4 studies may be made a condition to approval of the BLA. Concurrent with clinical
trials,  companies  may  complete  additional  animal  studies  and  develop  additional  information  about  the  biological  characteristics  of  the
product  candidate  and  must  finalize  a  process  for  manufacturing  the  product  in  commercial  quantities  in  accordance  with  cGMP
requirements. The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among
other things, must develop methods for testing the identity, strength, quality and purity of the final product, or for biologics, the safety, purity
and potency. Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the
product candidate does not undergo unacceptable deterioration over its shelf life.

BLA Submission and Review

Assuming  successful  completion  of  all  required  testing  in  accordance  with  all  applicable  regulatory  requirements,  the  results  of  product
development, nonclinical studies and clinical trials are submitted to the FDA as part of a BLA requesting approval to market the product for
one or more indications. The BLA must include all relevant data available from pertinent preclinical and clinical studies, including negative
or  ambiguous  results  as  well  as  positive  findings,  together  with  detailed  information  relating  to  the  product’s  chemistry,  manufacturing,
controls,  and  proposed  labeling,  among  other  things.  The  submission  of  a  BLA  requires  payment  of  a  substantial  application  user  fee  to
FDA, unless a waiver or exemption applies.

14

Table of Contents

Once a BLA has been submitted, the FDA’s goal is to review standard applications within ten months after it accepts the application for
filing, or, if the application qualifies for priority review, six months after the FDA accepts the application for filing. In both standard and
priority reviews, the review process is often significantly extended by FDA requests for additional information or clarification. The FDA
reviews a BLA to determine, among other things, whether a product is safe, pure and potent and the facility in which it is manufactured,
processed, packed, or held meets standards designed to assure the product’s continued safety, purity and potency. The FDA may convene an
advisory committee to provide clinical insight on application review questions. Before approving a BLA, the FDA will typically inspect the
facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing
processes  and  facilities  are  in  compliance  with  cGMP  requirements  and  adequate  to  assure  consistent  production  of  the  product  within
required specifications. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure compliance
with GCP. If the FDA determines that the application, manufacturing process or manufacturing facilities are not acceptable, it will outline
the deficiencies in the submission and often will request additional testing or information. Notwithstanding the submission of any requested
additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.

After  the  FDA  evaluates  a  BLA  and  conducts  inspections  of  manufacturing  facilities  where  the  investigational  product  and/or  its  drug
substance will be produced, the FDA may issue an approval letter or a Complete Response letter. An approval letter authorizes commercial
marketing of the product with specific prescribing information for specific indications. A Complete Response letter will describe all of the
deficiencies  that  the  FDA  has  identified  in  the  BLA,  except  that  where  the  FDA  determines  that  the  data  supporting  the  application  are
inadequate  to  support  approval,  the  FDA  may  issue  the  Complete  Response  letter  without  first  conducting  required  inspections,  testing
submitted product lots, and/or reviewing proposed labeling. In issuing the Complete Response letter, the FDA may recommend actions that
the applicant might take to place the BLA in condition for approval, including requests for additional information or clarification. The FDA
may  delay  or  refuse  approval  of  a  BLA  if  applicable  regulatory  criteria  are  not  satisfied,  require  additional  testing  or  information  and/or
require post-marketing testing and surveillance to monitor safety or efficacy of a product.

If  regulatory  approval  of  a  product  is  granted,  such  approval  will  be  granted  for  particular  indications  and  may  entail  limitations  on  the
indicated  uses  for  which  such  product  may  be  marketed.  For  example,  the  FDA  may  approve  the  BLA  with  a  Risk  Evaluation  and
Mitigation Strategy, or REMS, to ensure the benefits of the product outweigh its risks. A REMS is a safety strategy to manage a known or
potential serious risk associated with a product and to enable patients to have continued access to such medicines by managing their safe use,
and could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods,
patient  registries  and  other  risk  minimization  tools.  The  FDA  also  may  condition  approval  on,  among  other  things,  changes  to  proposed
labeling  or  the  development  of  adequate  controls  and  specifications.  Once  approved,  the  FDA  may  withdraw  the  product  approval  if
compliance with pre- and post-marketing requirements is not maintained or if problems occur after the product reaches the marketplace. The
FDA  may  require  one  or  more  Phase  4  post-market  trials  and  surveillance  to  further  assess  and  monitor  the  product’s  safety  and
effectiveness after commercialization and may limit further marketing of the product based on the results of these post-marketing studies.

Post-Approval Requirements

Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA,
including,  among  other  things,  requirements  relating  to  record-keeping,  reporting  of  adverse  experiences,  periodic  reporting,  product
sampling  and  distribution,  and  advertising  and  promotion  of  the  product.  After  approval,  most  changes  to  the  approved  product,  such  as
adding  new  indications  or  other  labeling  claims,  are  subject  to  prior  FDA  review  and  approval.  There  also  are  continuing  user  fee
requirements, under which FDA assesses an annual program fee for each product identified in an approved BLA. Biologic manufacturers
and  their  subcontractors  are  required  to  register  their  establishments  with  the  FDA  and  certain  state  agencies  and  are  subject  to  periodic
unannounced  inspections  by  the  FDA  and  certain  state  agencies  for  compliance  with  cGMP,  which  impose  certain  procedural  and
documentation requirements upon us and our third-party manufacturers. Changes to the manufacturing process are strictly regulated, and,
depending  on  the  significance  of  the  change,  may  require  prior  FDA  approval  before  being  implemented.  FDA  regulations  also  require
investigation and correction of any deviations from cGMP and impose reporting requirements upon us and any third-party manufacturers
that we may decide to use. Accordingly, manufacturers must continue to expend time,

15

Table of Contents

money  and  effort  in  the  area  of  production  and  quality  control  to  maintain  compliance  with  cGMP  and  other  aspects  of  regulatory
compliance.

The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the
product  reaches  the  market.  Later  discovery  of  previously  unknown  problems  with  a  product,  including  adverse  events  of  unanticipated
severity  or  frequency,  or  with  manufacturing  processes,  or  failure  to  comply  with  regulatory  requirements,  may  result  in  revisions  to  the
approved  labeling  to  add  new  safety  information;  imposition  of  post-market  studies  or  clinical  studies  to  assess  new  safety  risks;  or
imposition  of  distribution  restrictions  or  other  restrictions  under  a  REMS  program.  Other  potential  consequences  include,  among  other
things:

● restrictions  on  the  marketing  or  manufacturing  of  a  product,  complete  withdrawal  of  the  product  from  the  market  or  product

recalls;

● fines, warning letters or holds on post-approval clinical studies;

● refusal  of  the  FDA  to  approve  pending  applications  or  supplements  to  approved  applications,  or  suspension  or  revocation  of

existing product approvals;

● product seizure or detention, or refusal of the FDA to permit the import or export of products; or

● injunctions or the imposition of civil or criminal penalties.

The FDA closely regulates the marketing, labeling, advertising and promotion of biologics. A company can make only those claims relating
to safety and efficacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label. The
FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. Failure to comply with these
requirements  can  result  in,  among  other  things,  adverse  publicity,  warning  letters,  corrective  advertising  and  potential  civil  and  criminal
penalties. Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from
those tested by us and approved by the FDA. Such off-label uses are common across medical specialties. Physicians may believe that such
off-label uses are the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their
choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of their products.

Biosimilars and Reference Product Exclusivity

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA,
signed into law in 2010, includes a subtitle called the Biologics Price Competition and Innovation Act of 2009, or BPCIA, which created an
abbreviated approval pathway for biological products that are biosimilar to or interchangeable with an FDA-approved reference biological
product. To date, a number of biosimilars have been licensed under the BPCIA, and numerous biosimilars have been approved in Europe.
The FDA has issued several guidance documents outlining an approach to review and approval of biosimilars.

Biosimilarity, which requires that there be no clinically meaningful differences between the biological product and the reference product in
terms  of  safety,  purity,  and  potency,  can  be  shown  through  analytical  studies,  animal  studies,  and  a  clinical  study  or  studies.
Interchangeability requires that a product is biosimilar to the reference product and the product must demonstrate that it can be expected to
produce the same clinical results as the reference product in any given patient and, for products that are administered multiple times to an
individual,  the  biologic  and  the  reference  biologic  may  be  alternated  or  switched  after  one  has  been  previously  administered  without
increasing safety risks or risks of diminished efficacy relative to exclusive use of the reference biologic. Complexities associated with the
larger, and often more complex, structures of biological products, as well as the processes by which such products are manufactured, pose
significant hurdles to implementation of the abbreviated approval pathway that are still being worked out by the FDA.

16

Table of Contents

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 12 years from the date on which the reference product was first licensed. During this 12-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 that
applicant’s own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety, purity and potency of its
product. The BPCIA also created certain exclusivity periods for biosimilars approved as interchangeable products.

Other U.S. Healthcare Laws and Compliance Requirements

Although we currently do not have any products on the market, our current and future arrangements with healthcare professionals, principal
investigators, consultants, customers and third-party payors expose us to broadly applicable healthcare regulation and enforcement by the
federal government and the states and foreign governments in which we conduct our business. These laws include, without limitation, state
and federal anti-kickback, fraud and abuse, false claims, privacy and security and physician sunshine laws and regulations.

The  federal  Anti-Kickback  Statute  prohibits,  among  other  things,  any  person  or  entity  from  knowingly  and  willfully  offering,  soliciting,
receiving or providing remuneration, directly or indirectly, in cash or in kind, either to induce or award the referral of an individual, for an
item or service or the purchasing, recommending or ordering of a good or service, for which payment may be made under federal healthcare
programs such as the Medicare and Medicaid programs. The federal Anti-Kickback Statute is subject to evolving interpretations. In the past,
the government has enforced the federal Anti-Kickback Statute to reach large settlements with healthcare companies based on, in certain
cases,  sham  consulting  and  other  financial  arrangements  with  physicians.  Further,  the  Patient  Protection  and  Affordable  Care  Act,  as
amended by the Health Care and Education Reconciliation Act, or collectively, the Affordable Care Act, among other things, amends the
intent requirement of the federal Anti-Kickback Statute and the criminal statutes governing healthcare fraud. A person or entity no longer
needs to have actual knowledge of these statutes or specific intent to violate them in order to commit a violation. In addition, the Affordable
Care Act provides that the government may assert that 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 civil False Claims Act or federal civil monetary penalties statute.

Additionally, the federal false claims and civil monetary penalties laws, including the civil False Claims Act prohibit, among other things,
knowingly presenting or causing the presentation of a false, fictitious or fraudulent claim for payment to the U.S. government, or making a
false statement to avoid, decrease, or conceal an obligation to pay money to the federal government. Actions under the civil False Claims
Act  may  be  brought  by  the  Attorney  General  or  as  a  qui  tam  action  by  a  private  individual  in  the  name  of  the  government.  The  federal
government has used the civil False Claims Act, and the accompanying threat of significant liability, in its investigation and prosecution of
pharmaceutical  and  biotechnology  companies  throughout  the  country,  for  example,  in  connection  with  the  promotion  of  products  for
unapproved uses and other illegal sales and marketing practices.

The  federal  Health  Insurance  Portability  and  Accountability  Act  of  1996,  or  HIPAA,  created  additional  federal  criminal  statutes  that
prohibit,  among  other  actions,  knowingly  and  willfully  executing,  or  attempting  to  execute,  a  scheme  to  defraud  any  healthcare  benefit
program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully
obstructing a criminal investigation of a healthcare offense, and knowingly and willfully falsifying, concealing or covering up a material fact
or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items
or services.

HIPAA,  as  amended  by  the  Health  Information  Technology  for  Economic  and  Clinical  Health  Act,  or  HITECH,  and  their  implementing
regulations, imposes requirements regarding the privacy and security of individually identifiable health information, including mandatory
contractual  terms,  for  covered  entities,  or  certain  healthcare  providers,  health  plans,  and  healthcare  clearinghouses,  and  their  business
associates that provide services to the covered entity that involve individually identifiable health information and their subcontractors that
use, disclose or otherwise process individually identifiable health information. HITECH also increased the civil and criminal penalties that
may  be  imposed  against  covered  entities  and  business  associates  and  gave  state  attorneys  general  new  authority  to  file  civil  actions  for
damages or injunctions in federal courts to enforce HIPAA.

17

Table of Contents

In  addition,  there  has  been  a  recent  trend  of  increased  federal  and  state  regulation  of  payments  made  to  physicians  and  other  healthcare
providers. The Affordable Care Act, among other things, via the Physician Payments Sunshine Act, imposes annual reporting requirements
on certain manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the
Children’s  Health  Insurance  Program,  with  specific  exceptions,  for  payments  made  by  them  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.  Beginning  in  2022,  applicable  manufacturers  will  also  be  required  to  report  information  related  to
payments  and  other  transfers  of  value  provided  in  the  previous  year  to  physician  assistants,  nurse  practitioners,  clinical  nurse  specialists,
certified registered nurse anesthetists, and certified nurse midwives.

Certain states also impose restrictions on pharmaceutical manufacturer marketing practices and/or require the tracking and reporting of gifts,
compensation and other remuneration to physicians. Certain states and local governments require the registration of pharmaceutical sales
representatives. Additionally, analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply
to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors,
including private insurers. State laws may also apply that require pharmaceutical companies to comply with the pharmaceutical industry’s
voluntary  compliance  guidelines  and  the  relevant  compliance  guidance  promulgated  by  the  federal  government  or  otherwise  restrict
payments that may be made to healthcare providers or other potential referral sources. In addition, certain states require drug manufacturers
to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures
or drug pricing. In addition, state and local laws may require the registration of pharmaceutical sales representatives. We may also be subject
to state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each
other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.

The shifting commercial compliance environment and the need to build and maintain robust systems to comply with different compliance
and/or  reporting  requirements  in  multiple  jurisdictions  increase  the  possibility  that  a  healthcare  company  may  violate  one  or  more  of  the
requirements. If our operations are found to be in violation of any of such laws or any other governmental regulations that apply to us, we
may  be  subject  to  significant  penalties,  including,  without  limitation,  civil,  criminal  and  administrative  penalties,  damages,  fines,
disgorgement, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement
to resolve allegations of non-compliance with these laws, the curtailment or restructuring of our operations, exclusion from participation in
federal and state healthcare programs and individual imprisonment, any of which could adversely affect our ability to operate our business
and our financial results.

Healthcare Reform

The Affordable Care Act has had, and is expected to continue to have, a significant impact on the healthcare industry. The Affordable Care
Act  was  designed  to  expand  coverage  for  the  uninsured  while  at  the  same  time  containing  overall  healthcare  costs.  With  regard  to
pharmaceutical  products,  among  other  things,  the  Affordable  Care  Act  expanded  and  increased  industry  rebates  for  drugs  covered  under
Medicaid programs and made changes to the coverage requirements under the Medicare prescription drug benefit. There have been judicial,
Congressional  and  executive  branch  challenges  to  certain  aspects  of  the  Affordable  Care  Act,  and  we  expect  there  will  be  additional
challenges and amendments to the Affordable Care Act in the future. While Congress has not passed comprehensive repeal legislation, it has
enacted laws that modify certain provisions of the Affordable Care Act such as removing or delaying penalties, starting January 1, 2019, for
not  complying  with  the  Affordable  Care  Act’s  individual  mandate  to  carry  health  insurance,  delaying  the  implementation  of  certain
Affordable Care Act-mandated fees, and increasing the point-of-sale discount that is owed by pharmaceutical manufacturers who participate
in Medicare Part D. Additionally, on June 17, 2021 the U.S. Supreme Court dismissed a challenge on procedural grounds that argued the
Affordable  Care  Act  is  unconstitutional  in  its  entirety  because  the  “individual  mandate”  was  repealed  by  Congress.  Thus,  the  Affordable
Care Act will remain in effect in its current form. Further, prior to the U.S. Supreme Court ruling, on January 28, 2021, President Biden
issued  an  executive  order  that  initiated  a  special  enrollment  period  for  purposes  of  obtaining  health  insurance  coverage  through  the
Affordable Care Act marketplace, which began on February 15, 2021 and remained open through August 15, 2021. The executive order also
instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including
among others, reexamining Medicaid demonstration projects and waiver programs that include work

18

Table of Contents

requirements,  and  policies  that  create  unnecessary  barriers  to  obtaining  access  to  health  insurance  coverage  through  Medicaid  or  the
Affordable  Care  Act.  It  is  possible  that  the  Affordable  Care  Act  will  be  subject  to  judicial  or  Congressional  challenges  in  the  future.
Accordingly, we continue to evaluate the effect that the Affordable Care Act has on our business.

Other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. For example,
through the process created by the Budget Control Act of 2011, there are automatic reductions of Medicare payments to providers up to 2%
per fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments, including the Infrastructure Investment
and Jobs Act, will remain in effect through 2031 unless additional Congressional action is taken. However, the novel coronavirus (“COVID-
19”)  relief  legislation  suspended  the  2%  Medicare  sequester  from  May  1,  2020  through  December  31,  2021.  In  January  2013,  President
Obama  signed  into  law  the  American  Taxpayer  Relief  Act  of  2012,  which,  among  other  things,  further  reduced  Medicare  payments  to
several  providers.  Additionally,  on  March  11,  2021,  President  Biden  signed  the  American  Rescue  Plan  Act  of  2021  into  law,  which
eliminates  the  statutory  Medicaid  drug  rebate  cap,  currently  set  at  100%  of  a  drug’s  average  manufacturer  price,  for  single  source  and
innovator multiple source drugs, beginning January 1, 2024. In addition, Congress is considering additional health reform measures as part
of the budget reconciliation process.

In  addition,  there  has  been  heightened  governmental  scrutiny  recently  over  the  manner  in  which  drug  manufacturers  set  prices  for  their
marketed products, which have resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed
to,  among  other  things,  bring  more  transparency  to  product  pricing,  review  the  relationship  between  pricing  and  manufacturer  patient
programs, and reform government program reimbursement methodologies for drug products. At the federal level, the Trump administration
used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy
initiatives.  For  example,  on  July  24,  2020  and  September  13,  2020,  President  Trump  announced  several  executive  orders  related  to
prescription drug pricing that seek to implement several of the administration's proposals. The FDA also released a final rule on September
24, 2020 providing guidance for states to build and submit importation plans for drugs from Canada. Further, on November 20, 2020, the
Department  of  Health  and  Human  Services,  or  HHS,  finalized  a  regulation  removing  safe  harbor  protection  for  price  reductions  from
pharmaceutical  manufacturers  to  plan  sponsors  under  Part  D,  either  directly  or  through  pharmacy  benefit  managers,  unless  the  price
reduction is required by law. The implementation of the rule has been delayed by the Biden administration from January 1, 2022 to January
1, 2023 in response to ongoing litigation. The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as
a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have
also been delayed until January 1, 2023. In July 2021, the Biden administration released an executive order, “Promoting Competition in the
American Economy,” with multiple provisions aimed at prescription drugs. In response to Biden’s executive order, on September 9, 2021,
HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety
of  potential  legislative  policies  that  Congress  could  pursue  as  well  as  potential  administrative  actions  HHS  can  take  to  advance  these
principles.  No  legislation  or  administrative  actions  have  been  finalized  to  implement  these  principles.  In  the  coming  years,  additional
legislative  and  regulatory  changes  could  be  made  to  governmental  health  programs  that  could  significantly  impact  pharmaceutical
companies and the success of our product candidates. At the state level, legislatures have increasingly passed legislation and implemented
regulations  designed  to  control  pharmaceutical  and  biological  product  pricing,  including  price  or  patient  reimbursement  constraints,
discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to
encourage  importation  from  other  countries  and  bulk  purchasing.  The  Affordable  Care  Act,  as  well  as  other  federal,  state  and  foreign
healthcare reform measures that have been and may be adopted in the future, could harm our future revenues. Further, it is also possible that
additional governmental action is taken in response to the COVID-19 pandemic.

International Regulation

In addition to regulations in the United States, foreign regulations also govern clinical trials, commercial sales and distribution of product
candidates within their jurisdiction. The regulatory approval process varies from country to country and the time to approval may be longer
or shorter than that required for FDA approval. In the European Union, the approval of a biosimilar for marketing is based on an opinion
issued by the European Medicines Agency and a decision issued by the European Commission. However, substitution of a biosimilar for the
innovator is a decision that is made at the local (national) level on a country-by-country basis. Additionally, a number of European countries
do not permit the automatic substitution of biosimilars for the reference product. Many countries also have published their own legislation
outlining a

19

Table of Contents

regulatory pathway for the development and approval of biosimilars. In some cases, countries have either adopted European guidance or are
following guidance issued by the World Health Organization. Although similarities are apparent across these various regulatory guidance,
there is also the potential for additional country-specific requirements.

Pharmaceutical Coverage, Pricing and Reimbursement

In the United States and other countries, sales of any products for which we receive regulatory approval for commercial sale will depend in
part on the availability of coverage and the adequacy of reimbursement from third-party payors, including government health administrative
authorities, managed care organizations, private health insurers and other organizations. Third-party payors are increasingly examining the
medical  necessity  and  cost  effectiveness  of  drug  products  and  services  in  addition  to  safety  and  efficacy  and,  accordingly,  significant
uncertainty exists as to the reimbursement status of newly drug products. A payor’s decision to provide coverage for a drug product does not
imply  that  an  adequate  reimbursement  rate  will  be  approved.  Further,  there  is  no  uniform  policy  for  coverage  and  reimbursement  in  the
United  States.  Third-party  payors  often  rely  upon  Medicare  coverage  policy  and  payment  limitations  in  setting  their  own  reimbursement
rates,  but  also  have  their  own  methods  and  approval  process  apart  from  Medicare  determinations.  As  such,  one  payor’s  determination  to
provide coverage for a drug product does not assure that other payors will also provide coverage for the drug product. Adequate third-party
reimbursement may not be available to enable us to realize an appropriate return on our investment in product development. Obtaining and
maintaining adequate reimbursement for our product candidates, once approved, may be difficult. We may be required to conduct expensive
pharmacoeconomic studies to justify coverage and reimbursement or the level of reimbursement compared to existing approved biologics
and  other  therapies.  There  may  be  significant  delays  in  obtaining  coverage  and  reimbursement  for  newly  approved  drugs  in  the  United
States,  and  coverage  may  be  more  limited  than  the  indications  for  which  the  product  is  approved  by  the  FDA  or  similar  regulatory
authorities  outside  the  United  States.  In  addition,  the  U.S.  government,  state  legislatures  and  foreign  governments  have  continued
implementing  cost-containment  programs,  including  price  controls,  restrictions  on  coverage  and  reimbursement  and  requirements  for
substitution  of  generic  products.  Adoption  of  price  controls  and  cost-containment  measures  and  adoption  of  more  restrictive  policies  in
jurisdictions with existing controls and measures could further limit our net revenue and results. Decreases in third-party reimbursement for
our  product  candidates  or  a  decision  by  a  third-party  payor  to  not  cover  our  product  candidates  could  reduce  physician  utilization  of  our
products and have a material adverse effect on our sales, results of operations and financial condition.

Employees and Human Capital Resources

As of September 30, 2021, we had nine full-time employees, five of whom were primarily engaged in research and development activities
and four of whom have a Ph.D. degree. We also have two part-time consultants, who serve as executive officers. None of our employees are
represented by a labor union or covered by a collective bargaining agreement.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing
and new employees, advisors and consultants. The principal purposes of our equity and cash incentive plans are to attract, retain and reward
personnel through the granting of stock-based and cash-based compensation awards, in order to increase stockholder value and the success
of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

Corporate Information

We initially incorporated in January 2010 in New Jersey as Oncobiologics, Inc., and in October 2015, we reincorporated in Delaware by
merging with and into a Delaware corporation. In November 2018, we changed our name to Outlook Therapeutics, Inc. Our headquarters are
located at 485 Route 1 South, Building F Suite 320, Iselin, New Jersey, 08830, and our telephone number at that location is (609) 619-3990.
Our website address is www.outlooktherapeutics.com. The information contained on, or that can be accessed through, our website is not part
of, and is not incorporated by reference into this Annual Report on Form 10-K.

20

Table of Contents

Item 1A. Risk Factors

You should consider carefully the risks and uncertainties described below, together with all of the other information in this Annual Report on
Form  10-K.  If  any  of  the  following  risks  are  realized,  our  business,  financial  condition,  results  of  operations  and  prospects  could  be
adversely affected. The risks described below are not the only risks facing our company. Risks and uncertainties not currently known to us or
that we currently deem to be immaterial also may adversely affect our business, financial condition, results of operations and/or prospects.

Risks Related to Our Financial Condition and Capital Requirements

We  have  incurred  significant  losses  and  negative  cash  flows  from  operations  since  our  inception  and  expect  to  continue  to  incur
significant losses and negative cash flows from operations for at least the next 12 months.

We are a late clinical-stage biopharmaceutical company and we have incurred net losses in each year since our inception in January 5, 2010,
including net losses of $53.2 million and $35.2 million for the years ended September 30, 2021 and 2020, respectively.

We  have  devoted  substantially  all  of  our  financial  resources  to  identify,  develop  and  manufacture  our  product  candidates,  including
conducting,  among  other  things,  analytical  characterization,  process  development  and  manufacture,  formulation  and  clinical  trials,
regulatory filing and communication activities and providing general and administrative support for these operations. To date, none of our
product candidates have been approved for sale and we have financed our operations primarily through the sale of equity securities and debt
financings, as well as to a limited degree, payments under our co-development and license agreements. The amount of our future net losses
will  depend,  in  part,  on  our  ability  to  generate  revenue  from  product  sales,  the  rate  of  our  future  expenditures  and  our  ability  to  obtain
funding  through  equity  or  debt  financing  or  our  ability  to  enter  into  and  receive  funding  under  strategic  licensing  or  co-development
collaborations.

We expect to continue to incur significant expenses and operating losses for at least the next 12 months. We anticipate that our expenses may
increase substantially if and as we:

● prepare to launch and market ONS-5010 (LYTENAVA (bevacizumab-vikg)), if approved;

● continue the clinical development of ONS-5010;

● advance ONS-5010 into additional clinical trials;

● change  or  add  contract  manufacturing  providers,  clinical  research  service  providers,  testing  laboratories,  device  suppliers,  legal

service providers or other vendors or suppliers;

● seek regulatory and marketing approvals for ONS-5010 in the United States and other markets if we successfully complete clinical

trials;

● establish  a  sales,  marketing  and  distribution  infrastructure  to  commercialize  any  products  for  which  we  may  obtain  marketing

approval and for which we retain such rights;

● seek to identify, assess, acquire or develop other product candidates that may be complementary to ONS-5010;

● make upfront, milestone, royalty or other payments under any license agreements;

● seek to create, maintain, protect and expand our intellectual property portfolio;

● engage in litigation, including patent litigation, with respect to our product candidates;

● seek to attract and retain skilled personnel;

21

Table of Contents

● create additional infrastructure to support our operations as a public company and any future commercialization efforts; and

● experience  any  delays  or  encounter  issues  with  any  of  the  above,  including  but  not  limited  to  failed  clinical  trials,  conflicting
results,  safety  issues  or  regulatory  challenges  that  may  require  longer  follow-up  of  existing  studies,  additional  major  studies  or
additional supportive studies in order to pursue marketing approval.

Our failure to become and remain profitable would decrease our value and could impair our ability to raise capital, maintain our research and
development efforts, expand our business or continue our operations. A decline in our value could also cause you to lose all or part of your
investment.

We have chosen to not seek forgiveness of our Paycheck Protection Program, or PPP, loan, but our application for the PPP loan could in
the future be determined to have been impermissible or could result in damage to our reputation.

On May 4, 2020, we received proceeds of $0.9 million from a loan under the Paycheck Protection Program, or PPP, of the Coronavirus Aid,
Relief, and Economic Security Act, the CARES Act, which we used to maintain payroll and make lease and utility payments. The PPP loan
matures on May 2, 2022 and bears annual interest at a rate of 1% per annum. Commencing October 15, 2021, we started paying the lender
equal monthly payments of principal and interest as required to fully amortize by May 2, 2022 any principal amount outstanding on the PPP
loan as of October 15, 2021. A portion of the PPP loan may be forgiven upon documentation of expenditures in accordance with the Small
Business Administration, or SBA, requirements and in compliance with the CARES Act. We will be required to repay any portion of the
outstanding principal that is not forgiven, along with accrued interest, in accordance with the amortization schedule described above, and we
cannot provide any assurance that we will be eligible for loan forgiveness or that any amount of the PPP loan will ultimately be forgiven by
the SBA.

To obtain the PPP loan, we were required to certify, among other things, that the current economic uncertainty made the request necessary to
support  our  ongoing  operations.  We  made  this  certification  in  good  faith  after  analyzing,  among  other  things,  our  financial  situation  and
access to alternative forms of capital, and believe that we satisfied all eligibility criteria, and that our receipt of the PPP loan is consistent
with the broad objectives of the PPP. However, recent guidance stated that it is unlikely that a public company with substantial market value
and access to capital markets will be able to make the required certification in good faith. The lack of clarity regarding loan eligibility under
the PPP has resulted in significant media coverage and controversy with respect to public companies applying for and receiving loans. If,
despite  our  good-faith  belief  that  we  satisfy  all  eligibility  requirements  for  the  PPP  loan,  we  could  be  subject  to  penalties,  including
significant civil, criminal and administrative penalties, and be required to repay the PPP loan in its entirety if we were later determined to
have violated any of the laws or governmental regulations that apply to us in connection with the loan, such as the False Claims Act, or it is
otherwise determined that we were ineligible to receive the PPP loan. In addition, our receipt of the PPP loan may result in adverse publicity
and damage to our reputation, and a review or audit by the SBA or other government entity or claims under the False Claims Act could
consume significant financial and management resources.

We have never generated any revenue from product sales and may never be profitable.

Although  we  have  received  upfront  and  milestone  payments  from  our  license  and  collaboration  agreements  for  our  inactive  biosimilar
development programs, we have no products approved for commercialization and have never generated any revenue from product sales. Our
ability  to  generate  revenue  and  achieve  profitability  depends  on  our  ability,  alone  or  with  strategic  collaboration  partners,  to  successfully
complete the development of, and obtain the regulatory and marketing approvals necessary to commercialize, ONS-5010 for the treatment of
wet  age  related  macular  degeneration,  or  wet  AMD,  and  our  other  targeted  indications,  and  as  appropriate,  any  of  our  other  product
candidates. We currently estimate that we could potentially begin generating revenue from product sales in the first half of calendar 2023,
but this depends heavily on our success in many areas, including but not limited to:

● completing  clinical  development  of  ONS-5010  for  the  treatment  of  wet  AMD  and  the  other  targeted  indications,  and  any  other

product candidates we may develop in the future;

22

Table of Contents

● obtaining  regulatory  and  marketing  approvals  for  ONS-5010  and  any  other  product  candidates  for  which  we  or  our  partners

complete clinical trials;

● retaining  our  manufacturing  partner  for  ONS-5010  and  any  approved  product  candidates  to  support  clinical  development,

regulatory requirements and the market demand for any such approved product candidates;

● launching and commercializing ONS-5010 and any other product candidates for which we or our partners obtain regulatory and

marketing approval;

● obtaining third-party coverage and adequate reimbursements for our products;

● obtaining  market  acceptance  of  ONS-5010  and  any  other  product  candidates  for  which  we  obtain  regulatory  and  marketing

approval as viable treatment options;

● negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter;

● maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how;

and

● attracting, hiring and retaining qualified personnel.

Even if ONS-5010 or one or more of our other product candidates is approved for commercialization, we anticipate incurring significant
costs  to  commercialize  any  such  product.  Our  expenses  could  increase  beyond  our  expectations  if  we  are  required  by  the  U.S.  Food  and
Drug Administration, or the FDA, the European Medicines Agency, or the EMA, other regulatory agencies, domestic or foreign, or by any
unfavorable  outcomes  in  intellectual  property  litigation  filed  against  us,  to  change  our  manufacturing  processes  or  assays  or  to  perform
clinical, preclinical or other types of studies in addition to those that we currently anticipate. In cases where we are successful in obtaining
regulatory approvals to market one or more of our product candidates, our revenue will be dependent, in part, upon:

● the size of the markets in the territories for which we gain regulatory approval;

● the number of competitors in such markets;

● the market acceptance of our products;

● the accepted price for the product;

● the ability to obtain coverage and adequate reimbursement for the product;

● the quality and performance of our products, including the relative safety and efficacy; and

● whether we own, or have partnered, the commercial rights for that territory.

If the market for ONS-5010 or any other product candidates we may develop in the future, or our share of that market, is not as large as we
expect,  the  number  of  indications  approved  by  regulatory  authorities  is  narrower  than  we  expect  or  the  target  population  for  treatment  is
narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of such products to
become profitable. If we are unable to successfully complete development and obtain regulatory approval for ONS-5010, our business will
be harmed.

23

Table of Contents

We  will  need  to  raise  substantial  additional  funding  to  complete  the  development  of  ONS-5010  (LYTENAVA  (bevacizumab-vikg))  and
support our operations after the planned launch in early 2023 until we are able to generate sufficient revenue. This additional funding
may not be available on acceptable terms or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or
terminate our product development efforts or other operations.

Developing  product  candidates  is  an  expensive,  risky  and  lengthy  process.  We  are  currently  advancing  ONS-5010  through  clinical
development.  Our  expenses  may  increase  in  connection  with  our  ongoing  activities,  particularly  as  we  continue  the  research  and
development of, continue and initiate clinical trials of, and seek marketing approval for, ONS-5010.

As of September 30, 2021, our cash and cash equivalents balance was $14.5 million. We expect that our current cash resources together with
the $3.5 million in net proceeds from the sale of shares of common stock under our under its "at-the-market" equity offering program (the
"ATM Offering") in October 2021 and November 2021, $10.0 million in net proceeds from issuance of an unsecured promissory note in
November  2021,  and  net  proceeds  of  $54.0  million  received  in  November  2021  from  the  public  offering  will  be  sufficient  to  fund  our
operations through the anticipated approval of the ONS-5010 BLA expected in the first calendar quarter of 2023. We will require substantial
additional capital to commercialize ONS-5010. Although we continue to pursue discussions with potential strategic partners for ONS-5010,
there  is  no  guarantee  that  we  will  be  successful  in  reaching  any  such  agreement,  nor  that  such  agreement,  if  successful,  will  cover  the
anticipated commercialization costs for ONS-5010. Our operating plan may also change as a result of many factors currently unknown to us,
and  we  may  need  to  seek  additional  funds  sooner  than  planned,  through  public  or  private  equity  or  debt  financings,  third-party  funding,
marketing  and  distribution  arrangements,  as  well  as  through  other  collaborations,  strategic  alliances  and  licensing  arrangements,  or  a
combination  of  these  approaches.  Even  if  we  believe  we  have  sufficient  funds  for  our  current  or  future  operating  plans,  we  may  seek
additional capital if market conditions are favorable or if we have specific strategic considerations.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to
develop  and  commercialize  our  product  candidates.  In  addition,  we  cannot  guarantee  that  future  financing  will  be  available  in  sufficient
amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may negatively impact the holdings or the rights of our
stockholders, and the issuance of additional securities, whether equity or debt, by us or the possibility of such issuance may cause the market
price of our securities to decline. The incurrence of indebtedness could result in increased fixed payment obligations and we may be required
to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or
license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We may
be required to relinquish rights to some of our technologies or product candidates or otherwise agree to terms unfavorable to us, in order to
obtain necessary funding, any of which may harm our business, operating results and prospects. Even if we believe we have sufficient funds
for  our  current  or  future  operating  plans,  we  may  seek  additional  capital  if  market  conditions  are  favorable  or  for  specific  strategic
considerations. If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or
more of our development programs or the commercialization of any product candidates. We may also be unable to expand our operations or
otherwise capitalize on our business opportunities, as desired, which could harm our business, financial condition and results of operations.

24

Table of Contents

Raising  additional  capital  may  cause  dilution  to  our  securityholders,  restrict  our  operations  or  require  us  to  relinquish  rights  to  our
technologies or product candidates.

Until such time, if ever, as we can generate sufficient product revenues, we expect to finance our cash needs through a combination of equity
and debt financings, as well as selectively continuing to enter into collaborations, strategic alliances and licensing arrangements. We do not
currently  have  any  committed  external  source  of  funding.  To  the  extent  that  we  raise  additional  capital  through  the  sale  of  equity  or
convertible  debt  securities,  your  ownership  interest  will  be  diluted,  and  the  terms  of  these  securities  may  include  liquidation  or  other
preferences that adversely affect your rights as a securityholder. Debt financing, if available, may involve agreements that include covenants
limiting  or  restricting  our  ability  to  take  specific  actions,  such  as  incurring  additional  debt,  making  capital  expenditures  or  declaring
dividends, and may be secured by all or a portion of our assets.

If we secure development funds for ONS-5010 or any future product candidate through entering into collaborations, strategic alliances or
licensing arrangements with third parties, we may have to relinquish additional valuable rights to our technologies, future revenue streams,
research programs or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional
funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or
grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, terminate product
development or future commercialization efforts or to cease operations altogether.

Risks Related to the Discovery and Development of Our Product Candidates

We  are  highly  dependent  on  the  success  of  ONS-5010,  our  only  product  candidate  in  active  development,  and  if  ONS-5010  does  not
successfully receive regulatory approval, or is not successfully commercialized, our business may be harmed.

We currently have no products that are approved for commercial sale and may never be able to develop marketable products. We expect that
a substantial portion of our efforts and expenditures in the foreseeable future will be devoted to the advancement of ONS-5010, our only
product candidate in active development, through clinical trials and the regulatory approval process, and we also expect that we will need to
devote significant effort to the commercialization of ONS-5010 following regulatory approval, if received. We cannot assure you that we
will be able to successfully obtain regulatory approval and develop sufficient commercial capabilities for ONS-5010 if and when necessary.
Accordingly, our business currently depends heavily on the successful regulatory approval and commercialization of ONS-5010.

We  cannot  be  certain  that  ONS-5010  will  receive  regulatory  approval  or  be  successfully  commercialized  even  if  we  receive  regulatory
approval in our targeted markets. The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of products are,
and will remain, subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries that
each have differing regulations. We are not permitted to market ONS-5010 in the United States until we receive approval from the FDA, or
in any foreign country until we receive the requisite approvals from the appropriate authorities in such countries for marketing authorization.

There  can  be  no  assurance  that  our  completed,  or  planned  future,  clinical  trials  of  ONS-5010  for  wet  AMD  will  ultimately  meet  the
requirements sufficient for us to receive regulatory approval. We have not submitted a biologics license application, or BLA, for any product
candidate  to  the  FDA  or  any  comparable  application  to  any  other  regulatory  authority.  Obtaining  approval  from  the  FDA  or  similar
regulatory approval is an extensive, lengthy, expensive and inherently uncertain process, and the FDA or other foreign regulatory authorities
may delay, limit or deny approval of ONS-5010 for many reasons, including:

● we may not be able to demonstrate that ONS-5010 is effective as a treatment for any of our currently targeted indications to the

satisfaction of the FDA or other relevant regulatory authorities;

● the relevant regulatory authorities may require additional pre-approval studies or clinical trials, which would increase our costs and

prolong our development timelines;

25

Table of Contents

● the results of our clinical trials may not meet the level of statistical or clinical significance required by the FDA or other relevant

regulatory authorities for marketing approval;

● the  FDA  or  other  relevant  regulatory  authorities  may  disagree  with  the  number,  design,  size,  conduct  or  implementation  of  our

clinical trials;

● the  FDA  or  other  relevant  regulatory  authorities  may  not  find  the  data  from  nonclinical  studies  or  clinical  trials  sufficient  to

demonstrate that the clinical and other benefits of these products outweigh their safety risks;

● the FDA or other relevant regulatory authorities may disagree with our interpretation of data or significance of results from the
nonclinical studies and clinical trials of ONS-5010 and any future product candidate, or may require that we conduct additional
trials;

● the FDA or other relevant regulatory authorities may require development of a risk evaluation and mitigation strategy, or REMS, or

its equivalent, as a condition of approval;

● the FDA or other relevant regulatory authorities may require additional post-marketing studies, which would be costly;

● the FDA or other relevant regulatory authorities may identify deficiencies in the manufacturing processes or facilities of our third-

party manufacturers; or

● the FDA or other relevant regulatory authorities may change their approval policies or adopt new regulations.

