Windtree Therapeutics, Inc.

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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

For the fiscal year ended December 31, 2021

Or

☐

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

For the transition period from _____ to _____

Commission File Number: 000-26422

WINDTREE THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

2600 Kelly Road, Suite 100
Warrington, Pennsylvania
(Address of principal executive offices)

94-3171943
(I.R.S. Employer
Identification No.)
18976-3622
(Zip Code)

Registrant’s telephone number, including area code: (215) 488-9300

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

Title of each class
Common Stock, $0.001 par value

Trading symbol(s)
WINT

Name of exchange on which registered
The Nasdaq Capital Market

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 Exchange Act. Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐

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

Large accelerated filer     ☐

Non-accelerated filer     ☒

Emerging growth company     ☐

Accelerated filer     ☐

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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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On June 30, 2021, the aggregate market value of shares of voting and non-voting common equity held by non-affiliates of the registrant was approximately
$44.1 million (based on the closing price on The Nasdaq Capital Market on that date). In determining this amount, the registrant has assumed solely for this
purpose that all of its directors, executive officers and persons beneficially owning 10% or more of the outstanding shares of common stock of the
registrant may be considered to be affiliates. This assumption shall not be deemed conclusive as to affiliate status for this or any other purpose.

As of March 30, 2022, there were 28,469,274 shares of the registrant’s common stock issued and outstanding.

Unless the context otherwise requires, all references to “we,” “us,” “our,” and the “Company” include Windtree Therapeutics, Inc., and its consolidated
subsidiaries.

Part III of this Annual Report on Form 10-K incorporates certain information by reference from the registrant’s proxy statement for the annual meeting of
stockholders to be filed no later than 120 days after the end of the registrant’s fiscal year ended December 31, 2021.

DOCUMENTS INCORPORATED BY REFERENCE

FORWARD-LOOKING STATEMENTS

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, or
the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements provide
our current expectations or forecasts of future events and financial performance and may be identified by the use of forward-looking terminology, including
such terms as “believes,” “estimates,” “anticipates,” “expects,” “plans,” “intends,” “may,” “will,” “should,” “could,” “targets,” “projects,” “contemplates,”
“predicts,” “potential” or “continues” or, in each case, their negative, or other variations or comparable terminology, though the absence of these words
does not necessarily mean that a statement is not forward-looking.

We intend that all forward-looking statements be subject to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-
looking statements are subject to many risks and uncertainties that could cause actual results to differ materially from any future results expressed or
implied by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither
statements of historical fact nor guarantees or assurances of future performance. Examples of such risks and uncertainties, which potentially could have a
material adverse effect on our development programs, business and/or operations, include, but are not limited to the following:

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our estimates regarding future results of operations, financial position, research and development costs, capital requirements and our
needs for additional financing;

how long we can continue to fund our operations with our existing cash and cash equivalents; 

delays in our anticipated timelines and milestones and additional costs associated with the impact of the residual effects of the novel
coronavirus, or COVID-19, pandemic, or with the impact of the geopolitical instability (including the ongoing military conflict between
Russia and Ukraine), on our clinical trial operations;

the costs, timing, and results, of our preclinical studies and clinical trials, as well as the number of required trials for regulatory approval
and the criteria for success in such trials;

legal and regulatory developments in the United States, or U.S., and foreign countries, including any actions or advice that may affect the
design, initiation, timing, continuation, progress or outcome of clinical trials or result in the need for additional clinical trials;

the difficulties and expenses associated with obtaining and maintaining regulatory approval of our product candidates, and the indication
and labeling under any such approval;

our plans and the plans of our licensee, Lee’s Pharmaceutical (HK) Ltd., or Lee’s (HK), in Asia and our respective abilities to
successfully execute necessary clinical and business development activities in a timely manner, if at all, to support development and
commercialize our product candidates;

risks related to manufacturing active pharmaceutical ingredients, or APIs, drug product, medical devices and other materials we need;

delays, interruptions or failures in the manufacture and supply of our product candidates;

the performance of third parties, both foreign and domestic, upon which we depend, including contract research organizations, or CROs,
contract manufacturing organizations, or CMOs, contractor laboratories and independent contractors;

the size and growth of the potential markets for our product candidates, the regulatory requirements in such markets, the rate and degree
of market acceptance of our product candidates and our ability to serve those markets;

the success of competing therapies and products that are or become available;

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our ability to limit our exposure under product liability lawsuits;

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

recently enacted and future legislation regarding the healthcare system in the U.S. or the healthcare systems in foreign jurisdictions;

our ability to recruit or retain key scientific, commercial or management personnel or to retain our executive officers;

our ability to secure electronically stored work product, including clinical data, analyses, research, communications and other materials
necessary to gain regulatory approval of our product candidates, including those acquired from third parties, and assure the integrity,
proper functionality and security of our internal computer and information systems and prevent or avoid cyber-attacks, malicious
intrusion, breakdown, destruction, loss of data privacy or other significant disruption;

the impact of the significant impairment of our intangible assets on our consolidated balance sheet, and any future impairment charges
that may be reported; and

economic uncertainty resulting from geopolitical instability, including the ongoing military conflict between Russia and Ukraine.

Pharmaceutical, biotechnology and medical technology companies have suffered significant setbacks conducting clinical trials, even after obtaining
promising earlier preclinical and clinical data. In addition, data obtained from clinical trials are susceptible to varying interpretations, which could delay,
limit or prevent regulatory approval. After gaining approval of a drug product, medical device or combination drug/device product, pharmaceutical and
biotechnology companies face considerable challenges in marketing and distributing their products and may never become profitable.

The forward-looking statements contained in this report or the documents incorporated by reference herein speak only as of their respective dates. Factors
or events that could cause our actual results to differ may emerge from time to time and it is not possible for us to predict them all. Except to the extent
required by applicable laws, rules or regulations, we do not undertake any obligation to publicly update any forward-looking statements or to publicly
announce revisions to any of the forward-looking statements, whether as a result of new information, future events or otherwise.

Trademark Notice
AEROSURF®, AFECTAIR®, SURFAXIN®, SURFAXIN LS™, WINDTREE THERAPEUTICS® (logo),
WINDTREE THERAPEUTICS™, and WINDTREE™ are registered and common law trademarks of Windtree Therapeutics, Inc. (Warrington, PA).

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RISK FACTOR SUMMARY

The risk factors summarized and detailed below could materially harm our business, operating results and/or financial condition, impair our

future prospects and/or cause the price of our common stock to decline. These are not all of the risks we face, and other factors not presently known to us
or that we currently believe are immaterial may also affect our business if they occur. The following is a summary of the material risks that may affect our
business, operating results and financial condition include, but are not necessarily limited to, those relating to:

Risks Related to Our Financial Condition

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We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on
acceptable terms, or at all, could force us to delay, limit, reduce or terminate our product development programs, or other operations.

Our losses, negative cash flows from operations, and accumulated deficit raise substantial doubt about our ability to continue as a going
concern absent obtaining adequate new debt or equity financings.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition, and stock price.

Due to the significant resources required to develop each of our product candidates, we must prioritize development of certain product
candidates and/or certain disease indications. We may be delayed in advancing a product candidate if our plan does not include sufficient
funding to execute a clinical program. If we expend our limited resources on candidates or indications that do not yield a successful
product and fail to capitalize on other product candidates or indications that may be more profitable or for which there is a greater
likelihood of success, such failure could have a material adverse effect on our business, financial condition, results of operations, and
prospects.

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We may never realize the full value of our intangible assets.

Risks Related to our Development Activities and Regulatory Approval of our Product Candidates

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We are substantially dependent on the success of our lead product candidate, istaroxime. To the extent that our clinical development of
istaroxime is not successful, our business, financial condition, and results of operations may be materially adversely affected and the
price of our common stock may decline.

We have limited experience with the development of therapies targeted to the treatment of early cardiogenic shock and COVID-19-
related acute lung injury and may not succeed in our efforts to gain approval of our product candidates and establish a profitable business.

Delays in clinical trials are common and have many causes, and any delay could result in increased costs to us and jeopardize or delay
our ability to obtain regulatory approval and commence product sales or allow for competition to emerge.

The COVID-19 pandemic has negatively impacted, and may continue to negatively impact our ability to develop our product candidates.

Use of our product candidates could be associated with side effects, adverse events or other properties or safety risks, which could delay
or preclude approval, cause us to suspend or discontinue clinical trials, abandon a product candidate, limit the commercial profile of an
approved label or result in other significant negative consequences that could severely harm our business, prospects, operating results and
financial condition.

Although we may pursue expedited regulatory programs for a product candidate or an indication, it may not qualify for expedited
development or, if it does qualify for expedited development, it may not actually lead to a faster development or regulatory review or
approval process.

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

We have conducted, and may in the future conduct, clinical trials for our product candidates at clinical sites located in the U.S. and
outside of the U.S. If the FDA and other foreign equivalents raise concerns about certain of the clinical sites based on location and
regulatory environment, they may not accept data from such trials, in which case our development plans will be delayed, which could
materially harm our business.

If the FDA or other applicable regulatory authorities approve generic products with claims that compete with our product candidates, it
could reduce our sales of our product candidates if approved.

The successful commercialization of our product candidates, if approved, will depend in part on the extent to which governmental
authorities and health insurers establish coverage, adequate reimbursement levels and favorable pricing policies. Failure to obtain or
maintain coverage and adequate reimbursement for our product candidates could limit our ability to market those product candidates and
decrease our ability to generate revenue.

Risks Related to Our Reliance on Third Parties

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We rely on third parties, primarily outside of the U.S., to conduct many of our preclinical studies and clinical trials. Any failure by a third
party to conduct the clinical trials according to good clinical practices, or GCPs, and other requirements and in a timely manner may
delay or prevent our ability to seek or obtain regulatory approval for or commercialize our product candidates.

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We plan to rely on third parties, some of which are located outside the U.S., to manufacture our drug product candidates, which exposes
us to risks that may affect our ability to maintain supplies of our clinical materials, and subject us to uncertainty associated with the
international political climate, and could potentially delay our research and development activities, as well as eventual regulatory
approval and commercialization of our drug product candidates.

Risks Related to our Business and Operations

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Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our
operating results to fall below expectations or any guidance we may provide.

We are continually evaluating our business strategy and may modify this strategy to respond to developments in our business and other
factors, and any such modification, if not successful, could have a material adverse effect on our business, financial condition, and results
of operations.

The political and healthcare policy and reimbursement environment is becoming more challenging for pharmaceutical companies and
medical device manufacturers and may adversely affect our business.

We depend upon key employees and consultants in a competitive market for skilled personnel. If we or our strategic partners or
collaborators are unable to attract and retain key personnel, it could adversely affect our ability to develop and market our product
candidates.

We could be adversely affected by any interruption, including from breaches in cybersecurity, in our ability to conduct business at our
current location.

Risks Related to Government Regulation

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Our activities are subject to various and complex laws and regulations, and we are susceptible to a changing regulatory environment.
Violations or allegations of violations of these laws may result in large civil and criminal penalties, debarment from participating in
government programs, diversion of management time, attention and resources and may otherwise have a material adverse effect on our
business, financial condition and results of operations.

Failure in our information technology systems could disrupt our operations and cause the loss of confidential information and business
opportunities.

Healthcare reform measures in the U.S., as well as the general tightening of drug reimbursement pathways and levels of reimbursement
globally, are expected to add additional pressure to achieve financial expectations for our product candidates, if approved.

Our international operations subject us to additional regulatory oversight in foreign jurisdictions, as well as economic, social, and
political uncertainties, which could cause a material adverse effect on our business, financial position, and operating results.

Our employees and independent contractors, including principal investigators, CROs, consultants and vendors, may engage in
misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are subject to anti-bribery, anti-corruption, and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act, in
which violations of these laws could result in substantial penalties and prosecution.

We and any of our third-party manufacturers or suppliers may use potent chemical agents and hazardous materials, and any claims
relating to improper handling, storage or disposal of these materials could be time consuming or costly.

Risks Related to Intellectual Property Matters

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If we cannot protect our intellectual property, others could use our technology in competitive products. Even if we obtain patents to
protect our product candidates, those patents may not be sufficiently broad, or they may expire and others could then compete with us.

Intellectual property rights of third parties could limit our ability to develop and market our product candidates.

We rely on agreements containing obligations regarding intellectual property, confidentiality and noncompetition provisions that could be
breached and may be difficult to enforce.

Intellectual property rights do not necessarily address all potential threats.

Risks Related to the Ownership of our Securities

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A small group of our investors, including Lee’s Pharmaceutical Holdings Limited, or Lee’s Holdings, may be able to exercise significant
influence over our business strategy and operations.

Our common stock is listed on the Nasdaq Capital Market. We can provide no assurance that we will be able to comply with the
continued listing requirements over time and that our common stock will continue to be listed on the Nasdaq Capital Market.

Our Certificate of Incorporation provides 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 file in a different judicial forum
to resolve disputes with us or our directors, officers or employees.

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WINDTREE THERAPEUTICS, INC.

Table of Contents to Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 2021

PART I

PART II

PART III

PART IV

ITEM 1. BUSINESS.
ITEM 1A. RISK FACTORS.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
ITEM 2. PROPERTIES.
ITEM 3. LEGAL PROCEEDINGS.
ITEM 4. MINE SAFETY DISCLOSURES

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER

PURCHASES OF EQUITY SECURITIES.

ITEM 6. [Reserved].
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
ITEM 9A. CONTROLS AND PROCEDURES.
ITEM 9B. OTHER INFORMATION.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

SIGNATURES 

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ITEM 1. BUSINESS.

Overview

PART I

We are a clinical-stage biopharmaceutical company focused on the development of novel therapeutics intended to address significant unmet

medical needs in important acute care markets. Our development programs are primarily focused in the treatment of acute cardiovascular and secondarily
in acute pulmonary diseases. Our lead product candidate, istaroxime, is a first-in-class, dual-acting agent being developed to improve cardiac function in
patients with acute heart failure, or AHF, with a potentially differentiated safety profile from existing treatments. Istaroxime demonstrated significant
improvement in both diastolic and systolic aspects of cardiac function and was generally well tolerated in two phase 2 clinical trials. Istaroxime has been
granted Fast Track designation for the treatment of AHF by the U.S. Food and Drug Administration, or FDA. Based on the profile observed in our phase 2
clinical studies in AHF, where istaroxime significantly improved cardiac function and systolic blood pressure in acute decompensated heart failure patients,
we initiated a phase 2 global clinical study to evaluate istaroxime for the treatment of early cardiogenic shock (Society for Cardiovascular Angiography and
Interventions Stage B shock), a severe form of heart failure characterized by very low blood pressure and risk for hypoperfusion to critical organs. We
believe that istaroxime has the potential to fulfill an unmet need in early cardiogenic shock. Our heart failure cardiovascular portfolio also includes sarco
endoplasmic reticulum Ca2+ -ATPase 2a, or SERCA2a, activators which activate SERCA2a. This research program is evaluating these preclinical product
candidates, including oral and intravenous SERCA2a activator heart failure compounds. As potential oral agents, these candidates would be developed for
chronic heart failure. In addition, our cardiovascular drug product candidates include rostafuroxin, a novel product candidate for the treatment of
hypertension in patients with a specific genetic profile. We are pursuing potential licensing arrangements and/or other strategic partnerships and do not
intend to advance this product candidate without securing such an arrangement or partnership.

Our pulmonary product candidate portfolio consists of a KL4 surfactant platform to address a range of serious respiratory conditions in children
and adults. KL4 surfactant has been in development as a liquid instillate for noninvasive delivery as an aerosol. In September 2020, the FDA accepted our
investigational new drug, or IND, application for an open-label phase 2 pilot study to assess safety and tolerability in the COVID-19 acute respiratory
distress syndrome, or ARDS, population and the ability of our KL4 surfactant liquid instillate to impact key respiratory parameters in the treatment of lung
injury and ARDS resulting from severe acute respiratory syndrome coronavirus 2, or SARS-CoV-2, the causative agent in novel coronavirus, or COVID-
19, infections. In January 2022, we completed enrollment of 20 patients in our phase 2 study of lucinactant (KL4 surfactant) for patients with severe
COVID-19 associated ARDS and lung injury. The study demonstrated that intratracheal administration of reconstituted lyophilized lucinactant was
generally safe and well tolerated. Lucinactant was safely administered to critically ill, mechanically ventilated patients with severe COVID-19 associated
ARDS. Oxygenation and other physiological parameters were stable to improved after dosing, supporting the feasibility of this treatment approach to
develop a potential treatment for critically ill patients with ARDS due to COVID-19 or other causes.

Previously, we were also developing AEROSURF (lucinactant for inhalation), a novel drug/medical device combination product for noninvasive

delivery of aerosolized KL4 surfactant using our ADS technology for the treatment of respiratory distress syndrome, or RDS, in premature infants. We
suspended all internal AEROSURF clinical activities in November 2020, because istaroxime, our lead product candidate, has become our primary focus for
investment and execution as we believe development of istaroxime represents a greater value opportunity for us and our stockholders than development of
KL4 surfactant. Since completing our phase 2 study of lucinactant (KL4 surfactant) for patients with severe COVID-19 associated ARDS and lung injury
in January 2022, in order to preserve resources for the highest priority programs, we have begun to reduce costs that were not already transferred to our
licensee in Asia, Lee’s Pharmaceutical (HK) Ltd., or Lee’s (HK), under the terms of our License, Development and Commercialization Agreement between
us and Lee’s (HK) dated as of June 12, 2017, as amended, or the Asia License Agreement. These costs include certain reductions in headcount dedicated to
KL4 surfactant and the decommissioning of both our analytical and technical support laboratory, which previously conducted release testing of active
pharmaceutical ingredients, or APIs, and supportive research for our lyophilized and aerosolized KL4 surfactant, and our medical device development
laboratory, which was previously used to conduct development activities and testing for our ADS technologies. To support the future development of our
KL4 surfactant platform in markets outside of Asia, including the U.S., we are pursuing one or more licensing transactions.

Our ability to advance our development programs is dependent upon our ability to secure additional capital in both the near and long-term,
through public or private equity offerings; through potential strategic opportunities, including licensing agreements, drug product development and
marketing collaboration arrangements, pharmaceutical research cooperation arrangements or other similar transactions in geographic markets, including the
U.S., and/or through potential grants and other funding commitments from U.S. government agencies, in each case, if available. We have engaged with
potential counterparties in various markets and will continue to pursue non-dilutive sources of capital as well as potential private and public offerings.
There can be no assurance, however, that we will be able to identify and enter into public or private securities offerings on acceptable terms and in amounts
sufficient to meet our needs or qualify for non-dilutive funding opportunities under any grant programs sponsored by U.S. government agencies, private
foundations and/or leading academic institutions, or identify and enter into any strategic transactions that will provide the additional capital that we will
require. If none of these alternatives is available, or if available, we are unable to raise sufficient capital through such transactions, we potentially could be
forced to limit or cease our development activities, which would have a material adverse effect on our business, financial condition and results of
operations.

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Our Development Programs

The table below summarizes the current status and anticipated milestones for our principal product development programs. However, due to the

disruptive impact of the COVID-19 pandemic, in the U.S. and globally, and its effect on hospital resources, focus, availability of services, and professional
staff, our clinical trials and the next expected milestones of our product candidates may be impacted, and we may experience delays in anticipated timelines
and milestones. In addition, these timelines are dependent on our ability to secure sufficient capital to continue development without interruption.

Product Candidate

Indication

Status

Next Expected Milestone

Cardiovascular Programs
Istaroxime

Early Cardiogenic Shock

Phase 2a

Istaroxime

AHF

Phase 2b

Oral SERCA2a Activators

Chronic and AHF, including
HFpEF

Preclinical

Completed clinical study in 60 patients; topline data
expected April 2022.

Ongoing study start-up activities for second phase 2b
clinical trial in approximately 300 patients targeted to
start once the clinical trial is fully funded.

Ongoing preclinical studies; pursuing potential licensing
transactions, research partnership arrangements or other
strategic opportunities.

Rostafuroxin

Genetically Associated
Hypertension

Phase 2b

Pursuing potential out-licensing transactions or other
strategic opportunities.

Pulmonary Programs
Lyophilized KL4 Surfactant

COVID-19-associated lung injury
and ARDS

Phase 2a

Enrollment of 20 patients is complete; data was
announced in the first quarter of 2022 and showed that
the product candidate was generally safe and well
tolerated with stable to improved oxygenation and other
physiological parameters after dosing.

AEROSURF (aerosolized KL4
surfactant based on ADS technology)

RDS

Cardiovascular Programs

Phase 2b

Pursuing one or more licensing transactions in markets
outside of Asia, including in the U.S., for RDS and all
KL4 surfactant related products.

Heart failure is a chronic, progressive condition in which patients often experience episodic periods of increased symptoms known as AHF, where

the heart fails to adequately pump, resulting in worsening symptoms, including pulmonary and peripheral edema and other severe complications. In the
U.S., approximately 6 million people (nearly 2% of the adult population) have heart failure and approximately half of these patients are expected to die
within five years of diagnosis; and in the combined U.S., EU and Japan markets, there are more than 18 million patients suffering from heart failure. Heart
failure is the leading cause of hospitalization in patients age 65 years and older. AHF can be precipitated by many factors and puts patients at increased risk
for morbidity, hospital readmission and mortality. There are more than 1.3 million hospital admissions for heart failure in the U.S. each year and over 2.5
million hospital estimated admissions for AHF in the combined U.S., EU and Japan markets. We estimate that AHF may represent a potential combined
annual addressable market (U.S., EU and Japan) of approximately two million patients with multi-billion-dollar annual market value.

Istaroxime (Early Cardiogenic Shock)

We are evaluating istaroxime for the treatment of early cardiogenic shock, a severe presentation of heart failure characterized by very low blood

pressure and risk for hypoperfusion to critical organs which is associated with high mortality and morbidity and is not well treated with current therapies. In
September 2020, we initiated a small phase 2 clinical study of istaroxime for the acute treatment of early cardiogenic shock in heart failure patients with a
more severe case of heart failure to evaluate the potential to improve blood pressure. The study also will evaluate the safety and side effect profile of
istaroxime in this patient population. We expect data to be available in April 2022. The global COVID-19 pandemic has had a disruptive effect on hospital
resources (including in intensive care units, or ICUs) where this study is being conducted. The COVID-19 pandemic has impacted the severity of illness of
patients presenting with early cardiogenic shock and/or conditions that could lead to early cardiogenic shock. In addition, the geographic mix of patients
can impact the outcome of a clinical trial, and with the global spread of COVID-19 occurring in waves, the mix of patients across countries has fluctuated.
How these dynamics could potentially impact both timelines and outcomes is unknown.

We believe istaroxime may fulfill an unmet need in early cardiogenic shock based on the profile observed in our phase 2 clinical studies in AHF,

which demonstrated that istaroxime significantly improved cardiac function and systolic blood pressure. There is significant unmet medical need in the area
of early cardiogenic shock and severe heart failure. If istaroxime is able to demonstrate a meaningful improvement in blood pressure in clinical trials of this
condition, we believe there may be an opportunity to apply for a Breakthrough Therapy designation that could provide beneficial opportunities for the
development program. We note that regulatory precedent exists for an approval in shock (distributive) based primarily upon improvements in blood
pressure with an acceptable safety profile. We will be exploring the potential for this type of pathway for istaroxime. In addition, we believe the receipt of
either Fast Track or Breakthrough Therapy designation may increase the likelihood of receiving priority review of a marketing application, which would
provide for an expedited review timeframe; however, there is no guarantee that we would receive Breakthrough Therapy or Fast Track designation or that
any such designation will lead to a faster development process, review or approval compared to product candidates considered for approval under
conventional FDA procedures.

Using cardiogenic shock patient U.S. hospital claims and worldwide prevalence data, we estimate the worldwide total market value of cardiogenic
shock to be $1.25 billion. This estimate is calculated by multiplying the patient numbers from the largest markets, by the assumed various regional prices of
drug treatment in the acute care market. The addressable market for istaroxime will be a subset of the total market value of $1.25 billion.

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Istaroxime (AHF)

Istaroxime is a first-in-class, dual action investigational drug that we are developing to treat AHF with a potentially differentiated safety profile
from current AHF therapies. In 2019, we announced topline results of a successful phase 2b clinical trial of istaroxime in which the primary endpoint of
cardiac function, E/e’ ratio (echocardiographic assessment reflecting changes in pulmonary capillary wedge pressure, or PCWP, or left ventricular filing
pressure) as well as other important parameters were significantly improved. Istaroxime has been granted Fast Track designation by the FDA for the
treatment of AHF. In April 2020, we announced the presentation at the American College of Cardiology 2020 virtual meeting of a new subset analysis from
a phase 2b study of istaroxime in patients hospitalized with AHF. This post-hoc analysis characterized the responses between Caucasian and Asian patients
and demonstrated that the istaroxime dose of 0.5 µg/kg/min produced a similar response on E/e’, the primary study endpoint, and stroke volume index, an
important measure of cardiac performance.

Istaroxime represents a novel approach to the treatment of AHF. It has a dual mechanism of action to improve cardiovascular physiology. Current

therapy for heart failure in the hospital typically includes intravenous diuretics and, if the blood pressure is low, supportive therapy with inotropes.
Inotropes are often associated with adverse effects such as hypotension, arrhythmias and, in some cases, increased mortality. These drugs are used only if
needed to support blood pressure and cardiac function. We believe that istaroxime, if approved, may have the potential to address unmet medical needs of
these patients by improving cardiac function and management of fluid accumulation that contributes to heart failure symptoms with a potentially
differentiated safety profile from current AHF therapies, including a potential reduction in complications and improvement of other clinical outcomes.

To advance istaroxime for the treatment of AHF potentially through the phase 2 clinical program and be in a phase 3-ready position, our strategy

includes, subject to adequate resources, planning an additional phase 2 clinical trial that will enroll approximately 300 patients in approximately 60 clinical
sites globally. This trial will focus on treating heart failure patients with low blood pressure, who also tend to be diuretic resistant, as a patient population
that we believe could particularly benefit from the unique profile and potential ability of istaroxime to increase cardiac function and increase blood pressure
while maintaining or improving renal function.

This trial will also collect data on measures that may serve as primary endpoints in a phase 3 clinical trial, and will include an optimized dosing

regimen, potentially extending the infusion time beyond 24 hours. We currently do not have sufficient capital to execute this clinical trial. We are exploring
capital from public and private equity offerings and potential strategic opportunities to fund the initiation of this clinical trial, and plan to initiate the
clinical trial after obtaining adequate funding. We plan to closely monitor the impact of the COVID-19 pandemic and its impact on hospital resources and
resulting potential changes in regulatory timelines for conducting non-COVID-19-related clinical trials.

Rostafuroxin

Rostafuroxin is a novel investigational drug product candidate being developed for the treatment of hypertension in patients with a specific genetic

profile, which is found in approximately 20% - 25% of the adult hypertensive population. Rostafuroxin has been studied in three phase 2 clinical trials
assessing reduction in blood pressure in a hypertensive population selected in accordance with the specified genetic profile. After positive phase 2a results,
a phase 2b study was initiated. In this most recent phase 2b clinical trial, rostafuroxin demonstrated efficacy in Caucasian patients in treatment naïve
hypertension. During the second quarter of 2021, we concluded an initial process to test the industry’s interest in investing in our drug product candidate.
We currently have not been able to secure a licensing transaction or other strategic opportunity. As a result, we recorded an impairment of the related
intangible asset (see, Note 4 – Accounting Policies and Recent Accounting Pronouncements – Goodwill and Intangible Assets). Based on feedback
received from potential licensing partners, we have determined that there is a need for an additional phase 2 clinical trial to demonstrate efficacy in non-
Caucasian and Caucasian patients in treatment resistant hypertension. We are continuing to pursue licensing arrangements and/or other strategic
partnerships for rostafuroxin. We do not intend to conduct the additional phase 2 clinical trial without securing such an arrangement or partnership.

According to the Centers for Disease Control and Prevention, or the CDC, patients with high blood pressure have a greater risk for heart disease

and stroke, which are leading causes of death in the U.S. Nearly half of adults in the U.S. (108 million, or 45%) have hypertension defined as a systolic
blood pressure ≥ 130 mm Hg or a diastolic blood pressure ≥ 80 mm Hg or are taking medication for hypertension. In 2018, nearly half a million deaths in
the U.S. included hypertension as a primary or contributing cause. Only about 1 in 4 adults (24%) with hypertension have their condition under control.
Patients often have persistent hypertension despite being on multiple therapies. Ethnicity and genetic makeup are known to impact the response to anti-
hypertensive treatments, and uncontrolled hypertension has been associated with certain genetic makeups. Given the size of the market and the prevalence
of unmet medical needs, major pharmaceutical companies have maintained hypertension as a key area of focus and continue to seek new drugs to compete
in markets they have established with previous anti-hypertensive therapies.

SERCA2a Activators – Preclinical Oral, Chronic and Acute Heart Failure Product Candidates

We are pursuing several early exploratory research programs to assess potential product candidates, including oral and intravenous SERCA2a
activator heart failure compounds, and believe that we can add value to our cardiovascular portfolio by advancing these SERCA2a activator candidates
through preclinical studies. To further advance these product candidates, we are actively exploring potential licensing transactions, research partnership
arrangements or other strategic opportunities.

Pulmonary Programs

Lyophilized KL4 Surfactant (COVID-19 related Lung Injury)

Patients with COVID-19 pneumonia may progress to severe respiratory failure requiring supplemental oxygen and mechanical ventilation. This
acute lung injury, known as ARDS, has no approved therapies and is associated with significant morbidity, mortality and healthcare resource utilization.
The COVID-19 virus infects via angiotensin-converting enzyme 2 receptor, or ACE2, on surfactant producing cells in the lung. The ACE2 receptor is
found on alveolar Type 2 cells in the lung. Type 2 cells are the source of pulmonary surfactant production. When these cells are infected and damaged,
surfactant production is impaired, increasing the risk for respiratory failure as surfactant is necessary for the lungs to stay inflated and for proper gas
exchange. Surfactant deficiency is known to contribute to the pathophysiology of ARDS, respiratory failure, and lung injury in patients on mechanical
ventilation.

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In January 2022, we completed enrollment of 20 patients in our study of lucinactant (KL4 surfactant) for patients with severe COVID-19
associated ARDS and lung injury. The phase 2 trial was designed to assess feasibility, safety, and tolerability of administration of reconstituted lyophilized
lucinactant in these critically ill patients. The multicenter, single-arm study enrolled 20 critically ill patients who were intubated and on mechanical
ventilation due to severe COVID-19 associated ARDS. Patients received lucinactant as a liquid via the endotracheal tube assessing safety and tolerability of
the administration procedure and of the drug. Oxygenation and other physiological responses were also measured. Study sites were in the U.S. and
Argentina.

The study demonstrated that intratracheal administration of reconstituted lyophilized lucinactant was generally safe and well tolerated. Lucinactant

was safely administered to critically ill, mechanically ventilated patients with severe COVID-19 associated ARDS. Oxygenation and other physiological
parameters were stable to improved after dosing, supporting the feasibility of this treatment approach to develop a potential treatment for critically ill
patients with ARDS due to COVID-19 or other causes.

AEROSURF (lucinactant for inhalation)

AEROSURF is an investigational combination drug/medical device product to improve the management of RDS in premature infants. RDS is a
condition that occurs in premature infants who may not have fully developed natural lung surfactant, which is essential to normal respiratory function and
survival, and may require surfactant therapy to sustain life, and can result in long-term respiratory problems, developmental delays and death. Surfactant
therapy is the primary therapy to address an underlying surfactant deficiency, and AEROSURF is designed to deliver aerosolized KL4 surfactant
noninvasively using our proprietary ADS technology. We have completed three AEROSURF phase 2 clinical trials. Our most recent phase 2b clinical trial
did not achieve its primary endpoint, due primarily, we believe, to an unexpected rate of treatment interruptions associated with the prototype phase 2 ADS
used in the phase 2b clinical trial, or phase 2 ADS. After excluding patients whose doses were interrupted, in accordance with the predesignated statistical
plan, we observed a meaningful treatment effect in line with our desired targeted outcome and believe that these results support the further development of
AEROSURF to reduce both the rate of nasal continuous positive airway pressure, or nCPAP, failure and the need for intubation in premature infants being
treated for RDS. AEROSURF has been granted Fast Track designation by the FDA for the treatment of RDS.

In August 2020, we entered into a Project Financing Agreement with Lee’s (HK), or the PF Agreement, dated and effective as of August 12, 2020,

under which we received payments totaling $2.8 million through October 2020. Pursuant to the PF Agreement, Lee’s (HK) agreed to pay additional
amounts to be set forth in an updated development budget to be agreed between the parties by September 1, 2020 and updated every six months thereafter,
to fund the continued development of AEROSURF and to be paid with the payment schedule to be set forth in each updated development budget. In partial
satisfaction of our obligations under the PF Agreement, we agreed to pay Lee’s (HK) 50% of any Commercialization Net Revenues (as defined in the PF
Agreement) up to an amount that is equal to 125% of the Project Expenses (as defined in the PF Agreement) funded by Lee’s (HK). On November 12,
2020, Lee’s (HK) provided notice of termination of additional funding under the PF Agreement, and we and Lee’s (HK) revised our plans for the continued
development of AEROSURF. Lee’s (HK) agreed to continue the development of AEROSURF in Asia at its own cost. Lee’s (HK) agreed to fund an
additional $1.0 million to us in 2021 for certain transition and analytical services to be provided by us with respect to the development of AEROSURF,
which will be considered “Project Expenses” under the terms of the PF Agreement. In 2021, we received payments totaling $1.0 million from Lee’s (HK)
and no further amounts are due under the PF Agreement as of December 31, 2021.

With the termination of the PF Agreement in November 2020, we ceased enrollment in our phase 2b bridging study at the European Union, or EU,

clinical sites and are transferring AEROSURF development activities to Lee’s (HK) to be implemented under the terms of our Asia License
Agreement. Since the 2018 acquisition of CVie Investments Limited and its wholly owned subsidiary CVie Therapeutics Limited, istaroxime has become
our primary focus for investment and execution due to what we believe represents a greater potential value opportunity for us and our stockholders. Since
completing our phase 2 study of lucinactant (KL4 surfactant) for patients with severe COVID-19 associated ARDS and lung injury in January 2022, in
order to preserve resources for the highest priority programs, we have begun to reduce costs not already transferred to our licensee in Asia, Lee’s (HK),
under the terms of our Asia License Agreement. These costs include certain reductions in headcount dedicated to KL4 surfactant and the decommissioning
of both our analytical and technical support laboratory, which previously conducted release testing of APIs and supportive research for our lyophilized and
aerosolized KL4 surfactant, and our medical device development laboratory, which was previously used to conduct development activities and testing for
our ADS technologies. To support the future development of our KL4 surfactant platform in markets outside of Asia, including the U.S., we are pursuing
one or more licensing transactions.

Lyophilized KL4 Surfactant (Lung Injury and Other Studies)

We believe our lyophilized KL4 surfactant and ADS technologies may potentially support a product pipeline to address a range of serious
respiratory conditions in children and adults. We have from time to time worked with independent investigators and pharmaceutical companies to conduct
or assist with preclinical studies, some of which were funded under grants from National Institutes of Health, or NIH, and other government agencies, to
assess the utility of using our KL4 surfactant, alone or in combination with other pharmaceutical compounds, to address various respiratory conditions.

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Impact of COVID-19

The COVID-19 pandemic continues to evolve, and we continue to closely monitor its impact on our business and operations, including its
continued impact on our clinical development plans and timelines, and financial condition. There has been intermittent impact of the pandemic in differing
geographies, and there may be continued impact, particularly in light of the surge of new COVID-19 cases relating to new variants, such as the delta and
omicron variants. As of the date of this Annual Report on Form 10-K, our operations, capital and financial resources and overall liquidity position and
outlook have been impacted by COVID-19, primarily due to delays experienced in our operations, including in clinical study initiation and enrollment. The
extended timelines have required us to expend more of our capital resources than planned to achieve our projected milestones. For example, our phase 2
study of istaroxime for early cardiogenic shock in heart failure patients experienced delays in trial initiation and enrollment in 2020 and 2021. The full
extent, duration, or impact that the COVID-19 pandemic will have, directly or indirectly, on our financial condition and operations, including ongoing and
planned clinical trials, will depend on future developments that are highly uncertain and cannot be accurately predicted. These potential future
developments include new information that may emerge concerning the severity of the COVID-19 outbreak, the severity and transmissibility of new
variants of the virus, information about any resurgences in one or more geographic locations where our current or intended clinical trial sites, our principal
executive offices, research and development laboratories or manufacturing facilities are located, and the actions taken to contain it or treat its impact, which
may include, among others, the timing and extent of government reopening activities and the economic impact on local, regional, national, and
international markets. In addition, regional impact and responses to the COVID-19 pandemic have affected where a clinical trial could be executed and
how various elements of the clinical trial are performed. Going forward, the pandemic could also impact how monitoring/auditing of clinical trial sites and
data occur. The maintenance, or strategic re-implementation, of mitigating COVID-19 measures in one or more geographic locations where our clinical
trial sites, principal executive offices, research and development laboratories or other facilities are located remains possible and if realized, we believe there
could be further impact on the clinical development of our product candidates, which may include potential delays, halts or modifications to our ongoing
and planned trials in 2022 and beyond.

Our Strategy

We intend to maximize the value of our product candidates and proprietary technologies. Our strategy to achieve this goal includes plans to:

●

●

●

●

●

●

Study istaroxime for early cardiogenic shock and, if the drug demonstrates adequate potential to raise blood pressure with an
acceptable safety profile, pursue opportunity for an indication, which we believe may include a Breakthrough Therapy
designation from the FDA, and if available, an expedited regulatory pathway to address this area of unmet medical need. In
March 2022, we completed a 60-patient phase 2a clinical trial in early cardiogenic shock, with topline data expected in April 2022;

Advance istaroxime for the treatment of AHF to a phase 3-ready position and potential partnering, collaboration or other
strategic transaction. We have begun start-up activities for an additional phase 2b clinical trial in approximately 300 patients and plan to
execute the clinical trial after obtaining adequate funding;

Advance development of chronic and acute preclinical heart failure programs. To create added value for our cardiovascular
portfolio, we plan to advance oral (chronic) and intravenous (acute) SERCA2a activator product candidates through selected preclinical
studies to demonstrate proof of concept; actively exploring potential licensing transactions, research partnership arrangements and other
strategic opportunities;

Pursue non-dilutive funding and partnership support of a clinical trial meant to enhance the potential clinical positioning of
rostafuroxin by examining its potential in the treatment resistant hypertension patient population. Our primary objective for
rostafuroxin is to identify out-licensing or other strategic arrangements for the completion of development and potential
commercialization with one or more larger companies that have an interest in and/or operate in the very large and broad anti-hypertension
market, and thereafter, to reinvest any proceeds to provide for our other core priority programs;

Continue to support Lee’s (HK) in its development of the KL4 platform in Asia. To support the future global development of our
KL4 surfactant platform, including development in RDS via aerosolized AEROSURF and/or instillate delivery and/or in other potential
applications such as acute lung injury, in markets outside of Asia, including the U.S., we are pursuing one or more licensing transactions;
and

To enhance our product portfolio and leverage our depth of experience in late-stage clinical development and commercialization,
we plan to pursue a focused business development agenda directed towards enhancing our current offerings and identifying
additional product candidates that enhance our portfolio and provide more opportunity to grow value and diversify risk. The
strategic focus is on areas that fit our market focus (specialty critical, acute care and/or orphan designation), fit our scale for development
and cost structure and leverage our therapeutic area and other competencies such as clinical-stage development.

Our Product Candidates

Istaroxime

Our lead cardiovascular product candidate is istaroxime, a novel, first-in-class, dual action investigational drug that we are developing to treat

AHF and early cardiogenic shock. Istaroxime has been evaluated in two phase 2 clinical trials, the results of which suggest that istaroxime may improve
cardiovascular physiological function as assessed by parameters of pump function, decreases in heart rate, increases in blood pressure and renal function
(as measured by filtration rate) without adverse events such as arrhythmias or cardiac damage (as indicated by elevated troponin values). In August 2019,
the FDA granted us Fast Track designation for istaroxime for the treatment of AHF.

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AHF and Early Cardiogenic Shock Overview

Heart failure can result from structural or functional cardiac abnormalities. Heart failure is a chronic, progressive disease that commonly but

episodically worsens to a point of critical decompensation, where cardiac output fails to meet the body’s metabolic needs. The disease is characterized by
inadequate pumping function of the heart that results in fluid accumulation manifesting as pulmonary congestion, peripheral edema and congestion in other
parts of the body. Insufficient cardiac output can result in inadequate peripheral perfusion that increases the risk of other organ dysfunction such as renal
failure. Chronic heart failure is commonly treated with multiple medications including diuretics, inhibitors of neurohumoral imbalances (angiotensin, renin,
aldosterone, naturetic peptides) and beta blockers. Effective treatments for AHF in a hospital setting are lacking.

Clinical objectives for AHF patient management include: (i) relieve pulmonary congestion and general edema with intravenous diuretics, (ii)
improve cardiac function and peripheral / organ perfusion, (iii) achieve a stable, fully compensated clinical state and, (iv) transition to oral, outpatient
medicines (for chronic management of their heart failure). 

Current approaches to acutely improve cardiac function are associated with unwanted effects including heart rhythm disturbances, increased heart

rate and myocardial oxygen demand, decreased blood pressure, potential damage to the heart muscle, worsening renal function and even increases in
mortality have been observed. In particular, patients with low systolic blood pressure, or SBP, and peripheral hypoperfusion are high risk, challenging
patients and are also generally resistant to diuretic therapy and often discharged in a sub-optimal state.

Early cardiogenic shock is a severe presentation of heart failure characterized by very low blood pressure and risk for hypoperfusion to critical

organs. It is associated with high mortality and morbidity and is not well treated with current therapies.

Method of Action

Istaroxime represents a novel approach to the treatment of AHF. It has a dual mechanism of action to improve cardiovascular physiology. First, it

activates the SERCA2a calcium pump on the sarcoplasmic reticulum, or SR, leading to enhanced SR calcium uptake and a reduction in cytoplasmic
calcium that is thought to improve myocardial relaxation. Second, it inhibits the sodium-potassium ATPase activity leading to improved myocardial
contractility.

We believe that these mechanisms of action may result in improvement in cardiac function and perfusion to reduce congestion and edema and
preserve other organ function while avoiding the side effects associated with other classes of heart failure therapies. Data from preclinical, phase 2a and
phase 2b clinical studies performed to date suggest that istaroxime may improve cardiovascular physiology as assessed by parameters of pump function,
decreases in PCWP, decreases in heart rate, increases in blood pressure without an increase in adverse events such as arrhythmias, cardiac damage (as
indicated by elevated troponin values) or adverse impact on kidney function. We believe that these features of istaroxime, if approved, could potentially
result in clinical improvement of patients' heart failure symptoms, reduce complications and improve other clinical outcomes when compared to current
therapeutic regimens for AHF.

Clinical Development

Early Cardiogenic Shock

After assessing the regulatory landscape and data from the istaroxime phase 2 clinical program in AHF and discussions with our scientific
advisors, we added to our istaroxime development program a study in early cardiogenic shock due to heart failure. We believe that istaroxime may fulfill an
unmet medical need in early cardiogenic shock based on the profile observed in prior phase 2 clinical studies in AHF, in which istaroxime increased SBP,
suggesting that istaroxime could potentially contribute to the clinical improvement of select patients in cardiogenic shock due to heart failure.

In the second half of 2020, we initiated a small study of istaroxime for the acute treatment of early cardiogenic shock in patients with more severe
cases of heart failure, to evaluate the potential to improve blood pressure. This study is a phase 2 international randomized double-blind placebo-controlled
study to assess the effect of istaroxime in patients with early cardiogenic shock due to heart failure. This study includes 60 patients (30 assigned to
istaroxime and 30 assigned to placebo) receiving study drug infusion over 24 hours. The primary endpoint is the change in systolic blood pressure over six
hours after initiating the infusion. Secondary endpoints will include characterization of blood pressure changes over 24 hours, the number of patients
requiring rescue therapy (vasopressors, inotropes or mechanical devices), assessment of renal function and measures associated with safety and tolerability.
The study will also evaluate the safety and side effect profile of istaroxime in this patient population. In March 2022, we completed enrollment of 60
patients and expect data to be available in April 2022. The global COVID-19 pandemic has had a disruptive effect on hospital resources (including in
ICUs) where this study is being conducted. The COVID-19 pandemic has impacted the severity of illness of patients presenting with early cardiogenic
shock and/or conditions that could lead to early cardiogenic shock. In addition, the geographic mix of patients can impact the outcome of a clinical trial,
and with the global spread of COVID-19 occurring in waves, the mix of patients across countries has fluctuated. How these dynamics could potentially
impact both timelines and outcomes is unknown.

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AHF

Istaroxime has been evaluated in six clinical trials assessing various doses in 280 patients, including two phase 2 clinical trials. In a phase 2a

randomized, double-blind, placebo-controlled, dose-escalation clinical trial, three doses of istaroxime were evaluated in a study of 120 hospitalized patients
(approximately 30 patients per cohort) with AHF and reduced left ventricular ejection fraction. The three doses of istaroxime were administered
intravenously over six hours. In this clinical trial, the primary endpoint of lowering of PCWP was significantly improved in all three doses relative to
placebo, and certain secondary hemodynamic endpoints (increased systolic blood pressure and decreased heart rate) also improved. The main side effects
were vomiting (7.9%) and pain at the infusion site (5.6%); one severe adverse event of ventricular tachycardia was observed. The favorable effects on
PCWP, blood pressure and heart rate provided the basis for moving the program forward into a phase clinical 2b trial and for selecting the doses to study.

The primary endpoint of the istaroxime phase 2b clinical trial for AHF was a change from baseline to 24 hours after start of infusion (Day 1) in
E/e’ with istaroxime 0.5 or 1.0 µg/kg/min compared to placebo. The E/e’ ratio is a marker of the function of the left ventricle, or LV, of the heart and was
measured using doppler echocardiography read by a central laboratory. Secondary endpoints included change in other parameters of cardiac function, such
as diastolic function, or E/A, stroke volume, or SVI, left ventricle ejection fraction, or LVEF, LV volumes, left atrial, or LA, area, interior vena cava, or
IVC, diameter. A 24-hour infusion of istaroxime was associated with significant improvements in cardiac function, in both dosing groups, with a mean E/e'
of -4.55 for the 0.5 µg/kg/min group and -3.16 for the 1.0 µg/kg/min group, compared with mean placebo E/e’ ratios of -1.55 and -1.08, respectively.
Twenty-four-hour infusions of istaroxime were also associated with substantial increases in stroke volume in both dosing groups, with a mean SVI value of
5.33 ml/beat/m2 for the 0.5 µg/kg/min group and 5.49 ml/beat/m2 for the 1.0 µg/kg/min group, compared with the mean placebo SVI of 1.65 ml/beat/m2
and 3.18 ml/beat/m2, respectively. Importantly, subjects also maintained or increased SBP, with a mean change in SBP of 2.82 mmHg for the 0.5 µg/kg/min
group and 6.1 mmHg for the 1.0 µg/kg/min group, compared with the mean placebo SBP values of -2.47 mmHg and 2.7 mmHg, respectively. There were
no signs of increased risk for arrhythmias or increased troponin levels (a marker of heart muscle damage) during or after istaroxime infusion. Additionally,
blood pressure tended to increase, and heart rate decreased, during the infusion with istaroxime, which may have contributed to the short-term trend toward
improvement in renal function. The findings were consistent with the physiologic improvements seen in the phase 2a study and the effects of istaroxime in
AHF.

Istaroxime was generally well tolerated. Istaroxime did not appear to be associated with an increased risk for arrhythmias or increases in cardiac
troponin T. The rate of cardiovascular-related adverse events was 23% for placebo, 10% for istaroxime low dose, and 18% for istaroxime high dose, with
cardiac failure occurring in 3%, 5% and 8% of placebo, low dose and high dose patients, respectively. The cases of cardiac failure were reported by the
investigator as “worsening of heart failure” symptoms that occurred approximately 10-14 days after study drug administration and were not considered to
be drug related. The most common adverse drug reactions reported included pain at infusion site, generally associated with use of short catheters, and dose-
related gastrointestinal adverse events in 5%, 10% and 38% of placebo, low dose and high dose patients, respectively. Serious adverse events included one
cardiac death and one case of cardiogenic shock (in the same patient who died) in the istaroxime 1.0 µg/kg/min group, two cases of cardiac failure in the
0.5 µg/kg/min group, three cases of cardiac failure in the 1.0 µg/kg/min group, and one case of renal embolism in the 1.0 µg/kg/min group.