Due  to  our  limited  resources  and  access  to  capital,  we  have,  and  will  continue  to  need  to,  prioritize  development  of  certain  product
candidates; and these decisions may prove to have been wrong and may harm our business.

Because we have limited resources and access to capital to fund our operations, we must decide which product candidates to pursue and the
amount of resources to allocate to each. We are currently focusing only on one active development program, ONS-5010, and are no longer
actively developing ONS-3010, ONS-1045 or the other biosimilar product candidates in our pipeline. We currently do not intend to actively
develop such biosimilar product candidates. Our decisions concerning the allocation of research, collaboration, management and financial
resources toward particular product candidates or therapeutic areas may not lead to the development of viable commercial products and may
divert  resources  away  from  better  opportunities.  Similarly,  our  potential  decisions  to  delay,  terminate  or  collaborate  with  third  parties  in
respect to certain product development programs may also prove not to be optimal and could cause us to miss valuable opportunities. If we
make incorrect determinations regarding the market potential of our product candidates or misread trends in the pharmaceutical industry, our
business, financial condition and results of operations could be harmed.

Clinical drug development is a lengthy and expensive process and we may encounter substantial delays in our clinical trials or may fail
to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.

ONS-5010, our only product candidate in active development, will require extensive additional clinical testing before we are prepared to
submit an application for regulatory approval for other indications besides wet AMD. Before obtaining marketing approval from regulatory
authorities for the sale of our product candidates, we and any collaboration partners must conduct clinical trials to demonstrate the safety and
efficacy of the product candidates in humans.

We cannot guarantee that any future clinical trials will be conducted as planned or completed on schedule, if at all. For example, enrollment
in the NORSE ONE and NORSE TWO studies was delayed from our original expectations. We could experience similar enrollment delays
in the remaining NORSE trials (FOUR, FIVE, SIX and SEVEN) once they are initiated. A failure of one or more clinical trials can occur at
any stage of testing, and our future clinical trials may not be

26

Table of Contents

successful. Events that may prevent successful or timely completion of clinical development include but are not limited to:

● inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of human clinical

trials;

● delays in reaching a consensus with regulatory agencies on study design;

● delays  in  reaching  agreement  on  acceptable  terms  with  prospective  contract  research  organizations,  or  CROs,  and  clinical  trial
sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical trial
sites;

● delays in obtaining required IRB approval at each clinical trial site;

● imposition of a clinical hold by regulatory agencies, after review of an investigational new drug, or IND, application or amendment
or equivalent filing, or an inspection of our clinical trial operations or trial sites, or as a result of adverse events reported during a
clinical trial;

● further delays in recruiting suitable patients to participate in our clinical trials;

● difficulty collaborating with patient groups and investigators;

● failure by our CROs, other third parties or us to adhere to clinical trial requirements;

● failure to perform in accordance with the FDA’s good clinical practice, or GCP, requirements or applicable regulatory guidelines in

other countries;

● delays  in  having  subjects  complete  participation  in  a  study  or  return  for  post-treatment  follow-up,  or  subjects  dropping  out  of  a

study;

● occurrence of adverse events associated with the product candidate that are viewed to outweigh its potential benefits;

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

● the cost of clinical trials of our product candidates being greater than we anticipate;

● clinical trials of our product candidates producing negative or inconclusive results, which may result in us deciding or regulators

requiring us to conduct additional clinical trials or abandon product development programs; and

● delays in manufacturing, testing, releasing, validating or importing/exporting and/or distributing sufficient stable quantities of our

product candidates for use in clinical trials or the inability to do any of the foregoing.

Any inability to successfully complete preclinical studies and clinical development could result in additional costs to us or impair our ability
to  generate  revenue.  In  addition,  if  we  make  manufacturing  or  formulation  changes  to  our  product  candidates,  we  may  need  to  conduct
additional clinical trials to bridge our modified product candidates to earlier versions.

The results of previous clinical trials may not be predictive of future results, and the results of our current and planned clinical trials
may not satisfy the requirements of the FDA, EMA or other foreign regulatory agencies.

Clinical failure can occur at any stage of clinical development. Clinical trials may produce negative or inconclusive results, and we or any of
our current and future collaborators may decide, or regulators may require us, to conduct additional

27

Table of Contents

clinical or preclinical testing. We will be required to demonstrate with substantial evidence through well controlled clinical trials that our
product  candidates  are  as  safe  and  effective  for  use  in  a  specific  patient  population  before  we  can  seek  regulatory  approvals  for  their
commercial sale. Success in early clinical trials does not mean that future larger registration clinical trials will be successful because product
candidates in later-stage clinical trials may fail to demonstrate equivalent safety and efficacy to the satisfaction of the FDA, EMA and other
foreign regulatory agencies despite having progressed through initial clinical trials. Product candidates that have shown promising results in
early clinical trials may still fail in subsequent confirmatory clinical trials. Similarly, the outcome of preclinical testing and early clinical
trials may not be predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results.
A  number  of  companies  in  the  pharmaceutical  industry,  including  those  with  greater  resources  and  experience  than  us,  have  suffered
significant setbacks in advanced clinical trials, even after obtaining promising results in earlier clinical trials.

In addition, the design of a clinical trial can determine whether its results will support approval of a product and flaws in the design of a
clinical trial may not become apparent until the clinical trial is well advanced. We may be unable to design and execute a clinical trial to
support regulatory approval. In some instances, there can be significant variability in safety or efficacy results between different trials of the
same product candidate due to numerous factors, including but not limited to changes in trial protocols, differences in size and type of the
patient populations, adherence to the dosing regimen and the rate of dropout among clinical trial participants.

Further, our product candidates may not be approved even if they achieve their primary endpoints in Phase 3 clinical trials or registration
trials.  The  FDA,  EMA  and  other  foreign  regulatory  agencies  may  disagree  with  our  trial  design  and  our  interpretation  of  data  from
preclinical  studies  and  clinical  trials.  In  addition,  any  of  these  regulatory  authorities  may  change  the  requirements  for  the  approval  of  a
product candidate even after reviewing and providing comments or advice on a protocol for a Phase 3 clinical trial that has the potential to
result in FDA or other agencies’ approval. We initially intend to seek approval for ONS-5010 for the treatment of wet AMD. Any of the
regulatory  authorities  may  approve  a  product  candidate  for  fewer  indications  than  we  request  or  may  grant  approval  contingent  on  the
performance of costly post-marketing clinical trials.

Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval,
limit the commercial profile of an approved label or result in significant negative consequences following marketing approval, if granted.

As with most pharmaceutical products, use of our product candidates could be associated with side effects or adverse events, which can vary
in severity and frequency. Side effects or adverse events associated with the use of our product candidates may be observed at any time,
including in clinical trials or when a product is commercialized. Undesirable side effects caused by our product candidates could cause us or
regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory
approval by the FDA or other foreign authorities. Results of our trials could reveal a high and unacceptable severity and prevalence of side
effects,  toxicity  or  other  safety  issues,  and  could  require  us  to  perform  additional  studies  or  halt  development  or  sale  of  these  product
candidates  or  expose  us  to  product  liability  lawsuits  that  will  harm  our  business.  In  such  an  event,  we  may  be  required  by  regulatory
agencies to conduct additional animal or human studies regarding the safety and efficacy of our product candidates that we have not planned
or anticipated or our studies could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to
cease further development of or deny or withdraw approval of our product candidates for any or all targeted indications. There can be no
assurance that we will resolve any issues related to any product-related adverse events to the satisfaction of the FDA or any other regulatory
agency in a timely manner, if ever, which could harm our business, prospects and financial condition.

Additionally, product quality characteristics have been shown to be sensitive to changes in process conditions, manufacturing techniques,
equipment  or  sites  and  other  related  considerations,  and  as  such,  any  manufacturing  process  changes  we  implement  prior  to  or  after
regulatory approval could impact product safety.

28

Table of Contents

Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects
caused by such products, a number of potentially significant negative consequences could result, including but not limited to:

● regulatory authorities may withdraw approvals of such product;

● regulatory authorities may require additional warnings on the label;

● we may be required to create a REMS plan, which could include a medication guide outlining the risks of such side effects for

distribution to patients, a communication plan for healthcare providers and/or other elements to assure safe use;

● we could be sued and held liable for harm caused to patients; and

● our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and
could significantly harm our business, results of operations and prospects.

If we receive approval, regulatory agencies including the FDA, EMA and other foreign regulatory agency regulations require that we report
certain information about adverse medical events if those products may have caused or contributed to those adverse events. The timing of
our obligation to report would be triggered by the date we become aware of the adverse event as well as the nature of the event. We may fail
to report adverse events we become aware of within the prescribed timeframe. We may also fail to appreciate that we have become aware of
a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed
in time from the use of our products. If we fail to comply with our reporting obligations, the FDA, EMA or other foreign regulatory agencies
could take action including but not limited to criminal prosecution, the imposition of civil monetary penalties, seizure of our products or
delay in approval or clearance of future products.

If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit commercialization of
our current or future product candidates, and our existing insurance coverage may not be sufficient to satisfy any liability that may arise.

Drug-related side effects could affect patient recruitment for clinical trials, the ability of enrolled patients to complete our studies or result in
potential product liability claims. We currently carry product liability insurance in the amount of $10.0 million per product candidate and we
are required to maintain product liability insurance pursuant to certain of our license agreements. We may not be able to maintain insurance
coverage  at  a  reasonable  cost  or  in  sufficient  amounts  to  protect  us  against  losses  due  to  liability.  A  successful  product  liability  claim  or
series  of  claims  brought  against  us  could  negatively  impact  our  results  of  operations  and  business.  In  addition,  regardless  of  merit  or
eventual outcome, product liability claims may result in impairment of our business reputation, withdrawal of clinical trial participants, costs
due  to  related  litigation,  distraction  of  management’s  attention  from  our  primary  business,  initiation  of  investigations  by  regulators,
substantial monetary awards to patients or other claimants, the inability to commercialize our product candidates and decreased demand for
our product candidates, if approved for commercial sale. Furthermore, we may also not be able to take advantage of limitations on product
liability lawsuits that apply to generic drug products, which could increase our exposure to liability for products deemed to be dangerous or
defective.

Failure  to  obtain  regulatory  approval  in  any  targeted  jurisdiction  would  prevent  us  from  marketing  our  products  to  a  larger  patient
population and reduce our commercial opportunities.

Neither we nor any collaboration partners have initiated marketing efforts in any jurisdiction. In order to market our products in Europe, the
United  States  and  other  jurisdictions,  we  and  any  collaboration  partners  must  obtain  separate  regulatory  approvals  and  comply  with
numerous  and  varying  regulatory  requirements.  The  EMA  is  responsible  for  the  regulation  and  recommendation  for  approval  of  human
medicines in the E.U. This procedure results in a single marketing

29

Table of Contents

authorization that is valid in all E.U. countries, as well as in Iceland, Liechtenstein and Norway. The time required to obtain approval abroad
may differ from that required to obtain FDA approval. The foreign regulatory approval process may include all of the risks associated with
obtaining  FDA  approval  and  we  may  not  obtain  foreign  regulatory  approvals  on  a  timely  basis,  if  at  all.  Approval  by  the  FDA  does  not
ensure approval by regulatory authorities in other countries, and approval by one foreign regulatory authority does not ensure approval by
regulatory  authorities  in  other  foreign  countries  or  by  the  FDA.  We  or  any  collaboration  partners  may  not  be  able  to  file  for  regulatory
approvals and may not receive necessary approvals to commercialize our products within Europe, the United States or in other jurisdictions.
Failure to obtain these approvals would harm our business, financial condition and results of operations.

Even if we obtain regulatory approval for a product candidate, our products will remain subject to regulatory scrutiny.

If ONS-5010, or any other product candidates we may pursue, are approved, they will be subject to ongoing regulatory requirements for
manufacturing,  labeling,  packaging,  storage,  advertising,  promotion,  sampling,  record-keeping,  conduct  of  post-marketing  studies  and
submission  of  safety,  efficacy  and  other  post-market  information,  including  both  federal  and  state  requirements  in  the  United  States  and
requirements of comparable foreign regulatory authorities.

Manufacturers  and  manufacturing  facilities  are  required  to  comply  with  extensive  FDA,  and  comparable  foreign  regulatory  authority,
requirements, including ensuring that quality control and manufacturing procedures conform to current Good Manufacturing Practices, or
cGMP,  regulations.  As  such,  our  current  and  future  manufacturing  partners  will  be  subject  to  continual  review  and  inspections  to  assess
compliance with cGMP and adherence to commitments made in any non-disclosure agreement, BLA or marketing authorization application.
Accordingly, we and our collaborators and suppliers must continue to expend time, money and effort in all areas of regulatory compliance,
including manufacturing, production and quality control.

Any  regulatory  approvals  that  we  or  any  collaboration  partners  receive  for  our  product  candidates  may  be  subject  to  limitations  on  the
approved indicated uses for which the product may be marketed or to the conditions of approval or may contain requirements for potentially
costly additional clinical trials and surveillance to monitor the safety and efficacy of the product candidate. We will be required to report
certain adverse reactions and production problems, if any, to the FDA and comparable foreign regulatory authorities. Any new legislation
addressing drug safety issues could result in delays in product development or commercialization or increased costs to assure compliance.
We  will  have  to  comply  with  requirements  concerning  advertising  and  promotion  for  our  products.  Promotional  communications  with
respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the
product’s approved label. As such, we are not allowed to promote our products for indications or uses for which they do not have approval.
If our product candidates are approved, we must submit new or supplemental applications and obtain approval for certain changes to the
approved products, product labeling or manufacturing process. We could also be asked to conduct post-marketing clinical trials to verify the
safety and efficacy of our products in general or in specific patient subsets. An unsuccessful post-marketing study or failure to complete such
a study could result in the withdrawal of marketing approval.

If a regulatory agency discovers previously unknown problems with an approved product, such as adverse events of unanticipated severity
or  frequency  or  problems  with  our  manufacturing  facilities  or  disagrees  with  the  promotion,  marketing  or  labeling  of  a  product,  such
regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If we fail to
comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things:

● issue untitled and warning letters;

● impose civil or criminal penalties;

● suspend or withdraw regulatory approval;

● suspend any of our ongoing clinical trials;

● refuse to approve pending applications or supplements to approved applications submitted by us;

30

Table of Contents

● impose restrictions on our operations, including closing our manufacturing facilities; or

● seize or detain products or require a product recall.

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

The development and commercialization of pharmaceutical products is subject to extensive regulation, and we may not obtain regulatory
approvals for ONS-5010 in any of the indications for which we plan to develop it, or any future product candidates, on a timely basis or
at all.

The  clinical  development,  manufacturing,  labeling,  packaging,  storage,  recordkeeping,  advertising,  promotion,  export,  import,  marketing,
distribution,  adverse  event  reporting,  including  the  submission  of  safety  and  other  post-marketing  information  and  reports,  and  other
possible activities relating to ONS-5010, as well as any other product candidate that we may develop in the future, are subject to extensive
regulation. Marketing approval of biologics in the United States requires the submission of a BLA to 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 trials 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. Despite the time and expense associated with preclinical
studies and clinical trials, failure can occur at any stage. The results of preclinical and early clinical trials of ONS-5010 or any future product
candidates may not be predictive of the results of our later-stage clinical trials.

Clinical trial failure may result from a multitude of factors including flaws in trial design, dose selection, placebo effect, patient enrollment
criteria and failure to demonstrate favorable safety or efficacy traits, and failure in clinical trials can occur at any stage. Companies in the
biopharmaceutical industry frequently suffer setbacks in the advancement of clinical trials due to lack of efficacy or adverse safety profiles,
notwithstanding promising results in earlier trials. Based upon negative or inconclusive results, we may decide, or regulators may require us,
to  conduct  additional  clinical  trials  or  preclinical  studies.  In  addition,  data  obtained  from  clinical  trials  are  susceptible  to  varying
interpretations,  and  regulators  may  not  interpret  our  data  as  favorably  as  we  do,  which  may  further  delay,  limit  or  prevent  marketing
approval.

The FDA could delay, limit or deny approval of a product candidate for many reasons, including because they:

● may not deem our product candidate to be adequately safe and effective;

● may not agree that the data collected from clinical trials are acceptable or sufficient to support the submission of a BLA or other
submission or to obtain regulatory approval, and may impose requirements for additional preclinical studies or clinical trials;

● may determine that adverse events experienced by participants in our clinical trials represents an unacceptable level of risk;

● may determine that population studied in the clinical trial may not be sufficiently broad or representative to assure safety in the full

population for which we seek approval;

31

Table of Contents

● may  not  accept  clinical  data  from  trials  which  are  conducted  at  clinical  facilities  or  in  countries  where  the  standard  of  care  is

potentially different from that of the United States;

● may disagree regarding the formulation, labeling and/or the specifications;

● may not approve the manufacturing processes or facilities associated with our product candidate;

● may change approval policies or adopt new regulations; or

● may not accept a submission due to, among other reasons, the content or formatting of the submission.

Generally,  public  concern  regarding  the  safety  of  pharmaceutical  products  could  delay  or  limit  our  ability  to  obtain  regulatory  approval,
result in the inclusion of unfavorable information in our labeling, or require us to undertake other activities that may entail additional costs.
We have not obtained FDA approval for any product. This lack of experience may impede our ability to obtain FDA approval in a timely
manner, if at all, for ONS-5010.

If we experience delays in obtaining approval or if we fail to obtain approval of ONS-5010, our commercial prospects will be harmed and
our ability to generate revenues will be materially impaired which would adversely affect our business, prospects, financial condition and
results of operations.

Any delays in the commencement or completion, or termination or suspension, of our planned or future clinical trials could result in
increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects.

Any  delays  in  the  commencement  or  completion,  or  termination  or  suspension,  of  our  planned  or  future  clinical  trials  could  result  in
increased costs to us, delay or limit our ability to generate revenue and adversely affect our commercial prospects. Before we can initiate
clinical trials in the United States in any distinct indication, we must submit the results of preclinical and/or other studies to the FDA along
with other information, including information about chemistry, manufacturing and controls and our proposed clinical trial protocol, as part of
an IND or similar regulatory filing.

Before obtaining marketing approval from the FDA for the sale of a product candidate in any indication, we must conduct extensive clinical
studies to demonstrate its safety and efficacy. Clinical testing is expensive, time consuming and uncertain as to outcome. In addition, we
expect to rely in part on preclinical, clinical and quality data generated by CROs, and other third parties for regulatory submissions for ONS-
5010.  While  we  have  or  will  have  agreements  governing  these  third  parties’  services,  we  have  limited  influence  over  their  actual
performance. If these third parties do not make data available to us, or, if applicable, make regulatory submissions in a timely manner, in
each  case  pursuant  to  our  agreements  with  them,  our  development  programs  may  be  significantly  delayed  and  we  may  need  to  conduct
additional studies or collect additional data independently. In either case, our development costs would increase.

The FDA may require us to conduct additional studies for a product candidate before it allows us to initiate clinical trials under any IND,
which  could  lead  to  additional  delays  and  increase  the  costs  of  our  development  programs.  Any  such  delays  in  the  commencement  or
completion  of  our  planned  or  future  clinical  trials  could  significantly  affect  our  product  development  costs.  We  do  not  know  whether
planned trials will begin on time or be completed on schedule, if at all. The commencement and completion of clinical trials can be delayed
for a number of reasons, including delays related to:

● the FDA disagreeing as to the design or implementation of our clinical studies;

● obtaining FDA authorizations to commence a trial or reaching a consensus with the FDA on trial design;

● any failure or delay in reaching an agreement with CROs and clinical trial sites, the terms of which can be subject to extensive

negotiation and may vary significantly among different CROs and trial sites;

● obtaining approval from one or more IRBs;

32

Table of Contents

● IRBs  refusing  to  approve,  suspending  or  terminating  the  trial  at  an  investigational  site,  precluding  enrollment  of  additional

subjects, or withdrawing their approval of the trial;

● changes to clinical trial protocol;

● clinical sites deviating from trial protocol or dropping out of a trial;

● manufacturing  sufficient  quantities  of  product  candidate  or  obtaining  sufficient  quantities  of  combination  therapies  for  use  in

clinical trials;

● subjects failing to enroll or remain in our trial at the rate we expect, or failing to return for post-treatment follow-up, including as a

result of the ongoing COVID-19 global pandemic;

● subjects choosing an alternative treatment, or participating in competing clinical trials;

● lack of adequate funding to continue the clinical trial;

● subjects experiencing severe or unexpected drug-related adverse effects;

● occurrence of serious adverse events in trials of the same class of agents conducted by other companies;

● selection of clinical end points that require prolonged periods of clinical observation or analysis of the resulting data;

● a  facility  manufacturing  our  product  candidates  or  any  of  their  components  being  ordered  by  the  FDA  to  temporarily  or
permanently  shut  down  due  to  violations  of  current  good  manufacturing  practice,  or  cGMP,  regulations  or  other  applicable
requirements, or infections or cross-contaminations of product candidates in the manufacturing process;

● any changes to our manufacturing process that may be necessary or desired;

● third-party clinical investigators losing the licenses or permits necessary to perform our clinical trials, not performing our clinical
trials on our anticipated schedule or consistent with the clinical trial protocol, good clinical practices, or GCP, or other regulatory
requirements;

● third-party contractors not performing data collection or analysis in a timely or accurate manner; or

● third-party  contractors  becoming  debarred  or  suspended  or  otherwise  penalized  by  the  FDA  or  other  government  or  regulatory
authorities for violations of regulatory requirements, in which case we may need to find a substitute contractor, and we may not be
able to use some or all of the data produced by such contractors in support of our marketing applications.

We could also encounter delays if a clinical trial is suspended or terminated by us, by the IRBs of the institutions in which such trials are
being conducted, by a Data Safety Monitoring Board for such trial or by the FDA.

Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in
accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA resulting
in  the  imposition  of  a  clinical  hold,  unforeseen  safety  issues  or  adverse  side  effects,  failure  to  demonstrate  a  benefit  from  using  a
pharmaceutical, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. In
addition, changes in regulatory requirements and policies may occur, and we may need to amend clinical trial protocols to comply with these
changes. Amendments may require us to resubmit our clinical trial protocols to IRBs for reexamination, which may impact the costs, timing
or successful completion of a clinical trial.

33

Table of Contents

Any delays in completing our clinical trials 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.

If we experience delays or difficulties in enrolling patients in our planned clinical trials, our receipt of necessary regulatory approval
could be delayed or prevented.

We may not be able to initiate or continue our planned clinical trials if we are unable to identify and enroll a sufficient number of eligible
patients  to  participate  in  these  trials  as  required  by  the  FDA.  Some  of  our  competitors  may  have  ongoing  clinical  trials  for  product
candidates that would treat the same indications as ONS-5010 or any future product candidates we may develop, and patients who would
otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates. Patient enrollment is
also affected by other factors, including:

● severity of the disease under investigation;

● our ability to recruit clinical trial investigators of appropriate competencies and experience;

● invasive procedures required to obtain evidence of the product candidate’s performance during the clinical trial;

● availability and efficacy of approved medications for the disease under investigation;

● eligibility criteria defined in the protocol for the trial in question;

● the size of the patient population required for analysis of the trial’s primary endpoints;

● perceived risks and benefits;

● efforts to facilitate timely enrollment in clinical trials;

● reluctance of physicians to encourage patient participation in clinical trials;

● the ability to monitor patients adequately during and after treatment;

● our ability to obtain and maintain patient consents; and

● proximity and availability of clinical trial sites for prospective patients.

These factors can be exacerbated by other situations, such as the ongoing COVID-19 global pandemic, which impacted enrollment in our
NORSE 2 clinical trial. Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays or may
require  us  to  abandon  one  or  more  clinical  trials  altogether.  Enrollment  delays  in  our  clinical  trials  may  result  in  increased  development
costs, which would cause the value of our company to decline and limit our ability to obtain additional financing.

34

Table of Contents

Adverse side effects or other safety risks associated with ONS-5010 or any future product candidate could delay or preclude approval,
cause us to suspend or discontinue clinical trials, abandon further development, limit the commercial profile of an approved label, or
result in significant negative consequences following marketing approval, if any.

As  is  the  case  with  pharmaceuticals  generally,  it  is  likely  that  there  may  be  side  effects  and  adverse  events  associated  with  a  product
candidate in planned clinical trials. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects
or unexpected characteristics. Undesirable side effects caused by a product candidate could result in the delay, suspension or termination of
clinical  trials  by  us  or  the  FDA  for  a  number  of  reasons.  If  we  elect  or  are  required  to  delay,  suspend  or  terminate  any  clinical  trial,  the
commercial prospects of ONS-5010 or any future product candidate will be harmed and our ability to generate product revenues from this
product candidate will be delayed or eliminated. Serious adverse events observed in clinical trials could hinder or prevent market acceptance
of ONS-5010 or any future product candidate. Any of these occurrences may harm our business, prospects, financial condition and results of
operations significantly.

Moreover, if ONS-5010 or any future product candidate is associated with undesirable side effects in clinical trials or have characteristics
that are unexpected, we may elect to abandon or limit its development to more narrow uses or subpopulations in which the undesirable side
effects  or  other  characteristics  are  less  prevalent,  less  severe  or  more  acceptable  from  a  risk-benefit  perspective,  which  may  limit  the
commercial  expectations,  if  approved.  We  may  also  be  required  to  modify  our  study  plans  based  on  findings  in  our  clinical  trials.  Many
biologics that initially showed promise in early stage testing have later been found to cause side effects that prevented further development.
In addition, regulatory authorities may draw different conclusions or require additional testing to confirm these determinations.

It is possible that as we test a product candidate in larger, longer and more extensive clinical trials including for additional indications, or as
the  use  of  ONS-5010  or  any  future  product  candidate  becomes  more  widespread  following  regulatory  approval,  illnesses,  injuries,
discomforts  and  other  adverse  events  that  were  observed  in  earlier  trials,  as  well  as  conditions  that  did  not  occur  or  went  undetected  in
previous trials, will be reported by patients. If such side effects become known later in development or upon approval, if any, such findings
may harm our business, financial condition and prospects significantly.

In  addition,  if  ONS-5010  or  any  future  product  candidate  receives  marketing  approval,  and  we  or  others  later  identify  undesirable  side
effects, a number of potentially significant negative consequences could result, including:

● regulatory authorities may withdraw approval of such product;

● we may be required to recall a product or change the way such product is administered to patients;

● regulatory authorities may require additional warnings on the label, such as a “black box” warning or a contraindication, or issue
safety  alerts,  Dear  Healthcare  Provider  letters,  press  releases  or  other  communications  containing  warnings  or  other  safety
information about the product;

● we may be required to implement a REMS, or create a medication guide outlining the risks of such side effects for distribution to

patients;

● additional restrictions may be imposed on the marketing or promotion of the particular product or the manufacturing processes for

the product or any component thereof;

● we could be sued and held liable for harm caused to patients;

● such product could become less competitive; and

● our reputation may suffer.

35

Table of Contents

Any of these events could prevent us from achieving or maintaining market acceptance of ONS-5010 or any future product candidate, if
approved, and could significantly harm our business, results of operations and prospects.

Risks Related to Commercialization of Our Product Candidates

We  face  intense  competition  and  rapid  technological  change  and  the  possibility  that  our  competitors  may  develop  therapies  that  are
similar,  more  advanced  or  more  effective  than  ours.  Other  products  may  be  approved  and  successfully  commercialized  before  ours,
which may adversely affect our financial condition and our ability to successfully commercialize our product candidates.

We expect to enter highly competitive pharmaceutical markets. Successful competitors in the pharmaceutical markets have demonstrated the
ability to effectively discover, obtain patents, develop, test and obtain regulatory approvals for products, as well as an ability to effectively
commercialize,  market  and  promote  approved  products.  Numerous  companies,  universities  and  other  research  institutions  are  engaged  in
developing,  patenting,  manufacturing  and  marketing  of  products  competitive  with  those  that  we  are  developing.  Many  of  these  potential
competitors  are  large,  experienced  pharmaceutical  companies  that  enjoy  significant  competitive  advantages,  such  as  substantially  greater
financial,  research  and  development,  manufacturing,  personnel  and  marketing  resources.  These  companies  also  have  greater  brand
recognition  and  more  experience  in  conducting  preclinical  testing  and  clinical  trials  of  product  candidates  and  obtaining  FDA  and  other
regulatory approvals of products.

We  have  competitors  both  in  the  United  States  and  internationally,  including  major  multinational  pharmaceutical  companies,  specialty
pharmaceutical companies and biotechnology companies. Some of the pharmaceutical and biotechnology companies we expect to compete
with  include,  for  example,  Novartis,  which  currently  markets  LUCENTIS  and  BEOVU  and  Regeneron,  with  their  product  Eylea,  all  of
which have been approved for use in patients with wet AMD. Furthermore, the cancer drug Avastin, sold by Roche, is used off-label in wet
AMD patients although it has not been approved for use in these patients. Our ONS-5010 is being developed as an approved alternative to
the  use  of  off-label  Avastin  as  well  as  the  much  more  expensive  approved  therapies.  In  addition,  these  companies  and  other,  smaller,
biotechnology and pharmaceutical companies are also developing new treatments for wet AMD and are at various stages of pre-clinical and
clinical development.

Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff
and experienced marketing and manufacturing organizations. Additional mergers and acquisitions in the pharmaceutical industry may result
in even more resources being concentrated in our competitors. As a result, these companies may obtain regulatory approval more rapidly
than we are able to and may be more effective in selling and marketing their products. Smaller or early-stage companies may also prove to
be significant competitors, particularly through collaborative arrangements with large, established companies, and we also compete against
such companies for resources from and in securing partnering arrangements with, such large, established companies. Our competitors may
succeed  in  developing,  acquiring  or  licensing  on  an  exclusive  basis,  products  that  are  more  effective  or  less  costly  than  any  product
candidate  that  we  may  develop;  they  may  also  obtain  patent  protection  that  could  block  our  products;  and  they  may  obtain  regulatory
approval,  product  commercialization  and  market  penetration  earlier  than  we  do.  Product  candidates  developed  by  our  competitors  may
render ONS-5010 and any of our other potential product candidates uneconomical, less desirable or obsolete, and we may not be successful
in marketing our product candidates against competitors.

We expect additional companies to seek approval to manufacture and market anti-VEGF therapies for ophthalmic indications. If other anti-
VEGF therapies are approved and successfully commercialized before ONS-5010, we may never achieve significant market share for this
product, our revenue would be reduced and, as a result, our business, prospects and financial condition could be harmed.

The commercial success of any current or future product candidate will depend upon the degree of market acceptance by physicians,
patients, third-party payors and others in the medical community.

Even with the requisite approvals from the FDA and comparable foreign regulatory authorities, the commercial success of ONS-5010 or any
other  product  candidates  we  may  pursue  will  depend  in  part  on  the  medical  community,  patients  and  third-party  payors  accepting  our
product candidates as medically useful, cost-effective and safe. Even though we expect

36

Table of Contents

that ONS-5010 will be priced responsibly, if approved, there is no guarantee that ONS-5010 or any other product that we bring to the market
directly  or  through  a  strategic  partner  will  gain  market  acceptance  by  physicians,  patients,  third-party  payors  and  others  in  the  medical
community. The degree of market acceptance of any of our product candidates, if approved for commercial sale, will depend on a number of
factors, including but not limited to:

● the safety and efficacy of the product in clinical trials, and potential advantages over competing treatments;

● the publication of unfavorable safety or efficacy data concerning our product by third-parties;

● the prevalence and severity of any side effects, including any limitations or warnings contained in a product’s approved labeling;

● the clinical indications for which approval is granted;

● recognition and acceptance of our product candidates over our competitors’ products;

● prevalence of the disease or condition for which the product is approved;

● the cost of treatment, particularly in relation to competing treatments;

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

● the strength of marketing and distribution support and timing of market introduction of competitive products;

● the extent to which the product is approved for inclusion on formularies of hospitals and managed care organizations;

● publicity concerning our products or competing products and treatments;

● the  extent  to  which  third-party  payors  provide  coverage  and  adequate  reimbursement  for  ONS-5010,  or  any  other  product

candidates we may pursue, if approved;

● our ability to maintain compliance with regulatory requirements; and

● labeling or naming imposed by FDA or other regulatory agencies.

Even if ONS-5010 or any other product candidate we may develop in the future displays an equivalent or more favorable efficacy and safety
profile in preclinical and clinical trials, market acceptance of the product candidate will not be fully known until after it is launched and may
be negatively affected by a potential poor safety experience and the track record of other product candidates. Our efforts, or those of any
strategic licensing partner, to educate the medical community and third-party payors on the benefits of our product candidates may require
significant resources, may be under-resourced compared to large well-funded pharmaceutical entities and may never be successful. If ONS-
5010  or  any  other  product  candidates  we  may  develop  in  the  future  are  approved  but  fail  to  achieve  an  adequate  level  of  acceptance  by
physicians, patients, third-party payors and others in the medical community, we will not be able to generate sufficient revenue to become or
remain profitable.

Even if ONS-5010 is approved, off-label repackaging of Avastin at compounding pharmacies may continue, which could have a material
adverse effect on our business and financial condition.

It is currently estimated that Avastin accounts for at least 50% of wet AMD prescriptions in the United States, notwithstanding that such use
is off-label and requires repackaging at a compounding pharmacy. Even if ONS-5010 is approved for use as a treatment for wet AMD, there
is no guarantee that we will be effective in reducing the off-label use of Avastin and other drugs in the United States or other major markets
where we plan to seek regulatory approval and

37

Table of Contents

commercialize ONS-5010, directly or through a strategic partner, if approved. If we are not successful in reducing off-label use of Avastin or
other drugs with ONS-5010, our business and financial condition could be adversely affected.

We currently have no marketing and sales organization. If we are unable to establish sales and marketing capabilities in jurisdictions for
which we choose to retain commercialization rights, we may be unable to generate any revenue.

We currently have no marketing or sales organization. We do not yet have any products approved for sale, and we, as a company, have no
experience selling and marketing any pharmaceutical products. To successfully commercialize any products, we will need to develop these
capabilities, either on our own or with others. If ONS-5010 receives regulatory approval and we are not able to secure a strategic licensing
partner who will commercialize such product, we may need to establish our own sales and marketing organization with technical expertise
and  supporting  distribution  capabilities  to  commercialize  ONS-5010  or  any  other  product  candidates  that  are  approved  in  major  markets
where we may choose to retain commercialization rights. Doing so will be expensive, difficult and time-consuming. Any failure or delay in
the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of our products.
Further, given our lack of prior experience in marketing and selling our products, our initial estimate of the size of the required sales force
may be materially more or less than the size of the sales force actually required to effectively commercialize our product candidates. As
such,  we  may  be  required  to  hire  substantially  more  sales  representatives  and  medical  support  liaisons  to  adequately  support  the
commercialization of ONS-5010 or we may incur excess costs as a result of hiring more sales representatives than necessary. With respect to
certain  geographical  markets,  we  may  enter  into  collaborations  with  other  entities  to  utilize  their  local  marketing  and  distribution
capabilities,  but  we  may  be  unable  to  enter  into  such  agreements  on  favorable  terms,  if  at  all.  If  our  future  collaboration  partners  do  not
commit sufficient resources to commercialize our future products, if any, and we are unable to develop the necessary marketing capabilities
on  our  own,  we  will  be  unable  to  generate  sufficient  product  revenue  to  sustain  our  business.  If  we  are  unable  to  establish  sales  and
marketing capabilities for any approved product, whether on our own or through collaborations, our results of operations will be negatively
impacted.

We  may  need  to  enter  into  alliances  with  other  companies  that  can  provide  capabilities  and  funds  for  the  development  and
commercialization  of  product  candidates.  If  we  are  unsuccessful  in  forming  or  maintaining  these  alliances  on  favorable  terms,  our
business could be harmed.

Because we are a late clinical-stage biopharmaceutical company, we have found it necessary to enter into alliances with other companies.
For example, we entered into a strategic partnership agreement for consulting services for ONS-5010, pursuant to which we paid a monthly
fee prior to terminating such arrangement. We have also entered into service agreements for clinical trials, and co-development and license
agreements  for  our  biosimilar  product  candidates,  and  are  pursuing  strategic  partners  for  ONS-5010.  In  the  future,  we  may  also  find  it
necessary  to  form  other  alliances  or  joint  ventures  with  major  pharmaceutical  companies  to  jointly  develop  and/or  commercialize  the
inactive biosimilar product candidates in our pipeline and any other product candidates that we may develop. In such alliances, we would
expect  our  collaboration  partners  to  provide  substantial  capabilities  in  regulatory  affairs,  as  well  as  sales  and  marketing.  We  may  not  be
successful in entering into any such alliances, including reaching agreement with a potential partner for ONS-5010. Even if we do succeed in
securing such alliances, we may not be able to maintain them if, for example, development or approval of a product candidate is delayed or
sales of an approved product are disappointing. We may also have disagreements from time to time with our collaboration partners regarding
our rights and obligations under such arrangements. For example, one of our contract counterparties for our former biosimilar program filed
a complaint claiming breach. See Item 3. “Legal Proceedings.” If we are not able to successfully resolve this or any other disagreements
with  our  contract  partners,  it  could  negatively  impact  our  business  or  reputation.  Further,  if  we  are  unable  to  secure  or  maintain  such
alliances,  we  may  not  have  the  capabilities  necessary  to  continue  or  complete  development  of  our  product  candidates  and  bring  them  to
market, which may have an adverse effect on our business.

In  addition  to  commercialization  capabilities,  we  may  depend  on  our  alliances  with  other  companies  to  provide  substantial  additional
funding  for  development  and  potential  commercialization  of  our  product  candidates.  We  may  not  be  able  to  obtain  funding  on  favorable
terms from these alliances, and even if so, we may underestimate our development costs, and such fund may not be sufficient to develop a
particular product candidate internally or to bring it to market. Failure to bring ONS-5010, or any other product candidates we may develop
in the future, to market will prevent us from generating sales revenue and this will substantially harm our business. Furthermore, any delay
in entering into these alliances could

38

Table of Contents

delay the development and commercialization of our product candidates and reduce their competitiveness even if they reach the market. As a
result, our business and operating results may be harmed.

The  third-party  coverage  and  reimbursement  status  of  newly  approved  products  is  uncertain.  Failure  to  obtain  or  maintain  adequate
coverage  and  reimbursement  for  new  or  current  products  could  limit  our  ability  to  market  those  products  and  decrease  our  ability  to
generate revenue.