Based on feedback from the FDA in June 2019 and discussions with our scientific advisors, to advance istaroxime for the treatment of AHF
potentially through the phase 2 clinical program and be in a phase 3-ready position, our strategy includes, subject to adequate resources, planning an
additional phase 2 clinical trial that will enroll approximately 300 patients in approximately 60 clinical sites globally. This trial will focus on treating heart
failure patients with low blood pressure, who also tend to be diuretic resistant, as a patient population that we believe could particularly benefit from the
unique profile and potential ability of istaroxime to increase cardiac function and increase blood pressure while maintaining or improving renal
function. This trial will also collect data on measures that may serve as primary endpoints in a phase 3 clinical trial, and will include an optimized dosing
regimen, potentially extending the infusion time beyond 24 hours. We currently do not have sufficient capital to execute this clinical trial. We are exploring
capital from public and private equity offerings and potential strategic opportunities to fund the initiation of this clinical trial, and plan to initiate the
clinical trial after obtaining adequate funding. We plan to closely monitor the impact of the COVID-19 pandemic and its impact on hospital resources and
resulting potential changes in regulatory timelines for conducting non-COVID-19-related clinical trials.

Manufacturing

Istaroxime is manufactured for us by an affiliate of Lee’s (HK).

The API used in production of the drug product candidate is manufactured by ScinoPharm Taiwan, Ltd.

We contracted with Clinigen for the receipt, labeling, packaging and distribution of drug and materials to support the istaroxime phase 2 clinical

trial in early cardiogenic shock.

Rostafuroxin

Rostafuroxin is a novel investigational drug product candidate being developed for the treatment of hypertension in patients with a specific genetic

profile, which is found in approximately 20% - 25% of the adult hypertensive population.

Hypertension Overview

According to the CDC, patients with high blood pressure have a greater risk for heart disease and stroke, which are leading causes of death in the

U.S. Nearly half of adults in the U.S. (108 million, or 45%) have hypertension defined as a systolic blood pressure ≥ 130 mm Hg or a diastolic blood
pressure ≥ 80 mm Hg or are taking medication for hypertension. In 2018, nearly half a million deaths in the U.S. included hypertension as a primary or
contributing cause. Only about 1 in 4 adults (24%) with hypertension have their condition under control. Patients often have persistent hypertension despite
being on multiple therapies. Ethnicity and genetic makeup are known to impact the response to anti-hypertensive treatments, and uncontrolled hypertension
has been associated with certain genetic makeups. Given the size of the market and the prevalence of unmet medical needs, major pharmaceutical
companies have maintained hypertension as a key area of focus and continue to seek new drugs to compete in markets they have established with previous
anti-hypertensive therapies. We are currently engaged in a process to test the industry’s interest in investing in new drugs in this market, and plan to pursue
potential licensing transactions and/or other strategic opportunities with a company that has interest in and/or operates in the anti-hypertension market.

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Method of Action

Rostafuroxin is designed to be a selective antagonist of adducin polymorphisms and endogenous ouabain, both known triggers of hypertension,

and creates functional effects by enhancing renal tubular sodium reabsorption and increasing vascular tone.

Clinical Development

Rostafuroxin has been studied in three phase 2 clinical trials assessing reduction in blood pressure in a hypertensive population selected in
accordance with a specified genetic profile. A phase 2b clinical trial was conducted as a two-part study with the first part conducted in Italy with Caucasian
patients and the second part conducted in Taiwan with ethnic Chinese patients. The efficacy results in Italy were positive in both this trial and in an earlier
phase 2a clinical trial; however, the blood pressure response in Chinese patients in the second part of the phase 2b study was minimal.

Rostafuroxin has demonstrated efficacy in Caucasian patients in treatment naïve hypertension in a phase 2b trial. During the second quarter, we

concluded an initial process to test the industry’s interest in investing in our product candidate. We currently have not been able to secure a licensing
transaction or other strategic opportunity. As a result, we recorded an impairment of the related intangible asset (see, Note 4 – Accounting Policies and
Recent Accounting Pronouncements – Goodwill and Intangible Assets). Based on feedback received from potential licensing partners, we have determined
that there is a need for an additional phase 2 clinical trial to demonstrate efficacy in non-Caucasian patients in treatment resistant hypertension. We are
continuing to pursue licensing arrangements and/or other strategic partnerships for rostafuroxin. We do not intend to conduct the additional phase 2 clinical
trial without securing such an arrangement or partnership.

Manufacturing

The drug product candidate for rostafuroxin is manufactured by an affiliate of Lee’s (HK).

The API used in the production of the drug product candidate is manufactured by SciAnda (Changshu) Pharmaceutical, Ltd.

Preclinical Heart Failure Product Candidates

We are pursuing early exploratory research to assess our preclinical follow-on oral and intravenous SERCA2a activator heart failure compounds.

To advance these product candidates, we are actively exploring potential licensing transactions, research partnership arrangements or other strategic
opportunities.

KL4 Surfactant

We believe our KL4 surfactant and ADS technologies may potentially support a product pipeline to address a range of serious respiratory
conditions in children and adults. Since completing our phase 2 study of lucinactant (KL4 surfactant) for patients with severe COVID-19 associated ARDS
and lung injury in January 2022, in order to preserve resources for the highest priority programs, we have begun to reduce costs not already transferred to
our licensee in Asia, Lee’s (HK), under the terms of our Asia License Agreement. These costs include certain reductions in headcount dedicated to KL4
surfactant and the decommissioning of both our analytical and technical support laboratory, which previously conducted release testing of APIs and
supportive research for our lyophilized and aerosolized KL4 surfactant, and our medical device development laboratory, which was previously used to
conduct development activities and testing for our ADS technologies. To support the future development of our KL4 surfactant platform in markets outside
of Asia, including the U.S., we are pursuing one or more licensing transactions.

COVID-19 related Lung Injury Overview

Patients with COVID-19 pneumonia may progress to ARDS and require supplemental oxygen and mechanical ventilation. ARDS has no approved
therapies and is associated with significant morbidity, mortality and healthcare resource utilization. The COVID-19 virus infects via angiotensin-converting
enzyme 2 receptor, or ACE2, on surfactant producing cells in the lung. This impairs surfactant production, resulting in poor gas exchange, decreased lung
compliance, and increased likelihood of needing mechanical ventilation. Pre-clinical and clinical evidence shows surfactant replacement therapy has the
potential to improve lung function, oxygenation, lung compliance and decrease pulmonary inflammation. These beneficial effects could lead to potential
clinical improvements such as decreased need for mechanical ventilation, decreased time on ventilator (freeing the devices for other patients) and possibly
mortality.

RDS Overview

Our KL4 surfactant can be lyophilized (freeze-dried) and reconstituted to a liquid just prior to administration. We have in the past considered

potential development pathways to secure marketing approval for lyophilized KL4 surfactant as an intratracheal instillate for the treatment and/or
prevention of RDS in premature infants who, because they are unable to breathe on their own or other reason, are not candidates for AEROSURF.
Lyophilized KL4 surfactant is the drug product component of AEROSURF and a lyophilized (freeze-dried) dosage form of the liquid KL4 surfactant
intratracheal instillate, SURFAXIN®, that was approved by the FDA in 2012, but the SURFAXIN drug product was withdrawn from the market by us
voluntarily in 2015 to focus our resources on the development of aerosolized KL4 surfactant for respiratory diseases, beginning with AEROSURF. We have
demonstrated in laboratory experiments that our lyophilized KL4 surfactant retains many of the key attributes and characteristics of SURFAXIN. We
expect that Lee’s (HK) will continue to pursue approval of lyophilized KL4 surfactant in Asia pursuant to the Asia License Agreement.

Clinical Development

COVID-19 related Lung Injury

In January 2022, we completed enrollment of 20 patients in our study of lucinactant (KL4 surfactant) for patients with severe COVID-19
associated ARDS and lung injury. The phase 2 trial was designed to assess feasibility, safety, and tolerability of administration of reconstituted lyophilized
lucinactant in these critically ill patients. The multicenter, single-arm study enrolled 20 critically ill patients who were intubated and on mechanical
ventilation due to severe COVID-19 associated ARDS. Patients received lucinactant as a liquid via the endotracheal tube assessing safety and tolerability of
the administration procedure and of the drug. Oxygenation and other physiological responses were also measured. Study sites were in the U.S. and
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The study demonstrated that intratracheal administration of reconstituted lyophilized lucinactant was generally safe and well tolerated. Lucinactant

was safely administered to critically ill, mechanically ventilated patients with severe COVID-19 associated ARDS. Oxygenation and other physiological
parameters were stable to improved after dosing, supporting the feasibility of this treatment approach to develop a potential treatment for critically ill
patients with ARDS due to COVID-19 or other causes.

AEROSURF

Overview

AEROSURF® (lucinactant for inhalation) is an investigational drug/medical device combination product candidate to improve the management of

RDS in premature infants who may not have fully developed natural lung surfactant and may require surfactant therapy to sustain life. AEROSURF is
designed to deliver aerosolized KL4 surfactant noninvasively using our proprietary ADS technology and potentially may meaningfully reduce the use of
invasive endotracheal intubation and mechanical ventilation. 

Clinical Development

On March 18, 2020, we entered into the Term Sheet with Lee’s (HK) pursuant to which Lee’s (HK) agreed to provide financing to fund the

development of AEROSURF for the period April 1, 2020 through September 30, 2020 and make payments of up to $3.9 million (which was reduced to
$2.8 million under specified circumstances) prior to September 1, 2020. In August 2020, we entered into the PF Agreement with Lee’s (HK), formalizing
the terms of the Term Sheet, and under which we received payments totaling $2.8 million through October 2020. Pursuant to the PF Agreement, Lee’s
(HK) agreed to pay additional amounts to be set forth in an updated development budget to be agreed between the parties by September 1, 2020 and
updated every six months thereafter, to fund the continued development of AEROSURF and to be paid with the payment schedule to be set forth in each
updated development budget. In partial satisfaction of our obligations under the PF Agreement, we agreed to pay Lee’s (HK) 50% of any
Commercialization Net Revenues (as defined in the PF Agreement) up to an amount that is equal to 125% of the Project Expenses (as defined in the PF
Agreement) funded by Lee’s (HK). On November 12, 2020, Lee’s (HK) provided notice of termination of additional funding under the PF Agreement, and
we and Lee’s (HK) revised our plans for the continued development of AEROSURF. Lee’s (HK) agreed to continue the development of AEROSURF in
Asia at its own cost. Lee’s (HK) agreed to fund an additional $1.0 million to us in 2021 for certain transition and analytical services to be provided by us
with respect to the development of AEROSURF, which will be considered “Project Expenses” under the terms of the PF Agreement. In 2021, we received
payments totaling $1.0 million from Lee’s (HK) and no further amounts are due under the PF Agreement as of December 31, 2021.

Since the 2018 acquisition of CVie Investments Limited and its wholly owned subsidiary CVie Therapeutics Limited, istaroxime has become our

primary focus for investment and execution due to what we believe represents a greater potential value opportunity for us and our stockholders. Since
completing our phase 2 study of lucinactant (KL4 surfactant) for patients with severe COVID-19 associated ARDS and lung injury in January 2022, in
order to preserve resources for the highest priority programs, we have begun to reduce costs not already transferred to our licensee in Asia, Lee’s (HK),
under the terms of our Asia License Agreement. These costs include certain reductions in headcount dedicated to KL4 surfactant and the decommissioning
of both our analytical and technical support laboratory, which previously conducted release testing of APIs and supportive research for our lyophilized and
aerosolized KL4 surfactant, and our medical device development laboratory, which was previously used to conduct development activities and testing for
our ADS technologies. To support the future development of our KL4 surfactant platform in markets outside of Asia, including the U.S., we are pursuing
one or more licensing transactions.

Manufacturing

KL4 surfactant is comprised of four APIs, which were previously supplied to us by sole-source suppliers under now expired supply agreements or

purchase orders.

Our lyophilized KL4 surfactant was manufactured for us by Pharma Services Group, Patheon, part of Thermo Fisher Scientific, or Patheon. In

March 2022, we provided notice to Patheon of our plans to wind-down our Master Services Agreement dated as of October 24, 2013 for the manufacture of
lyophilized KL4 surfactant. Manufacturing of the KL4 drug product in both liquid and lyophilized forms is in the process of being transferred to our
licensee in Asia, Lee’s (HK), under the terms of our Asia License Agreement.

With respect to our ADS, we are currently undertaking a technology transfer of our device manufacturing process from Battelle Memorial
Institute, or Battelle, to Mack Molding Company, or Mack, an FDA-registered medical device manufacturer. We currently have a Memorandum of
Understanding with Mack to cover this transfer. Upon completion of the technology transfer to Mack, we expect that the manufacturing of the ADS will be
transferred to our licensee in Asia, Lee’s (HK), under the terms of our Asia License Agreement.

Material Licenses and Collaborations

Lee’s Pharmaceutical (HK) Ltd. Asia License Agreement

We are party to an Asia License Agreement with Lee’s (HK), an affiliate of Lee’s Holdings. Under the Asia License Agreement, we granted to

Lee’s (HK) an exclusive license with a right to sublicense (i) to develop, manufacture and commercialize our KL4 surfactant products, including
SURFAXIN, which was approved by the FDA in 2012 for RDS in premature infants, SURFAXIN LS™, the lyophilized dosage form of SURFAXIN, and
AEROSURF, including the ADS, and (ii) to register and manufacture SURFAXIN and SURFAXIN LS for use in the licensed territory, which includes
China, Japan, Hong Kong, Thailand, Taiwan and 12 other countries. Under the Asia License Agreement, Lee’s (HK) made an upfront payment to us of $1.0
million. We also may receive up to $35.8 million in potential clinical, regulatory and commercial milestone payments and will share in any sublicense
income Lee’s (HK) may receive at a rate equal to low double digits. In addition, Lee’s (HK) is responsible for all costs and expenses in and for the licensed
territory related to development activities, including a planned AEROSURF phase 3 clinical program, regulatory activities, and commercialization
activities.

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We will be eligible to receive tiered royalties based on a percent of Net Sales (as defined in the Asia License Agreement), depending on the

product, in the range of high single to low-to-mid double-digit percentages. Royalties are payable on a country-by-country basis until the latest of (i) the
expiration of the last valid patent claim covering the product in the country of sale, (ii) the expiration or revocation of any applicable regulatory exclusivity
in the country of sale, and (iii) ten years after the first commercial sale in the country of sale. Thereafter, in consideration of licensed rights other than
patent rights, royalties shall continue for the commercial life of each product and, for the initial three years, shall be in the range of low-to- mid single
digits. In addition, in the event that one or more generic products are introduced, the royalty rates will be reduced, subject to certain minimums if we are
subject to continuing obligations at the time to pay royalties under our in-license agreements.

Under the Asia License Agreement, Lee’s (HK) is responsible for all activities related to development, regulatory approval and commercialization
of KL4 surfactant and drug/medical device combination products in the licensed territory. Lee’s (HK) will hold the product licenses for all non-aerosolized
products in the licensed territory and will seek regulatory approval initially for SURFAXIN and SURFAXIN LS for RDS. We will hold the product license
in the licensed territory (except where prohibited by law) for all aerosolized products and will designate Lee’s (HK) our exclusive agent and representative
to develop and register AEROSURF and other aerosolized products in our name and on our behalf. Lee’s (HK) also has agreed that, except as provided in
the Asia License Agreement, for a period of ten (10) years beginning with the later of the first commercial sale of the first aerosolized product and the first
commercial sale of the first non-aerosolized product in China, it will not develop, register, manufacture, or commercialize any product for the prevention
and/or treatment of RDS in premature infants or other diseases and conditions in humans, in either case, that administers, utilizes or contains pulmonary
surfactant without our prior written consent.

The term of the Asia License Agreement will continue on a country-by-country basis for the commercial life of the products. Either party may

terminate the Asia License Agreement in the event of bankruptcy or a material breach of the Asia License Agreement by the other party that remains
uncured for a period of sixty (60) days. In addition, either party may terminate the Asia License Agreement in its entirety or with respect to any individual
product or country if a regulatory authority terminates, suspends or discontinues development of a product and such termination, suspension or
discontinuance persists for a period in excess of eighteen (18) months. Upon termination of the Asia License Agreement in its entirety or with respect to a
particular product or country, generally all related rights and licenses granted to Lee’s (HK) will terminate, all rights under our technology will revert to us,
and Lee’s (HK) will cease all use of our technology.

Universita degli Studi di Milano-Bicocca Collaboration Agreement

In April 2015, our subsidiary, CVie Therapeutics Limited, or CVie Therapeutics, entered into an Agreement for Scientific Collaboration, or the

2015 Agreement, with the Universita degli Studi di Milano-Bicocca, or Bicocca, in Milan, Italy, focused on defining the role of SERCA2a and
phospholamban, or PLN, in modulating cardiac contraction, and discovering new small molecules to modulate SERCA2a activity or new drugs for treating
chronic and acute human heart failure. The initial term of the 2015 Agreement, which was three years, was extended for approximately an additional year,
with an option for further renewal. In June 2019, we entered into a new Agreement for Scientific Collaboration with Bicocca, or the 2019 Agreement,
focused on continuing the studies under the 2015 Agreement. The 2019 Agreement supersedes and replaces all prior agreements with Bicocca.

Under the 2019 Agreement, we provided funds aggregating € 0.16 million (approximately $0.178 million) to extend our use of Bicocca
laboratories and to fund research conducted pursuant to the collaboration. (Under the 2015 Agreement, Bicocca had given us exclusive use of a research
laboratory for the collaboration work, and nonexclusive access to a physiology laboratory within the university.) Under the 2019 Agreement, any results
obtained from the collaboration are jointly owned by the parties. However, Bicocca has agreed to assign to us its interest in patent applications and patents
covering any new SERCA2a activator compounds and diagnostic products suitable for further clinical development. We have agreed to pay Bicocca
(corresponding to stage of development): (i) € 0.1 million (approximately $0.11 million) for new SERCA2a activator compounds developed up to phase 1
studies in humans upon the completion and availability of the proof of concept of biological efficacy of new compounds on modulating the SERCA2a
activity in cell-free systems, or its functional counterpart in cardiac myocytes and (ii) € 1.5 million (approximately $1.7 million) upon obtaining marketing
authorization in the U.S., EU, or China of new compounds with the corresponding companion diagnostic assay. We have also agreed to pay royalties on
products generated from the collaboration in the range of a fraction of a single digit to a low single digit percent of net sales for any products sold in any
country for a period of ten years from the date of the first commercial sale or until the expiry of patent(s) covering the products.

On March 19, 2021, we entered into an Agreement for Scientific Collaboration, or the New SERCA2a Agreement, with Bicocca, which extends

our collaboration. The New SERCA2a Agreement amends and restates the recently expired terms of the prior collaboration agreement. Under the New
SERCA2a Agreement, we will provide Bicocca with approximately € 0.2 million (approximately $0.2 million) for research activities and to cover
laboratory space and operation costs. Results obtained from the collaboration will be jointly owned by the parties. However, Bicocca will assign to us its
interest in patent applications and patents covering any new SERCA2a compounds and diagnostic products suitable for further clinical development. We
have agreed to pay Bicocca (corresponding to stage of development): (i) € 25,000 for execution of an assignment to us of Bicocca’s interest in the patent at
issue, (ii) € 75,000 for new SERCA2a compounds developed up to phase 1 studies in humans upon the completion and availability of the proof of concept
of biological efficacy of new compounds on modulating the SERCA2a activity in cell-free systems, or its functional counterpart in isolated cells and (iii) €
1.5 million upon obtaining marketing authorization in the U.S., EU, or China of new compounds with the corresponding companion diagnostic assay. We
have also agreed to pay royalties on products generated from the collaboration in the range of a fraction of a single digit to a low single digit percent of net
sales for any products sold in any country for a period of ten years from the date of the first commercial sale or until the expiry of patent(s) covering the
products.

Philip Morris License Agreements

In 2008, we entered into an Amended and Restated License Agreement with Philip Morris USA, Inc., or PMUSA, with respect to the U.S., or the

U.S. License Agreement, and, as PMUSA had assigned its ex-U.S. rights to Philip Morris Products S.A., or PMPSA, effective on the same date and on
substantially the same terms and conditions, we entered into a license agreement with PMPSA with respect to rights outside of the U.S., which we refer to,
together with the U.S. License Agreement, as the PM License Agreements. Under the PM License Agreements, we have worldwide exclusive rights to the
PMUSA and PMPSA proprietary capillary aerosol technology, which is a key component of our ADS, for use in a drug/device combination product with
pulmonary surfactants (alone or in combination with other pharmaceutical compounds) for all respiratory diseases and conditions. In addition, under the
U.S. License Agreement, our license to use the capillary aerosol technology includes certain non-surfactant drugs to treat certain designated pediatric and
adult respiratory indications in hospitals and other health care institutions. See also, “– Patents and Proprietary Rights – Aerosol Delivery System (ADS)
Patent Rights.”

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Under the PM License Agreements, we are obligated to pay royalties at a rate equal to a low single-digit percent of sales of products sold in the
Exclusive Field (as defined in the PM License Agreements) in the territories. In connection with exclusive undertakings of PMUSA and PMPSA not to
exploit the aerosol technology for all licensed uses, we are obligated to pay royalties on all product sales, including sales of certain aerosol devices that are
not based on the licensed aerosol technology; provided, however, that no royalties are payable to the extent that we exercise our right to terminate the
license with respect to a specific indication. While there is no legal obligation under the PM License Agreements to make minimum royalty payments, in
the event we do not make quarterly minimum royalty payments, PMUSA and PMPSA can terminate the PM License Agreements. In making such
payments, we are entitled to reduce future quarterly royalties above the quarterly minimums in the amount of the true-up payments we make to satisfy
minimum royalties for prior quarters. Our license rights extend to innovations to the aerosol technology that are made under the PM License Agreements.

In addition to customary termination provisions for breach of the agreements, we may terminate the PM License Agreements, in whole or in part,

upon advance written notice to the licensor. In addition, either party to each PM License Agreement may terminate upon a material breach by the other
party (subject to a specified cure period). PMUSA and PMPSA may also terminate the PM License Agreements in the event that we fail to make certain
minimum royalty payments. Our license under each PM License Agreement, unless terminated earlier, will expire as to each licensed product, on a
country-by-country basis, upon the latest to occur of: the date on which the sale of such licensed product ceases to be covered by a valid patent claim in
such country; the date a generic form of the product is introduced in such country; or the tenth anniversary of the first commercial sale of such licensed
product.

Battelle Collaboration Agreement

In October 2014, we entered into a Collaboration Agreement with Battelle, or, as amended, the Battelle Collaboration Agreement, for the
development of our new ADS for use in our phase 3 program. We had previously worked with Battelle, which has expertise in developing and integrating
aerosol devices using innovative and advanced technologies, in connection with development of our phase 2 ADS used in the AEROSURF phase 2b
clinical trial. Under the Battelle Collaboration Agreement, we and Battelle shared the costs of development for a three-stage development plan that
included planning, executing the project plan and testing and completing verification and documentation of a new phase 3 ADS, putting us in a position to
manufacture a new phase 3 ADS for use in the remaining AEROSURF development activities, including a potential phase 3 clinical program, and, if
approved, initial commercial activities. We retained final decision-making authority over all matters related to the design, registration, manufacture,
packaging, marketing, distribution and sale of the phase 3 ADS. We and Battelle shared the costs of the project plan equally. Battelle agreed to bear the cost
of any cost overruns associated with the project plan and we agreed to bear the cost of any increase in cost resulting from changes in the scope of the
product requirements. We also agreed that, if Battelle successfully completed the project plan in a timely manner, we would pay Battelle royalties equal to a
low single-digit percentage of the worldwide net sales and license royalties on sales of AEROSURF for the treatment of RDS in premature infants, up to an
initial aggregate limit of $25.0 million, which under a payment restructuring agreement (discussed below), was increased to $35.0 million. The Battelle
Collaboration Agreement will end at the time we fulfill our payment obligations to Battelle, unless sooner terminated by a party as provided therein.

Laboratorios del Dr. Esteve, S.A. Strategic Alliance

We have a strategic alliance with Laboratorios del Dr. Esteve, S.A., or Esteve, for the development, marketing and sales of a portfolio of potential
KL4 surfactant products in Andorra, Greece, Italy, Portugal, and Spain, or, collectively, the Territory. Under the alliance, Esteve will pay us a transfer price
on sales of our KL4 surfactant products. We are responsible for the manufacture and supply of all covered products and Esteve will be responsible for all
sales and marketing in the Territory. Esteve is obligated to make stipulated cash payments to us upon our achievement of certain milestones, primarily upon
receipt of marketing regulatory approvals for the covered products. In addition, Esteve has agreed to contribute to phase 3 clinical trials for the covered
products by conducting and funding development performed in the Territory. As part of a 2004 restructuring, Esteve returned certain countries to us,
referred to as the Former Esteve Territories, and we agreed to pay Esteve 10% of any cash up front and milestone fees (up to a maximum aggregate of
$20.0 million) that we receive in connection with any strategic collaborations for the development and/or commercialization of certain of our KL4
surfactant products in the Former Esteve Territories. In addition, with respect to our aerosolized KL4 surfactant, Esteve will pay us $0.5 million upon the
initial filing for regulatory approval with the European Medicines Agency, or EMA, and $0.5 million upon receipt of regulatory approval. Esteve will also
contribute up to $3 million to support a phase 3 clinical trial in the Territory. The alliance will terminate as to each covered product, on a country-by-
country basis, upon the latest to occur of: the expiration of the last patent claim related to a covered product in such country; the first commercial sale in
such country of the first-to-appear generic formulation of the covered product, and the tenth anniversary of the first sale of the covered product in such
country. In addition to customary termination provisions for breach of the agreement by a party, the alliance agreement may be terminated by Esteve on 60
days’ prior written notice, up to the date of receipt of the first marketing regulatory approval, or, on up to six months’ written notice, if the first marketing
regulatory approval has issued. We may terminate the alliance agreement in the event that Esteve acquires a competitive product (as defined in the
agreement).

Johnson & Johnson License Agreement

Our precision-engineered KL4 surfactant technology was invented at The Scripps Research Institute, or Scripps, and was exclusively licensed to
and further developed by Johnson & Johnson, or J&J. Pursuant to a license agreement, dated October 28, 1996, with J&J and its wholly owned subsidiary,
Ortho Pharmaceutical Corporation, or the J&J license, we obtained an exclusive, worldwide license and sublicense to a series of over 30 patents and patent
filings (worldwide), or the J&J Patents. All J&J Patents have expired. Under the license agreement, we are obligated to pay the licensors fees of up to $3.0
million in the aggregate upon our achievement of certain milestones, primarily upon receipt of marketing regulatory approvals for certain designated
products. We have made milestone payments totaling $1.0 million to date. In addition, the agreement provides that we are required to pay royalties at
different rates based on the type of revenue and country, in amounts in the range of a high single-digit percent of net sales (as defined in the license
agreement) of licensed products sold by us or sublicensees, or, if greater, a percentage of royalty income from sublicensees in the low double digits. The
license agreement provides that the license will expire, on a country-by-country basis, upon the payment of royalties for all licensed products for ten years
beginning on the date of the first commercial sale of the first licensed product in such country. Thereafter, the license agreement provides that royalties
shall be paid in respect of a licensed product until the expiration of the last licensed patent containing a valid claim covering the licensed product in such
country. For countries in the EU in which royalties are paid only by virtue of licensed know-how, royalties shall be payable commencing from the date of
first commercial sale of the first licensed product in such country and ending on the earlier of (i) the date on which the licensed know-how becomes public
or (ii) the tenth anniversary of the first commercial sale of the first licensed product in any country of the EU. In addition to customary termination
provisions for breach of the agreement by a party, we may terminate the agreement, as to countries other than the U.S. and Western Europe territories (as
defined in the agreement), on a country-by-country basis, on six months’ prior written notice; and as to the entire agreement, on 60 days’ prior written
notice.

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Intellectual Property

We continue to invest in maintaining and enforcing our potential competitive position through a number of means: (i) by protecting our exclusive

rights in our cardiovascular agents including istaroxime, rostafuroxin and SERCA2a activators, (ii) by protecting our exclusive rights in our lyophilized
KL4 surfactant, ADS and aerosol-conducting airway connector technologies through patents that we own or exclusively license, (iii) by seeking regulatory
exclusivities, including potential Orphan Drug and new drug product exclusivities, and (iv) through protecting our trade secrets and proprietary
methodologies that support our manufacturing and analytical processes.

Patents and Proprietary Rights

In addition to the inventions covered by the patents and patent applications described in this Annual Report on Form 10-K, we have been active in
identifying and seeking to identify new inventions eligible for patent protection. We have filed and plan to file patent and provisional patent applications to
protect  our  innovations  relating  to  our  current  and  potential  future  product  candidates,  including  for  composition  of  matter,  new  dosage  forms,
formulations, methods of manufacture, methods of use and related processes. We intend to file for patent protection for select inventions, in such markets
that we deem material to our patent strategy, as well as for other new inventions that we may identify.

Our Patents and Patent Applications Related to Rostafuroxin, Istaroxime and SERCA2a Activators

We hold a patent portfolio of six patent families that include patents and patent applications directed to compounds, pharmaceutical formulations,
methods of manufacturing, methods of delivery, and/or treatment methods using istaroxime, rostafuroxin, their metabolites and/or derivatives, as well as
SERCA2a  activators,  for  the  treatment  of  cardiovascular  diseases  and  related  conditions.  We  plan  to  continue  these  patent  activities  and  focus  on  new
follow-on compounds, dosage forms, formulations, and treatment methods related to AHF and persistent hypertension. To benefit from potential non-patent
exclusivity within the U.S., we believe that we may qualify istaroxime as a new chemical entity entitled to market exclusivity for a period of years. See the
section titled “- Government Regulation - Drug Products - The Hatch-Waxman Act - Market Exclusivity.”

●

Istaroxime-Related Patents and Patent Applications

In November 2019, we filed an international patent application PCT/US2019/060961, directed to methods of treating AHF through an
extended  istaroxime  dosing  regimen,  as  well  as  to  metabolites  of  istaroxime  having  SERCA2a  stimulating  activity.  The  international
application  entered  the  national  phase  in  China  on  December  31,  2019  (Application  No.  201980003356.1),  and  in  the  following  PCT
contracting  states/regions  in  September  and  October  of  2021:  Australia,  Brazil,  Canada,  European  Patent  Office,  Israel,  Hong  Kong
(extended from China), Japan, Mexico, Republic of Korea, and Singapore. This patent family will expire on or about November 12, 2039.

An expedited U.S. patent application based on PCT/US2019/060961 was filed with the United States Patent and Trademark Office, or
USPTO, on April 16, 2020, and issued as U.S. Patent No. 11197869 on December 14, 2021. The U.S. Patent, titled: “Istaroxime-
Containing Intravenous Formulation for the Treatment of Acute Heart Failure (AHF),” covers longer infusion durations of istaroxime for
improved outcomes in the treatment of acute heart failure. In particular, the patent refers to results in improvement in at least one
echocardiographic indicator of diastolic function, which we attribute to the SERCA2a mechanism of action of istaroxime and its
metabolites. A follow-on U.S. continuation patent application has been filed and is pending before the USPTO.

●

New Compounds for Treatment of Heart Failure and Related Conditions

Two patent application families have resulted from research under the 2019 Agreement with Bicocca. Pursuant to that agreement, those
patent families have been or are obligated to be assigned to CVie (or to us).

In July 2018, the parties to the 2019 Agreement filed European Application No. EP18185753.3, directed to 17ß-heterocyclyl-digitalis like
compounds and their use for the treatment of heart failure and related conditions. International application PCT/EP2019/069283, based
on  the  European  application,  was  filed  in  July  2019.  National  applications  based  on  PCT/EP2019/069283  were  filed  in  January  and
February 2021 in Australia, Brazil, Canada, China (extended into Hong Kong), Israel, Japan, Mexico, Republic of Korea, Singapore, and
the U.S. Patents granted on this family of applications will expire on or about July 17, 2039.

In October 2019, the parties to the 2019 Agreement filed European Application No. 19202257.2, directed to androstane derivatives with
activity  as  pure  or  predominantly  pure  stimulators  of  SERCA2a  for  the  treatment  of  heart  failure  and  related  conditions.  International
application PCT/EP2020/078253 and Taiwan Application No. 109134997, both based on the European application, were filed in October
2020. Patents granted on this family of applications will expire on or about October 8, 2040.

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●

Rostafuroxin-Related Patents

In  June  2008,  international  patent  application  PCT/EP2008/056928  was  filed,  directed  to  rostafuroxin  derivatives  useful  for  the
prevention  or  treatment  of  restenosis  after  angioplasty  or  endarterectomy,  as  well  as  diseases  resulting  from  organ  fibrosis.  The
international  application  entered  into  the  national  phase  in  the  U.S.,  European  Patent  Office,  or  EPO,  and  several  other  foreign
jurisdictions.  In  this  patent  family,  multiple  foreign  counterparts  are  pending  or  granted.  U.S.  Patent  Application  No.  12/602,827  was
abandoned  following  an  unsuccessful  appeal  of  a  decision  of  the  U.S.  Patent  Office  examiner.  European  Patent  No.  2160190B1  will
expire on June 4, 2028.

In March 2010, international patent application PCT/EP2010/053571 was filed, directed to rostafuroxin derivatives for the treatment of
proteinuria,  glomerulosclerosis,  and  renal  failure.  The  international  patent  application  entered  into  the  national  phase  in  the  EPO
(EP10709529.1, now European Patent No. 2411015B1), U.S., and multiple other foreign nations. U.S. Patent Application No. 13/258,728
was abandoned on June 2, 2016 in favor of child application U.S. 14/931,083, now U.S. Patent No. 9,868,757. U.S. Patent No. 9,868,757
and European Patent No. 2411015B1 will expire on March 18, 2030.

In October 2010, international patent application PCT/EP2010/065589 was filed, covering methods of rostafuroxin administration for the
treatment or prevention of cardiovascular conditions in individuals with various single nucleotide polymorphisms, or SNPs, associated
with improved therapeutic response to rostafuroxin administration. The international patent application entered into the national phase in
the EPO (EP10807525.0, now European Patent No. 2490694B1), U.S. (U.S. 13/502,518, now U.S. Patent No. 9,408,854), and multiple
other foreign nations. U.S. Patent No. 9,408,854 and European Patent No. 2490694B1 will expire on October 18, 2030.

Our KL4 -Related Patents and Patent Rights

We have been active in seeking patent protection for our innovations relating to new dosage forms, formulations and methods of manufacturing

and delivering synthetic peptide containing pulmonary surfactants. Our patent activities have focused particularly on improved dosage forms and delivery
of aerosolized pulmonary surfactant.

In January 2006, we filed U.S. and international patent applications (U.S. 11/326,885 which is now U.S. Patent No. 7,541,331 issued on June 2,

2009 and PCT/US06/000308), directed to a surfactant treatment regimen for BPD. U.S. Patent No. 7,541,331 will expire on January 6, 2026.

In September 2007, we filed U.S. and international patent applications (U.S. 11/901,866 which is now U.S. Patent No. 8,221,772 and PCT
US/2007/020260), directed to surfactant compositions and methods of promoting mucus clearance and treating pulmonary disorders such as cystic fibrosis.
U.S. Patent No. 8,221,772 will expire on September 19, 2027.

In March 2013, we filed international patent applications (PCT/US13/34364 and PCT/US13/34464, which entered national phase and commenced

expedited examination in the U.S. and EPO) directed to lyophilized pulmonary surfactant and methods of manufacture. In this patent family, two U.S.
Patents Nos. 8,748,396 and 8,748,397, were issued on June 10, 2014, European patent 2723323B1 granted on September 23, 2015, U.S. Patent No.
9,554,999, issued on January 31, 2017 and multiple foreign counterparts are pending or granted. U.S. Patents Nos. 8,748,396; 8,748,397 and 9,554,999 and
European Patent No. 2723323B1 will expire on March 28, 2033.

Aerosol Delivery System (ADS) Patent Rights

Pursuant to the PM Licenses Agreements, we have worldwide exclusive rights to the proprietary capillary aerosol technology incorporated into the

ADS for use in a drug/device combination product. The ADS is the medical device component of our AEROSURF product candidate. We completed
design verification of the new ADS for use in the remaining AEROSURF development activities, including a phase 2b bridging study to be conducted in
China, potentially a phase 3 clinical program and, if approved, initial commercial activities.

Our ADS technology and our new ADS are protected by a portfolio of issued patents and pending patent applications covering various

components of the system. While certain of the earlier patents on the technology have expired, there remain over 150 in-force patents worldwide that
protect, among other things, core elements of the ADS technology and the new ADS. These patents and applications will expire on dates ranging from
2021 to 2039. As an illustrative example, important components of our new ADS technology are covered by a patent family represented by US Patent No.
9,713,687, expiring on February 10, 2035, and European Patent No. 2887984B1, expiring on August 21, 2033. In addition, several key components of our
new ADS are covered by recently issued U.S. Patent No. 10,874,818, which expires on January 22, 2039.

Aerosol-Conducting Airway Connector Technology Patents and Patent Rights

In March 2009, we filed an international patent application (PCT US/2009/037409) directed to aerosol-conducting airway connectors and

improvements of an ADS using AFECTAIR®. The claims of this application are directed to a novel ventilation circuit adaptor (an aerosol-conducting
airway connector) and related aerosol circuitry that are intended to (i) increase the efficiency of aerosol delivery to the patient by allowing more efficient
delivery of aerosols to the patient, and (ii) reduce drug compound dilution and wastage and result in more precise aerosol dosing. In this patent family, U.S.
Patent No. 8,701,658 was issued on April 22, 2014, European patent No. 2265309 was granted on December 16, 2015, U.S. Patent No. 9,352,114 was
issued on May 31, 2016, U.S. Patent No. 9,592,361 was issued on March 14, 2017 and several foreign patents have issued during 2011 through 2017. U.S.
Patent No. 8,701,658 and U.S. Patent No. 9,352,114 will expire on March 17, 2029. U.S. Patent No. 9,592,361 will expire on September 9, 2033. European
Patent No. 2265309 will expire on March 17, 2029.

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Trademarks

AEROSURF®, AFECTAIR®, SURFAXIN®, SURFAXIN LS™, WINDTREE THERAPEUTICS® (logo), WINDTREE™ and WINDTREE

THERAPEUTICS™ are our material registered and common law trademarks.

Trade Secrets

In addition to our patent exclusivities, we rely on trade secrets to protect and maintain our competitive position. We take measures to protect and
maintain our trade secrets and know-how licensed to us or developed by us by entering in confidentiality agreements with third parties. Our trade secrets
and know-how include information related to manufacturing processes for our drug product candidates and devices, analytical methods and procedures,
research and development activities, provisional patent applications, as well as certain information provided to the FDA that was not made public which
relates to our regulatory activities and clinical trials.

Other Regulatory Designations

Orphan Drug and Orphan Medicinal Product Designations

The FDA has granted Orphan Drug designation for (i) our KL4 surfactant (lucinactant) for the treatment of RDS in premature infants, (ii) our KL4

surfactant for the prevention and treatment of BPD in premature infants, (iii) our KL4 surfactant for the treatment of ARDS in adults, and (iv) our KL4
surfactant for the treatment of CF. See the section titled “- Government Regulation - Drug Products - Orphan Drugs.”

The European Commission, or EC, grants Orphan Medicinal Product designation for pharmaceutical products for the diagnosis, prevention or

treatment of a life-threatening or chronically debilitating condition affecting no more than 5 in 10,000 people which provides for exclusive marketing rights
for indications in Europe for 10 years (subject to revision after six years) following marketing approval by the EMA. In addition, the designation would
enable us to receive regulatory assistance in the further development process, and to access reduced regulatory fees throughout its marketing life. The EC
has granted Orphan Medicinal Product designation for (i) our KL4 surfactant for the prevention of RDS in premature neonates of less than 32 weeks
gestational age, (ii) our KL4 surfactant for the treatment of RDS in premature neonates of less than 37 weeks gestational age, (iii) our KL4 surfactant for
the treatment of ALI (which in this circumstance encompasses ARDS), and (iv) our KL4 surfactant for the treatment of CF. In submitting the requests to
the EMA for Orphan Medicinal Product designations, instead of listing the drug product under the USAN name (lucinactant) as we have in the U.S., we
were required to submit our requests under the names of the four APIs in our KL4 surfactant (lucinactant) as follows: sinapultide (KL4),
dipalmitoylphosphatidylcholine, palmitoyl-oleoyl phosphatidylglycerol and palmitic acid.

Fast Track Designations

The FDA has granted Fast Track designation for (i) istaroxime for the treatment of AHF, (ii) AEROSURF for the treatment of RDS in premature

neonates, and (iii) SURFAXIN® for the prevention and treatment of BPD in premature neonates and the treatment of ARDS in adults. We believe that
other of our product candidates may qualify for Fast Track or Breakthrough Therapy designation or other expedited programs. These designations and
programs are intended to facilitate and expedite development and review of a New Drug Application, or NDA, to address unmet medical needs in the
treatment of serious or life-threatening conditions. See the section titled “- Government Regulation - Drug Products - Fast Track Designation.”

Competition

The biotechnology industry is a highly competitive industry. As we work to gain marketing authorization for our product candidates, in some
therapeutic areas, competition from numerous existing pharmaceutical companies and other companies entering our fields is expected to be intense and
expected to increase. In fact, our future competitors are competing with us currently to secure access to development resources, including clinical sites and
their patients to advance development programs. We expect that those companies that are successful at being the first to introduce new products and
technologies to the market may gain significant advantages over their competitors in the establishment of a customer base and track record for the
performance of their products and technologies. Moreover, there are also existing therapies that may compete with the products we are developing.
Therefore, as a development stage biotechnology company, our competitors are comprised of other biotechnology firms and pharmaceutical companies that
have existing products or are developing products for our primary markets -- respiratory and cardiovascular indications.

Government Regulation

In the U.S., drug products, medical devices, and drug/medical device combination products are subject to extensive regulation by the FDA. The

Federal Food, Drug, and Cosmetic Act, or the FDC Act, and other federal and state statutes and regulations, govern, among other things, the research,
development, testing, manufacture, storage, recordkeeping, approval, clearance, labeling, promotion, advertising and marketing, distribution, post-approval
monitoring and reporting, sampling, and import and export of drug products, medical devices, and drug/medical device combination products. Failure to
comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve or
clear pending new submissions to market drugs or devices warning or untitled letters, product recalls, product seizures, total or partial suspension of
production or distribution, injunctions, fines, civil penalties, and criminal prosecution. Drug products, medical devices, and drug/medical device
combination products must receive all relevant regulatory approvals or clearances before they may be marketed in the U.S. Drug products, medical devices,
and drug/medical device combination products are subject to extensive regulation, including premarket review and marketing authorization, by similar
agencies in other countries.

Drug Products

Pharmaceutical product development for a new product or certain changes to an approved product in the U.S. typically involves preclinical
laboratory and animal tests, the submission to the FDA of an IND application, which must be accepted before clinical testing may commence, and adequate
and well-controlled clinical trials to establish the safety and effectiveness of the drug for each indication for which FDA approval is sought. Satisfaction of
FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity,
and novelty of the product or disease.

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Preclinical tests include laboratory evaluation of product chemistry, formulation, and toxicity, as well as animal trials to assess the characteristics

and potential safety and efficacy of the product. The conduct of the preclinical tests must comply with federal regulations and requirements, including good
laboratory practices. The results of preclinical testing are submitted to the FDA as part of an IND along with other information, including information about
product chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long-term preclinical tests, such as animal tests of reproductive
toxicity and carcinogenicity, may continue after the IND is submitted.

A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has

neither commented on nor questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin.

Clinical trials involve the administration of the IND to volunteers or patients under the supervision of a qualified investigator. Clinical trials must
be conducted: (i) in compliance with federal regulations; (ii) in compliance with GCPs, an international standard meant to protect the rights and health of
patients and to define the roles of clinical trial sponsors, administrators, and monitors; as well as (iii) under protocols detailing the objectives of the trial,
the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and
subsequent protocol amendments must be submitted to the FDA as part of the IND.

The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time, or impose other sanctions, if it believes that the

clinical trial either is not being conducted in accordance with the FDA requirements or presents an unacceptable risk to the clinical trial patients. The study
protocol and informed consent information for patients in clinical trials must also be submitted to an institutional review board, or IRB, for approval. An
IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements, or may
impose other conditions.

Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In phase 1,
the initial introduction of the drug into human subjects or patients, the drug is tested to assess metabolism, pharmacokinetics, pharmacological actions, side
effects associated with increasing doses, and, if possible, early evidence on effectiveness. Phase 2 usually involves trials in a limited patient population to
determine the effectiveness of the drug for a particular indication, dosage tolerance, and optimum dosage, and to identify common adverse effects and
safety risks. If a compound demonstrates evidence of effectiveness and an acceptable safety profile in phase 2 evaluations, phase 3 trials are undertaken to
obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to
permit the FDA to evaluate the overall benefit- risk relationship of the drug and to provide adequate information for the labeling of the drug. In most cases
the FDA requires two adequate and well-controlled phase 3 clinical trials to demonstrate the efficacy of the drug. A single phase 3 trial with other
confirmatory evidence may be sufficient in rare instances where the study is a large multicenter trial demonstrating internal consistency and a statistically
very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome
and confirmation of the result in a second trial would be practically or ethically impossible. Data from clinical trials conducted outside the U.S. may be
accepted by the FDA subject to certain conditions. For example, the clinical trial must be conducted in accordance with GCPs and the FDA must be able to
validate the data from the clinical trial through an onsite inspection if it deems such inspection necessary. Where data from foreign clinical trials are
intended to serve as the sole basis for marketing approval in the U.S., the FDA will not approve the application on the basis of foreign data alone unless
those data are considered applicable to the U.S. patient population and U.S. medical practice, the clinical trials were performed by clinical investigators of
recognized competence, and the data is considered valid without the need for an onsite inspection by the FDA or, if the FDA considers such an inspection
to be necessary, the FDA is able to validate the data through an onsite inspection or other appropriate means.

The manufacturer of an investigational drug in a phase 2 or 3 clinical trial for a serious or life-threatening disease is required to make available,

such as by posting on its website, its policy on evaluating and responding to requests for expanded access to such investigational drug.

After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. The FDA approval of the NDA is required before

marketing of the product may begin in the U.S. The NDA must include the results of all preclinical, clinical, and other testing and a compilation of data
relating to the product’s pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting an NDA is substantial. The submission
of most NDAs is additionally subject to a substantial application user fee, currently exceeding $2,875,000 for fiscal year 2021, and the applicant under an
approved new drug application is also subject to an annual program fee, currently exceeding $336,000 per product for fiscal year 2021. These fees are
typically increased annually.

The FDA has 60 days from its receipt of an NDA to determine whether the application will be filed based on the agency’s threshold determination

that it is sufficiently complete to permit substantive review. If the NDA submission is filed, the FDA reviews the NDA to determine, among other things,
whether the proposed product is safe and effective for its intended use. The FDA has agreed to certain performance goals in the review of NDAs. Most
such applications for standard review drug products are reviewed within ten to twelve months; most applications for priority review drugs are reviewed in
six to eight months. Priority review can be applied to drugs that the FDA determines offer major advances in treatment or provide a treatment where no
adequate therapy exists. The review process for both standard and priority review may be extended by the FDA for three additional months to consider
certain late-submitted information, or information intended to clarify information already provided in the submission.

The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an advisory
committee - typically a panel that includes clinicians and other experts - for review, evaluation, and a recommendation as to whether the application should
be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving
an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCPs. Additionally, the FDA will inspect the facility or the
facilities at which the drug is manufactured. The FDA will not approve the product unless compliance with current good manufacturing practices, or
cGMPs, is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.

After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete

response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to
reconsider the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue
an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of information included.