Pricing, coverage and reimbursement of ONS-5010, or any other product candidates we may develop in the future, if approved, may not be
adequate  to  support  our  commercial  infrastructure.  Our  per-patient  prices  may  not  be  sufficient  to  recover  our  development  costs  and
potentially  achieve  profitability.  The  availability  of  coverage  and  adequacy  of  reimbursement  by  governmental  and  private  payors  are
essential for most patients to be able to afford expensive treatments such as ours, if approved. Accordingly, sales of our product candidates
will  depend  substantially,  both  domestically  and  abroad,  on  the  extent  to  which  the  costs  of  ONS-5010  and  any  of  our  other  product
candidates  will  be  paid  for  by  third-party  payors  such  as  health  maintenance,  managed  care  organizations,  pharmacy  benefit  and  similar
healthcare management organizations, private health insurers and other third-party payors. If coverage and reimbursement are not available,
or are available only at insufficient levels, we may not be able to successfully commercialize our product candidates. Coverage decisions
may  depend  upon  clinical  and  economic  standards  that  disfavor  new  drug  products  when  more  established  or  lower  cost  therapeutic
alternatives are already available or subsequently become available. Even if coverage is provided, the approved reimbursement amount may
not be adequate to allow us to realize a return on our investment.

There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved products. In the United States,
third-party payors play an important role in determining the extent to which new drugs and biologics will be covered and reimbursed. The
Medicare  program  covers  certain  individuals  aged  65  or  older  or  those  who  are  disabled  or  suffering  from  end-stage  renal  disease.  The
Medicaid program, which varies from state to state, covers certain individuals and families who have limited financial means and/or certain
disabilities. The Medicare and Medicaid programs increasingly are used as models for how third-party payors develop their coverage and
reimbursement policies for drugs and biologics. It is difficult to predict at this time what third-party payors will decide with respect to the
coverage  and  reimbursement  for  our  biosimilar  product  candidates,  if  approved.  In  addition,  in  the  United  States,  no  uniform  policy  of
coverage and reimbursement for biologics exists among third-party payors. Therefore, coverage and reimbursement for biologics can differ
significantly from payor to payor. As a result, the process for seeking favorable coverage determinations often is time-consuming and costly
and may require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that
coverage and adequate reimbursement will be obtained. Our inability to promptly obtain coverage and profitable reimbursement rates from
third-party  payors  for  any  approved  products  that  we  develop  could  have  an  adverse  effect  on  our  operating  results,  our  ability  to  raise
capital needed to commercialize products and our overall financial condition.

Outside  the  United  States,  pharmaceutical  businesses  are  generally  subject  to  extensive  governmental  price  controls  and  other  market
regulations.  We  believe  the  increasing  emphasis  on  cost-containment  initiatives  in  the  E.U.,  Canada  and  other  countries  has  and  will
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.

Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to control healthcare costs may cause
such organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or
provide adequate payment for ONS-5010, or any other product candidates we may develop in the future. We expect to experience pricing
pressures in connection with the sale of ONS-5010, or any other product candidates we may develop in the future, if approved, due to the
trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes.

39

Table of Contents

Risks Related to Our Reliance on Third Parties

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

We have relied upon and plan to continue to rely upon CROs to monitor and manage data for our ongoing clinical development programs.
We  rely  on  these  parties  for  execution  of  our  preclinical  and  clinical  trials  and  we  can  only  control  certain  aspects  of  their  activities.
Nevertheless,  we  are  responsible  for  ensuring  that  each  of  our  studies  is  conducted  in  accordance  with  the  applicable  protocol,  legal,
regulatory and scientific requirements and standards and our reliance on the CROs does not relieve us of our regulatory responsibilities. We
and our CROs and other vendors are required to comply with cGMP, GCP, and Good Laboratory Practices, or GLP, which are regulations
and  guidelines  enforced  by  the  FDA,  the  Competent  Authorities  of  the  Member  States  of  the  EEA  and  comparable  foreign  regulatory
authorities  for  all  of  our  product  candidates  in  clinical  development.  Regulatory  authorities  enforce  these  regulations  through  periodic
inspections  of  study  sponsors,  principal  investigators,  study  sites  and  other  contractors.  If  we,  any  of  our  CROs,  service  providers  or
investigators  fail  to  comply  with  applicable  regulations  or  GCPs,  the  data  generated  in  our  preclinical  and  clinical  trials  may  be  deemed
unreliable  and  the  FDA,  EMA  or  comparable  foreign  regulatory  authorities  may  require  us  to  perform  additional  preclinical  and  clinical
trials  before  approving  our  marketing  applications.  We  cannot  assure  you  that  upon  inspection  by  a  given  regulatory  authority,  such
regulatory  authority  will  determine  that  any  of  our  clinical  trials  comply  with  GCP  requirements.  In  addition,  our  clinical  trials  must  be
conducted with products produced under cGMP regulations. Failure to comply by any of the participating parties or ourselves with these
regulations  may  require  us  to  repeat  clinical  trials,  which  would  delay  the  regulatory  approval  process.  Moreover,  our  business  may  be
implicated  if  our  CROs  or  any  other  participating  parties  violate  federal  or  state  fraud  and  abuse  or  false  claims  laws  and  regulations  or
healthcare privacy and security laws.

If any of our relationships with any of these third-party CROs terminate, we may not be able to enter into arrangements with alternative
CROs or do so on commercially reasonable terms. In addition, our CROs are not our employees, and except for remedies available to us
under  our  agreements  with  such  CROs,  we  cannot  control  whether  or  not  they  devote  sufficient  time  and  resources  to  our  on-going
preclinical and clinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if
they need to be replaced or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our protocols,
regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain
regulatory approval for or successfully commercialize our product candidates. CROs may also generate higher costs than anticipated. As a
result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our
ability to generate revenue could be delayed.

Changing  or  adding  additional  CROs  involves  additional  cost  and  requires  management  time  and  focus.  In  addition,  there  is  a  natural
transition period when a new CRO commences work. As a result, delays may occur, which can negatively impact our ability to meet our
desired clinical development timelines. We may encounter challenges or delays in the future and these delays or challenges may have an
adverse effect on our business, financial condition and prospects.

Previously, we manufactured bulk drug substance for preclinical and clinical supplies of our product candidates in our in-house facility.
Our  business  could  be  harmed  if  our  new  contract  manufacturer  is  unable  to  manufacture  our  product  candidates  at  the  necessary
quantity or quality levels.

We no longer have the infrastructure or capability internally to manufacture supplies of ONS-5010, or any other product candidate, for use in
clinical development, and we lack the resources and the capability to manufacture any product candidates on a clinical or commercial scale.
If we are unable to manufacture or have manufactured sufficient supplies of ONS-5010 or any other product candidates, our development
efforts would be delayed, which would adversely affect our business and prospects. We have selected FUJIFILM Diosynth Biotechnologies
to manufacture and supply us with our product candidates for future clinical development, as well as to establish commercial supplies of our
product candidates. If our need for contract manufacturing services increases during a period of industry-wide production capacity shortage,
we may not be able to produce our product candidates on a timely basis or on commercially viable terms. Any significant

40

Table of Contents

delay  or  discontinuation  in  the  supply  of  a  product  candidate  for  an  ongoing  clinical  trial  due  to  the  need  to  replace  a  third-party
manufacturer  could  considerably  delay  completion  of  our  clinical  trials,  product  testing  and  potential  regulatory  approval  of  our  product
candidates, which could harm our business and results of operations.

Reliance  on  third-party  manufacturers  entails  additional  risks,  including  reliance  on  the  third  party  for  regulatory  compliance  and  quality
assurance,  the  possible  breach  of  the  manufacturing  agreement  by  the  third  party  and  the  possible  termination  or  nonrenewal  of  the
agreement by the third party at a time that is costly or inconvenient for us. In addition, third-party manufacturers may not be able to comply
with  cGMP  or  similar  regulatory  requirements  outside  the  United  States.  Our  failure  or  the  failure  of  our  third-party  manufacturers  to
comply  with  applicable  regulations  could  result  in  sanctions  being  imposed  on  us,  including  fines,  injunctions,  civil  penalties,  delays,
suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions,
any of which could adversely affect supplies of ONS-5010 or any other product candidates that we may develop. Any failure or refusal to
supply  the  components  for  our  product  candidates  that  we  may  develop  could  delay,  prevent  or  impair  our  clinical  development  or
commercialization  efforts.  If  our  contract  manufacturers  were  to  breach  or  terminate  their  manufacturing  arrangements  with  us,  the
development or commercialization of the affected products or product candidates could be delayed, which could have an adverse effect on
our  business.  Any  change  in  our  manufacturers  could  be  costly  because  the  commercial  terms  of  any  new  arrangement  could  be  less
favorable and because the expenses relating to the transfer of necessary technology and processes could be significant.

If  ONS-5010  or  any  of  our  product  candidates  are  approved,  we  may  need  to  enter  into  agreements  with  another  third  party  for  contract
manufacturing  in  order  to  produce  the  quantities  necessary  to  meet  anticipated  market  demand.  If  we  are  unable  to  build  and  stock  our
product candidates in sufficient quantities to meet the requirements for the launch of these candidates or to meet future demand, our revenue
and gross margins could be adversely affected. Although we believe that we will not have any material supply issues, we cannot be certain
that we will be able to obtain long-term supply arrangements for our product candidates or materials used to produce them on acceptable
terms, if at all. If we are unable to arrange for third-party manufacturing, or to do so on commercially reasonable terms, we may not be able
to complete development of our product candidates or market them.

Any  adverse  developments  affecting  the  manufacture  of  ONS-5010  could  substantially  increase  our  costs  and  limit  supply  for  such
product candidate.

The  process  of  manufacturing  our  ONS-5010  and  our  other  monoclonal  antibody  product  candidates  is  complex,  highly  regulated  and
subject to several risks, including but not limited to:

● failure to establish contracts with contract manufacturing organization, or CMOs, and device vendors where applicable;

● product  loss  due  to  contamination,  equipment  failure  or  improper  installation  or  operation  of  equipment  or  vendor  or  operator

error;

● infringing intellectual property rights of third parties relating to manufacturing and quality testing;

● failure to achieve or maintain compliance with FDA’s requirements for acceptance of the applicable manufacturing facilities; and

● labor shortages, natural disasters and power failures.

Even minor deviations from normal manufacturing processes for any of our product candidates could result in reduced production yields,
product  defects  and  other  supply  disruptions.  In  addition,  if  we  require  a  change  in  CMO,  this  will  add  time  along  with  financial  and
personnel resources to change manufacturing sites. If microbial, viral or other contaminations are discovered in our product candidates or in
our manufacturing facilities, our facilities may need to be closed for an extended period of time to investigate and remedy the contamination.

41

Table of Contents

Any  adverse  developments  affecting  manufacturing  operations  for  our  product  candidates  may  result  in  shipment  delays,  inventory
shortages,  lot  failures,  withdrawals  or  recalls  or  other  interruptions  in  the  supply  of  our  product  candidates.  We  may  also  have  to  take
inventory  write-offs  and  incur  other  charges  and  expenses  for  product  candidates  that  fail  to  meet  specifications,  undertake  costly
remediation efforts or seek more costly manufacturing alternatives.

We may depend on third parties for the commercialization of ONS-5010, and failure to commercialize in those markets could harm our
business and operating results.

We  continue  to  pursue  discussions  for  the  licensing  and/or  co-development  rights  to  ONS-5010.  We  may  not  be  successful  in  reaching
agreements with such parties on terms that are as favorable to our company as we would anticipate. We do not have in place any licensing
agreements  for  commercialization  of  ONS-5010  and  have  only  licensed  ONS-5010  to  our  PRC-joint  venture,  for  commercialization  in
greater China. Our current arrangements are for our inactive biosimilar product candidates, and aside from one U.S. arrangement for ONS-
3010, are for smaller ex-U.S. markets where we would not otherwise intend to commercialize our biosimilar product candidates, such as
China  and  India,  among  others.  If  any  entity  with  whom  we  enter  into  a  commercialization  arrangement  fails  to  exercise  commercially
reasonable efforts to market and sell our approved products in their respective licensed jurisdictions or are otherwise ineffective in doing so,
our business will be harmed and we may not be able to adequately remedy the harm through negotiation, litigation, arbitration or termination
of the license agreements.

Moreover, any disputes with our collaboration partners concerning the adequacy of their commercialization efforts will substantially divert
the attention of our senior management from other business activities and will require us to incur substantial legal costs to fund litigation or
arbitration proceedings.

In the event that any of our license agreements terminate, we may need to find another partner in those markets to commercialize and in
certain  instances,  manufacture  any  product  candidates.  Further,  upon  any  such  termination,  our  contract  counterparties  may  still  have  the
right to commercialize these product candidates in such markets, which may affect our ability to commercialize in the same markets.

Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or
that our trade secrets will be misappropriated or disclosed.

Because  we  expect  to  rely  on  third  parties  to  manufacture  our  current  and  any  future  product  candidates,  and  we  expect  to  continue  to
collaborate with third parties on the development of our current and any future product candidates, we must, at times, share trade secrets
with  them.  We  also  conduct  joint  research  and  development  programs  that  may  require  us  to  share  trade  secrets  under  the  terms  of  our
collaboration  or  similar  agreements.  For  example,  under  our  joint  participation  arrangement  with  Huahai,  we  are  obligated  to  share  with
Huahai certain information relating to the development of ONS-3010, including reports from nonclinical studies and clinical trials. We seek
to  protect  our  proprietary  technology  in  part  by  entering  into  confidentiality  agreements  and,  if  applicable,  material  transfer  agreements,
consulting  agreements  or  other  similar  agreements  with  our  advisors,  employees,  CROs,  third-party  contractors  and  consultants  prior  to
beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose
our confidential information, including our trade secrets. Despite the contractual provisions employed when working with third parties, the
need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors,
are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Any disclosure, either
intentional or unintentional, by our employees, the employees of third parties with whom we share our facilities or third-party consultants
and  vendors  that  we  engage  to  perform  research,  clinical  trials  or  manufacturing  activities,  or  misappropriation  by  third  parties  (such  as
through  a  cybersecurity  breach)  of  our  trade  secrets  or  proprietary  information  could  enable  competitors  to  duplicate  or  surpass  our
technological achievements, thus eroding our competitive position in our market. Further, adequate remedies may not exist in the event of
unauthorized  use  or  disclosure.  Given  that  our  proprietary  position  is  based,  in  part,  on  our  know-how  and  trade  secrets,  a  competitor’s
discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have an adverse effect
on our business and results of operations.

In addition, these agreements typically restrict the ability of our advisors, employees, third-party contractors and consultants to publish data
potentially relating to our trade secrets, although our agreements may contain certain limited

42

Table of Contents

publication rights. Policing unauthorized use of our or our licensors’ intellectual property is difficult, expensive and time-consuming, and we
may  be  unable  to  determine  the  extent  of  any  unauthorized  use.  Moreover,  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.  Despite  our  efforts  to  protect  our  trade  secrets,  our
competitors  may  discover  our  trade  secrets,  either  through  breach  of  our  agreements  with  third  parties,  independent  development  or
publication  of  information  by  any  of  our  third-party  collaborators.  A  competitor’s  discovery  of  our  trade  secrets  would  impair  our
competitive position and have an adverse impact on our business.

We are required to co-fund the development of, and proportionately share in the revenue from, the commercialization of ONS-3010 in
the United States, Canada, E.U., Japan, Australia and New Zealand under a joint participation agreement with Huahai. We may also be
required to form a joint venture to further co-develop and commercialize ONS-3010 with Huahai in the agreed countries, if so requested
by Huahai.

We currently have a joint participation arrangement with Huahai that provides for the co-funding of the development of ONS-3010 in the
United  States,  Canada,  E.U.,  Japan,  Australia  and  New  Zealand  and  the  proportionate  sharing  of  the  revenue  from  commercialization  of
ONS-3010 in such countries. In the event we were to restart the active development of this program, we could also be required to further co-
develop  and  commercialize  ONS-3010  with  Huahai  in  the  agreed  countries  pursuant  to  a  joint  venture,  if  so  requested  by  Huahai,  as
contemplated by our joint participation agreement. Under the joint participation agreement, assuming Huahai funds its proportionate share of
development costs incurred after completion of the “Phase-3 Ready Package” for ONS-3010, we will have a 49% value ownership interest
with  Huahai  having  a  51%  value  ownership  interest  in  ONS-3010.  Accordingly,  our  share  of  any  potential  revenues  from  the  successful
commercialization  of  ONS-3010  in  the  agreed  countries,  including  major  markets  such  as  the  United  States  and  E.U.,  would  also  be  in
proportion to such ownership interests. While we anticipate that we will each act in accordance with the terms of our agreement for the joint
development and commercialization of ONS-3010, we cannot control Huahai, nor can we predict with any certainty that our interests will be
aligned and that we will successfully collaborate.

We  currently  engage  single  source  suppliers  for  clinical  trial  services  and  multiple  source  suppliers  for  future  drug  substance
manufacturing,  fill-finish  manufacturing  and  product  testing  of  ONS-5010.  The  loss  of  any  of  these  suppliers,  or  any  future  single
source suppliers, could harm our business.

Our ONS-5010 product candidate is fill-finished by Ajinomoto Bio-Pharma Services, Inc., or Ajinomoto. As such, we are heavily dependent
on  Ajinomoto  for  supplying  us  with  sufficient  supply  of  ONS-5010.  Additionally,  we  selected  FUJIFILM  Diosynth  Biotechnologies  to
conduct all future manufacturing of ONS-5010 bulk drug substance. Although we believe that there are alternate sources for these services,
we cannot assure you that identifying and establishing new relationships would not result in significant delay in the development of ONS-
5010. Additionally, we may not be able to enter into arrangements with alternative vendors on commercially reasonable terms, or at all. A
delay in the development of ONS-5010 or having to enter into a new agreement with a different third party on less favorable terms than we
have with our current suppliers could negatively impact our business.

Risks Related to Intellectual Property

If we infringe or are alleged to infringe intellectual property rights of third parties, our business could be harmed. Third-party claims of
intellectual property infringement may prevent or delay our development and commercialization efforts.

Our  commercial  success  depends  in  large  part  on  avoiding  infringement  of  the  patents  and  proprietary  rights  of  third  parties.  There  have
been many lawsuits and other proceedings involving patent and other intellectual property rights in the pharmaceutical industry, including
patent  infringement  lawsuits,  interferences,  oppositions  and  reexamination  proceedings  before  the  U.S.  Patent  and  Trademark  Office,  or
USPTO,  and  corresponding  foreign  patent  offices.  Numerous  U.S.  and  foreign  issued  patents  and  pending  patent  applications,  which  are
owned by third parties, exist in the fields in which we are developing product candidates. As the pharmaceutical industry expands and more
patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

43

Table of Contents

Our research, development and commercialization activities may infringe or otherwise violate or be claimed to infringe or otherwise violate
patents owned or controlled by other parties.

Third  parties  may  assert  that  we  are  employing  their  proprietary  technology  without  authorization.  There  may  be  third-party  patents  or
patent  applications  with  claims  to  compositions,  formulations,  methods  of  manufacture  or  methods  for  treatment  related  to  the  use  or
manufacture of our product candidates. We have conducted patent searches for third-party patents with respect to our lead product candidate,
and  are  not  aware  of  third-party  patent  families  with  claims  that,  if  valid  and  enforceable,  could  be  construed  to  cover  such  product
candidates or their respective methods of manufacture or use. We cannot guarantee that any of our analyses are complete and thorough, nor
can we be sure that we have identified each and every patent and pending application in the United States and abroad that is relevant or
necessary  to  the  commercialization  of  our  product  candidates.  Moreover,  because  patent  applications  can  take  many  years  to  issue,  there
may be currently pending patent applications that may later result in issued patents covering our product candidates. The existence of any
patent  with  valid  and  enforceable  claims  covering  one  or  more  of  our  product  candidates  could  cause  substantial  delays  in  our  ability  to
introduce a candidate into the U.S. market if the term of such patent extends beyond our desired product launch date.

There may also be patent applications that have been filed but not published and if such applications issue as patents, they could be asserted
against us. For example, in most cases, a patent filed today would not become known to industry participants for at least 18 months given
patent rules applicable in most jurisdictions that do not require publication of patent applications until 18 months after filing. Moreover, we
may face claims from non-practicing third-party entities that have no relevant product revenue and against whom our own patent portfolio
may have no deterrent effect. In addition, the scope of patent claims is subject to interpretation by the courts, and the interpretation is not
always  uniform.  If  we  are  sued  for  patent  infringement,  we  would  need  to  demonstrate  that  our  product  candidates,  products  or  methods
either do not infringe the asserted patent claims or that the claims are invalid and/or unenforceable, and we may not be successful.

Proving that a patent is invalid or unenforceable is difficult. For example, in the United States, proving invalidity requires a showing of clear
and convincing evidence to overcome the presumption of validity enjoyed by issued patents. In proceedings before courts in the E.U., the
burden of proving invalidity of a patent also usually rests on the party alleging invalidity. Even if we are successful in litigation, we may
incur  substantial  costs  and  the  time  and  attention  of  our  management  and  scientific  personnel  could  be  diverted,  which  could  harm  our
business. In addition, we may not have sufficient resources to bring these actions to a successful conclusion.

Third parties could bring claims against us that would cause us to incur substantial expenses and, if successful against us, could cause us to
pay  substantial  monetary  damages.  The  outcome  of  intellectual  property  litigation  is  subject  to  uncertainties  that  cannot  be  adequately
quantified  in  advance.  If  a  patent  infringement  suit  were  brought  against  us,  we  could  be  forced  to  stop  or  delay  research,  development,
manufacturing  or  sales  of  the  product  or  product  candidate  that  is  the  subject  of  the  suit.  Ultimately,  we  could  be  prevented  from
commercializing  a  product  or  be  forced  to  cease  some  aspect  of  our  business  operations  if,  as  a  result  of  actual  or  threatened  patent
infringement claims, we are unable to enter into licenses on commercially acceptable terms or at all. If, as a result of patent infringement
claims  or  to  avoid  potential  claims,  we  choose  or  are  required  to  seek  licenses  from  third  parties,  these  licenses  may  not  be  available  on
acceptable terms or at all. Even if we are able to obtain a license, the license may obligate us to pay substantial license fees or royalties or
both,  and  the  rights  granted  to  us  might  be  nonexclusive,  which  could  result  in  our  competitors  gaining  access  to  the  same  intellectual
property.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop
and  commercialize  one  or  more  of  our  product  candidates.  Defense  of  these  claims,  regardless  of  their  merit,  would  likely  involve
substantial  litigation  expense  and  would  likely  be  a  substantial  diversion  of  employee  resources  from  our  business.  In  the  event  of  a
successful  claim  of  infringement  against  us,  we  may,  in  addition  to  being  blocked  from  the  market,  have  to  pay  substantial  monetary
damages, including treble damages and attorneys’ fees for willful infringement, pay royalties, redesign our infringing products or obtain one
or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

In addition to infringement claims against us, we may become a party to other patent litigation and other proceedings, including interference,
derivation or post-grant proceedings declared or granted by the USPTO and similar proceedings in

44

Table of Contents

foreign countries, regarding intellectual property rights with respect to our current or future products. An unfavorable outcome in any such
proceedings  could  require  us  to  cease  using  the  related  technology  or  to  attempt  to  license  rights  to  it  from  the  prevailing  party  or  could
cause us to lose valuable intellectual property rights. Our business could be harmed if the prevailing party does not offer us a license on
commercially reasonable terms, if any license is offered at all. Litigation or other proceedings may fail and, even if successful, may result in
substantial  costs  and  distract  our  management  and  other  employees.  We  may  also  become  involved  in  disputes  with  others  regarding  the
ownership of intellectual property rights.

Third  parties  may  submit  applications  for  patent  term  extensions  in  the  United  States  or  other  jurisdictions  where  similar  extensions  are
available and/or Supplementary Protection Certificates in the E.U. states (including Switzerland) seeking to extend certain patent protection
that, if approved, may interfere with or delay the launch of one or more of our product candidates.

The  cost  to  us  of  any  patent  litigation  or  other  proceeding,  even  if  resolved  in  our  favor,  could  be  substantial.  Patent  litigation  and  other
proceedings may fail, and even if successful, may result in substantial costs and distract our management and other employees. Uncertainties
resulting from the initiation and continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace.

So called “submarine” patents may be granted to our competitors that may significantly alter our launch timing expectations, reduce our
projected market size, cause us to modify our product or process or block us from the market altogether.

The term “submarine” patent has been used in the pharmaceutical industry and in other industries to denote a patent issuing from a U.S.
application  with  an  effective  filing  date  prior  to  June  8,  1995  that  was  not  published,  publicly  known  or  available  prior  to  its  grant.
Submarine patents add substantial risk and uncertainty to our business. Submarine patents may be issued to our competitors covering our
product  candidates  and  thereby  cause  significant  market  entry  delay,  defeat  our  ability  to  market  our  product  candidates  or  cause  us  to
abandon development and/or commercialization of a product candidate.

The issuance of one or more submarine patents may harm our business by causing substantial delays in our ability to introduce a candidate
into the U.S. market.

We may not identify relevant patents or may incorrectly interpret the relevance, scope or expiration of a patent, which might adversely
affect our ability to develop and market our products.

We cannot guarantee that any of our patent searches or analyses, including but not limited to the identification of relevant patents, the scope
of patent claims or the expiration of relevant patents, are complete and thorough, nor can we be certain that we have identified each and
every  patent  and  pending  application  in  the  United  States  and  abroad  that  is  relevant  to  or  necessary  for  the  commercialization  of  our
product candidates in any jurisdiction.

The  scope  of  a  patent  claim  is  determined  by  an  interpretation  of  the  law,  the  written  disclosure  in  a  patent  and  the  patent’s  prosecution
history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact
our ability to market our products or pipeline candidates. We may incorrectly determine that our products are not covered by a third party
patent. Further, we may conclude that a well-informed court or other tribunal would find the claims of a relevant third-party patent to be
invalid  based  on  prior  art,  enablement,  written  description,  or  other  ground,  and  that  conclusion  may  be  incorrect,  which  may  negatively
impact our ability to market our products or pipeline molecules.

Many patents may cover a marketed product, including but not limited to the composition of the product, methods of use, formulations, cell
line constructs, vectors, growth media, production processes and purification processes. The identification of all patents and their expiration
dates relevant to the production and sale of a reference product is extraordinarily complex and requires sophisticated legal knowledge in the
relevant jurisdiction. It may be impossible to identify all patents in all jurisdictions relevant to a marketed product. We may not identify all
relevant  patents,  or  incorrectly  determine  their  expiration  dates,  which  may  negatively  impact  our  ability  to  develop  and  market  our
products.

45

Table of Contents

Our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop, market and commercialize our
products.

We  may  become  involved  in  lawsuits  to  protect  or  enforce  any  future  patents,  which  could  be  expensive,  time-consuming  and
unsuccessful.

We  have  issued  patents  and  when  and  if  we  do  obtain  additional  issued  patents,  we  may  discover  that  competitors  are  infringing  these
patents. Expensive and time-consuming litigation may be required to enforce our patents. If we or one of our collaboration partners were to
initiate legal proceedings against a third party to enforce a patent covering one of our product candidates, the defendant could counterclaim
that  the  patent  covering  our  product  candidate  is  invalid  and/or  unenforceable.  In  patent  litigation  in  the  United  States,  defendant
counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to
meet  any  of  several  statutory  requirements,  including  but  not  limited  to  lack  of  novelty,  obviousness  or  non-enablement.  Grounds  for  an
unenforceability assertion could include an allegation that someone involved in the prosecution of the patent withheld relevant or material
information related to the patentability of the invention from the USPTO or made a misleading statement during prosecution. The outcome
following legal assertions of invalidity and unenforceability is unpredictable, and there is a risk that a court will decide that a patent of ours
is invalid or unenforceable, in whole or in part, and that we do not have the right to stop the other party from using the invention at issue.
There is also a risk that, even if the validity of such patents is upheld, the court will construe the patent’s claims narrowly and decide that we
do  not  have  the  right  to  stop  the  other  party  from  using  the  invention  at  issue  on  the  grounds  that  our  patent  claims  do  not  cover  the
invention. An adverse outcome in a litigation or proceeding involving our patents could limit our ability to assert our patents against those
parties or other competitors and may curtail or preclude our ability to exclude third parties from making and selling similar or competitive
products.  Any  of  these  occurrences  could  adversely  affect  our  competitive  business  position,  business  prospects  and  financial  condition.
Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only
monetary damages, which may or may not be an adequate remedy.

Similarly, if we assert trademark infringement claims, a court may determine that the marks we have asserted are invalid or unenforceable,
or that the party against whom we have asserted trademark infringement has superior rights to the marks in question. In this case, we could
ultimately be forced to cease use of such trademarks.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that
some  of  our  confidential  information  could  be  compromised  by  disclosure  during  any  litigation  we  initiate  to  enforce  our  patents.  There
could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts
or investors perceive these results to be negative, it could have a negative impact on the market price of our securities. Moreover, there can
be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for
years before they are concluded. Even if we ultimately prevail in such claims, the monetary cost of such litigation and the diversion of the
attention of our management and scientific personnel could outweigh any benefit we receive as a result of the proceedings.

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

We  employ  individuals  and  retain  independent  contractors  and  consultants  and  members  on  our  board  of  directors  who  were  previously
employed at universities or other pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure
that our employees, consultants and independent contractors do not use the proprietary information or know-how of others in their work for
us and we are not currently subject to any claims that they have done so, we may in the future be subject to such claims. Litigation may be
necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose
valuable intellectual property rights or personnel, which could adversely impact our business. Even if we are successful in defending against
such claims, litigation could result in substantial costs and be a distraction to management and other employees.

In addition, while we typically require our employees, consultants and contractors who may be involved in the development of intellectual
property to execute agreements assigning such intellectual property to us, we may be

46

Table of Contents

unsuccessful in executing such an agreement with each party who in fact develops intellectual property that we regard as our own, which
may  result  in  claims  by  or  against  us  asserting  ownership  of  such  intellectual  property.  If  we  fail  in  prosecuting  or  defending  any  such
claims, in addition to paying monetary damages, we may lose valuable intellectual property rights. Even if we are successful in prosecuting
or  defending  against  such  claims,  litigation  could  result  in  substantial  costs  and  be  a  distraction  to  our  senior  management  and  scientific
personnel.

If we are unable to obtain and maintain effective patent rights for our product candidates or any future product candidates, we may not
be able to prevent competitors from using technologies we consider important in our successful development and commercialization of
our product candidates, resulting in loss of any potential competitive advantage our patents may have otherwise afforded us.

While our principal focus in matters relating to intellectual property is to avoid infringing the valid and enforceable rights of third parties, we
also  rely  upon  a  combination  of  patents,  trade  secret  protection  and  confidentiality  agreements  to  protect  our  own  intellectual  property
related  to  our  product  candidates  and  development  programs.  Our  ability  to  enjoy  any  competitive  advantages  afforded  by  our  own
intellectual  property  depends  in  large  part  on  our  ability  to  obtain  and  maintain  patents  and  other  intellectual  property  protection  in  the
United States and in other countries with respect to various proprietary elements of our product candidates, such as, for example, our product
formulations and processes for manufacturing our products and our ability to maintain and control the confidentiality of our trade secrets and
confidential information critical to our business.

We have sought to protect our proprietary position by filing patent applications in the United States and abroad related to our products that
are important to our business. This process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or
desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of
our research and development output before it is too late to obtain patent protection. There is no guarantee that any patent application we file
will result in an issued patent having claims that protect our products; and, as a result, we may not be able to effectively prevent others from
commercializing  competitive  products.  Additionally,  while  the  basic  requirements  for  patentability  are  similar  across  jurisdictions,  each
jurisdiction has its own specific requirements for patentability. We cannot guarantee that we will obtain identical or similar patent protection
covering our products in all jurisdictions where we file patent applications.

The  patent  positions  of  biopharmaceutical  companies  generally  are  highly  uncertain  and  involve  complex  legal  and  factual  questions  for
which legal principles remain unresolved. As a result, the patent applications that we own or license may fail to result in issued patents with
claims that cover our product candidates in the United States or in other foreign countries for many reasons. There is no assurance that all
potentially relevant prior art relating to our patents and patent applications has been found, considered or cited during patent prosecution,
which can be used to invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully
issue, and even if such patents cover our product candidates, third parties may challenge their validity, enforceability or scope, which may
result in such patent claims being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, our patents and
patent  applications  may  not  adequately  protect  our  intellectual  property,  provide  exclusivity  for  our  product  candidates  or  prevent  others
from  designing  around  our  claims.  Any  of  these  outcomes  could  impair  our  ability  to  prevent  competitors  from  using  the  technologies
claimed in any patents issued to us, which may have an adverse impact on our business.

Patents granted by the European Patent Office may be opposed by any person within nine months from the publication of their grant and, in
addition, may be challenged before national courts at any time.

Furthermore,  even  if  they  are  unchallenged,  our  patents  and  patent  applications  may  not  adequately  protect  our  intellectual  property  or
prevent others from designing around our claims. If the breadth or strength of protection provided by the patents and patent applications we
hold, license or pursue with respect to our product candidates is threatened, it could threaten our ability to prevent third parties from using
the  same  technologies  that  we  use  in  our  product  candidates.  In  addition,  recent  changes  to  the  patent  laws  of  the  United  States  provide
additional procedures for third parties to challenge the validity of issued patents based on patent applications filed after March 15, 2013. If
the breadth or strength of protection provided by the patents and patent applications we hold or pursue with respect to our current or future
product candidates is challenged, then it could threaten our ability to prevent competitive products from using our proprietary technology.
Further, because patent applications in the United States and most other countries are confidential for a period of time,

47

Table of Contents

typically for 18 months after filing, we cannot be certain that we were the first to either (i) file any patent application related to our product
candidates or (ii) invent any of the inventions claimed in our patents or patent applications. Furthermore, for applications filed before March
16, 2013 or patents issuing from such applications, an interference proceeding can be provoked by a third party or instituted by the USPTO
to  determine  who  was  the  first  to  invent  any  of  the  subject  matter  covered  by  the  patent  claims  of  our  applications  and  patents.  If  third
parties have filed such applications after March 15, 2013, a derivation proceeding in the United States can be initiated by such third parties
to determine whether our invention was derived from theirs.

In  addition  to  our  issued  patents,  we  have  patent  applications  in  the  United  States  and  other  jurisdictions,  which  are  currently  pending,
directed to various aspects of our product candidates. We cannot offer any assurances about which, if any, patents will be issued, the breadth
of any such patent or whether any issued patents will be found invalid and unenforceable or will be threatened or infringed by third parties.
Any successful actions by third parties to challenge the validity or enforceability of any patents that may be issued to us could deprive us of
the ability to prevent others from using the technologies claimed in such issued patents.

Further, if we encounter delays in regulatory approvals, the period of time during which we could market a product candidate under patent
protection could be reduced.

We  have  filed  patent  applications  directed  to  our  own  proprietary  formulations  and  processes  for  our  product  candidates  when  we  have
believed  securing  such  patents  may  afford  a  competitive  advantage.  For  example,  the  companies  that  originated  Humira  and  Avastin®
(AbbVie and Genentech, respectively) own patents directed to formulations for these products. Rather than wait for the expiration of these
formulation patents, we have developed our own proprietary formulations for these products that we believe are not covered by valid claims
of  third-party  patents,  including  AbbVie  or  Genentech’s  formulation  patents;  and  we  have  filed  patent  applications  directed  to  our
formulations.  We  cannot  guarantee  that  our  proprietary  formulations  will  avoid  infringement  of  third-party  patents.  Moreover,  because
competitors may be able to develop their own proprietary product formulations, it is uncertain whether issuance of any of our pending patent
applications  directed  to  formulations  of  adalimumab  (Humira)  and  bevacizumab  (Avastin®)  would  cover  the  formulations  of  any
competitors.  For  example,  we  are  aware  that  Sandoz  is  developing  biosimilar  versions  of  adalimumab  (Humira)  and  has  filed  patent
applications  directed  to  formulations  of  adalimumab  (Humira).  We  are  also  aware  that  Boehringer  is  developing  a  biosimilar  version  of
adalimumab  (Humira)  and  has  filed  a  patent  application  directed  to  formulations  of  adalimumab  (Humira).  We  have  patents  and  patent
applications directed to aspects of our downstream manufacturing processes for various biosimilars, including ONS-3010. In contrast to our
patent applications directed to formulations of ONS-3010, the proprietary technologies embodied in our process-related patent filings, while
directed to inventions we believe may provide us with competitive advantage, were not developed by us to avoid third-party patents. As in
the case of our formulation patent filings, it is highly uncertain and we cannot predict whether our patent filings on process enhancements
will afford us a competitive advantage against third parties.

Obtaining and maintaining our patent protection depends on compliance with various procedural requirements, document submissions,
fee payment and other requirements imposed by governmental patent agencies. Our patent protection could be reduced or eliminated for
non-compliance with these requirements.

The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment
and other provisions during the patent process. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means
in  accordance  with  the  applicable  rules.  However,  there  are  situations  in  which  noncompliance  can  result  in  abandonment  or  lapse  of  a
patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors
might be able to enter the market earlier than would otherwise have been the case.

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

Filing,  prosecuting,  defending  and  enforcing  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. Further, licensing partners may choose not to file

48

Table of Contents

patent applications in certain jurisdictions in which we may obtain commercial rights, thereby precluding the possibility of later obtaining
patent protection in these countries. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries
outside the United States or importing products made using our inventions 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 may also export infringing
products to territories where we have patent protection, but the ability to enforce our patents 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, trade secrets and other
intellectual  property  protection,  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,  whether  or  not
successful, 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 being approved, 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. Governments of some foreign countries may force us to license our patents to third parties on terms that are not
commercially reasonable or acceptable to us. 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.

Changes  in  U.S.  patent  law  could  diminish  the  value  of  patents  in  general,  thereby  impairing  our  ability  to  protect  our  product
candidates.

As  is  the  case  with  other  biopharmaceutical  companies,  our  success  is  heavily  dependent  on  intellectual  property,  particularly  patents.
Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity. Therefore, obtaining
and  enforcing  biopharmaceutical  patents  is  costly,  time-consuming  and  inherently  uncertain.  In  addition,  the  United  States  has  recently
enacted  and  is  currently  implementing  wide-ranging  patent  reform  legislation,  including  the  Leahy-Smith  America  Invents  Act,  or  the
America Invents Act, signed into law on September 16, 2011.

As of March 16, 2013, the United States transitioned to a “first-to-file” system for deciding which party should be granted a patent when two
or  more  patent  applications  claiming  the  same  invention  are  filed  by  different  parties.  A  third  party  that  files  a  patent  application  in  the
USPTO before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made
by the third party. The change to “first-to-file” from “first-to-invent” is one of the changes to the patent laws of the United States resulting
from the America Invents Act. Among some of the other significant changes to the patent laws are changes that limit where a patentee may
file  a  patent  infringement  suit  and  provide  opportunities  for  third  parties  to  challenge  any  issued  patent  in  the  USPTO  via  procedures
including  post-grant  and  inter  partes  review.  These  adversarial  actions  at  the  USPTO  review  patent  claims  without  the  presumption  of
validity afforded to U.S. patents in lawsuits in U.S. federal courts, and use a lower burden of proof than used in litigation in U.S. federal
courts. Therefore, it is generally considered easier for a competitor or third party to have a patent invalidated in a Patent Office post-grant
review or inter partes review proceeding than invalidated in a litigation in a U.S. federal court. If any of our patents are challenged by a third
party in such a USPTO proceeding, there is no guarantee that we or our licensors or collaborators will be successful in defending the patent,
which would result in a loss of the challenged patent right. It is not yet clear what, if any, impact the America Invents Act will have on the
operation of our business. However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding
the prosecution of our patent applications and the enforcement or defense of any issued patents, all of which could harm our business and
financial condition.

Further, recent court rulings in cases such as Association for Molecular Pathology v. Myriad Genetics, Inc. (Myriad I); BRCA1- & BRCA2-
Based Hereditary Cancer Test Patent Litig., (Myriad II); and Promega Corp. v. Life Technologies Corp. have narrowed the scope of patent
protection available in certain circumstances and weakened the rights of patent owners in certain situations.

49

Table of Contents

In  addition  to  increasing  uncertainty  with  regard  to  our  ability  to  obtain  patents  in  the  future,  this  combination  of  events  has  created
uncertainty  with  respect  to  the  value  of  patents,  once  obtained.  Depending  on  future  actions  by  the  United  States  Congress,  the  Federal
Courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to
obtain new patents or to enforce existing patents and patents that we might obtain in the future.

If we are unable to maintain effective proprietary rights for our product candidates or any future product candidates, we may not be able
to compete effectively in our markets.

While we have filed patent applications to protect certain aspects of our own proprietary formulation and process developments, we also rely
on trade secret protection and confidentiality agreements to protect proprietary scientific, business and technical information and know-how
that is not or may not be patentable or that we elect not to patent. However, confidential information and trade secrets can be difficult to
protect.  Moreover,  the  information  embodied  in  our  trade  secrets  and  confidential  information  may  be  independently  and  legitimately
developed or discovered by third parties without any improper use of or reference to information or trade secrets. We seek to protect the
scientific, technical and business information supporting our operations, as well as the confidential information relating specifically to our
product candidates by entering into confidentiality agreements with parties to whom we need to disclose our confidential information, such
as, our employees, consultants, board members, contractors, potential collaborators and financial investors. However, we cannot be certain
that such agreements have been entered into with all relevant parties. We also seek to preserve the integrity and confidentiality of our data
and  trade  secrets  by  maintaining  physical  security  of  our  premises  and  physical  and  electronic  security  of  our  information  technology
systems, but it is possible that these security measures could be breached. While we have confidence in these individuals, organizations and
systems,  agreements  or  security  measures  may  be  breached  and  we  may  not  have  adequate  remedies  for  any  breach.  Our  confidential
information and trade secrets thus may become known by our competitors in ways we cannot prove or remedy.

Although we expect all of our employees and consultants to assign their inventions to us, and all of our employees, consultants, advisors and
any  third  parties  who  have  access  to  our  proprietary  know-how,  information  or  technology  to  enter  into  confidentiality  agreements,  we
cannot  provide  any  assurances  that  all  such  agreements  have  been  duly  executed.  We  cannot  guarantee  that  our  trade  secrets  and  other
confidential  proprietary  information  will  not  be  disclosed  or  that  competitors  will  not  otherwise  gain  access  to  our  trade  secrets  or
independently develop substantially equivalent information and techniques. For example, 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.

Misappropriation  or  unauthorized  disclosure  of  our  trade  secrets  could  impair  our  competitive  position  and  may  harm  our  business.
Additionally, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties
for  misappropriating  any  trade  secret.  We  cannot  guarantee  that  our  employees,  former  employees  or  consultants  will  not  file  patent
applications  claiming  our  inventions.  Because  of  the  “first-to-file”  laws  in  the  United  States,  such  unauthorized  patent  application  filings
may defeat our attempts to obtain patents on our own inventions.

We may be subject to claims challenging the inventorship of our patent filings and other intellectual property.

We  may  in  the  future  be  subject  to  claims  that  former  employees,  collaborators  or  other  third  parties  have  an  interest  in  our  patent
applications  or  patents  we  may  be  granted  or  other  intellectual  property  as  an  inventor  or  co-inventor.  For  example,  we  may  have
inventorship or ownership disputes arise from conflicting obligations of consultants or others who are involved in developing our product
candidates.  Litigation  may  be  necessary  to  defend  against  these  and  other  claims  challenging  inventorship  or  ownership.  If  we  fail  in
defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive
ownership of or right to use valuable intellectual property. Such an outcome could harm our business. Even if we are successful in defending
against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

50

Table of Contents

If  we  fail  to  comply  with  our  obligations  in  the  agreements  under  which  we  license  intellectual  property  and  other  rights  from  third
parties  or  otherwise  experience  disruptions  to  our  business  relationships  with  our  licensors,  we  could  lose  license  rights  that  are
important to our business.

We are party to a non-exclusive worldwide commercial license agreements with Selexis SA, or Selexis, pertaining to clinical testing and sale
of its cell line expression technology and we may enter into additional license agreements in the future. Our commercial license agreements
with  Selexis  impose,  and  we  expect  that  future  license  agreements  will  impose,  various  milestone  payments,  royalty  payments  and  other
obligations on us. If we fail to comply with our obligations under these agreements or if we are subject to a bankruptcy, we may be required
to make certain payments to the licensor of our license or the licensor may have the right to terminate the license, in which event we would
not  be  able  to  develop  or  market  products  covered  by  the  license.  Additionally,  the  milestone  and  other  payments  associated  with  these
licenses will make it less profitable for us to develop our product candidates.

In the event we breach any of our obligations under these agreements, we may incur significant liability to our licensing partners. Disputes
may arise regarding intellectual property subject to a licensing agreement, including but not limited to:

● the scope of rights granted under the license agreement and other interpretation-related issues;

● the extent to which our technology and processes infringe on intellectual property of the licensor that is not subject to the licensing

agreement;

● the sublicensing of patents and other rights;

● our diligence obligations under the license agreement and what activities satisfy those diligence obligations;

● the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us

and our collaborators; and

● the priority of invention of patented technology.

If disputes over intellectual property and other rights that we have licensed prevent or impair our ability to maintain our current licensing
arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates and that
could harm our business.

We may not be successful in obtaining or maintaining necessary rights to our product candidates through acquisitions and in-licenses.

We currently have rights to certain intellectual property through licenses from third parties, including Selexis, to develop ONS-5010/ONS-
1045 and ONS-3010. Because we may find that our programs require the use of proprietary rights held by third parties, the growth of our
business may depend in part on our ability to acquire, in-license or use these proprietary rights. We may be unable to acquire or in-license
compositions, methods of use, processes or other third-party intellectual property rights from third parties that we identify as necessary for
our product candidates. The licensing and acquisition of third-party intellectual property rights is a competitive area, and a number of more
established  companies  are  also  pursuing  strategies  to  license  or  acquire  third-party  intellectual  property  rights  that  we  may  consider
attractive. These established companies may have a competitive advantage over us due to their size, financial resources and greater clinical
development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or
license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make
an appropriate return on our investment.

If we are unable to successfully obtain rights to required third party intellectual property rights or maintain the existing intellectual property
rights we have, we may have to abandon development of that program and our business and financial condition could suffer.

51

Table of Contents

Risks Related to Our Business Operations

Our  business  could  be  adversely  affected  by  the  effects  of  health  pandemics  or  epidemics,  including  the  ongoing  COVID-19  global
pandemic, in regions where we or third parties on which we rely have significant manufacturing facilities, concentrations of clinical trial
sites or other business operations, or materially affect our operations, including at our headquarters in New Jersey, and at our clinical
trial sites, as well as the business or operations of our manufacturers, CROs or other third parties with whom we conduct business.

Our  business  could  be  adversely  affected  by  the  effects  of  health  pandemics  or  epidemics,  including  the  ongoing  COVID-19  global
pandemic, which has resulted in travel and other restrictions, including on certain businesses and operations deemed non-essential, to reduce
the spread of the disease. As a result of travel restrictions, quarantines, shelter-in-place, social distancing and other similar developments, we
implemented  work-from-home  policies  for  all  our  employees.  While  certain  of  these  restrictions  were  lifted  and  phased  re-openings
occurred,  there  can  be  no  certainty  that  such  policies  will  continue,  or  that  new  or  similar  restrictions  will  not  be  imposed  to  address
continued spread of disease. These restrictions have impacted not just our headquarters, but also the clinical trial sites where our NORSE
TWO and NORSE THREE trials occurred, and we experienced enrollment delays in NORSE TWO as a result of the COVID-19 pandemic.
The continuing effects of these orders, government-imposed quarantines and our work-from-home policies, including the uncertainty and
changing nature of such restrictions, may negatively impact productivity, disrupt our business and could further delay our ONS-5010 clinical
programs and timelines, including manufacturing of our product candidate and supply chain, the magnitude of which will depend, in part, on
the  length  and  severity  of  the  restrictions  and  other  limitations  on  our  ability  to  conduct  our  business  in  the  ordinary  course.  These  and
similar,  and  perhaps  more  severe,  disruptions  in  our  operations  could  negatively  impact  our  business,  operating  results  and  financial
condition.

Further,  our  ongoing  clinical  trials  could  be  further  affected  by  the  COVID-19  outbreak.  Patient  enrollment  and  recruitment  of  NORSE
TWO was delayed due to local clinical trial site protocols designed to protect staff and patients from COVID-19 infection, and some patients
may not be able to comply with clinical trial protocols if quarantines or other restrictions, which could be reimposed due to the continuing
spread of the disease, impede patient movement or interrupt healthcare services. Similarly, our ability to retain principal investigators and
site staff who, as healthcare providers, may have heightened exposure to COVID-19, could be disrupted, which would adversely impact our
clinical trial operations.

The  spread  of  COVID-19,  which  has  caused  a  broad  impact  globally,  may  also  materially  adversely  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, it is currently
resulting in significant disruption of global financial markets. This disruption, if sustained or recurrent, could make it more difficult for us to
access  capital,  which  could  in  the  future  negatively  affect  our  liquidity.  In  addition,  a  recession  or  market  correction  resulting  from  the
spread of COVID-19 could materially affect our business and the value of our common stock.

The COVID-19 pandemic continues to evolve. The ultimate impact of the COVID-19 outbreak or a similar health pandemic or epidemic is
highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, our clinical trials,
healthcare systems or the global economy as a whole. These effects could have a material impact on our operations, and we will continue to
monitor the COVID-19 situation closely.

We may not be successful in our efforts to identify, develop or commercialize additional product candidates.

Although a substantial amount of our current effort is focused on the potential approval and commercialization of ONS-5010, the long-term
success  of  our  business  also  depends  upon  our  ability  to  identify,  develop  and  commercialize  additional  product  candidates.  Research
programs  to  identify  new  product  candidates  require  substantial  technical,  financial  and  human  resources.  We  may  focus  our  efforts  and
resources on potential programs or product candidates that ultimately prove to be unsuccessful. Our development efforts may fail to yield
additional product candidates suitable for clinical development and commercialization for a number of reasons, including but not limited to
the following:

● we may not be successful in identifying potential product candidates that pass our strict screening criteria;

52

Table of Contents

● we may not be able to overcome technological hurdles to development or a product candidate may not be capable of producing

commercial quantities at an acceptable cost, or at all;

● we may not be able to assemble sufficient resources to acquire or discover additional product candidates;

● our product candidates may not succeed in preclinical or clinical testing;

● competitors  may  develop  alternatives  that  render  our  product  candidates  obsolete  or  less  attractive  or  the  market  for  a  product

candidate may change such that a product candidate may not justify further development.

If any of these events occur, we may be forced to abandon our development efforts for a program or programs or we may not be able to
identify, develop or commercialize additional product candidates, which would harm our business and could potentially cause us to cease
operations.

We  are  highly  dependent  on  the  services  of  our  key  executives  and  personnel,  and  if  we  are  not  able  to  retain  these  members  of  our
management or recruit additional management, clinical and scientific personnel, our business will suffer.

We are highly dependent on the principal members of our management and scientific and technical staff. The loss of service of any of our
management  or  key  scientific  and  technical  staff  could  harm  our  business  and  our  prospects  in  the  continued  development  and
commercialization of ONS-5010 and any future product candidates we may develop. In addition, we are dependent on our continued ability
to  attract,  retain  and  motivate  highly  qualified  additional  management,  clinical  and  scientific  personnel.  If  we  are  not  able  to  retain  our
management and to attract, on acceptable terms, additional qualified personnel necessary for the continued development of our business, we
may not be able to sustain our operations or grow our product offering beyond ONS-5010.

We  may  not  be  able  to  attract  or  retain  qualified  personnel  in  the  future  due  to  the  intense  competition  for  qualified  personnel  among
biotechnology,  pharmaceutical  and  other  businesses.  Our  industry  has  experienced  a  high  rate  of  turnover  of  management  personnel  in
recent years. If we are not able to attract, retain and motivate necessary personnel to accomplish our business objectives, we may experience
constraints  that  will  significantly  impede  the  achievement  of  our  development  objectives,  our  ability  to  raise  additional  capital  and  our
ability to implement our business strategy.

Our future performance will also depend, in part, on our ability to successfully integrate new executive officers into our management team
and our ability to develop an effective working relationship among senior management. Our failure to integrate these individuals and create
effective  working  relationships  among  them  and  other  members  of  management  could  result  in  inefficiencies  in  the  development  and
commercialization  of  our  product  candidates,  harming  future  regulatory  approvals,  sales  of  our  product  candidates  and  our  results  of
operations. Additionally, we do not currently maintain “key person” life insurance on the lives of our executives or any of our employees.

53

Table of Contents

Healthcare legislative reform measures may harm our business and results of operations.

In the United States, there have been and continue to be a number of legislative initiatives to improve the access to and quality of healthcare,
and to contain healthcare costs. For example, in March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care
and Education Reconciliation Act of 2010, or together, the Affordable Care Act, was passed, which substantially changes the way health
care is financed by both governmental and private insurers and significantly impacts the U.S. pharmaceutical industry. The Affordable Care
Act, among other things, imposed a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program
are  calculated  for  drugs  that  are  inhaled,  infused,  instilled,  implanted  or  injected,  increased  the  minimum  Medicaid  rebates  owed  by
manufacturers under the Medicaid Drug Rebate Program, extended the rebate program to individuals enrolled in Medicaid managed care
organizations,  added  a  provision  to  increase  the  Medicaid  rebate  for  line  extensions  or  reformulated  drugs,  established  annual  fees  on
manufacturers and importers of certain branded prescription drugs and biologic agents, and promoted a new Medicare Part D coverage gap
discount  program.  The  Affordable  Care  Act  also  expanded  eligibility  for  Medicaid  programs  and  introduced  a  new  Patient  Centered
Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding
for such research. There have been judicial, Congressional and executive branch challenges to certain aspects of the Affordable Care Act,
and we expect there will be additional challenges and amendments to the Affordable Care Act in the future. While Congress has not passed
comprehensive  repeal  legislation,  it  has  enacted  laws  that  modify  certain  provisions  of  the  Affordable  Care  Act  such  as  removing  or
delaying penalties, starting January 1, 2019, for not complying with the Affordable Care Act’s individual mandate to carry health insurance,
delaying  the  implementation  of  certain  Affordable  Care  Act-mandated  fees,  and  increasing  the  point-of-sale  discount  that  is  owed  by
pharmaceutical  manufacturers  who  participate  in  Medicare  Part  D.  Additionally,  on  June  17,  2021  the  U.S.  Supreme  Court  dismissed  a
challenge on procedural grounds that argued the Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was
repealed  by  Congress.  Thus,  the  Affordable  Care  Act  will  remain  in  effect  in  its  current  form.  Further,  prior  to  the  U.S.  Supreme  Court
ruling, on January 28, 2021, President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining
health  insurance  coverage  through  the  Affordable  Care  Act  marketplace,  which  began  on  February  15,  2021  and  remained  open  through
August 15, 2021. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules
that  limit  access  to  healthcare,  including  among  others,  reexamining  Medicaid  demonstration  projects  and  waiver  programs  that  include
work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the
Affordable Care Act. It is possible that the Affordable Care Act will be subject to judicial or Congressional challenges in the future. It is
unclear how any such challenges and the healthcare reform measures of the Biden administration will impact the Affordable Care Act and
our business. Accordingly, we continue to evaluate the potential impact of the Affordable Care Act and its possible repeal or replacement on
our business.

In addition, other legislative changes have been proposed and adopted in the United States since the Affordable Care Act was enacted. For
example,  on  August  2,  2011,  the  Budget  Control  Act  of  2011,  was  signed  into  law,  which,  among  other  things,  created  measures  for
spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of
at  least  $1.2  trillion  for  the  years  2012  through  2021,  was  unable  to  reach  required  goals,  thereby  triggering  the  legislation’s  automatic
reduction to several government programs. This includes aggregate reductions of Medicare payments to providers up to 2% per fiscal year,
which went into effect on April 1, 2013 and, due to subsequent legislative amendments, including the Infrastructure Investment and Jobs
Act, will stay in effect through 2031 unless additional Congressional action is taken. However, COVID-19 relief legislation suspended the
2% Medicare sequester from May 1, 2020 through December 31, 2021. Additionally, on January 2, 2013, President Obama signed into law
the American Taxpayer Relief Act of 2012, which among other things, further reduced Medicare payments to certain providers, including
physicians, hospitals and cancer treatment centers. Further, on March 11, 2021, President Biden signed the American Rescue Plan Act of
2021 into law, which eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average manufacturer price, for
single source and innovator multiple source drugs, beginning January 1, 2024. In addition, Congress is considering additional health reform
measures as part of the budget reconciliation process.

54

Table of Contents

In  addition,  there  has  been  heightened  governmental  scrutiny  recently  over  the  manner  in  which  drug  manufacturers  set  prices  for  their
marketed products, which have resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed
to,  among  other  things,  bring  more  transparency  to  product  pricing,  review  the  relationship  between  pricing  and  manufacturer  patient
programs, and reform government program reimbursement methodologies for drug products. At the federal level, the Trump administration
used several means to propose or implement drug pricing reform, including through federal budget proposals, executive orders and policy
initiatives.  For  example,  on  July  24,  2020  and  September  13,  2020,  President  Trump  announced  several  executive  orders  related  to
prescription drug pricing that seek to implement several of the administration's proposals. The FDA also released a final rule on September
24, 2020 providing guidance for states to build and submit importation plans for drugs from Canada. Further, on November 20, 2020, the
Department  of  Health  and  Human  Services,  or  HHS,  finalized  a  regulation  removing  safe  harbor  protection  for  price  reductions  from
pharmaceutical  manufacturers  to  plan  sponsors  under  Part  D,  either  directly  or  through  pharmacy  benefit  managers,  unless  the  price
reduction is required by law. The implementation of the rule has been delayed by the Biden administration from January 1, 2022 to January
1, 2023 in response to ongoing litigation. The rule also creates a new safe harbor for price reductions reflected at the point-of-sale, as well as
a safe harbor for certain fixed fee arrangements between pharmacy benefit managers and manufacturers, the implementation of which have
also been delayed until January 1, 2023. In July 2021, the Biden administration released an executive order, “Promoting Competition in the
American Economy,” with multiple provisions aimed at prescription drugs. In response to Biden’s executive order, on September 9, 2021,
HHS released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and sets out a variety
of  potential  legislative  policies  that  Congress  could  pursue  as  well  as  potential  administrative  actions  HHS  can  take  to  advance  these
principles. No legislation or administrative actions have been finalized to implement these principles. At the state level, legislatures have
increasingly  passed  legislation  and  implemented  regulations  designed  to  control  pharmaceutical  and  biological  product  pricing,  including
price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency
measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

We expect that the Affordable Care Act, as well as other healthcare reform measures that may be adopted in the future, may result in more
rigorous  coverage  criteria  and  lower  reimbursement,  and  additional  downward  pressure  on  the  price  that  we  receive  for  any  approved
product.  Any  reduction  in  reimbursement  from  Medicare  or  other  government-funded  programs  may  result  in  a  similar  reduction  in
payments  from  private  payors.  The  implementation  of  cost  containment  measures  or  other  healthcare  reforms  could  result  in  reduced
demand  for  our  product  candidates  or  additional  pricing  pressures,  and  may  prevent  us  from  being  able  to  generate  revenue,  attain
profitability or commercialize our drugs. Further, it is also possible that additional governmental action is taken in response to the COVID-
19 pandemic.

We  are  subject,  directly  and  indirectly,  to  federal  and  state  healthcare  laws  and  regulations,  including  fraud  and  abuse,  false  claims,
physician payment transparency and health information privacy and security laws. If we are unable to comply or have not fully complied
with such laws, we could face substantial penalties.

Our operations are directly and indirectly through our current and future arrangements with healthcare professionals, principal investigators,
consultants,  customers  and  third-party  payors  subject  to  various  federal  and  state  fraud  and  abuse  laws,  including  without  limitation,  the
federal Anti-Kickback Statute, the civil False Claims Act and physician sunshine laws and regulations. These laws may impact, among other
things, our clinical research, proposed sales, marketing and education programs. In addition, we may be subject to patient data privacy and
security regulation by both the federal government and the states in which we conduct our business. The healthcare laws that may affect our
ability to operate include but are not limited to:

● the  federal  Anti-Kickback  Statute,  which  prohibits,  among  other  things,  persons  and  entities  from  knowingly  and  willfully
soliciting, receiving, offering or paying remuneration, directly or indirectly, in cash or in kind, to induce, reward, or in return for
either the referral of an individual for, or the purchase, recommendation, order or furnishing of an item or service reimbursable, in
whole or in part, under a federal healthcare program, such as the Medicare and Medicaid programs;

● federal civil and criminal false claims laws and civil monetary penalty laws, including the civil False Claims Act, which can be

enforced by private individuals through civil whistleblower or qui tam actions, which prohibit,

55

Table of Contents

among  other  things,  individuals  or  entities  from  knowingly  presenting  or  causing  to  be  presented  claims  for  payment  from
Medicare, Medicaid or other government health programs that are false or fraudulent;

● the  federal  Health  Insurance  Portability  and  Accountability  Act  of  1996,  or  HIPAA,  which  created  additional  federal  criminal
statutes  that  prohibit,  among  other  things,  executing  a  scheme  to  defraud  any  healthcare  benefit  program  and  making  false
statements relating to healthcare matters;

● HIPAA,  as  amended  by  the  Health  Information  Technology  for  Economic  and  Clinical  Health  Act,  and  their  implementing
regulations,  which  imposes  certain  requirements,  including  mandatory  contractual  terms,  relating  to  the  privacy,  security  and
transmission  of  individually  identifiable  health  information  on  health  plans,  certain  healthcare  providers,  and  healthcare
clearinghouses,  known  as  covered  entities,  and  their  business  associates  that  provide  services  to  the  covered  entity  that  involve
individually identifiable health information and their subcontractors that use, disclose or otherwise process individually identifiable
health information;

● the  federal  legislation  commonly  referred  to  as  the  Physician  Payments  Sunshine  Act  under  the  Affordable  Care  Act,  which
requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare,
Medicaid, or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare &
Medicaid Services information related to payments and other transfers of value made by such manufacturers to physicians (defined
to  include  doctors,  dentists,  optometrists,  podiatrists  and  chiropractors)  and  teaching  hospitals  and  ownership  and  investment
interests held by physicians and their immediate family members and applicable group purchasing organizations, and, beginning in
2022, will require applicable manufacturers to report information related to payments and other transfers of value provided in the
previous  year  to  physician  assistants,  nurse  practitioners,  clinical  nurse  specialists,  certified  registered  nurse  anesthetists,  and
certified nurse midwives; and

● analogous state and foreign laws and regulations, such as anti-kickback and false claims laws that may apply to items or services
reimbursed by any third-party payor, including commercial insurers; state laws that require pharmaceutical companies to comply
with  the  pharmaceutical  industry’s  voluntary  compliance  guidelines  and  the  relevant  compliance  guidance  promulgated  by  the
federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources;
state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and
other  healthcare  providers  or  marketing  expenditures  or  drug  pricing;  state  and  local  laws  that  require  the  registration  of
pharmaceutical sales representatives; and state and foreign laws governing the privacy and security of health information in certain
circumstances,  many  of  which  differ  from  each  other  in  significant  ways  and  may  not  have  the  same  effect,  thus  complicating
compliance efforts.

Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available, it is possible that
some  of  our  business  activities  could  be  subject  to  challenge  under  one  or  more  of  such  laws.  In  addition,  recent  healthcare  reform
legislation has strengthened these laws. For example, the Affordable Care Act, among other things, amends the intent requirement of the
federal anti-kickback and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of these statutes or
specific intent to violate them in order to commit a violation. Moreover, the Affordable Care Act provides that the government may assert
that 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 civil False Claims Act.

If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we
may be subject to significant penalties, including civil, criminal and administrative penalties, damages, fines, exclusion from participation in
government  healthcare  programs,  such  as  Medicare  and  Medicaid,  individual  imprisonment,  disgorgement,  contractual  damages,
reputational  harm,  diminished  profits  and  future  earnings,  additional  reporting  requirements  and  oversight  if  we  become  subject  to  a
corporate  integrity  agreement  or  similar  agreement  to  resolve  allegations  of  non-compliance  with  these  laws,  and  the  curtailment  or
restructuring  of  our  operations,  any  of  which  could  adversely  affect  our  ability  to  operate  our  business  and  our  results  of  operations.
Defending against any such actions can be costly, time-consuming and may require significant financial and personnel resources.

56

Table of Contents

Therefore, even if we are successful in defending against any such actions that may be brought against us, our business may be impaired.

The  international  aspects  of  our  business  expose  us  to  business,  regulatory,  political,  operational,  financial  and  economic  risks
associated with doing business outside of the United States.

We currently have limited international operations of our own and have several international collaborations. Doing business internationally
involves a number of risks, including but not limited to:

● multiple,  conflicting  and  changing  laws  and  regulations  such  as  privacy  regulations,  tax  laws,  export  and  import  restrictions,

employment laws, regulatory requirements and other governmental approvals, permits and licenses;

● failure  by  us  or  our  collaboration  partners  to  obtain  and  maintain  regulatory  approvals  for  the  use  of  our  products  in  various

countries;

● additional potentially relevant third-party patent rights;

● complexities and difficulties in obtaining protection and enforcing our intellectual property;

● difficulties in staffing and managing foreign operations by us or our collaboration partners;

● complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems by

our collaboration partners;

● limits in our or our collaboration partners’ ability to penetrate international markets;

● financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial

crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations;

● natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts,

curtailment of trade and other business restrictions;

● certain expenses including, among others, expenses for travel, translation and insurance; and

● regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall

within the purview of the U.S. Foreign Corrupt Practices Act, its books and records provisions or its anti-bribery provisions.

If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur
costs that could harm our business.

Our third-party suppliers’ activities involve the controlled storage, use and disposal of hazardous materials, including the components of our
product  candidates  and  other  hazardous  compounds.  We  and  our  suppliers  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  our  facilities  pending  their  use  and  disposal.  We  cannot  eliminate  the  risk  of  contamination,  which
could cause an interruption of our commercialization efforts, research, development and manufacturing efforts and 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 our suppliers for
handling  and  disposing  of  these  materials  generally  comply  with  the  standards  prescribed  by  these  laws  and  regulations,  we  cannot
guarantee that this is the case or 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

57

Table of Contents

or  federal  or  other  applicable  authorities  may  curtail  our  use  of  certain  materials  and/or  interrupt  our  business  operations.  Furthermore,
environmental  laws  and  regulations  are  complex,  change  frequently  and  have  tended  to  become  more  stringent.  We  cannot  predict  the
impact of such changes and cannot be certain of our future compliance. We do not currently carry biological or hazardous waste insurance
coverage.

Risks Related to Ownership of Our Securities

The trading price of our securities is likely to be volatile, and purchasers of our securities could incur substantial losses.

The market price of our securities has been and will likely continue to be volatile. The stock market in general and the market in which we
operate 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 securities at a profit. The market price of our securities could be subject to wide
fluctuations in response to a variety of factors, including but not limited to:

● the success of competitive services, products or technologies;

● adverse results or delays in preclinical or clinical trials;

● any inability to obtain additional funding;

● any delay in filing an IND, BLA or other regulatory submission for ONS-5010, or any of our product candidates when planned,
and any adverse development or perceived adverse development with respect to the applicable regulatory agency’s review of that
IND, BLA or other regulatory submission;

● the perception of limited market sizes or pricing for ONS-5010 or any of our other product candidates;

● failure to successfully develop and commercialize ONS-5010 or any of our other product candidates;

● post-marketing safety issues relating to our product candidates generally;

● failure to maintain our existing strategic collaborations or enter into new collaborations;

● failure by us or our licensors and strategic collaboration partners to prosecute, maintain or enforce our intellectual property rights;

● changes in laws or regulations applicable to our products;

● any inability to obtain adequate product supply for our product candidates or the inability to do so at acceptable prices;

● adverse regulatory decisions;

● introduction of new products, services or technologies by our competitors;

● failure to meet or exceed financial projections we may provide to the public;

● failure to meet or exceed the financial projections of the investment community;

● the perception of the pharmaceutical industry by the public, legislatures, regulators and the investment community;

58

Table of Contents

● announcements  of  significant  acquisitions,  strategic  partnerships,  joint  ventures  or  capital  commitments  by  us,  our  strategic

collaboration partners or our competitors;

● disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent

protection for our technologies;

● additions or departures of key scientific or management personnel;

● significant lawsuits, including stockholder litigation and litigation filed by us or filed against us pertaining to patent infringement

or other violations of intellectual property rights;

● the  outcomes  of  any  citizens  petitions  filed  by  parties  seeking  to  restrict  or  limit  the  approval  of  our  product  candidates;  if
securities  or  industry  analysts  do  not  publish  research  or  reports  about  our  business  or  if  they  issue  an  adverse  or  misleading
opinion regarding our stock;

● changes in the market valuations of similar companies;

● general economic, industry or market conditions;

● sales of our securities by us or our stockholders in the future;

● trading volume of our securities;

● issuance of patents to third parties that could prevent our ability to commercialize our product candidates;

● the loss of one or more employees constituting our leadership team;

● changes in regulatory requirements that could make it more difficult for us to develop our product candidates; and

● the other factors described in this “Risk Factors” section.

In  addition,  biopharmaceutical  companies  in  particular  have  experienced  extreme  price  and  volume  fluctuations  that  have  often  been
unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the
market price of our securities, regardless of our actual operating performance.

BioLexis has beneficial ownership of a significant percentage of our common stock, has the right, together with an affiliate, to designate
members  to  our  board  of  directors  proportionate  to  its  ownership,  and  is  able  to  exert  significant  control  over  matters  subject  to
stockholder approval, which could prevent new investors from influencing significant corporate decisions.

As  of  September  30,  2021,  BioLexis  beneficially  owns  50,965,058  shares  of  our  common  stock,  and  its  affiliate  GMS  Ventures  and
Investments,  or  GMS  Ventures,  owns  an  additional  11,834,257  shares  of  common  stock  and  a  warrant  to  acquire  1,230,315  shares  of
common stock. Accordingly, BioLexis together with its affiliate GMS Ventures collectively beneficially owned approximately 36.0% of our
common stock as of such date. Under an investor rights agreement, as amended, with BioLexis and GMS Ventures, BioLexis also currently
has  the  power  to  designate  members  of  our  board  of  directors  proportionate  to  its  holdings,  and  two  of  our  eight  board  members  were
designated by BioLexis. BioLexis’ and GMS Ventures’ interests may not coincide with the interests of other securityholders. BioLexis and
GMS Ventures have the ability to influence our company through both its ownership position and representation on our board of directors,
which  may  prevent  or  discourage  unsolicited  acquisition  proposals  or  offers  for  our  capital  stock  that  you  may  believe  are  in  your  best
interest as one of our securityholders.

59

Table of Contents

Our quarterly operating results may fluctuate significantly or may fall below the expectations of investors or securities analysts, each of
which may cause our stock price to fluctuate or decline.

Our  quarterly  operating  results  may  fluctuate  significantly,  which  makes  it  difficult  for  us  to  predict  our  future  operating  results.  These
fluctuations may occur due to a variety of factors, many of which are out of our control and may be difficult to predict, including but not
limited to:

● our ability to successfully develop, market and sell ONS-5010 and any other product candidates;

● the cost of clinical development for ONS-5010 and any other product candidates;

● the success of competitive products or technologies;

● results of clinical trials of our product candidates or those of our competitors;

● developments or disputes concerning patent applications, issued patents or other proprietary rights;

● the recruitment or departure of key personnel;

● the level of expenses related to any of our product candidates or clinical development programs;

● the results of our efforts to discover, develop, manufacture, acquire or in-license additional product candidates;

● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts;

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

● market conditions in the pharmaceutical and biotechnology sectors;

● general economic, industry and market conditions; and

● the other factors described in this “Risk Factors” section.

If  our  quarterly  operating  results  fall  below  the  expectations  of  investors  or  securities  analysts,  the  market  price  of  our  securities  could
decline  substantially.  Furthermore,  any  quarterly  fluctuations  in  our  operating  results  may,  in  turn,  cause  the  price  of  our  securities  to
fluctuate substantially. We believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be relied
upon as an indication of our future performance.

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

The trading market for our securities depends in part on the research and reports that securities or industry analysts publish about us or our
business,  our  market  and  our  competitors.  We  do  not  have  any  control  over  these  analysts.  If  any  analysts  who  cover  us  downgrade  our
securities or change their opinion of our securities, the market price of our securities would likely decline. If one or more of these analysts
cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause
the market price of our securities or trading volume to decline.

60

Table of Contents

We are a “smaller reporting company” and, because we have opted to use the reduced reporting requirements available to us, certain
investors may find investing in our securities less attractive.

We are a “smaller reporting company” under the SEC’s disclosure rules, meaning that we have either: (i) a public float of less than $250
million; or (ii) annual revenues of less than $100 million during the most recently completed fiscal year; and no public float; or a public float
of less than $700 million.

As a smaller reporting company, we are permitted to comply with scaled-back disclosure obligations in our SEC filings compared to other
issuers, including with respect to disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We
have elected to adopt the accommodations available to smaller reporting companies. Until we cease to be a smaller reporting company, the
scaled-back disclosure in our SEC filings will result in less information about our company being available than for other public companies.
If investors consider our common shares less attractive as a result of our election to use the scaled-back disclosure permitted for smaller
reporting companies, there may be a less active trading market for our common shares and our share price may be more volatile.

We are also a non-accelerated filer under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and we are not required to
comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. Therefore, our internal controls over
financial reporting will not receive the level of review provided by the process relating to the auditor attestation included in annual reports of
issuers that are subject to the auditor attestation requirements. In addition, we cannot predict if investors will find our common shares less
attractive  because  we  are  not  required  to  comply  with  the  auditor  attestation  requirements.  We  cannot  predict  if  investors  will  find  our
securities less attractive because we rely on these available exemptions. If some investors find our securities less attractive as a result, there
may be a less active trading market for our securities and the market price of our securities may be more volatile.

We  have  and  will  continue  to  incur  significant  costs  and  demands  upon  management  as  a  result  of  complying  with  the  laws  and
regulations affecting public companies in the United States, which may harm our operating results.

As  a  public  company  listed  in  the  United  States,  we  have  and  will  continue  to  incur  significant  additional  legal,  accounting  and  other
expenses. The Sarbanes-Oxley Act, as well as rules subsequently implemented by the Securities and Exchange Commission, or SEC, and
The Nasdaq Stock Market LLC, or Nasdaq, have imposed various requirements on public companies. In addition, changing laws, regulations
and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and Nasdaq, or as a
result  of  stockholder  activism,  may  increase  legal  and  financial  compliance  costs  and  make  some  activities  more  time-consuming.  These
laws, regulations and standards are subject to varying interpretations, and as a result, their application in practice may evolve over time as
new  guidance  is  provided  by  regulatory  and  governing  bodies.  The  Sarbanes-Oxley  Act  requires,  among  other  things,  that  we  maintain
effective internal controls for financial reporting and disclosure controls and procedures. In particular, we are required to perform system and
process  evaluation  and  testing  of  our  internal  control  over  financial  reporting  to  allow  management  to  report,  on  the  effectiveness  of  our
internal control over financial reporting by Section 404 of the Sarbanes-Oxley Act, or Section 404. Our testing may reveal deficiencies in
our  internal  control  over  financial  reporting  that  are  deemed  to  be  material  weaknesses.  Our  compliance  with  Section  404  requires  us  to
incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group and rely
on independent contractors for control monitoring and for the preparation and review of our consolidated financial statements. If we are not
able to comply with the requirements of Section 404 in a timely manner or if we identify or our independent registered public accounting
firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our
stock could decline and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities, which would
require  additional  financial  and  management  resources.  We  intend  to  invest  resources  to  comply  with  evolving  laws,  regulations  and
standards,  and  this  investment  may  result  in  increased  general  and  administrative  expenses  and  a  diversion  of  management’s  time  and
attention from revenue-generating activities to compliance activities. If, notwithstanding our efforts to comply with new laws, regulations
and standards, we fail to comply, regulatory authorities may initiate legal proceedings against us, and our business may be harmed.

Further,  failure  to  comply  with  these  laws,  regulations  and  standards  might  also  make  it  more  difficult  for  us  to  obtain  certain  types  of
insurance, including director and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or incur
substantially higher costs to obtain the same or similar coverage. The impact of these

61

Table of Contents

events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our
board of directors or as members of senior management.

Due to the speculative nature of warrants, there is no guarantee that it will ever be profitable for holders of the Series A warrants to
exercise such warrants.

The Series A warrants issued in our initial public offering represent the right to acquire shares of our common stock at a fixed price for a
limited period of time. If not exercised prior to their expiration dates, such warrants expire and have no further value. In the event the price
of  a  share  of  our  common  stock  price  does  not  exceed  the  exercise  price  for  one  whole  share,  such  warrants  may  not  have  any  value.
Moreover, the market value of the warrants is uncertain and there can be no assurance that the market value of the warrants will equal or
exceed their initial public offering price. There can be no assurance that the market price of our common stock will ever equal or exceed the
exercise price for one whole share of the warrants, and, consequently, whether it will ever be profitable for holders of the Series A warrants
to exercise such warrants.

Future sales and issuances of our common stock or rights to purchase securities, including pursuant to our equity incentive plans or
exercise  of  warrants,  could  result  in  additional  dilution  of  the  percentage  ownership  of  our  stockholders  and  could  cause  the  market
price of our securities to fall.

We will need additional capital in the future to continue our planned operations. To the extent we raise additional capital by issuing equity
securities, our stockholders may experience substantial dilution. We may sell common stock, convertible securities or other equity securities
in one or more transactions at prices and in a manner we determine from time to time. If we sell common stock, convertible securities or
other equity securities in more than one transaction, investors may be materially diluted by subsequent sales. These sales may also result in
material dilution to our existing stockholders, and new investors could gain rights superior to our existing stockholders.

Pursuant to the 2015 Equity Incentive Plan, or the 2015 Plan, our management is authorized to grant stock options and other equity-based
awards to our employees, directors and consultants. Under the 2015 Plan, the number of shares of our common stock reserved for future
issuance as of September 30, 2021 was 10,558,352 shares. The number of shares available for future grant under the 2015 Plan also provides
for an “evergreen” increase on an annual basis unless our board of directors determines otherwise. In addition, we have reserved shares for
issuance under our 2016 Employee Stock Purchase Plan, or the ESPP, which similarly provides for an annual “evergreen” increase unless
determined  otherwise  by  our  board  of  directors.  If  our  board  of  directors  does  not  elect  to  reduce  the  annual  increases  in  the  number  of
shares available for future grant under the 2015 Plan or the ESPP, our stockholders may experience additional dilution, which could cause
the market price of our securities to fall. We also currently have issued and outstanding a number of warrants to purchase an aggregate of
5,128,832 shares of our common stock, at prices ranging from $0.9535 to $12.00 per share.