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An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of

NDA approval, the FDA may require a Risk Evaluation and Mitigation Strategy, or REMS, to help ensure that the benefits of the drug outweigh the
potential risks. REMS can include medication guides, communication plans for healthcare professionals, and elements to assure safe use, or ETASU.
ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances,
special monitoring, and the use of patient registries. The requirement for a REMS can materially affect the potential market and profitability of the drug.
Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. Once granted, product
approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.

Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes

or facilities, require submission and the FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for
a new indication typically requires clinical data similar to that in the original application, and the FDA uses the same procedures and actions in reviewing
NDA supplements as it does in reviewing NDAs.

Orphan Drugs

Under the Orphan Drug Act, the FDA may grant Orphan Drug designation to drugs intended to treat a rare disease or condition - generally a

disease or condition that affects fewer than 200,000 individuals in the U.S. Orphan drug designation must be requested before submitting an NDA. After
the FDA grants Orphan Drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug
designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. The first NDA applicant to receive
FDA approval for a particular active moiety to treat a particular disease with FDA Orphan Drug designation is entitled to a seven- year exclusive marketing
period in the U.S. for that product, for that indication. During the seven-year exclusivity period, the FDA may not approve any other applications to market
the same drug for the same disease, except in limited circumstances, such as a showing of clinical superiority to the product with Orphan Drug exclusivity
by means of greater effectiveness, greater safety, or providing a major contribution to patient care. Orphan drug exclusivity does not prevent the FDA from
approving a different drug for the same disease or condition, or the same drug for a different disease or condition. Among the other benefits of Orphan
Drug designation are tax credits for certain research and a waiver of the NDA application user fee.

Fast Track Designation

The FDA is required to facilitate the development, and expedite the review, of drugs that are intended for the treatment of a serious or life-
threatening disease and which demonstrate the potential to address unmet medical needs for the condition. Under the Fast Track program, the sponsor of a
new drug candidate may request that the FDA designate the drug candidate for a specific indication as a Fast Track drug concurrent with, or after, the filing
of the IND for the drug candidate. The FDA must determine if the drug candidate qualifies for Fast Track designation within 60 days of receipt of the
sponsor’s request.

Under the Fast Track program, sponsors have the opportunity to engage in more frequent interactions with the FDA. In addition, the FDA may

initiate review of sections of a Fast Track drug’s NDA before the application is complete. This rolling review is available if the applicant provides, and the
FDA approves, a schedule for the submission of the remaining information and the applicant pays applicable user fees. However, the FDA’s time period
goal for reviewing an application does not begin until the last section of the NDA is submitted. Additionally, the Fast Track designation may be withdrawn
by the FDA if the FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

Breakthrough Therapy Designation

FDA is also required to expedite the development and review of the application for approval of drugs that are intended to treat a serious or life-

threatening disease or condition where preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing
therapies on one or more clinically significant endpoints. Under the Breakthrough Therapy program, the sponsor of a new drug candidate may request that
FDA designate the drug candidate for a specific indication as a Breakthrough Therapy concurrent with, or after, the filing of the IND for the drug
candidate. FDA must determine if the drug candidate qualifies for Breakthrough Therapy designation within 60 days of receipt of the sponsor’s request.

The Hatch-Waxman Act

Orange Book Listing

In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims covering the applicant’s

product or method of using the product. Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s
Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn,
be cited by potential generic competitors in support of approval of an abbreviated new drug application, or ANDA. An ANDA provides for marketing of a
drug product that has the same active ingredients in the same strengths and dosage form as the listed drug and has been shown to be bioequivalent to the
listed drug. Other than the requirement for bioequivalence testing, ANDA applicants are not required to conduct, or submit results of, preclinical or clinical
tests to prove the safety or effectiveness of their drug product. Drugs approved in this way are commonly referred to as generic equivalents to the listed
drug, and can often be substituted by pharmacists under prescriptions written for the original listed drug.

The ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book.
Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has
not expired, but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed by
the new product. The ANDA applicant may also elect to submit a Section VIII statement certifying that its proposed ANDA labeling does not contain (or
carves out) any language regarding the patented method-of-use rather than certify to a listed method-of-use patent. If the applicant does not challenge the
listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired.

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A certification that the new product will not infringe the already approved product’s listed patents, or that such patents are invalid, is called a

Paragraph IV certification. If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the
Paragraph IV certification to the NDA and patent holders once the ANDA has been received by the FDA. The NDA and patent holders may then initiate a
patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the
receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months, expiration of the patent,
settlement of the lawsuit, or a decision in the infringement case that is favorable to the ANDA applicant.

An applicant submitting an NDA under Section 505(b)(2) of the FDC Act, which permits the filing of an NDA where at least some of the
information required for approval comes from studies not conducted by, or for, the applicant and for which the applicant has not obtained a right of
reference, is required to certify to the FDA regarding any patents listed in the Orange Book for the approved product it references to the same extent that an
ANDA applicant would.

Market Exclusivity

Market exclusivity provisions under the FDC Act also can delay the submission or the approval of certain applications. The FDC Act provides a

five-year period of non-patent exclusivity within the U.S. to the first applicant to gain approval of an NDA for a new chemical entity, or NCE. A drug is
entitled to NCE exclusivity if it contains a drug substance no active moiety of which has been previously approved by the FDA. During the exclusivity
period, the FDA may not receive for review an ANDA or file a 505(b)(2) NDA submitted by another company for another version of such drug where the
applicant does not own or have a legal right of reference to all the data required for approval. However, an application may be submitted after four years if
it contains a Paragraph IV certification. The FDC Act also provides three years of market exclusivity for an NDA, 505(b)(2) NDA or supplement to an
existing NDA if new clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to
be essential to the approval of the application, for example, for new indications, dosages or strengths of an existing drug. This three-year exclusivity covers
only the conditions for use associated with the new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs for the original
conditions of use, such as the originally approved indication. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA;
however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all the non-clinical studies and adequate and
well- controlled clinical trials necessary to demonstrate safety and effectiveness.

Patent Term Extension

After NDA approval, the owner of a relevant drug patent may apply for up to five years of patent term extension. Only one patent may be
extended for each regulatory review period, which is composed of two parts: a testing phase, and an approval phase. The allowable patent term extension is
calculated as half of the drug’s testing phase - the time between the day the IND becomes effective and NDA submission - and all of the review phase - the
time between NDA submission and approval - up to a maximum of five years. The time can be shortened if the FDA determines that the applicant did not
pursue approval with due diligence. The total remaining patent term after the extension may not exceed 14 years.

For patents that might expire during the application phase, the patent owner may request an interim patent extension. An interim patent term

extension increases the patent term by one year and may be renewed up to four times. For each interim patent term extension granted, the post-approval
patent term extension is reduced by one year. The director of the United States Patent and Trademark Office, or USPTO, must determine that approval of
the drug covered by the patent for which a patent extension is being sought is likely. Interim patent term extensions are not available for a drug for which
an NDA has not been submitted.

Post-Approval Requirements

Once an NDA is approved, a product will be subject to certain post-approval requirements. For instance, the FDA closely regulates the post-

approval marketing and promotion of drugs, including standards and regulations for direct-to- consumer advertising, off-label promotion, industry-
sponsored scientific and educational activities and promotional activities involving the internet. Drugs may be marketed only for the approved indications
and in accordance with the provisions of the approved labeling.

Adverse event reporting and submission of periodic reports is required following FDA approval of an NDA. The FDA also may require post-

marketing testing, known as phase 4 testing, REMS, and surveillance to monitor the effects of an approved product, or the FDA may place conditions on an
approval that could restrict the distribution or use of the product. In addition, quality-control, drug manufacture, packaging, and labeling procedures must
continue to conform to cGMPs, after approval. Drug manufacturers and certain of their subcontractors are required to register their establishments with the
FDA and certain state agencies. Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the agency
inspects manufacturing facilities to assess compliance with cGMPs. Accordingly, manufacturers must continue to expend time, money, and effort in the
areas of production and quality-control to maintain compliance with cGMPs. Regulatory authorities may withdraw product approvals or request product
recalls if a company fails to comply with regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized
problems are subsequently discovered. In addition, prescription drug manufacturers in the U.S. must comply with applicable provisions of the Drug Supply
Chain Security Act and provide and receive product tracing information, maintain appropriate licenses, ensure they only work with other properly licensed
entities, and have procedures in place to identify and properly handle suspect and illegitimate products.

Pediatric Information

Under the Pediatric Research Equity Act, or PREA, NDAs or supplements to NDAs must contain data to assess the safety and effectiveness of the

drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for
which the drug is safe and effective. The FDA may grant full or partial waivers, or deferrals, for submission of data. Unless otherwise required by
regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted except a product with a new active ingredient
that is a molecularly targeted cancer product intended for the treatment of an adult cancer and directed at a molecular target determined by the FDA to be
substantially relevant to the growth or progression of a pediatric cancer that is subject to an NDA or Biologics License Application, or BLA, submitted on
or after August 18, 2020.

The Best Pharmaceuticals for Children Act, or BPCA, provides NDA holders a six-month extension of any exclusivity—patent or non-patent—for

a drug if certain conditions are met. Conditions for exclusivity include the FDA’s determination that information relating to the use of a new drug in the
pediatric population may produce health benefits in that population, the FDA making a written request for pediatric studies, and the applicant agreeing to

 
 
 
 
 
 
 
 
 
 
 
 
 
perform, and reporting on, the requested studies within the statutory timeframe. Applications under the BPCA are treated as priority applications, with all
of the benefits that designation confers.

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Disclosure of Clinical Trial Information

Sponsors of clinical trials of FDA-regulated products are required to register and disclose certain clinical trial information. Information related to
the product, patient population, phase of investigation, trial sites and investigators, and other aspects of the clinical trial is then made public as part of the
registration. Sponsors are also obligated to discuss the results of their clinical trials after completion. Disclosure of the results of these trials can be delayed
in certain circumstances for up to two years after the date of completion of the trial. Competitors may use this publicly available information to gain
knowledge regarding the progress of development programs.

Medical Device Products

A medical device is an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article,

including any component part, or accessory which is: (i) recognized in the official National Formulary, or the US Pharmacopoeia, or any supplement to
them; (ii) intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other
animals; or (iii) intended to affect the structure or any function of the body of man or other animals, and which does not achieve any of its primary intended
purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement
of any of its primary intended purposes.

The FDC Act classifies medical devices into one of three categories based on the risks associated with the device and the level of control

necessary to provide reasonable assurance of safety and effectiveness. Class I devices are deemed to be low risk and are subject to the fewest regulatory
controls. Class III devices are generally the highest risk devices and are subject to the highest level of regulatory control to provide reasonable assurance of
the device’s safety and effectiveness. Class III devices must typically be approved by the FDA before they are marketed.

Generally, establishments that manufacture and/or distribute devices, including manufacturers, contract manufacturers, sterilizers, repackagers and

relabelers, specification developers, reprocessors of single-use devices, remanufacturers, initial importers, manufacturers of accessories and components
sold directly to the end user, and U.S. manufacturers of export-only devices, are required to register their establishments with the FDA and provide the
FDA a list of the devices that they handle at their facilities.

Pre-market Authorization and Notification

While most Class I and some Class II devices can be marketed without prior FDA authorization, most medical devices can be legally sold within
the U.S. only if the FDA has: (i) approved a premarket approval application, or PMA, prior to marketing, generally applicable to Class III devices; or (ii)
cleared the device in response to a premarket notification, or 510(k) submission, generally applicable to Class I and II devices. Some devices that have been
classified as Class III are regulated pursuant to the 510(k) requirements because the FDA has not yet called for PMAs for these devices. Other less common
regulatory pathways to market for certain devices include the de novo classification process, the humanitarian device exception, or a product development
protocol.

The 510(k) Clearance Process

Under the 510(k) process, the manufacturer must submit to the FDA a premarket notification, demonstrating that the device is “substantially

equivalent,” as defined in the statute, to a legally marketed predicate device.

A predicate device is a legally marketed device that is not subject to premarket approval, i.e., a device that was legally marketed prior to May 28,
1976, often referred to as a preamendments device, and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I,
or a device that was previously found substantially equivalent through the 510(k) process. To be “substantially equivalent,” the proposed device must have
the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological
characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required to support
substantial equivalence.

After a 510(k) premarket notification is submitted, the FDA determines whether to accept it for substantive review. If it lacks necessary
information for substantive review, the FDA will refuse to accept the 510(k) notification. If it is accepted for filing, the FDA begins a substantive review.
By statute, the FDA has a performance goal to complete its review of 95% of 510(k) submissions within 90 days of receipt. As a practical matter, clearance
often takes longer, because the FDA can request additional date and information, which pauses the review clock for up to 180 days, and clearance is never
assured. Although many 510(k) premarket notifications are cleared without clinical data, the FDA may require further information, including clinical data,
to make a determination regarding substantial equivalence. If the FDA agrees that the device is substantially equivalent, it will grant clearance to
commercially market the device.

If the FDA determines that the device is not “substantially equivalent” to a predicate device, or if the device is automatically classified into Class

III, the device sponsor must then fulfill the much more rigorous premarketing requirements of the PMA approval process, or seek reclassification of the
device through the de novo process. A manufacturer can also submit a petition for direct de novo review if the manufacturer is unable to identify an
appropriate predicate device and the new device or new use of the device presents a moderate or low risk.

After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a new

or major change in its intended use, will require a new 510(k) clearance or, depending on the modification, could require a PMA application or de novo
classification. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k) or a PMA in the first
instance, but the FDA can review any such decision and disagree with a manufacturer’s determination. Many minor modifications are accomplished by a
letter-to- file in which the manufacturer documents the change in an internal letter-to-file. The letter-to-file is in lieu of submitting a new 510(k) to obtain
clearance for such change. The FDA can always review these letters to file in an inspection. If the FDA disagrees with a manufacturer’s determination
regarding whether a new premarket submission is required for the modification of an existing device, the FDA can require the manufacturer to cease
marketing and/or recall the modified device until 510(k) clearance or approval of a PMA application is obtained. In addition, in these circumstances, the
FDA can impose significant regulatory fines or penalties for failure to submit the requisite PMA application(s).

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The PMA Approval Process

Following receipt of a PMA application, the FDA conducts an administrative review to determine whether the application is sufficiently complete

to permit a substantive review. If it is not, the agency will refuse to file the PMA. If it is, the FDA will accept the application for filing and begin the
review. The FDA, by statute and by regulation, has a performance goal to review 90% of PMA applications within 180 days, if advisory committee input is
not required, and within 320 days, if advisory committee input is required, although the review of an application more often occurs over a significantly
longer period of time. During this review period, the FDA may request additional information or clarification of information already provided, and the
FDA may issue a major deficiency letter to the applicant, requesting the applicant’s response to deficiencies communicated by the FDA. The FDA
considers a PMA or PMA supplement to have been voluntarily withdrawn if an applicant fails to respond to an FDA request for information (i.e., major
deficiency letter) within a total of 360 days. Before approving or denying a PMA, an FDA advisory committee may review the PMA at a public meeting
and provide the FDA with the committee’s recommendation on whether the FDA should approve the submission, approve it with specific conditions, or not
approve it. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making
decisions.

Prior to approval of a PMA, the FDA may conduct inspections of the clinical trial data and clinical trial sites, as well as inspections of the

manufacturing facility and processes. Overall, the FDA review of a PMA application generally takes between one and three years, but may take
significantly longer. The FDA can delay, limit or deny approval of a PMA application for many reasons, including:

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the device may not be shown safe or effective to the FDA’s satisfaction;

the data from preclinical studies and/or clinical trials may be found unreliable or insufficient to support approval;

the manufacturing process or facilities may not meet applicable requirements; and

changes in FDA approval policies or adoption of new regulations may require additional data.

If the FDA evaluation of a PMA is favorable, the FDA will issue either an approval letter, or an approvable letter, the latter of which usually
contains a number of conditions that must be met in order to secure final approval of the PMA. When and if those conditions have been fulfilled to the
satisfaction of the FDA, the agency will issue a PMA approval letter authorizing commercial marketing of the device, subject to the conditions of approval
and the limitations established in the approval letter. If the FDA’s evaluation of a PMA application or manufacturing facilities is not favorable, the FDA
will deny approval of the PMA or issue a not approvable letter. The FDA also may determine that additional tests or clinical trials are necessary, in which
case the PMA approval may be delayed for several months or years while the trials are conducted and data is submitted in an amendment to the PMA, or
the PMA is withdrawn and resubmitted when the data are available. The PMA process can be expensive, uncertain and lengthy and a number of devices for
which the FDA approval has been sought by other companies have never been approved by the FDA for marketing.

New PMA applications or PMA supplements are required for modification to the manufacturing process, equipment or facility, quality control
procedures, sterilization, packaging, expiration date, labeling, device specifications, ingredients, materials or design of a device that has been approved
through the PMA process. PMA supplements often require submission of the same type of information as an initial PMA application, except that the
supplement is limited to information needed to support any changes from the device covered by the approved PMA application and may or may not require
as extensive technical or clinical data or the convening of an advisory panel, depending on the nature of the proposed change. In approving a PMA
application, as a condition of approval, the FDA may also require some form of post-approval study or post-market surveillance, whereby the applicant
conducts a follow-up study or follows certain patient groups for a number of years and makes periodic reports to the FDA on the clinical status of those
patients when necessary to protect the public health or to provide additional or longer term safety and effectiveness data for the device. The FDA may also
require post-market surveillance for certain devices cleared under a 510(k) notification, such as implants or life-supporting or life- sustaining devices used
outside a device user facility. The FDA may also approve a PMA application with other post-approval conditions intended to ensure the safety and
effectiveness of the device, such as, among other things, restrictions on labeling, promotion, sale, distribution and use.

Exempt Devices

If a manufacturer’s device falls into a generic category of Class I or Class II devices that the FDA has exempted by regulation, a premarket

notification is not required before marketing the device in the U.S. Manufacturers of such devices are required to register their establishments and list the
proprietary device name and the generic category or classification regulation into which the device fits. Some 510(k)-exempt devices are also exempt from
Quality System Regulation, or QSR, requirements.

Post-market Requirements

After a device is placed on the market, numerous regulatory requirements apply. These include: the QSR, labeling regulations, the FDA’s general

prohibition against promoting products for unapproved or off-label uses, the Medical Device Reporting regulation (which requires that manufacturers
report to the FDA if their device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or
contribute to a death or serious injury if it were to recur), and the Reports of Corrections and Removals regulation (which requires manufacturers to report
recalls and field actions to the FDA if initiated to reduce a risk to health posed by the device or to remedy a violation of the FDC Act).

The FDA enforces these requirements by inspection and market surveillance. If the FDA finds a violation, it can institute a wide variety of

enforcement actions, ranging from a public warning letter to more severe sanctions such as: fines, injunctions, and civil penalties; recall or seizure of
products; operating restrictions, partial suspension or total shutdown of production; refusing requests for 510(k) clearance or PMA approval of new
products; withdrawing 510(k) clearance or PMA approvals already granted; and criminal prosecution.

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Combination Products

A combination product is a product comprised of (i) two or more regulated components, i.e., drug/medical device, biologic/medical device,

drug/biologic, or drug/medical device/biologic, that are physically, chemically, or otherwise combined or mixed and produced as a single entity; (ii) two or
more separate products packaged together in a single package or as a unit and comprised of drug and device products, device and biological products, or
biological and drug products; (iii) a drug, device, or biological product packaged separately that according to its investigational plan or proposed labeling is
intended for use only with an approved individually specified drug, device, or biological product where both are required to achieve the intended use,
indication, or effect and where, upon approval of the proposed product, the labeling of the approved product would need to be changed, i.e., to reflect a
change in intended use, dosage form, strength, route of administration, or significant change in dose; or (iv) any investigational drug, device, or biological
product packaged separately that according to its proposed labeling is for use only with another individually specified investigational drug, device, or
biological product where both are required to achieve the intended use, indication, or effect.

The FDA is divided into various branches, or Centers, by product type. Different Centers typically review drug, biologic, or device applications.

In order to review an application for a combination product, the FDA must decide which Center should be responsible for the review. FDA regulations
require that the FDA determine the combination product’s primary mode of action, or PMOA, which is the single mode of a combination product that
provides the most important therapeutic action of the combination product. The Center that regulates that portion of the product that generates the PMOA
becomes the lead evaluator. If there are two independent modes of action, neither of which is subordinate to the other, the FDA makes a determination as to
which Center to assign the product based on consistency with other combination products raising similar types of safety and effectiveness questions or to
the Center with the most expertise in evaluating the most significant safety and effectiveness questions raised by the combination product. When evaluating
an application, a lead Center may consult other Centers but still retain complete reviewing authority, or it may collaborate with another Center, by which
the Center assigns review of a specific section of the application to another Center, delegating its review authority for that section. Typically, the FDA
requires a single marketing application submitted to the Center selected to be the lead evaluator, although the agency has the discretion to require separate
applications to more than one Center. One reason to submit multiple evaluations is if the applicant wishes to receive some benefit that accrues only from
approval under a particular type of application, like new drug product exclusivity. If multiple applications are submitted, each may be evaluated by a
different lead Center.

Regulation Outside the U.S.

In addition to regulations in the U.S., we are subject to a variety of regulations in other jurisdictions governing clinical studies, commercial sales,
and distribution of our products. Most countries outside the U.S. require that clinical trial applications be submitted to and approved by the local regulatory
authority for each clinical study. In addition, whether or not we obtain FDA approval for a product, we must obtain approval of a product by the
comparable regulatory authorities of countries outside the U.S. before we can commence clinical studies or marketing of the product in those countries. The
approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval.

To obtain regulatory approval of an Orphan Drug under EU regulatory systems, we are mandated to submit marketing authorization applications,

or MAAs, in centralized procedure. The centralized procedure, which came into operation in 1995, allows applicants to obtain a marketing authorization
that is valid throughout the EU. It is compulsory for medicinal products manufactured using biotechnological processes, for orphan medicinal products and
for human products containing a new active substance which was not authorized in the Community before May 20, 2004 (date of entry into force of
Regulation (EC) No 726/2004) and which are intended for the treatment of AIDS, cancer, neurodegenerative disorder or diabetes. The centralized
procedure is optional for any other products containing new active substances not authorized in the Community before May 20, 2004 or for products which
constitute a significant therapeutic, scientific or technical innovation or for which a Community authorization is in the interests of patients at Community
level. When a company wishes to place on the market a medicinal product that is eligible for the centralized procedure, it sends an application directly to
the EMA, to be assessed by the Committee for Medicinal Products for Human Use, or CHMP. The procedure results in an EC decision, which is valid in all
EU Member States. Centrally-authorized products may be marketed in all EU Member States.

In centralized procedure, full copies of the MAA are sent to a rapporteur and a co-rapporteur designated by the competent EMA scientific

committee. They coordinate the EMA’s assessment of the medicinal product and prepare draft reports. Once the draft reports are prepared (other experts
might be called upon for this purpose), they are sent to the CHMP, whose comments or objections are communicated to the applicant. The rapporteur is
therefore the privileged interlocutor of the applicant and continues to play this role, even after the MAA has been granted. The rapporteur and co-rapporteur
then assess the applicant’s replies, submit them for discussion to the CHMP and, taking into account the conclusions of this debate, prepare a final
assessment report. Once the evaluation is completed, the CHMP gives a favorable or unfavorable opinion as to whether to grant the authorization. When
the opinion is favorable, it shall include the draft summary of the product’s characteristics, the package leaflet and the texts proposed for the various
packaging materials. The time limit for the evaluation procedure is 210 days. The EMA then has fifteen days to forward its opinion to the EC. This is the
start of the second phase of the procedure: the decision-making process.

The EMA sends to the EC its opinion and assessment report, together with annexes containing: the SmPC (Annex 1); the particulars of the

Marketing Authorisation Holder, or MAH, responsible for batch release, the particulars of the manufacturer of the active substance and the conditions of
the marketing authorization (Annex 2); and the labeling and the package leaflet (Annex 3). The annexes are translated into the 22 other official languages
of the EU. During the decision-making process, the EC services verify that the marketing authorization complies with EU law. The EC has fifteen days to
prepare a draft decision. The medicinal product is assigned a Community registration number, which will be placed on its packaging if the marketing
authorization is granted. During this period, various EC directorates general are consulted on the draft marketing authorization decision. The draft decision
is then sent to the Standing Committee on Medicinal Products for Human Use (EU Member States have one representative each in both of these
committees) for their opinions.

The centralized procedure, which is compulsory for medicines produced by certain biotechnological processes and optional for those which are
highly innovative, provides for the grant of a single marketing authorization that is valid for all EU member states. The decentralized procedure provides
for approval by one or more other, or concerned, member states of an assessment of an application performed by one member state, known as the reference
member state. Under this procedure, an applicant submits an application, or dossier, and related materials including a draft summary of product
characteristics, and draft labeling and package leaflet, to the reference member state and concerned member states. The reference member state prepares a
draft assessment and drafts of the related materials within 120 days after receipt of a valid application. Within 90 days of receiving the reference member
state’s assessment report, each concerned member state must decide whether to approve the assessment report and related materials. If a member state
cannot approve the assessment report and related materials on the grounds of potential serious risk to the public health, the disputed points may eventually
be referred to the EC, whose decision is binding on all member states.

 
 
 
 
 
 
 
 
 
 
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Applications from persons or companies seeking “orphan medicinal product designation” for products they intend to develop for the diagnosis,

prevention, or treatment of life-threatening or very serious conditions that affect not more than 5 in 10,000 persons in the EU are reviewed by the
Committee for Orphan Medicinal Products, or COMP. In addition, Orphan Drug designation can be granted if the drug is intended for a life threatening,
seriously debilitating, or serious and chronic condition in the EU and that without incentives it is unlikely that sales of the drug in the EU would be
sufficient to justify developing the drug. Orphan drug designation is only available if there is no other satisfactory method approved in the EU of
diagnosing, preventing, or treating the condition, or if such a method exists, the proposed Orphan Drug will be of significant benefit to patients. Orphan
drug designation provides opportunities for fee reductions for protocol assistance and access to the centralized regulatory procedures before and during the
first year after marketing approval, which reductions are not limited to the first year after marketing approval for small and medium enterprises. In addition,
if a product which has an Orphan Drug designation subsequently receives EMA marketing approval for the indication for which it has such designation, the
product is entitled to Orphan Drug exclusivity, which means the EMA may not approve any other application to market the same drug for the same
indication for a period of 10 years. The exclusivity period may be reduced to six years if the designation criteria are no longer met, including where it is
shown that the product is sufficiently profitable not to justify maintenance of market exclusivity. Competitors may receive marketing approval of different
drugs or biologics for the indications for which the orphan product has exclusivity. In order to do so, however, they must demonstrate that the new drugs or
biologics provide a significant benefit over the existing orphan product. This demonstration of significant benefit may be done at the time of initial
approval or in post-approval studies, depending on the type of marketing authorization granted.

A pediatric investigation plan, or PIP, is a development plan aimed at ensuring that the necessary data are obtained to support the authorization of
a medicine for children, through studies in children. All applications for marketing authorization for new medicines have to include the results of studies as
described in an agreed PIP, unless the medicine is exempt because of a deferral or waiver. This requirement also applies when a marketing-authorization
holder wants to add a new indication, pharmaceutical form, or route of administration for a medicine that is already authorized and covered by intellectual
property rights. Several rewards and incentives for the development of pediatric medicines for children are available in the EU. Medicines authorized
across the EU with the results of studies from a PIP included in the product information are eligible for an extension of their supplementary protection
certificate by six months. This is the case even when the studies’ results are negative. For orphan medicines, the incentive is an additional two years of
market exclusivity. Scientific advice and protocol assistance at the EMA are free of charge for questions relating to the development of pediatric medicines.
Medicines developed specifically for children that are already authorized but are not protected by a patent or supplementary protection certificate are
eligible for a pediatric-use marketing authorization, or PUMA. If a PUMA is granted, the product will benefit from 10 years of market protection as an
incentive.

The European Union Medical Devices Directive, or MDD, sets out the basic regulatory framework for medical devices in the EU. This directive

has been separately enacted in more detail in the national legislation of the individual member states of the EU. On April 5, 2017, the European Parliament
passed the Medical Devices Regulation (Regulation 2017/745), or MDR, which repeals and replaces the MDD and the Active Implantable Medical Devices
Directive. The changes were prompted by divergent interpretations of the current directives and to address issues concerning product quality and
performance. The MDR went into effect on May 26, 2021, and it:

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strengthens the rules on placing devices on the market and reinforces surveillance once they are available;

establishes explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance, and safety of devices placed on the
market;

improves the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;

sets up a central database to provide patients, healthcare professionals, and the public with comprehensive information on products available in
the EU; and

strengthens rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts
before they are placed on the market.

Under both the MDD and the MDR, the system of regulating medical devices operates by way of a certification for each medical device. Each

certificated device is marked with a Conformitè Europëenne mark, or CE mark, which shows that the device has a Certificat de Conformité, also referred to
as a Certificate of Conformance. There are national bodies known as Competent Authorities in each member state which oversee the implementation of the
MDD (and now the MDR) within their jurisdiction. The means for achieving the requirements for CE mark varies according to the nature of the device.
Devices are classified in accordance with their perceived risks, similarly to the U.S. system. The class of a product determines the requirements to be
fulfilled before a CE mark can be placed on a product, known as a conformity assessment. Conformity assessments for products are carried out as required
by the MDD (and now the MDR). Except for low-risk medical devices (Class I non-sterile, non-measuring devices), where the manufacturer can self-
certify compliance with the MDD (and now the MDR) based on a self-assessment of the conformity of its products with the essential requirements of the
EU MDD, a conformity assessment procedure requires the intervention of an organization accredited by a member state of the European Economic Area, or
EEA, to conduct conformity assessments, or a Notified Body. If a Notified Body of one member state has issued a Certificat de Conformité, the device can
be sold throughout the EU without further conformance tests being required in other member states.

Under transitional provisions provided in the MDR, medical devices that had valid CE Certificates of Conformity issued under the MDD prior to

May 26, 2021 may, provided related obligations are respected, continue to be placed on the EEA market for the remaining validity of the certificate, and
until May 27, 2024 at the latest. After the expiry of any applicable transitional period, only devices that have been CE marked on the basis of the MDR may
be placed on the market in the EEA.

Post-Brexit, the MDR does not apply in the United Kingdom, or UK, (except for Northern Ireland, which under the Northern Irish Protocol is

bound by certain EU laws). The medical device legislative framework in the UK is set out in the Medical Devices Regulations 2002. These regulations are
based on the previous medical device directives of the EU, but have been amended so that they function properly now that the UK is no longer part of the
EU. The Medical Devices Regulations 2002 have introduced several changes including (but not limited to) replacing the CE mark with a UK Conformity
Assessed marking (although EU CE marks will be recognized until June 30, 2023), requiring manufacturers outside of the UK to appoint a UK Responsible
Person if they place devices on the market in the UK and more wide-ranging device registration requirements.

In addition, there are new regulations for in vitro diagnostics, Regulation (EU) 2017/746 on In-Vitro Diagnostic Devices, and these will fully

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International Approvals

Drug products, medical devices, and drug/medical device combination products are subject to extensive regulation, including premarket review
and marketing authorization, by similar agencies in other countries. Regulatory requirements and approval processes are similar in approach to that of the
U.S. but are not harmonized. International regulators are independent and not bound by the findings of the FDA and there is a risk that foreign regulators
will not accept clinical trial design/results or may require additional data or other information not requested by the FDA. In addition, international
regulators may require different manufacturing practices than the FDA’s cGMPs.

Reimbursement

Potential sales of any of our product candidates, if approved, will depend, at least in part, on the extent to which such products will be covered by

third-party payors, such as government health care programs, commercial insurance and managed healthcare organizations. These third-party payors are
increasingly limiting coverage and/or reducing reimbursements for medical products and services. A third-party payor’s decision to provide coverage for a
drug product does not imply that an adequate reimbursement rate will be approved. Further, 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. In addition, the U.S. government, state legislatures and foreign
governments have continued implementing cost-containment programs, including price controls, restrictions on 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 future revenues and results of operations. Decreases in third-party reimbursement or a decision by a
third-party payor to not cover a product candidate, if approved, or any future approved products could reduce physician usage of our products, and have a
material adverse effect on our sales, results of operations and financial condition.

In the U.S., the Medicare Part D program provides a voluntary outpatient drug benefit to Medicare beneficiaries for certain products. We do not

know whether our product candidates, if approved, will be eligible for coverage under Medicare Part D, but individual Medicare Part D plans offer
coverage subject to various factors such as those described above. Furthermore, private payors often follow Medicare coverage policies and payment
limitations in setting their own coverage policies.

Anti-Kickback, False Claims Laws and Other Regulations

In addition to the FDA restrictions on marketing of pharmaceutical products, medical devices, and combination products, several other types of

state and federal laws have been applied to restrict certain marketing practices in the medical product industry in recent years. These laws include anti-
kickback statutes, false claims statutes, and other statutes pertaining to health care fraud and abuse. The federal healthcare program anti-kickback statute
prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce, or in return for, purchasing, leasing,
ordering or arranging for the purchase, lease or order of any healthcare item or service reimbursable under Medicare, Medicaid, or other federally financed
healthcare programs. The Patient Protection and Affordable Care Act, or PPACA, amended the intent element of the federal statute so that a person or
entity no longer needs to have actual knowledge of the statute or specific intent to violate it. This statute has been interpreted to apply to arrangements
between pharmaceutical manufacturers on the one hand and prescribers, purchasers, and formulary managers on the other. Violations of the anti-kickback
statute are punishable by imprisonment, criminal fines, civil monetary penalties, and exclusion from participation in federal healthcare programs. Although
there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions,
the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases, or
recommendations may be subject to scrutiny if they do not qualify for an exemption or safe harbor.

Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal

government, or knowingly making, or causing to be made, a false statement to have a false claim paid. This includes claims made to programs where the
federal government reimburses, such as Medicaid, as well as programs where the federal government is a direct purchaser, such as when it purchases off
the Federal Supply Schedule. Recently, several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly
inflating drug prices they report to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for
allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. In addition, certain
marketing practices, including off-label promotion, may also violate false claims laws. Additionally, PPACA amended the healthcare program anti-
kickback statute such that a violation can serve as a basis for liability under the federal false claims law. The majority of states also have statutes or
regulations similar to the federal anti-kickback law and false claims laws, which apply to items and services reimbursed under Medicaid and other state
programs, or, in several states, apply regardless of the payor.

The U.S. 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 or making any 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 of 2009, or HITECH, and their implementing
regulations, impose obligations on certain types of individuals and entities regarding the electronic exchange of information in common healthcare
transactions, as well as standards relating to the privacy and security of individually identifiable health information.i

Other federal statutes pertaining to healthcare fraud and abuse include the civil monetary penalties statute, which prohibits the offer or payment of
remuneration to a Medicaid or Medicare beneficiary that the offeror/payor knows or should know is likely to influence the beneficiary to order a receive a
reimbursable item or service from a particular supplier, and the healthcare fraud statute, which prohibits knowingly and willfully executing or attempting to
execute a scheme to defraud any healthcare benefit program or obtain by means of false or fraudulent pretenses, representations, or promises any money or
property owned by or under the control of any healthcare benefit program in connection with the delivery of or payment for healthcare benefits, items, or
services.

Additionally, to the extent that our product is sold in a foreign country, we may be subject to similar foreign laws.

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Privacy and Security laws

HIPAA, as amended by HITECH, and their respective implementing regulations, impose privacy, security transmission and breach reporting
obligations with respect to individually identifiable health information, including protected health information, or PHI, upon entities subject to the law, such
as health plans, healthcare clearinghouses and certain healthcare providers, and their respective business associates that perform services on their behalf
that involve individually identifiable health information, including PHI. HIPAA imposes criminal liability and amends provisions on the reporting,
investigation, enforcement, and penalizing of civil liability for, among other things, knowingly and recklessly executing a scheme or artifice to defraud any
healthcare benefit program, including private payors, as well as knowingly and willfully falsifying, concealing, or covering up a material fact by any trick,
scheme, or device or making any materially false, fictitious, or fraudulent statement in connection with the delivery of or payment for healthcare benefits,
items, or services. A violation of this statute is a felony and may result in fines, imprisonment, or exclusion from government-sponsored programs. Similar
to the federal Anti-Kickback Statute, a person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it in order to
have committed a violation. In addition, state attorney generals have authority to file civil actions for damages or injunctions in federal courts to enforce the
HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions. Although we are not directly subject to HIPAA, other than
potentially with respect to providing certain employee benefits, we could be subject to criminal penalties if we knowingly obtain or disclose individually
identifiable health information maintained by a HIPAA covered entity in a manner that is not authorized or permitted by HIPAA.

Many states have laws that protect the privacy and security of sensitive and personal information, including health information, to which we are

subject. For example, California enacted the California Consumer Privacy Act, or CCPA, which creates individual privacy rights for California consumers
and increases the privacy and security obligations of entities handling certain personal data. The CCPA became effective on January 1, 2020. The CCPA
provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.

Federal and state laws that govern the privacy and security of health information or personally identifiable information in certain circumstances,
including state health information privacy and data breach notification laws which govern the collection, use, disclosure, and protection of health-related
and other personal information, many of which differ from each other in significant ways, may require us to undertake compliance efforts that could be
costly and time consuming or subject us to liability for a failure to comply.

Other Federal and State Regulatory Requirements

Manufacturers of prescription drugs are required to collect and report information on certain payments or transfers of value to physicians and
teaching hospitals, as well as investment interests held by physicians and their immediate family members. The reports must be submitted on an annual
basis and the reported data are posted in searchable form on a public website on an annual basis. Failure to submit required information may result in civil
monetary penalties. Effective January 1, 2022, transfers of value to physician assistants, nurse practitioners or clinical nurse specialists, certified registered
nurse anesthetists, and certified nurse-midwives will also be required.

In addition, several states now require prescription drug companies to report certain expenses relating to the marketing and promotion of drug
products and to report gifts and payments to individual healthcare practitioners in these states. Other states prohibit various marketing-related activities,
such as the provision of certain kinds of gifts or meals. Still other states require the posting of information relating to clinical studies and their outcomes.
Some states require the reporting of certain pricing information, including information pertaining to and justifying price increases, or prohibit prescription
drug price gouging. In addition, states such as California, Connecticut, Nevada and Massachusetts require pharmaceutical companies to implement
compliance programs and/or marketing codes. Additional jurisdictions, such as the City of Chicago and the District of Columbia, require pharmaceutical
sales representatives to be licensed and meet continuing education requirements. Several additional states are considering similar proposals. Compliance
with these laws is difficult and time-consuming, and companies that do not comply with these state laws face civil penalties.

Healthcare Reform

The U.S. and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system. The U.S.

government, state legislatures and foreign governments also have shown significant interest in implementing cost-containment programs to limit the growth
of government-paid healthcare costs, including price controls, restrictions on reimbursement and requirements for substitution of generic products for
branded prescription drugs.

In recent years, Congress has considered reductions in Medicare reimbursement levels for drugs administered by physicians. CMS, the agency that

administers the Medicare and Medicaid programs, also has authority to revise reimbursement rates and to implement coverage restrictions for some drugs.
Cost reduction initiatives and changes in coverage implemented through legislation or regulation could decrease utilization of and reimbursement for any
approved products. While Medicare regulations apply only to drug benefits for Medicare beneficiaries, private payers often follow Medicare coverage
policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from federal legislation or
regulation may result in a similar reduction in payments from private payers.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or collectively

the Affordable Care Act, substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacts the
pharmaceutical industry. The Affordable Care Act is intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending,
enhance remedies against healthcare fraud and abuse, add new transparency requirements for healthcare and health insurance industries, impose new taxes
and fees on pharmaceutical and medical device manufacturers, and impose additional health policy reforms. Among other things, the Affordable Care Act
expanded manufacturers' rebate liability under the Medicaid Drug Rebate Program by increasing the minimum Medicaid rebate for both branded and
generic drugs, expanded the 340B program, and revised the definition of AMP, which could increase the amount of Medicaid drug rebates manufacturers
are required to pay to states. The legislation also extended Medicaid drug rebates, previously due only on fee-for-service Medicaid utilization, to include
the utilization of Medicaid managed care organizations as well and created an alternative rebate formula for certain new formulations of certain existing
products that is intended to increase the amount of rebates due on those drugs. On February 1, 2016, CMS issued final regulations to implement the
changes to the Medicaid Drug Rebate program under the Affordable Care Act. These regulations became effective on April 1, 2016. Since that time, there
have been significant ongoing efforts to modify or eliminate the Affordable Care Act.

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There have been significant ongoing efforts to modify or eliminate the Affordable Care Act. For example, the Tax Act, enacted on December 22,

2017, repealed the shared responsibility payment for individuals who fail to maintain minimum essential coverage under section 5000A of the Internal
Revenue Code of 1986, as amended, or the Code, commonly referred to as the individual mandate.

Other legislative changes have been proposed and adopted since passage of the Affordable Care Act. The Budget Control Act of 2011, among

other things, created the Joint Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select
Committee did not achieve its targeted deficit reduction of an amount greater than $1.2 trillion for the fiscal years 2012 through 2021, triggering the
legislation’s automatic reductions to several government programs. These reductions included aggregate reductions to Medicare payments to healthcare
providers of up to 2.0% per fiscal year, which went into effect in April 2013. Subsequent litigation extended the 2% reduction, on average, to 2030 unless
additional Congressional action is taken. However, pursuant to the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, the 2% Medicare
sequester reductions were suspended from May 1, 2020 through December 31, 2021 due to the COVID-19 pandemic. On January 2, 2013, the American
Taxpayer Relief Act was signed into law, which, among other things, reduced Medicare payments to several types of providers, including hospitals,
imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from
three to five years.

The Affordable Care Act has been subject to challenges in the courts. On December 14, 2018, a Texas U.S. District Court Judge ruled that the

Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. On December 18, 2019, the Fifth
Circuit U.S. Court of Appeals held that the individual mandate is unconstitutional and remanded the case to the Texas District Court to reconsider its earlier
invalidation of the entire Affordable Care Act. An appeal was taken to the U.S. Supreme Court which heard oral arguments in the case on November 10,
2020. On June 17, 2021, the Supreme Court ruled that the plaintiffs lacked standing to challenge the law as they had not alleged personal injury traceable to
the allegedly unlawful conduct. As a result, the Supreme Court did not rule on the constitutionality of the Affordable Care Act or any of its provisions.

The Affordable Care Act requires pharmaceutical manufacturers of branded prescription drugs to pay a branded prescription drug fee to the

federal government. Each individual pharmaceutical manufacturer pays a prorated share of the branded prescription drug fee, based on the dollar value of
its branded prescription drug sales to certain federal programs identified in the law. Furthermore, the law requires manufacturers to provide a 50% discount
off the negotiated price of prescriptions filled by beneficiaries in the Medicare Part D coverage gap, referred to as the “donut hole.” The Bipartisan Budget
Act of 2018, among other things, amended the Affordable Care Act, effective January 1, 2019, to close the coverage gap in most Medicare drug plans by
increasing from 50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D.

The Affordable Care Act also expanded the Public Health Service’s 340B drug pricing program. As noted above, the 340B drug pricing program

requires participating manufacturers to agree to charge statutorily-defined covered entities no more than the 340B “ceiling price” for the manufacturer’s
covered outpatient drugs. The Affordable Care Act expanded the 340B program to include additional types of covered entities: certain free-standing cancer
hospitals, critical access hospitals, rural referral centers and sole community hospitals, each as defined by the Affordable Care Act. Because the 340B
ceiling price is determined based on AMP and Medicaid drug rebate data, revisions to the Medicaid rebate formula and AMP definition could cause the
required 340B discounts to increase.

Payment methodologies may be subject to changes in healthcare legislation and regulatory initiatives as well. For example, CMS may develop

new payment and delivery models, such as bundled payment models. Recently, there has been heightened governmental scrutiny over the manner in which
manufacturers set prices for their marketed products. Such scrutiny has resulted in several recent U.S. Congressional inquiries and proposed and enacted
federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and
manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for
pharmaceutical products.

Further changes to and under the Affordable Care Act remain possible, but it is unknown what form any such changes or any law proposed to

replace or revise the Affordable Care Act would take, and how or whether it may affect our business in the future.

At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical 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 additional federal, state and foreign healthcare reform measures will be adopted in the future, any of which could limit the amounts

that federal and state governments will pay for healthcare products and services, which could result in limited coverage and reimbursement and reduced
demand for our products, once approved, or additional pricing pressures.

Foreign Corrupt Practices Act

The Foreign Corrupt Practices Act, or FCPA, prohibits U.S. businesses and their representatives from offering to pay, paying, promising to pay or

authorizing the payment of money or anything of value to a foreign official in order to influence any act or decision of the foreign official in his or her
official capacity or to secure any other improper advantage in order to obtain or retain business. The FCPA also obligates companies whose securities are
listed in the U.S. to comply with accounting provisions requiring us to maintain books and records, which in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the corporation, including international subsidiaries, if any, and to devise and maintain a system of internal
accounting controls sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial
statements. Our industry is heavily regulated and therefore involves significant interaction with public officials, including officials of non-U.S.
governments. Additionally, in many other countries, the health care providers who prescribe pharmaceuticals are employed by their government, and the
purchasers of pharmaceuticals are government entities; therefore, our dealings with these prescribers and purchasers are subject to regulation under the
FCPA. Recently, the Securities and Exchange Commission, or the SEC, and Department of Justice have increased their FCPA enforcement activities with
respect to pharmaceutical companies. Violations could result in fines, criminal sanctions against us, our officers, or our employees, the closing down of our
facilities, requirements to obtain export licenses, cessation of business activities in sanctioned countries, implementation of compliance programs, and
prohibitions on the conduct of our business. Recent enacted legislation has expanded the SEC’s power to seek disgorgement in all FCPA cases filed in
federal court and extended the statute of limitations in SEC enforcement actions in intent-based claims such as those under the FCPA from five years to ten
years.

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International laws

In Europe, and throughout the world, other countries have enacted anti-bribery laws and/or regulations similar to the FCPA. Violations of any of
these antibribery laws, or allegations of such violations, could have a negative impact on our business, results of operations and reputation. There are also
international privacy laws that impose restrictions on the access, use, including the EU’s General Data Protection Regulation, and disclosure of health
information. All of these laws may impact our business. Our failure to comply with these privacy laws or significant changes in the laws restricting our
ability to obtain required patient information could significantly impact our business and our future business plans.

CVie Acquisition

In December 2018, we acquired CVie Investments Limited, or CVie Investments, an exempted company with limited liability incorporated under
the laws of the Cayman Islands, which we refer to herein as the CVie Acquisition. Since the CVie Acquisition, we have operated CVie Investments and its
wholly owned subsidiary, CVie Therapeutics Limited, or CVie Therapeutics, a Taiwan corporation organized under the laws of the Republic of China, as a
subsidiary focused on the development of drug product candidates for cardiovascular diseases.

Employees and Human Capital Resources

As of March 31, 2022, we have 33 full-time employees, 28 of whom are based in the U.S. Our employees are skilled in drug and device
development, including clinical trial design, clinical operations in support of our clinical trials and related activities, corporate administration, finance and
business development. None of our employees are represented by a labor union or covered by collective bargaining agreements, and we believe our
relationship with our employees is good. We also work with independent professional advisors and consultants to support our program development
activities, particularly in the areas of drug product development, regulatory, compliance, and international clinical operations.

We believe our human capital resources are fundamental to our success; as such, our corporate objectives include recruiting, retaining,

incentivizing and integrating existing and new employees, advisors and consultants for the common purpose of increasing stockholder value and promoting
the success of our company. Our compensation and equity incentive programs are designed to attract, retain and reward personnel through cash-based
compensation and granting of stock-based awards intended to motivate such individuals to perform to the best of their abilities and advance our corporate
objectives. We endeavor to provide competitive benefits that will reward and retain our employees. Our compensation program includes competitive salary
and annual bonus programs, comprehensive healthcare benefits for employees and dependent family members, paid time off, paid holidays, family medical
leave and flexible work schedules. We sponsor a 401(k) plan and automatically enroll all employees when eligible and generally provide a discretionary
matching corporate contribution. In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest
of our employees and our company, and which complied with government regulations. This included initially providing all employees the option of
working from home, while implementing additional workplace safety measures for employees working on site.