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

We have incurred substantial losses during our history and do not expect to become profitable in the near future, and we may never achieve
profitability. Unused federal net operating losses, or NOLs, for taxable years beginning before January 1, 2018 may be carried forward to
offset future taxable income, if any, until such unused NOLs expire. Under legislation enacted in 2017, informally titled the Tax Cuts and
Jobs Act, or the Tax Act, as modified by legislation enacted on March 27, 2020, entitled the Coronavirus Aid, Relief, and Economic Security
Act, or the CARES Act, federal NOLs incurred in taxable years beginning after December 31, 2017, can be carried forward indefinitely, but
the  deductibility  of  such  federal  NOLs  in  taxable  years  beginning  after  December  31,  2020  is  limited  to  80%  of  taxable  income.  It  is
uncertain if and to what extent various states will conform to the Tax Act or the CARES Act.

In  addition,  under  Sections  382  and  383  of  the  Internal  Revenue  Code  of  1986,  as  amended,  if  a  corporation  undergoes  an  “ownership
change,” generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain stockholders over a
three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research tax credits) to
offset  its  post-change  income  or  taxes  may  be  limited.  We  may  have  experienced  ownership  changes  in  the  past  and  may  experience
ownership changes in the future as a result of subsequent shifts in our stock ownership (some of which shifts are outside our control). As a
result, if we earn net taxable income, our

62

Table of Contents

ability to use our pre-change NOLs to offset such taxable income will be subject to limitations. Similar provisions of state tax law may also
apply to limit our use of accumulated state tax attributes. 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. As a result, even if we attain profitability,
we  may  be  unable  to  use  a  material  portion  of  our  NOLs  and  other  tax  attributes,  which  could  adversely  affect  our  future  cash  flows  or
results of operations.

We do not intend to pay dividends on our capital stock, and as such any returns will be limited to the value of our securities.

We have never declared or paid any cash dividends on our capital stock. We currently anticipate that we will retain future earnings for the
development,  operation  and  expansion  of  our  business  and  do  not  anticipate  declaring  or  paying  any  cash  dividends  for  the  foreseeable
future. Any return to securityholders will therefore be limited to the appreciation of their securities.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware
law, could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our
securityholders or remove our current management.

Our amended and restated certificate of incorporation, as amended, amended and restated bylaws, as amended and Delaware law contain
provisions  that  may  have  the  effect  of  delaying  or  preventing  a  change  in  control  of  us  or  changes  in  our  management.  Our  charter
documents also contain other provisions that could have an anti-takeover effect, such as:

● establishing a classified board of directors so that not all members of our board of directors are elected at one time;

● permitting the board of directors to establish the number of directors and fill any vacancies and newly created directorships;

● providing that directors may only be removed for cause;

● prohibiting cumulative voting for directors;

● requiring super-majority voting to amend some provisions in our amended and restated certificate of incorporation and amended

and restated bylaws;

● authorizing the issuance of “blank check” preferred stock that our board of directors could use to implement a stockholder rights

plan;

● eliminating the ability of stockholders to call special meetings of stockholders; and

● prohibiting  stockholder  action  by  written  consent,  which  requires  all  stockholder  actions  to  be  taken  at  a  meeting  of  our

stockholders.

These provisions, alone or together, could delay, deter or prevent hostile takeovers and changes in control or changes in our management.

In  addition,  because  we  are  incorporated  in  Delaware,  we  are  governed  by  the  provisions  of  Section  203  of  the  Delaware  General
Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine
with us.

Any provision of our amended and restated certificate of incorporation or amended and restated bylaws, each as amended, or Delaware law
that has the effect of delaying or deterring a change in control could limit the opportunity for our

63

Table of Contents

securityholders  to  receive  a  premium  for  their  securities  and  could  also  affect  the  price  that  some  investors  are  willing  to  pay  for  our
securities.

Our amended and restated certificate of incorporation and our amended and restated bylaws, each as amended, provide that the Court of
Chancery  of  the  State  of  Delaware  will  be  the  exclusive  forum  for  substantially  all  disputes  between  us  and  our  stockholders,  which
could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our  amended  and  restated  certificate  of  incorporation  and  our  amended  and  restated  bylaws,  each  as  amended,  provide  that  the  Court  of
Chancery  of  the  State  of  Delaware  is  the  exclusive  forum  for  the  following  types  of  actions  or  proceedings  under  Delaware  statutory  or
common law: any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting
a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our
amended and restated bylaws, each as amended, or any action asserting a claim against us that is governed by the internal affairs doctrine.
This provision would not apply to suits brought to enforce a duty or liability created by the Securities Exchange Act of 1934, as amended, or
any other claim for which the U.S. federal courts have exclusive jurisdiction.

The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with
us  or  our  directors,  officers  or  other  employees,  which  may  discourage  such  lawsuits  against  us  and  our  directors,  officers  and  other
employees. If a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation or in our
amended and restated bylaws, as amended, 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 and financial condition.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

Our headquarters are located in Iselin, New Jersey where we occupy approximately 2,711 square feet of office and warehouse space under a
lease that expires in March 2024. In March 2021, we assigned our Monmouth Junction, New Jersey corporate office lease to a third party
and  as  of  September  30,  2021,  did  not  have  remaining  future  obligations.  In  May  2020,  we  terminated  our  lease  agreement  for
approximately 66,000 square feet of office, manufacturing and laboratory space located in Cranbury, New Jersey, which previously served as
our headquarters.

Item 3. Legal Proceedings

From time to time, we may become involved in litigation relating to claims arising from the ordinary course of business. Our management
believes that there are currently no claims or actions pending against us, the ultimate disposition of which would have a material adverse
effect on our results of operations, financial condition or cash flows.

On July 20, 2020, Laboratorios Liomont S.A. de C.V., or Liomont, filed a complaint against us in the U.S. District Court of the Southern
District  of  New  York  alleging  certain  breach  of  contract  claims  under  our  June  25,  2014  strategic  development,  license  and  supply
agreement relating to the biosimilar development program for ONS-3010 and ONS-1045 claiming $3,000,000 in damages. On March 30,
2021, we entered into a confidential settlement agreement with Liomont and the complaint was dismissed on April 11, 2021. We agreed to
make an initial settlement payment of $625,000 that was paid in April 2021; and an additional payment of $750,000, which is contingent
upon the occurrence of certain future events.

Item 4. Mine Safety Disclosures

Not applicable.

64

Table of Contents

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Market Information

Our units, which comprised one share of our common stock, one-half of a Series A warrant and one-half of a Series B warrant began trading
under  the  symbol  “ONSIU”  on  The  Nasdaq  Global  Market  on  May  13,  2016  in  connection  with  our  initial  public  offering.  Following
separation of the units, on June 13, 2016, our shares of common stock and the Series A warrants and Series B warrants began trading under
the symbols “ONS,” “ONSIW” and “ONSIZ,” respectively, and our units were delisted. On February 13, 2018, the listing of our common
stock and the Series A Warrants was transferred to The Nasdaq Capital Market. On February 18, 2018, the Series B warrants expired and
were  delisted  on  May  16,  2018.  Following  our  name  change  to  “Outlook  Therapeutics,  Inc.,”  effective  December  4,  2018,  our  common
stock and the Series A warrants began trading under the symbols “OTLK” and “OTLKW,” respectively. Prior to our initial public offering,
there was no public market for our securities.

On December 17, 2021, the closing sale price of our common stock was [$1.45], and the closing price of our Series A warrants was [$0.20].

Common Stockholders

As of December 17, 2021, there were approximately [105] stockholders of record of our common stock. The actual number of stockholders
is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name
by brokers and other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by
other entities.

Series A Warrant Holders

As of December 17, 2021, there was one holder of record of our Series A warrants. The actual number of warrantholders is greater than this
number of record holders, and includes warrantholders who are beneficial owners, but whose warrants are held in street name by brokers and
other nominees. This number of holders of record also does not include warrantholders whose shares may be held in trust by other entities.
As a result of our 1-for-8 reverse stock split that was effected in March 2019, each whole Series A warrant is exercisable for 1/8 of one
whole share of our common stock. Each whole Series A warrant has a current exercise price of $1.50, or $12.00 per whole common share,
and is exercisable until February 18, 2022. The exercise price and number of shares issuable upon exercise of the Series A warrants may be
further adjusted upon the occurrence of certain events, including but not limited to any stock split, stock dividend, extraordinary dividend,
recapitalization,  reorganization,  merger  or  consolidation.  The  Series  A  warrant  holders  do  not  have  rights  or  privileges  of  holders  of
common stock or any voting rights until they exercise their warrants and receive common stock.

Dividend Policy

We have never declared or paid any cash dividends on our capital stock and do not anticipate paying any cash dividends in the foreseeable
future. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors and will depend on then-existing
conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other
factors our board of directors may deem relevant.

Securities Authorized for Issuance Under Equity Compensation Plans

The information required by this Item regarding equity compensation plans is incorporated by reference to the information set forth in Item
12 of this Annual Report on Form 10-K.

65

Table of Contents

Recent Sales of Unregistered Equity Securities

None.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during fiscal year ended September 30, 2021.

Item 6. Selected Financial Data

As a “Smaller Reporting Company”, this Item and the related disclosure is not required.

66

Table of Contents

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included elsewhere in
this  Annual  Report  on  Form  10-K.  This  Annual  Report  on  Form  10-K,  including  the  following  sections,  contains  forward-looking
statements. These statements are subject to risks and uncertainties that could cause actual results and events to differ materially from those
expressed  or  implied  by  such  forward-looking  statements.  For  a  detailed  discussion  of  these  risks  and  uncertainties,  see  Item  1A  “Risk
Factors” in this Annual Report on Form 10-K. See also “Cautionary Note Regarding Forward-Looking Statements and Industry Data.” We
caution the reader not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date
of this Form 10-K. We undertake no obligation to update forward-looking statements, which reflect events or circumstances occurring after
the date of this Form 10-K.

Overview

We are a biopharmaceutical company working to develop and launch the first ophthalmic formulation of bevacizumab approved by the U.S.
Food and Drug Administration, or FDA, for use in retinal indications. Our goal is to launch directly in the United States as the first and only
approved  bevacizumab  for  the  treatment  of  wet  age-related  macular  degeneration,  or  wet  AMD,  diabetic  macular  edema,  or  DME,  and
branch  retinal  vein  occlusion,  or  BRVO.  Our  plans  also  include  potentially  securing  a  strategic  partner  for  the  United  Kingdom,  Europe,
Japan and other markets.

ONS-5010 (LYTENAVA (bevacizumab-vikg)), our sole product candidate in active clinical development, is an investigational ophthalmic
formulation of bevacizumab, which we are developing to be administered as an intravitreal injection for the treatment of wet AMD and other
retinal  diseases.  Bevacizumab  is  a  full-length,  humanized  anti-VEGF  (Vascular  Endothelial  Growth  Factor)  recombinant  monoclonal
antibody,  or  mAb,  that  inhibits  VEGF  and  associated  angiogenic  activity.  The  study  design  for  our  Phase  3  clinical  program  to  evaluate
ONS-5010 as an ophthalmic formulation of bevacizumab was reviewed at an end of Phase 2 meeting with the FDA in April 2018, and we
filed our investigational new drug application, or IND, with the FDA in the first quarter of calendar 2019.

Our  clinical  program  for  ONS-5010  in  wet  AMD  involves  three  clinical  trials,  which  we  refer  to  as  NORSE  ONE,  NORSE  TWO  and
NORSE  THREE.  We  reported  achieving  the  anticipated  safety  and  efficacy  and  positive  proof-of-concept  topline  results  from  NORSE
ONE, a clinical experience study, in August 2020. NORSE TWO is our pivotal Phase 3 clinical trial comparing ONS-5010 to ranibizumab
(LUCENTIS). The topline results reported from NORSE TWO in August 2021 showed that ONS-5010 met the primary and key secondary
endpoint  for  efficacy  with  clinically  impactful  change  observed  for  treated  patients.  The  NORSE  TWO  primary  endpoint  difference  in
proportion of subjects gaining at least 15 letters BCVA was met and was highly statistically significant and clinically relevant. In the intent-
to-treat (ITT) primary dataset, the percentage of patients who gained at least 15 letters who were treated with ranibizumab was 23.1%, and
the percentage of patients who gained at least 15 letters who were treated with ONS-5010 was 41.7 % (p = 0.0052). The primary endpoint
was  also  statistically  significant  and  clinically  relevant  in  the  secondary  per-protocol  (PP)  dataset  (p  =  0.04)  where  the  percentages  were
almost identical, at 24.7% with ranibizumab and 41.0% with ONS-5010. The key secondary endpoint BCVA score change from baseline to
month 11 in the primary ITT dataset was also highly statistically significant and clinically relevant (p = 0.0043). A mean change in BCVA
was  observed  with  ranibizumab  of  5.8  letters  and  the  mean  change  with  bevacizumab-vikg  was  11.2  letters.  The  results  were  also
statistically  significant  in  the  secondary  PP  dataset  (p  =  0.05)  with  a  mean  change  in  letters  with  ranibizumab  of  7.0  letters  and  with
bevacizumab-vikg  11.1  letters.  NORSE  THREE  is  an  open-label  safety  study  we  conducted  to  ensure  the  adequate  number  of  safety
exposures to ONS-5010 are available for the initial ONS-5010 Biologics License Application, or BLA, submission with the FDA. In March
2021  we  reported  that  the  results  from  NORSE  THREE  provided  a  positive  safety  profile  for  ONS-5010.  Accordingly,  all  three  of  these
clinical trials required for our planned BLA submission in the first quarter of calendar 2022 for wet AMD have been completed.

We have also received agreement from the FDA on three Special Protocol Assessments, or SPAs, for three additional registration clinical
trials for our ongoing Phase 3 program for ONS-5010. The agreements reached with the FDA on these SPAs cover the protocols for NORSE
FOUR, a registration clinical trial evaluating ONS-5010 to treat BRVO, and NORSE FIVE and NORSE SIX, two registration clinical trials
evaluating ONS-5010 to treat DME. We intend to initiate these studies in 2023 after we receive FDA approval of our planned BLA for wet
AMD.  

67

Table of Contents

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

Currently, the cancer drug Avastin (bevacizumab) is used off-label for the treatment of wet AMD and other retinal diseases such as DME
and BRVO even though Avastin has not been approved by regulatory authorities for use in these diseases. If the ONS-5010 clinical program
is  successful,  it  will  support  our  plans  to  submit  for  regulatory  approval  in  multiple  markets  in  2021  including  the  United  States,  United
Kingdom,  Europe  and  Japan,  as  well  as  other  markets.  Because  there  are  no  approved  bevacizumab  products  for  the  treatment  of  retinal
diseases  in  such  major  markets,  we  are  developing  ONS-5010  as  a  standard  Biologics  License  Application,  or  BLA,  and  not  using  the
biosimilar drug development pathway that would be required if Avastin were an approved drug for the targeted diseases. If approved, we
believe  ONS-5010  has  potential  to  mitigate  risks  associated  with  off-label  use  of  unapproved  bevacizumab.  Off-label  use  of  unapproved
bevacizumab is currently estimated to account for at least 50% of all wet AMD prescriptions in the United States.

Going Concern Consideration

Through September 30, 2021, we have funded substantially all of our operations with $338.7 million in proceeds from the sale and issuance
of our equity and debt securities. We have also received $29.0 million pursuant to our collaboration and licensing agreements through such
date.  Our  net  loss  for  the  year  ended  September  30,  2021  was  $53.2  million.  We  also  had  a  net  loss  of  $35.2  million  for  the  year  ended
September 30, 2020. We have not generated any revenue from product sales. We anticipate incurring additional losses until such time, if
ever, that we can generate significant sales of ONS-5010 or any other product candidate we may develop.

In October 2021 and November 2021, we sold 1,773,974 shares of common stock under our "at-the-market" equity offering program (the
"ATM Offering"). We received $3.6 million in gross proceeds from the ATM Offering and paid fees to the sales agent of $0.1 million.

On  November  16,  2021,  we  received  $10.0  million  in  net  proceeds  from  issuance  of  an  unsecured  promissory  note  with  face  amount  of
$10.2 million (the “2021 Note”). The note bears interest at a rate of 9.5% per annum, matures January 1, 2023, and includes an original issue
discount of $0.2 million. We may prepay all or a portion of the note at any time by paying 105% of the outstanding balance elected for pre-
payment.

On November 16, 2021, we also entered into a note amendment (the “Note Amendment”) to a note dated November 4, 2020 (the “2020
Note”) in the original principal amount of $10,220,000. The Note Amendment amended the 2020 Note to, among other things, (i) extend the
maturity date to January 1, 2023, (ii) increase the interest rate from 7.5% per annum to 10% per annum beginning on January 1, 2022 and
(iii)  provide  for  the  lender’s  right  to  redeem  some  or  all  of  the  outstanding  balance  of  the  2020  Note  for  shares  of  our  common  stock
beginning July 1, 2022, subject to certain limitations.

In  November  2021,  we  issued  in  an  underwritten  public  offering,  including  full  exercise  of  the  underwriters’  overallotment  option,  an
aggregate of 46,000,000 shares of common stock at a purchase price per share of $1.25 for $54.0 million in net proceeds after payment of
underwriter discounts and commissions and other underwriter offering costs. GMS Ventures and Investments (“GMS Ventures”), an affiliate
of BioLexis Pte. Ltd. (“BioLexis”), our largest stockholder and strategic partner, purchased an aggregate of 16,000,000 shares of common
stock  in  the  public  offering  at  the  public  offering  price  per  share.  In  connection  with  the  underwritten  public  offering  (including  the  full
exercise  of  the  overallotment  option)  we  issued  the  underwriter  warrants  to  purchase  up  to  an  aggregate  of  2,100,000  shares  of  common
stock at an exercise price of $1.5625 per share, which warrants have a 5-year term.

We evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as
a going concern. Our current cash resources of $14.5 million as of September 30, 2021 together with the $3.5 million in net proceeds from
the  sale  of  shares  of  common  stock  under  our  ATM  Offering  in  October  2021  and  November  2021,  $10.0  million  in  net  proceeds  from
issuance of the 2021 Note, and net proceeds of $54.0 million received in November 2021 from the public offering are expected to fund our
operations through the anticipated approval of the

68

Table of Contents

ONS-5010 BLA expected in the first calendar quarter of 2023, at least one year from the issuance date of this report. We do not anticipate
making  any  material  capital  expenditures  in  fiscal  2022  as  we  believe  our  facilities  and  equipment  held  as  of  September  30,  2021,  are
sufficient for at least twelve months subsequent to the date of filing this report.

Impacts of the COVID-19 Pandemic

We continue to monitor the ongoing COVID-19 global pandemic, which has resulted in travel and other restrictions to reduce the spread of
the disease. To date, we have experienced only minor disruptions from the ongoing COVID-19 pandemic, including a brief delay in patient
enrollment and recruitment in NORSE TWO due to local clinical trial site protocols designed to protect staff and patients. Given our current
infrastructure needs and current strategy, we were able to transition to remote working with limited impact on productivity, as shelter-in-
place and other types of local and state orders were imposed. We have confirmed with the Ophthalmic Division of the FDA that it considers
both  approved  and  investigational  treatments  for  sight-threatening  conditions  such  as  wet  AMD  not  to  be  elective,  and  that  as  such  they
should continue during the COVID-19 restrictions. All clinical and chemistry, manufacturing and control, or CMC, activities are currently
active.

All three of our clinical trials have required to support our planned BLA submission are now complete. To date, we have not experienced
any significant COVID-19 disruptions to patient follow-up but the clinical trial protocol accounts for potential delayed or missed visits for
any reason, including COVID-19 type interruptions. The FDA has provided guidance in the event of COVID-19 disruptions and we intend
to  confer  with  the  FDA  and  follow  the  appropriate  guidance  in  the  event  that  NORSE  TWO  experiences  an  unusually  high  number  of
delayed or missed patient visits due to COVID-19.

The safety, health and well-being of all patients, medical staff and our internal and external teams is paramount and is our primary focus. As
the  pandemic  and  its  resulting  restrictions  evolve  in  jurisdictions  across  the  country,  we  are  aware  that  the  potential  exists  for  further
disruptions  to  our  projected  timelines.  We  are  in  close  communication  with  our  clinical  teams  and  key  vendors  and  are  prepared  to  take
action should the pandemic worsen and impact our business in the future.

The  ultimate  impact  of  the  COVID-19  pandemic  is  highly  uncertain  and  subject  to  change.  We  do  not  yet  know  the  full  extent  of  any
impacts  the  evolving  COVID-19  pandemic  may  have  on  our  business,  operations,  financial  position  and  our  clinical  and  regulatory
activities.  See  also  the  section  titled  “Risk  Factors”  herein  for  additional  information  on  risks  and  uncertainties  related  to  the  ongoing
COVID-19 pandemic.

Collaboration and License Agreements

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

MTTR, LLC – ONS 5010

In January 2020, we agreed to terminate our February 2018 arrangement with MTTR LLC, or MTTR, for ONS-5010. Following receipt of
necessary stockholder approval, in March 2020, we issued an aggregate of 7,244,739 shares of our common stock to the four principals of
MTTR (who include two of our named executive officers, Mr. Dagnon and Mr. Evanson) pursuant to individual consulting agreements we
entered into with each of them, and paid MTTR a one-time settlement fee of $110,000. The consulting agreements also include terms setting
for the respective compensation arrangements of each of the principals, including for Mr. Dagnon and Mr. Evanson, who have been serving
as executive officers since November 2018.

See also Item 1 “Business—Collaboration and License Agreements—MTTR-Strategic Partnership Agreement (ONS-5010).”

69

Table of Contents

MTTR  and  its  four  principals  under  the  strategic  partnership  agreement  and  the  subsequent  individual  consulting  agreements  earned  an
aggregate $1,089,408 and $1,294,089 during the years ended September 30, 2021 and 2020, respectively, which includes monthly consulting
fees and expense reimbursement, but excludes stock-based compensation related to restricted stock.

Syntone – Private Placement and PRC Joint Venture

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

Selexis SA

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

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

Components of Our Results of Operations

Collaboration Revenue

To date, we have derived revenue only from activities pursuant to our emerging market collaboration and licensing agreements related to our
inactive biosimilar development program. We have not generated any revenue from commercial product sales. For the foreseeable future, we
expect  all  of  our  revenue,  if  any,  will  be  generated  from  our  collaboration  and  licensing  agreements.  If  any  of  our  product  candidates
currently  under  development  are  approved  for  commercial  sale,  we  may  generate  revenue  from  product  sales,  or  alternatively,  we  may
receive royalties from any collaborator we select to commercialize our product candidates.

Each  of  our  collaboration  and  licensing  agreements  was  considered  to  be  a  multiple-element  arrangement  for  accounting  purposes.  We
determined  that  there  were  two  deliverables;  specifically,  the  license  to  our  product  candidate  and  the  related  research  and  development
services that we were obligated to provide. We concluded that these deliverables should be accounted for as a single unit of accounting and
revenue was being recognized on a straight-line basis through the estimated period of completion of our obligations under the agreement. All
remaining deferred revenue under our collaboration agreements was fully recognized as of September 30, 2019.

70

Table of Contents

Research and Development Expenses

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

● expenses incurred under agreements with contract research organizations, or CROs, as well as investigative sites and consultants

that conduct our preclinical studies and clinical trials;

● expenses  incurred  by  us  directly,  as  well  as  under  agreements  with  contract  manufacturing  organizations,  or  CMOs,  for
manufacturing  scale-up  expenses  and  the  cost  of  acquiring  and  manufacturing  preclinical  and  clinical  trial  materials  and
commercial materials, including manufacturing validation batches;

● outsourced professional scientific development services;

● employee-related expenses, which include salaries, benefits and stock-based compensation;

● payments made under a third-party assignment agreement, under which we acquired intellectual property;

● expenses relating to regulatory activities, including filing fees paid to regulatory agencies;

● laboratory materials and supplies used to support our research activities; and

● allocated expenses, utilities and other facility-related costs.

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

● the number of clinical sites included in the trials;

● the length of time required to enroll suitable patients;

● the number of patients that ultimately participate in the trials;

● the number of doses patients receive;

● the duration of patient follow-up;

● the results of our clinical trials;

● the establishment of commercial manufacturing capabilities;

● the receipt of marketing approvals; and

● the commercialization of product candidates.

Our expenditures are subject to additional uncertainties, including the terms and timing of regulatory approvals. We may never succeed in
achieving regulatory approval for any of our biosimilar product candidates. We may obtain unexpected results from our clinical trials. We
may elect to discontinue, delay or modify clinical trials of some product candidates or focus on others. A change in the outcome of any of
these variables with respect to the development of a product candidate

71

Table of Contents

could mean a significant change in the costs and timing associated with the development of that product candidate. For example, if the U.S.
Food and Drug Administration, or FDA, or other regulatory authorities were to require us to conduct clinical trials beyond those that we
currently  anticipate,  or  if  we  experience  significant  delays  in  enrollment  in  any  of  our  clinical  trials,  we  could  be  required  to  expend
significant additional financial resources and time on the completion of clinical development. Product commercialization will take several
years and millions of dollars in development costs.

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

General and Administrative Expenses

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

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

Interest Expense

Interest expense consists of cash paid and non-cash interest expense related to our senior secured notes, and unsecured notes with current
and former stockholders, equipment loans, lease liabilities and other finance obligations.

Loss on Extinguishment of Debt

During the year ended September 30, 2020, we recorded a loss on extinguishment of $1.9 million in connection with the exchange of our old
senior secured notes for new senior secured notes in December 2019 and the exchange of the remaining outstanding principal and accrued
interest on all new senior secured notes for shares of our common stock during the third quarter in fiscal 2020. The new senior secured notes
were considered substantially different from the old notes, as such, they qualified for extinguishment accounting.

Change in Fair Value of Redemption Feature

Change in fair value of the redemption feature reflects the change in the fair value of the embedded derivative contained in the new senior
secured  notes  issued  in  December  2019,  as  a  result  of  the  fact  that  such  notes  were  convertible  into  a  variable  number  of  shares  of  our
common stock and at a discount that was deemed to be substantial. This embedded derivative was recorded at fair value and was subject to
re-measurement at each balance sheet date until our obligations under the new senior secured notes were satisfied.

Change in Fair Value of Warrant Liability

We issued warrants to purchase our common stock in conjunction with our old senior secured notes, which are classified as liabilities and
recorded at fair value. The warrants are subject to re-measurement at each balance sheet date and we recognize any change in fair value in
our statements of operations as other (income) expense.

72

Table of Contents

Income Taxes

During the year ended September 30, 2020, we sold New Jersey State net operating losses, or NOLs, in the amount of $33.3 million and
unused research and development, or R&D, tax credits in the amount of $0.6 million resulting in the recognition of income tax benefits of
$3.3 million recorded in our statement of operations. We did not sell any NOLs or unused research and development tax credits during the
year ended September 30, 2021.

Since inception, we have not recorded any U.S. federal or state income tax benefits (excluding the sale of New Jersey state NOLs and R&D
tax credits) for the net losses we have incurred in each year or on our earned R&D tax credits, due to our uncertainty of realizing a benefit
from  those  items.  As  of  September  30,  2021,  we  had  federal  and  state  NOL  carryforwards  of  $282.4  million  and  $118.2  million,
respectively,  that  will  begin  to  expire  in  2030  and  2039,  respectively.  As  of  September  30,  2021,  we  had  federal  foreign  tax  credit
carryforwards of $2.4 million available to reduce future tax liabilities, which begin to expire starting in 2023. As of September 30, 2021, we
also had federal research and development tax credit carryforwards of $8.1 million and $0.8 million, respectively, which begin to expire in
2032 and 2033, respectively.

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

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

Results of Operations

Comparison of Years Ended September 30, 2021 and 2020

Operating expenses:

Research and development
General and administrative
Impairment of property and equipment

Loss from operations

Loss on equity method investment
Interest expense, net
Loss on extinguishment of debt
Change in fair value of redemption feature
Change in fair value of warrant liability
Loss before income taxes
Income tax expense (benefit)
Net loss

Year ended September 30, 

2021

2020

Change

$

 38,958,010
 12,768,725
 —
 51,726,735

$

 26,341,998
 9,971,015
 527,624
 36,840,637

 12,616,012
 2,797,710
 (527,624)
 14,886,098

 (51,726,735)

 (36,840,637)

 (14,886,098)

 46,340
 936,127
 —
 —
 452,146
 (53,161,348)
 2,000
 (53,163,348)

$

 —
 1,756,471
 1,896,296
 (1,796,982)
 (184,962)
 (38,511,460)
 (3,271,962)
 (35,239,498)

$

 46,340
 (820,344)
 (1,896,296)
 1,796,982
 637,108
 (14,649,888)
 3,273,962
 (17,923,850)

$

$

73

    
    
    
Table of Contents

Research and Development Expenses

The  following  table  summarizes  our  research  and  development  expenses  by  functional  area  for  the  years  ended  September  30,  2021  and
2020:

ONS-5010 development
Compensation and related benefits
Stock-based compensation
Other research and development

Total research and development expenses

Year ended September 30, 
2020
2021
$  21,707,174
$  34,469,098
 1,392,041
 1,560,119
 1,241,945
 953,328
 2,000,838
 1,975,465
$  26,341,998
$  38,958,010

Research  and  development  expenses  for  the  year  ended  September  30,  2021  increased  by  $12.6  million  compared  to  the  year  ended
September 30, 2020. We saw a significant increase in ONS-5010 development costs of $12.8 million as we completed NORSE TWO Phase
3  and  NORSE  THREE  Phase  3  clinical  trials  in  fiscal  2021  and  continued  with  our  ongoing  necessary  process  characterization  and
manufacturing scale up activities with external partners to support our planned BLA submission in 2022.

General and Administrative Expenses

The following table summarizes our general and administrative expenses by type for the years ended September 30, 2021 and 2020:

Professional fees
Compensation and related benefits
Stock-based compensation
Facilities, fees and other related costs

Total general and administrative expenses

$

Year ended September 30, 
2020
2021
$  3,953,660
 998,123
 1,565,484
 3,453,748
$  9,971,015

 6,038,823
 1,419,954
 3,933,959
 1,375,989
$  12,768,725

General  and  administrative  expenses  for  the  year  ended  September  30,  2021  increased  by  $2.8  million  compared  to  the  year  ended
September 30, 2020. The increase was primarily due to a $2.4 million increase in stock-based compensation from equity grants to employees
and directors in fiscal year 2021, a $2.1 million increase in professional fees primarily driven by increased recruitment expenses, licensing
efforts, commercial consulting, litigation legal costs, and public company consulting costs, and a $0.4 million increase in salary and benefits
from  increased  headcount.  These  increases  were  partially  offset  by  a  $2.1  million  decrease  in  facilities  related  costs  primarily  due  to
decrease in rent and utilities of $1.0 million, a gain on lease terminations of $0.6 million in 2021 after the assignment of our Monmouth
Junction, New Jersey corporate office lease; and a loss on lease termination recorded in 2020 of $0.7 million recognized upon termination of
our lease at our former corporate headquarters in Cranbury, New Jersey.

Impairment of Property and Equipment

During the year ended September 30, 2020, we recorded an impairment charge of $0.5 million primarily due to the write-off of assets held
for  sale  after  we  determined  that  the  carrying  amount  of  these  assets  was  not  recoverable  as  result  of  the  May  2020  termination  of  our
remaining lease for office, manufacturing and laboratory space at our former corporate headquarters in Cranbury, New Jersey and relocation
of our corporate headquarters to our warehouse space in Monmouth Junction, New Jersey.

74

    
    
    
    
Table of Contents

Interest Expense, Net

Interest expense, net decreased by $0.8 million to $0.9 million for the year ended September 30, 2021 as compared to $1.8 million for the
year ended September 30, 2020. The decrease was primarily due to due to conversion of both secured and unsecured notes in fiscal 2020.

Change in Fair Value of Warrant Liability

During the year ended September 30, 2021, we recorded a loss of $0.5 million related to the increase in the fair value of our common stock
warrant liability as a result of the increase in the price of our common stock during the period. During the year ended September 30, 2020,
we recorded income of $0.2 million related to the decrease in the fair value of our common stock warrant liability as a result of the decrease
in the price of our common stock during the period.

Liquidity and Capital Resources

We  have  not  generated  any  revenue  from  product  sales.  Since  inception,  we  have  incurred  net  losses  and  negative  cash  flows  from  our
operations. Through September 30, 2021, we have funded substantially all of our operations with $338.7 million in net proceeds from the
sale and issuance of our equity securities, debt securities and borrowings under debt facilities. We have also received an aggregate of $29.0
million pursuant to emerging markets collaboration and licensing agreements for our inactive biosimilar development programs.

We anticipate incurring additional losses until such time, if ever, that we can generate significant sales of ONS-5010 or any other product
candidate we may develop. We will need substantial additional financing to fund our operations and to commercially develop ONS-5010 or
any  other  product  candidate  we  may  develop.  Management  is  currently  evaluating  various  strategic  opportunities  to  obtain  the  required
funding  for  future  operations.  These  strategies  may  include  but  are  not  limited  to  payments  from  potential  strategic  research  and
development, licensing and/or marketing arrangements with pharmaceutical companies, private placements and/or public offerings of equity
and/or debt securities. Alternatively, we will be required to, among other things, make further reductions in our workforce, scale back our
plans  and  place  certain  activities  on  hold,  discontinue  our  development  programs,  liquidate  all  or  a  portion  of  our  assets,  and/or  seek
protection under the provisions of the U.S. Bankruptcy Code.

On November 5, 2020, we received $10.0 million in net proceeds from issuance of an unsecured promissory note, or 2020 Note, with face
amount  of  $10.2  million.  The  note  bears  interest  at  a  rate  of  7.5%  per  annum,  matures  January  1,  2022,  and  includes  an  original  issue
discount of $0.2 million. We may prepay all or a portion of the note at any time by paying 105% of the outstanding balance elected for pre-
payment. In November 2020, we repaid $3.6 million of unsecured stockholder notes that were due on demand as of September 30, 2020. On
November 16, 2021, entered into a note amendment (the “Note Amendment”) which, among other things, (i) extended the maturity date to
January 1, 2023, (ii) increased the interest rate from 7.5% per annum to 10% per annum beginning on January 1, 2022 and (iii) provided for
the  lender’s  right  to  redeem  some  or  all  of  the  outstanding  balance  of  the  Note  for  shares  of  our  common  stock  beginning  July  1,  2022,
subject to certain limitations.

In February 2021, we closed an underwritten public offering of our common stock for net proceeds of $35.5 million. We also entered into a
securities purchase agreement with Syntone Ventures, for the sale of an additional $3.0 million of shares which concurrent private placement
closed in February 2021. Following partial exercise of the underwriters’ overallotment option, in a separate concurrent private placement,
we issued an additional $1.0 million of shares of common stock to GMS Ventures at a purchase price of $1.00 per share.

During  the  year  ended  September  30,  2021,  warrants  to  purchase  an  aggregate  of  3,642,138  shares  of  common  stock  with  a  weighted
averaged exercise price of $0.9866 were exercised for aggregate gross proceeds of $3.6 million.

During the year ended September 30, 2021, we sold 2,855,190 shares of common stock under our ATM Offering and generated $7.2 million
in gross proceeds from the ATM Offering and paid fees to the sales agent of $0.2 million. In October 2021 and November 2021, we sold an
additional 1,773,974 shares of common stock under and generated $3.5 million in net proceeds from the ATM Offering after payment of fees
to the sales agent of $0.1 million.

75

Table of Contents

On November 16, 2021, we received $10.0 million in net proceeds from issuance of an unsecured promissory note, or 2021 Note, with face
amount  of  $10.2  million.  The  note  bears  interest  at  a  rate  of  9.5%  per  annum,  matures  January  1,  2023,  and  includes  an  original  issue
discount of $0.2 million. We may prepay all or a portion of the note at any time by paying 105% of the outstanding balance elected for pre-
payment.

In November 2021, we issued in an underwritten public offering an aggregate of 46,000,000 shares of common stock at a purchase price per
share  of  $1.25  for  $54.0  million  in  net  proceeds  after  payment  of  underwriter  discounts  and  commissions  and  other  underwriter  offering
costs. GMS Ventures purchased an aggregate of 16,000,000 shares of common stock in the public offering at the public offering price per
share. In connection with the underwritten public offering we issued the underwriter warrants to purchase up to an aggregate of 2,100,000
shares of common stock at an exercise price of $1.5625 per share, which warrants have a 5-year term.

We evaluated whether there are conditions or events, considered in the aggregate, that raise substantial doubt about our ability to continue as
a going concern. As of September 30, 2021, we had stockholders’ equity of $4.6 million. In addition, a $10.9 million unsecured promissory
note, which bears interest at a rate of 7.5% per annum compounding daily, matures January 1, 2023, as amended, and a $0.9 million loan
granted pursuant to the PPP of the CARES Act, which matures on May 2, 2022 are outstanding as of September 30, 2021. Our current cash
resources of $14.5 million as of September 30, 2021 together with the $3.5 million in net proceeds from the sale of shares of common stock
under  our  ATM  Offering  in  October  2021  and  November  2021  and  net  proceeds  of  $54.0  million  received  in  November  2021  from  the
public offering are expected to fund our operations through the anticipated approval of the ONS-5010 BLA expected in the first calendar
quarter of 2023, at least one year from the issuance date of this report. We do not anticipate making any material capital expenditures in
fiscal 2022 as we believe our facilities and equipment held at the year ended September 30, 2021 are sufficient for at least twelve months
subsequent to the date of filing this report.

Our  future  operations  are  highly  dependent  on  a  combination  of  factors,  including  (i)  the  timely  and  successful  completion  of  additional
financing discussed above, (ii) our ability to complete revenue-generating partnerships with pharmaceutical companies, (iii) the success of
our research and development, (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies, and,
ultimately, (v) regulatory approval and market acceptance of our proposed future products.

Cash Flows

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

Net cash used in operating activities
Net cash used in investing activities
Net cash provided by financing activities

Operating Activities

$

Year ended September 30, 

2021

 (54,253,288)
 —
 56,194,626

$

2020

 (31,790,093)
 (900,000)
 37,210,551

During the year ended September 30, 2021, we used $54.3 million of cash in operating activities resulting primarily from our net loss of
$53.2 million. This use of cash was partially offset by $6.0 million of non-cash items such as stock-based compensation, non-cash interest
expense, change in fair value of warrant liability, gain on settlement of lease termination obligation, loss on equity method investment and
depreciation  and  amortization  expense.  The  net  cash  outflow  of  $7.1  million  from  changes  in  our  operating  assets  and  liabilities  was
primarily due to an increase in prepaid expenses of $1.7 million for prepayments associated with ONS 5010 development costs, a decrease
in accrued expenses of $5.3 million primarily due to the settlement of lease termination obligation and payments to sites for accrued costs,
decrease in accounts payable of $0.2 million and $0.2 million of payments for operating leases. These outflows were partially offset by a
decrease in other assets of $0.3 million.

During the year ended September 30, 2020, we used $31.8 million of cash in operating activities resulting primarily from our net loss of
$35.2 million and the change in our operating assets and liabilities of $3.0 million. This use of cash was

76

    
    
Table of Contents

partially offset by $4.7 million of non-cash items such as change in fair value of redemption feature, non-cash interest expense, stock-based
compensation, change in fair value of warrant liability, impairment of property and equipment, loss on extinguishment of debt, loss on lease
termination, and depreciation and amortization expense. The change in our operating assets and liabilities of $1.3 million was primarily due
to  an  increase  in  our  prepaid  expenses  of  $0.3  million  associated  with  our  ONS  5010  development  costs  and  a  decrease  in  our  accounts
payable and operating lease liability of $1.7 million primarily due to payments in fiscal 2020 offset by an increase in accrued expenses of
$0.7 million associated with our ONS 5010 development costs and clinical trial costs.

Investing Activities

During the year ended September 30, 2020, we used cash of $0.9 million in investing activities for the initial investment in our planned PRC
joint venture.

Financing Activities

During  the  year  ended  September  30,  2021,  net  cash  provided  by  financing  activities  was  $56.2  million,  primarily  attributable  to  $39.5
million  in  net  proceeds  from  the  registered  direct  offering  and  concurrent  private  placements  in  February  2021  for  an  aggregate  of
42,607,394 shares of our common stock and accompanying 2,116,364 warrants to purchase shares of our common stock, $6.8 million in net
proceeds  from  the  sale  of  common  stock  under  the  ATM  Offering  and  $10.0  million  in  net  proceeds  from  issuance  of  an  unsecured
promissory note with face amount of $10.2 million in November 2020. Additionally, we received $3.6 million in net proceeds from common
stock warrants exercised. We also made $3.7 million in debt and finance lease obligations payments.

During  the  year  ended  September  30,  2020,  net  cash  provided  by  financing  activities  was  $37.2  million,  primarily  attributable  to  $9.2
million in net proceeds from a February 2020 registered direct offering and concurrent private placement; $16.0 million in net proceeds from
the initial private placement to Syntone; and $9.2 million in net proceeds from the registered direct offering in June 2020, and $1.0 million
from a concurrent private placement that closed in July 2020. We also received $1.1 million in net proceeds from the exercise of common
stock warrants and $0.9 million in proceeds from the PPP loan. We made $0.3 million in debt and finance lease obligations payments during
the year ended September 30, 2020.

Description of Indebtedness

In November 2020, we entered into a note purchase agreement with Streeterville Capital, LLC, a Utah limited liability company pursuant to
which we issued an unsecured promissory note in the original principal amount of $10.2 million for $10.0 million in cash proceeds. The
unsecured  note  bears  interest  at  a  rate  of  7.5%  per  annum  compounding  daily,  matures  January  1,  2022,  and  includes  an  original  issue
discount  of  $0.2  million.  We  may  prepay  all  or  a  portion  of  the  unsecured  note  at  any  time  by  paying  105%  of  the  outstanding  balance
elected for pre-payment. On November 16, 2021, we entered into a note amendment (the “Note Amendment”) which, among other things,
(i)  extended  the  maturity  date  to  January  1,  2023,  (ii)  increased  the  interest  rate  from  7.5%  per  annum  to  10%  per  annum  beginning  on
January  1,  2022  and  (iii)  provided  for  the  lender’s  right  to  redeem  some  or  all  of  the  outstanding  balance  of  the  Note  for  shares  of  our
common stock beginning July 1, 2022, subject to certain limitations.

On November 16, 2021, we received $10.0 million in net proceeds from issuance of an unsecured promissory note, or 2021 Note, with face
amount of $10.2 million. The note bears interest at a rate of 9.5% per annum compounding daily, matures January 1, 2023, and includes an
original issue discount of $0.2 million. We may prepay all or a portion of the note at any time by paying 105% of the outstanding balance
elected for pre-payment.

While  the  unsecured  notes  are  outstanding,  we  agreed  to  keep  adequate  public  information  available,  maintain  our  Nasdaq  listing,  and
refrain from undertaking certain “Variable Security Issuances” without the noteholders’ consent, subject to certain limited exempt issuances,
in addition to other negative covenants. The unsecured notes provide that in the event of default if we breach our negative covenants under
the purchase agreements, undertake certain “Fundamental Transactions” (as defined therein), along with other customary events of default,
in addition to providing for a default rate of 14%, the noteholder has the right to increase the outstanding balance by 5%.

77

Table of Contents

Funding Requirements

We plan to focus in the near term on the submission of a Biologics License Application for ONS-5010 with the FDA to support the
generation of commercial revenues. We anticipate we will incur net losses and negative cash flow from operations for the foreseeable future.
We may not be able to initiate commercialization of ONS-5010 if, among other things, the FDA does not approve our application arising out
of our current clinical trials when we expect, or at all, or if we are not able to secure sufficient funding of our expected post-launch
commercial costs.

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

We believe our existing cash and cash equivalents as of September 30, 2021 of $14.5 million together with the $3.5 million in net proceeds
from the sale of shares of common stock under our ATM Offering in October 2021 and November 2021 and net proceeds of $54.0 million
received in November 2021 from the public offering are expected to fund our operations through the anticipated approval of the ONS-5010
BLA  expected  in  the  first  calendar  quarter  of  2023.  We  do  not  anticipate  making  any  material  capital  expenditures  in  fiscal  2022  as  we
believe our facilities and equipment held at the year ended September 30, 2021 are sufficient for at least twelve months subsequent to the
date of filing this report. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital
resources  sooner  than  we  expect.  We  will  need  to  raise  substantial  additional  capital  in  order  to  support  our  post-launch  commercial
operations  until  we  generate  sufficient  revenue.  We  plan  to  finance  our  future  operations  with  a  combination  of  proceeds  from  potential
strategic collaborations, sale of the development and commercial rights to our drug product candidates, the issuance of equity securities, the
issuance of additional debt, and revenues from potential future product sales, if any. If we raise additional capital through the sale of equity
or convertible debt securities, your ownership will be diluted, and the terms of these securities may include liquidation or other preferences
that  adversely  affect  your  rights  as  a  holder  of  our  common  stock.  There  are  no  assurances  that  we  will  be  successful  in  obtaining  an
adequate  level  of  financing  for  the  development  and  commercialization  of  ONS-5010  or  any  other  current  or  future  product  candidates.
Alternatively,  we  will  be  required  to,  among  other  things,  modify  our  clinical  trial  plans  for  ONS-5010  in  additional  indications,  make
reductions in our workforce, scale back our plans and place certain activities on hold, discontinue our development programs, liquidate all or
a portion of our assets, and/or seek protection under the provisions of the U.S. Bankruptcy Code.

Because of the numerous risks and uncertainties associated with research, development and commercialization of pharmaceutical products,
we  are  unable  to  estimate  the  exact  amount  of  our  working  capital  requirements.  Our  future  funding  requirements  will  depend  on  many
factors, including:

● the number and characteristics of the product candidates we pursue;

● the scope, progress, results and costs of researching and developing our product candidates, and conducting preclinical studies and

clinical trials;

● the timing of, and the costs involved in, obtaining regulatory approvals for our product candidates;

● the cost of manufacturing our product candidates and any drugs we successfully commercialize;

● our  ability  to  establish  and  maintain  strategic  collaborations,  licensing  or  other  arrangements  and  the  financial  terms  of  such

agreements;

● the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims, including litigation costs

and the outcome of such litigation; and

78

Table of Contents

● the  timing,  receipt  and  amount  of  sales  of,  or  milestone  payments  related  to  or  royalties  on,  our  current  or  future  product

candidates, if any.

See Item 1A “Risk Factors” for additional risks associated with our substantial capital requirements.

Critical Accounting Policies and Significant Judgments and Estimates

Our  consolidated  financial  statements  are  prepared  in  accordance  with  U.S.  generally  accepted  accounting  principles,  or  GAAP.  The
preparation  of  our  consolidated  financial  statements  and  related  disclosures  requires  us  to  make  estimates  and  judgments  that  affect  the
reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements,
and the reported amounts of revenues and expenses during the reported period. We base our estimates on historical experience, known trends
and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and
assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions.

While our significant accounting policies are described in more detail in the notes to our audited consolidated financial statements appearing
elsewhere in this Annual Report on Form 10-K we believe that the following accounting policies are those most critical to the judgments and
estimates used in the preparation of our consolidated financial statements.

Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development
expenses.  This  process  involves  reviewing  open  contracts  and  purchase  orders,  communicating  with  our  applicable  personnel  to  identify
services  that  have  been  performed  on  our  behalf  and  estimating  the  level  of  service  performed  and  the  associated  cost  incurred  for  the
service  when  we  have  not  yet  been  invoiced  or  otherwise  notified  of  actual  costs.  The  majority  of  our  service  providers  require  advance
payments;  however,  some  invoice  us  in  arrears  for  services  performed,  on  a  pre-determined  schedule  or  when  contractual  milestones  are
met. We make estimates of our prepaid expenses and accrued expenses as of each balance sheet date in the consolidated financial statements
based on facts and circumstances known to us at that time. We periodically confirm the accuracy of the estimates with the service providers
and make adjustments if necessary. Examples of estimated accrued research and development expenses include fees paid to:

● vendors in connection with preclinical development activities

● CMOs for the production of preclinical and clinical trial materials;

● CROs in connection with clinical trials; and

● clinical trial sites.

We base our expenses related to preclinical studies and clinical trials on our estimates of the services received and efforts expended pursuant
to quotes and contracts with multiple research institutions and CROs that conduct and manage preclinical studies and clinical trials on our
behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment
flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment
of the expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion
of clinical trial milestones. In accruing service fees, we estimate the time period over which services will be performed and the level of effort
to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the
accrual  or  prepaid  accordingly.  Although  we  do  not  expect  our  estimates  to  be  materially  different  from  amounts  actually  incurred,  our
understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may
result in reporting amounts that are too high or too low

79

Table of Contents

in any particular period. To date, we have not made any material adjustments to our prior estimates of accrued research and development
expenses.

Recently Issued Accounting Pronouncements

In  August  2018,  the  Financial  Accounting  Standards  Board  (“FASB”)  issued  ASU  No.  2018  13,  Fair  Value  Measurement  (Topic  820):
Disclosure  Framework — Changes  to  the  Disclosure  Requirements  for  Fair  Value  Measurement  ("ASU  2018-13"),  which  removes  and
modifies  some  existing  disclosure  requirements  and  adds  others.  ASU  2018-13  modifies  the  disclosure  requirements  for  fair  value
measurements and removes the requirement to disclose (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair
value hierarchy, (2) the policy for timing of transfers between levels, and (3) the valuation processes for Level 3 fair value measurements.
ASU 2018-13 requires disclosure of changes in unrealized gains and losses for the period included in other comprehensive income (loss) for
recurring  Level  3  fair  value  measurements  held  at  the  end  of  the  reporting  period  and  the  range  and  weighted  average  of  significant
unobservable  inputs  used  to  develop  Level  3  fair  value  measurements.  The  Company  adopted  ASU  2018-13  on  October  1,  2020  and  the
adoption of this standard did not have a material impact on the Company’s financial statements.

In  January  2020,  FASB  issued  ASU  2020-01,  Investments-Equity  Securities  (Topic  321),  Investments-Equity  Method  and  Joint  Ventures
(Topic 323), and Derivatives and Hedging (Topic 815), which, generally, provides guidance for investments in entities accounted for under
the equity method of accounting. ASU 2020-01 is effective for all entities with fiscal years beginning after December 15, 2021, including
interim periods therein. The Company is currently evaluating the impact of adopting this guidance to its consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

As a “Smaller Reporting Company”, this Item and the related disclosure is not required.

80

Table of Contents

Item 8. Consolidated Financial Statements and Supplementary Data

OUTLOOK THERAPEUTICS, INC.

ANNUAL REPORT ON FORM 10-K

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

Page

82
84
85
86
87
88

81

Table of Contents

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Outlook Therapeutics, Inc.:

Opinion on the Consolidated Financial Statements

We  have  audited  the  accompanying  consolidated  balance  sheets  of  Outlook  Therapeutics,  Inc.  and  subsidiaries  (the  Company)  as  of
September  30,  2021  and  2020,  the  related  consolidated  statements  of  operations,  convertible  preferred  stock  and  stockholders’  equity
(deficit), and cash flows for the years then ended and the related notes (collectively, the consolidated financial statements). In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2021
and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting
principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight  Board  (United  States)  (PCAOB)  and  are  required  to  be  independent  with  respect  to  the  Company  in  accordance  with  the  U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or
fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As
part  of  our  audits,  we  are  required  to  obtain  an  understanding  of  internal  control  over  financial  reporting  but  not  for  the  purpose  of
expressing  an  opinion  on  the  effectiveness  of  the  Company’s  internal  control  over  financial  reporting.  Accordingly,  we  express  no  such
opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due
to  error  or  fraud,  and  performing  procedures  that  respond  to  those  risks.  Such  procedures  included  examining,  on  a  test  basis,  evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that
was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to
the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of
a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to
which it relates.

Evaluation of prepaid research and development expenses

As  discussed  in  Note  3  to  the  consolidated  financial  statements,  research  and  development  costs  are  expensed  as  incurred  and
consist  primarily  of  funds  paid  to  third  parties  for  the  provision  of  services  for  product  candidate  development,  clinical  and
preclinical development and related supply and manufacturing costs, and regulatory compliance costs. At the end of the reporting
period, the Company compares the payments made to third-party service providers to the estimated progress towards completion of
the  research  or  development  objectives.  Such  estimates  are  subject  to  change  as  additional  information  becomes  available.
Depending on the timing of

82

Table of Contents

payments to the service providers and the progress that the Company estimates has been made as a result of the service provided,
the Company may record net prepaid or accrued expense related to these costs.

We  identified  the  evaluation  of  prepaid  research  and  development  expenses  for  a  certain  contract  manufacturing  organization
(CMO) used by the Company for the production of pre-clinical and clinical trial materials as a critical audit matter. Specifically,
evaluating the sufficiency of audit evidence obtained over associated costs incurred for the services provided by the identified CMO
required especially subjective auditor judgment due to the nature of evidence available regarding progress towards completion of
underlying phases within the statements of work.

The following are the primary procedures we performed to address this critical audit matter. For the selected CMO, we examined
(1)  statement  of  work  terms,  (2)  payments,  and  (3)  communications  received  from  the  CMO  related  to  the  status  of  underlying
phases  within  the  statements  of  work,  and  compared  them  to  the  Company’s  schedule  of  costs  incurred  as  of  year-end.  We  also
confirmed  the  status  of  underlying  phases  within  the  statements  of  work  directly  with  the  selected  CMO.  We  assessed  the
sufficiency of audit evidence obtained related to prepaid research and development expenses related to statements of work with the
selected CMO by evaluating the cumulative results of the audit procedures.

/s/ KPMG LLP

We have served as the Company’s auditor since 2015.

Philadelphia, Pennsylvania
December 23, 2021

83

Table of Contents

Current assets:

Cash and cash equivalents
Prepaid expenses and other current assets

Total current assets

Property and equipment, net
Operating lease right-of-use assets, net
Equity method investment
Other assets

Total assets

Outlook Therapeutics, Inc.
Consolidated Balance Sheets

Assets

September 30, 

2021

2020

$

$

$

$

$

$

14,477,324
7,030,823
21,508,147

163,625
111,429
853,660
174,590
22,811,451

904,200
26,464
42,854
—
2,196,349
1,725,721
1,856,629
6,752,217

10,885,854
16,018
26,995
522,918
18,204,002

—

—
—

—

—

12,535,986
5,407,882
17,943,868

327,249
166,986
—
1,294,448
19,732,551

50,285
29,778
187,486
3,612,500
2,394,818
7,757,310
1,856,629
15,888,806

904,200
42,482
—
70,772
16,906,260

—

—
—

—

—

1,764,616
345,726,087
(342,883,254)
4,607,449
22,811,451

$

1,271,831
291,274,366
(289,719,906)
2,826,291
19,732,551

$

Liabilities, convertible preferred stock and stockholders’ equity

Current liabilities:

Current portion of long-term debt
Current portion of finance lease liabilities
Current portion of operating lease liabilities
Stockholder notes
Accounts payable
Accrued expenses
Income taxes payable

Total current liabilities

Long-term debt
Finance lease liabilities
Operating lease liabilities
Warrant liability

Total liabilities

Commitments and contingencies (Note 10)
Convertible preferred stock:

Series A convertible preferred stock, par value $0.01 per share: 1,000,000 shares authorized, no shares
issued and outstanding
Series A-1 convertible preferred stock, par value $0.01 per share: 200,000 shares authorized, no shares
issued and outstanding

Total convertible preferred stock

Stockholders’ equity:

Preferred stock, par value $0.01 per share: 7,300,000 shares authorized, no shares issued and outstanding
Series B convertible preferred stock, par value $0.01 per share: 1,500,000 shares authorized, no shares issued
and outstanding
Common stock, par value $0.01 per share; 325,000,000 shares authorized; 176,461,628 and 127,183,109
shares issued and outstanding at September 30, 2021 and 2020, respectively

Additional paid-in capital
Accumulated deficit
Total stockholders' equity

Total liabilities, convertible preferred stock and stockholders' equity

See accompanying notes to consolidated financial statements

84

    
Table of Contents

Outlook Therapeutics, Inc.
Consolidated Statements of Operations

Operating expenses:

Research and development
General and administrative
Impairment of property and equipment

Loss from operations
Loss on equity method investment
Interest expense, net
Loss on extinguishment of debt
Change in fair value of redemption feature
Change in fair value of warrant liability
Loss before income taxes
Income tax expense (benefit)
Net loss
Series A-1 convertible preferred stock dividends and related settlement
Deemed dividend upon modification of warrants
Deemed dividend upon amendment of the terms of the Series A-1 convertible preferred stock
Net loss attributable to common stockholders

Per share information:
Net loss per share of common stock, basic and diluted
Weighted average shares outstanding, basic and diluted

Year ended September 30, 
2020
2021

38,958,010
12,768,725
—
51,726,735
(51,726,735)
46,340
936,127
—
—
452,146
(53,161,348)
2,000
(53,163,348)
—
—
—
(53,163,348)

(0.35)

$

$

$

26,341,998
9,971,015
527,624
36,840,637
(36,840,637)
—
1,756,471
1,896,296
(1,796,982)
(184,962)
(38,511,460)
(3,271,962)
(35,239,498)
(166,133)
(3,140,009)
(10,328,118)
(48,873,758)

(0.67)

152,676,145

72,555,636

$

$

$

See accompanying notes to consolidated financial statements

85

    
    
Table of Contents

Outlook Therapeutics, Inc.
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Convertible Preferred Stock
Series A‑1

Common Stock

     Shares

Balance at October 1, 2019
Issuance of common stock in connection with exercise of warrants
Issuance of common stock in connection with conversion of stockholder notes and interest
Issuance of common stock in connection with conversion of senior secured notes and interest 
Issuance of vested restricted stock units
Sale of common stock, net of issuance costs
Issuance of restricted common stock to MTTR, LLC principals (Note 13)
Series A-1 convertible preferred stock dividends and related settlement
Conversion of Series A-1 convertible preferred stock to common stock
Stock-based compensation expense
Net loss
Balance at September 30, 2020
Issuance of common stock in connection with exercise of warrants
Sale of common stock, net of issuance costs
Stock-based compensation expense
Net loss
Balance at September 30, 2021

66,451
—
—
—
—
—
—
1,661
(68,112)
—
—
—
—
—
—
—
—  

$

$

Stockholders’ Equity (Deficit)

Total Stockholders

$ (254,480,408)  $

Amount
5,359,404

Accumulated
Deficit

Shares
  28,609,995
—   13,003,414
—  
1,475,258
—   12,201,461
—  
109
—   35,289,512
7,244,739
—  
—
(5,525,537)   29,358,621
—
—  
—  
—
—   127,183,109
3,815,935
—  
—   45,462,584
—
—  
—  
—
—   176,461,628   $1,764,616   $ 345,726,087   $ (342,883,254)  $

Additional
    Paid-in Capital    
$ 238,064,947
1,008,866
1,533,673
7,872,479
(1)
34,993,602
(72,447)
(166,133)
5,231,951
2,807,429
—
291,274,366
3,555,221
46,009,213
4,887,287
—

     Amount
$ 286,100
130,034
14,753
122,015
1
352,895
72,447
—
293,586
—
—
1,271,831
38,159
454,626
—
—

—
—
—
—
—
—
—
—
—
(35,239,498)
(289,719,906)
—
—
—
(53,163,348)

     Equity (Deficit)
(16,129,361
1,138,900
1,548,426
7,994,494
—
35,346,497
—
(166,133
5,525,537
2,807,429
(35,239,498
2,826,291
3,593,380
46,463,839
4,887,287
(53,163,348
4,607,449

166,133

See accompanying notes to consolidated financial statements.

86

    
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

Outlook Therapeutics, Inc.
Consolidated Statements of Cash Flows

OPERATING ACTIVITIES

Net loss
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization
Loss on extinguishment of debt
Non-cash interest expense
Stock-based compensation
Change in fair value of redemption feature
Change in fair value of warrant liability
Impairment of property and equipment
Gain on settlement of lease termination obligation
Loss on lease termination
Loss on equity method investment
Changes in operating assets and liabilities:
Prepaid expenses and other current assets
Other assets
Operating lease liability
Accounts payable
Accrued expenses
Income taxes payable
Other liabilities

Net cash used in operating activities

INVESTING ACTIVITIES
Investment in joint venture
Net cash used in investing activities

FINANCING ACTIVITIES

Proceeds from the sale of common stock, net of issuance costs
Proceeds from debt
Payment of debt issuance costs
Proceeds from exercise of common stock warrants
Payments of finance lease obligations
Repayment of stockholder notes
Repayment of debt
Net cash provided by financing activities

Net increase in cash
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental disclosure of cash flow information
Cash paid for interest

Accrued interest settled by conversion into common stock
Supplemental schedule of non-cash financing activities:

Senior secured notes principal converted into common stock

Unsecured notes principal converted into common stock
Issuance of exchange notes at estimated fair value

Issuance of redemption feature at estimated fair value
Series A-1 convertible preferred stock dividends and related settlement

Deferred offering costs and common stock issuance costs in accounts payable and accrued expenses

See accompanying notes to consolidated financial statements.

87

Year ended September 30, 

2021

2020

$

(53,163,348)

$

(35,239,498)

262,140
—
893,886
4,887,287
—
452,146
—
(552,340)
—
46,340

(1,729,944)
298,523
(150,346)
(198,469)
(5,299,163)
—
—
(54,253,288)

—
—

46,301,841
10,000,000
(8,032)
3,593,380
(29,778)
(3,612,500)
(50,285)
56,194,626
1,941,338
12,535,986
14,477,324

$

554,069
1,896,296
235,636
2,807,429
(1,796,982)
(184,962)
527,624
—
680,017
—

(310,270)
(84,120)
(164,686)
(1,489,760)
726,332
(2,805)
55,587
(31,790,093)

(900,000)
(900,000)

35,430,727
904,200
—
1,138,900
(215,074)
—
(48,202)
37,210,551
4,520,458
8,015,528
12,535,986

46,239

$
— $

913,967
1,531,004

— $
— $

— $
— $

— $
— $

7,033,950
977,966

7,050,206
8,264,451

166,133
84,230

$

$
$

$
$

$
$

$
$

    
    
Table of Contents

1.     Organization and Operations

Description of the Business

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

Outlook Therapeutics, Inc., (formerly Oncobiologics, Inc.), ("Outlook" or the "Company") was incorporated in New Jersey on January 5,
2010, started operations in July 2011, reincorporated in Delaware by merging with and into a Delaware corporation in October 2015 and
changed  its  name  to  “Outlook  Therapeutics,  Inc."  in  November  2018.  The  Company  is  a  late  clinical-stage  biopharmaceutical  company
focused  on  developing  and  commercializing  ONS-5010,  an  ophthalmic  formulation  of  bevacizumab  for  use  in  retinal  indications.  The
Company is based in Iselin, New Jersey.

The Company has been actively monitoring the COVID-19 pandemic and its impact globally. Given the Company’s current infrastructure
needs and current strategy, the Company was able to transition to remote working with limited impact on productivity, as shelter-in-place
and similar government orders were imposed. All development activities are currently active in support of the Company’s Biologics License
Application (“BLA”) registration program for ONS-5010 for wet age-related macular degeneration (“wet AMD”).

The  full  extent  to  which  the  COVID-19  pandemic  will  directly  or  indirectly  impact  the  Company’s  business,  results  of  operations  and
financial condition will depend on future developments that are highly uncertain, including as a result of new information that may emerge
concerning COVID-19 and the actions taken to contain it or treat COVID-19. Management believes the financial results for the year ended
September 30, 2021 were not significantly impacted by COVID-19.

2.     Liquidity

The Company has incurred recurring losses and negative cash flows from operations since its inception and has an accumulated deficit of
$342.9 million as of September 30, 2021. As of September 30, 2021, the Company had $10.9 million of principal and accrued interest due
under an unsecured promissory note maturing on January 1, 2023, as amended in November 2021, and a $0.9 million loan granted pursuant
to  the  Paycheck  Protection  Program  (the  “PPP”)  of  the  Coronavirus  Aid,  Relief,  and  Economic  Security  Act  (the  “CARES  Act”),  which
matures  on  May  2,  2022.  The  Company  expects  to  continue  to  incur  significant  operational  expenses  and  net  losses  in  the  upcoming  12
months. These factors could, without future consideration of the following events, raise substantial doubt about the Company’s ability to
continue as a going concern.

In  October  2021  and  November  2021,  the  Company  sold  1,773,974  shares  of  common  stock  under  its  "at-the-market"  equity  offering
program (the "ATM Offering"). The Company received $3.5 million in net proceeds from the ATM Offering.

On November 16, 2021, the Company received $10.0 million in net proceeds from issuance of an unsecured promissory note with a face
amount of $10.2 million. The note bears interest at a rate of 9.5% per annum compounding daily, matures January 1, 2023, and includes an
original issue discount of $0.2 million. The Company may prepay all or a portion of the note at any time by paying 105% of the outstanding
balance elected for pre-payment.

On November 16, 2021, the Company also entered into a note amendment (the “Note Amendment”) to a note dated November 4, 2020 (the
“2020 Note”) in the original principal amount of $10.2 million. The Note Amendment amended the 2020 Note to, among other things, (i)
extend  the  maturity  date  to  January  1,  2023,  (ii)  increase  the  interest  rate  from  7.5%  per  annum  to  10%  per  annum  compounding  daily
beginning on January 1, 2022 and (iii) provide for the lender’s right to redeem some or all of the outstanding balance of the 2020 Note for
shares of the Company’s common stock beginning July 1, 2022, subject to certain limitations.

In November 2021, the Company issued in an underwritten public offering of 46,000,000 shares of common stock at a purchase price per
share of $1.25 for $54.0 million in net proceeds after payment of underwriter discounts and commissions

88

Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

and other underwriter offering costs. GMS Ventures and Investments (“GMS Ventures”), an affiliate of BioLexis Pte. Ltd. (“BioLexis”), the
Company’s largest stockholder and strategic partner, purchased an aggregate of 16,000,000 shares of common stock in the public offering at
the  public  offering  price  per  share.  In  connection  with  the  underwritten  public  offering  the  Company  issued  the  underwriter  warrants  to
purchase up to an aggregate of 2,100,000 shares of common stock at an exercise price of $1.5625 per share, which warrants have a 5-year
term.

The  Company  has  evaluated  whether  there  are  conditions  or  events,  considered  in  the  aggregate,  that  raise  substantial  doubt  about  the
Company’s  ability  to  continue  as  a  going  concern.  Management  believes  that  the  Company’s  existing  cash  and  cash  equivalents  as  of
September  30,  2021  together  with  the  $3.5  million  in  net  proceeds  from  the  sale  of  shares  of  common  stock  under  the  ATM  Offering  in
October 2021 and November 2021, $10.0 million in net proceeds from issuance of an unsecured promissory note in November 2021, and net
proceeds of $54.0 million received in November 2021 from the public offering are expected to fund its operations through the anticipated
approval of the ONS-5010 BLA expected in the first calendar quarter of 2023, at least one year from the issuance date of this report. The
Company does not anticipate making any material capital expenditures in fiscal 2022 as management believes its facilities and equipment
held as of September 30, 2021 are sufficient for at least twelve months subsequent to the date of filing this report.

3.     Basis of Presentation and Summary of Significant Accounting Policies

Basis of presentation

The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles
(“GAAP”).  Any  reference  in  these  notes  to  applicable  guidance  is  meant  to  refer  to  GAAP  as  found  in  the  Accounting  Standards
Codification  (“ASC”)  and  Accounting  Standards  Updates  (“ASU”)  of  the  Financial  Accounting  Standards  Board  (“FASB”).  The
accompanying consolidated financial statements include the accounts of the Company and Outlook Therapeutics Pty Ltd, its wholly-owned
subsidiary incorporated in Australia (the “Subsidiary”). All intercompany accounts and transactions have been eliminated in consolidation.
The Company has determined the functional currency of the Subsidiary to be the U.S. dollar. The Company translates assets and liabilities of
its  foreign  operations  at  exchange  rates  in  effect  at  the  balance  sheet  date.  The  Company  records  remeasurement  gains  and  losses  on
monetary assets and liabilities, such as incentive and tax receivables and accounts payables, which are not in the functional currency of the
operation. These remeasurement gains and losses are recorded in the consolidated statements of operations as they occur.

Cash and cash equivalents

Cash  and  cash  equivalents  include  cash-on-hand  and  demand  deposits  with  financial  institutions  and  other  short-term  investments  with
maturities  of  less  than  three  months  when  acquired  and  convertible  to  known  cash  amounts.  At  September  30,  2021  and  2020,  the
Company’s cash equivalents consist of a money market account.

Equity method investment

The Company accounts for equity investments where it owns a non-controlling interest, but has the ability to exercise significant influence,
under  the  equity  method  of  accounting.  Under  the  equity  method  of  accounting,  the  original  cost  of  the  investment  is  adjusted  for  the
Company’s  share  of  equity  in  the  earnings  or  loss  of  the  equity  investee  and  reduced  by  dividends  and  distributions  of  capital  received,
unless the fair value option is elected, in which case the investment balance is marked to fair value each reporting period and the impact of
changes in fair value of the equity investment are reported in earnings. The Company has not elected the fair value option. The Company
assesses its investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of
the investment might not be recoverable and recognize an impairment loss to adjust the investment to its then-current fair value.

89

Table of Contents

Use of estimates

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions
that  affect  the  reported  amounts  of  assets  and  liabilities  and  disclosure  of  contingent  assets  and  liabilities  at  the  date  of  the  financial
statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Due
to the uncertainty of factors surrounding the estimates or judgments used in the preparation of the consolidated financial statements, actual
results  may  materially  vary  from  these  estimates.  Estimates  and  assumptions  are  periodically  reviewed  and  the  effects  of  revisions  are
reflected in the consolidated financial statements in the period they are determined to be necessary.

Fair value of financial instruments

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an
asset  or  paid  to  transfer  a  liability  (an  exit  price)  in  the  principal  or  most  advantageous  market  for  the  asset  or  liability  in  an  orderly
transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of
observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and
disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is
considered unobservable:

● Level 1 — Quoted prices in active markets for identical assets or liabilities.

● Level  2  —  Observable  inputs  (other  than  Level  1  quoted  prices),  such  as  quoted  prices  in  active  markets  for  similar  assets  or
liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable
or can be corroborated by observable market data.

● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair

value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The  asset’s  or  liability’s  fair  value  measurement  level  within  the  fair  value  hierarchy  is  based  on  the  lowest  level  of  any  input  that  is
significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of
unobservable inputs.

At September 30, 2021 and 2020, the Company’s financial instruments included cash, accounts payable, accrued expenses, equipment loans,
stockholder notes and the PPP loan under the CARES Act. The carrying amount of accounts payable, accrued expenses, equipment loans,
stockholder notes, and the PPP loan approximates fair value due to the short-term maturities of these instruments.

Fair Value of Other Financial Instruments

As of September 30, 2021, the carrying value of the unsecured promissory note of $10.9 million approximates fair value due to the short
maturity of this instrument.

Property and equipment

Property and equipment are recorded at cost. Depreciation and amortization is determined using the straight-line method over the estimated
useful lives ranging from 3 to 10 years. Leasehold improvements are amortized over the term of the lease or the estimated useful life of the
assets,  whichever  is  shorter.  Expenditures  for  maintenance  and  repairs  are  expensed  as  incurred  while  renewals  and  betterments  are
capitalized. When property and equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are eliminated
from the accounts and any resulting gain or loss is reflected in operations.

90

Table of Contents

Long-lived assets

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to
future net cash flows expected to be generated. Impairment charges are recognized at the amount by which the carrying amount of an asset
exceeds the fair value of the asset. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to
sell. The Company recognized an impairment charge of $0.5 million during the year ended September 30, 2020, which is described more
fully in Note 5.

Leases

At lease commencement, the Company records a lease liability based on the present value of lease payments over the expected lease term
including any options to extend the lease that the Company is reasonably certain to exercise. The Company calculates the present value of
lease  payments  using  an  incremental  borrowing  rate  as  the  Company’s  leases  do  not  provide  an  implicit  interest  rate.  The  Company’s
incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the
lease payments under similar terms. At the lease commencement date, the Company records a corresponding right-of-use lease asset based
on  the  lease  liability,  adjusted  for  any  lease  incentives  received  and  any  initial  direct  costs  paid  to  the  lessor  prior  to  the  lease
commencement date. The Company may enter into leases with an initial term of 12 months or less (“Short-Term Leases”). For Short-Term
Leases, the Company records the rent expense on a straight-line basis and does not record the leases on the consolidated balance sheet. The
Company had no Short-Term Leases as of September 30, 2021.

After lease commencement, the Company measures its leases as follows: (i) the lease liability based on the present value of the remaining
lease  payments  using  the  discount  rate  determined  at  lease  commencement  and  (ii)  the  right-of-use  lease  asset  based  on  the  re-measured
lease  liability,  adjusted  for  any  unamortized  lease  incentives  received,  any  unamortized  initial  direct  costs  and  the  cumulative  difference
between rent expense and amounts paid under the lease agreement. Any lease incentives received, and any initial direct costs incurred are
amortized  on  a  straight-line  basis  over  the  expected  lease  term.  Rent  expense  is  recorded  on  a  straight-line  basis  over  the  expected  lease
term.

Stock-based compensation

The  Company  measures  equity  classified  stock-based  awards  based  on  the  estimated  fair  value  on  the  date  of  grant  and  recognizes
compensation expense of those awards on a straight-line basis over the requisite service period, which is generally the vesting period of the
respective award. The Company accounts for forfeitures of stock option awards as they occur.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model, which is described
more fully in Note 13. The fair value of each restricted stock award is measured as the fair value per share of the Company’s common stock
on the date of grant.

Incentive and tax receivables

The  Subsidiary  is  eligible  to  participate  in  an  Australian  research  and  development  tax  incentive  program.  As  part  of  this  program,  the
Subsidiary is eligible to receive a cash refund from the Australian Taxation Office for a percentage of the research and development costs
expended  by  the  Subsidiary  in  Australia.  The  cash  refund  is  available  to  eligible  companies  with  annual  aggregate  revenues  of  less  than
$20.0  million  (Australian)  during  the  reimbursable  period.  The  Company’s  estimate  of  the  amount  of  cash  refund  it  expects  to  receive
related  to  the  Australian  research  and  development  tax  incentive  program  is  included  in  prepaid  expenses  and  other  current  assets  in  the
accompanying consolidated balance sheets. As of September 30, 2021, the Company’s estimate of the amount of cash refund it expects to
receive in 2022 for fiscal 2021 eligible spending as part of this incentive program was $0.1 million. As of September 30, 2020, the Company
had a receivable of $0.8 million which was received in fiscal 2021 as part of this incentive program.

91

Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

In addition, the Subsidiary incurs Goods and Services Tax (“GST”) on services provided by Australian vendors. As an Australian entity, the
Subsidiary is entitled to a refund of the GST paid. The Company’s estimate of the amount of cash refund it expects to receive related to GST
incurred is included in prepaid expenses and other current assets in the accompanying consolidated balance sheet. As of September 30, 2021
and 2020, the refundable GST on expenses incurred with Australian vendors was immaterial.

Research and development

Research and development costs are expensed as incurred and consist primarily of funds paid to third parties for the provision of services for
product candidate development, clinical and preclinical development and related supply and manufacturing costs, and regulatory compliance
costs. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress
toward  completion  of  the  research  or  development  objectives.  Such  estimates  are  subject  to  change  as  additional  information  becomes
available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a
result of the service provided, the Company may record net prepaid or accrued expense relating to these costs.

Upfront milestone payments made to third parties who perform research and development services on the Company’s behalf are expensed as
services  are  rendered.  Costs  incurred  in  obtaining  technology  licenses  are  charged  to  research  and  development  expense  as  acquired  in-
process  research  and  development  if  the  technology  licensed  has  not  reached  technological  feasibility  and  has  no  alternative  future  use.
Research  and  development  expenses  are  recorded  net  of  expected  refunds  of  eligible  research  and  development  costs  paid  to  Australian
vendors pursuant to the Australian research and development tax incentive program and GST incurred on services provided by Australian
vendors. During the years ended September 30, 2021 and 2020, the Company recorded $0.1 million and $0.5 million, respectively, in its
consolidated  statements  of  operations  related  to  the  cash  refund  it  expected  to  receive  from  the  Australian  research  and  development  tax
incentive program.

Income taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and
liabilities  are  recognized  for  the  future  tax  consequences  attributable  to  differences  between  the  financial  statement  carrying  amounts  of
existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax  assets  and  liabilities  of  a  change  in  tax  rates  is  recognized  in  income  in  the  period  that  includes  the  enactment  date.  A  valuation
allowance is recorded to the extent it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Net loss per share

Basic net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average number of
shares  of  common  stock  outstanding  during  the  period.  For  purposes  of  calculating  diluted  net  loss  per  common  share,  the  denominator
includes  both  the  weighted  average  common  shares  outstanding  and  the  number  of  common  stock  equivalents  if  the  inclusion  of  such
common  stock  equivalents  would  be  dilutive.  Dilutive  common  stock  equivalents  potentially  include  warrants,  performance-based  stock
options and units, and stock options and non-vested restricted stock unit (“RSU”) awards using the treasury stock method. For all periods
presented, there is no difference in the number of shares used to compute basic and diluted shares due to the Company’s loss.

92

Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding as of
September 30, 2021 and 2020, as they would be antidilutive:

Performance-based stock units
Performance-based stock options
Stock options
Common stock warrants

Recently issued accounting pronouncements

As of September 30, 
2021

2020

2,470
1,000,000
16,110,015
5,128,829

2,470
—
3,762,143
7,051,854

In August 2018, the FASB issued ASU No. 2018 13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the
Disclosure Requirements for Fair Value Measurement ("ASU 2018-13"), which removes and modifies some existing disclosure
requirements and adds others. ASU 2018-13 modifies the disclosure requirements for fair value measurements and removes the requirement
to disclose (1) the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of
transfers between levels, and (3) the valuation processes for Level 3 fair value measurements. ASU 2018-13 requires disclosure of changes
in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements
held at the end of the reporting period and the range and weighted average of significant unobservable inputs used to develop Level 3 fair
value measurements. The Company adopted ASU 2018-13 on October 1, 2020 and the adoption of this standard did not have a material
impact on the Company’s consolidated financial statements.