Corporate Information

We were incorporated in Delaware on November 6, 1992. Our principal executive offices are located at 2600 Kelly Road, Suite 100, Warrington,

Pennsylvania, 18976, and our telephone number is 215-488-9300. Our website address is www.windtreetx.com. The information contained in, or accessible
through, our website does not constitute part of this Annual Report on Form 10-K. We have included our website address as an inactive textual reference
only.

Available Information

We file annual, quarterly and current reports, proxy or stockholder information statements and other information with the SEC. The SEC maintains

an Internet site that contains reports, proxy and information statements, certain and other information that we may file electronically with the SEC
(http://www.sec.gov). We maintain our corporate website at http://www.windtreetx.com. Our website and the information contained therein or connected
thereto are not incorporated into this Annual Report on Form 10-K.

ITEM 1A. RISK FACTORS.

You should carefully consider the following risks and uncertainties when reading this Annual Report on Form 10-K. If any of the following risks
actually occurs, our business, financial condition and results of operations could be materially and adversely affected. In that event, the trading price of
our common stock could decline. Although we believe that we have identified and discussed below the key risk factors affecting our business, there may be
additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our
performance or financial condition.

Risks Related to Our Financial Condition

We have incurred significant operating losses since inception, we expect to incur operating losses in the future, and we may not be able to achieve or
sustain profitability.

We have incurred operating losses since our incorporation on November 6, 1992. For the years ended December 31, 2021 and 2020, we had

operating losses of $77.3 million and $30.3 million, respectively. As of December 31, 2021, we had an accumulated deficit of $785.3 million. To date, we
have financed our operations primarily through private placements and public offerings of our common and preferred stock and borrowings from investors
and financial institutions.

We expect to continue to incur significant research and clinical development, regulatory and other expenses as we (i) continue to develop our

product candidates; (ii) seek regulatory clearances or approvals for our planned or future product candidates; (iii) conduct clinical trials on our existing and
planned or future product candidates; and (iv) manufacture, market and sell any product candidates for which we may obtain regulatory approval. As a
result, we expect to continue to incur operating losses for the foreseeable future and may never achieve profitability. Even if we do achieve profitability, we
may not be able to sustain or increase profitability on an ongoing basis. If we do not achieve or sustain profitability, it will be more difficult for us to
finance our business and accomplish our strategic objectives, either of which would have a material adverse effect on our business, financial condition and
results of operations and may cause the market price of our common stock to decline.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Our losses, negative cash flows from operations, and accumulated deficit raise substantial doubt about our ability to continue as a going concern
absent obtaining adequate new debt or equity financings.

Management has concluded that substantial doubt exists about our ability to continue as a going concern for the next twelve months from the date
of the financial statements included in this Annual Report on Form 10-K. As of December 31, 2021, we had cash and cash equivalents of $22.3 million and
current liabilities of $4.9 million. As of March 31, 2022, we believe that we have sufficient resources available to support our development activities and
business operations and satisfy our obligations into the first quarter of 2023. We do not have sufficient cash and cash equivalents as of the date of this
Annual Report on Form 10-K to support our operations for at least the 12 months following the date that the financial statements are issued.

To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, management plans to secure additional

capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential licensing arrangements,
alliances and drug product collaborations focused on specified geographic markets; however, none of these alternatives are committed at this time. There
can be no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all, or identify
and enter into any strategic transactions that will provide the capital that we will require. If none of these alternatives is available, or if available, we are
unable to raise sufficient capital through such transactions, we will not have sufficient cash resources and liquidity to fund our business operations for at
least the next 12 months following the date that the financial statements are issued. The failure to obtain sufficient capital on acceptable terms when needed
may require us to delay, limit, or eliminate the development of business opportunities and our ability to achieve our business objectives and our
competitiveness, and our business, financial condition, and results of operations will be materially adversely affected. In addition, market instability,
including as a result of the ongoing COVID-19 pandemic and geopolitical instability, may reduce our ability to access capital, which could negatively
affect our liquidity and ability to continue as a going concern. In addition, the perception that we may not be able to continue as a going concern may cause
others to choose not to deal with us due to concerns about our ability to meet our contractual obligations.

The report of our independent registered accounting firm on our audited financial statements for the fiscal year ended December 31, 2021 contains an
explanatory paragraph relating to our ability to continue as a going concern.

The auditor’s opinion on our audited financial statements for the year ended December 31, 2021 includes an explanatory paragraph stating that we

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

We will require substantial additional financing to achieve our goals, and a failure to obtain this necessary capital when needed on acceptable terms, or
at all, could force us to delay, limit, reduce or terminate our product development programs, or other operations.

The development of biopharmaceutical product candidates is capital-intensive. We expect our expenses to increase in connection with our ongoing

activities, particularly as we conduct our ongoing and planned clinical trials under our key clinical development programs, continue research and
development and potentially initiate clinical trials under our other development programs and seek regulatory approval for our current product candidates
and any future product candidates we may develop. In addition, as our product candidates progress through development and toward commercialization, we
may need to make milestone payments to licensors and other third parties from whom we have in-licensed or acquired our product candidates. Furthermore,
if and to the extent we seek to acquire or in-license additional product candidates in the future, we may be required to make significant upfront payments,
milestone payments, and/or licensing payments. If we obtain regulatory approval for any of our product candidates, we also expect to incur significant
commercialization expenses related to product manufacturing, marketing, sales and distribution. Because the outcome of any clinical trial or preclinical
study is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of
our product candidates. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. Moreover, a small
group of investors that hold a significant portion of our issued and outstanding common stock may be in a position to influence the terms of a funding
transaction, potentially making it more difficult to reach agreement on terms that are acceptable to investors participating in the financing, in a timely
manner, if at all. If we are unable to raise sufficient capital to fund our activities when needed and on acceptable terms, we could be forced to delay, reduce
or eliminate our research and development programs or, if our product candidates are approved, any future commercialization efforts.

Our existing cash and cash equivalents are not sufficient to fund operations for at least the next 12 months. We currently do not have sufficient

capital to execute our planned phase 2 clinical trial of istaroxime for the treatment of AHF. We are exploring capital from public and private equity
offerings and potential strategic opportunities to fund the initiation of this clinical trial, and plan to execute the clinical trial after obtaining adequate
funding.

We have based estimates included in our operating plan on assumptions that may prove to be wrong, and we could use our capital resources sooner

than we currently expect. Our operating plans and other demands on our cash resources may 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 or other capital sources, including
potentially collaborations, licenses and other similar arrangements. In addition, we may seek additional capital due to favorable market conditions or
strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Attempting to secure additional financing may
divert our management from our day-to-day activities, which may adversely affect our ability to develop our product candidates.

Our future capital requirements will depend on many factors, including:

●

●

●

the type, number, scope, progress, expansions, results, costs and timing of our clinical trials and preclinical studies of our product
candidates, which we are pursuing or may choose to pursue in the future;

the costs and timing of manufacturing for our product candidates, including commercial manufacturing if any product candidate is
approved;

the costs, timing and outcome of regulatory review of our product candidates;

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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●

●

●

●

●

●

the costs of obtaining, maintaining and enforcing our patents and other intellectual property rights;

the timing and amount of the milestone or other payments we must make to the licensors and other third parties from whom we have in-
licensed or acquired our product candidates;

the costs and timing of establishing or securing sales and marketing capabilities if any product candidate is approved;

the costs, terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements;

costs associated with any product candidates or technologies that we may in-license or acquire; and

our ability to achieve sufficient market acceptance, coverage and adequate reimbursement from payors and adequate market share and
revenue for any approved products.

Conducting clinical trials and preclinical studies is a time consuming, expensive and uncertain process that takes years to complete, and we may

never generate the necessary data or results required to obtain regulatory approval and achieve product sales. In addition, our product candidates, if
approved, may not achieve commercial success.

Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be

available to us at any time on acceptable terms, or at all.

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

Until we can generate substantial product revenues to support our operations, we expect to finance our cash needs through equity offerings, debt

financings or other capital sources, including potentially collaborations, licenses and other strategic transactions. This may include equity sales pursuant to
an at-the-market offering agreement which allows us to offer and sell, from time to time at our sole discretion, up to a maximum of $10.0 million of shares
of our common stock under an at-the-market program, or the ATM Program. To the extent that we raise additional capital through the sale of equity or
convertible debt securities, our stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other
preferences that adversely affect their rights as common stockholders. Debt financing and preferred equity 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.

If we raise funds through future collaborations, licenses and other similar arrangements, we may have to relinquish valuable rights to our future

revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or that may reduce the value of our
common stock.

Unstable market and economic conditions may have serious adverse consequences on our business, financial condition, and stock price.

Global financial markets have recently, and may continue to, experience extreme volatility and disruptions, declines in

consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability as
a result of the ongoing COVID-19 pandemic, political unrest, and other factors beyond control. There can be no assurance that
further deterioration in credit and financial markets and confidence in economic conditions will not occur. Our general business
strategy and ability to raise capital may be adversely affected by any such economic downturn, volatile business environment, or
continued unpredictable and unstable market conditions. If the current equity and credit markets deteriorate, it may make any
necessary debt or equity financing more difficult, more costly, and more dilutive. Failure to secure any necessary financing in a
timely manner and on favorable terms could have a material adverse effect on our growth strategy, financial performance, and
stock price and could require us to delay or abandon clinical development plans. In addition, there is a risk that one or more of
our current service providers, manufacturers, and other partners may not survive these difficult economic times, which could
directly affect our ability to attain our operating goals on schedule and on budget.

In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to
affect the market prices of equity securities of many companies, including in connection with the ongoing COVID-19 pandemic,
which has resulted in decreased stock prices for many companies notwithstanding the lack of a fundamental change in their
underlying business models or prospects. These fluctuations have often been unrelated or disproportionate to the operating
performance of those companies. Further, the impacts of political unrest, including as a result geopolitical tension, such as a
deterioration in the relationship between the U.S. and China or continued escalation in conflict between Russia and Ukraine,
including any additional sanctions, export controls or other restrictive actions that may be imposed by the U.S. and/or other
countries against governmental or other entities in, for example, China or Russia, also could lead to disruption, instability, and
volatility in the global markets, which may have an adverse impact on our business or ability to access the capital markets. Broad
market and industry factors, including potentially worsening economic conditions and other adverse effects, or developments
relating to the ongoing COVID-19 pandemic, political, regulatory, and other market conditions, may negatively affect the market
price of shares of our common stock, regardless of our actual operating performance.

Due to the significant resources required to develop each of our product candidates, we must prioritize development of certain product candidates
and/or certain disease indications. We may be delayed in advancing a product candidate if our plan does not include sufficient funding to execute a
clinical program. If we expend our limited resources on candidates or indications that do not yield a successful product and fail to capitalize on other
product candidates or indications that may be more profitable or for which there is a greater likelihood of success, such failure could have a material
adverse effect on our business, financial condition, results of operations, and prospects.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
We are currently focused on developing product candidates to address unmet medical needs in acute cardiovascular and pulmonary diseases. We
seek to allocate our limited capital among our programs in an efficient manner and to advance our cardiovascular product candidate. However, due to the
significant resources required to advance the development of our product candidates, we also must focus on specific diseases and disease pathways and
decide which product candidates to pursue and the amount of resources to allocate to each such product candidate.

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Our ability to advance a product candidate depends on our ability to secure the additional capital required to execute each phase of product

development. In developing our plan, we were aware of the size and projected costs of our planned phase 2b clinical trial in istaroxime to improve cardiac
functions in patients with AHF and determined to allocate our limited resources to other programs. Such decisions concerning the allocation of research
and development funds towards, or away from, particular product candidates or therapeutic areas may not lead to the development of any viable
commercial product and may divert resources away from better opportunities. Similarly, any decision to delay, terminate or engage with third parties in
respect of certain programs may subsequently also prove to be suboptimal and could cause us to miss valuable opportunities. In that event, our business,
financial condition and results of operations could be materially adversely affected. As a result, we may fail to capitalize on viable commercial products or
profitable market opportunities, be required to forego or delay pursuit of opportunities with other product candidates or other diseases and disease pathways
that may later prove to have greater commercial potential than those we choose to pursue, or relinquish valuable rights to such product candidates through
collaboration, licensing or other royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain
development and commercialization rights.

We may never realize the full value of our intangible assets.

We have recorded significant goodwill and intangible assets on our consolidated balance sheets as a result of the acquisition of CVie
Therapeutics in December 2018. The identifiable intangible assets resulting from the CVie Therapeutics acquisition relate to IPR&D of istaroxime and
rostafuroxin. In accordance with applicable accounting standards, we are required to review intangible assets and goodwill for impairment on an annual
basis, or more frequently where there is an indication of impairment. During the second quarter of 2021, we concluded an initial process to test the
industry’s interest in investing in our rostafuroxin drug candidate and were not able to secure a licensing transaction or other strategic opportunity at that
time. Based on feedback received from potential licensing partners, we determined that there is a need for an additional phase 2 clinical trial to demonstrate
efficacy in non-Caucasian patients in treatment resistant hypertension. Due to these developments, we determined that the fair value of the IPR&D related
to our rostafuroxin drug candidate was more likely than not less than its carrying value. As a result, we recorded a loss on impairment of intangible assets
of $37.8 million during the second quarter of 2021. As part of our annual quantitative impairment assessment of indefinite-lived IPR&D intangible assets,
we reassessed certain of the assumptions related to our rostafuroxin drug candidate due to the current macroeconomic conditions which have made it harder
to secure the funding needed to conduct the additional phase 2 clinical trial and have therefore delayed our intended development of rostafuroxin. As a
result, we concluded that the fair value of the IPR&D related to our rostafuroxin drug candidate was again less than its carrying value and recorded an
additional loss on impairment of intangible assets of $7.2 million during the fourth quarter of 2021. No events or changes in the business environment
occurred during 2021 that would indicate that the fair value of the IPR&D related to our istaroxime drug candidate or our goodwill was impaired. We are
continuing to pursue licensing arrangements and/or other strategic partnerships for rostafuroxin. However, if we are unable to secure such an arrangement
or partnership, or if we secure an arrangement for an amount less than anticipated, we may have to record additional impairments related to rostafuroxin in
the future, which may materially adversely affect our results of operations and financial condition.

If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and timely financial statements
could be impaired, investors may lose confidence in our financial reporting and the trading price of our common stock may decline.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, we are required to furnish a report by our management on our internal

control over financial reporting. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over
financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our
financial condition, results of operations or cash flows. If our financial statements are not accurate, investors may not have a complete understanding of our
operations. If we do not file our financial statements on a timely basis as required by the Securities and Exchange Commission, or the SEC, we could face
severe consequences. If we are unable to conclude that our internal control over financial reporting is effective, investors may lose confidence in the
accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or
investigations by the Nasdaq Stock Market LLC, the SEC or other regulatory authorities. Moreover, responding to such investigations, are likely to
consume a significant amount of our management resources and cause us to incur significant legal and accounting expense. Failure to remedy any material
weakness in our internal control over financial reporting, or to maintain effective control systems, could also restrict our future access to the capital
markets. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

Risks Related to our Development Activities and Regulatory Approval of our Product Candidates

We are substantially dependent on the success of our lead product candidate istaroxime. To the extent that our clinical development of istaroxime is not
successful, our business, financial condition, and results of operations may be materially adversely affected and the price of our common stock may
decline.

We currently have no product candidates approved for sale, and we may never be able to develop marketable products. We are focusing a

significant portion of our activities and resources on our lead product candidate, istaroxime, and we believe our prospects are highly dependent on, and a
significant portion of the value of our company relates to, our ability to successfully obtain regulatory approval for istaroxime. The clinical development
and regulatory approval of istaroxime is subject to many risks, including the risks discussed in other risk factors, and istaroxime may not receive marketing
approval from any regulatory agency. If the results or timing of regulatory filings, the regulatory process, regulatory developments, clinical trials or
preclinical studies, or other activities, actions or decisions related to istaroxime do not meet our or others’ expectations, the market price of our common
stock could decline significantly. Should the results of our clinical development program be insufficient to support regulatory approval, we may be forced
to rely on our other product candidates, which will require additional time and resources to obtain regulatory approval. There can be no assurance that we
will be able to successfully develop istaroxime.

Clinical development involves a lengthy and expensive process with an uncertain outcome, and results of preclinical studies and early clinical trials are
not necessarily predictive of future results. In addition, our assumptions about why certain of our product candidates are worthy of future development
and potential approval are based on data primarily collected by other companies. Our product candidates may not have favorable results in later
clinical trials, if any, or receive regulatory approval on a timely basis, if at all.

Clinical drug development is expensive and can take many years to complete, and its outcome is inherently uncertain. We cannot guarantee that

any clinical trials will be conducted as planned or completed on schedule, if at all, and failure can occur at any time during the preclinical study or clinical
trial process as a result of inadequate study design, inadequate performance of a drug, inadequate adherence by patients or investigators to clinical trial
protocols, or other factors. For example, conducting a toxicology study as part of the preclinical program for istaroxime, to be included in a required
regulatory submission, could result in unanticipated findings that could potentially negatively impact the ongoing clinical program for istaroxime. In
addition, there is not data currently available to show the impact of istaroxime on early cardiogenic shock. Despite promising preclinical or clinical results,

 
 
 
 
 
 
 
 
 
 
any product candidate can unexpectedly fail at any stage of preclinical or clinical development. The historical failure rate for product candidates in our
industry is high.

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New drugs in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through earlier clinical
trials. As a result, data we obtain from our phase 2 clinical trials may not accurately predict phase 3 trial results, whether due to differences in sample size,
study arms, duration, endpoints, or other factors. If any of our product candidates should fail to perform as designed in their respective phase 3 clinical
programs, such failures could adversely affect the results of our clinical development program despite promising results in earlier trials. If clinical trials for
any of our product candidates fail to demonstrate safety or efficacy to the satisfaction of the U.S. Food and Drug Administration, or FDA, or the equivalent
regulatory authorities in other countries, the FDA or the equivalent regulatory authorities in other countries will not approve that drug and we would not be
able to commercialize it, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. Moreover, if
we are required to cease development activities on any of our recently acquired product candidates due to adverse clinical results or otherwise, it could
result in impairment of related intangible assets and goodwill on our consolidated balance sheets.

Even if later stage clinical trials are successful, regulatory authorities may question the trial design or sufficiency for approval of the endpoints we

select for our clinical trials or add new requirements, such as the completion of additional studies, as conditions for obtaining approval or obtaining an
indication. For the foregoing reasons, we cannot be certain that our ongoing and planned clinical trials and preclinical studies will be successful. Any safety
concerns observed in any one of our clinical trials in our targeted indications could limit the prospects for regulatory approval of our product candidates in
those and other indications, which could have a material adverse effect on our business, financial condition and results of operations, and result in
significant additional costs and expenses, require additional time and have an adverse effect on our business, including our financial condition and results
of operations.

We have limited experience with the development of therapies targeted to the treatment of early cardiogenic shock and COVID-19-related acute lung
injury and may not succeed in our efforts to gain approval of our product candidates and establish a profitable business.

Although our team has significant experience with designing and conducting clinical trials, and has access to data, preclinical work and research conducted
by our predecessor concerning istaroxime and expertise in the development of cardiovascular product candidates generally and the treatment of AHF in
particular, we have limited experience in conducting clinical trials through to regulatory approval for the treatment of early cardiogenic shock. In addition,
while we believe that our KL4 surfactant may have the potential to be an effective intervention for influenza-induced acute lung injury, or ALI, and have
previously conducted preclinical studies assessing the utility of KL4 surfactant in the treatment of influenza-induced ALI and, in 2009, conducted a clinical
trial assessing our KL4 surfactant in young children after exposure to serious respiratory infections such as influenza (including the type A serotype
referred to as H1N1) or respiratory syncytial virus, we do not have experience in conducting clinical trials through to regulatory approval of a product
candidate for patients with COVID-19 associated lung injury. We also have not produced any prior clinical or preclinical data in these indications. In part
because of this lack of precedent, we are subject to development risks associated with studying new indications and cannot be certain that such
developments will be successful.

Delays in clinical trials are common and have many causes, and any delay could result in increased costs to us and jeopardize or delay our ability to
obtain regulatory approval and commence product sales or allow for competition to emerge.

We may experience delays in clinical trials of our product candidates, or the time required to complete clinical trials for our product candidates
may be longer than anticipated. Our planned clinical trials may not begin on time, have an effective design, enroll a sufficient number of patients, or be
completed on schedule, if at all. Our clinical trials can be delayed for a variety of reasons, including, but not limited to:

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delays associated with severe acute respiratory syndrome coronavirus 2, or SARS-CoV-2, the causative agent in a novel strain of
coronavirus, or COVID-19, which will impact our healthcare systems and our trial sites ability to conduct trials to varied degrees and
times. COVID-19 creates risk of interrupting availability of necessary clinical supplies, local regulatory reviews, hospital ethics
committee reviews, professional staff, site monitors and other necessary travel;

our inability to raise funding necessary to initiate or continue a trial;

delays in obtaining regulatory approval to commence a trial or reaching a consensus with regulatory authorities on trial design;

delays in reaching an agreement with the FDA or the equivalent foreign regulatory authorities in other countries on final trial design or
the scope of the development program;

inability to develop studies that are acceptable in all markets of interest;

inability to come to an agreement on clinical trial design or execution factors with potential development partners;

imposition of a clinical hold following an inspection of our clinical trial operations or trial sites by the FDA or the equivalent regulatory
authorities in other countries;

failures or delays in reaching agreement on acceptable terms with prospective 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;

delays in obtaining contracts with clinical sites and required IRB approval at each site;

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;

competition with other studies for study patients;

changes to clinical trial protocol;

delays in recruiting suitable patients to participate in a trial;

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subjects choosing an alternative treatment for the indication for which we are developing our product candidates, or participating in
competing clinical trials;

delays in having subjects complete participation in a trial or return for post-treatment follow-up;

clinical sites deviating from trial protocol or dropping out of a trial to the detriment of enrollment;

subjects experiencing severe or unexpected adverse events;

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

selection of clinical endpoints that require prolonged periods of clinical observation or analysis of the resulting data;

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, GCPs, or other regulatory requirements;

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

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;

manufacturing sufficient quantities of product candidate or obtaining sufficient quantities of combination therapies for use in clinical
trials or changes in the manufacturing process that may be necessary or desired;

time required to add new clinical sites; or

delays by our contract manufacturers to produce and deliver a sufficient supply of clinical trial materials or being ordered by the FDA or
comparable foreign regulatory authorities to temporarily or permanently shut down due to violations of current good manufacturing
practices, or cGMP, regulations or other applicable requirements, or infections or cross-contaminations of product candidates in the
manufacturing process.

In addition, we may not reach agreement with the FDA, or a foreign regulator on the extent of our phase 3 programs, the design of any one or

more of the clinical trials necessary for approval, or we may be unable to reach agreement on a single design that would permit us to conduct a common
pivotal phase 3 clinical development program in all markets of interest. For example, we may not be able to design a study that is acceptable to both the
FDA and European Medicines Agency, or EMA, regulators, which would cause us to limit the scope of our geographical activities or greatly increase our
investment. Even if we complete the clinical trial within our anticipated time, if our results are inconclusive or non-compelling or otherwise insufficient to
support a strategic or financing transaction, we potentially could be forced to limit or cease our development activities, which would have a material
adverse effect on our business.

We have conducted, and may in the future conduct, clinical trials for our product candidates at clinical sites located in the U.S. and outside of the U.S.
If the FDA and other foreign equivalents raise concerns about certain of the clinical sites based on location and regulatory environment, they may not
accept data from such trials, in which case our development plans will be delayed, which could materially harm our business.

We have conducted and are expecting in the future to conduct one or more of our clinical trials for our product candidates at clinical sites located

in the U.S. and outside of the U.S., including EU, China, Russia, and South America. Although the FDA may accept data from clinical trials conducted
outside the U.S., acceptance of this data may be subject to certain conditions imposed by the FDA. For example, the FDA requires the clinical trial to have
been conducted in accordance with GCPs, and the FDA must be able to validate the data from the clinical trial through an onsite inspection if it deems such
inspection necessary. Where data from foreign clinical trials are intended to serve as the sole basis for marketing approval in the U.S., the FDA will not
approve the application on the basis of foreign data alone unless those data are considered applicable to the U.S. patient population and U.S. medical
practice, the clinical trials were performed by clinical investigators of recognized competence, and the data is considered valid without the need for an
onsite inspection by the FDA or, if the FDA considers such an inspection to be necessary, the FDA is able to validate the data through an onsite inspection
or other appropriate means. There can be no assurance the FDA will accept data from clinical trials conducted outside of the U.S. If the FDA does not
accept data from our clinical trials of our product candidates, it would likely result in the need for additional clinical trials, which would be costly and time
consuming and delay or permanently halt our development of our product candidates.

For example, we have previously conducted clinical trials in Russia, and may plan to do so again in the future. The escalation of tensions in the

region, including Russia’s February 2022 invasion of Ukraine and the resulting imposition of economic and other sanctions by the U.S., EU, and many
other nations on Russia, individuals in Russia, Russian businesses, and the Russian central bank, could disrupt or delay our ability to conduct clinical trial
activities in Russia in the future. Although the length and impact of any military action are highly unpredictable, clinical trial sites in Russia and other
countries may close, and patients could be forced to evacuate or voluntarily choose to relocate far from clinical trial sites, making them unavailable for
follow-up. The closure of sites, the inability to screen and enroll new patients or any premature discontinuation of treatment by patients enrolled in our
future trials or our inability to conclude follow-up evaluations with patients that were enrolled in our completed clinical trial, could result in increased costs
and could delay our anticipated timeline for the completion of our future clinical trials.

The COVID-19 pandemic has negatively impacted, and may continue to negatively impact our ability to develop our product candidates.

The impact of the ongoing COVID-19 pandemic has resulted in, and will likely continue to result in, significant disruptions to the global economy,

as well as businesses and capital markets around the world. Efforts to contain the spread of COVID-19 have intensified at times to manage surges in the
infection rate and deaths, and many countries have at times implemented severe travel restrictions, social distancing, and delays or cancellations of elective
surgeries at different times. Notwithstanding the introduction of effective vaccines, COVID-19 is expected to continue affecting our ability and the ability
of our employees, contractors, suppliers, and other partners to conduct normal business activities from time to time, including due to shutdowns that may
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The continued spread of COVID-19 globally has adversely impacted and may continue to impact our operations. We have initiated several clinical

trials and plan in the near future to initiate an additional clinical trial for istaroxime in the EU and other worldwide locations impacted by the COVID-19
outbreak. Our ongoing clinical trials have suffered delays and interruptions and our decision to cease enrollment in the AEROSURF clinical trial was
partially due to such delays and escalating expenses. Our ongoing efforts to conduct these trials could be materially delayed in the future by governmental
restrictions and enrollment difficulties as hospitals reduce and divert staffing, divert resources to patients suffering from the infectious disease and limit
hospital access for nonpatients.

Similarly, there is a risk that clinical supplies of our product candidates may be significantly delayed or may become unavailable as a result of

COVID-19 and the resulting impact on our suppliers’ labor forces and operations, including as a result of governmental restrictions on business operations
and the movement of people and goods in an effort to curtail the spread of the virus. There can be no assurance that we would be able to timely implement
any mitigation plans. Disruptions in our supply chain, whether as a result of restricted travel, quarantine requirements or otherwise, could negatively impact
clinical supplies of our product candidates, which could materially adversely impact our clinical trial and development timelines.

The continued spread of COVID-19, including potential new variants, has also led to periodic disruption and volatility in the global capital
markets, which could increase our cost of capital and adversely affect our ability to access the capital markets in the future. It is possible that the continued
spread of COVID-19 could cause an economic slowdown or recession or cause other unpredictable events, each of which could adversely affect our
business, results of operations or financial condition.

The extent to which COVID-19 impacts our financial results going forward will depend on future developments, which are highly uncertain and
cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 outbreak, the rise of variants, which may be
more contagious and potentially more lethal, and the actions recommended to contain the outbreak or treat its impact, among others. Moreover, the
COVID-19 outbreak has had indeterminable adverse effects on general commercial activity and the world economy, and our business and results of
operations could be adversely affected to the extent that COVID-19 or any other pandemic harms the global economy generally.

Use of our product candidates could be associated with side effects, adverse events or other properties or safety risks, which could delay or preclude
approval, cause us to suspend or discontinue clinical trials, abandon a product candidate, limit the commercial profile of an approved label or result in
other significant negative consequences that could severely harm our business, prospects, operating results and financial condition.

As is the case with pharmaceuticals generally, there may be adverse events in patients treated with our product candidates. 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 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 comparable foreign regulatory authorities. Adverse events could affect patient recruitment or the ability of
enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition
and prospects significantly.

Moreover, if our product candidates are associated with undesirable side effects in clinical trials or have characteristics that are unexpected, we
may elect to abandon their development or limit their 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 for the
product candidate if approved. We may also be required to modify our study plans based on findings in our ongoing clinical trials. Many compounds that
initially show promise in early-stage testing have later been found to cause side effects that prevented further development of the compound. In addition,
regulatory authorities may draw different conclusions or require additional testing to confirm these determinations.

It is possible that as we test our product candidates in larger, longer and more extensive clinical trials, or as the use of these product candidates

becomes more widespread if they receive 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 subjects. 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 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:

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regulatory authorities may withdraw, suspend or limit approvals 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;

we may be required to implement a Risk Evaluation and Mitigation Strategy, or REMS, or create a medication guide outlining the risks of
such side effects for distribution to patients;

we may be required to change the way a product is distributed or administered, conduct additional clinical trials or change the labeling of
a product or be required to conduct additional post-marketing studies or surveillance;

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

sales of the product may decrease significantly, or the product could become less competitive; 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.

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Our product candidates are subject to extensive regulation and compliance, which is costly and time consuming, and such regulation may cause
unanticipated delays or prevent the receipt of the required approvals to commercialize our product candidates.

The clinical development, manufacturing, labeling, storage, record-keeping, advertising, promotion, import, export, marketing and distribution of

our product candidates are subject to extensive regulation by the FDA in the U.S. and by comparable foreign regulatory authorities in foreign markets. In
the U.S., the process of obtaining regulatory approval is expensive, often takes many years following the commencement of clinical trials and can vary
substantially based upon the type, complexity and novelty of the product candidates involved, as well as the target indications and patient population.
Approval policies or regulations may change, and the FDA has substantial discretion in the drug approval process, including the ability to delay, limit or
deny approval of a product candidate for many reasons. Despite the time and expense invested in clinical development of product candidates, regulatory
approval is never guaranteed. We are not permitted to market any of our product candidates in the U.S. until we receive approval of a New Drug
Application, or NDA, from the FDA.

Prior to obtaining approval to commercialize a product candidate in the U.S. or abroad, we must demonstrate with substantial evidence from
adequate and well-controlled clinical trials, and to the satisfaction of the FDA or comparable foreign regulatory authorities, that such product candidates are
safe and effective for their intended uses.

Even if we believe the nonclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by

the FDA and comparable foreign regulatory authorities. The FDA or comparable foreign regulatory authorities, as the case may be, may also require us to
conduct additional preclinical studies or clinical trials for our product candidates either prior to or post-approval, or may object to elements of our clinical
development program.

The FDA or comparable foreign regulatory authorities can delay, limit or deny approval of a product candidate for many reasons, including:

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such authorities may disagree with the design or implementation of our clinical trials;

negative or ambiguous results from our clinical trials or results may not meet the level of statistical significance required by the FDA or
comparable foreign regulatory agencies for approval;

such authorities may disagree with our interpretation of data from preclinical studies or clinical trials;

such authorities may not agree that the data collected from clinical trials of our product candidates are acceptable or sufficient to support
approval;

serious and unexpected adverse events may be experienced by participants in our clinical trials or by individuals using drugs similar to
our product candidates;

the 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;

such authorities may not accept clinical data from trials which are conducted at clinical facilities or in countries where the standard of
care or patient characteristics are potentially different from that of the U.S.;

we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety risks or the safety data base
may not be large enough;

such authorities may not accept the submission of an NDA or other submission to obtain regulatory approval in the U.S. or elsewhere,
and such authorities may impose requirements for additional preclinical studies or clinical trials;

such authorities may disagree regarding the formulation, labeling and/or the specifications of our product candidates;

approval may be granted only for indications that are significantly more limited than what we apply for and/or with other significant
restrictions on distribution and use;

such authorities may find deficiencies in the manufacturing processes or facilities of our third-party manufacturers with which we
contract for clinical and, if approved, commercial supplies; or the approval policies;

regulations of such authorities may significantly change in a manner rendering our or any of our potential future collaborators’ clinical
data insufficient for approval; or

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

We may conduct clinical development in the U.S., Canada, the EU, Eastern Europe, Latin America, and Asia Pacific regions and sell our products

in the U.S. and potentially in other major markets. To accomplish this objective, we must obtain and maintain regulatory approvals and comply with
regulatory requirements in each jurisdiction. To avoid the significant expense and lengthy time required to complete multiple regional clinical development
programs, we expect to meet with relevant regulatory authorities. While we would prefer to design a single, global clinical development program that
would satisfy the regulators in all of our target markets, there can be no assurance that our efforts will be successful. If we are unable to reach agreement
with the various regulatory authorities, we may not be able to pursue regulatory approval of our products in all of our selected markets.

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With respect to foreign markets, approval procedures vary among countries and, in addition to the foregoing risks, may involve additional product

testing, administrative review periods and agreements with pricing authorities. In addition, events raising questions about the safety of certain marketed
pharmaceuticals may result in increased cautiousness by the FDA and comparable foreign regulatory authorities in reviewing new drugs based on safety,
efficacy or other regulatory considerations and may result in significant delays in obtaining regulatory approvals. Any delay in obtaining, or inability to
obtain, applicable regulatory approvals would prevent us or any of our potential future collaborators from commercializing our product candidates. In
addition, delays associated with COVID-19 may impact local regulatory reviews occurring in a timely manner and result in delays for trial and site
initiations.

Of the large number of drugs in development, only a small percentage successfully complete the FDA or foreign regulatory approval processes

and are commercialized. The lengthy approval process as well as the unpredictability of future clinical trial results may result in our failing to obtain
regulatory approval to market our product candidates, which would significantly harm our business, financial condition, results of operations and prospects.

If our competitors develop and receive FDA approval for treatments or vaccines for COVID-19, our commercial opportunity with respect to our
development of KL4 surfactant for the treatment of lung injury and ARDS caused by COVID-19 may be reduced or eliminated.

There are numerous companies working on therapies to treat COVID-19 and/or vaccines to prevent or treat COVID-19. Multiple vaccines have

received full FDA approval or emergency use authorization.

Furthermore, the FDA has authorized, and many companies are developing, therapeutics to treat COVID-19. The FDA requires us to conduct

clinical trials for the approval of KL4 surfactant as a therapy for COVID-19-related lung injury and ARDS and enrollment in such trials may be impacted
given the commercial availability of approved or authorized vaccines and/or therapies. The success or failure of other vaccines and/or therapies, or
perceived success or failure, may adversely impact our ability to obtain any future funding for our KL4 surfactant development efforts or for us to
ultimately commercialize any product candidate, if authorized or approved. In addition, we may not be able to compete effectively if our product candidate
does not satisfy government procurement requirements with respect to biodefense products.

If competing therapies are approved, such approval could have a material adverse impact on our ability to commercialize KL4 surfactant as a

therapy for COVID-19-related lung injury and ARDS. The speed at which all parties are acting to create and test many treatments and vaccines for
COVID-19 is unusual and evolving or changing plans or priorities within the FDA and other branches of the U.S. government involved in the fight against
the pandemic, including changes based on new knowledge of COVID-19, new COVID-19 variants and how the disease affects the human body, may
significantly affect the regulatory timeline for KL4 surfactant. In addition, there are numerous clinical trial programs in progress for COVID-19 therapies
which are all competing for largely the same patient population for enrollment. This problem is exacerbated by changing rates of infection and spread.
Many of our competitors and potential competitors have substantially greater scientific, research, and product development capabilities, as well as greater
financial, marketing, sales and human resources capabilities than we do. In addition, many specialized biotechnology firms have formed collaborations
with large, established companies to support the research, development and commercialization of products that may be competitive with ours.

Because we have multiple product candidates in our clinical pipeline, we may expend our limited resources to pursue a particular product candidate
and fail to capitalize on other product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

Because we have limited financial and managerial resources, we may focus on specific product candidates, indications and development programs
at any time. We also may plan to conduct several clinical trials for multiple product candidates in parallel over the next several years, which may make our
decision as to the product candidates on which we will focus more difficult. As a result, we may forgo or delay pursuit of opportunities with other product
candidates that could have had greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial
products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific
indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular
product candidate, we may relinquish valuable rights to that product candidate through future collaborations, license agreements and other similar
arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product
candidate. For example, following a decision by our licensee in Asia to terminate a funding agreement for AEROSURF clinical development in the EU, we
ceased our development activities for AEROSURF. To support the further development of AEROSURF, we are pursuing one or more licensing agreements.
This decision was driven by our desire to focus on acute cardiovascular and other KL4 surfactant programs, primarily treatment of lung injury in patients
with COVID-19.

Additionally, we may pursue additional in-licenses or acquisitions of development-stage assets or programs, which entails additional risk to us.

Identifying, selecting and acquiring promising product candidates requires substantial technical, financial and human resources expertise. Efforts to do so
may not result in the actual acquisition or license of a particular product candidate, potentially resulting in a diversion of our management’s time and the
expenditure of our resources with no resulting benefit. If we are unable to identify programs that ultimately result in approved products, we may spend
material amounts of our capital, management and other resources evaluating, acquiring and developing products that ultimately do not provide a return on
our investment.

Even though some of our product candidates have Fast Track designation, the FDA may not approve them at all or any sooner than other product
candidates that do not have Fast Track designation.

We have received Fast Track designation from the FDA for istaroxime for the treatment of acute heart failure, or AHF. Fast Track designation

does not ensure that we will receive marketing approval or that approval will be granted within any particular timeframe. We may not experience a faster
development, regulatory review or approval process with Fast Track designation compared to conventional FDA procedures. Additionally, the FDA may
withdraw Fast Track designation, for reasons such as it comes to believe a drug candidate no longer adequately addresses an unmet medical need. Fast
Track designation alone does not guarantee qualification for the FDA’s priority review procedures. If we seek Fast Track designation for other product
candidates, we may not receive such a designation from the FDA.

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Although we may pursue expedited regulatory programs for a product candidate or an indication, it may not qualify for expedited development or, if it
does qualify for expedited development, it may not actually lead to a faster development or regulatory review or approval process.

Although we have received Fast Track designation for certain of our product candidates, we believe there may be an opportunity to expedite the
development of other product candidates or indications through one or more of the FDA’s expedited programs, such as Fast Track, Breakthrough Therapy
or priority review, we cannot be assured that any of our product candidates or indications will qualify for such programs.

For example, a drug may be eligible for designation as a Breakthrough Therapy if the drug is intended, alone or in combination with one or more

other drugs, to treat a serious or life-threatening condition and preliminary clinical evidence indicates that the drug may demonstrate substantial
improvement over existing therapies on one or more clinically significant endpoints. Although Breakthrough Therapy designation or access to any other
expedited program may expedite the development or approval process, it does not change the standards for approval. If we apply for Breakthrough Therapy
designation or any other expedited program for our product candidates, the FDA may determine that our proposed target indication or other aspects of our
clinical development plans do not qualify for such expedited program. Even if we are successful in obtaining a Breakthrough Therapy designation or access
to any other expedited program, we may not experience faster development timelines or achieve faster review or approval compared to conventional FDA
procedures. Access to an expedited program may also be withdrawn by the FDA if it believes that the designation is no longer supported by data from our
clinical development program. Additionally, qualification for any expedited program does not ensure that we will ultimately obtain regulatory approval for
such product candidate.

In addition, we believe that istaroxime may fulfill an unmet medical need in early cardiogenic shock based on the profile observed in prior phase 2
clinical studies in AHF, in which istaroxime increased systolic blood pressure, or SBP, suggesting that istaroxime could potentially contribute to the clinical
improvement of select patients in cardiogenic shock due to heart failure. If our ongoing clinical study is successful, we believe there may be an opportunity
to explore an expedited regulatory pathway and review of istaroxime for the treatment of early cardiogenic shock.

We may not be able to obtain or maintain Orphan Drug exclusivity for our product candidates.

Regulatory authorities in some jurisdictions, including the U.S. and Europe, may designate drugs for relatively small patient populations as

Orphan Drugs. In the U.S., Orphan Drug designation entitles a party to financial incentives such as tax advantages and user-fee waivers. In addition, if a
product candidate that has Orphan Drug designation subsequently receives the first FDA approval for the disease for which it has such designation, the
product is entitled to Orphan Drug exclusivity, which means that the FDA may not approve any other applications, including an NDA, to market the same
drug for the same indication for seven years, except in limited circumstances, including if the FDA concludes that the later drug is clinically superior to the
approved drug. A drug is clinically superior if it is safer, more effective, or makes a major contribution to patient care. The FDA has granted Orphan Drug
designation for our (i) KL4 surfactant (lucinactant) for the treatment of RDS in premature infants, (ii) our KL4 surfactant for the prevention and treatment
of BPD in premature infants, (iii) our KL4 surfactant for the treatment of ARDS in adults, and (iv) our KL4 surfactant for the treatment of cystic fibrosis.

If we obtain Orphan Drug exclusivity, we may lose such exclusivity if the FDA or the European Commission, or EC, determines that the request
for designation was materially defective or if we are unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or
condition. Moreover, Orphan Drug exclusivity may not effectively protect our product candidates from competition because different drugs can be
approved for the same condition. Even after an Orphan Drug is approved, the FDA or comparable foreign regulatory authority can subsequently approve
the same drug for the same condition if such regulatory authority concludes that the later drug is clinically superior if it is shown to be safer, more effective
or makes a major contribution to patient care. Orphan drug designation neither shortens the development time or regulatory review time of a drug nor gives
the drug any advantage in the regulatory review or approval process.

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

From time to time, we may publicly disclose preliminary or topline or data from our clinical studies, which is based on a preliminary analysis of

then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to
the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have
received or had the opportunity to fully and carefully evaluate all data. As a result, the topline results that we report may differ from future results of the
same studies, or different conclusions or considerations may qualify such results once additional data have been received and fully evaluated. Topline data
also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously
published. As a result, topline data should be viewed with caution until the final data are available. From time to time, we may also disclose interim data
from our clinical studies. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may
materially change as patient enrollment continues and more patient data become available. Adverse differences between preliminary or interim data and
final data could significantly harm our business prospects.

Even if we receive regulatory approval for any product candidates, we will be subject to ongoing regulatory obligations and continued regulatory
review, which may result in significant additional expense. Additionally, our product candidates, if approved, could be subject to labeling and other
restrictions on marketing or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we
experience unanticipated problems with our product candidates, when and if any of them are approved.

Following potential approval of any our product candidates, the FDA may impose significant restrictions on a product’s indicated uses or other

aspects of the directions for use or marketing or impose ongoing requirements for potentially costly and time-consuming post-approval studies, post-market
surveillance or clinical trials to monitor the safety and efficacy of the product. The FDA may also require a REMS as a condition of approval of our product
candidates, which could include requirements for a medication guide, physician communication plans or additional elements to ensure safe use, such as
restricted distribution methods, patient registries and other risk minimization tools. In addition, if the FDA or a comparable foreign regulatory authority
approves our product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion,
import, export and recordkeeping for our products will be subject to extensive and ongoing regulatory requirements. These requirements include
submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and GCP requirements
for any clinical trials that we conduct post-approval. Later discovery of previously unknown problems with our products, including adverse events of
unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements,
may result in, among other things:

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restrictions on the marketing or manufacturing of our products, withdrawal of the product from the market or voluntary or mandatory
product recalls;

restrictions on product distribution or use, or requirements to conduct post-marketing studies or clinical trials;

fines, restitutions, disgorgement of profits or revenues, warning letters, untitled letters or holds on clinical trials;

refusal by the FDA to approve pending applications or supplements to approved applications filed by us or suspension or revocation of
approvals;

product seizure or detention, or refusal to permit the import or export of our products; and

injunctions or the imposition of civil or criminal penalties.

The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and generate revenue and

could require us to expend significant time and resources in response and could generate negative publicity.

In addition, if any of our product candidates is approved, our product labeling, advertising and promotion will be subject to regulatory
requirements and continuing regulatory review. The FDA strictly regulates the promotional claims that may be made about drug products. In particular, a
product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling. If we receive marketing approval
for a product candidate, physicians may nevertheless prescribe it to their patients in a manner that is inconsistent with the approved label. If we are found to
have promoted such off-label uses, we may become subject to significant liability.

The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit

or delay regulatory approval of our product candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new
requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we
may not achieve or sustain profitability.

If we fail to obtain and maintain regulatory approval in foreign jurisdictions, our market opportunities will be limited.

In order to market our product candidates in the EU or other foreign jurisdictions, we must obtain and maintain separate regulatory approvals and

comply with numerous and varying regulatory requirements. The approval procedure varies from country to country and can involve additional testing. The
time required to obtain approval abroad may be longer than the time required to obtain FDA clearance or approval. Foreign regulatory approval processes
include many of the risks associated with obtaining FDA clearance or approval and we may not obtain foreign regulatory approvals on a timely basis, if at
all. FDA clearance or approval 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. However, the failure to obtain clearance or approval in one jurisdiction may have a
negative impact on our ability to obtain clearance or approval elsewhere. If we do not obtain or maintain necessary approvals to commercialize our product
candidates in markets outside the U.S., it would negatively affect our overall market penetration.

If the FDA or other applicable regulatory authorities approve generic products with claims that compete with our product candidates, it could reduce
our sales of our product candidates if approved.

In the U.S., after an NDA is approved, the product covered thereby becomes a “listed drug” which can, in turn, be cited by potential competitors in
support of approval of an abbreviated NDA, or ANDA. The Federal Food, Drug, and Cosmetic Act, or the FDC Act, FDA regulations and other applicable
regulations and policies provide incentives to manufacturers to create modified, non-infringing versions of a drug to facilitate the approval of an ANDA or
other application for generic substitutes. These manufacturers might only be required to conduct a relatively inexpensive study to show that their product
has the same active ingredients, dosage form, strength, route of administration, and conditions of use, or product labeling, as our product candidates and
that the generic product is absorbed in the body at the same rate and to the same extent as, or is bioequivalent to, our product candidates. These generic
equivalents would be significantly less costly than ours to bring to market and companies that produce generic equivalents are generally able to offer their
products at lower prices. Thus, after the introduction of a generic competitor, a significant percentage of the sales of any branded product are typically lost
to the generic product. Accordingly, competition from generic equivalents to our product candidates would substantially limit our ability to generate
revenues and therefore to obtain a return on the investments we have made in our product candidates.

Even if we receive regulatory approval for any of our product candidates, we may not be able to successfully commercialize the product and the
revenue that we generate from its sales, if any, may be limited.

If approved for marketing, the commercial success of our product candidates will depend upon the acceptance of each product by the medical
community, including physicians, patients and health care payors. The degree of market acceptance for any of our product candidates will depend on a
number of factors, including:

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demonstration of clinical safety and efficacy;

efficacy of our product candidates compared to competing products;

relative convenience, dosing burden and ease of administration;

the prevalence and severity of any adverse effects;

the willingness of physicians to prescribe our product candidates, and the target patient population to try new therapies;

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our ability to obtain and maintain sufficient third-party coverage or reimbursement from government health care programs, including
Medicare and Medicaid, global government payors, private health insurers and other third-party payors or to receive the necessary pricing
approvals from government bodies regulating the pricing and usage of therapeutics;

the willingness of patients to pay out-of-pocket in the absence of third-party coverage or reimbursement or government pricing approvals;

government health care payor imposed mandatory pricing discounting and reductions;

delays in achieving hospital formulary acceptance or limitations of use that are more restrictive than the approved label;

the introduction of any new products that may in the future become available targeting indications for which our product candidates may
be approved;

new procedures or therapies that may reduce the incidences of any of the indications in which our product candidates may show utility;

pricing and cost-effectiveness;

the inclusion or omission of our product candidates in applicable therapeutic guidelines;

the effectiveness of our own or any future collaborators’ sales and marketing strategies; and

limitations or warnings contained in approved labeling from regulatory authorities.