In  January  2020,  FASB  issued  ASU  2020-01,  Investments-Equity  Securities  (Topic  321),  Investments-Equity  Method  and  Joint  Ventures
(Topic 323), and Derivatives and Hedging (Topic 815), which, generally, provides guidance for investments in entities accounted for under
the equity method of accounting. ASU 2020-01 is effective for all entities with fiscal years beginning after December 15, 2020, including
interim periods therein. The Company is currently evaluating the impact of adopting this guidance to its consolidated financial statements.

4.     Fair Value Measurements

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis:

Liabilities
Warrant liability

Liabilities
Warrant liability

(Level 1)

September 30, 2021
(Level 2)

(Level 3)

— $

— $ 522,918

(Level 1)

September 30, 2020
(Level 2)

(Level 3)

— $

— $

70,772

$

$

93

    
    
    
    
    
    
    
Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

The  table  presented  below  is  a  summary  of  changes  in  the  fair  value  of  the  Company’s  Level  3  valuation  for  the  warrant  liability  and
redemption feature for the years ended September 30, 2021 and 2020:

Balance at October 1, 2019
Addition of feature on December 20, 2019
Change in fair value
Write off due to extinguishment of senior secured notes
Balance at September 30, 2020
Change in fair value
Balance at September 30, 2021

Warrants

Redemption
Feature

255,734
—
(184,962)
—
70,772
452,146
522,918

$

$

—
8,264,451
(1,796,982)
(6,467,469)
—
—
—

$

$

The warrants issued in connection with the convertible senior secured notes (see Note 9) are classified as liabilities on the accompanying
consolidated balance sheets as the warrants include cash settlement features at the option of the holders under certain circumstances. The
warrant liability is revalued each reporting period with the change in fair value recorded in the accompanying consolidated statements of
operations  until  the  warrants  are  exercised  or  expire.  The  fair  value  of  the  warrant  liability  is  estimated  using  the  Black-Scholes  option
pricing model using the following assumptions:

Risk-free interest rate
Remaining contractual term of warrant (years)
Expected volatility
Annual dividend yield
Fair value of common stock (per share)

September 30, 

2021
0.62 %
3.4
124.7 %
— %

2020
0.24 %
4.4
94.7 %
— %

$

2.17

$ 0.72

The fair value of the redemption feature was estimated by using a Monte Carlo simulation model and a with-and-without perspective, where
the fair value of debt instrument was measured with the derivative and without the derivative and the difference is the implied fair value of
the redemption feature. The value of the debt instrument with the redemption feature depended on the daily stock price path followed by the
Company’s common stock price. This model simulated daily common stock prices from the issuance date through the maturity date for the
debt instrument. At issuance, the Company utilized a volatility estimate of 130% based upon the observed historical volatility of both the
Company and peer group for 1-year and 2-year periods. Risk-free interest rate was based upon US treasury yields.

5.     Property and Equipment

Property and equipment, net, consists of:

Laboratory equipment
Less: accumulated depreciation

September 30, 

2021
1,067,351
(903,726)
163,625

$

$

$

$

2020
1,067,351
(740,102)
327,249

Depreciation expense for the years ended September 30, 2021 and 2020 was $163,624 and $219,416, respectively.

94

    
    
    
    
    
    
Table of Contents

Impairment Charge

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

During the year ended September 30, 2020, the Company recorded an impairment charge of $527,624 primarily due to the write-off of assets
held  for  sale  after  the  Company  determined  that  the  carrying  amount  of  these  assets  was  not  recoverable  as  result  of  a  lease  termination
agreement entered into in May 2020. Refer to Note 10 for further details.

6.      Other Assets

Other assets consist of:

Investment in PRC joint venture
Other assets

September 30, 

2021

— $

174,590
174,590

$

$

$

2020

900,000
394,448
1,294,448

In connection with the execution of a stock purchase agreement with Syntone Ventures LLC (“Syntone Ventures”), the U.S. based affiliate of
Syntone  Technologies  Group  Co.  Ltd.  (“Syntone  PRC”)  on  May  22,  2020,  the  Company  and  Syntone  PRC  entered  into  a  joint  venture
agreement  pursuant  to  which  they  agreed  to  form  a  People’s  Republic  of  China  (“PRC”)  joint  venture,  Beijing  Syntone  Biopharma  Ltd
(“Syntone”), that is 80% owned by Syntone PRC and 20% owned by the Company. As the Company can exert significant influence over,
but does not control, Syntone’s operations through voting rights or representation on Syntone’s board of directors, the Company accounts for
this investment using the equity method of accounting. Upon formation of Syntone in April 2021, the Company entered into a royalty-free
license with Syntone for the development, commercialization and manufacture of ONS-5010 in the greater China market, which includes
Hong Kong, Taiwan and Macau.

The  Company  made  the  initial  investment  of  $900,000  in  June  2020  which  was  included  in  other  assets  at  September  30,  2020.  Upon
formation  of  Syntone  in  April  2021,  the  Company  reclassified  the  investment  to  equity  method  investment  in  the  accompanying
consolidated balance sheets. The Company expects to be required to make an additional capital contribution to Syntone of approximately
$2.1 million, which will be made within four years after the establishment date in accordance with the development plan contemplated in the
license  agreement  or  on  such  other  terms  within  such  four-year  period.  The  maximum  exposure  to  a  loss  as  a  result  of  the  Company’s
involvement in Syntone is limited to the initial investment and the future capital contributions of approximately $2.1 million.

7.     Accrued Expenses

Accrued expenses consists of:

Compensation
Severance and related costs
Research and development
Interest payable
Professional fees
Lease termination obligation
Other accrued expenses

September 30, 

$

2021
753,808
—
808,780
12,909
—
—
150,224
$ 1,725,721

2020
579,618
9,521
2,890,333
3,691
132,085
3,971,111
170,951
7,757,310

$

$

95

    
    
    
    
    
Table of Contents

8.     Stockholder Notes

Restricted stock repurchase notes
Common stock repurchase note

Less: current portion

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

September 30, 

2021

— $
—
—
—
— $

2020

800,000
2,812,500
3,612,500
(3,612,500)
—

$

$

The Company previously repurchased shares of its restricted stock in exchange for notes totaling $800,000 that bore interest at rates ranging
from 0% to 4% per annum and were due on demand. These notes were paid in full in November 2020.

The Company had a $2,812,500 note payable related to the previous repurchase of common stock that did not bear interest and was due on
demand. This note was paid in full in November 2020.

9.     Debt

Debt consists of:

Unsecured promissory note
Paycheck Protection Program term loan
Equipment loans
Total debt
Less: unamortized loan costs
Total debt, net of unamortized loan costs
Less: current portion
Long-term debt

Unsecured promissory note

September 30, 

2021
10,938,145
904,200
—
11,842,345
(52,291)
11,790,054
(904,200)
10,885,854

$

$

$

$

2020

—
904,200
50,285
954,485
—
954,485
(50,285)
904,200

On  November  5,  2020,  the  Company  received  $10.0  million  in  net  proceeds  from  issuance  of  an  unsecured  promissory  note  with  face
amount  of  $10.2  million.  Debt  issuance  costs  totaling  $228,032  are  recorded  as  debt  discount  and  are  deducted  from  the  principal  in  the
accompanying consolidated balance sheets. The debt discount is amortized as a component of interest expense over the 14-month term of the
underlying debt using the effective interest method. The note bears interest at a rate of 7.5% per annum compounding daily and matures
January 1, 2023, as amended on November 16, 2021. Refer to Note 2 for further details on the unsecured promissory note amendment. The
Company may prepay all or a portion of the note at any time by paying 105% of the outstanding balance elected for pre-payment. During the
year ended September 30, 2021, the Company recognized $893,886 of interest expense related to the unsecured promissory note.

Paycheck Protection Program term loan

On May 4, 2020, the Company received $904,200 in proceeds from a loan granted pursuant to the PPP of the CARES Act. The PPP term
loan is evidenced by a promissory note containing the terms and conditions for repayment of the PPP term loan. The PPP term loan provides
for an initial six-month deferral of payments and any amount owed on the loan has a two-year maturity (May 2022), with an interest rate of
1% per annum. Commencing October 15, 2021, the Company began to pay the lender equal monthly payments of principal and interest as
required to fully amortize any principal amount outstanding on the PPP term loan as of October 15, 2021 by May 2, 2022. The Company has
the right to prepay any

96

    
    
    
    
    
    
Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

amounts outstanding under this loan at any time and from time to time, in whole or in part, without penalty. Interest expense on the PPP loan
for the years ended September 30, 2021 and 2020 was $9,219 and $3,691, respectively.

Equipment loans

The  equipment  loans  bore  interest  at  rates  ranging  from  12%  to  16%  with  the  original  term  of  the  loans  ranging  from  one  to  five  years.
Minimum monthly payments of principal and interest under the equipment loans were collateralized by the related equipment purchased and
an  unconditional  personal  guarantee  by  the  founding  stockholder  and  former  chief  executive  officer.  The  equipment  loans  were  repaid
during the year ended September 30, 2021.

Interest expense on the equipment loans for the years ended September 30, 2021 and 2020 was $3,237 and $8,940, respectively.

Unsecured notes

On March 7, 2019, the Company entered into a forbearance and exchange agreement with Iliad Research and Trading, L.P., a Utah limited
partnership  (“the  Lender”).  Concurrent  with  the  execution  of  this  agreement,  the  Lender  purchased  two  stockholder  notes  issued  by  the
Company  previously  in  the  original  principal  amount  of  $1,000,000  with  an  aggregate  outstanding  balance  as  of  March  7,  2019  of
$1,947,133, including accrued interest. The stockholder notes were accruing interest at the rate of 2.5% per month. The Lender agreed to
refrain  and  forbear  from  bringing  any  action  to  collect  under  the  stockholder  notes  until  March  7,  2020  and  to  reduce  the  interest  rates
currently in effect to 12.0% per annum simple interest during such forbearance period. The Company also agreed to, at Lender’s election,
repay or exchange the stockholder notes (or portions thereof) for shares of the Company’s common stock at an exchange rate of $13.44 per
share  or,  beginning  September  2019,  at  95%  of  the  average  of  the  two  lowest  closing  bid  prices  in  the  prior  twenty  trading  days,  as
applicable.

During  the  year  ended  September  30,  2020,  the  remaining  unsecured  notes  with  an  aggregate  carrying  amount  of  $977,966  and  accrued
interest of $570,460 were exchanged for 1,475,258 shares of the Company’s common stock at an average exchange price of $1.05. As of
September  30,  2020,  these  unsecured  notes  were  no  longer  outstanding.  Interest  expense  on  the  unsecured  notes  for  the  year  ended
September 30, 2020 was $12,997.

Senior secured notes

In  December  2019,  the  Company  entered  into  an  exchange  agreement  with  the  holders  of  its  $7,254,077  outstanding  aggregate  principal
amount  and  accrued  interest  of  senior  secured  notes  (the  “Old  Senior  Notes”)  originally  issued  pursuant  to  the  certain  Note  and  Warrant
Purchase  Agreement  dated  December  22,  2017,  as  amended  on  April  13,  2017,  November  5,  2018,  and  June  28,  2019  (the  “Exchange
Agreement”).  Pursuant  to  the  Exchange  Agreement,  the  holders  of  the  Old  Senior  Notes  exchanged  the  entire  outstanding  principal  and
accrued interest for new senior secured notes having an aggregate outstanding original principal amount of $7,589,027 which included an
aggregate exchange fee of $334,950.
The new senior secured notes were substantially similar to the Old Senior Notes, as amended through the date of the Exchange Agreement,
bore  interest  at  a  rate  of  12.0%  per  annum  and  would  have  matured  December  31,  2020  (subject  to  extension  to  June  30,  2021  at  the
Company’s  option  upon  payment  of  an  extension  fee  equal  to  3%  of  the  outstanding  balance  and  being  in  compliance  with  applicable
Nasdaq  listing  requirements).  The  new  senior  secured  notes  were  convertible,  at  the  option  of  the  holder,  beginning  April  1,  2020,  into
shares  of  the  Company’s  common  stock  at  a  conversion  price  equal  to  90%  of  the  two  lowest  closing  bid  prices  in  the  20  trading  days
immediately  preceding  such  conversion,  subject  to  a  floor  price  of  $0.232  per  share.  The  conversion  feature  was  determined  to  be  a
redemption  feature  and  was  bifurcated  from  the  debt  instrument.  The  estimated  fair  value  of  the  redemption  feature  was  $8,264,451  at
issuance  (see  Note  4).  The  Exchange  Agreement  was  accounted  for  as  an  extinguishment  of  debt.  The  Company  recognized  a  loss  on
extinguishment of convertible senior secured notes for the Exchange Agreement during the year ended September 30, 2020 of $8,060,580,
which amount was equal to the excess fair value of the notes and bifurcated redemption feature over the notes’ net carrying value.

97

Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

During  the  year  ended  September  30,  2020,  the  holder  of  the  new  senior  secured  notes  converted  the  entire  outstanding  principal  and
accrued  interest  totaling  $7,994,494  for  12,201,461  shares  of  the  Company’s  common  stock  at  an  average  conversion  price  of  $0.66  per
share. As of September 30, 2020, there are no longer any new senior secured notes outstanding. The Company recognized a $6,164,284 gain
on  extinguishment  of  the  new  senior  secured  notes  exchanged  for  shares  of  common  stock  during  the  year  ended  September  30,  2020
primarily due to the redemption feature liability and write-off of unamortized debt discount.

Aggregate interest expense on the Old Senior Notes and the new senior secured notes for the year ended September 30, 2020 was $819,498.

Future maturities of indebtedness at September 30, 2021 are as follows for the years ending September 30:

2022
2023

10.     Commitments and Contingencies

Selexis Commercial License Agreements

     $

  $

904,200
10,938,145
11,842,345

In April 2013, the Company entered into commercial license agreements with Selexis for each of the ONS-3010, ONS-1045 and ONS-1050
biosimilar  product  candidates  (which  agreements  were  subsequently  amended  on  May  21,  2014).  Under  the  terms  of  each  commercial
license  agreement,  the  Company  acquired  a  non-exclusive  worldwide  license  under  the  Selexis  Technology  to  use  the  applicable  Selexis
expression technology along with the resulting Selexis materials/cell lines, each developed under the research license, to manufacture and
commercialize licensed and final products, with a limited right to sublicense.

The Company paid an upfront licensing fee to Selexis for each commercial license and also agreed to pay a fixed milestone payment for
each licensed product. In addition, the Company is required to pay a low single-digit royalty on a final product-by-final product and country-
by-country basis, based on worldwide net sales of such final products by the Company or any of the Company’s affiliates or sublicensees
during the royalty term. The royalty term for each final product in each country is the period commencing from the first commercial sale of
the applicable final product in the applicable country and ending on the expiration of the specified patent coverage. At any time during the
term,  the  Company  has  the  right  to  terminate  its  royalty  payment  obligation  by  providing  written  notice  to  Selexis  and  paying  Selexis  a
royalty termination fee.

Each of the Company’s commercial agreements with Selexis will expire upon the expiration of all applicable Selexis patent rights. Either
party  may  terminate  the  related  agreement  in  the  event  of  an  uncured  material  breach  by  the  other  party  or  in  the  event  the  other  party
becomes subject to specified bankruptcy, winding up or similar circumstances. Either party may also terminate the related agreement under
designated circumstances if the Selexis Technology infringes third-party intellectual property rights. In addition, the Company has the right
to terminate each of the commercial agreements at any time at its convenience; however, with respect to the agreements relating to ONS-
3010 and ONS-1045, this right is subject to the licensee’s consent pursuant to a corresponding letter the Company executed in conjunction
with the standby agreement entered into between Selexis and Laboratories Liomont, S.A. de C.V. (“Liomont”) in November 2014.

The  standby  agreement  permits  Liomont  to  assume  the  license  under  the  applicable  commercial  agreement  for  Mexico  upon  specified
triggering events involving the Company’s bankruptcy, insolvency or similar circumstances.

98

Table of Contents

Technology license

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

The  Company  entered  into  a  technology  license  agreement  with  Selexis  that  will  require  milestone  payments  of  $375,011  (based  on  an
exchange  rate  on  September  30,  2021  for  converting  Swiss  Francs  to  U.S.  dollars)  to  the  licensor  by  the  Company  upon  achievement  of
certain clinical milestones and pay a single digit royalty on net sales by the Company utilizing such technology. The Company also has the
contractual right to buy out the royalty payments at a future date.

Litigation

On July 20, 2020, Liomont, filed a complaint against the Company in the U.S. District Court of the Southern District of New York alleging
certain  breach  of  contract  claims  under  the  June  25,  2014  strategic  development,  license  and  supply  agreement  relating  to  the  biosimilar
development  program  for  ONS-3010  and  ONS-1045  claiming  $3,000,000  in  damages.  On  March  30,  2021,  the  Company  entered  into  a
confidential  settlement  agreement  with  Liomont,  and  the  complaint  was  dismissed  on  April  11,  2021.  The  Company  agreed  to  make  an
initial settlement payment of $625,000 that was paid in April 2021; and an additional payment of $750,000, which is contingent upon the
occurrence of certain future events.

Leases

Corporate office and warehouse leases

On May 6, 2020, the Company terminated its lease agreement for approximately 66,000 square feet of office, manufacturing and laboratory
space  located  in  Cranbury,  New  Jersey,  which  previously  served  as  its  headquarters,  and  relocated  its  corporate  office  to  Monmouth
Junction,  New  Jersey,  a  site  previously  used  as  a  warehouse  location.  In  consideration  for  the  termination  of  the  Cranbury  lease,  the
Company agreed to make payments to the landlord totaling $981,987, payable in eight monthly installments commencing May 1, 2020. In
connection with the lease termination, the Company recorded a liability of $981,987 at May 11, 2020, the cease-use date, that represented
the  undiscounted  future  termination  payments  as  the  termination  period  was  less  than  a  year.  The  Company  derecognized  the  assets  and
liabilities associated with the financing lease and recorded a charge of $680,017 to general and administrative expense.

In March 2021, the Company assigned its Monmouth Junction, New Jersey corporate office lease to a third party and as of September 30,
2021,  did  not  have  remaining  future  obligations.  Upon  assignment,  the  Company  derecognized  the  operating  lease  right-of-use  asset  and
related operating lease liability and recognized a gain of $10,250.

In March 2021, the Company entered into a new three-year term corporate office lease in Iselin, New Jersey which commenced on April 23,
2021.

At September 30, 2020, the lease termination obligation of $356,987 is included in accounts payable on the consolidated balance sheet. A
rollforward of the charges incurred to general and administrative expense for the years ended September 30, 2021 and 2020:

Balance
     October 1, 2020     

Expensed / Accrued
Expense

Cash
Payments

Non-cash
Adjustments

Balance
September 30, 2021

Lease termination payments

$

356,987

$

— $

(356,987)

$

— $

—

Balance
     October 1, 2019     

Expensed / Accrued
Expense

Cash
Payments

Non-cash

     Adjustments

Balance
September 30, 2020

Lease termination payments
Assets and liabilities derecognition
Other charges
Lease termination payments

$

$

— $
—
—
— $

981,987
(842,514)
540,544
680,017

$

$

(625,000)
—
(540,544)
(1,165,544)

$

$

— $

842,514
—
842,514

$

356,987
—
—
356,987

99

    
    
    
    
    
Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

Office and laboratory lease termination obligation

In August 2018, the Company entered into a lease termination agreement effective September 1, 2018, to terminate the lease for office and
laboratory  space  in  Cranbury,  New  Jersey  which  was  due  to  expire  in  March  2026.  In  consideration  for  the  termination  of  the  lease,  the
Company  agreed  to  make  payments  to  the  landlord  totaling  up  to  $5.8  million,  which  included  (i)  $287,615  upon  execution  of  the
termination agreement, (ii) $50,000 per month for up to 30 months, commencing September 1, 2018, and (iii) a $4.0 million payment, in any
event, on or before February 1, 2021. The Company and landlord agreed that the $174,250 security deposit will be used to pay the 7th, 8th,
9th and a portion of the 10th monthly payments. In November 2020, the Company fully settled the remaining lease termination payments for
a  one-time  cash  payment  of  $3,250,000  and  $190,336  security  deposit  from  the  terminated  Cranbury,  New  Jersey  corporate  office  lease.
Upon  settlement,  the  Company  recognized  a  gain  of  $542,090  in  general  and  administrative  expenses  which  represented  the  difference
between the carrying value of the liability at the time of settlement and the settlement amounts. At September 30, 2020, the lease termination
obligation  is  included  in  accrued  expenses  on  the  consolidated  balance  sheets.  A  rollforward  of  the  charges  incurred  to  general  and
administrative expense for the years ended September 30, 2021 and 2020 is as follows:

Balance
     October 1, 2020     

Expensed / Accrued
Expense

Cash
Payments

Non-cash
Adjustments

Balance
September 30, 2021

Lease termination payments

$

3,971,111

$

111,315

$

(3,540,336)

$

(542,090)

$

—

Lease termination payments

$

3,909,448  

$

661,663  

$

(600,000) 

$

—  

$

Balance 
     October 1, 2019     

Expensed /
Accrued Expense

Cash
Payments

Non-cash
Adjustments

Balance
September 30, 2020
3,971,111

Equipment leases

The Company has equipment leases with terms between 12 and 36 months and has recorded those leases as finance leases. The equipment
leases bear interest between 4.0% and 13.0%.

Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include minimum payments
that the Company is obligated to make under the non-cancelable initial terms of the leases as the renewal terms are at the Company’s option.
Lease expense is recorded as research and development or general and administrative based on the use of the leased asset.

The components of lease cost for the years ended September 30, 2021 and 2020 were as follows:

Lease cost:
Amortization of right-of-use assets

Interest on lease liabilities

Total finance lease cost
Operating lease cost
Total lease cost

Year ended September 30, 

2021

2020

$

$

—
5,093
5,093
106,879
111,972

$

$

182,967
905,027
1,087,994
174,500
1,262,494

100

    
 
 
 
 
 
    
    
    
 
    
    
 
   
  
 
 
 
 
 
 
Table of Contents

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee were as follows:

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

Operating leases:
Right-of-use asset
Operating lease liabilities
Finance leases:
Right-of-use asset
Financing lease liabilities
Weighted-average remaining lease term (years):
Operating leases
Finance leases
Weighted-average discount rate:
Operating leases
Finance leases

$

$

September 30, 

2021

2020

111,429
69,849

$

— $

42,482

2.6
1.7

7.5%
9.5%  

166,986
187,486

—
72,260

1.0
2.4

9.0%
8.5%

Other information related to leases for the years ended September 30, 2021 and 2020 are as follows:

Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from finance leases
Operating cash flows from operating leases
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
Finance leases

Year ended September 30, 
2020

2021

$

$

$

5,093
158,708
29,778

905,027
187,500
215,074

128,473

$
—  

—
—

Future minimum payments under noncancelable leases at September 30, 2021 are as follows for the years ending September 30:

Operating leases

Finance leases

2022
2023
2024
Total undiscounted lease payments
Less: Imputed interest
Total lease obligations

Employee Benefit Plan

$

$

$

46,652
27,675

$

—  
$

74,327
4,478
69,849

$

29,605
13,149
4,383
47,137
4,655
42,482

The  Company  maintains  a  defined  contribution  401(k)  plan  in  which  employees  may  contribute  up  to  100%  of  their  salary  and  bonus,
subject to statutory maximum contribution amounts. The Company matches 100% of the first 3% of employee contributions. The Company
assumes  all  administrative  costs  of  the  Plan.  For  the  years  ended  September  30,  2021  and  2020,  the  expense  relating  to  the  matching
contribution was $40,305 and $48,315, respectively.

101

    
    
 
 
  
 
 
 
  
 
  
 
 
 
  
 
  
 
 
 
  
 
  
 
    
    
 
 
  
 
 
 
 
 
  
 
  
 
 
 
 
 
 
Table of Contents

11.   Stockholders’ Equity (Deficit)

Common stock

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

In February 2021, the Company issued in an underwritten public offering an aggregate of 38,593,767 shares of common stock at a purchase
price per share of $1.00 for $35.5 million in net proceeds after payment of underwriter discounts and commissions and other underwriter
offering costs. GMS Ventures purchased an aggregate of 8,360,000 shares of common stock in the public offering at the public offering price
per  share.  In  a  separate  concurrent  private  placement,  the  Company  issued  3,000,000  shares  of  common  stock  to  Syntone  Ventures  at  a
purchase price of $1.00 per share for aggregate gross proceeds of $3.0 million.

Following partial exercise of the underwriters’ overallotment option subsequent to the initial closing, and pursuant to the Investor Rights
Agreement dated as of September 11, 2017 and as amended, by and among the Company, BioLexis and GMS Ventures, the Company sold
an additional 1,013,627 shares of common stock to GMS Ventures in a private placement for aggregate gross proceeds to the Company of
$1.0 million at the public offering price per share of $1.00.

In  connection  with  the  underwritten  public  offering  (including  the  partial  exercise  of  the  overallotment  option)  the  Company  issued  the
underwriter warrants to purchase up to an aggregate of 2,116,364 shares of common stock at an exercise price of $1.25 per share, which
warrants have a 5-year term.

On  March  24,  2021,  following  receipt  of  stockholder  approval  at  the  Company’s  2021  annual  meeting  of  stockholders,  the  number  of
authorized shares of common stock was increased from 200,000,000 shares to 325,000,000 shares.

In  February  2020,  the  Company  issued,  in  a  registered  direct  offering,  an  aggregate  of  7,598,426  shares  of  common  stock  and,  in  a
concurrent  private  placement  to  the  same  investors,  warrants  to  purchase  up  to  an  aggregate  of  3,799,213  shares  of  common  stock  at  a
combined purchase price per share and accompanying warrant of $1.016, for approximately $7.7 million in gross proceeds. In the separate
concurrent  private  placement,  the  Company  issued  2,460,630  shares  of  common  stock  and  warrants  to  purchase  up  to  an  aggregate  of
1,230,315 shares of common stock to GMS Ventures at a combined purchase price per share and accompanying warrant of $1.016 for $2.5
million in gross proceeds. The warrants issued are exercisable immediately at an exercise price of $0.9535 per share and will expire four
years from the issuance date.

In  connection  with  the  registered  direct  offering  and  concurrent  private  placement  of  warrants  to  those  investors,  the  Company  issued
placement  agent  warrants  to  purchase  up  to  an  aggregate  of  531,890  shares  of  common  stock,  on  substantially  the  same  terms  as  the
concurrent private placement warrants, at an exercise price of $1.27 per share and a 5-year term.

Effective March 19, 2020, following approval of the Company’s stockholders, the Company issued an aggregate of 7,244,739 shares of its
common  stock  to  the  four  principals  (who  include  two  of  its  named  executive  officers,  Messrs.  Dagnon  and  Evanson)  of  MTTR,  LLC
(“MTTR”)  pursuant  to  their  respective  consulting  agreements  that  were  entered  into  on  January  27,  2020  and  concurrent  with  the
termination agreement and mutual release with MTTR to terminate the strategic partnership agreement. Refer to Note 13 for the accounting
of the restricted stock issued and Note 15 for further details on the terminated MTTR strategic partnership agreement.

In June 2020, the Company issued, in a private placement, an aggregate of 16,000,000 shares of common stock to Syntone, pursuant to a
stock purchase agreement entered into on May 22, 2020, at a purchase price of $1.00 per share, for aggregate gross proceeds to the Company
of $16.0 million.

In June 2020, the Company issued, in a registered direct offering, an aggregate of 8,407,411 shares of common stock at a purchase price of
$1.215  per  share,  for  aggregate  gross  proceeds  to  the  Company  of  approximately  $10.2  million.  In  connection  with  the  registered  direct
offering, the Company issued placement agent warrants to purchase up to an aggregate of 588,519 shares of common stock, at an exercise
price of $1.51875 per share and a 5-year term.

102

Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

On July 16, 2020, the Company received $1.0 million in gross proceeds in connection with a securities purchase agreement entered into on
June 22, 2020 with Syntone, in a private placement pursuant to which the Company issued and sold 823,045 shares of its common stock at a
purchase price of $1.215 per share.

During the year ended September 30, 2020, the Company issued 109 shares of common stock upon the vesting of RSUs.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Subject to
preferences that may apply to any outstanding preferred stock, holders of common stock are entitled to receive ratably any dividends that the
Company’s board of directors may declare out of funds legally available for that purpose on a non-cumulative basis. No dividends had been
declared through September 30, 2021.

H.C. Wainwright & Co. At-the-Market Offering Agreement

On March 26, 2021, the Company entered into an At-the-Market Offering Agreement (the “Agreement”) with H.C. Wainwright & Co., as
sales  agent  (“Wainwright”  or  the  “Agent”),  under  which  the  Company  may  issue  and  sell  shares  of  its  common  stock  from  time  to  time
through Wainwright as sales agent. The Company filed a prospectus supplement, dated March 26, 2021, with the Securities and Exchange
Commission pursuant to which the Company may offer and sell shares of common stock having an aggregate offering price of up to up to
$40.0 million from time to time through Wainwright. The Company incurred financing costs of $197,654 which were capitalized and are
being reclassified to additional paid in capital on a pro rata basis when the Company sells common stock under the ATM Offering. As of
September 30, 2021, $161,997 of such deferred costs are included in other assets on the consolidated balance sheets.

Under the Agreement, the Company pays Wainwright a commission equal to 3.0% of the aggregate gross proceeds of any sales of common
stock under the Agreement. The offering of common stock pursuant to the Agreement will terminate upon the earlier of (i) the sale of all
common stock subject to the Agreement or (ii) termination of the Agreement in accordance with its terms.

During the year ended September 30, 2021, the Company sold 2,855,190 shares of common stock under the ATM Offering and generated
$7.2 million in gross proceeds. The Company paid fees to the sales agent of $0.2 million.

Common stock warrants

As of September 30, 2021, the Company had the following warrants outstanding to acquire shares of its common stock:

Expiration Date
February 18, 2022
December 22, 2024
April 13, 2025
May 31, 2025
February 24, 2025
February 26, 2024
June 22, 2025
January 28, 2026

Shares of
common stock
issuable upon
exercise of
warrants

Exercise Price
Per Share

(i)
(i)
(i)

416,035
277,128
145,686
62,437
172,864
1,747,047
191,268
2,116,364
5,128,829

$
$
$
$
$
$
$
$

12.00
12.00
12.00
12.00
1.27
0.9535
1.51875
1.25

(i)

The warrants were issued in connection with the convertible senior secured notes (see Note 9) and are classified as liabilities
on the accompanying consolidated balance sheets as the warrants include cash

103

    
    
Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

settlement  features  at  the  option  of  the  holders  under  certain  circumstances.  Refer  to  Note  4  for  fair  value  measurements
disclosures.

On December 23, 2019, the Company amended the terms of its then outstanding 15-month warrants and five-year warrants issued April 12,
2019 (the “April 2019 Warrants”), which originally had an exercise price of $2.90 per share of the Company’s common stock. The exercise
price of all outstanding April 2019 Warrants was reduced to $0.2320 per share and the exercise period was amended such that all April 2019
Warrants expired on December 24, 2019. Immediately prior to expiration, all then unexercised April 2019 Warrants were automatically net
exercised pursuant to the amended provisions.

On January 27, 2020, the Company amended the exercise price of its outstanding warrants to purchase an aggregate 4,657,852 shares of its
common, all of which were held by BioLexis, to $0.232 per share. BioLexis exercised all such warrants for cash payment of approximately
$1.1 million on January 29, 2020.

The  estimated  change  in  fair  value  of  warrants  amended  during  the  year  ended  September  30,  2020  was  $3,140,009,  and  reflected  as  a
deemed dividend in the consolidated statements of operations for purposes of presenting net loss attributable to common stockholders when
calculating basic and diluted loss per share.

During  the  year  ended  September  30,  2020,  warrants  to  purchase  an  aggregate  of  15,085,240  shares  of  common  stock  with  a  weighted
averaged exercise price of $0.232 were exercised (including the warrants exercised by BioLexis on December 26, 2019) for an aggregate
13,003,414  shares  of  the  Company’s  common  stock;  and  warrants  to  purchase  an  aggregate  of  80,797  shares  of  common  stock  with  a
weighted averaged exercise price of $0.08 expired. In aggregate, 10,157,050 of the exercised warrants were April 2019 Warrants, described
above, exercised pursuant to the net exercise provisions therein, as amended.

During  the  year  ended  September  30,  2021,  warrants  to  purchase  an  aggregate  of  3,642,138  shares  of  common  stock  with  a  weighted
averaged  exercise  price  of  $0.9866  were  exercised  for  aggregate  gross  proceeds  to  the  Company  of  $3,593,380.  In  addition,  warrants  to
purchase an aggregate of 397,251 shares of common stock with a weighted averaged exercise price of $1.51875 were exercised on a cashless
basis and the Company issued 173,797 shares of common stock in connection with these cashless exercises.

12.   Convertible Preferred Stock

Series A-1 Convertible Preferred Stock

A total of 200,000 shares of Series A-1 have been authorized for issuance under the Certificate of Designation of Series A-1 Convertible
Preferred Stock of the Company. The shares of Series A-1 have a stated value of $100.00 per share and rank senior to all junior securities (as
defined in the Certificate of Designation).

The Series A-1 accrue dividends at a rate of 10% per annum, compounded quarterly, payable quarterly at the Company’s option in cash or in
kind  in  additional  shares  of  Series A-1.  The  Series A-1  is  also  entitled  to  dividends  on  an  as-if-converted  basis  in  the  same  form  as  any
dividends actually paid on shares of Common Stock or other securities. The initial conversion rate is subject to appropriate adjustment in the
event of a stock split, stock dividend, combination, reclassification or other recapitalization affecting the Common Stock. The holders of the
Series A-1 have the right to vote on matters submitted to a vote of the Company’s stockholders on an as-converted basis, voting with the
Company’s  other  stockholders  as  a  single  class.  In  addition,  without  the  prior  written  consent  of  a  majority  of  the  outstanding  shares  of
Series A-1, the Company may not take certain actions, including amending its certificate of incorporation or bylaws, or issuing securities
ranking pari passu or senior to the Series A-1.

104

Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

On  March  23,  2020,  the  Company  issued  29,358,621  shares  of  its  common  stock  upon  conversion  of  the  68,112  shares  of  Series  A-1
outstanding by BioLexis, pursuant to an agreement entered on January 27, 2020 with BioLexis, whereby the effective conversion rate of the
Series A-1 was increased from the $18.89797 per share to $431.03447263 per share, (or an effective conversion rate of $0.232 per share)
following stockholder approval of the amended terms on March 19, 2020.

The amendment to the Series A-1 was deemed an extinguishment for accounting purposes. The excess fair value of common stock received
over  the  net  carrying  value  of  the  Series  A-1  was  $10,328,118  and  reflected  as  a  deemed  dividend  in  the  consolidated  statements  of
operations for purposes of presenting net loss attributable to common stockholders when calculating basic and diluted loss per share.

During the years ended September 30, 2020, the Company issued an additional 1,661 shares of Series A-1 to settle the related dividends that
were due on a quarterly basis.

At September 30, 2021 and 2020, there were no shares of Series A-1 outstanding.

13.   Stock-Based Compensation

2011 Equity Incentive Plan

The  Company’s  2011  Equity  Compensation  Plan  (the  “2011  Plan”)  provided  for  the  Company  to  sell  or  issue  restricted  common  stock,
RSUs,  performance-based  awards  (“PSUs”),  cash-based  awards  or  to  grant  stock  options  for  the  purchase  of  common  stock  to  officers,
employees, consultants and directors of the Company. The 2011 Plan was administered by the board of directors or, at the discretion of the
board of directors, by a committee of the board. As of September 30, 2021, PSUs representing 2,470 shares of the Company’s common stock
were  outstanding  under  the  2011  Plan.  In  light  of  the  December  2015  adoption  of  the  2015  Equity  Incentive  Plan,  (the  “2015  Plan”)  no
future awards under the 2011 Plan will be granted.

2015 Equity Incentive Plan

In December 2015, the Company adopted the 2015 Plan. The 2015 Plan provides for the grant of stock options, stock appreciation rights,
restricted stock awards, RSU awards, performance stock awards and other forms of equity compensation to Company employees, directors
and  consultants.  The  aggregate  number  of  shares  of  common  stock  authorized  for  issuance  pursuant  to  the  Company’s  2015  Plan  is
27,838,019. As of September 30, 2021, 10,558,352 shares remained available for grant under the 2015 Plan.

Stock options and RSUs granted under the Company's 2015 Plan generally vest over a period of one to four years from the date of grant and,
in the case of stock options, have a term of 10 years. The Company recognizes the grant date fair value of each option and share of RSU
over its vesting period.

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations
for the years ended September 30, 2021 and 2020:

Research and development
General and administrative

Year ended September 30, 

2021

2020

953,328
3,933,959
4,887,287

$

$

1,241,945
1,565,484
2,807,429

$

$

105

    
    
Table of Contents

Stock options

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

The following table summarizes all of the Company’s stock option activity for the years ended September 30, 2020 and 2021:

Balance at October 1, 2019
Granted
Forfeited or expired
Balance at September 30, 2020
Granted
Forfeited or expired
Balance at September 30, 2021
Vested and exercisable
Vested and expected to vest at September 30, 2021

Weighted
Average
Exercise Price

Weighted
Average
Remaining
Contractual
     Term (Years)

Aggregate
Intrinsic Value

3.46
1.33
2.78
2.01
1.29
0.76
1.46
1.65
1.46

9.0
8.5
9.0

$
$

14,303,576
3,218,406

Number of
Shares
1,389,999
2,641,621
(269,477)
3,762,143
12,461,645
(113,773)
16,110,015
3,683,874
16,110,015

$

$

The aggregate intrinsic value represents the total amount by which the fair market value of the common stock subject to options exceeds the
exercise price of the related options.

The Company estimated the fair value of each stock option award on the grant date using the Black-Scholes option pricing model, wherein
expected volatility is based on historical volatility of the publicly traded common stock of a peer group of companies. The expected term
calculation is based on the “simplified” method described in Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, and SAB
No. 110, Share-Based Payment, since the simplified method provides a reasonable estimate in comparison to actual experience. For options
granted to non-employees, the Company uses the remaining contractual life. The risk-free interest rate is based on the U.S. Treasury yield at
the date of grant for an instrument with a maturity that is commensurate with the expected term of the stock options. The dividend yield is
zero since the Company has never paid cash dividends on its common stock and has no present intention to pay cash dividends. Options
granted under the 2015 Plan generally vest over one to four years and have a term of 10 years.

The weighted average grant date fair value of the options awarded to employees and directors for the years ended September 30, 2021 and
2020 was $0.98 and $0.96 per option, respectively. The fair value of the options was estimated on the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions:

Risk-free interest rate
Expected term (years)
Expected volatility
Expected dividend yield

Year ended September 30, 

2021

2020

0.58 %  
6.04
94.5 %  
—

0.66 %
5.72
90.5 %
—

As of September 30, 2021, there was $11,039,997 of unrecognized compensation expense that is expected to be recognized over a weighted-
average period of 3.3 years.

Performance-based stock options

During  the  year  ended  September  30,  2021,  the  Company  granted  an  officer  of  the  Company  share  option  awards  whose  vesting  is
contingent upon meeting company-wide performance goals, including upon the Company raising $100 million on or prior to the last day of
the first calendar quarter of 2022, and upon the Company filing the ONS-5010 BLA on or

106

    
    
    
    
    
Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

prior  to  the  last  day  of  the  second  calendar  quarter  of  2022.  The  performance  stock  options  were  granted  “at-the-money”  and  have
contractual lives 10 years.