If any of our product candidates are approved, but do not achieve an adequate level of acceptance by physicians, health care payors, and patients,
we may not generate sufficient revenue and we may not be able to achieve or sustain profitability. Our efforts to educate the medical community and third-
party payors on the benefits of our product candidates may require significant resources and may never be successful.

In addition, even if we obtain regulatory approvals, the timing or scope of any approvals may prohibit or reduce our ability to commercialize our

product candidates successfully. For example, if the approval process takes too long, we may miss market opportunities and give other companies the
ability to develop competing products or establish market dominance. Any regulatory approval we ultimately obtain may be limited or subject to
restrictions or post-approval commitments that render our product candidates not commercially viable. For example, regulatory authorities may approve
any of our product candidates for fewer or more limited indications than we request, may grant approval contingent on the performance of costly post-
marketing clinical trials, or may approve any of our product candidates with a label that does not include the labeling claims necessary or desirable for the
successful commercialization for that indication. Further, the FDA or comparable foreign regulatory authorities may place conditions on approvals or
require risk management plans or a REMS to assure the safe use of the drug. Any of these limitations on approval or marketing could restrict the
commercial promotion, distribution, prescription or dispensing of our product candidates. Moreover, product approvals may be withdrawn for non-
compliance with regulatory standards or if problems occur following the initial marketing of the product. Any of the foregoing scenarios could materially
harm the commercial success of our product candidates.

The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off- label uses. If we are found or
alleged to have improperly promoted any of our products, if approved, for off-label uses, we may become subject to significant liability.

The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products, as our product

candidates would be, if approved. In general, a product may not be promoted for uses that are not approved by the FDA or in ways that may not be
consistent with the product’s approved labeling. If we are found to have promoted such off-label uses, we may become subject to significant liability. The
federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from
engaging in off-label promotion. The FDA and other regulatory agencies have also requested that companies enter into consent decrees or permanent
injunctions under which specified promotional conduct is changed or curtailed. If we cannot successfully manage the promotion of our product candidates,
if approved, we could become subject to significant liability, which would materially adversely affect our business and financial condition.

We currently have no sales and marketing organization. If we are unable to establish satisfactory sales and marketing capabilities or secure a sales and
marketing partner, we may not successfully commercialize any of our product candidates.

We may not be able to enter into collaboration agreements on terms acceptable to us or at all. In addition, even if we enter into such relationships,

we may have limited or no control over the sales, marketing and distribution activities of these third parties. Our future revenues may depend heavily on the
success of the efforts of these third parties. If we elect to establish a sales and marketing infrastructure, we may not realize a positive return on this
investment. In addition, we will have to compete with established and well-funded pharmaceutical and biotechnology companies to recruit, hire, train and
retain sales and marketing personnel. Factors that may inhibit our efforts to commercialize our product candidates without strategic partners or licensees
include:

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the inability of sales personnel to obtain access to or educate and appropriately persuade adequate numbers of physicians to prescribe any
of our product candidates;

inability to obtain a competitive share of voice and frequency of meeting with physicians against multiple, larger competitors;

unforeseen costs and expenses associated with creating an independent sales and marketing organization; and

inability to control or influence partner sales and marketing personnel or their prioritization of promotion of our product candidates.

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The successful commercialization of our product candidates, if approved, will depend in part on the extent to which governmental authorities and
health insurers establish coverage, adequate reimbursement levels and favorable pricing policies. Failure to obtain or maintain coverage and adequate
reimbursement for our product candidates could limit our ability to market those product candidates and decrease our ability to generate revenue.

The availability of coverage and the adequacy of reimbursement by governmental healthcare programs such as Medicare and Medicaid, private
health insurers and other third-party payors are essential for most patients to be able to afford prescription medications such as our product candidates, if
approved. Our ability to achieve coverage and acceptable levels of reimbursement for our products by third-party payors will have an effect on our ability
to successfully commercialize our products. Even if we obtain coverage for a given product by a third-party payor, the resulting reimbursement payment
rates may not be adequate or may require co-payments that patients find unacceptably high. We cannot be sure that coverage and reimbursement in the
U.S., the EU or elsewhere will be available for any product that we may develop, and any reimbursement that may become available may be decreased or
eliminated in the future.

Third-party payors increasingly are challenging prices charged for pharmaceutical products and services, and many third-party payors may refuse

to provide coverage and reimbursement for particular drugs when an equivalent generic drug or a less expensive therapy is available. It is possible that a
third-party payor may consider our products as substitutable and only offer to reimburse patients for the less expensive product. Even if we are successful
in demonstrating improved efficacy or improved convenience of administration with our products, pricing of existing drugs may limit the amount we will
be able to charge for our products. These payors may deny or revoke the reimbursement status of a given product or establish prices for new or existing
marketed products at levels that are too low to enable us to realize an appropriate return on our investment in product development. If reimbursement is not
available or is available only at limited levels, we may not be able to successfully commercialize our products and may not be able to obtain a satisfactory
financial return on products that we may develop.

There is significant uncertainty related to third-party payor coverage and reimbursement of newly approved products. In the U.S., third-party

payors, including private and governmental payors, such as the Medicare and Medicaid programs, play an important role in determining the extent to which
new drugs will be covered. Some third-party payors may require pre-approval of coverage for new or innovative devices or drug therapies before they will
reimburse healthcare providers who use such therapies. It is difficult to predict at this time what third-party payors will decide with respect to the coverage
and reimbursement for our products.

Obtaining and maintaining reimbursement status is time consuming, costly and uncertain. The Medicare and Medicaid programs increasingly are
used as models for how private payors and other governmental payors develop their coverage and reimbursement policies for drugs. However, no uniform
policy for coverage and reimbursement for products exists among third-party payors in the U.S. Therefore, coverage and reimbursement for products can
differ significantly from payor to payor. As a result, the coverage determination process is often a time consuming and costly process that will require us to
provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement
will be applied consistently or obtained in the first instance. Furthermore, rules and regulations regarding reimbursement change frequently, in some cases
at short notice, and we believe that changes in these rules and regulations are likely.

Outside the U.S., international operations are generally subject to extensive governmental price controls and other market regulations, and we

believe the increasing emphasis on cost-containment initiatives in Europe and other countries has and will continue to put pressure on the pricing and usage
of our products. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems.
Additional foreign price controls, discounts or other changes in pricing regulation could restrict the amount that we are able to charge for our products.
Accordingly, in markets outside the U.S., the reimbursement for our products may be reduced and experience continual mandatory price reductions
compared with the U.S. and may be insufficient to generate commercially reasonable revenue and profits.

Moreover, increasing efforts by governmental and third-party payors in the U.S. and abroad to cap or reduce healthcare costs may cause such

organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate
payment for our products. We expect to experience pricing pressures in connection with the sale of any of our products due to the trend toward managed
healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in
general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are
being erected to the entry of new products.

Risks Related to Our Reliance on Third Parties

We rely on third parties, primarily outside of the U.S., to conduct many of our preclinical studies and clinical trials. Any failure by a third party to
conduct the clinical trials according to GCPs and other requirements and in a timely manner may delay or prevent our ability to seek or obtain
regulatory approval for or commercialize our product candidates.

We are dependent on third parties to conduct our clinical trials and preclinical studies and preclinical studies for our other development programs.

Specifically, we have used and relied on, and intend to continue to use and rely on, medical institutions, clinical investigators, CROs and consultants to
conduct our clinical trials in accordance with our clinical protocols and regulatory requirements. These CROs, investigators and other third parties play a
significant role in the conduct and timing of these trials and subsequent collection and analysis of data. While we have agreements governing the activities
of our third-party contractors, we have limited influence over their actual performance. Nevertheless, we are responsible for ensuring that each of our
clinical trials is conducted in accordance with the applicable protocol and legal, regulatory and scientific standards, and our reliance on the CROs and other
third parties does not relieve us of our regulatory responsibilities. We and any third-party that we rely upon are required to comply with GCP requirements,
which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for all of our product candidates in clinical
development. Regulatory authorities enforce these GCPs through periodic inspections of trial sponsors, principal investigators and trial sites. If we or any
third-party that we rely on or trial sites fail to comply with applicable GCPs or to provide adequate data with respect to such trials, the clinical data
generated in our clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional
clinical trials before approving our marketing applications. In addition, our clinical trials must be conducted with product produced under cGMP and/or
Quality System Regulation, or QSR requirements. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay
the regulatory approval process.

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There is no guarantee that any such CROs, investigators or other third parties will devote adequate time and resources to such trials or perform as

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

If any of our relationships with these third parties terminate, we may not be able to enter into arrangements with alternative third parties or do so

on commercially reasonable terms. Switching or adding additional CROs, investigators and other third parties involves additional costs and requires
management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can
materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs,
investigators and other third parties, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or
challenges will not have a material adverse impact on our business, financial condition and prospects.

We currently do not have a back-up facility for our CMO for our drug product candidates, or our suppliers of APIs. If the parties we depend on for
supplying our APIs and manufacturing our drug product candidates do not supply these products in a timely manner, it may delay or impair our ability
to execute our development plans for our current and potential pipeline products. Such delays could adversely impact our operations and financial
condition.

In most cases, we are dependent upon a single supplier to provide all of our requirements for each of our APIs. We rely on a single CMO, located
in China, to manufacture each of our drug product candidates that meets appropriate content, quality and stability standards for use in preclinical programs
and clinical trials. In most cases, we submit purchase orders to our CMO and API suppliers as needed and do not have contractual commitments to
manufacture for us in the future. If we do not maintain these manufacturing and service relationships that are important to us and are not able to identify
replacement suppliers, vendors and laboratories, our ability to obtain regulatory approval for our product candidates could be impaired or delayed and our
costs could substantially increase.

We may be unable to identify additional manufacturers with whom we might establish appropriate arrangements on acceptable terms, if at all,

because the number of potential CMOs is limited. Even if we are able to find replacement manufacturers, suppliers, vendors and service providers when
needed, we may not be able to enter into agreements with them on terms and conditions favorable to us or there could be a substantial delay before such
manufacturer, vendor or supplier, or a related new facility is properly qualified and registered with the FDA or other foreign regulatory authorities. A new
manufacturer currently not qualified with the FDA would have to be educated in, or develop substantially equivalent processes for, production of our
approved products after receipt of FDA approval. To qualify and receive regulatory approval for a new manufacturer could take as long as two years. The
process of changing a supplier could have an adverse impact on our current clinical development programs if supplies of drug substances or materials on
hand are insufficient to satisfy demand. Such delays could have a material adverse effect on our development activities and our business.

We plan to rely on third parties, some of which are located outside the U.S., to manufacture our drug product candidates, which exposes us to risks that
may affect our ability to maintain supplies of our clinical materials, and subject us to uncertainty associated with the international political climate,
and could potentially delay our research and development activities, as well as eventual regulatory approval and commercialization of our drug product
candidates.

Our manufacturing strategy involves manufacturing our drug product candidates using a CMO. We do not own or operate manufacturing facilities
and have no plans to build our own clinical or commercial scale manufacturing capabilities. We rely, and expect to continue to rely, on third parties for the
manufacture of our drug product candidates and related raw materials for clinical and preclinical development, as well as for commercial manufacture if
any of our product candidates receive marketing approval. The facilities used by third-party manufacturers to manufacture our product candidates must be
approved by the FDA pursuant to inspections that will be conducted after we submit an NDA to the FDA. We do not control the manufacturing process of,
and are completely dependent on, third-party manufacturers for compliance with cGMP requirements for manufacture of drug products and QSR
requirements for the manufacture of medical devices and other government regulations and corresponding international standards. If these third-party
manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or others,
including requirements related to the manufacturing of high potency compounds, they will not be able to secure and/or maintain regulatory approval for
their manufacturing facilities.

Istaroxime and rostafuroxin are currently manufactured by an affiliate of Lee’s (HK) in Hefei, China. We expect that Lee’s (HK) will manufacture

KL4 surfactant drug product candidate at an affiliate of Lee’s (HK) in Hefei, China. The APIs for istaroxime and rostafuroxin are manufactured in China
and the APIs for KL4 surfactant are manufactured in the U.S. If the FDA is unable to inspect the manufacturing site in China or if it is able to inspect the
site but finds it deficient in any way, to secure marketing approval for our product candidates in the U.S., and potentially other markets, we may be required
to designate a different manufacturer for each of our drug product candidates. A technology transfer of a manufacturing process from one CMO to another
can be time consuming and expensive and there can be no assurance that such a transfer will be successful or that a new manufacturer will be able to
manufacture our drug product candidates successfully. Moreover, a technology transfer from one country to another may be subject to changing
international legal and regulatory requirements in a potential difficult political climate. In addition, we have limited control over the ability of third-party
manufacturers to maintain adequate quality control, quality assurance and qualified personnel and the third-party manufacturers may fail to manufacture
our product candidate according to our schedule or at all. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the
manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which
would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved. Our failure, or the failure of
our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines,
injunctions, civil penalties, delays, suspension or withdrawal of approvals, seizures or recalls of product candidates or products, operating restrictions and
criminal prosecutions, any of which could significantly and adversely affect supplies of our product candidates. In addition, any performance failure on the
part of our existing or future manufacturers could delay clinical development or marketing approval, and any related remedial measures may be costly or
time consuming to implement. We do not currently have arrangements in place for redundant supply or a second source for all required raw materials used
in the manufacture of our product candidates. If our current third-party manufacturer cannot perform as agreed, we may be required to replace such
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A third party’s failure to execute on our manufacturing requirements, technology transfers of our manufacturing and our planned future reliance

on CMOs exposes us, among other things, to the following risks:

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an inability to initiate or continue clinical trials of istaroxime or any future product candidates under development;

subjecting third-party manufacturing facilities to additional inspections by regulatory authorities;

we may implement a plan to execute a technology transfer of our manufacturing process to a CMO and, after investing significant time
and resources, learn that the CMO we chose is unable to successfully complete the technology transfer and thereafter manufacture our
product candidates in accordance with our plan;

CMOs might be unable to manufacture our product candidates in the volume and to our specifications to meet our clinical and
commercial needs, or we may have difficulty scheduling the production of drug product and devices in a timely manner to meet our
timing requirements;

if we desire to make our drug product candidates and/or devices available outside the U.S. for clinical or commercial purposes, our
CMOs would become subject to, and may not be able to comply with, corresponding manufacturing and quality system regulations or
standards of the various foreign regulators having jurisdiction over our activities abroad. Such failures (such as in-country quality testing)
could result in not only a loss of approved supply to that country, but a total loss of a lot (or lots) of materials globally and could restrict
our ability to execute our business strategies;

we may have difficulty implementing changes or necessary modifications to our manufacturing processes that may be required by the
FDA or foreign regulator or our CMO, if, for example, such changes would burden our CMO or otherwise disrupt operations, or our
CMO could impose significant financial terms to implement any such change that could adversely affect our business. We may fail to
adequately develop new manufacturing processes. Failure to achieve such required changes or modifications could delay or prevent our
gaining regulatory approval for our product candidates or prevent us from continuing to market our approved products, which would have
a material adverse effect on our business, financial condition and operations;

we may fail to adequately scale manufacturing to achieve our objectives for cost of goods and profit margins;

we may be subject to disputes arising with respect to the ownership of rights to any technology developed with third parties; and

we may be subject to the misappropriation of our proprietary information, including our trade secrets and know-how.

Each of the foregoing risks and others could delay our development programs and, if approved, commercial manufacturing plans, limit our ability

to maintain continuity of supply for our approved products, delay or impair the approval, if any, of our product candidates by the FDA, or result in higher
costs or deprive us of potential product revenues.

In addition, our product candidates and any products that we may develop may compete with other product candidates and products for access to

manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for
us.

Our current and anticipated future dependence upon others for the manufacture of our product candidates or products may adversely affect our

future profit margin and our ability to commercialize any products that receive marketing approval on a timely and competitive basis.

Our ability to manufacture our product candidates depends upon receiving adequate supplies and related services, which may be difficult or
uneconomical to procure.

Supply chain or manufacturing interruptions could negatively impact our operations and financial performance. In connection with our drug

product manufacturing activities, for certain of our product candidates, we own certain specialized manufacturing equipment installed at our CMO.
However, we do not have fully redundant systems and equipment to respond promptly in the event of a significant loss at a CMO’s manufacturing
operations. Under certain conditions, we may be unable to produce our drug product candidates at the required volumes or to appropriate standards, if at all.
The supply of any of our manufacturing materials may be interrupted because of supply shortages, poor vendor performance or other events outside our
control, which may require us, among other things, to identify alternate vendors, which could involve a lengthy process, and result in increased expenses.

Risks Related to our Business and Operations

Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to
fall below expectations or any guidance we may provide.

Our quarterly and annual 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 outside of our control, including, but not limited to:

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the timing and cost of, and level of investment in, research, development, including manufacturing development regulatory approval and
commercialization activities relating to our product candidates, which may change from period to period;

the timing and success or failure of preclinical studies or clinical trials for our product candidates or competing product candidates, or any
other change in the competitive landscape of our industry, including consolidation among our competitors or partners;

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the level of investment funding we are able to achieve and apply to our development operations;

the cost of manufacturing our product candidates, which may vary depending on the quantity of production and the terms of our
agreements with third-party manufacturers;

the timing and amount of the milestone or other payments we must make to the licensors and other third parties from whom we have in-
licensed our acquired our product candidates;

expenditures that we may incur to acquire, develop or commercialize additional product candidates and technologies;

our allocation of resources and ability to raise additional capital;

future changes in requirements to achieve regulatory approval;

future accounting pronouncements or changes in our accounting policies.

the capital markets stability and openness to investing;

delays associated with COVID-19 which will impact the ability of our healthcare systems and trial sites to conduct trials to varied
degrees and times;

coverage and reimbursement policies with respect to our product candidates, if approved, and potential future drugs that compete with
our products; and

the level of demand for any approved products, which may vary significantly.

The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a

result, comparing our operating results on a period-to-period basis may not be meaningful. Investors should not rely on our past results as an indication of
our future performance.

This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any

period. If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the
forecasts we provide to the market are below the expectations of analysts or investors, the price of our common stock could decline substantially. Such a
stock price decline could occur even when we have met any previously publicly stated revenue or earnings guidance we may provide.

We are continually evaluating our business strategy and may modify this strategy to respond to developments in our business and other factors, and any
such modification, if not successful, could have a material adverse effect on our business, financial condition, and results of operations.

We plan to continually evaluate our business strategy and will modify our plans as necessary to achieve our objectives. In 2020, we modified our
business strategy to preserve our limited capital and focus primarily on acute cardiovascular and KL4 surfactant for the treatment of lung injury in patients
with COVID-19 and other similar indications. As part of our shift in priorities, our licensee in Asia is expected to continue the further development of
AEROSURF for the treatment of RDS in China pursuant to the terms of our Asia License Agreement. For markets outside of Asia, including the U.S., we
plan in the short term to seek one or more licensing transactions to support the development of AEROSURF and our lyophilized KL4 surfactant, including
the U.S. If for any reason, our licensee in Asia does not proceed with development of AEROSURF, or if for any reason, we are unable to transfer the
financial burden of AEROSURF to strategic partners or licensees in markets outside of Asia, we may determine that it is in our best interest to terminate
some or all AEROSURF activity and cease some or all development activities in all markets. Such action could have a material adverse effect on our
business, financial condition and results of operations.

Similarly, our strategy currently contemplates that we will seek to out-license rostafuroxin and invest the proceeds in our other core programs. If

we are not successful in our efforts, we may be forced to accept a significant write down of our rostafuroxin asset on our balance sheet and reassess our
strategy. This action also could have a material adverse effect on our business, financial condition and results of operations.

The execution of a clinical program is complex and involves the cooperation of many individuals and entities, including third parties that we may

not be able to control, and require the coordination of a number of components, any one of which could experience delays or unforeseen events or
circumstances that may require the development of alternative strategies. If we encounter such events or circumstances, if we believe that certain changes
would be in our best interest, we will consider adjusting our strategy and planning. If we conclude that an alternative approach may improve our ability to
achieve our objectives, we will consider adopting such other approach. Similarly, if a third party were to share observations or make recommendations
concerning the focus, sequence or approach of any or all of our research and development programs, we may consider taking such recommendations into
account in our planning process and future activities.

There can be no assurance, whether or not we alter our strategy or plans, that we will be successful, or that we will secure regulatory approval for

our product candidates and execute any product launches effectively and on time, if at all, in all markets that we may identify. Our ability to discover and/or
develop new product candidates depends in part on our internal research capabilities and whether we have the resources required to conduct a development
program or to acquire new product candidates. Our limited resources may not be sufficient to discover and develop or to acquire new product candidates.
To support our efforts to develop our product candidates and, if approved, commercialize our products in the world markets, including the U.S., we
continue to evaluate potential licensing transactions, collaboration arrangements and other strategic transactions. However, there can be no assurance that
our efforts will be successful or that, even if we identify and enter into any strategic transactions, that such transactions will be successfully implemented, if
at all, within our expected time frames.

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We plan to continue evaluating our business strategy and may modify our strategy again in the future. To respond to changing circumstances, we
may expand or alter our research and development activities from time to time and allocate resources to work on development of different products or may
pace, delay or halt the development of potential product development programs. As a result of changes in our strategy, we may also change or refocus our
existing drug development and manufacturing activities or our plans for commercialization of our product candidates, if approved. These decisions could
require changes in our facilities and personnel and restructuring various financial arrangements. There can be no assurances that any product development
or other changes that we implement will be successful or that, after implementation of any such changes, that we will not refocus our efforts on new or
different objectives.

Our industry is highly competitive, and we have less capital and resources than many of our competitors, which may give them an advantage in
developing and marketing products similar to ours or make our product candidates obsolete.

Our industry is highly competitive and subject to rapid technological innovation and evolving industry standards. We compete with numerous

existing companies in many ways. We need to successfully introduce new products to achieve our strategic business objectives. If we cannot successfully
introduce new products, adapt to changing technologies or anticipate changes in our current and potential customers’ requirements, our product candidates
may become obsolete and our business could suffer.

Many of our competitors’ companies have substantially greater research and development, manufacturing, marketing, financial, and technology

personnel and managerial resources than we have. In addition, many of these competitors, either alone or with their collaborative partners, have
significantly greater experience than we do in developing products, preclinical testing and human clinical trials management, obtaining FDA approval and
other regulatory approvals, and manufacturing and marketing products. Accordingly, our competitors may succeed in receiving FDA or foreign regulatory
approval or commercializing products and obtaining patent protection before us. Our competitors may successfully secure regulatory exclusivities in
various markets, which could have the effect of barring us or limiting our ability to market our product candidates in such markets. In addition,
developments by our competitors may render our drug product candidates obsolete or noncompetitive.

We also face, and will continue to face, competition from colleges, universities, governmental agencies and other public and private research

organizations. These competitive forces frequently and aggressively seek patent protection and licensing arrangements to collect royalties for technologies
that they develop. Some of these technologies may compete directly with the technologies that we are developing. These institutions will also compete with
us in recruiting highly qualified scientific personnel.

The political and healthcare policy and reimbursement environment is becoming more challenging for pharmaceutical companies and medical device
manufacturers and may adversely affect our business.

Political, economic and regulatory influences globally are subjecting the healthcare industry to potential fundamental challenges that could
substantially affect our business and results of operations. Government and private sector initiatives to limit the growth of healthcare costs, including price
regulation, competitive pricing, coverage and payment policies, comparative effectiveness of therapies, technology assessments and managed-care
arrangements, are continuing to arise in many countries where we potentially may seek to do business, including the U.S. There is increasing pressure on
pricing, reimbursement and demands for value-based data to gain access to patients and healthcare funds globally. This may increase the costs of
development, risks of commercialization and overall value of the opportunity. We also cannot predict the likelihood, nature or extent of government
regulation that may arise from future legislation, administrative, judicial, or executive action, either in the U.S. or abroad. In addition, we rely on CMOs
located in China to manufacture drug product and APIs for us, such that the supply lines for our drug product, and APIs may be affected by trade and
political considerations.

Given the increasing uncertainty in the healthcare and pharmaceutical industries as well as increased regulatory scrutiny on foreign investment,

capital investment in our industry and our ability to attract capital investment is becoming more challenging. This trend, if continued, may restrict or impair
our ability to gain necessary funding for continued development and, if approved, commercialization of our product candidates.

We depend upon key employees and consultants in a competitive market for skilled personnel. If we or our strategic partners or collaborators are
unable to attract and retain key personnel, it could adversely affect our ability to develop and market our product candidates.

We have assembled a team of qualified personnel to advance the development programs for our product candidates. We have competed and will
continue to compete for qualified individuals with numerous biopharmaceutical companies, universities and other research institutions. Competition for
such individuals is significant and attracting and retaining qualified personnel will be critical to our success, and any failure to do so successfully may have
a material adverse effect on us.

We are highly dependent upon the members of our executive management team and our directors, as well as our consultants and collaborating

scientists. Many of these individuals have been involved with us for many years, have played integral roles in our progress and we believe that they
continue to provide value to us. We have over the last few years lost long-term members of our executive team and certain professional, scientific and
management personnel, due to retirement, shifts in our focus and other causes. The loss of such personnel potentially exposes us to a lack of ready recall
and knowledge of past corporate events, risks previously identified and related learnings. As such, loss of any of our remaining key personnel may further
increase the associated risk and may have a material adverse effect on aspects of our business and clinical development and regulatory programs. The loss
of services from any of our executives could significantly adversely affect our ability to develop and market our product candidates and obtain necessary
regulatory approvals. Further, we do not maintain key man life insurance.

Our future success also will depend on the continued service of our key professional, scientific and management personnel and our ability to

recruit and retain additional personnel. While we attempt to provide competitive compensation packages to attract and retain key personnel at all levels in
our organization, many of our competitors have greater resources and more experience than we do, making it difficult for us to compete successfully for
key personnel. We may experience intense competition for qualified personnel and the existence of non-competition agreements between prospective
employees and their former employers may prevent us from hiring those individuals or subject us to lawsuits brought by their former employers.

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If our business development activities are unsuccessful, our business could suffer, and our financial performance could be adversely affected.

As part of our long-term growth strategy, we engage in business development activities intended to identify strategic opportunities, including

potential strategic alliances, joint development opportunities, acquisitions, technology licensing arrangements and other similar opportunities. Such
opportunities may result in substantial investments in our business. Our success in developing product candidates or expanding into new markets from such
activities will depend on a number of factors, including our ability to find suitable opportunities for investment, alliance or acquisition; whether we are able
to complete an investment, alliance or acquisition on terms that are satisfactory to us; the strength of our underlying technology, product candidates and our
ability to execute our business strategies; any intellectual property and litigation related to these product candidates or technology; and our ability to
successfully integrate the investment, alliance or acquisition into our existing operations, including to fund our share of any IPR&D projects. If we are
unsuccessful in our business development activities, we may be unable to secure needed capital and expertise to support our development programs and our
financial condition could be adversely affected.

We may seek to enter into licensing transactions, collaboration arrangements, and other similar transactions and strategic opportunities, and may not
be successful in doing so, and even if we are, we may not realize the benefits of such relationships.

We may seek to enter into licensing transactions, collaboration arrangements, and other similar transactions and strategic opportunities for the

development or commercialization of our product candidates, or to secure the capital required to develop or commercialize a product candidate or address
manufacturing constraints. We may not be successful in our efforts to establish such collaborations for our product candidates because our research and
development pipeline may be insufficient, our product candidates may be deemed to be at too early of a stage of development for collaborative effort or
third parties may not view our product candidates as having the requisite potential to demonstrate safety and efficacy or significant commercial opportunity.
In addition, we face significant competition in seeking appropriate strategic partners, and the negotiation process can be time consuming and complex.
Further, any future collaboration agreements may restrict us from entering into additional agreements with potential collaborators. We cannot be certain
that, following a strategic transaction or licensing agreement, we will achieve an economic benefit that justifies such transaction.

Even if we are successful in our efforts to establish such collaborations, the terms that we agree upon may not be favorable to us, and we may not

be able to maintain such collaborations if, for example, development or approval of a product candidate is delayed, the safety of a product candidate is
questioned or sales of an approved product candidate are unsatisfactory.

In addition, any potential future collaborations may be terminable by our strategic partners, and we may not be able to adequately protect our

rights under these agreements. Furthermore, strategic partners may negotiate for certain rights to control decisions regarding the development and
commercialization of our product candidates, if approved, and may not conduct those activities in the same manner as we do. Any termination of
collaborations we enter into in the future, or any delay in entering into collaborations related to our product candidates, could delay the development and
commercialization of our product candidates and reduce their competitiveness if they reach the market, which could have a material adverse effect on our
business, financial condition and results of operations.

We could be adversely affected by any interruption, including from breaches in cybersecurity, in our ability to conduct business at our current location.

We do not have redundant facilities. We perform substantially all of our research and development and back office activity in a small number of

locations, including our headquarters in Warrington, Pennsylvania, research laboratories at Universita degli Studi di Milano-Bicocca, a university in Milan,
Italy, which are made available to us under a collaboration agreement with the university, and a research laboratory at Chang Gung University in Taiwan
under a separate collaboration agreement. We also depend upon third-party manufacturers and laboratories to manufacture our drug product candidates,
APIs and our ADS and perform important API and drug product release testing and stability work.

Our facilities, equipment and inventory would be costly to replace and could require substantial lead time to repair or replace. Our facilities and

those of our third-party manufacturers and laboratories may be harmed or rendered inoperable by natural or man-made disasters, including, but not limited
to, tornadoes, flooding, fire and power outages, which may render it difficult or impossible for us to perform our research, development and
commercialization activities for some period of time. The inability to perform those activities, combined with the time it may take to rebuild our inventory
of finished product, may result in the loss of customers or harm to our reputation. Although we have insurance for damage to our property and the
disruption of our business, this insurance may not be sufficient to cover all of our potential losses and this insurance may not continue to be available to us
on acceptable terms, or at all.

The failure to prevail in litigation or the costs of litigation, including securities class actions, product liability claims and patent infringement claims,
could harm our financial performance and business operations.

We are potentially susceptible to litigation. For example, as a public company, we may be subject to claims asserting violations of securities

laws. Even if such actions are found to be without merit, the potential impact of such actions, which generally seek unquantifiable damages and attorneys’
fees and expenses, is uncertain. There can be no assurance that an adverse result in any future proceeding would not have a potentially material adverse
effect on our business, results of operations and financial condition.

Our business activities, including development, manufacture and, if our product candidates are approved, marketing of our drug products and
drug/medical device combination products also exposes us to liability risks. Using our drug product candidates or medical devices, including in clinical
trials, may expose us to product liability claims. Even if approved, our products may be subject to claims resulting from unintended effects that result in
injury or death. Product liability claims alleging inadequate disclosure and warnings in our package inserts and medical device disclosures also may arise.

We presently carry comprehensive general liability, property damage, product liability, workers’ compensation, health benefits and other insurance

coverage in amounts that we believe to be adequate for the protection of our assets and operations and customary for companies in our industry of
comparable size and level of activity. However, our insurance policies contain various deductibles, limitations and exclusions from coverage, and in any
event might not fully cover any potential claims. There can be no assurance that the insurance coverage we maintain is sufficient or will be available in
adequate amounts or at a reasonable cost. A successful claim brought against us in excess of available insurance or not covered by indemnification
agreements, or any claim that results in significant adverse publicity against us, could have an adverse effect on our business and our reputation.

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Product liability claims may be brought by individuals or by groups seeking to represent a class. The outcome of litigation, particularly class

action lawsuits, is difficult to assess or quantify. Plaintiffs in these types of lawsuits often seek recovery of very large or indeterminate amounts, and the
magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time.

We face a potential risk of product liability as a result of the clinical testing of our product candidates and will face an even greater risk if we

commercialize any of our product candidates or any other future product. For example, we may be sued if any product we develop, including any of our
product candidates, or any materials that we use in our product candidates allegedly causes injury or is found to be otherwise unsuitable during product
testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure
to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties. In the U.S., claims could also be asserted under state
consumer protection acts. If we cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to
limit commercialization of our product candidates. Even successful defense would require significant financial and management resources. Regardless of
the merits or eventual outcome, liability claims may result in:

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decreased demand for any of our product candidates or any future products that we may develop;

injury to our reputation;

withdrawal of clinical trial participants;

costs to defend the related litigation;

a diversion of management’s time, attention and our resources;

substantial monetary awards to trial participants or patients;

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

the inability to commercialize some or all of our product candidates; and

a decline in the value of our stock.

There can be no assurance that the insurance coverage we maintain is sufficient or will be available in adequate amounts or at a reasonable cost. A

successful claim brought against us in excess of available insurance or not covered by indemnification agreements, or any claim that results in significant
adverse publicity against us, could have an adverse effect on our business and our reputation.

We may be required to obtain additional product liability insurance coverage. However, such insurance is expensive and may not be available

when we need it. In the future, we may not be able to obtain adequate insurance, with acceptable limits and retentions, at an acceptable cost. Any product,
general liability or product liability claim, even if such claim is within the limits of our insurance coverage or meritless and/or unsuccessful, could
adversely affect the availability or cost of insurance generally and our cash available for other purposes, such as research and development. In addition,
such claims could result in:

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uninsured expenses related to defense or payment of substantial monetary awards to claimants;

a decrease in demand for our drug product candidates;

damage to our reputation; and

an inability to complete clinical trial programs or to commercialize our drug product candidates, if approved.

Risks Related to Government Regulation

Our activities are subject to various and complex laws and regulations, and we are susceptible to a changing regulatory environment. Violations or
allegations of violations of these laws may result in large civil and criminal penalties, debarment from participating in government programs, diversion
of management time, attention and resources and may otherwise have a material adverse effect on our business, financial condition and results of
operations.

Our product candidates and our operations are regulated by numerous government agencies, both inside and outside the U.S. Our drug product
candidates and medical devices must undergo lengthy and rigorous testing and other extensive, costly and time-consuming procedures mandated by the
FDA and foreign regulatory authorities. Our facilities and those of our third-party providers must pass inspection and/or be approved or licensed prior to
production and remain subject to inspection at any time thereafter. Failure to comply with the requirements of the FDA or other regulatory authorities could
result in warning or untitled letters, product recalls or seizures, monetary sanctions, injunctions to halt the manufacture and distribution of our product
candidates, civil or criminal sanctions, refusal of a government to grant approvals or licenses, restrictions on operations or withdrawal of existing approvals
and licenses. Any of these actions could damage our reputation and have a material adverse effect on our sales.

If our product candidates are approved for commercial sale, we will be required to comply with not only the requirements of applicable regulators,

but also will become subject to various laws regulating the sales, marketing, and distribution of healthcare-related products. The sales and marketing of
products and relationships that pharmaceutical and medical device companies have with healthcare providers are under increasing scrutiny by federal, state
and foreign government agencies. The FDA and other federal regulators have increased their enforcement activities with respect to the Anti-Kickback
Statute, False Claims Act, off-label promotion of products, and other healthcare related laws, antitrust and other competition laws. Foreign governments
have also increased their scrutiny of pharmaceutical companies’ sales and marketing activities and relationships with healthcare providers.

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Of particular importance, federal and state anti-kickback laws make it illegal for a prescription drug manufacturer to solicit, offer, receive, or pay

any remuneration in exchange for, or to induce, the referral of business, including the purchase or prescription of a particular drug. These laws can be
complicated, are subject to frequent change and may be violated unknowingly. In addition, a number of states require that companies implement
compliance programs or comply with industry ethics codes, adopt spending limits, and report to state governments any gifts, compensation, and other
remuneration provided to physicians. Sanctions under these laws may include civil monetary penalties, exclusion of a manufacturer’s products from
reimbursement under government programs (including Medicare and Medicaid), criminal fines, and imprisonment. Companies that have chosen to settle
these alleged violations have typically paid multi-million-dollar fines to the government and agreed to abide by corporate integrity agreements, which often
include significant and costly burdens.

There has been a recent trend of increased federal and state regulation of payments and transfers of value provided to healthcare professionals and

entities. For example, the Physician Payment Sunshine Act imposes annual reporting requirements on certain manufacturers of drugs, medical devices,
biologics and medical supplies with respect to payments and other transfers of value provided by them, directly or indirectly, to physicians and teaching
hospitals, as well as with respect to certain ownership and investment interests held by physicians and their family members. A manufacturer’s failure to
submit timely, accurately and completely the required information regarding all payments, transfers of value or ownership or investment interests may
result in civil monetary penalties. Certain states also mandate implementation of commercial compliance programs, impose restrictions on medical device
manufacturers’ marketing practices, and require the tracking and reporting of gifts, compensation and other remuneration to healthcare professionals and
entities under certain circumstances.

We are continually evaluating our compliance programs, including policies, training and various forms of monitoring, designed to address the

requirements outlined above. However, no compliance program can mitigate risk in its entirety. Violations or allegations of violations of these laws may
result in large civil and criminal penalties, debarment from participating in government programs, diversion of management time, attention and resources
and may otherwise have a material adverse effect on our business, financial condition and results of operations.

Failure in our information technology systems could disrupt our operations and cause the loss of confidential information and business opportunities.

In the ordinary course of our business, we and our third-party contractors maintain sensitive data on our and their respective networks, including
our intellectual property and proprietary or confidential business information relating to our business and that of our clinical trial participants and business
partners and electronically stored work product, including clinical data, analyses, research, communications and other materials necessary to gain
regulatory approval of our product candidates. The secure maintenance of this sensitive information is critical to our business and reputation. Despite the
implementation of security measures, our internal computer systems and those of our third-party contractors are vulnerable to damage from cyber-attacks,
computer viruses, unauthorized access, unintended loss, human error, natural disasters, terrorism, war and telecommunication and electrical failures. For
information stored with our third-party contractors, we rely upon, and the integrity and confidentiality of such information is dependent upon, the risk
mitigation and data preservation efforts such third-party contractors have in place. Our and our third-party contractors’ respective network and storage
applications and policies may not be sufficient to protect our sensitive business information and may be subject to loss, unauthorized access by hackers or
breached due to operator error, malfeasance or other system disruptions. It is often difficult to anticipate or immediately detect such incidents and the
damage caused by such incidents. Such incidents could compromise our intellectual property, expose sensitive business information, result in loss of data
necessary to secure regulatory approval of our product candidates, cause interruptions in our operations, result in a material disruption of our operations, or
require substantial expenditures of resources to remedy.

We face risks related to our collection and use of data, which could result in investigations, inquiries, litigation, fines, legislative and regulatory action
and negative press about our privacy and data protection practices.

Our business processes personal data, including some data related to health. When conducting clinical trials, we face risks associated with
collecting trial participants’ data, especially health data, in a manner consistent with applicable laws and regulations. We also face risks inherent in
handling large volumes of data and in protecting the security of such data. We could be subject to attacks on our systems by outside parties or fraudulent or
inappropriate behavior by our service providers or employees. Third parties may also gain access to users’ accounts using stolen or inferred credentials,
computer malware, viruses, spamming, phishing attacks or other means, and may use such access to obtain users’ personal data or prevent use of their
accounts. Data breaches could subject us to individual or consumer class action litigation and governmental investigations and proceedings by federal, state
and local regulatory entities in the U.S. and by international regulatory entities, resulting in exposure to material civil and/or criminal liability. Further, our
general liability insurance and corporate risk program may not cover all potential claims to which we are exposed and may not be adequate to indemnify us
for all liability that may be imposed.

Our business requires that we and our third-party service providers collect and store sensitive data, including legally protected health information,
personally identifiable information about patients, credit card information, and our proprietary business and financial information. As a covered entity, we
must comply with the HIPAA privacy and security regulations, which may increase our operational costs. Furthermore, the privacy and security regulations
provide for significant fines and other penalties for wrongful use or disclosure of protected health information, or PHI, including potential civil and
criminal fines and penalties. We face a number of risks relative to our protection of, and our service providers’ protection of, this critical information,
including loss of access, fraudulent modifications, inappropriate disclosure and inappropriate access, as well as risks associated with our ability to identify
and audit such events. The secure processing, storage, maintenance and transmission of this critical information is vital to our operations and business
strategy, and we devote significant resources to protecting such information. Although we take measures to protect sensitive information from unauthorized
access or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or otherwise breached due to
employee error, malfeasance or other activities. If such event would occur and cause interruptions in our operations, our networks would be compromised
and the information we store on those networks could be accessed by unauthorized parties, publicly disclosed, modified without our knowledge, lost or
stolen.

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Additionally, we share PHI with third-party contractors who are contractually obligated to safeguard and maintain the confidentiality of PHI.

Unauthorized persons may be able to gain access to PHI stored in such third-party contractors’ computer networks. Any wrongful use or disclosure of PHI
by us or our third-party contractors, including disclosure due to data theft or unauthorized access to our or our third-party contractors’ computer networks,
could subject us to fines or penalties that could adversely affect our business and results of operations. Although the HIPAA statute and regulations do not
expressly provide for a private right of damages, we also could incur damages under state laws to private parties for the wrongful use or disclosure of
confidential health information or other private personal information by us or our third-party contractors. Unauthorized access, loss, modification or
dissemination could disrupt our operations, including our ability to process tests, provide test results, bill payers or patients, process claims, provide
customer assistance services, conduct research and development activities, collect, process and prepare company financial information, provide information
about our solution and other patient and physician education and outreach efforts through our website, manage the administrative aspects of our business
and damage our reputation, any of which could adversely affect our business. In addition, the interpretation and application of consumer, health-related and
data protection laws in the U.S. are often uncertain, contradictory and in flux. It is possible that these laws may be interpreted and applied in a manner that
is inconsistent with our practices. Complying with these various laws could cause us to incur substantial costs or require us to change our business
practices, systems and compliance procedures in a manner adverse to our business.

As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face
increased scrutiny or attention from regulatory authorities, including various domestic and international privacy and security regulations. The legislative
and regulatory landscape for privacy and data protection continues to evolve. In the U.S., certain states may adopt privacy and security laws and regulations
that may be more stringent than applicable federal law. For example, California enacted the California Consumer Privacy Act, or CCPA, which took effect
on January 1, 2020. The CCPA creates individual privacy rights for California consumers and increases the privacy and security obligations of entities
handling certain personal data. We may also be subject to data protection laws and regulations of other jurisdictions, such as the EU’s General Data
Protection Regulation, which provides data subjects with certain rights and requires organizations to adopt technical and organizational safeguards to
protect personal data. In the event that we are subject to or affected by privacy and data protection laws, including the CCPA, the EU’s General Data
Protection Regulation, or GDPR, and other domestic or international privacy and data protection laws, we may expend significant resources to comply with
such laws, and any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.

Additionally, we are subject to laws and regulations regarding cross-border transfers of personal data, including laws relating to transfer of
personal data outside of the EEA and Switzerland. We rely on transfer mechanisms permitted under these laws, including EU Standard Contract Clauses. If
we cannot rely on existing mechanisms for transferring personal data from the EEA, the UK, Switzerland or other jurisdictions, we could be prevented
from transferring personal data of patients or employees in those regions, all of which could have a material adverse effect on our business, operating
results and prospects.

Healthcare reform measures in the U.S., as well as the general tightening of drug reimbursement pathways and levels of reimbursement globally, are
expected to add additional pressure to achieve financial expectations for our product candidates, if approved.

The U.S. and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that may

affect our ability to profitably sell our product and product candidates, if approved. The U.S. government, state legislatures and foreign governments also
have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price
controls, restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.

The Affordable Care Act was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance
remedies against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the
health industry and impose additional health policy reforms.

There have been significant ongoing judicial, administrative, executive and legislative efforts to modify or eliminate the Affordable Care Act. For

example, the Tax Act enacted on December 22, 2017, repealed the shared responsibility payment for individuals who fail to maintain minimum essential
coverage under section 5000A of the Internal Revenue Code, commonly referred to as the individual mandate. The Trump administration issued executive
orders which sought to reduce burdens associated with the Affordable Care Act and modified how it was implemented. Other legislative changes have been
proposed and adopted since passage of the Affordable Care Act. The Budget Control Act of 2011, among other things, created the Joint Select Committee
on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select Committee did not achieve its targeted deficit reduction
of an amount greater than $1.2 trillion for the fiscal years 2012 through 2021, triggering the legislation’s automatic reductions to several government
programs. These reductions included aggregate reductions to Medicare payments to healthcare providers of up to 2.0% per fiscal year, which went into
effect in April 2013. Subsequent litigation extended the 2% reduction, on average, to 2030 unless additional Congressional action is taken. However,
pursuant to the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, the 2% Medicare sequester reductions have been suspended from May
1, 2020 through December 31, 2021 due to the COVID-19 pandemic. On January 2, 2013, the American Taxpayer Relief Act was signed into law, which,
among other things, reduced Medicare payments to several types of providers, including hospitals, imaging centers and cancer treatment centers, and
increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

The Affordable Care Act has also been subject to challenges in the courts. On December 14, 2018, a Texas U.S. District Court Judge ruled that the

Affordable Care Act is unconstitutional in its entirety because the “individual mandate” was repealed by Congress. On December 18, 2019, the Fifth
Circuit U.S. Court of Appeals held that the individual mandate is unconstitutional and remanded the case to the Texas District Court to reconsider its earlier
invalidation of the entire Affordable Care Act. An appeal was taken to the U.S. Supreme Court which heard oral arguments in the case on November 10,
2020. On June 17, 2021, the Supreme Court upheld the Affordable Care Act and dismissed the case.

Further changes to and under the Affordable Care Act remain possible, although the new Biden administration has signaled that it plans to build

on the Affordable Care Act and expand the number of people who are eligible for subsidies under it. President Biden indicated that he intends to use
executive orders to undo changes to the Affordable Care Act made by the Trump administration and would advocate for legislation to build on the
Affordable Care Act. It is unknown what form any such changes or any law proposed to replace the Affordable Care Act would take, and how or whether it
may affect our business in the future. We expect that changes to the Affordable Care Act, the Medicare and Medicaid programs, changes allowing the
federal government to directly negotiate drug prices and changes stemming from other healthcare reform measures, especially with regard to healthcare
access, financing or other legislation in individual states, could have a material adverse effect on the healthcare industry.

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Any reduction in reimbursement from Medicare, Medicaid, or other government programs may result in a similar reduction in payments from

private payers. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain
and maintain profitability of our product and product candidates, if approved.

Our international operations subject us to additional regulatory oversight in foreign jurisdictions, as well as economic, social, and political
uncertainties, which could cause a material adverse effect on our business, financial position, and operating results.

We are subject to certain risks associated with having assets, both physical and intangible, and operations located in Taiwan and a representative

office in Italy. Our activity in Taiwan and Italy are subject to regulatory agencies, such as the Taiwan Food and Drug Administration and the Italian
Ministry of Health. Our operations in foreign jurisdictions are conducted by our subsidiary, CVie Therapeutics, Taiwan, which also owns a substantial
portion of our intellectual property. Our international operations may be adversely affected by general economic conditions and economic and fiscal policy,
including changes in exchange rates and controls, interest rates and taxation policies, and increased government regulation, which could have a material
adverse effect on our business, financial position, and operating results. In addition, the impacts of political unrest, including as a result geopolitical
tension, such as a deterioration in the relationship between the U.S. and China, including any potential resulting sanctions, export controls, or other
restrictive actions that may be imposed by the U.S. and/or other countries against governmental or other entities in, for example, China or Taiwan, also
could have an adverse impact on our international operations.

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

We face an inherent risk of product liability as a result of the clinical trials of our product candidates and will face an even greater risk if we

commercialize our product candidates. For example, we may be sued if our product candidates allegedly cause injury or are found to be otherwise
unsuitable during product testing, manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing,
defects in design, a failure to warn of dangers inherent in the product candidate, negligence, strict liability and a breach of warranties. Claims may be
brought against us by clinical trial participants, patients or others using, administering or selling products that may be approved in the future. Claims could
also be asserted under state consumer protection acts.

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

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decreased demand for our product candidates;

injury to our reputation and significant negative media attention;

withdrawal of clinical trial participants;

costs to defend the related litigation;

a diversion of management’s time, attention and our resources;

substantial monetary awards to trial participants or patients;

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

significant negative financial impact;

the inability to commercialize our product candidates; and

a decline in our stock price.

We currently hold product liability insurance coverage at a level we believe to be consistent with our activities. We may need to increase our

insurance coverage as we expand our clinical trials or if we commence commercialization of our product candidates. Insurance coverage is increasingly
expensive.

Our inability to obtain and retain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims

could prevent or inhibit the commercialization of our product candidates. Although we maintain such insurance, any claim that may be brought against us
could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our
insurance coverage. Our insurance policies will also have various exclusions, and we may be subject to a product liability claim for which we have no
coverage. We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by
our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

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Our employees and independent contractors, including principal investigators, CROs, consultants and vendors, may engage in misconduct or other
improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk that our employees and independent contractors, including principal investigators, CROs, consultants and vendors may

engage in misconduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of
unauthorized activities to us that violate: (i) the laws and regulations of the FDA and other similar regulatory requirements, including those laws that
require the reporting of true, complete and accurate information to such authorities, (ii) manufacturing standards, including cGMP requirements, (iii)
federal and state data privacy, security, fraud and abuse and other healthcare laws and regulations in the U.S. and abroad or (iv) laws that require the true,
complete and accurate reporting of financial information or data. Activities subject to these laws also involve the improper use or misrepresentation of
information obtained in the course of clinical trials, the creation of fraudulent data in our preclinical studies or clinical trials, or illegal misappropriation of
drug product, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter misconduct
by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or
unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance
with such laws or regulations. In addition, we are subject to the risk that a person or government could allege such fraud or other misconduct, even if none
occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a
significant impact on our business and financial results, including, without limitation, the imposition of significant civil, criminal and administrative
penalties, damages, monetary fines, disgorgements, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs,
individual imprisonment, 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 curtailment of our
operations, any of which could adversely affect our ability to operate our business and our results of operations.

We are subject to anti-bribery, anti-corruption, and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act, in which violations
of these laws could result in substantial penalties and prosecution.

We are exposed to trade and economic sanctions and other restrictions imposed by the U.S. and other governments and organizations. The U.S.
Departments of Justice, Commerce, State and Treasury and other federal agencies and authorities have a broad range of civil and criminal penalties they
may seek to impose against corporations and individuals for violations of economic sanctions laws, export control laws, the U.S. Foreign Corrupt Practices
Act, or the FCPA, and other federal statutes and regulations, including those established by the Office of Foreign Assets Control. The Department of
Justice, or DOJ, also has increased its focus on the enforcement of the FCPA, particularly as it relates to the conduct of pharmaceutical companies.

In addition, the U.K. Bribery Act of 2010, or the Bribery Act, prohibits both domestic and international bribery, as well as bribery across both

private and public sectors. An organization that “fails to prevent bribery” by anyone associated with the organization can be charged under the Bribery Act
unless the organization can establish the defense of having implemented “adequate procedures” to prevent bribery. Under these laws and regulations, as
well as other anti-corruption laws, anti-money laundering laws, export control laws, customs laws, sanctions laws and other laws governing our operations,
various government agencies may require export licenses, may seek to impose modifications to business practices, including cessation of business activities
in sanctioned countries or with sanctioned persons or entities and modifications to compliance programs, which may increase compliance costs, and may
subject us to fines, penalties and other sanctions. A violation of these laws or regulations would negatively affect our business, financial condition and
results of operations.

We and any of our third-party manufacturers or suppliers may use potent chemical agents and hazardous materials, and any claims relating to
improper handling, storage or disposal of these materials could be time consuming or costly.

We and any of our third-party manufacturers or suppliers will use biological materials, potent chemical agents and may use hazardous materials,
including chemicals and biological agents and compounds that could be dangerous to human health and safety of the environment. Our operations and the
operations of our third-party manufacturers and suppliers also produce hazardous waste products. Federal, state and local laws and regulations govern the
use, generation, manufacture, storage, handling and disposal of these materials and wastes. Compliance with applicable environmental laws and regulations
may be expensive, and current or future environmental laws and regulations may impair our product development efforts. In addition, we cannot eliminate
the risk of accidental injury or contamination from these materials or wastes. We carry a limited amount of specific biological or hazardous waste insurance
coverage, and our property, casualty and general liability insurance policies offer limited coverage for damages and fines arising from biological or
hazardous waste exposure or contamination. In the event of contamination or injury, we could be held liable for damages or be penalized with fines in an
amount exceeding our resources, and our clinical trials or regulatory approvals could be suspended.

Although we maintain workers’ compensation insurance for certain costs and expenses we may incur due to injuries to our employees resulting

from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities.

We maintain a limited amount of insurance for toxic tort claims that may be asserted against us in connection with our storage or disposal of

biologic, hazardous or radioactive materials.

In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations, which
have tended to become more stringent over time. These current or future laws and regulations may impair our research, development or production efforts.
Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions or liabilities, which could materially
adversely affect our business, financial condition, results of operations and prospects.

Risks Related to Intellectual Property Matters

If we cannot protect our intellectual property, others could use our technology in competitive products. Even if we obtain patents to protect our product
candidates, those patents may not be sufficiently broad, or they may expire and others could then compete with us.

The patent position of biotechnology companies is highly uncertain and involves complex legal and factual questions for which important legal
principles are unresolved. To date, the U.S. Patent and Trademark Office, or USPTO, has not adopted a consistent policy regarding the breadth of claims
that is accorded in biotechnology patents or the degree of protection that these types of patents afford. As a result, there are risks that we may not secure
proprietary rights to products or processes that appear to be patentable.

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The parties who licensed technologies to us and we have filed various U.S. and foreign patent applications with respect to the products and

technologies under our development, and the USPTO and foreign patent offices have issued patents with respect to our products and technologies. These
patent applications include international applications filed under the Patent Cooperation Treaty. Our pending patent applications, as well as those we may
file in the future or those we may license from third parties, may not result in the USPTO or foreign patent office issuing patents. In addition, if patent
rights covering our products are not sufficiently broad, they may not provide us with sufficient proprietary protection or competitive advantages against
competitors with similar products and technologies. For example, the core composition of matter patents covering istaroxime have expired. As such,
istaroxime relies on data and market exclusivity, as well as method-of-use patents, which may offer a lesser scope of protection than the original core
patents. Furthermore, even if the USPTO or foreign patent offices were to issue patents to us or our licensors, others may challenge the patents or
circumvent the patents, or the patent office or the courts may invalidate the patents. Thus, any patents we own or license from third parties may not provide
us any protection against competitors.

The patents that we own or in-license have a limited life. Patents related to our cardiovascular drug products issued in the U.S., Europe and

elsewhere have expired or will expire on various dates between 2028 and 2039.

Intellectual property rights of third parties could limit our ability to develop and market our product candidates.

Our success also depends upon our ability to operate our business without infringing the patents or violating the proprietary rights of others. Patent
applications in most jurisdictions are not published until 18 months after filing. In certain cases, the USPTO keeps U.S. patent applications confidential for
the entire time the applications are pending. As a result, we cannot determine in advance what inventions third parties may claim in their pending patent
applications. We may need to defend or enforce our patent and license rights or to determine the scope and validity of the proprietary rights of others
through legal proceedings, which would be costly, unpredictable and time consuming. Even in proceedings where the outcome is favorable to us, they
would likely divert substantial resources, including management time, from our other activities. Moreover, any adverse determination could subject us to
significant liability or require us to seek licenses that third parties might not grant to us or might only grant at rates that diminish or deplete the profitability
of our products. An adverse determination could also require us to alter our products or processes or cease altogether any product sales or related research
and development activities.

We may need to license intellectual property from third parties, and such licenses may not be available or may not be available on commercially
reasonable terms.

We may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates, and we cannot
provide any assurances that third-party patents do not exist which might be enforced against our product candidates in the absence of such a license. The
licensing and acquisition of third-party intellectual property rights is a competitive practice and companies that may be more established, or have greater
resources than we do, may also be pursuing strategies to license or acquire third-party intellectual property rights that we may consider necessary or
attractive in order to commercialize our product candidates. We may fail to obtain any of these licenses on commercially reasonable terms, if at all. Even if
we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. In that event, we
may be required to expend significant time and resources to develop or license replacement technology. If we are unable to do so, we may be unable to
develop or commercialize the affected product candidates, which could materially harm our business and the third parties owning such intellectual property
rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties and/or other forms of
compensation. Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues. If
disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms,
we may not be able to successfully develop and commercialize the affected product candidates, which would have a material adverse effect on our
business.

We rely on agreements containing obligations regarding intellectual property, confidentiality and noncompetition provisions that could be breached
and may be difficult to enforce.

Although we take what we believe to be reasonable steps to protect our intellectual property, including the use of agreements relating to the non-

disclosure of our confidential and proprietary information and trade secrets to third parties, as well as agreements that provide for disclosure and
assignment to us of all rights to the ideas, developments, improvements, discoveries and inventions of our employees, consultants, advisors and research
collaborators while we employ them, such agreements can be difficult and costly to enforce. We generally seek to enter into these types of agreements with
consultants, advisors and research collaborators; however, to the extent that such parties apply or independently develop intellectual property in connection
with any of our projects, disputes may arise concerning allocation of the related proprietary rights. Such disputes often involve significant expense and
yield unpredictable results.

Moreover, although all employees enter into agreements with us that include non-compete covenants, and our senior executive officers have
agreements that include broader non-competition covenants and provide for severance payments that are contingent upon the applicable employee’s
refraining from competition with us, such non-compete provisions can be difficult and costly to monitor and enforce, such that, if any should resign, we
may not be successful in enforcing our noncompetition agreements with them.

Despite the protective measures we employ, we still face the risk that:

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agreements may be breached;

agreements may not provide adequate remedies for the applicable type of breach;

our trade secrets or proprietary know-how may otherwise become known;

our competitors may independently develop similar technology; or

our competitors may independently discover our proprietary information and trade secrets.

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Patents covering our product candidates could be found invalid or unenforceable if challenged in court or before administrative bodies in the U.S. or
abroad.

Although an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability and it may not

provide us with adequate proprietary protection or competitive advantages against competitors with similar product candidates. Competitors could attempt
to replicate the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights, design around the
relevant patents, or develop and obtain patent protection for more effective technologies, designs or methods. We may be unable to prevent the
unauthorized disclosure or use of our technical knowledge or trade secrets by consultants, suppliers, vendors, former employees and current employees.
The laws of some non-U.S. countries do not protect our proprietary rights to the same extent as the laws of the U.S., and we may encounter significant
problems in protecting our proprietary rights in these countries.

In addition, proceedings to enforce or defend our patents, or patents to which we have ownership rights through licensing agreements, could put

those patents at risk of being invalidated, held unenforceable or interpreted narrowly. Such proceedings could also provoke third parties to assert claims
against us, including that some or all of the claims in one or more of those patents are invalid or otherwise unenforceable. If any of the patents covering our
product candidates are invalidated or found unenforceable, or if a court found that valid, enforceable patents held by third parties covered one or more of
our product candidates, our competitive position could be harmed or we could be required to incur significant expenses to enforce or defend our rights.

Third parties may assert ownership or commercial rights to inventions we develop.

Third parties may in the future make claims challenging the inventorship or ownership of our intellectual property. In addition, we may face
claims by third parties that our agreements with employees, contractors or consultants obligating them to assign intellectual property to us are ineffective or
in conflict with prior or competing contractual obligations of assignment, which could result in ownership disputes regarding intellectual property we have
developed or will develop and interfere with our ability to capture the commercial value of such intellectual property. Litigation may be necessary to
resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property or may lose our exclusive rights in
such intellectual property. Either outcome could harm our business and competitive position.

Litigation or other proceedings or third-party claims of intellectual property infringement could require us to spend significant time and money and
could prevent us from selling our product candidates or affect our stock price.

Our commercial success will depend in part on not infringing the patents or violating other proprietary rights of others. Significant litigation

regarding patent rights occurs in our industry. Our competitors may have applied for or obtained, or may in the future apply for and obtain, patents that will
prevent, limit or otherwise interfere with our ability to make, use and sell our product candidates. We do not always conduct independent reviews of patents
issued to third parties. In addition, patent applications in the U.S. and elsewhere can be pending for many years before issuance, or unintentionally
abandoned patents or applications can be revived, so there may be applications of others now pending or recently revived patents of which we are unaware.
Patent applications in the U.S., the EU and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with
such earliest filing date being commonly referred to as the priority date. These applications may later result in issued patents, or the revival of previously
abandoned patents, that will prevent, limit or otherwise interfere with our ability to develop and market our product candidates. Third parties may assert
claims that we are employing their proprietary technology without authorization, including claims from competitors or from nonpracticing entities that
have no relevant product revenue and against whom our own patent portfolio may have no deterrent effect.

As we attempt to commercialize our product candidates in their current or updated forms, launch new product candidates and enter new markets,

we expect competitors may claim that one or more of our product candidates infringe their intellectual property rights as a strategy to impede our
commercialization and entry into new markets. The large number of patents, the rapid rate of new patent applications and issuances, the complexities of the
technologies involved, and the uncertainty of litigation may increase the risk of business resources and management’s attention being diverted to patent
litigation. We may in the future receive, letters or other threats or claims from third parties inviting us to take licenses under, or alleging that we infringe,
their patents.

Moreover, we may become party to adversarial proceedings regarding our or third-party patent portfolios. Such proceedings could include

supplemental examination or contested post-grant proceedings such as review, reexamination, inter parties review, interference or derivation proceedings
before the USPTO and challenges in U.S. District Courts. Patents may be subjected to opposition, post-grant review or comparable proceedings lodged in
various foreign, both national and regional, patent offices. The legal threshold for initiating litigation or contested proceedings may be low, so that even
lawsuits or proceedings with a low probability of success might be initiated. Litigation and contested proceedings can also be expensive and time-
consuming, and our adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than
we can. We may also occasionally use these proceedings to challenge the patent rights of others. We cannot be certain that any particular challenge will be
successful in limiting or eliminating the challenged patent rights of the third party.

Any lawsuits resulting from such allegations could subject us to significant liability for damages and/ or invalidate our proprietary rights. Any

potential intellectual property litigation also could force us to do one or more of the following:

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stop making, selling or using product candidates or technologies that allegedly infringe the asserted intellectual property;

lose the opportunity to license our technology to others or to collect royalty payments;

incur significant legal expenses, including, in some cases, the attorney’s fees and costs of litigation to the party whose intellectual
property rights we may be found to be infringing;

pay substantial damages (possibly treble damages) or royalties to the party whose intellectual property rights on which we may be found
to be infringing;

redesign product candidates that contain the allegedly infringing intellectual property; and

attempt to obtain a license to the relevant intellectual property from third parties, which may not be available on reasonable terms or at
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Any litigation or claim against us, even those without merit, may cause us to incur substantial costs, and could place a significant strain on our
financial resources, divert the attention of management from our business and harm our reputation. If we are found to infringe the intellectual property
rights of third parties, we could be required to pay substantial damages (which may be increased up to three times of awarded damages) and/or substantial
royalties and could be prevented from selling our product candidates unless we obtain a license or are able to redesign our product candidates to avoid
infringement. Any such license may not be available on reasonable terms, if at all, and there can be no assurance that we would be able to redesign our
product candidates in a technically feasible way that would not infringe the intellectual property rights of others. We could encounter delays while we
attempt to develop alternative methods or product candidates. If we fail to obtain any required licenses or make any necessary changes to our product
candidates or technologies, we may be unable to commercialize one or more of our product candidates.

Even if we were ultimately to prevail, any of these events could require us to divert substantial financial and management resources that we would

otherwise be able to devote to our business. Intellectual property litigation, regardless of its outcome, may cause negative publicity, or prohibit us from
manufacturing, importing, marketing or otherwise commercializing our product candidates, services and technology. In addition, if the breadth or strength
of protection provided by the patents and patent applications we own or in-license is threatened, it could dissuade companies from collaborating with us to
license, develop or commercialize current or future product candidates. In addition, 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 this type of
litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities
analysts or investors view these announcements in a negative light, the price of our common stock could be adversely affected.

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

We also rely upon copyright and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our

employees, consultants and third parties, to protect our confidential and proprietary information.

In addition to contractual measures, we try to protect the confidential nature of our proprietary information using commonly accepted physical and

technological security measures. Such measures may not provide adequate protection for our proprietary information. Our security measures may not
prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor, and recourse we take against such
misconduct may not provide an adequate remedy to protect our interests fully. Unauthorized parties may also attempt to copy or reverse engineer certain
aspects of our product candidates that we consider proprietary. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be
difficult, expensive and time-consuming, and the outcome of any such claim is unpredictable. Trade secret violations are often a matter of state law, and the
criteria for protection of trade secrets can vary among different jurisdictions. In addition, trade secrets may be independently developed or reverse
engineered by others in a manner that could prevent legal recourse by us. If any of our confidential or proprietary information, such as our trade secrets,
were to be disclosed or misappropriated, or if any such information were independently developed by a competitor, our business and competitive position
could be harmed.

We may be unable to enforce our intellectual property rights throughout the world.

Filing, prosecuting and defending patents covering our product candidates in all countries throughout the world would be prohibitively expensive,

and the laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the U.S. Many companies have
encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. This could make it difficult for us
to stop infringement of our foreign patents, if obtained, or the misappropriation of our other intellectual property rights. For example, some foreign
countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, some countries limit the
enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or
no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain
outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such
countries. Additionally, in the event that our trademarks are successfully challenged, we could be forced to rebrand our product candidates, which could
result in loss of brand recognition and could require us to devote resources to advertising and marketing new brands. Our competitors may infringe our
trademarks, and we may not have adequate resources to enforce our trademarks.

Proceedings to enforce our patent or trademark rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention

from other aspects of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate.

Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade
secrets.

In the future, we may employ individuals who previously worked with other companies, including our competitors. Although we try to ensure that

our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or
our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property or personal data, including
trade secrets or other proprietary information, of a former employer or other third party. Litigation may be necessary to defend against these claims. If we
fail in defending any such claims or settling those claims, in addition to paying monetary damages or a settlement payment, we may lose valuable
intellectual property rights or personnel. 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.

Changes in U.S. patent laws may limit our ability to obtain, defend and/or enforce our patents.

In 2011, the U.S. enacted and later implemented wide ranging patent reform legislation. The U.S. Supreme Court has ruled on several patent cases

since that time, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain
situations. 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 actions by the U.S. Congress, the U.S. federal courts, and the USPTO, the laws and
regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce patents that we have
licensed or that we might obtain in the future. Similarly, changes in patent law and regulations in other countries or jurisdictions, changes in the
governmental bodies that enforce them or changes in how the relevant governmental authority enforces patent laws or regulations may weaken our ability
to obtain new patents or to enforce patents that we have licensed or that we may obtain in the future.

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

The USPTO and other patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions
during the patent application process. In addition, periodic maintenance and annuity fees on any issued patent are due to be paid to the USPTO and other
patent agencies over the lifetime of the patent. While an inadvertent failure to make payment of such fees or to comply with such provisions can in many
cases be cured by additional payment of a late fee or by other means in accordance with the applicable rules, there are situations in which non-compliance
with such provisions will result in the abandonment or lapse of the patent or patent application, and the partial or complete loss of patent rights in the
relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include failure to respond to official
actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents within prescribed time limits. If
we or our licensors fail to maintain the patents and patent applications covering our product or if we or our licensors otherwise allow our patents or patent
applications to be abandoned or lapse, it can create opportunities for competitors to enter the market, which would hurt our competitive position and could
impair our ability to successfully commercialize our product candidates.

We may be unable to obtain a patent term extension in the U.S. under the Hatch-Waxman Act and in foreign countries under similar legislation.

In the U.S., a patent that covers a drug product or medical device approved by the FDA may be eligible for a term extension designed to restore
the period of the patent term that is lost during the premarket regulatory review process conducted by the FDA. Depending upon the timing, duration and
conditions of FDA marketing approval of our product candidates, it is possible, though unlikely, that one or more of our U.S. patents may be eligible for
limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, which permits a
patent term extension of up to five years for a patent covering an approved product as compensation for effective patent term lost during product
development and the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from
the date of product approval, and only claims covering such approved drug product, a method for using it or a method for manufacturing it may be
extended, and only one patent may be extended. In the EU, it is possible, though unlikely, that our product candidates may be eligible for term extensions
based on similar legislation. However, in either jurisdiction, if we were eligible to apply for patent term extension, we may not receive an extension if we
fail to apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. Even if we
are granted such extension, the duration of such extension may be less than our request. If we are unable to obtain a patent term extension, or if the term of
any such extension is less than our request, the period during which we can enforce our patent rights for that product will be in effect shortened and our
competitors may obtain approval to market competing products sooner. The resulting reduction of years of revenue from applicable product candidates
could be substantial.

Intellectual property rights do not necessarily address all potential threats.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and

may not adequately protect our business or permit us to maintain our competitive advantage. For example:

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others may be able to make products that are similar to our product candidates or utilize similar technology but that are not covered by
the claims of our patents or that incorporate certain technology in our product candidates that is in the public domain;

we, or our future licensors or collaborators, might not have been the first to make the inventions covered by the applicable issued patent
or pending patent application that we own now or may own or license in the future;

we, or our future licensors or collaborators, might not have been the first to file patent applications covering certain of our or their
inventions;

we may not be able to successfully commercialize our product candidates before our relevant patents we may have, or to which we have
ownership rights through licensing agreements, expire;

others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our
intellectual property rights;

it is possible that our current or future pending patent applications will not lead to issued patents;

issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or
other third parties;

our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights
and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

we may not develop additional proprietary technologies that are patentable;

the patents of others may harm our business; and

we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent
covering such intellectual property.

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

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Risks Related to the Ownership of our Securities

The market price of our common stock may be highly volatile, and investors may not be able to resell their shares at or above the price at which they
purchase them.

The market price of our common stock, like that of many other development stage pharmaceutical or biotechnology companies, has been and is
likely to be volatile. In addition to general economic, political and market conditions, the price and trading volume of our stock could fluctuate widely in
response to many factors, including:

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our ability to execute our ongoing and planned clinical trials on a timely basis consistent with timelines established;

results of our clinical trials and preclinical studies, and the results of trials of our competitors or those of other companies in our market
sector;

regulatory approval of our product candidates, or limitations to specific label indications or patient populations for its use, or changes or
delays in the regulatory review process;

regulatory developments in the U.S. and foreign countries;

changes in the structure of healthcare payment systems, especially in light of current reforms to the U.S. healthcare system;

the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates, along with
any product modifications and improvements;

the success or failure of our efforts to acquire, license or develop additional product candidates;

innovations or new products developed by us or our competitors;

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

manufacturing, supply or distribution delays or shortages;

any changes to our relationship with any manufacturers, suppliers, licensors, future collaborators or other strategic partners;

our expectations regarding the potential market size and the size of the patient populations for our product candidates;

the implementation of our business model and strategic plans for our business and technology;

achievement of expected product sales and profitability;

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

market conditions in the biopharmaceutical sector and issuance of securities analysts’ reports or recommendations;

trading volume of our common stock;

an inability to obtain additional funding;

sales of our stock by insiders and stockholders;

general economic, industry and market conditions other events or factors, many of which are beyond our control;

our commercialization, marketing and manufacturing prospects and capabilities;

additions or departures of key personnel; and

intellectual property, product liability or other litigation against us.

In addition, the stock markets in general, and the markets for biopharmaceutical and biotechnology stocks in particular, have experienced extreme
volatility that may have been unrelated to the operating performance of the issuer. These broad market fluctuations may adversely affect the market price or
liquidity of our common stock. In the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities
class action litigation against the issuer. If any of our stockholders were to bring such a lawsuit against us, we could incur substantial costs defending the
lawsuit and the attention of our management would be diverted from the operation of our business.

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The sale and issuance of our common stock or rights to purchase our common stock, stock incentive plans and upon the exercise of outstanding
securities exercisable for shares of our common stock, including our AEROSURF warrants, which are exercisable in the future for no consideration,
could result in substantial additional dilution of our stockholders, cause our stock price to fall and adversely affect our ability to raise capital.

We will require additional capital to continue to execute our business plan and advance our research and development efforts. To the extent that we

raise additional capital through the issuance of additional equity securities and through the exercise of outstanding warrants, our stockholders may
experience substantial dilution. We may sell shares of preferred stock or common stock in one or more transactions at prices that may be at a discount to the
then-current market value of our common stock and on such other terms and conditions as we may determine from time to time. Any such transaction
could result in substantial dilution of our existing stockholders. If we sell shares of our common stock in more than one transaction, stockholders who
purchase our common stock may be materially diluted by subsequent sales. Such sales could also cause a drop in the market price of our common stock.
The issuance of shares of our common stock in connection with a public or private financing, in connection with our compensation programs, and upon
exercise of outstanding warrants will have a dilutive impact on our other stockholders and the issuance, or even potential issuance, of such shares could
have a negative effect on the market price of our common stock.

The exercise of stock options and other securities could also cause our stockholders to experience substantial dilution. Moreover, holders of our
stock options and warrants are likely to exercise them, if ever, at a time when we otherwise could obtain a price for the sale of our securities that is higher
than the exercise price per security of the options or warrants. Such exercises, or the possibility of such exercises, may impede our efforts to obtain
additional financing through the sale of additional securities or make such financing more costly. It may also reduce the price of our common stock.

A small group of our investors, including Lee’s Holdings, may be able to exercise significant influence over our business strategy and operations.

As of March 31, 2022, Lee’s Holdings beneficially owns directly and through its affiliates, approximately 17% of our issued and outstanding

shares of common stock and fund affiliates of our Chairman, James Huang, own directly and through affiliates approximately 9% of our issued and
outstanding common stock. These investors could exercise their voting power in a coordinated fashion with a limited number of other investors to approve
any matter requiring stockholder approval by written consent without a stockholder meeting. As a result, there is a risk that these investors could exert
significant influence over the timing, scope, size or ultimate terms of our financing transactions and the process by which such corporate actions are
permitted to proceed, or cause corporate actions to be approved even if their interests conflict with the interests of our other stockholders. This
concentration of voting power could have the effect of deterring or preventing institutional investors interested in us or a change of control that might be
beneficial to our other stockholders.

In addition, affiliates of Lee’s Holdings in China serve as CMOs for istaroxime, rostafuroxin and potentially lyophilized KL4 surfactant. As such,

we are highly dependent upon their performance to maintain our operational timelines and achieve planned milestones, and as a result, they may be in a
position to exert leverage over our planning processes.

Our common stock is listed on the Nasdaq Capital Market. We can provide no assurance that we will be able to comply with the continued listing
requirements over time and that our common stock will continue to be listed on the Nasdaq Capital Market.

In May 2020, we successfully listed our common stock on the Nasdaq Capital Market, or Nasdaq. However, we can give no assurance that we will

be able to satisfy the continued listing requirements of Nasdaq in the future, including but not limited to the corporate governance requirements and the
minimum closing bid price requirement or the minimum equity requirement. If we fail to maintain compliance with the continued listing requirements,
Nasdaq may take steps to delist our common stock. If such delisting should occur, it would likely have a negative effect on the price of our common stock
and would impair an investor’s ability to sell or purchase our common stock when desired. In the event of a delisting, we can provide no assurance that any
action taken by us to restore compliance with listing requirements would allow our common stock to become listed again, stabilize the market price or
improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement or prevent future
non-compliance with Nasdaq’s listing requirements.

Provisions of our Amended and Restated Certificate of Incorporation, or Certificate of Incorporation, our Amended and Restated By-Laws, or By-
Laws, and Delaware law could deter a change of our management and thereby discourage or delay offers to acquire us.

Provisions of our Certificate of Incorporation, our By-Laws and Delaware law may make it more difficult for someone to acquire control of us or

for our stockholders to remove existing management and might discourage a third party from offering to acquire us, even if a change of control or in
management would be beneficial to our stockholders. Such provisions may make it costlier for a potential acquirer to engage in a business combination
transaction with us. Provisions that have the effect of discouraging, delaying or preventing a change of control could limit the opportunity for our
stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our
common stock.

Our Certificate of Incorporation provides 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 file in a different judicial forum to resolve disputes with us or our
directors, officers or employees.

Our Certificate of Incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for 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 Certificate of Incorporation or our By-Laws, or any action asserting a claim against us that is governed by the internal affairs
doctrine; provided, that, this provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. These choice of forum
provisions 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.

We do not intend to pay dividends on our common stock so any returns will be limited to the value of our 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 stockholders will therefore be limited to the appreciation of their stock.

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We are a “smaller reporting company,” and the reduced disclosure requirements applicable to smaller reporting companies may make our common
stock less attractive to investors.

We are a “smaller reporting company” as defined in the Exchange Act and have elected to take advantage of certain of the scaled disclosures

available to smaller reporting companies, which include, among other things, audited financial statements and Management Discussion and Analysis for
two years instead of three years, an update of the general development of the business for such period that is material to an understanding of the
company, simplified executive compensation disclosures, and exemption from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that an
independent registered accounting firm provide an attestation report on the effectiveness of internal control over financial reporting. We cannot predict
whether investors will find our common stock less attractive because of our reliance on any of these exemptions. If some investors find our common stock
less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

We maintain our principal executive offices at 2600 Kelly Road, Suite 100, Warrington, Pennsylvania 18976-3622. Our premises include

corporate administration, research and drug development, clinical operations, regulatory affairs, and quality.

We also maintain a location in Taipei, Taiwan consisting of approximately 1,317 square feet of office space, where we oversee certain
manufacturing development and preclinical activities occurring at a university in Taiwan related to our cardiovascular drug product candidates. We also
have access to research laboratories in Milan, Italy under our collaboration agreement with Universita degli Studi di Milano-Bicocca. We believe our
current facilities are adequate for our needs in 2021.

ITEM 3. LEGAL PROCEEDINGS.

We are not aware of any pending legal actions that would, if determined adversely to us, have a material adverse effect on our business and

operations.

We may be subject to other legal proceedings and claims in the ordinary course of business. We cannot predict the results of any such disputes,

and despite the potential outcomes, the existence thereof may have an adverse material impact on us due to diversion of management time and attention as
well as the financial costs related to resolving such disputes.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF

EQUITY SECURITIES.

Market Information

Our common stock is quoted on The Nasdaq Capital Market, or Nasdaq, operated by The Nasdaq Stock Market LLC under the symbol “WINT.”

Holders of Our Common Stock

As of March 30, 2022, we had 40 holders of record of shares of our common stock, and there were 28,469,274 shares of our common stock issued

and outstanding. The actual number of holders of our common stock 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 or held by other nominees. This number of holders of record also does not include
stockholders whose shares may be held in trust by other entities.

Dividend Policy

We have not paid any dividends and we do not anticipate paying any cash dividends in the foreseeable future and we intend to retain all of our

earnings, if any, to finance our growth and operations and to fund the expansion of our business. Payment of any dividends will be made in the discretion of
our Board of Directors, or the Board, after our taking into account various factors, including our financial condition, operating results, current and
anticipated cash needs and plans for expansion.

Recent Sales of Unregistered Securities

During the period covered by this Annual Report on Form 10-K, there were no sales by us of unregistered securities that were not previously

reported by us in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.

Securities Authorized for Issuance Under Equity Compensation Plans

Information about our equity compensation plans is incorporated herein by reference to Part III, Item 12 of this Annual Report on Form 10-K.

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Share Repurchase

We did not purchase any of our registered equity securities during the period covered by this Annual Report on Form 10-K.

ITEM 6. [Reserved].

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

INTRODUCTION

Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including
information with respect to our plans and strategy for our business and related financing activities, includes forward-looking statements that involve risks
and uncertainties. You should review the Forward-Looking Statements and Risk Factors sections of this Annual Report on Form 10-K for a discussion of
important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in
the following discussion and analysis or elsewhere in the Annual Report on Form 10-K.

Management’s discussion and analysis of financial condition and results of operations, or MD&A, is provided as a supplement to the
accompanying consolidated financial statements and footnotes to help provide an understanding of our financial condition, the changes in our financial
condition and our results of operations. This item should be read in connection with our Consolidated Financial Statements for the year ending December
31, 2021 and notes thereto, or Notes, included in this Annual Report on Form 10-K. See, Item 8 – Financial Statements and Supplementary Data.

OVERVIEW

We are a clinical-stage biopharmaceutical company focused on the development of novel therapeutics intended to address significant unmet

medical needs in important acute care markets. Our development programs are primarily focused in the treatment of acute cardiovascular and secondarily
in acute pulmonary diseases. Our lead product candidate, istaroxime, is a first-in-class, dual-acting agent being developed to improve cardiac function in
patients with acute heart failure, or AHF, with a potentially differentiated safety profile from existing treatments. Istaroxime demonstrated significant
improvement in both diastolic and systolic aspects of cardiac function and was generally well tolerated in two phase 2 clinical trials. Istaroxime has been
granted Fast Track designation for the treatment of AHF by the U.S. Food and Drug Administration, or FDA. Based on the profile observed in our phase 2
clinical studies in AHF, where istaroxime significantly improved cardiac function and systolic blood pressure in acute decompensated heart failure patients,
we initiated a phase 2 global clinical study to evaluate istaroxime for the treatment of early cardiogenic shock (Society for Cardiovascular Angiography and
Interventions Stage B shock), a severe form of heart failure characterized by very low blood pressure and risk for hypoperfusion to critical organs. We
believe that istaroxime has the potential to fulfill an unmet need in early cardiogenic shock. Our heart failure cardiovascular portfolio also includes sarco
endoplasmic reticulum Ca2+ -ATPase 2a, or SERCA2a, activators which activate SERCA2a. This research program is evaluating these preclinical product
candidates, including oral and intravenous SERCA2a activator heart failure compounds. As potential oral agents, these candidates would be developed for
chronic heart failure. In addition, our cardiovascular drug product candidates include rostafuroxin, a novel product candidate for the treatment of
hypertension in patients with a specific genetic profile. We are pursuing potential licensing arrangements and/or other strategic partnerships and do not
intend to advance this product candidate without securing such an arrangement or partnership.

Our pulmonary product candidate portfolio consists of a KL4 surfactant platform to address a range of serious respiratory conditions in children
and adults. KL4 surfactant has been in development as a liquid instillate for noninvasive delivery as an aerosol. In September 2020, the FDA accepted our
investigational new drug, or IND, application for an open-label phase 2 pilot study to assess safety and tolerability in the COVID-19 acute respiratory
distress syndrome, or ARDS, population and the ability of our KL4 surfactant liquid instillate to impact key respiratory parameters in the treatment of lung
injury and ARDS resulting from severe acute respiratory syndrome coronavirus 2, or SARS-CoV-2, the causative agent in novel coronavirus, or COVID-
19, infections. In January 2022, we completed enrollment of 20 patients in our phase 2 study of lucinactant (KL4 surfactant) for patients with severe
COVID-19 associated ARDS and lung injury. The study demonstrated that intratracheal administration of reconstituted lyophilized lucinactant was
generally safe and well tolerated. Lucinactant was safely administered to critically ill, mechanically ventilated patients with severe COVID-19 associated
ARDS. Oxygenation and other physiological parameters were stable to improved after dosing, supporting the feasibility of this treatment approach to
develop a potential treatment for critically ill patients with ARDS due to COVID-19 or other causes.

Previously, we were also developing AEROSURF (lucinactant for inhalation), a novel drug/medical device combination product for noninvasive

delivery of aerosolized KL4 surfactant using our ADS technology for the treatment of respiratory distress syndrome, or RDS, in premature infants. We
suspended all internal AEROSURF clinical activities in November 2020, because istaroxime, our lead product candidate, has become our primary focus for
investment and execution as we believe development of istaroxime represents a greater value opportunity for us and our stockholders than development of
KL4 surfactant. Since completing our phase 2 study of lucinactant (KL4 surfactant) for patients with severe COVID-19 associated ARDS and lung injury
in January 2022, in order to preserve resources for the highest priority programs, we have begun to reduce costs that were not already transferred to our
licensee in Asia, Lee’s Pharmaceutical (HK) Ltd., or Lee’s (HK), under the terms of our License, Development and Commercialization Agreement between
us and Lee’s (HK) dated as of June 12, 2017, as amended, or the Asia License Agreement. These costs include certain reductions in headcount dedicated to
KL4 surfactant and the decommissioning of both our analytical and technical support laboratory, which previously conducted release testing of active
pharmaceutical ingredients, or APIs, and supportive research for our lyophilized and aerosolized KL4 surfactant, and our medical device development
laboratory, which was previously used to conduct development activities and testing for our ADS technologies. To support the future development of our
KL4 surfactant platform in markets outside of Asia, including the U.S., we are pursuing one or more licensing transactions.

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Our ability to advance our development programs is dependent upon our ability to secure additional capital in both the near and long-term,
through public or private equity offerings; through potential strategic opportunities, including licensing agreements, drug product development and
marketing collaboration arrangements, pharmaceutical research cooperation arrangements or other similar transactions in geographic markets, including the
U.S., and/or through potential grants and other funding commitments from U.S. government agencies, in each case, if available. We have engaged with
potential counterparties in various markets and will continue to pursue non-dilutive sources of capital as well as potential private and public offerings.
There can be no assurance, however, that we will be able to identify and enter into public or private securities offerings on acceptable terms and in amounts
sufficient to meet our needs or qualify for non-dilutive funding opportunities under any grant programs sponsored by U.S. government agencies, private
foundations and/or leading academic institutions, or identify and enter into any strategic transactions that will provide the additional capital that we will
require. If none of these alternatives is available, or if available, we are unable to raise sufficient capital through such transactions, we potentially could be
forced to limit or cease our development activities, which would have a material adverse effect on our business, financial condition and results of
operations.

We have incurred operating losses since our incorporation on November 6, 1992. For the years ended December 31, 2021 and 2020, we had

operating losses of $77.3 million and $30.3 million, respectively. As of December 31, 2021, we had an accumulated deficit of $785.3 million. To date, we
have financed our operations primarily through private placements and public offerings of our common and preferred stock and borrowings from investors
and financial institutions.

We expect to continue to incur significant research and clinical development, regulatory and other expenses as we (i) continue to develop our

product candidates; (ii) seek regulatory clearances or approvals for our product candidates; (iii) conduct clinical trials on our product candidates; and (iv)
manufacture, market and sell any product candidates for which we may obtain regulatory approval.

As a result, we will need additional financing to support our continuing operations. Until such time that we can generate substantial product

revenues, if ever, we expect to finance our operations through public or private equity offerings; through potential strategic opportunities, including
licensing agreements, drug product development and marketing collaboration arrangements, pharmaceutical research cooperation arrangements or other
similar transactions in geographic markets outside of Asia, including the U.S.; and/or through potential grants and other funding commitments from U.S.
government agencies, in each case, if available. There can be no assurance, however, that we will be able to identify and enter into public or private
securities offerings on acceptable terms and in amounts sufficient to meet our needs, or qualify for non-dilutive funding opportunities under any grant
programs sponsored by U.S. government agencies, private foundations and/or leading academic institutions, or identify and enter into any strategic
transactions that will provide the additional capital that we will require. If none of these alternatives is available, or if available, we are unable to raise
sufficient capital through such transactions, we potentially could be forced to limit or cease our development activities, which would have a material
adverse effect on our business, financial condition and results of operations.

RESULTS OF OPERATIONS

Comparison of Years Ended December 31, 2021 and 2020

Net Loss and Operating Loss

The operating loss for the years ended December 31, 2021 and 2020 was $77.3 million and $30.3 million, respectively. The increase in operating
loss from 2020 to 2021 was due to a $45.0 million non-cash loss on impairment of intangible assets and a $1.9 million increase in combined research and
development and general and administrative expenses, which includes a $1.2 million increase in non-cash stock compensation expense and $0.5 million of
non-cash expense related to equity consideration for a financial advisory service agreement.

The net loss for the years ended December 31, 2021 and 2020 was $67.6 million, or $2.73 basic net loss per common share, and $32.6 million, or
$2.08 basic net loss per common share, respectively. Included in the net loss is (i) a $45.0 million non-cash loss on impairment of intangible assets in 2021;
(ii) a deferred income tax benefit of $10.0 million related to the reduction of the deferred tax liability in 2021; (iii) $1.1 million in non-cash expense related
to the modification of certain warrants in 2020; (iv) $0.3 million and $1.2 million in foreign currency losses in 2021 and 2020, respectively; and (v) interest
expense of $0.1 million for both 2021 and 2020.

Research and Development Expenses

Our research and development expenses are charged to operations as incurred and we incur both direct and indirect expenses for each of our

programs. We track direct research and development expenses by preclinical and clinical programs, which include third-party costs such as contract
research organization, consulting and clinical trial costs. We do not allocate indirect research and development expenses, which include product
development and manufacturing expenses and clinical, medical and regulatory operations expenses, to specific programs. We also account for research and
development and report annually by major expense category as follows: (i) contracted services; (ii) salaries and benefits; (iii) stock-based compensation;
(iv) raw materials, aerosol devices and supplies; (v) royalties; (vi) rents and utilities; (vii) depreciation; (viii) travel; and (ix) other. We expect to increase
our investment in research and development in order to advance our product candidates through additional clinical trials. As a result, we expect that our
research and development expenses will increase throughout the foreseeable future as we pursue clinical development of istaroxime and our other current
and future product candidates. At this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be
necessary to complete the development of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence
from sales of our product candidates.

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Research and development expenses for the years ended December 31, 2021 and 2020 are as follows:

(in thousands)

Istaroxime - early cardiogenic shock
Istaroxime - AHF
KL4 surfactant
Preclinical studies
Total direct clinical and preclinical programs

Product development and manufacturing
Clinical, medical and regulatory operations
Total research and development expenses

Year Ended December 31,
2020
2021

  $

  $

3,236    $
1,551     
1,037     
6     
5,830     

4,360     
7,597     
17,787    $

1,813 
966 
1,583 
42 
4,404 

4,474 
6,495 
15,373 

Research and development expenses include non-cash charges associated with stock-based compensation and depreciation of $3.1 million and

$2.2 million for 2021 and 2020, respectively.

Direct Clinical and Preclinical Programs

Direct clinical and preclinical development programs include: (i) activities associated with conducting clinical trials, including patient enrollment

costs, clinical site costs, clinical device and drug supply, and related external costs, such as consultant fees and expenses; and (ii) development activities,
toxicology studies and other preclinical studies.

Total direct clinical and preclinical development programs expenses increased $1.4 million from 2020 to 2021 primarily due to (i) an increase
of $1.4 million for ongoing clinical studies of istaroxime for early cardiogenic shock; (ii) an increase of $0.6 million for our continued development of
istaroxime for AHF; partially offset by (iii) a decrease of $0.5 million for costs associated with KL4 surfactant.

Product Development and Manufacturing

Product development and manufacturing includes (i) manufacturing operations, with our CMO, validation activities, quality assurance and

analytical chemistry capabilities that support the manufacture of our drug products used in research and development activities, and our medical devices,
including our ADS, (ii) design and development activities related to our ADS; and (iii) pharmaceutical and manufacturing development activities of our
drug product candidates including development of istaroxime. These costs include employee expenses, facility-related costs, depreciation, costs of drug
substances (including raw materials), supplies, quality control and assurance activities, analytical services, and expert consultants and outside services to
support pharmaceutical and device development activities.

Product development and manufacturing expenses decreased $0.1 million from 2020 to 2021.

Clinical, Medical and Regulatory Operations

Clinical, medical and regulatory operations include (i) medical, scientific, preclinical and clinical, regulatory, data management and biostatistics
activities in support of our research and development programs; and (ii) medical affairs activities to provide scientific and medical education support for
our KL4 surfactant. These costs include personnel, expert consultants, outside services to support regulatory and data management, symposiums at key
medical meetings, facilities-related costs, and other costs for the management of clinical trials.

Clinical, medical and regulatory operations expenses increased $1.1 million from 2020 to 2021 due to an increase of $0.6 million in personnel

costs and employee-related incentive bonus expense and an increase of $0.5 million in non-cash, stock compensation expense.

Research and Development Expense by Major Expense Category

We also account for our research and development expense by major expense category as shown in the following table:

(in thousands)

Contracted services
Salaries and benefits
Stock-based compensation
Royalties
Rents and utilities
Depreciation
Raw materials, aerosol devices and supplies
Travel
Other

Year Ended December 31,
2020
2021

8,116    $
4,906     
2,940     
800     
541     
149     
85     
30     
220     
17,787    $

5,737 
4,768 
2,098 
800 
503 
145 
915 
28 
379 
15,373 

  $

  $

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Contracted services include third-party costs of preclinical studies, clinical trial activities, certain components of our manufacturing operations,

quality control and analytical stability and release testing of our drug products, consulting services, aerosol device design and engineering services, etc. The
increase of $2.4 million from 2020 to 2021 is due to an increase in contracted research and clinical trials expense in 2021, primarily related to ongoing
clinical studies of istaroxime for early cardiogenic shock and our continued development of istaroxime for AHF.

The decrease in raw materials, aerosol devices and supplies of $0.8 million from 2020 to 2021 is due to a $0.4 million purchase of KL4 surfactant

raw materials during 2020 and a decrease in costs associated with our phase 2b bridging study as we ceased enrollment in the study in November 2020.

Royalties represent minimum royalties due under our licensing agreements with Philip Morris USA Inc. and Philip Morris Products S.A. for our

ADS technology.

Other consists primarily of ongoing research and development costs such as insurance, taxes, education and training, and software licenses.

Research and Development Projects

A substantial portion of our cumulative losses to date relate to investments in our research and development projects, for which we incurred $33.2

million in expenses for the two-year period ended December 31, 2021. Due to the significant risks and uncertainties inherent in the clinical development
and regulatory approval processes, the nature, timing and costs of the efforts necessary to complete individual projects in development are not reasonably
estimable. With every phase of a development project, there are unknowns that may significantly affect cost projections and timelines. In view of the
number and nature of these factors, many of which are outside our control, the success, timing of completion and ultimate cost of development of any of
our product candidates are highly uncertain and cannot be estimated with any degree of certainty. In addition to the risks and uncertainties affecting our
research and development projects discussed in this MD&A (see, Item 1A – Risk Factors), other risks could arise that we may not foresee that could affect
our ability to estimate projections and timelines.

Ultimately, if we do not successfully develop and gain marketing approval for our drug product candidates, in the U.S. or elsewhere, we will not
be able to commercialize, or generate any revenues from the sale of our products and the value of our company and our financial condition and results of
operations will be substantially harmed.

General and Administrative Expenses

(in thousands)

Year Ended December 31,
2020
2021

General and administrative expenses

  $

14,473    $

14,944 

General and administrative expenses consist of costs for executive management, business development, intellectual property, finance and

accounting, legal, human resources, information technology, facility, and other administrative costs.

General and administrative expenses include non-cash charges associated with stock-based compensation of $4.3 million and $3.6 million,
respectively, for the years ended December 31, 2021 and 2020. General and administrative expenses decreased $0.5 million from 2020 to 2021 due to (i) a
decrease of $0.8 million in severance costs; and (ii) a decrease of $0.4 million in personnel costs; partially offset by (iii) an increase of $0.7 million in non-
cash, stock compensation expense.

Other (Expense) Income, Net

(in thousands)

Interest income
Interest expense
Other expense, net
Total other expense, net

Interest Income

Year Ended December 31,
2020
2021

  $

  $

91    $
(114)    
(320)    
(343)   $

122 
(125)
(2,246)
(2,249)

Interest income relates to income on our money market account and U.S. Treasury notes.

Interest expense

Interest expense in 2021 consists of interest expense associated with the loans payable. Interest expense in 2020 consists of interest expense

associated with the loans payable and the collaboration and device development payables.

Other expense, net

Other expense, net in 2021 primarily consists of $0.3 million in losses on foreign currency translation. Other expense, net in 2020 primarily
consists of $1.2 million in losses on foreign currency translation and $1.1 million in non-cash expense related to the modification of certain warrants.

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LIQUIDITY AND CAPITAL RESOURCES

We are subject to risks common to companies in the biotechnology industry, including but not limited to, the need for additional capital, risks of
failure of preclinical and clinical studies, the need to obtain marketing approval and reimbursement for any drug product candidate that we may identify
and develop, the need to successfully commercialize and gain market acceptance of our product candidates, dependence on key personnel, protection of
proprietary technology, compliance with government regulations, development of technological innovations by competitors, and risks associated with our
international locations and activities abroad, including but not limited to having foreign suppliers, manufacturers and clinical sites in support of our
development activities.