The  fair  value  of  each  option  grant  under  the  performance  share  option  plan  was  estimated  on  the  date  of  grant  using  the  same  option
valuation model used for nonstatutory options above. Compensation expense for performance-based stock options is only recognized when
management determines it is probable that the awards will vest.

A summary of the activity under the performance share option plan as of September 30, 2021, and changes during the year then ended is
presented below.

Balance at October 1, 2020
Granted
Balance at September 30, 2021
Vested and exercisable
Vested and expected to vest at September 30, 2021

Weighted
Average
Exercise Price

Weighted
Average
Remaining
Contractual
     Term (Years)

—
2.42
2.42
—
—

9.8
—
—

Number of
Shares

— $

1,000,000
1,000,000
—
— $

Aggregate
Intrinsic Value

$
$

—
—

The weighted average grant date fair value of the performance stock options awarded for the year ended September 30, 2021 was $1.76 per
option.  As  of  September  30,  2021,  the  Company  assessed  that  the  performance  conditions  were  not  probable  of  achievement.  The
assessment  was  based  on  the  relevant  facts  and  circumstances,  including  the  Company  historical  success  rate  of  financing  and  bringing
developmental drug therapies to market and therefore no compensation costs was recognized. The fair value of the options was estimated on
the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

Risk-free interest rate
Expected term (years)
Expected volatility
Expected dividend yield

Performance-based stock units

Year ended
September 30, 2021

0.88 %
5.43
93.1 %
—

The Company has issued PSUs, which generally have a ten-year life from the date of grant. Upon exercise, the PSU holder receives common
stock  or  cash  at  the  Company’s  discretion.  The  following  table  summarizes  the  activity  related  to  PSUs  during  the  years  ended
September 30, 2021 and 2020:

Balance at October 1, 2019
Forfeitures
Balance at September 30, 2020
Forfeitures
Balance at September 30, 2021
Vested and exercisable at September 30, 2021
Vested and expected to vest at September 30, 2021

Weighted
Average
Remaining
Contractual

Base
Price

Aggregate

     Per PSU      Term (Years)      Intrinsic Value

$ 49.97
—
—
—
49.97
49.97
$ 49.97

3.0
3.0
3.0

$
$
$

—
—
—

Number
of

     PSUs
2,470
—
2,470
—
2,470
2,470
2,470

107

    
    
    
    
    
Table of Contents

Restricted stock units

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

The  Company  has  granted  RSUs  that  generally  vest  over  a  period  of  two  to  four  years  from  the  date  of  grant.  The  following  table
summarizes the activity related to RSUs during the year ended September 30, 2020:

Balance at October 1, 2019
Vested and settled
Balance at September 30, 2020

Number
of
RSUs

Weighted
Average
Grant Date
Fair Value

$

109
(109)

— $

96.00
96.00
—

There was no RSU activity during the year ended September 30, 2021.

Restricted stock

In January 2020, in connection with the consulting agreements entered into by the Company and four principals of MTTR,  the Company
issued  an  aggregate  of  7,244,739  shares  of  its  common  stock.  Refer  to  Note  15  for  further  details  on  the  consulting  agreements  and
terminated strategic partnership agreement. The shares may not be sold until the earlier of (i) six months following FDA approval of ONS-
5010, (ii) the date the Company publicly announces not to pursue development of ONS-5010, (iii) a change in control or (iv) January 2025.
In addition, the Company has the right to repurchase the shares for $0.01 per share if the consultant terminates his agreement other than for
good  reason  or  the  Company  terminates  the  agreement  for  cause.  The  repurchase  right  lapses,  in  tiered  percentages,  based  upon  the
completion  of  enrollment  of  the  Company’s  NORSE  TWO  clinical  trial  of  ONS-5010  by  certain  dates.  The  Company  achieved  full
enrollment for NORSE TWO in June 2020. The repurchase right may also lapse as to 50% or 100% of the shares if the Company enters into
certain agreements pertaining to ONS-5010 that meet certain value thresholds or the Company’s share price meets certain predefined targets.
The repurchase right also lapses as to 100% of the shares upon the earliest to occur of (i) filing of the biologics license application for ONS-
5010,  (ii)  termination  of  the  agreement  by  the  consultant  for  good  reason  or  by  the  Company  other  than  for  cause,  (iii)  in  the  event  of
disability, or (iv) upon a change in control.

The grant date fair value of the restricted shares was $0.54 per share and equal to the closing stock price of the Company’s common stock at
the time of grant. Compensation expense is recognized over the shorter of the explicit service period or derived service period which was
determined to be 4.8 years at the time of grant. Compensation expense may be accelerated when certain performance conditions become
probable and the corresponding purchase right has lapsed. During the years ended September 30, 2021 and 2020, the Company recognized
compensation  expense  related  to  the  restricted  stock  of  $607,060  and  $1,301,152,  respectively.  As  of  September  30,  2021,  there  was
$2,003,948 of unrecognized compensation expense related to the restricted stock.

14.   Collaboration Arrangements

Syntone Strategic Partnership and PRC Joint Venture

In connection with a stock purchase agreement entered in May 2020 between the Company and Syntone, the Company and Syntone entered
into  a  joint  venture  agreement  pursuant  to  which  they  agreed  to  form  a  PRC  joint  venture  that  will  be  80%  owned  by  Syntone  and  20%
owned by the Company. Upon formation of the PRC joint venture in April 2021, the Company entered into a royalty-free license with the
PRC joint venture for the development, commercialization and manufacture of ONS-5010 in the greater China market, which includes Hong
Kong, Taiwan and Macau.

The Company made the initial investment of $900,000 in June 2020. The Company expects to be required to make an additional capital
contribution to the PRC joint venture of approximately $2.1 million, which will be made within four

108

    
    
Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

years after the establishment date in accordance with the development plan contemplated in the license agreement or on such other terms
within such four-year period.

15.   Related-Party Transactions

MTTR - Strategic Partnership Agreement (ONS-5010)

In February 2018, the Company entered into a strategic partnership agreement with MTTR to advise on regulatory, clinical and commercial
strategy  and  assist  in  obtaining  approval  of  ONS-5010,  the  Company's  bevacizumab  therapeutic  product  candidate  for  ophthalmic
indications.

In November 2018, the board of directors of the Company appointed Mr. Terry Dagnon as Chief Operating Officer, and Mr. Jeff Evanson as
Chief Commercial Officer. Both Mr. Dagnon and Mr. Evanson initially provided services to the Company pursuant to the February 2018
strategic partnership agreement with MTTR, as amended. Mr. Dagnon and Mr. Evanson were both principals in MTTR. The Company did
not pay Mr. Dagnon or Mr. Evanson any direct compensation as consultants or as employees during the period from October 1, 2019 through
March  19,  2020.  Both  Mr.  Dagnon  and  Mr.  Evanson  were  compensated  directly  by  MTTR  for  services  provided  to  the  Company  as  the
Company's Chief Operating Officer and Chief Commercial Officer, respectively, pursuant to the strategic partnership agreement until such
agreement, as amended, was terminated effective March 19, 2020. The Company began compensating Mr. Dagnon and Mr. Evanson directly
as  consultants  effective  March  19,  2020  pursuant  to  their  respective  consulting  agreements  with  the  Company,  which  became  effective
March 19, 2020 following stockholder approval of the share issuances contemplated therein. Mr. Dagnon and Mr. Evanson have also agreed
to provide consulting services to an affiliate of BioLexis pursuant to a separate arrangement.

On  January  27,  2020,  the  Company  entered  into  a  termination  agreement  and  mutual  release  with  MTTR  to  terminate  the  strategic
partnership agreement. Pursuant to the agreement, the Company agreed (x) to issue to the four principals of MTTR (who include two of its
named  executive  officers,  Messrs.  Dagnon  and  Evanson),  an  aggregate  of  7,244,739  shares  of  its  common  stock,  subject  to  stockholder
approval,  (y)  to  enter  into  consulting  agreements  with  each  of  the  four  principals  setting  forth  the  terms  of  his  respective  compensation
arrangement, and (z) to pay MTTR a one-time settlement fee of $110,000, upon effectiveness of the agreement.

Concurrently, the Company also entered into consulting agreements directly with each of the four principals of MTTR setting forth the terms
of  his  respective  compensation  arrangement,  as  well  as  providing  for  certain  transfer  restrictions  and  repurchase  rights  applicable  to  the
shares of common stock to be issued pursuant hereto. The termination agreement, and the consulting agreements, became effective upon
stockholder  approval  of  the  share  issuance  on  March  19,  2020.  Refer  to  Note  13  for  the  accounting  of  the  restricted  stock  issued  and
compensation expense recognized.

MTTR  and  its  four  principals  under  the  strategic  partnership  agreement  and  the  subsequent  individual  consulting  agreements  earned  an
aggregate $1,089,408 and $1,294,089 during the years ended September 30, 2021 and 2020, respectively, which includes monthly consulting
fees and expense reimbursement, but excludes stock-based compensation related to restricted stock (Note 13). As of September 30, 2021 and
2020,  an  aggregate  $89,762  due  to  the  former  MTTR  principals  as  consultants  is  included  in  accounts  payable  in  the  accompanying
consolidated balance sheets.

For other related party transactions during the years ended September 30, 2021 and 2020, refer to the Stockholder Notes (Note 8).

109

Table of Contents

16.   Income Taxes

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

Income tax benefit for the years ended September 30, 2021 and 2020 consists of the following:

State tax
Foreign tax provision

Year ended September 30, 

2021

2,000  
—
2,000  

$

$

2020
(3,269,157)
(2,805)
(3,271,962)

$

$

During  the  year  ended  September  30,  2020,  the  Company  sold  New  Jersey  State  net  operating  losses  (“NOLs”)  in  the  amount  of
$33,335,492, and unused research and development tax credits in the amount of $555,410 resulting in the recognition of income tax benefits
of $3,271,157 recorded in the Company’s statement of operations. The Company did not sell any NOLs or unused research and development
tax credits during the year ended September 30, 2021.

A  reconciliation  of  income  tax  expense  (benefit)  at  the  statutory  federal  income  tax  rate  and  income  taxes  as  reflected  in  the  financial
statements is as follows:

U.S. federal statutory rate
State taxes, net of federal benefit
Sale of New Jersey net operating losses
Net operating loss
Deferred true-up
Permanent differences
Research and development credit
Change in valuation allowance
Other

Effective income tax rate

Year ended September 30, 

2021

2020

(21.0)%  
(7.0) 
—  
1.9  
—
0.4  
(3.7) 
30.7  
(1.3) 
(0.0)%  

(21.0)%
(6.6)
(6.7)
6.2
26.8
(0.3)
3.3
(10.0)
(0.2)
(8.5)%

The tax effects of the temporary differences that gave rise to deferred taxes were as follows:

Deferred tax assets:

Net operating loss carryforwards
Stock-based compensation
Lease liability
Research and development credit carryforward
Foreign tax credits
Accruals and others
Gross deferred tax assets

Less: valuation allowance

Deferred tax liabilities:

Property and equipment
Right-of-use Assets
Net deferred tax assets

110

September 30, 

2021

2020

$

$

67,778,970
2,168,228
31,577
8,842,001
2,357,309
348,605
81,526,690
(81,449,372)
77,318

(45,995)
(31,323)

$

— $

54,836,227
795,216
52,702
6,892,133
2,357,309
307,745
65,241,332
(65,102,402)
138,930

(91,990)
(46,940)
—

    
    
 
 
 
    
    
 
 
 
 
 
 
 
 
 
    
    
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
 
  
 
 
 
 
Table of Contents

OUTLOOK THERAPEUTICS, INC.
Notes to Consolidated Financial Statements

As of September 30, 2021, the Company has approximately $282.4 million and $118.2 million of U.S. federal and New Jersey NOLs that
will begin to expire in 2030 and 2039, respectively. As of September 30, 2021, the Company has federal and state research and development
tax credit carryforwards of $8.1 million and $0.8 million, respectively, available to reduce future tax liabilities which will begin to expire in
2032 and 2033, respectively. As of September 30, 2021, the Company has federal foreign tax credit (“FTC”) carryforwards of $2.4 million
available  to  reduce  future  tax  liabilities  which  will  begin  to  expire  starting  in  2023,  of  which  $1.9  million  of  the  FTC  carryforward  is
included in the balance of unrecognized tax benefits. Realization of the deferred tax asset is contingent on future taxable income and based
upon the level of historical losses, management has concluded that the deferred tax asset does not meet the more-likely-than-not threshold
for realizability. Accordingly, a full valuation allowance continues to be recorded against the Company’s deferred tax assets as of September
30, 2021 and 2020. The valuation allowance increased $16.3 million during the year ended September 30, 2021 and decreased $3.9 million
during the year ended September 30, 2020.

When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely-
than-not be realized. The determination as to whether the tax benefit will more-likely-than-not be realized is based upon the technical merits
of the tax position as well as consideration of the available facts and circumstances. The Company recognizes interest and penalties accrued
on any unrecognized tax benefits within the provision for income taxes in its consolidated statements of operations.

In December 2017, the Tax Cuts and Jobs Act of 2017 (the "Act") was signed into law making significant changes to the Internal Revenue
Code. These changes include a federal statutory rate reduction from 34% to 21% effective for tax years beginning after December 31, 2017,
the elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest expense and executive
compensation. For the fiscal years ended September 30, 2021 and 2020 the federal tax rate is 21.0%. The Act also transitions international
taxation  from  a  worldwide  system  to  a  modified  territorial  system  and  includes  base  erosion  prevention  measures  on  non-U.S.  earnings,
which  has  the  effect  of  subjecting  certain  earnings  of  the  Company's  foreign  subsidiaries  to  U.S.  taxation  as  global  intangible  low-taxed
income.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

Balance at beginning of year
Changes based on tax positions related to the current year
Balance at end of year

Year ended September 30, 
2021
2020
     $ 1,856,629      $
—  
$

$ 1,856,629

1,859,434
(2,805)
1,856,629

The Company does not anticipate material change in the unrecognized tax benefits in the next 12 months. These unrecognized tax benefits,
if recognized, would affect the annual effective tax rate. The Company’s income tax returns for the years from 2011 through 2020 remain
open for examination by the Internal Revenue Service as well as various states and municipalities.

Due  to  the  change  in  ownership  provisions  of  the  Internal  Revenue  Code,  the  availability  of  the  Company’s  NOL  carryforwards  may  be
subject  to  annual  limitations  against  taxable  income  in  future  periods,  which  could  substantially  limit  the  eventual  utilization  of  such
carryforwards.  The  Company  has  not  analyzed  the  historical  or  potential  impact  of  its  equity  financings  on  beneficial  ownership  and
therefore no determination has been made whether the net operating loss carry forward is subject to any Internal Revenue Code Section 382
limitation.  To  the  extent  there  is  a  limitation,  there  would  be  a  reduction  in  the  deferred  tax  assets  with  an  offsetting  reduction  in  the
valuation allowance.

111

 
Table of Contents

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, have evaluated our disclosure controls
and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act)
prior to the filing of this Annual Report on Form 10-K. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that, as of the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures were, in
design and operation, effective as of September 30, 2021.

Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in
Rule 13a-15(f) of the Exchange Act. Our internal control system is designed to provide reasonable assurance regarding the preparation and
fair presentation of financial statements for external purposes in accordance with generally accepted account principles. All internal control
systems, no matter how well designed, have inherent limitations and can provide only reasonable assurance that the objectives of the internal
control system are met.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we
conducted an evaluation of the effectiveness of our internal control over financial reporting, based on criteria established by the Committee
of  Sponsoring  Organizations  of  the  Treadway  Commission  (COSO)  in  its  2013  Internal  Control-Integrated  Framework.  Based  on  our
evaluation, we concluded that our internal control over financial reporting was effective as of September 30, 2021.

As  a  smaller  reporting  company,  our  independent  registered  accounting  firm  is  not  required  to  issue  an  attestation  report  on  our  internal
control over financial reporting.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2021 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Control.

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the
exercise  of  judgment  in  designing,  implementing,  operating,  and  evaluating  the  controls  and  procedures,  and  the  inability  to  eliminate
misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed
and  operated,  can  only  provide  reasonable,  not  absolute  assurances.  In  addition,  projections  of  any  evaluation  of  effectiveness  to  future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate
for our business but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial
reporting.

Item 9B. Other Information

Not applicable.

112

Table of Contents

Certain information required by Part III is omitted from this Report on Form 10-K because we intend to file our definitive Proxy Statement
for our next Annual Meeting of the Stockholders, pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended, or the
2021 Proxy Statement, no later than January 31, 2022, and certain information to be included in the 2021 Proxy Statement is incorporated
herein by reference.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item is to be included in our 2021 Proxy Statement as follows:

● The information relating to our directors and nominees for director is to be included in the section entitled “Election of Directors”;

● The information relating to our executive officers is to be included in the section entitled “Executive Officers”;

● The information regarding compliance with Section 16(a) of the Exchange Act is to be included in the section entitled “Delinquent

Section 16(a) Reports”;  

● The  information  regarding  family  relationships  is  to  be  included  in  the  section  entitled  “Election  of  Directors  –  Family

Relationships”;

● The  information  relating  to  our  Code  of  Ethics  is  to  be  included  in  the  section  entitled  “Information  Regarding  the  Board  of

Directors and Corporate Governance – Code of Ethics”; and

● The  information  relating  to  our  audit  committee  and  audit  committee  financial  expert  is  to  be  included  in  the  section  entitled

“Information Regarding the Board of Directors and Corporate Governance – Audit Committee”.

Item 11. Executive Compensation

The information required by this item is to be included in our 2022 Proxy Statement under the section entitled “Executive Compensation”
and is incorporated herein by reference, provided that if the 2022 Proxy Statement is not filed within 120 days after the end of the fiscal year
covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-
K filed not later than the end of such 120-day period.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required with respect to equity compensation plans is to be included in our 2022 Proxy Statement under the section entitled
“Equity Compensation Plan Information” and the information required by this item with respect to security ownership of certain beneficial
owners and management is to be included in our 2022 Proxy Statement under the section entitled “Security Ownership of Certain Beneficial
Owners and Management” and is incorporated herein by reference, provided that if the 2021 Proxy Statement is not filed within 120 days
after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to
this Annual Report on Form 10-K filed not later than the end of such 120-day period.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is to be included in our 2022 Proxy Statement under the sections entitled “Transactions with Related
Persons” and “Information Regarding the Board of Directors and Corporate Governance – Independence of the Board of Directors” and is
incorporated  herein  by  reference,  provided  that  if  the  2022  Proxy  Statement  is  not  filed  within  120  days  after  the  end  of  the  fiscal  year
covered by this Annual Report on Form 10-K, the omitted information will be included in an amendment to this Annual Report on Form 10-
K filed not later than the end of such 120-day period.

113

Table of Contents

Item 14. Principal Accounting Fees and Services

The information required by this item is to be included in our 2022 Proxy Statement under the section entitled “Ratification of Selection of
Independent Registered Public Accounting Firm” and is incorporated herein by reference, provided that if the 2022 Proxy Statement is not
filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, the omitted information will be included
in an amendment to this Annual Report on Form 10-K filed not later than the end of such 120-day period.
.

114

Table of Contents

Item 15. Exhibits and Financial Statement Schedules

PART IV

(a)   (1)   The financial statements required by Item 15(a) are filed in Item 8 of this Annual Report on Form 10-K.

(2)   The financial statement schedules required by Item 15(a) are omitted because they are not applicable, not required or the required

information is included in the financial statements or notes thereto as filed in Item 8 of this Annual Report on Form 10-K.

EXHIBITS

Exhibit
Number
3.1

3.2

3.3

3.4

3.5

3.6

3.7

4.1

10.1#

10.2#

10.3#

10.4#

Description
Amended  and  Restated  Certificate  of  Incorporation  (incorporated  by  reference  to  Exhibit  3.1  to  the  Registrant’s
current report on Form 8-K filed with the SEC on May 19, 2016).

Certificate  of  Amendment  to  the  Amended  and  Restated  Certificate  of  Incorporation  (incorporated  by  reference  to
Exhibit 3.1 to the Registrant’s current report on Form 8-K filed with the SEC on December 6, 2018).

Certificate  of  Amendment  to  the  Amended  and  Restated  Certificate  of  Incorporation  (incorporated  by  reference  to
Exhibit 3.1 to the Registrant’s current report on Form 8-K filed with the SEC on March 18, 2019).

Certificate of Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit
3.1 to the Registrant’s current report on Form 8-K filed with the SEC on March 26, 2021).

Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s current report on Form 8-
K filed with the SEC on May 19, 2016).

Amendment to the Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the Registrant’s current
report on Form 8-K filed with the SEC on November 29, 2016).

Second Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to the Registrant’s current report on
Form 8-K filed with the SEC on March 26, 2021).

Description of Registrant’s securities (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 10-K for the
year ended September 30, 2020).

2011  Stock  Incentive  Plan  (incorporated  by  reference  to  Exhibit  10.2  to  the  Registrant’s  registration  statement  on
Form S-1 (File No. 333-209011) filed with the SEC on January 15, 2016).

Form of Amended and Restated Performance Stock Unit Agreement for 2011 Stock Incentive Plan (incorporated by
reference to Exhibit 10.29 to the Registrant’s registration statement on Form S-1 (File No. 333-209011) filed with the
SEC on April 27, 2016).

2015  Equity  Incentive  Plan,  as  amended  and  restated  (incorporated  by  reference  to  Exhibit  99.1  to  the  Registrant’s
current report on Form 8-K filed with the SEC on September 18, 2020).

Forms  of  agreements  and  award  grant  notices  for  2015  Equity  Incentive  Plan  (incorporated  by  reference  to  Exhibit
10.4 to the Registrant’s registration statement on Form S-1 (File No. 333-209011) filed with the SEC on January 15,
2016).

115

    
Table of Contents

10.5#

10.6#

10.7#

10.8#¥

10.9#¥

10.10†

10.10†

10.11†

10.12

10.13

10.14

10.15

2016  Employee  Stock  Purchase  Plan  (incorporated  by  reference  to  Exhibit  10.5  to  the  Registrant’s  registration
statement on Form S-1 (File No. 333-209011) filed with the SEC on February 12, 2016).

Form  of  Indemnity  Agreement,  by  and  between  the  Registrant  and  each  of  its  directors  and  executive  officers
(incorporated  by  reference  to  Exhibit  10.12  to  the  Registrant’s  registration  statement  on  Form  S-1  (File  No.  333-
209011) filed with the SEC on January 15, 2016).

Executive  Employment  Agreement  between  the  Registrant  and  Lawrence  A.  Kenyon,  dated  October  22,  2018
(incorporated  by  reference  to  Exhibit  10.1  to  the  Registrant’s  current  report  on  Form  8-K  filed  with  the  SEC  on
October 26, 2018).

Consulting Agreement between the Company and The Dagnon Group LLC (Dagnon), dated as of January 27, 2020
(incorporated  by  reference  to  Exhibit  10.4  to  the  Registrant’s  current  report  on  Form  8-K  filed  with  the  SEC  on
January 31, 2020).

Consulting  Agreement  between  the  Company  and  Scott  Three  Consulting,  LLC  (Evanson),  dated  as  of  January  27,
2020 (incorporated by reference to Exhibit 10.5 to the Registrant’s current report on Form 8-K filed with the SEC on
January 31, 2020).

ONS-3010 Commercial License Agreement by and between the Registrant and Selexis SA effective as of April 11,
2013,  as  amended  effective  as  of  May  21,  2014  (incorporated  by  reference  to  Exhibit  10.14  to  the  Registrant’s
registration statement on Form S-1 (File No. 333-209011) filed with the SEC on January 15, 2016).

ONS-1045 Commercial License Agreement by and between the Registrant and Selexis SA effective as of April 11,
2013,  as  amended  effective  as  of  May  21,  2014  (incorporated  by  reference  to  Exhibit  10.15  to  the  Registrant’s
registration statement on Form S-1 (File No. 333-209011) filed with the SEC on January 15, 2016).

ONS-1050 Commercial License Agreement by and between the Registrant and Selexis SA effective as of April 11,
2013,  as  amended  effective  as  of  May  21,  2014  (incorporated  by  reference  to  Exhibit  10.16  to  the  Registrant’s
registration statement on Form S-1 (File No. 333-209011) filed with the SEC on January 15, 2016).

Warrant Agreement by and between the Registrant and American Stock Transfer & Trust Company LLC, as Warrant
Agent dated May 18, 2016 (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form
10-Q filed with the SEC on June 27, 2016).

Amendment to the Warrant Agreement dated May 18, 2016 by the Registrant and American Stock Transfer & Trust
Company  LLC,  as  Warrant  Agent,  dated  February  6,  2017  (incorporated  by  reference  to  Exhibit  10.1  to  the
Registrant’s current report on Form 8-K filed with the SEC on February 6, 2017).

Amendment #2 to the Warrant Agreement dated May 18, 2016 by and between the Registrant and American Stock
Transfer & Trust Company LLC, as Warrant Agent, dated February 9, 2018 (incorporated by reference to Exhibit 10.1
to the Registrant’s current report on Form 8-K filed with the SEC on February 9, 2018).

Amendment #3 to the Warrant Agreement dated May 18, 2016 by and between the Registrant and American Stock
Transfer & Trust Company LLC, as Warrant Agent, dated January 22, 2019 (incorporated by reference to Exhibit 10.1
to the Registrant’s current report on Form 8-K filed with the SEC on January 22, 2019).

10.16

Form of Series A warrant certificate (included in Exhibit 10.13).

116

Table of Contents

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

10.29

Form of Warrant to Purchase Common Stock of the Registrant (incorporated by reference to Exhibit B to the Note and
Warrant Purchase Agreement filed as Exhibit 10.1 to the Registrant’s current report on Form 8-K filed with the SEC
on December 23, 2016).

Investor  Rights  Agreement  by  and  between  the  Registrant  and  BioLexis  Pte.  Ltd.  (formerly  GMS  Tenshi  Holdings
Pte. Limited), dated September 11, 2017 (incorporated by reference to Exhibit 10.3 to the Registrant’s current report
on Form 8-K filed with the SEC on September 11, 2017).

Amendment  to  Investor  Rights  Agreement  by  and  between  the  Registrant  and  BioLexis  Pte.  Ltd.  (formerly  GMS
Tenshi  Holdings  Pte.  Limited),  dated  May  11,  2018  (incorporated  by  reference  to  Exhibit  10.2  to  the  Registrant’s
current report on Form 8-K filed with the SEC on May 15, 2018).

Second Amendment to Investor Rights Agreement by and between the Registrant, and BioLexis Pte. Ltd. (formerly
GMS Tenshi Holdings Pte. Limited), dated July 18, 2018 (incorporated by reference to Exhibit 10.2 to the Registrant’s
current report on Form 8-K filed with the SEC on July 19, 2018).

Third  Amendment  to  Investor  Rights  Agreement  by  and  between  the  Registrant  and  BioLexis  Pte.  Ltd.  (formerly
GMS  Tenshi  Holdings  Pte.  Limited),  dated  November  5,  2018  (incorporated  by  reference  to  Exhibit  10.2  to  the
Registrant’s current report on Form 8-K filed with the SEC on November 9, 2018).

Fourth  Amendment  to  Investor  Rights  Agreement  dated  September  11,  2017  by  and  between  the  Registrant  and
BioLexis Pte. Ltd. (formerly GMS Tenshi Holdings Pte. Limited) by and between the Registrant, BioLexis Pte. Ltd.
and  GMS  Ventures  and  Investments  dated  February  24,  2020  (incorporated  by  reference  to  Exhibit  10.4  to  the
Registrant’s current report on Form 8-K filed with the SEC on February 24, 2020).

Form  of  Securities  Purchase  Agreement,  dated  February  24,  2020,  by  and  among  the  Company  and  the  purchasers
named therein (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed with the
SEC on February 24, 2020).

Form of Common Stock Purchase Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s current report
on Form 8-K filed with the SEC on February 24, 2020).  

Securities Purchase Agreement by and between the Company and GMS Ventures and Investments dated February 24,
2020 (incorporated by reference to Exhibit 10.2 to the Registrant’s current report on Form 8-K filed with the SEC on
February 24, 2020).

Form of GMS Stock Purchase Warrant (incorporated by reference to Exhibit 4.2 to the Registrant’s current report on
Form 8-K filed with the SEC on February 24, 2020).

Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s current report on Form
8-K filed with the SEC on February 24, 2020).

Stock  Purchase  Agreement  dated  May  22,  2020,  by  and  between  the  Registrant  and  Syntone  Ventures  LLC
(incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed with the SEC on May
28, 2020).

Form of Securities Purchase Agreement dated June 22, 2020, by and among the Registrant and the purchasers named
therein (incorporated by reference to Exhibit 10.1 to the Registrant’s current report on Form 8-K filed with the SEC
June 23, 2020).

117

Table of Contents

10.30

10.31

10.32

10.33

10.34

10.35

10.36

10.37

10.38

10.39

10.40

10.41

10.42

10.43

Securities  Purchase  Agreement  dated  June  22,  2020  by  and  between  the  Registrant  and  Syntone  Ventures  LLC
(incorporated by reference to Exhibit 10.2 to the Registrant’s current report on Form 8-K filed with the SEC June 23,
2020).

Engagement Letter dated June 2, 2020 by and between the Registrant and H.C. Wainwright & Co., LLC (incorporated
by reference to Exhibit 10.3 to the Registrant’s current report on Form 8-K filed with the SEC June 23, 2020).

Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s current report on Form
8-K filed with the SEC June 23, 2020).

Lease  Termination  Agreement  dated  May  6,  2020  between  the  Registrant  and  Cedar  Brooke  Corporate  Center,  LP
(incorporated  by  reference  to  Exhibit  10.6  to  the  Registrant’s  quarterly  report  on  Form  10-Q  filed  with  the  SEC
August 14, 2020).

Note  Purchase  Agreement  dated  November  4,  2020,  between  the  Registrant  and  Streeterville  Capital,  LLC
(incorporated  by  reference  to  Exhibit  10.1  to  the  Registrant’s  current  report  on  Form  8-K  filed  with  the  SEC
November 6, 2020).

Promissory  Note  dated  November  4,  2020  between  the  Registrant  and  Streeterville  Capital,  LLC  (incorporated  by
reference to Exhibit 10.2 to the Registrant’s current report on Form 8-K filed with the SEC November 6, 2020).

Note  Purchase  Agreement  dated  November  16,  2021,  between  the  Registrant  and  Streeterville  Capital,  LLC
(incorporated  by  reference  to  Exhibit  10.1  to  the  Registrant’s  current  report  on  Form  8-K  filed  with  the  SEC
November 16, 2021).

Promissory Note dated November 16, 2021, between the Registrant and Streeterville Capital, LLC (incorporated by
reference to Exhibit 10.2 to the Registrant’s current report on Form 8-K filed with the SEC November 16, 2021).

Note Amendment dated November 16, 2021, between the Registrant and Streeterville Capital, LLC (incorporated by
reference to Exhibit 10.3 to the Registrant’s current report on Form 8-K filed with the SEC November 16, 2021).

Securities  Purchase  Agreement  dated  January  28,  2021,  between  the  Registrant  and  Syntone  Ventures  LLC
(incorporated  by  reference  to  Exhibit  10.1  to  the  Registrant’s  current  report  on  Form  8-K  filed  with  the  SEC  on
February 2, 2021).

At  The  Market  Offering  Agreement  between  the  Company  and  H.C.  Wainwright  &  Co.  dated  March  26,  2021
(incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with the SEC on March
26, 2021).

Form of underwriter warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s current report on Form 8-K
filed with the SEC on February 2, 2021).

Securities  Purchase  Agreement,  dated  February  9,  2021,  by  and  between  the  Company  and  GMS  Ventures  and
Investments (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with the
SEC on February 11, 2021).

Amendment No. 1 to Consulting Agreement dated November 8, 2021, by and between the Registrant and Scott Three
Consulting, LLC (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with
the SEC on November 12, 2021).

118

Table of Contents

10.44

10.45#

10.46#

21.1

23.1

31.1

31.2

32.1*

Amendment No. 1 to Consulting Agreement dated November 8, 2021, by and between the Registrant and the Dagnon
Group LLC (incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K filed with the
SEC on November 12, 2021).

Executive Employment Agreement by and between C. Russell Trenary III and Outlook Therapeutics, Inc, dated July
6, 2021 (incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with the SEC on
July 9, 2021).

Executive Employment Agreement by and between Lawrence Kenyon and Outlook Therapeutics, Inc, dated July 27,
2021(incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed with the SEC on
July 30, 2021).

Subsidiaries of the Registrant

Consent of independent registered public accounting firm.

Certification  of  Principal  Executive  Officer  pursuant  to  Rules  13a-14(a)  and  15d-14(a)  promulgated  under  the
Securities Exchange Act of 1934, as amended.

Certification  of  Principal  Financial  Officer  pursuant  to  Rules  13a-14(a)  and  15d-14(a)  promulgated  under  the
Securities Exchange Act of 1934, as amended.

Certification  of  Principal  Executive  Officer  and  Principal  Financial  Officer  pursuant  to  18  U.S.C.  Section  1350,  as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

† Confidential  treatment  has  been  granted  for  certain  information  contained  in  this  document  pursuant  to  an  order  of  the  SEC.  Such

information (indicated by asterisks) has been omitted and been filed separately with the SEC.

¥ Certain portions of this exhibit (indicated by “[***]”) have been omitted because they are not material.
*

Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and
shall  not  be  deemed  to  be  incorporated  by  reference  into  any  filing  under  the  Securities  Act  of  1933,  as  amended,  or  the  Securities
Exchange Act of 1934, as amended.
Indicates management contract or compensatory plan.

#

Item 16. Form 10-K Summary

None.

119

Table of Contents

Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

Date: December 23, 2021

/s/ C. Russell Trenary III

By:
Name: C. Russell Trenary III
Title:

President and Chief Executive Officer

SIGNATURES

Pursuant  to  the  requirements  of  the  Securities  Exchange  Act  of  1934,  this  Annual  Report  on  Form  10-K  has  been  signed  below  by  the
following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ Ralph H. Thurman
Ralph H. Thurman

Executive Chairman

December 23, 2021

/s/ C. Russell Trenary III
C. Russell Trenary III

President, Chief Executive Officer and Director
(Principal Executive Officer)

/s/ Lawrence A. Kenyon
Lawrence A. Kenyon

/s/ Yezan Haddadin
Yezan Haddadin

/s/ Kurt J. Hilzinger
Kurt J. Hilzinger

/s/ Faisal G. Sukhtian
Faisal G. Sukhtian

/s/ Julian Gangolli
Julian Gangolli

/s/ Gerd Auffarth
Gerd Auffarth

/s/ Andong Huang
Andong Huang

Chief Financial Officer,
Treasurer, Secretary and Director
(Principal Financial and Accounting Officer)

Director

Director

Director

Director

Director

Director

120

December 23, 2021

December 23, 2021

December 23, 2021

December 23, 2021

December 23, 2021

December 23, 2021

December 23, 2021

December 23, 2021

    
    
Subsidiaries of the Registrant

Exhibit 21.1

Name of Subsidiary

Outlook Therapeutics Pty Ltd

Outlook Therapeutics Limited (dormant subsidiary)

State or Other Jurisdiction

Australia

England and Wales

This list does not include joint ventures in which the Company has an ownership interest.

Consent of Independent Registered Public Accounting Firm

Exhibit 23.1

The Board of Directors
Outlook Therapeutics, Inc.:

We consent to the incorporation by reference in the Registration Statements (Nos. 333-211362, 333-216081, 333-223064, 333-229685,  333-
234024, 333-236471, 333-238318, and 333-254777) on Form S-8, (Nos. 333-222387, 333-223063, 333-231922 and 333-254778) on Form
S-3 and (Nos. 333-209011, 333-212351, 333-216080, 333-216610, 333-229761 and 333-237607) on Form S-1 of Outlook Therapeutics, Inc.
of our report dated December 22, 2021, with respect to the consolidated balance sheets of Outlook Therapeutics, Inc. as of September 30,
2021 and 2020, and the related consolidated statements of operations, convertible preferred stock and stockholders’ equity (deficit), and cash
flows for the years then ended and related notes (collectively, the consolidated financial statements), which report appears in the September
30, 2021 annual report on Form 10-K of Outlook Therapeutics, Inc.

 /s/ KPMG LLP

Philadelphia, Pennsylvania
December 23, 2021

Exhibit 31.1

I, C. Russell Trenary III, certify that:

CERTIFICATIONS

I have reviewed this Annual Report on Form 10-K of Outlook Therapeutics, Inc. (the “registrant”); and

1.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact

necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to
the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)

and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made
known to me by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed

under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on
such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the

registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the

audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting

which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

Date: December 23, 2021
/s/ C. Russell Trenary III
C. Russell Trenary III
Chief Executive Officer
(Principal Executive Officer)

Exhibit 31.2

I, Lawrence A. Kenyon, certify that:

CERTIFICATIONS

I have reviewed this Annual Report on Form 10-K of Outlook Therapeutics, Inc. (the “registrant”); and

1.
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all

material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in
this report;
4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-
15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed

under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries,
is made known to me by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be

designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my

conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and

5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors

and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting

which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the

registrant’s internal control over financial reporting.

Date: December 23, 2021
/s/ Lawrence A. Kenyon
Lawrence A. Kenyon
Chief Financial Officer
(Principal Financial and Accounting Officer)

CERTIFICATIONS OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I,  C.  Russell  Trenary  III,  pursuant  to  18  U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002,
certifies that the Annual Report of Outlook Therapeutics, Inc. on Form 10-K for the year ended September 30, 2021 (the “Report”) fully
complies  with  the  requirements  of  Section  13(a)  or  15(d),  as  applicable,  of  the  Securities  Exchange  Act  of  1934,  as  amended,  and  that
information contained in the Report fairly presents in all material respects the financial condition and results of operations of the Registrant.

Exhibit 32.1

Date: December 23, 2021

/s/ C. Russell Trenary III

By:
Name:  C. Russell Trenary III
Title: Chief Executive Officer

(Principal Executive Officer)

I,  Lawrence  A.  Kenyon,  pursuant  to  18  U.S.C.  Section  1350,  as  adopted  pursuant  to  Section  906  of  the  Sarbanes-Oxley  Act  of  2002,
certifies that the Annual Report of Outlook Therapeutics, Inc. on Form 10-K for the year ended September 30, 2021 (the “Report”) fully
complies  with  the  requirements  of  Section  13(a)  or  15(d),  as  applicable,  of  the  Securities  Exchange  Act  of  1934,  as  amended,  and  that
information contained in the Report fairly presents in all material respects the financial condition and results of operations of the Registrant.

Date: December 23, 2021

/s/ Lawrence A. Kenyon

By:
Name: Lawrence A. Kenyon
Title: Chief Financial Officer

(Principal Financial and Accounting Officer)

A signed original of this written statement required by Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C.
Section  1350  has  been  provided  to  the  Registrant  and  will  be  retained  by  the  Registrant  and  furnished  to  the  Securities  and  Exchange
Commission or its staff upon request.

This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is
not  to  be  incorporated  by  reference  into  any  filing  of  the  Registrant  under  the  Securities  Act  of  1933,  as  amended,  or  the  Securities
Exchange  Act  of  1934,  as  amended,  (whether  made  before  or  after  the  date  of  the  Report),  irrespective  of  any  general  incorporation
language contained in such filing.