We have incurred net losses since inception. Our net loss was $67.6 million and $32.6 million, respectively, for the years ended December 31,

2021 and 2020. Included in our net loss for the year ended December 31, 2021 is a $45.0 million loss on impairment of intangible assets related to
rostafuroxin and a related $10.0 million deferred income tax benefit (see, Note 4 – Accounting Policies and Recent Accounting Pronouncements). We
expect to continue to incur operating losses for at least the next several years. As of December 31, 2021, we had an accumulated deficit of $785.3 million.
Our future success is dependent on our ability to fund and develop our product candidates, and ultimately upon our ability to attain profitable
operations. We have devoted substantially all of our financial resources and efforts to research and development and general and administrative expense to
support such research and development. Net losses and negative cash flows have had, and will continue to have, an adverse effect on our
stockholders’ equity and working capital, and accordingly, our ability to execute our future operating plans.

In March 2021, we received net proceeds of approximately $27.4 million related to a public offering of 9,230,500 units at a price per unit of $3.25.
Each unit consisted of one share of our common stock and a warrant to purchase one share of common stock, or the March 2021 Warrants. The March 2021
Warrants were immediately exercisable for shares of common stock at a price of $3.60 per share and expire five years from the date of issuance.

We are party to an At-The-Market Offering Agreement with Ladenburg Thalmann & Co. Inc., or Ladenburg, pursuant to which we may offer and

sell, from time to time at our sole discretion, up to a maximum of $10.0 million of shares of our common stock through Ladenburg as agent and/or principal
through an at-the-market program, or the ATM Program. For the year ended December 31, 2021, we sold 2,116,944 shares of our common stock under the
ATM Program resulting in aggregate gross proceeds to us of approximately $5.0 million and net proceeds of approximately $4.8 million (see, Note 10 –
Stockholders’ Equity).

As of December 31, 2021, we had cash and cash equivalents of $22.3 million and current liabilities of $4.9 million. As of March 31, 2022, we

believe that we have sufficient resources available to support our development activities and business operations and satisfy our obligations into the first
quarter of 2023. We do not have sufficient cash and cash equivalents as of the date of this Annual Report on Form 10-K to support our operations for at
least the 12 months following the date that the financial statements are issued. These conditions raise substantial doubt about our ability to continue as a
going concern through 12 months after the date that the financial statements are issued.

To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, management plans to secure additional

capital, potentially through a combination of public or private equity offerings and strategic transactions, including potential licensing arrangements,
alliances and drug product collaborations focused on specified geographic markets; however, none of these alternatives are committed at this time. There
can be no assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all, or identify
and enter into any strategic transactions that will provide the capital that we will require. If none of these alternatives is available, or if available, we are
unable to raise sufficient capital through such transactions, we will not have sufficient cash resources and liquidity to fund our business operations for at
least the next 12 months following the date that the financial statements are issued. The failure to obtain sufficient capital on acceptable terms when needed
would have a material adverse effect on our business, results of operations, and financial condition. Accordingly, management has concluded that
substantial doubt exists with respect to our ability to continue as a going concern through 12 months after the issuance of the accompanying financial
statements.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction
of liabilities in the normal course of business, and do not include any adjustments relating to recoverability and classification of recorded asset amounts or
the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Cash Flows

Cash flows for the years ended December 31, 2021 and 2020

Net cash outflows for 2021 consist of $23.7 million net cash used in operating activities, $0.3 million of net cash used in investing activities,

and $29.4 million of net cash provided by financing activities.

Operating Activities

Net cash used in operating activities was $23.7 million for the year ended December 31, 2021 and consisted primarily of (i) a net loss of $67.6
million, (ii) a non-cash deferred income tax benefit of $10.0 million, partially offset by (iii) a non-cash loss on impairment of intangible assets of $45.0
million, (iv) non-cash stock-based compensation of $7.2 million, (v) non-cash expense related to equity consideration for a financial advisory service
agreement of $0.5 million, (vi) non-cash lease expense of $0.7 million, (vii) an unrealized loss on foreign exchange rate changes of $0.4 million, (viii)
changes in operating assets and liabilities of $0.1 million, and (ix) depreciation and amortization of $0.2 million. Changes in prepaid expenses and other
current assets, accounts payable, accrued expenses and operating lease liabilities result from timing differences between the receipt and payment of cash
and when the transactions are recognized in our results of operations.

Investing Activities

Net cash used in investing activities was $0.3 million for each of the years ended December 31, 2021 and 2020. The net cash used in investing

activities is due to $0.3 million in purchases of property and equipment in both 2021 and 2020.

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Financing Activities

Net cash provided by financing activities was $29.4 million and $20.0 million for the years ended December 31, 2021 and 2020, respectively,

summarized as follows:

(in thousands)

Proceeds from issuance of common stock and warrants, net of issuance costs
Proceeds from ATM Program, net of expenses
Proceeds from research and development funding arrangement
Proceeds from exercise of common stock warrants
Principal payments on loans payable
Proceeds from Paycheck Protection Program loan
Principal payments on Paycheck Protection Program loan
Net cash provided by financing activities

The following sections provide a more detailed discussion of our available financing facilities.

Financings Pursuant to Common Stock Offerings

Year Ended December 31,
2020
2021

  $

  $

27,390    $
4,843     
1,000     
-     
(3,872)    
-     
-     
29,361    $

20,246 
- 
2,800 
141 
(3,229)
547 
(547)
19,958 

Historically, we have funded, and expect that we will continue to fund, our business operations through various sources, including financings in

the form of common stock offerings. In September 2020, we filed with the SEC a “shelf” registration statement on Form S-3 (No. 333-248874), or the 2020
Universal Shelf, that was declared effective on September 29, 2020, for the proposed offering from time to time of up to $75.0 million of our securities,
including common stock, preferred stock, debt securities, warrants, units, subscription rights, or any combination of the foregoing, on terms and conditions
that will be determined at the time of an offering. As of December 31, 2021, approximately $1.8 million remained available under the 2020 Universal
Shelf. The 2020 Universal Shelf will expire upon the earlier to occur of (i) the sale of $75.0 million of our securities or (ii) September 29, 2023.

In December 2021, we filed with the SEC a “shelf” registration statement on Form S-3 (No. 333-261878), or the 2022 Universal Shelf, that was

declared effective on January 3, 2022, for the proposed offering from time to time of up to $100.0 million of our securities, including common stock,
preferred stock, debt securities, warrants, units, subscription rights, or any combination of the foregoing, on terms and conditions that will be determined at
the time of an offering. The 2022 Universal Shelf will expire upon the earlier to occur of (i) the sale of $100.0 million of our securities or (ii) January 3,
2025. We have not yet made any offerings or sales of our securities under the 2022 Universal Shelf.

At-The-Market Program

On September 17, 2020, we entered into an At-The-Market Offering Agreement with Ladenburg Thalmann & Co. Inc., or Ladenburg, pursuant to
which we may offer and sell, from time to time at our sole discretion, up to a maximum of $10.0 million of shares of our common stock through Ladenburg
as agent and/or principal through an at-the-market program, or the ATM Program. When we issue sales notices to Ladenburg, we designate the maximum
amount of shares to be sold by Ladenburg daily and the minimum price per share at which shares may be sold. Ladenburg may sell shares by any method
permitted by law deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) under the Securities Act, or in privately negotiated transactions.

For the year ended December 31, 2021, we sold 2,116,944 shares of our common stock under the ATM Program resulting in aggregate gross

proceeds to us of approximately $5.0 million and net proceeds of approximately $4.8 million (see, Note 10 – Stockholders’ Equity).

As of March 31, 2022, approximately $5.0 million remains available under the ATM Program.

March 2021 Public Offering

On March 23, 2021, we entered into an underwriting agreement with Oppenheimer & Co. Inc. as representative for the several underwriters
named therein, relating to a public offering, or the March 2021 Offering, of an aggregate of 9,230,500 units with each unit consisting of one share of
common stock and a warrant, or the March 2021 Warrants. The March 2021 Warrants were immediately exercisable for shares of common stock at a price
of $3.60 per share and expire five years from the date of issuance. The shares of common stock and the March 2021 Warrants were immediately separable
and were issued separately in the March 2021 Offering.

The closing of the March 2021 Offering occurred on March 25, 2021. The offering price to the public was $3.25 per unit resulting in gross
proceeds to us of $30.0 million. After deducting underwriting discounts and commissions and estimated offering expenses payable by us, and excluding the
proceeds, if any, from the exercise of the March 2021 Warrants issued pursuant to the March 2021 Offering, the net proceeds to us were
approximately $27.4 million.

May 2020 Public Offering

On May 20, 2020, we entered into an underwriting agreement, or the Underwriting Agreement, with Ladenburg as representative for the several
underwriters named therein, or collectively, the Underwriters, relating to a public offering, or the May 2020 Offering, of an aggregate of 2,758,620 units
with each unit consisting of one share of our common stock and a warrant, or the May 2020 Warrants. The May 2020 Warrants were immediately
exercisable for shares of common stock at a price of $7.975 per share and expire five years from the date of issuance. The shares of common stock and the
May 2020 Warrants were immediately separable and were issued separately in the May 2020 Offering.

In addition, we granted the Underwriters a 45-day option, or the Overallotment Option, to purchase up to 413,793 additional shares of common
stock and/or May 2020 Warrants to purchase up to 413,793 additional shares of common stock, which such Overallotment Option was exercised in full.

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The closing of the May 2020 Offering occurred on May 22, 2020, inclusive of the Overallotment Option. The offering price to the public

was $7.25 per unit. After deducting underwriting discounts and commissions and offering expenses of $2.8 million payable by us, and excluding the
proceeds, if any, from the exercise of the May 2020 Warrants issued pursuant to the May 2020 Offering, the net proceeds to us were
approximately $20.2 million.

Loans Payable

Current Portion

Loan Payable to Bank Direct Capital Finance

In June 2020, we entered into an insurance premium financing and security agreement with Bank Direct Capital Finance, or Bank Direct. Under

the agreement, we financed $1.1 million of certain premiums at a 4.26% annual interest rate. Payments of approximately $117,000 were due monthly from
July 2020 through March 2021. As of December 31, 2020, the outstanding principal of the loan was $0.4 million. The balance of the loan was repaid during
the first quarter of 2021.

In June 2021, we entered into an insurance premium financing and security agreement with Bank Direct. Under the agreement, we financed $1.3

million of certain premiums at a 3.37% annual interest rate. Payments of approximately $147,000 are due monthly from July 2021 through March 2022. As
of December 31, 2021, the outstanding principal of the loan was $0.3 million.

Non-Current Portion

O-Bank Co., Ltd. Credit Facility

In September 2016, CVie Therapeutics entered into a 12-month revolving credit facility of approximately $2.9 million with O-Bank Co., Ltd., or

O-Bank, to finance operating activities, or the O-Bank Facility. The O-Bank Facility was later renewed and increased to approximately $5.8 million in
September 2017. The O-Bank Facility is guaranteed by Lee’s Pharmaceutical Holdings Limited, or Lee’s Holdings, which pledged bank deposits in the
amount of 110% of the actual borrowing amount. Interest, payable in cash on a monthly basis, was determined based on the 90-day Taipei Interbank Offer
Rate, or TAIBOR, plus 0.91%. The O-Bank Facility expired on September 11, 2019 and the loans were set to mature six months after the expiration date,
on March 11, 2020. In March 2020, the O-Bank Facility was amended, among other things, to extend the maturity date to March 2022, to decrease the total
amount of the O-Bank Facility to approximately $5.0 million, to change the applicable interest rate to the TAIBOR plus 1.17% and to adjust the term to 24-
month non-revolving.

In the second quarter of 2020, we were informed by Lee’s Holdings of their desire to reduce the amount of pledged bank deposits with O-Bank by
50%. To remain in compliance with the terms of the O-Bank Facility, we repaid approximately $2.3 million of the outstanding principal in August 2020. In
November 2020, Lee’s Holdings committed to maintain the required level of pledged bank deposits with O-Bank through the date of full repayment of the
O-Bank Facility. In June 2021, we repaid the remaining outstanding principal of the O-Bank Facility of approximately $2.5 million.

As of December 31, 2020, the outstanding principal of the O-Bank Facility was approximately $2.4 million and was classified as loans payable -

non-current portion. There was no outstanding principal balance as of December 31, 2021, and the O-Bank Facility is no longer available to us.

Restructured Debt Liability

On October 27, 2017, we and Deerfield Management Company, L.P., or Deerfield, entered into the Exchange and Termination Agreement

pursuant to which (i) promissory notes evidencing a loan with affiliates of Deerfield Management Company L.P., or the Deerfield Loan, in the aggregate
principal amount of $25.0 million and (ii) warrants to purchase up to 8,333 shares of our common stock at an exercise price of $2,360.40 per share held by
Deerfield were cancelled in consideration for (i) a cash payment in the aggregate amount of $2.5 million, (ii) 23,703 shares of common stock, representing
2% of fully-diluted shares outstanding (as defined in the Exchange and Termination Agreement) on the closing date, and (iii) the right to receive certain
milestone payments based on achievement of specified AEROSURF development and commercial milestones, which, if achieved, could potentially total
up to $15.0 million. In addition, a related security agreement, pursuant to which Deerfield held a security interest in substantially all of our assets, was
terminated. We established a $15.0 million long-term liability for the contingent milestone payments potentially due to Deerfield under the Exchange and
Termination Agreement (see, Note 4 – Accounting Policies and Recent Accounting Pronouncements). The liability has been recorded at the full value of
the contingent milestones and will continue to be carried at full value until the milestones are achieved and paid or the milestones are not achieved and the
liability is written off as a gain on debt restructuring.

As of December 31, 2021 and 2020, the restructured debt liability balance was $15.0 million.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preceding discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements,

which have been prepared in conformity with U.S. generally accepted accounting principles, or GAAP. Preparing financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Estimates are based on our historical operations,
our future business plans and projected financial results, the terms of existing contracts, our observance of trends in the industry, and information available
from other outside sources, as appropriate. These estimates and assumptions are affected by the application of our accounting policies. Critical accounting
policies and practices are both important to the portrayal of a company’s financial condition and results of operations, and require management’s most
difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain. Actual
results could differ from such estimates due to changes in economic factors or other conditions that are outside the control of management. A summary of
our significant accounting policies is described in Note 4 of the Audited Consolidated Financial Statements contained in this Annual Report on Form 10-K.
Of those policies, we believe that the following accounting policy is critical to aid our stockholders in fully understanding and evaluating our reported
financial results.

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Intangible Assets and Goodwill

We record acquired identified intangibles, which includes intangible assets (such as goodwill and other intangibles), based on estimated fair value.

The acquired IPR&D assets are considered indefinite-lived intangible assets until completion or abandonment of the associated research and development
efforts. IPR&D is not amortized but reviewed for impairment at least annually, or when events or changes in the business environment indicate that the
carrying value may be impaired.

When testing our goodwill and indefinite-lived intangible assets for impairment, we can elect to perform a qualitative assessment to determine if it

is more likely than not that the fair values of our reporting unit and indefinite-lived intangible assets are less than their respective carrying values. Such
qualitative factors can include, among others, industry and market conditions, overall financial performance, and relevant entity-specific events. If we
conclude based on our qualitative assessment that it is more likely than not that the fair value of our reporting unit or indefinite-lived intangible assets are
less than their respective carrying values, we perform a quantitative assessment. When conducting our annual impairment test of goodwill and indefinite-
lived intangible assets as of December 1, 2021, we elected to perform a quantitative assessment.

When performing the quantitative impairment assessment for our indefinite-lived IPR&D intangible assets, we estimate the fair values of the
assets using the multi-period excess earnings method, or MPEEM. MPEEM is a variation of the income approach which estimates the fair value of an
intangible asset based on the present value of the incremental after-tax cash flows attributable to the intangible asset. Significant factors considered in the
calculation of IPR&D intangible assets include the risks inherent in the development process, including the likelihood of achieving commercial success and
the cost and related time to complete the remaining development. Future cash flows for each project were estimated based on forecasted revenue and costs,
taking into account the expected product life cycles, market penetration, and growth rates. Other significant estimates and assumptions inherent in this
approach include (i) the amount and timing of the projected net cash flows associated with the IPR&D assets, (ii) the discount rate, which seeks to reflect
the various risks inherent in the projected cash flows; and (iii) the tax rate, which considers geographic diversity of the projected cash flows. While we use
the best available information to prepare our cash flows and discount rate assumptions, actual future cash flows could differ significantly based on the
commercial success of the related drug candidates and market conditions which could result in future impairment charges related to our indefinite-lived
intangible asset balances.

During the second quarter of 2021, we concluded an initial process to test the industry’s interest in investing in our rostafuroxin drug candidate

and were not able to secure a licensing transaction or other strategic opportunity at that time. Based on feedback received from potential licensing partners,
we have determined that there is a need for an additional phase 2 clinical trial to demonstrate efficacy in non-Caucasian patients in treatment resistant
hypertension. Due to these developments, and in connection with the preparation of the interim unaudited condensed consolidated financial statements as of
and for the period ending June 30, 2021, we determined that the fair value of the IPR&D related to our rostafuroxin drug candidate was more likely than
not less than its carrying value. As a result, we performed the required quantitative impairment assessment of the related intangible asset. We estimated the
fair value of the asset using MPEEM and determined that the fair value as of June 30, 2021 was approximately $17.0 million. We then compared this fair
value to the carrying value of approximately $54.8 million and recorded a loss on impairment of intangible assets of $37.8 million during the second
quarter of 2021.

As part of our annual quantitative impairment assessment of indefinite-lived IPR&D intangible assets, we reassessed certain of the assumptions

related to our rostafuroxin drug candidate due to the current macroeconomic conditions which have made it harder to secure the funding needed to conduct
the additional phase 2 clinical trial and have therefore delayed our intended development of rostafuroxin. As a result, we concluded that the fair value of the
IPR&D related to our rostafuroxin drug candidate was again less than its carrying value. We estimated the fair value of the asset using MPEEM and
determined that the fair value as of December 1, 2021 was approximately $9.7 million. We then compared this fair value to the carrying value of
approximately $17.0 million, and recorded an additional loss on impairment of intangible assets of $7.2 million in the fourth quarter of 2021. When
combined with the loss on impairment of intangible assets recorded during the second quarter, we recorded a loss on impairment of intangible assets
totaling $45.0 million within operating expenses in our consolidated statements of operations during the year ended December 31, 2021. No events or
changes in the business environment occurred during 2021 that would indicate that the fair value of the IPR&D related to our istaroxime drug candidate
was impaired.

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination and is
not amortized. It is reviewed for impairment at least annually or when events or changes in the business environment indicate that its carrying value may be
impaired. Our company consists of one reporting unit. In order to perform the quantitative goodwill impairment test, we compare the estimated fair value of
our reporting unit to its carrying value. If the fair value exceeds the carrying value, no further evaluation is required, and no impairment exists. If the
carrying value exceeds the fair value, the difference between the carrying value and the fair value is recorded as an impairment loss, the amount of which
may not exceed the total amount of goodwill. When performing our annual goodwill impairment assessment as of December 1, 2021, we estimated the fair
value of our reporting unit based upon the quoted market price and related market capitalization of our common stock, adjusted for an estimated control
premium. Based on the quantitative test performed, we determined that the fair value of our reporting unit exceeded its carrying value and no impairment
exists.

The following table represents identifiable intangible assets and goodwill as of December 31, 2021 and 2020:

(in thousands)

Istaroxime drug candidate
Rostafuroxin drug candidate
Intangible assets

Goodwill

December 31,

2021

2020

22,340    $
9,730     
32,070     

15,682    $

22,340 
54,750 
77,090 

15,682 

  $

  $

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Accrued Research and Development Expenses

As part of the process of preparing our financial statements, we are required to estimate our accrued expenses. This process involves reviewing

quotations and contracts, identifying 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 the actual cost. The majority of our service providers invoice us
monthly in arrears for services performed or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date
in our financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of our estimates with the
service providers and make adjustments if necessary. The significant estimates in our accrued research and development expenses are related to expenses
incurred with respect to CROs, CMOs, clinical trial sites, and other vendors supporting our research and development and manufacturing activities.

We base our expenses related to CROs, CMOs and clinical trial sites on our estimates of services received and efforts expended under quotations

and contracts with those vendors that conduct research and development and manufacturing activities on our behalf. The financial terms of these
agreements are negotiated, vary from contract to contract and may result in uneven payment flows. At times, payments made to our vendors may exceed
the level of services provided and result in a prepayment of the applicable research and development or manufacturing expense. 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 our estimate, we adjust the accrual or prepaid expense 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 could result in us reporting amounts that are too high or too low in any particular period. There have
been no material changes in estimates for the periods presented.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information required by this Item is set forth in the financial statements and notes thereto beginning at page F-1 of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

(a)     Evaluation of Disclosure Controls and Procedures

Our management, including our President and Chief Executive Officer (principal executive officer) and our Senior Vice President and Chief

Financial Officer and Treasurer (principal financial and accounting officer), do not expect that our disclosure controls or our internal control over financial
reporting will prevent all error and all fraud. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts
of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on
certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with
policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be
detected. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how
well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and our management necessarily was
required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our President and Chief Executive Officer and our Senior Vice President and Chief Financial Officer and Treasurer have evaluated the
effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act)
as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our President and Chief Executive Officer and our
Senior Vice President and Chief Financial Officer and Treasurer concluded that, as of the end of the period covered by this report, our disclosure controls
and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is
accumulated and communicated to our management, including our President and Chief Executive Officer and our Senior Vice President and Chief
Financial Officer and Treasurer, to allow for timely decisions regarding required disclosures, and recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms.

(b)     Management’s Report on 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) promulgated under the Exchange Act. Our internal control system is designed to provide reasonable assurance to our management and Board of
Directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement
preparation and presentation.

Under the supervision and with the participation of our management, including our President and Chief Executive Officer and our Senior Vice
President and Chief Financial Officer and Treasurer, our management conducted an evaluation of the effectiveness of our internal control over financial
reporting as of December 31, 2021. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission, or COSO, in Internal Control-Integrated 2013 Framework. Based on our assessment, our management believes that our
internal control over financial reporting is effective based on those criteria, as of December 31, 2021.

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This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over

financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and
Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.

(c)     Changes in Internal Controls

There were no changes in our internal control over financial reporting identified in connection with the evaluation described above that occurred

during the quarter ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial
reporting.

ITEM 9B. OTHER INFORMATION.

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

Not applicable.

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

PART III

The information required by this Item is incorporated herein by reference from our proxy statement on Schedule 14A, or the Proxy Statement, for

our 2022 Annual Meeting of Stockholders.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2022 Annual Meeting of Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER

MATTERS

The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2022 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2022 Annual Meeting of Stockholders.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item is incorporated herein by reference from our Proxy Statement for our 2022 Annual Meeting of Stockholders.

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Financial Statements.

PART IV

The consolidated financial statements required to be filed in this Annual Report on Form 10-K are listed on the Index to Consolidated Financial

Statements on page F-1 hereof.

(b) Exhibits.

The following exhibits are included with this Annual Report on Form 10-K.

Exhibit No.

Description

3.1

3.2

3.3

4.1

4.2

Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Windtree’s Annual Report on Form 10-
K, as filed with the SEC on April 17, 2018).

Certificate of Amendment to the Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to
Windtree’s Current Report on Form 8-K, as filed with the SEC on April 29, 2020).

Amended and Restated By-Laws (incorporated by reference to Exhibit 3.2 to Windtree’s Form 8-K filed on April 18, 2016).

Form of Warrant dated October 10, 2014 (incorporated by reference to Exhibit 4.11 to Windtree’s Quarterly Report on Form 10-Q, as
filed with the SEC on November 7, 2014).

Form of Series A Warrant dated July 22, 2015 (incorporated by reference to Exhibit 4.1 to Windtree’s Current Report on Form 8-K, as
filed with the SEC on July 17, 2015).

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4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

4.13

4.14

4.15

4.16

10.1†

10.2†

10.3†

10.4††

10.5††

10.6†

10.7†

Form of Series B Warrant dated July 22, 2015 (incorporated by reference to Exhibit 4.3 to Windtree’s Current Report on Form 8-K, as
filed with the SEC on July 17, 2015).

Form of Series A-1 Warrant dated February 13, 2017 (incorporated by reference to Exhibit 4.1 to Windtree’s Current Report on Form 8-
K, as filed with the SEC on February 15, 2017).

Form of Series C Warrant dated April 4, 2018 (incorporated by reference to Exhibit 4.1 to Windtree’s Current Report on Form 8-K, as
filed with the SEC on April 4, 2018).

Form of Series D Warrant dated July 2, 2018 (incorporated by reference to Exhibit 4.1 to Windtree’s Current Report on Form 8-K, as
filed with the SEC on July 6, 2018).

Form of Series E Warrant dated December 11, 2018 (incorporated by reference to Exhibit 4.7 to Windtree’s Annual Report on Form 10-
K, as filed with the SEC on April 16, 2019).

Form of Series F Warrant dated December 24, 2018 (incorporated by reference to Exhibit 4.2 to Windtree’s Current Report on Form 8-
K, as filed with the SEC on December 21, 2018).

Form of Series G Warrant dated December 24, 2018 (incorporated by reference to Exhibit 4.3 to Windtree’s Current Report on Form 8-
K, as filed with the SEC on December 21, 2018).

Form of Series H Warrant dated February 14, 2019 (incorporated by reference to Exhibit 4.1 to Windtree’s Current Report on Form 8-K,
as filed with the SEC on December 21, 2018).

Form of Series I Warrant dated December 6, 2019 (incorporated by reference to Exhibit 4.1 to Windtree’s Current Report on Form 8-K,
as filed with the SEC on December 9, 2019).

Form of Series F Warrant Amendment No. 1 dated April 24, 2020 (incorporated by reference to Exhibit 4.1 to Windtree’s Current Report
on Form 8-K, as filed with the SEC on April 29, 2020).

Form of Series I Warrant Amendment dated May 6, 2020, to the Series I Warrant dated December 6, 2019 (incorporated by reference to
Exhibit 4.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on May 7, 2020).

Form of Warrant issued in the Company’s May 2020 underwritten public offering of securities (incorporated by reference to Exhibit 4.1
to Windtree’s Current Report on Form 8-K, as filed with the SEC on May 22, 2020).

Form of Warrant issued in the Company’s March 2021 underwritten public offering of securities (incorporated by reference to Exhibit
4.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on March 24, 2021.

Description of Securities. (incorporated by reference to Exhibit 4.16 to Windtree’s Annual Report on Form 10-K, as filed with the SEC
on March 29, 2021).

Sublicense Agreement dated October 28, 1996 between Johnson & Johnson, Ortho Pharmaceutical Corporation and Acute Therapeutics,
Inc. (incorporated by reference to Exhibit 10.6 to Windtree’s Registration Statement on Form SB-2/A, as filed with the SEC on April 18,
1997 (Commission File Number 333-19375)).

Amended and Restated License Agreement dated March 28, 2008, between Windtree and Philip Morris USA Inc. (incorporated by
reference to Exhibit 10.4 to Windtree’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, as filed with the SEC on
May 9, 2008).

License Agreement dated March 28, 2008, between Windtree and Philip Morris Products S.A. (incorporated by reference to Exhibit 10.5
to Windtree’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, as filed with the SEC on May 9, 2008).

Amended and Restated Sublicense and Collaboration Agreement dated December 3, 2004, by and between Discovery Laboratories, Inc.
(predecessor-in-interest to Windtree) and Laboratorios del Dr. Esteve, S.A. (incorporated by reference to Exhibit 10.3 to Windtree’s
Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, as filed with the SEC on November 16, 2020).

Amended and Restated Supply Agreement dated December 3, 2004, by and between Discovery Laboratories, Inc. (predecessor-in-
interest to Windtree) and Laboratorios del Dr. Esteve, S.A. (incorporated by reference to Exhibit 10.2 to Windtree’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2020, as filed with the SEC on November 16, 2020).

License, Development and Commercialization Agreement dated June 12, 2017, between Windtree and Lee’s Pharmaceutical (HK)
Ltd. (incorporated by reference to Exhibit 10.1 to Windtree’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, as
filed with the SEC on August 21, 2017).

Amendment No. 1 dated August 14, 2017 to the License Development and Commercialization Agreement between Windtree and Lee’s
Pharmaceutical (HK) Ltd. dated June 12, 2017 (incorporated by reference to Exhibit 10.1 to Windtree’s Quarterly Report on Form 10-Q
for the quarter ended September 30, 2017, as filed with the SEC on November 14, 2017).

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10.8#

10.9#

10.10#

10.11#

10.12#

10.13#

10.14#

10.15#

10.16#

10.17#

10.18#

10.19#

10.20#

10.21#

10.22#

10.23#

10.24#

10.25

10.26

10.27

10.28

Windtree’s 2011 Long-Term Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to Windtree’s Current Report on
Form 8-K, as filed with the SEC on December 31, 2018).

Windtree’s 2020 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to Windtree’s Current Report on Form 8-K, as filed
with the SEC on December 31, 2020).

Form of Restricted Stock Unit Grant for Employees under Windtree’s 2020 Equity Incentive Plan (incorporated by reference to Exhibit
4.5 To Windtree’s Registration Statement on Form S-8, as filed with the SEC on February 12, 2021).

Form of Stock Option Grant for Employees under Windtree’s 2020 Equity Incentive Plan (incorporated by reference to Exhibit 4.6 To
Windtree’s Registration Statement on Form S-8, as filed with the SEC on February 12, 2021).

Form of Inducement Award Agreement (incorporated by reference to Exhibit 4.4 to Windtree’s Registration Statement on Form S-8 (File
No. 333-253067), as filed with the SEC on February 12, 2021)

Form of Employee Option Agreement under Windtree’s 2011 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.2 to
Windtree’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, as filed with the SEC on May 15, 2012).

Form of Non-Employee Director Option Agreement under Windtree’s 2011 Long-Term Incentive Plan (incorporated by reference to
Exhibit 10.10 to Windtree’s Form 10-K, as filed with the SEC on April 3, 2020).

Form of Restricted Stock Unit Award Agreement for Non-Employee Directors under Windtree’s 2011 Long-Term Incentive Plan
(incorporated by reference to Exhibit 10.11 to Windtree’s Annual Report on Form 10-K for the year ended December 31, 2014, as filed
with the SEC on March 16, 2015).

Form of Restricted Stock Unit Award Agreement for Employees under Windtree’s 2011 Long-Term Incentive Plan (incorporated by
reference to Exhibit 10.14 to Windtree’s Annual Report on Form 10-K for the year ended December 31, 2017, as filed with the SEC on
April 17, 2018).

Employment Agreement dated February 1, 2016, between Windtree and Craig Fraser (incorporated by reference to Exhibit 10.1 to
Windtree’s Current Report on Form 8-K, as filed with the SEC on February 3, 2016).

Inducement Stock Option Award Agreement dated February 1, 2016, between Windtree and Craig Fraser (incorporated by reference to
Exhibit 10.3 to Windtree’s Current Report on Form 8-K, as filed with the SEC on February 3, 2016).

Amendment dated March 13, 2018, to Employment Agreement dated February 1, 2016, between Windtree and Craig
Fraser (incorporated by reference to Exhibit 10.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on March 16, 2018).

Employment Agreement dated December 19, 2014, between Windtree and Steven G. Simonson, M.D. (incorporated by reference to
Exhibit 10.4 to Windtree’s Quarterly Report on Form 10-Q, as filed with the SEC on May 11, 2015).

Amendment dated December 29, 2014 to Employment Agreement dated December 19, 2014, effective as of April 1, 2015, between
Windtree and Steven G. Simonson, M.D. (incorporated by reference to Exhibit 10.5 to Windtree’s Quarterly Report on Form 10-Q, as
filed with the SEC on May 11, 2015).

Amendment dated March 13, 2018, to Employment Agreement dated December 19, 2014 between Windtree and Steven G. Simonson,
M.D. (incorporated by reference to Exhibit 10.3 to Windtree’s Current Report on Form 8-K, as filed with the SEC on March 16, 2018).

At The Market Offering Agreement, dated as of September 17, 2020, by and between Windtree Therapeutics, Inc. and Ladenburg
Thalmann & Co. Inc. (incorporated by reference to Exhibit 1.2 to the Windtree’s Registration Statement on Form S-3, as filed with the
SEC on September 17, 2020).

Form of Indemnification Agreement between Windtree and certain named executive officers and directors (incorporated by reference to
Exhibit 10.4 to Windtree’s Current Report on Form 8-K, as filed with the SEC on February 3, 2016).

Form of Indemnification Agreement between Windtree and certain named directors (incorporated by reference to Exhibit 10.23 to
Windtree’s Annual Report on Form 10-K, as filed with the SEC on April 16, 2019).

Lease Agreement dated May 26, 2004, and First Amendment to Lease Agreement, dated April 2, 2007, between TR Stone Manor Corp.
and Windtree (incorporated by reference to Exhibits 10.1 and 10.2 to Windtree’s Current Report on Form 8-K, as filed with the SEC on
April 6, 2007).

Second Amendment to Lease Agreement dated January 3, 2013 between TR Stone Manor Corp. and Windtree (incorporated by
reference to Exhibit 10.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on January 8, 2013).

Fourth Amendment to Lease Agreement dated April 29, 2016, between PH Stone Manor LP and Windtree (incorporated by reference to
Exhibit 10.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on May 31, 2016).

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10.29

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

10.44

10.45

10.46

10.47

Fifth Amendment to Lease Agreement dated February 23, 2018, between PH Stone Manor LP and Windtree (incorporated by reference
to Exhibit 10.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on March 1, 2018).

Master Services Agreement dated October 24, 2013 between Windtree and DSM Pharmaceuticals, Inc. (now known as Patheon
Manufacturing Services LLC) (incorporated by reference to Exhibit 10.3 to Windtree’s Quarterly Report on Form 10-Q, as filed with the
SEC on November 12, 2013).

Supply Agreement dated December 22, 2010 between Corden Pharma (formerly Genzyme Pharmaceuticals LLC, now known as Corden
Pharma) and Windtree (incorporated by reference to Exhibit 10.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on
December 29, 2010).

Exchange and Termination Agreement dated October 27, 2017, between Windtree and Deerfield (incorporated by reference to Exhibit
10.2 to Windtree’s Current Report on Form 8-K, as filed with the SEC on November 1, 2017).

Registration Rights Agreement dated October 27, 2017, between Windtree and LPH Investments Limited (incorporated by reference to
Exhibit 99.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on November 1, 2017).

Registration Rights Agreement dated March 30, 2018, between Windtree and LPH II Investments Limited (incorporated by reference to
Exhibit 10.2 to Windtree’s Current Report on Form 8-K, as filed with the SEC on April 4, 2018).

Collaboration Agreement dated as of October 14, 2014, by and between Battelle Memorial Institute and Discovery Laboratories, Inc.
(predecessor-in-interest to Windtree) (incorporated by reference to Exhibit 10.1 to Windtree’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2020, as filed with the SEC on November 16, 2020).

Payment Restructuring Agreement effective December 7, 2018, between Windtree and Battelle Memorial Institute (incorporated by
reference to Exhibit 10.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on December 7, 2018).

Amendment No. 1 dated March 30, 2020 to Payment Restructuring Agreement, effective December 7, 2018, between Windtree and
Lee’s Pharmaceutical (HK) LTD (incorporated by reference to Exhibit 10.48 to Windtree’s Registration Statement on Form S-1/A (File
No. 333-236085), as filed with the SEC on May 6, 2020).

Loan Agreement dated October 25, 2018, between CVie Therapeutics, Lee’s Pharmaceutical Holdings Limited, and O-Bank Co., Ltd.
(incorporated by reference to Exhibit 10.34 to Windtree’s Annual Report on Form 10-K, as filed with the SEC on April 16, 2019).

Shareholder Loan Agreement dated April 24, 2018, between Lee’s Pharmaceutical International Limited and CVie Therapeutics
(incorporated by reference to Exhibit 10.35 to Windtree’s Annual Report on Form 10-K, as filed with the SEC on April 16, 2019).

Shareholder Loan Agreement dated September 20, 2018, between Lee’s Pharmaceutical International Limited and CVie
Therapeutics (incorporated by reference to Exhibit 10.36 to Windtree’s Annual Report on Form 10-K, as filed with the SEC on April 16,
2019).

Shareholder Loan Agreement dated October 26, 2018, between Lee’s Pharmaceutical International Limited and CVie Therapeutics
(incorporated by reference to Exhibit 10.37 to Windtree’s Annual Report on Form 10-K, as filed with the SEC on April 16, 2019).

Shareholder Loan Agreement dated November 16, 2018, between Lee’s Pharmaceutical International Limited and CVie
Therapeutics (incorporated by reference to Exhibit 10.38 to Windtree’s Annual Report on Form 10-K, as filed with the SEC on April 16,
2019).

Merger Agreement dated December 21, 2018, between Windtree, WT Acquisition Corp., and CVie Investments Limited (incorporated
by reference to Exhibit 10.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on December 21, 2018).

Indemnification Letter Agreement dated December 21, 2018, between Windtree and Lee’s Pharmaceutical Holdings
Limited (incorporated by reference to Exhibit 10.2 to Windtree’s Current Report on Form 8-K, as filed with the SEC on December 21,
2018).

Securities Purchase Agreement dated December 21, 2018 between Windtree and certain purchasers party thereto (incorporated by
reference to Exhibit 10.3 to Windtree’s Current Report on Form 8-K, as filed with the SEC on December 21, 2018).

Registration Rights Agreement dated December 21, 2018 between Windtree and certain purchasers party thereto (incorporated by
reference to Exhibit 10.4 to Windtree’s Current Report on Form 8-K, as filed with the SEC on December 21, 2018).

Loan Agreement dated October 24, 2019 between Windtree and LPH II Investments Ltd. (incorporated by reference to Exhibit 10.1 to
Windtree’s Current Report on Form 8-K, as filed with the SEC on October 28, 2019).

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10.48

10.49

10.50#

10.51

10.52

10.53#

Form of Securities Purchase Agreement dated December 6, 2019 by and among Windtree and the purchasers party thereto (incorporated
by reference to Exhibit 10.1 to Windtree’s Current Report on Form 8-K, as filed with the SEC on December 9, 2019).

Form of Registration Rights Agreement dated December 6, 2019 by and among Windtree and the purchasers party thereto (incorporated
by reference to Exhibit 10.2 to Windtree’s Current Report on Form 8-K, as filed with the SEC on December 9, 2019).

Employment Agreement dated March 1, 2020, between Windtree and Eric Curtis (incorporated by reference to Exhibit 10.46 to
Windtree’s Form 10-K, as filed with the SEC on April 3, 2020).

Amendment to No. 1 dated February 20, 2020 to the Securities Purchase Agreement dated December 6, 2019 by and among Windtree
and the purchasers party thereto (incorporated by reference to Exhibit 10.47 to Windtree’s Form 10-K, as filed with the SEC on April 3,
2020).

Project Financing Agreement, dated August 12, 2020, by and between Windtree and Lee’s Pharmaceutical (HK) Ltd. (incorporated by
reference to Exhibit 10.4 to Windtree’s Quarterly Report on Form 10-Q, as filed with the SEC on November 16, 2020).

Employment Agreement by and between Windtree and John Hamill, dated as of July 20, 2020 (incorporated by reference to Exhibit 10.1
to Windtree’s Current Report on Form 8-K, as filed with the SEC on July 23, 2020).

10.54#*

Employment Agreement by and between Windtree and Diane Carman, dated as of July 1, 2021.

21.1

23.1*

31.1*

31.2*

32.1*

Subsidiaries of Windtree (incorporated by reference to Exhibit 21.1 to Windtree’s Annual Report on Form 10-K, as filed with the SEC
on April 16, 2019).

Consent of Ernst & Young LLP, independent registered public accounting firm.

Certification of the Chief Executive Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of the Chief Financial Officer, as required by Section 302 of the Sarbanes-Oxley Act of 2002.

Certifications of the Chief Executive Officer and Chief Financial Officer as required by 18 U.S.C. 1350.

101.INS*

Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are
embedded within the Inline XBRL document) (1).

101.SCH*

Inline XBRL Taxonomy Extension Schema Document (1).

101.CAL*

Inline XBRL Taxonomy Extension Calculation Linkbase Document (1).

101.DEF*

Inline XBRL Taxonomy Extension Definition Linkbase Document (1).

101.LAB*

Inline XBRL Taxonomy Extension Label Linkbase Document (1).

101.PRE*

Inline XBRL Taxonomy Extension Presentation Linkbase Document (1).

104

Cover Page Interactive Data File (formatted as Inline XBRL and combined in Exhibit 101.1)

* Filed herewith.
# Compensation Related Contract.
† Confidential treatment received for certain portions of this exhibit.
†† Certain confidential portions have been omitted from this exhibit pursuant to Item 601(b)(10)(iv) of Regulation S-K.
(1) These Interactive Data Files shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the
Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.

68

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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SIGNATURES

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

Date: March 31, 2022

WINDTREE THERAPEUTICS, INC.

By: /s/ Craig E. Fraser
Craig E. Fraser
Director, President, and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.

Signature

Title

/s/ Craig E. Fraser
Craig E. Fraser

/s/ John P. Hamill
John P. Hamill

/s/ James Huang
James Huang

/s/ Daniel E. Geffken
Daniel E. Geffken

/s/ Evan Loh, M.D.
Evan Loh, M.D.

/s/ Robert Scott, M.D.
Robert Scott, M.D.

/s/ Leslie J. Williams
Leslie J. Williams

Date

March 31, 2022

Director, President, and Chief Executive Officer
(Principal Executive Officer)

Senior Vice President and Chief Financial Officer and Treasurer (Principal
Financial and Accounting Officer)

March 31, 2022

Director (Chairman of the Board)

Director

Director

Director

Director

69

March 31, 2022

March 31, 2022

March 31, 2022

March 31, 2022

March 31, 2022

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

Contents
Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)

Consolidated Balance Sheets as of December 31, 2021 and 2020

Consolidated Statements of Operations for the years ended December 31, 2021 and 2020

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2021 and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020

Notes to consolidated financial statements

F-1

Page

F-2

F-3

F-4

F-5

F-6

F-7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Windtree Therapeutics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Windtree Therapeutics, Inc. and subsidiaries (the Company) as of December 31, 2021
and 2020, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the years then ended, and the related notes
(collectively  referred  to  as  the  “consolidated  financial  statements”).  In  our  opinion,  the  consolidated  financial  statements  present  fairly,  in  all  material
respects,  the  financial  position  of  the  Company  at  December  31,  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.

The Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in
Note  3  to  the  consolidated  financial  statements,  the  Company  has  suffered  recurring  losses  from  operations,  expects  to  incur  losses  for  the  foreseeable
future, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of the events and
conditions  and  management’s  plans  regarding  these  matters  are  also  described  in  Note  3.  The  consolidated  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s 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 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  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  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 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  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 financial statements and (2)
involved our especially challenging, subjective or complex judgments. The communication of the 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 a separate opinion
on the critical audit matter or on the account or disclosure to which it relates.

Fair value of indefinite-lived intangible assets

Description of
the Matter

As reflected in the Company’s consolidated financial statements, indefinite-lived intangible assets totaled $32.1 million and consisted of
in-process research and development (IPR&D) at December 31, 2021. As discussed in Note 4 to the consolidated financial statements,
IPR&D  assets  are  tested  by  management  for  impairment  at  least  annually,  or  when  events  or  changes  in  the  business  environment
indicate that the fair value of the IPR&D assets are more likely than not less than their carrying value. The Company recorded a loss on
impairment of intangible assets of $45.0 million for the year-ended December 31, 2021. The interim and annual quantitative impairment
tests require that management estimate the fair value of the IPR&D assets in order to determine if the asset is impaired.

Auditing  the  estimated  fair  value  of  the  IPR&D  assets  was  complex  and  involved  a  high  degree  of  subjectivity  due  to  the  significant
estimation uncertainty involved in determining the fair value of the IPR&D assets. In particular, the estimated fair value of the IPR&D
assets  was  sensitive  to  significant  assumptions  such  as  the  probability  of  achieving  development  and  commercial  success  for  the
products, the size of the addressable patient population, the anticipated pricing for the products, the probability, timing and amount of any
upfront  or  milestone  payments  from  potential  partnering  agreements,  the  timing  and  amount  of  additional  clinical  trial  costs  to  be
incurred by the Company, and the discount rate.

Continued on next page

F-2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

How We
Addressed the
Matter in Our
Audit

To test the estimated fair value of the Company’s IPR&D assets, we performed audit procedures that included, among others, testing the
significant assumptions used to develop the estimate and evaluating the completeness and accuracy of the underlying data used by the
Company in its analyses. For example, we compared the probability of achieving development and commercial success for the products
to  studies  published  in  medical  journals  evaluating  clinical  advancement  and  approval  rates  for  similar  products.  We  compared  the
estimated  size  of  the  addressable  patient  population  to  an  industry  database  that  tracks  healthcare  information  and  we  compared  the
anticipated  pricing  and  upfront/milestone  payment  assumptions  to  publicly  available  data  supporting  transactions  and  products  of  a
similar nature. We compared the anticipated future clinical trial costs to actual costs incurred by the Company for past comparable trials.
We also involved internal valuation specialists to assist in our evaluation of the discount rate used by the Company.

/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2000.
Philadelphia, Pennsylvania
March 31, 2022

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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share and per share data)

ASSETS
Current Assets:

Cash and cash equivalents
Prepaid expenses and other current assets

Total current assets

Property and equipment, net
Restricted cash
Operating lease right-of-use assets
Intangible assets
Goodwill

Total assets

LIABILITIES & STOCKHOLDERS’ EQUITY
Current Liabilities:

Accounts payable
Accrued expenses
Operating lease liabilities - current portion
Loans payable - current portion
Total current liabilities

Operating lease liabilities - non-current portion
Loans payable - non-current portion
Restructured debt liability - contingent milestone payments
Other liabilities
Deferred tax liabilities
Total liabilities

Stockholders’ Equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding at December

31, 2021 and 2020

Common stock, $0.001 par value; 120,000,000 shares authorized at December 31, 2021 and 2020;

28,268,950 and 16,921,506 shares issued at December 31, 2021 and 2020, respectively; 28,268,926 and
16,921,482 shares outstanding at December 31, 2021 and 2020, respectively

Additional paid-in capital
Accumulated deficit
Treasury stock (at cost); 24 shares

Total stockholders’ equity
Total liabilities & stockholders’ equity

See notes to consolidated financial statements

F-4

  December 31, 2021   

December 31,
2020

  $

  $

  $

  $

22,348    $
1,143     
23,491     

1,011     
154     
2,381     
32,070     
15,682     
74,789    $

693    $
3,408     
528     
294     
4,923     

2,071     
-     
15,000     
3,800     
7,114     
32,908     

16,930 
1,188 
18,118 

924 
154 
917 
77,090 
15,682 
112,885 

1,161 
3,813 
805 
352 
6,131 

201 
2,423 
15,000 
2,800 
16,778 
43,333 

-     

- 

28     
830,231     
(785,324)    
(3,054)    
41,881     
74,789    $

17 
790,277 
(717,688)
(3,054)
69,552 
112,885 

 
 
 
 
 
 
     
       
 
     
       
 
     
       
 
   
   
 
     
       
 
   
   
   
   
   
 
     
       
 
     
       
 
     
       
 
   
   
   
   
 
     
       
 
   
   
   
   
   
   
 
     
       
 
     
       
 
   
   
   
   
   
   
 
 
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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share data)

Expenses:

Research and development
General and administrative
Loss on impairment of intangible assets

Total operating expenses

Operating loss

Other expense:

Interest income
Interest expense
Other expense, net

Total other expense, net

Loss before income taxes

Deferred income tax benefit

Net loss

Net loss per common share
Basic and diluted

Weighted average number of common shares outstanding
Basic and diluted

See notes to consolidated financial statements

F-5

Year Ended December 31,
2020
2021

17,787     
14,473     
45,020     
77,280     
(77,280)    

91     
(114)    
(320)    
(343)    

(77,623)    
9,987     
(67,636)   $

15,373 
14,944 
- 
30,317 
(30,317)

122 
(125)
(2,246)
(2,249)

(32,566)
- 
(32,566)

(2.73)   $

(2.08)

24,760     

15,654 

  $

  $

 
 
 
 
 
 
 
 
   
 
 
     
       
 
     
       
 
   
   
   
   
   
 
     
       
 
     
       
 
   
   
   
   
 
     
       
 
   
   
 
     
       
 
     
       
 
 
     
       
 
     
       
 
   
 
 
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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders’ Equity
(in thousands)

Balance - December 31, 2019
Net loss
Issuance of common stock and common stock warrants,
net of issuance costs
Modification of warrants
Vesting of restricted stock units
Exercise of common stock warrants
Stock-based compensation expense
Balance - December 31, 2020
Net loss
Issuance of common stock and common stock warrants,
net of issuance costs
Issuance of common stock, ATM Program, net of
issuance costs
Issuance of common stock warrants, equity
consideration for service agreement
Stock-based compensation expense
Balance - December 31, 2021

See notes to consolidated financial statements

Common Stock

Treasury Stock

  Shares     Amount    

Additional
Paid-in
Capital

Accumulated
Deficit

    Shares     Amount    

13,697    $

14    $ 763,097    $

(685,122)    
(32,566)    

-    $

(3,054)   $

3,172     

35     
18     

16,922    $

3     

20,243     
1,112     
-     
141     
5,684     
17    $ 790,277    $

-     
-     

9,230     

9     

27,381     

2,117     

2     

4,841     

494     
7,238     
28    $ 830,231    $

28,269    $

F-6

(717,688)    
(67,636)    

-    $

(3,054)   $

(785,324)    

-    $

(3,054)   $

Total

74,935 
(32,566)

20,246 
1,112 
- 
141 
5,684 
69,552 
(67,636)

27,390 

4,843 

494 
7,238 
41,881 

 
 
 
 
 
     
 
     
 
   
     
 
 
 
   
 
 
     
       
       
     
 
       
       
       
 
   
   
      
      
      
      
      
   
      
      
      
   
      
      
      
      
      
   
      
      
      
   
      
      
      
   
      
      
      
      
      
   
   
      
      
      
      
      
   
     
     
     
   
     
     
     
   
      
     
     
      
     
   
      
      
      
      
      
   
 
 
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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)

Cash flows from operating activities:

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

Depreciation and amortization
Stock-based compensation
Non-cash expense related to warrant modifications
Non-cash lease expense
Non-cash expense related to equity consideration for a service agreement
Loss on impairment of intangible assets
Deferred income tax benefit
Unrealized loss on foreign exchange rate changes
Changes in assets and liabilities:

Prepaid expenses and other current assets
Accounts payable
Collaboration and device development payable
Accrued expenses
Operating lease liabilities
Net cash used in operating activities

Cash flows from investing activities:

Purchase of property and equipment

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock and warrants, net of issuance costs
Proceeds from ATM Program, net of expenses
Proceeds from research and development funding arrangement
Proceeds from exercise of common stock warrants
Principal payments on loans payable
Proceeds from Paycheck Protection Program loan
Principal payments on Paycheck Protection Program loan

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash - beginning of year
Cash, cash equivalents, and restricted cash - end of year

Supplementary disclosure of non-cash activity:

Operating lease liabilities arising from obtaining right-of-use assets
Prepayment of insurance through third-party financing

See notes to consolidated financial statements

F-7

Year Ended December 31,
2020
2021

  $

(67,636)   $

(32,566)

192     
7,238     
-     
677     
494     
45,020     
(9,987)    
396     

1,365     
(468)    
-     
(407)    
(548)    
(23,664)    

(279)    
(279)    

27,390     
4,843     
1,000     
-     
(3,872)    
-     
-     
29,361     
5,418     
17,084     
22,502    $

2,141    $
1,321     

168 
5,684 
1,112 
473 
- 
- 
- 
1,142 

1,147 
(547)
(1,975)
585 
(538)
(25,315)

(291)
(291)

20,246 
- 
2,800 
141 
(3,229)
547 
(547)
19,958 
(5,648)
22,732 
17,084 

249 
1,056 

  $

  $

 
 
 
 
 
 
 
 
   
 
     
       
 
     
       
 
   
   
   
   
   
   
   
   
     
       
 
   
   
   
   
   
   
 
     
       
 
     
       
 
   
   
 
     
       
 
     
       
 
   
   
   
   
   
   
   
   
   
   
 
     
       
 
     
       
 
   
 
 
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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

Note 1 – The Company and Description of Business

We are a clinical-stage biopharmaceutical company focused on the development of novel therapeutics intended to address significant unmet medical needs
in important acute care markets. Our development programs are primarily focused in the treatment of acute cardiovascular and secondarily in acute
pulmonary diseases. Our lead product candidate, istaroxime, is a first-in-class, dual-acting agent being developed to improve cardiac function in patients
with acute heart failure, or AHF, with a potentially differentiated safety profile from existing treatments. Istaroxime demonstrated significant improvement
in both diastolic and systolic aspects of cardiac function and was generally well tolerated in two phase 2 clinical trials. Istaroxime has been granted Fast
Track designation for the treatment of AHF by the U.S. Food and Drug Administration, or FDA. Based on the profile observed in our phase 2 clinical
studies in AHF, where istaroxime significantly improved cardiac function and systolic blood pressure in acute decompensated heart failure patients, we
initiated a phase 2 global clinical study to evaluate istaroxime for the treatment of early cardiogenic shock (Society for Cardiovascular Angiography and
Interventions Stage B shock), a severe form of heart failure characterized by very low blood pressure and risk for hypoperfusion to critical organs. We
believe that istaroxime has the potential to fulfill an unmet need in early cardiogenic shock. Our heart failure cardiovascular portfolio also includes sarco
endoplasmic reticulum Ca2+ -ATPase 2a, or SERCA2a, activators which activate SERCA2a. This research program is evaluating these preclinical product
candidates, including oral and intravenous SERCA2a activator heart failure compounds. As potential oral agents, these candidates would be developed for
chronic heart failure. In addition, our cardiovascular drug product candidates include rostafuroxin, a novel product candidate for the treatment of
hypertension in patients with a specific genetic profile. We are pursuing potential licensing arrangements and/or other strategic partnerships and do not
intend to advance this product candidate without securing such an arrangement or partnership.

Our pulmonary product candidate portfolio consists of a KL4 surfactant platform to address a range of serious respiratory
conditions in children and adults. KL4 surfactant has been in development as a liquid instillate for noninvasive delivery as an
aerosol. In September 2020, the FDA accepted our investigational new drug, or IND, application for an open-label phase 2 pilot
study to assess safety and tolerability in the COVID-19 acute respiratory distress syndrome, or ARDS, population and the ability
of our KL4 surfactant liquid instillate to impact key respiratory parameters in the treatment of lung injury and ARDS resulting
from severe acute respiratory syndrome coronavirus 2, or SARS-CoV-2, the causative agent in novel coronavirus, or COVID-19,
infections. In January 2022, we completed enrollment of 20 patients in our phase 2 study of lucinactant (KL4 surfactant) for
patients with severe COVID-19 associated ARDS and lung injury. The study demonstrated that intratracheal administration of
reconstituted lyophilized lucinactant was generally safe and well tolerated. Lucinactant was safely administered to critically ill,
mechanically ventilated patients with severe COVID-19 associated ARDS. Oxygenation and other physiological parameters were
stable to improved after dosing, supporting the feasibility of this treatment approach to develop a potential treatment for critically
ill patients with ARDS due to COVID-19 or other causes.

Previously, we were also developing AEROSURF (lucinactant for inhalation), a novel drug/medical device combination product for noninvasive delivery
of aerosolized KL4 surfactant using our ADS technology for the treatment of respiratory distress syndrome, or RDS, in premature infants. We suspended
all internal AEROSURF clinical activities in November 2020, because istaroxime, our lead product candidate, has become our primary focus for
investment and execution as we believe development of istaroxime represents a greater value opportunity for us and our stockholders than development of
KL4 surfactant. Since completing our phase 2 study of lucinactant (KL4 surfactant) for patients with severe COVID-19 associated ARDS and lung injury
in January 2022, in order to preserve resources for the highest priority programs, we have begun to reduce costs that were not already transferred to our
licensee in Asia, Lee’s Pharmaceutical (HK) Ltd., or Lee’s (HK), under the terms of our License, Development and Commercialization Agreement between
us and Lee’s (HK) dated as of June 12, 2017, as amended, or the Asia License Agreement. These costs include certain reductions in headcount dedicated to
KL4 surfactant and the decommissioning of both our analytical and technical support laboratory, which previously conducted release testing of active
pharmaceutical ingredients, or APIs, and supportive research for our lyophilized and aerosolized KL4 surfactant, and our medical device development
laboratory, which was previously used to conduct development activities and testing for our ADS technologies. To support the future development of our
KL4 surfactant platform in markets outside of Asia, including the U.S., we are pursuing one or more licensing transactions.

Our ability to advance our development programs is dependent upon our ability to secure additional capital in both the near and long-term, through public
or private equity offerings; through potential strategic opportunities, including licensing agreements, drug product development and marketing
collaboration arrangements, pharmaceutical research cooperation arrangements or other similar transactions in geographic markets, including the U.S.,
and/or through potential grants and other funding commitments from U.S. government agencies, in each case, if available. We have engaged with potential
counterparties in various markets and will continue to pursue non-dilutive sources of capital as well as potential private and public offerings. There can be
no assurance, however, that we will be able to identify and enter into public or private securities offerings on acceptable terms and in amounts sufficient to
meet our needs or qualify for non-dilutive funding opportunities under any grant programs sponsored by U.S. government agencies, private foundations
and/or leading academic institutions, or identify and enter into any strategic transactions that will provide the additional capital that we will require. If none
of these alternatives is available, or if available, we are unable to raise sufficient capital through such transactions, we potentially could be forced to limit or
cease our development activities, which would have a material adverse effect on our business, financial condition and results of operations.

Note 2 – Basis of Presentation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the U.S., or US GAAP, and include
accounts of Windtree Therapeutics, Inc. and its wholly owned subsidiaries. Intercompany balances and transactions have been eliminated in
consolidation. All adjustments (consisting of normally recurring accruals) considered for fair presentation have been included.

The accompanying consolidated financial statements reflect the 1-for-3 reverse split of our common stock that was approved by our Board of Directors and
controlling stockholders and made effective on April 29, 2020. All share and per share information herein that relates to our common stock prior to the
effective date has been retroactively restated to reflect the reverse stock split.

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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

Note 3 – Liquidity Risks and Management’s Plans

We are subject to risks common to companies in the biotechnology industry, including but not limited to, the need for additional capital, risks of failure of
preclinical and clinical studies, the need to obtain marketing approval and reimbursement for any drug product candidate that we may identify and develop,
the need to successfully commercialize and gain market acceptance of our product candidates, dependence on key personnel, protection of proprietary
technology, compliance with government regulations, development of technological innovations by competitors, and risks associated with our international
locations and activities abroad, including but not limited to having foreign suppliers, manufacturers and clinical sites in support of our development
activities.

We have incurred net losses since inception. Our net loss was $67.6 million and $32.6 million, respectively, for the years ended  December 31, 2021 and
2020. Included in our net loss for the year ended  December 31, 2021 is a $45.0 million loss on impairment of intangible assets related to rostafuroxin and a
related $10.0 million deferred income tax benefit (see, Note 4 – Accounting Policies and Recent Accounting Pronouncements). We expect to continue to
incur operating losses for at least the next several years. As of December 31, 2021, we had an accumulated deficit of $785.3 million. Our future success is
dependent on our ability to fund and develop our product candidates, and ultimately upon our ability to attain profitable operations. We have devoted
substantially all of our financial resources and efforts to research and development and general and administrative expense to support such research and
development. Net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital,
and accordingly, our ability to execute our future operating plans.

In March 2021, we received net proceeds of approximately $27.4 million related to a public offering of 9,230,500 units at a price per unit of $3.25. Each
unit consisted of one share of our common stock and a warrant to purchase one share of common stock, or the March 2021 Warrants. The March 2021
Warrants were immediately exercisable for shares of common stock at a price of $3.60 per share and expire five years from the date of issuance.

We are party to an At-The-Market Offering Agreement with Ladenburg Thalmann & Co. Inc., or Ladenburg, pursuant to which we may offer and sell, from
time to time at our sole discretion, up to a maximum of $10.0 million of shares of our common stock through Ladenburg as agent and/or principal through
an at-the-market program, or the ATM Program. For the year ended  December 31, 2021, we sold 2,116,944 shares of our common stock under the ATM
Program resulting in aggregate gross proceeds to us of approximately $5.0 million and net proceeds of approximately $4.8 million (see, Note 10 –
Stockholders’ Equity).

As of  December 31, 2021, we had cash and cash equivalents of $22.3 million and current liabilities of $4.9 million. As of March 31, 2022, we believe that
we have sufficient resources available to support our development activities and business operations and satisfy our obligations into the first quarter of
2023. We do not have sufficient cash and cash equivalents as of the date of this Annual Report on Form 10-K to support our operations for at least the 12
months following the date that the financial statements are issued. These conditions raise substantial doubt about our ability to continue as a going concern
through 12 months after the date that the financial statements are issued.

To alleviate the conditions that raise substantial doubt about our ability to continue as a going concern, management plans to secure additional capital,
potentially through a combination of public or private equity offerings and strategic transactions, including potential licensing arrangements, alliances and
drug product collaborations focused on specified geographic markets; however, none of these alternatives are committed at this time. There can be no
assurance that we will be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all, or identify and enter
into any strategic transactions that will provide the capital that we will require. If none of these alternatives is available, or if available, we are unable to
raise sufficient capital through such transactions, we will not have sufficient cash resources and liquidity to fund our business operations for at least the
next 12 months following the date that the financial statements are issued. The failure to obtain sufficient capital on acceptable terms when needed would
have a material adverse effect on our business, results of operations, and financial condition. Accordingly, management has concluded that substantial
doubt exists with respect to our ability to continue as a going concern through 12 months after the issuance of the accompanying financial statements.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business, and do not include any adjustments relating to recoverability and classification of recorded asset amounts or the
amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Note 4 – Accounting Policies and Recent Accounting Pronouncements

Principles of Consolidation

The consolidated financial statements are prepared in accordance with US GAAP and include accounts of Windtree Therapeutics, Inc. and our wholly
owned subsidiary, CVie Investments Limited and its wholly owned subsidiary, CVie Therapeutics Limited, or CVie Therapeutics,; and a presently inactive
subsidiary, Discovery Laboratories, Inc. (formerly known as Acute Therapeutics, Inc.).

Goodwill and Intangible Assets

We record acquired identified intangibles, which includes intangible assets (such as goodwill and other intangibles), based on estimated fair value. The
acquired in-process research and development, or IPR&D, assets are considered indefinite-lived intangible assets until completion or abandonment of the
associated research and development efforts. IPR&D is not amortized but reviewed for impairment at least annually, or when events or changes in the
business environment indicate that the carrying value may be impaired.

When testing our goodwill and indefinite-lived intangible assets for impairment, we can elect to perform a qualitative assessment to determine if it is more
likely than not that the fair values of our reporting unit and indefinite-lived intangible assets are less than their respective carrying values. Such qualitative
factors can include, among others, industry and market conditions, overall financial performance, and relevant entity-specific events. If we conclude based
on our qualitative assessment that it is more likely than not that the fair value of our reporting unit or indefinite-lived intangible assets are less than their
respective carrying values, we perform a quantitative assessment. When conducting our annual impairment test of goodwill and indefinite-lived intangible
assets as of December 1, 2021, we elected to perform a quantitative assessment.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

When performing the quantitative impairment assessment for our indefinite-lived IPR&D intangible assets, we estimate the fair values of the assets using
the multi-period excess earnings method, or MPEEM. MPEEM is a variation of the income approach which estimates the fair value of an intangible asset
based on the present value of the incremental after-tax cash flows attributable to the intangible asset. Significant factors considered in the calculation of
IPR&D intangible assets include the risks inherent in the development process, including the likelihood of achieving commercial success and the cost and
related time to complete the remaining development. Future cash flows for each project were estimated based on forecasted revenue and costs, taking into
account the expected product life cycles, market penetration, and growth rates. Other significant estimates and assumptions inherent in this approach
include (i) the amount and timing of the projected net cash flows associated with the IPR&D assets, (ii) the discount rate, which seeks to reflect the various
risks inherent in the projected cash flows; and (iii) the tax rate, which considers geographic diversity of the projected cash flows. While we use the best
available information to prepare our cash flows and discount rate assumptions, actual future cash flows could differ significantly based on the commercial
success of the related drug candidates and market conditions which could result in future impairment charges related to our indefinite-lived intangible asset
balances.

During the second quarter of 2021, we concluded an initial process to test the industry’s interest in investing in our rostafuroxin drug candidate and were
not able to secure a licensing transaction or other strategic opportunity at that time. Based on feedback received from potential licensing partners, we have
determined that there is a need for an additional phase 2 clinical trial to demonstrate efficacy in non-Caucasian patients in treatment resistant hypertension.
Due to these developments, and in connection with the preparation of the interim unaudited condensed consolidated financial statements as of and for the
period ending June 30, 2021, we determined that the fair value of the IPR&D related to our rostafuroxin drug candidate was more likely than not less than
its carrying value. As a result, we performed the required quantitative impairment assessment of the related intangible asset. We estimated the fair value of
the asset using MPEEM and determined that the fair value as of  June 30, 2021 was approximately $17.0 million. We then compared this fair value to the
carrying value of approximately $54.8 million and recorded a loss on impairment of intangible assets of $37.8 million during the second quarter of 2021.

As part of our annual quantitative impairment assessment of indefinite-lived IPR&D intangible assets, we reassessed certain of the assumptions related to
our rostafuroxin drug candidate due to the current macroeconomic conditions which have made it harder to secure the funding needed to conduct the
additional phase 2 clinical trial and have therefore delayed our intended development of rostafuroxin. As a result, we concluded that the fair value of the
IPR&D related to our rostafuroxin drug candidate was again less than its carrying value. We estimated the fair value of the asset using MPEEM and
determined that the fair value as of  December 1, 2021  was approximately  $9.7  million. We then compared this fair value to the carrying value of
approximately  $17.0  million, and recorded an additional loss on impairment of intangible assets of  $7.2  million in the fourth quarter of 2021. When
combined with the loss on impairment of intangible assets recorded during the second quarter, we recorded a loss on impairment of intangible assets
totaling  $45.0 million within operating expenses in our consolidated statements of operations during the year ended  December 31, 2021 . No events or
changes in the business environment occurred during 2021 that would indicate that the fair value of the IPR&D related to our istaroxime drug candidate
was impaired.

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed in a business combination and is not
amortized. It is reviewed for impairment at least annually or when events or changes in the business environment indicate that its carrying value may be
impaired. Our company consists of one reporting unit. In order to perform the quantitative goodwill impairment test, we compare the estimated fair value
of our reporting unit to its carrying value. If the fair value exceeds the carrying value, no further evaluation is required, and no impairment exists. If the
carrying value exceeds the fair value, the difference between the carrying value and the fair value is recorded as an impairment loss, the amount of which
may not exceed the total amount of goodwill. When performing our annual goodwill impairment assessment as of December 1, 2021, we estimated the fair
value of our reporting unit based upon the quoted market price and related market capitalization of our common stock, adjusted for an estimated control
premium. Based on the quantitative test performed, we determined that the fair value of our reporting unit exceeded its carrying value and no impairment
exists.

The following table represents identifiable intangible assets and goodwill as of December 31, 2021 and 2020:

(in thousands)

Istaroxime drug candidate
Rostafuroxin drug candidate
Intangible assets

Goodwill

Foreign Currency Transactions

December 31,

2021

2020

  $

  $

22,340    $
9,730     
32,070     

22,340 
54,750 
77,090 

15,682    $

15,682 

The functional currency for our foreign subsidiaries is US Dollars. We remeasure monetary assets and liabilities that are not denominated in the functional
currency at exchange rates in effect at the end of each period. Gains and losses from the remeasurement of foreign currency transactions are recognized in
other expense, net. Foreign currency transactions resulted in losses of approximately $0.3 million and $1.2 million, respectively, for the years ended
December 31, 2021 and 2020.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents are held at domestic and foreign financial institutions and consist of liquid investments, money market funds, and U.S. Treasury
notes with a maturity from date of purchase of 90 days or less that are readily convertible into cash.

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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

Fair Value of Financial Instruments

Our financial instruments consist principally of cash and cash equivalents and restricted cash. The fair values of our cash equivalents are based on quoted
market prices. The carrying value of cash equivalents is equal to their respective fair values at December 31, 2021 and 2020, respectively. Accounts
payable and accrued expenses are carried at cost, which approximates fair value because of their short maturity. The carrying value of loans payable
(including current installments) approximates fair value based on a comparison of interest rates on the loan to current market rates considering our credit
risk.

Property and Equipment

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets (generally three to
ten years). Leasehold improvements are amortized over the shorter of the estimated useful lives or the remaining term of the lease. Repairs and
maintenance costs are charged to expense as incurred.

Restricted Cash

Restricted cash consists principally of a $140,000 certificate of deposit held by our bank as collateral for a letter of credit in the same notional amount held
by our landlord to secure our obligations under our lease agreement dated May 26, 2004 for our headquarters location in Warrington, Pennsylvania
and $14,000 in deposits held by our landlord for our offices in Taipei, Taiwan.

Leases

Leases are accounted for under Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or ASC, Topic 842, Leases, or ASC
842. At the inception of an arrangement, we determine whether an arrangement is, or contains, a lease based on the unique facts and circumstances present
in the arrangement. An arrangement is, or contains, a lease if the arrangement conveys the right to control the use of an identified asset for a period of time
in exchange for consideration. Leases with a term greater than one year are generally recognized on the balance sheet as operating lease right-of-use assets
and current and non-current operating lease liabilities, as applicable. It is our policy not to recognize on the balance sheet leases with terms of 12 months or
less. We typically only include the initial lease term in our assessment of a lease arrangement. Options to extend a lease are not included in our assessment
unless there is reasonable certainty that we will renew.

Operating lease liabilities and their corresponding operating lease right-of-use assets are recorded based on the present value of lease payments over the
expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as incentives received. The interest rate implicit
in our leases is typically not readily determinable. As a result, we utilize our incremental borrowing rate, which reflects the fixed rate at which we could
borrow on a collateralized basis the amount of the lease payments in the same currency, for a similar term, in a similar economic environment.

At the inception of a contract, we assess whether the contract is, or contains, a lease. The assessment is based on: (i) whether the contract involves the use
of a distinct identified asset, (ii) whether we obtain the right to substantially all the economic benefit from the use of the asset throughout the period, and
(iii) whether we have the right to direct the use of the asset.

We evaluate the classification of our leases as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following
criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably
certain to be exercised, the lease term is for a major part of the remaining useful life of the asset, the present value of the lease payments equals or exceeds
substantially all of the fair value of the asset, or the leased asset is of such a specialized nature that it is expected to have no alternative use to the lessor at
the end of the lease. A lease is classified as an operating lease if it does not meet any of these criteria. Currently, all of our leases are classified as operating
leases.

Lease cost for our operating leases is recognized on a straight-line basis over the lease term. Included in lease cost are any variable lease payments incurred
in the period that are not included in the initial lease liability and lease payments incurred in the period for any leases with an initial term of 12 months or
less.

Long-lived Assets

Our long-lived assets, primarily consisting of property and equipment, are reviewed for impairment when events or changes in circumstances indicate that
the carrying value of an asset may not be recoverable, or its estimated useful life has changed significantly. When the undiscounted cash flows of an asset
are less than its carrying value, an impairment is recorded and the asset is written down to estimated value. No impairment was recorded during the years
ended December 31, 2021 and 2020 as management believes there are no circumstances that indicate that the carrying value of the assets will not be
recoverable.

Collaborative Arrangements

We account for collaborative arrangements in accordance with applicable accounting guidance provided in ASC Topic 808, Collaborative Arrangements.
See, Note 12 – Collaboration, Licensing and Research Funding Agreements.

Severance

In July 2020, we entered into separation agreements with two executives, which provide that the former employees are entitled to receive: (i) a severance
amount equal to the sum of their respective base salaries then in effect and their respective annual target bonus amounts, payable in equal installments
through August 2021 and (ii) subject to certain exceptions, a pro rata bonus commensurate with the bonus of other contract executives for the year 2020,
prorated for the number of days of their respective employment during 2020, and payable at the time that other contract executives are paid bonuses with
respect to 2020. The severance amount related to the departure of these executives is approximately $0.9 million, was accrued at the date of the
separations, and was paid ratably through August 2021. During the years ended December 31, 2021 and 2020, $0.5 million and $0.4 million, respectively,
was paid and no further amounts are due as of December 31, 2021.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Restructured Debt Liability – Contingent Milestone Payment

In conjunction with the November 2017 restructuring and retirement of long-term debt (see, Note 9 – Restructured Debt Liability), we have established
a $15.0 million long-term liability for contingent milestone payments potentially due under the Exchange and Termination Agreement dated as of October
27, 2017, or Exchange and Termination Agreement, between ourselves and affiliates of Deerfield Management Company L.P., or Deerfield. The liability
has been recorded at full value of the contingent milestones and will continue to be carried at full value until the milestones are achieved and paid or
milestones are not achieved and the liability is written off as a gain on debt restructuring.

Research and Development

We account for research and development expense by the following categories: (a) product development and manufacturing, (b) clinical, medical and
regulatory operations, and (c) direct clinical and preclinical development programs. Research and development expense includes personnel, facilities,
manufacturing and quality operations, pharmaceutical and device development, research, clinical, regulatory, other preclinical and clinical activities and
medical affairs. Research and development costs are charged to operations as incurred in accordance with ASC Topic 730, Research and Development.

Stock-based Compensation

Stock-based compensation is accounted for under the fair value recognition provisions of ASC Topic 718, Stock Compensation, or ASC Topic 718. See,
Note 11 – Stock Options and Stock-based Employee Compensation, for a detailed description of our recognition of stock-based compensation expense. The
fair value of stock option grants is recognized evenly over the vesting period of the options or over the period between the grant date and the time the
option becomes non-forfeitable by the employee, whichever is shorter.

Warrant Accounting

We account for common stock warrants in accordance with applicable accounting guidance provided in ASC Topic 815, Derivatives and Hedging –
Contracts in Entity’s Own Equity, or ASC Topic 815, as either derivative liabilities or equity instruments depending on the specific terms of the warrant
agreement.

Income Taxes

We account for income taxes in accordance with ASC Topic 740, Accounting for Income Taxes, or ASC Topic 740, which requires the recognition of
deferred tax liabilities and assets for the expected future tax consequences of temporary differences between financial statement carrying amounts and the
tax basis of assets and liabilities.

We use a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. Because we have never realized a profit, management has fully reserved the net deferred tax asset since realization is not assured.

For the year ended December 31, 2021, we recorded a deferred income tax benefit of $10.0 million. The deferred income tax benefit recorded for
this period relates solely to the reduction of the deferred tax liabilities as a result of the loss on impairment of intangible assets related to rostafuroxin.

Net Loss per Common Share

Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted
net loss per common share is computed by giving effect to all potentially dilutive securities outstanding for the period. For the years ended December 31,
2021 and 2020, the number of shares of common stock potentially issuable upon the exercise of certain stock options and warrants was 20.0 million and 9.1
million shares, respectively. As of December 31, 2021 and 2020, all potentially dilutive securities were anti-dilutive and therefore have been excluded from
the computation of diluted net loss per common share.

We do not have any components of other comprehensive (loss) income.

Concentration of Suppliers

We currently obtain the APIs of our drug products from a single supplier. In addition, our drug products are produced at one contract manufacturer. These
single source providers also perform various studies as well as quality control release and stability testing and other activities related to our development
and manufacturing activities. At the present time these providers are located outside of the U.S. The loss of either the supplier of our APIs or our drug
product contract manufacturer could have a material adverse effect on our operations.

Segment and Geographic Information

We currently operate in one operating segment, which is the research and development of products focused on acute cardiovascular and acute pulmonary
diseases. We are managed and operated as one business. A single management team that reports to the Chief Executive Officer comprehensively manages
the entire business. We do not operate separate lines of business with respect to our product candidates. We operate primarily in the U.S. and Asia. Long-
lived assets, consisting of intangible assets of $32.1 million and goodwill of $15.7 million, were located outside the U.S. as of  December 31, 2021.

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COVID-19

The COVID-19 pandemic continues to evolve, and we continue to closely monitor its impact on our business and operations, including its continued
impact on our clinical development plans and timelines, and financial condition. There has been intermittent impact of the pandemic in differing
geographies, and there may be continued impact, particularly in light of the surge of new COVID-19 cases relating to new variants, such as the delta and
omicron variants. As of the date of this Annual Report on Form 10-K, our operations, capital and financial resources and overall liquidity position and
outlook have been impacted by COVID-19, primarily due to delays experienced in our operations, including in clinical study initiation and enrollment. The
extended timelines have required us to expend more of our capital resources than planned to achieve our projected milestones. For example, our phase 2
study of istaroxime for early cardiogenic shock in heart failure patients experienced delays in trial initiation and enrollment in 2020 and 2021. The full
extent, duration, or impact that the COVID-19 pandemic will have, directly or indirectly, on our financial condition and operations, including ongoing and
planned clinical trials, will depend on future developments that are highly uncertain and cannot be accurately predicted. These potential future
developments include new information that may emerge concerning the severity of the COVID-19 outbreak, the severity and transmissibility of new
variants of the virus, information about any resurgences in one or more geographic locations where our current or intended clinical trial sites, our principal
executive offices, research and development laboratories or manufacturing facilities are located, and the actions taken to contain it or treat its impact, which
may include, among others, the timing and extent of government reopening activities and the economic impact on local, regional, national, and
international markets. In addition, regional impact and responses to the COVID-19 pandemic have affected where a clinical trial could be executed and
how various elements of the clinical trial are performed. Going forward, the pandemic could also impact how monitoring/auditing of clinical trial sites and
data occur. The maintenance, or strategic re-implementation, of mitigating COVID-19 measures in one or more geographic locations where our clinical
trial sites, principal executive offices, research and development laboratories or other facilities are located remains possible and if realized, we believe there
could be further impact on the clinical development of our product candidates, which may include potential delays, halts or modifications to our ongoing
and planned trials in 2022 and beyond.

We are not aware of any specific event or circumstance that would require us to further update our estimates, judgments or revise the carrying value of our
assets or liabilities as of the date of issuance of these consolidated financial statements. These estimates may change, as new events occur and additional
information is obtained.

Recent Accounting Pronouncements

In December 2019, the FASB issued Accounting Standards Update, or ASU, 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income
Taxes, or ASU 2019-12. ASU 2019-12 simplifies the accounting for income taxes by removing exceptions within the general principles of ASC Topic 740
regarding the calculation of deferred tax liabilities, the incremental approach for intra-period tax allocation, and calculating income taxes in an interim
period. In addition, the ASU adds clarifications to the accounting for franchise tax (or similar tax), which is partially based on income, evaluating tax basis
of goodwill recognized from a business combination, and reflecting the effect of any enacted changes in tax laws or rates in the annual effective tax rate
computation in the interim period that includes the enactment date. The ASU was effective for fiscal years beginning after December 15, 2020, and interim
periods within those fiscal years, with early adoption permitted. We adopted ASU 2019-12 on January 1, 2021, which did not have a material impact on our
consolidated financial statements and related disclosures

Note 5 – Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability 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. The fair value
hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:

●
●

●

Level 1 - Quoted prices in active markets for identical assets and liabilities.
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities,
quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for
substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or
liabilities.

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Fair Value on a Recurring Basis

The tables below categorize assets measured at fair value on a recurring basis as of December 31, 2021 and 2020:

(in thousands)

Cash equivalents:

Money market funds
Total Assets

(in thousands)

Cash equivalents:

U.S. Treasury notes
Money market funds
Total Assets

Fair Value

  December 31,

Fair value measurement using

2021

Level 1

Level 2

    Level 3  

  $
  $

21,104    $
21,104    $

21,104    $
21,104    $

-    $
-    $

- 
- 

Fair Value
  December 31,      
2020

Fair value measurement using

Level 1

Level 2

    Level 3  

  $

  $

9,101    $
6,518     
15,619    $

9,101    $
6,518     
15,619    $

-    $
-     
-    $

- 
- 
- 

Fair Value on a Non-Recurring Basis

The table below categorizes assets measured at fair value on a non-recurring basis for the period presented:

(in thousands)

Intangible assets:
Rostafuroxin drug candidate

Fair Value
  December 31,      
2021

Fair value measurement using

Level 1

Level 2

Level 3

  $

9,730    $

-    $

-    $

9,730 

The only asset or liability measured at fair value on a non-recurring basis during the year ended December 31, 2021 and 2020 was the IPR&D intangible
asset related to our rostafuroxin drug candidate, which was recorded at its estimated fair value as a result of the impairment tests performed during
2021 (see, Note 4 – Accounting Policies and Recent Accounting Pronouncements – Goodwill and Intangible Assets).

Significant factors considered in estimating the fair value of the IPR&D intangible asset include the risks inherent in the development process, including
the likelihood of achieving commercial success and the cost and related time to complete the remaining development. Future cash flows for the IPR&D
asset were estimated based on forecasted revenue and costs, taking into account the expected product life cycle, market penetration, and growth rates. Other
significant estimates and assumptions inherent in this approach include (i) the amount and timing of the projected net cash flows associated with the
IPR&D asset; (ii) the discount rate, which seeks to reflect the various risks inherent in the projected cash flows; and (iii) the tax rate, which considers
geographic diversity of the projected cash flows. Quantitative information about the significant unobservable inputs used in the fair value measurement of
the IPR&D asset included a discount rate of approximately 19.0% and a tax rate of 30.0%. While we use the best available information to prepare our cash
flows and discount rate assumptions, actual future cash flows could differ significantly based on the commercial success of the related drug candidate and
market conditions which could result in future impairment charges related to the indefinite-lived intangible asset balance.

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Note 6 – Property and Equipment

Property and equipment is comprised of the following:

(in thousands)

Manufacturing, laboratory & office equipment
Leasehold improvements
Furniture & fixtures

Subtotal

Accumulated depreciation and amortization
Property and equipment, net

December 31,

2021

2020

  $

  $

4,703    $
2,649     
390     
7,742     
(6,731)    
1,011    $

4,591 
2,482 
390 
7,463 
(6,539)
924 

Depreciation expense on property and equipment was $0.2 million for each of the years ended December 31, 2021 and 2020.

Note 7 – Accrued Expenses

Accrued expenses are comprised of the following:

(in thousands)

Research and development
Salaries, bonus and benefits
Severance
Professional fees
Manufacturing operations
Other
Total accrued expenses

Note 8 – Loans Payable

Current Portion

December 31,

2021

2020

  $

  $

1,500    $
1,218     
-     
391     
46     
253     
3,408    $

1,207 
1,214 
474 
455 
41 
422 
3,813 

Loan Payable to Bank Direct Capital Finance

In June 2020, we entered into an insurance premium financing and security agreement with Bank Direct Capital Finance, or Bank Direct. Under the
agreement, we financed $1.1 million of certain premiums at a 4.26% annual interest rate. Payments of approximately $117,000 were due monthly from July
2020 through March 2021. As of  December 31, 2020, the outstanding principal of the loan was $0.4 million. The balance of the loan was repaid during the
first quarter of 2021.

In June 2021, we entered into an insurance premium financing and security agreement with Bank Direct. Under the agreement, we financed $1.3 million of
certain premiums at a 3.37% annual interest rate. Payments of approximately $147,000 are due monthly from July 2021 through March 2022. As of 
December 31, 2021, the outstanding principal of the loan was $0.3 million.

Non-Current Portion

O-Bank Co., Ltd. Credit Facility

In September 2016, CVie Therapeutics entered into a 12-month revolving credit facility of approximately $2.9 million with O-Bank Co., Ltd., or O-Bank,
to finance operating activities, or the O-Bank Facility. The O-Bank Facility was later renewed and increased to approximately $5.8 million in September
2017. The O-Bank Facility was guaranteed by Lee’s Pharmaceutical Holdings Limited, or Lee’s Holdings, which pledged bank deposits in the amount of
110% of the actual borrowing amount. Interest, payable in cash on a monthly basis, was determined based on the 90-day Taipei Interbank Offer Rate,
or TAIBOR, plus 0.91%. The O-Bank Facility expired on September 11, 2019 and the loans were set to mature six months after the expiration date, on
March 11, 2020. In March 2020, the O-Bank Facility was amended, among other things, to extend the maturity date to March 2022, to decrease the total
amount of the O-Bank Facility to approximately $5.0 million, to change the applicable interest rate to the TAIBOR plus 1.17% and to adjust the term to 24-
month non-revolving.

In the second quarter of 2020, we were informed by Lee’s Holdings of their desire to reduce the amount of pledged bank deposits with O-Bank by 50%. To
remain in compliance with the terms of the O-Bank Facility, we repaid approximately $2.3 million of the outstanding principal in August 2020. In
November 2020, Lee’s Holdings committed to maintain the required level of pledged bank deposits with O-Bank through the date of full repayment of the
O-Bank Facility. In June 2021, we repaid the remaining outstanding principal of the O-Bank Facility of approximately $2.5 million.

As of  December 31, 2020, the outstanding principal of the O-Bank Facility was approximately $2.4 million and was classified as loans payable - non-
current portion. There was no outstanding principal balance as of  December 31, 2021, and the O-Bank Facility is no longer available to us.

 
 
 
 
 
 
 
 
 
   
 
 
     
       
 
   
   
   
   
 
 
 
 
 
 
 
 
 
   
 
 
     
       
 
   
   
   
   
   
 
 
 
 
 
 
 
 
 
 
 
 
 
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Note 9 – Restructured Debt Liability

On October 27, 2017, we and Deerfield entered into the Exchange and Termination Agreement pursuant to which (i) promissory notes evidencing a loan
with affiliates of Deerfield Management Company L.P., or the Deerfield Loan, in the aggregate principal amount of $25.0 million and (ii) warrants to
purchase up to 8,333 shares of our common stock at an exercise price of $2,360.40 per share held by Deerfield were cancelled in consideration for (i) a
cash payment in the aggregate amount of $2.5 million, (ii) 23,703 shares of common stock, representing 2% of fully-diluted shares outstanding (as defined
in the Exchange and Termination Agreement) on the closing date, and (iii) the right to receive certain milestone payments based on achievement of
specified AEROSURF development and commercial milestones, which, if achieved, could potentially total up to $15.0 million. In addition, a related
security agreement, pursuant to which Deerfield held a security interest in substantially all of our assets, was terminated. We established a $15.0 million
long-term liability for the contingent milestone payments potentially due to Deerfield under the Exchange and Termination Agreement. The liability has
been recorded at the full value of the contingent milestones and will continue to be carried at full value until the milestones are achieved and paid or the
milestones are not achieved and the liability is written off as a gain on debt restructuring.

As of  December 31, 2021 and 2020, the restructured debt liability balance was $15.0 million.

Note 10 – Stockholders’ Equity

March 2021 Public Offering

On March 23, 2021, we entered into an underwriting agreement with Oppenheimer & Co. Inc. as representative for the several underwriters named therein,
relating to a public offering, or the March 2021 Offering, of an aggregate of 9,230,500 units with each unit consisting of one share of common stock and a
warrant, or the March 2021 Warrants. The March 2021 Warrants were immediately exercisable for shares of common stock at a price of $3.60 per share
and expire five years from the date of issuance. The shares of common stock and the March 2021 Warrants were immediately separable and were issued
separately in the March 2021 Offering.

The closing of the March 2021 Offering occurred on March 25, 2021. The offering price to the public was $3.25 per unit resulting in gross proceeds to us
of $30.0 million. After deducting underwriting discounts and commissions and estimated offering expenses payable by us, and excluding the proceeds, if
any, from the exercise of the March 2021 Warrants issued pursuant to the March 2021 Offering, the net proceeds to us were approximately $27.4 million.

We have determined that the appropriate accounting treatment under ASC 480, Distinguishing Liabilities from Equity, or ASC 480, is to classify the
common stock and the March 2021 Warrants issued in the March 2021 Offering as equity. We have also determined that the March 2021 Warrants are not
in their entirety a derivative under the scope of ASC 815, Derivatives and Hedging, or ASC 815, due to the scope exception under ASC 815-10-15-74, nor
are there any material embedded derivatives that require separate accounting. We allocated the net proceeds from the March 2021 Offering based on the
relative fair value of the common stock and the March 2021 Warrants.

May 2020 Public Offering

On May 20, 2020, we entered into an underwriting agreement, or the Underwriting Agreement, with Ladenburg as representative for the several
underwriters named therein, or collectively, the Underwriters, relating to a public offering, or the May 2020 Offering, of an aggregate of 2,758,620 units
with each unit consisting of one share of our common stock and a warrant, or the May 2020 Warrants. The May 2020 Warrants are immediately exercisable
for shares of common stock at a price of $7.975 per share and expire five years from the date of issuance. The shares of common stock and the May 2020
Warrants were immediately separable and were issued separately in the May 2020 Offering.

In addition, we granted the Underwriters a 45-day option, or the Overallotment Option, to purchase up to 413,793 additional shares of common stock
and/or May 2020 Warrants to purchase up to 413,793 additional shares of common stock, which such Overallotment Option was exercised in full.

The closing of the May 2020 Offering occurred on May 22, 2020, inclusive of the Overallotment Option. The offering price to the public was $7.25 per
unit. After deducting underwriting discounts and commissions and offering expenses of $2.8 million payable by us, and excluding the proceeds, if any,
from the exercise of the May 2020 Warrants issued pursuant to the  May 2020 Offering, the net proceeds to us were approximately $20.2 million.

We have determined that the appropriate accounting treatment under ASC 480 is to classify the common stock and the May 2020 Warrants issued in the
May 2020 Offering as equity. We have also determined that the May 2020 Warrants are not in their entirety a derivative under the scope of ASC 815 due to
the scope exception under ASC 815-10-15-74, nor are there any material embedded derivatives that require separate accounting. We allocated the net
proceeds from the May 2020 Offering based on the relative fair value of the common stock and the May 2020 Warrants.

At-The-Market Program

On September 17, 2020, we entered into an At-The-Market Offering Agreement with Ladenburg pursuant to which we may offer and sell, from time to
time at our sole discretion, up to a maximum of $10.0 million of shares of our common stock through Ladenburg as agent and/or principal through an at-
the-market program, or the ATM Program. When we issue sales notices to Ladenburg, we designate the maximum amount of shares to be sold by
Ladenburg daily and the minimum price per share at which shares may be sold. Ladenburg may sell shares by any method permitted by law deemed to be
an “at-the-market offering” as defined in Rule 415(a)(4) under the Securities Act, or in privately negotiated transactions.

We agreed to pay Ladenburg a commission of 3% of the gross sales price of any shares sold pursuant to the ATM Program. The rate of compensation will
not apply when Ladenburg acts as principal.

For the year ended  December 31, 2021, we sold 2,116,944 shares of our common stock under the ATM Program resulting in aggregate gross proceeds to
us of approximately $5.0 million and net proceeds of approximately $4.8 million.

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As of March 31, 2022, approximately $5.0 million remains available under the ATM Program.

Warrant Amendments

On April 24, 2020, we and each of the holders of our Series F Warrants dated as of December 24, 2018, or the Series F Warrants, entered into Amendment
No. 1 to the Series F Warrant to Purchase Common Stock whereby the expiration date of the Series F Warrants was extended from June 24, 2020 to
December 24, 2020 in consideration for the holders agreeing to be bound by a lock-up provision with respect to any shares of our common stock or
securities convertible, exchangeable or exercisable into shares of our common stock that are beneficially owned, held or acquired by the holders for a
period of 90 days following the earlier of (i) the closing date of our next public offering of securities, or (ii) December 24, 2020. The lock-up provision
commenced upon closing of the May 2020 Offering discussed above and has expired. The Series F Warrants expired on December 24, 2020.

On May 6, 2020, we and certain holders of our Series I Warrants dated as of December 6, 2019, or the Series I Warrants, entered into Amendment No. 1 to
the Series I Warrant to Purchase Common Stock pursuant to which the exercise price of the Series I Warrants was amended from $12.09 to $9.67 if the
Series I Warrants are exercised, in whole or in part, prior to December 5, 2021. In addition, the certain holders of the Series I Warrants agreed to be bound
by a lockup provision with respect to any shares of our common stock or securities convertible, exchangeable or exercisable into shares of our common
stock that are beneficially owned, held or acquired by such holders for a period of 90 days following the earlier of (i) the closing date of our next public
offering of securities, or (ii) December 24, 2020. The lock-up provision commenced upon closing of the May 2020 Offering discussed above and has
expired.

While there is no specific guidance that addresses the modification of an equity-classified contract, such as the amendments to the Series F Warrants and
the Series I Warrants, it is the practice to determine the accounting for such modifications based on analogy to the share-based compensation guidance. The
model for a modified share-based payment award that is classified as equity and remains classified in equity after the modification is addressed in ASC
718-20, Compensation – Stock Compensation, or ASC 718-20. Pursuant to that guidance, the incremental fair value from the modification (the change in
the fair value of the instrument before and after the modification) is recognized as an expense in the income statement to the extent the modified instrument
has a higher fair value. 

For the Series F Warrants, the amendment to the terms related to a six-month extension of the expiration date and the incremental fair value from the
modification was determined by comparing the Black-Scholes value before and after the modification. The amendment to the Series I Warrants related to a
reduced exercise price for an 18-month period and the reversion after that period to the initial exercise price. As a result, the incremental fair value was
determined by comparing the Black-Scholes value before the modification to a Monte Carlo valuation after the modification.

We have determined, based on the guidance in ASC 718-20 and our valuation of the Series F Warrants and the Series I Warrants, that the incremental fair
value resulting from the modifications is $1.1 million, which was recorded as an increase to equity, with a corresponding expense recognized in the
consolidated statement of operations as other expense for the year ended December 31, 2020.

Common Shares Reserved for Future Issuance

Common shares reserved for potential future issuance upon exercise of warrants

The chart below summarizes shares of our common stock reserved for future issuance upon the exercise of warrants:

(in thousands, except price per share data)

Investors - March 2021 financing
Service Agreement - 2021 warrants
Investors - May 2020 financing
Investors - December 2019 financing
Investors - AEROSURF
Investors - December 2018 financing - long-term
Investors - December 2018 financing - short-term
Battelle - 2018 payables restructuring agreement (1)
Panacea Venture Management Company Ltd.
LPH II Investments Limited
Investors - February 2017 financing
Investors - July 2015 financing
Battelle - 2014 collaboration agreement

Total

December 31,

2021

2020

    Exercise Price  

  Expiration
Date

9,231     
170     
3,155     
1,458     
988     
1,296     
-     
25     
63     
45     
117     
80     
1     
16,629     

-    $
-    $
3,155    $
1,458    $
988    $
1,296    $
-    $
25    $
63    $
45    $
117    $
80    $
1    $
7,228     

3.60 
8.25 
7.98 
12.09 
- 
12.15 
11.04 
19.50 
12.00 
16.56 
82.20 
588.00 
4,200.00 

03/25/26
02/09/24
05/22/25
12/06/24
02/14/24
12/04/23
12/24/20
12/07/23
07/02/23
04/04/25
02/15/24
07/22/22
10/10/24

(1)

See, Note 12 – Collaboration, Licensing and Research Funding Agreements, for further details on the Battelle collaboration agreement.

Common shares reserved for potential future issuance upon granting of additional equity incentive awards

The 2020 Equity Incentive Plan, or the 2020 Plan, initially provided for up to a maximum of 1,535,500 shares of common stock to be available for issuance
pursuant to stock-based awards granted under the 2020 Plan. The 2020 Plan is subject to automatic annual increases on January 1 of each year (beginning
with January 1, 2022) of the lesser of (i) 4% of the number of shares of our common stock issued and outstanding on the last day of the immediately
preceding fiscal year, and (ii) such smaller number of shares as determined by our board. See, Note 11 – Stock Options and Stock-based Employee
Compensation.

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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

As of December 31, 2021, we had 0.6 million shares available for potential future issuance under the 2020 Plan.

Note 11 – Stock Options and Stock-based Employee Compensation

Long-term Incentive Plans

On November 23, 2020, our Board of Directors adopted our 2020 Plan, which was subsequently approved by our majority stockholders by written consent
on December 24, 2020 and became effective on January 20, 2021, or the Effective Date. On the Effective Date, the 2020 Plan replaced our 2011 long-term
incentive plan, or the 2011 Plan, and the 2020 Plan became our primary plan for providing equity-based compensation to our eligible employees,
consultants, and non-employee directors. Awards under the 2020 Plan may include stock options, stock appreciation rights, or SARs, restricted stock
awards, or RSAs, restricted stock units, or RSUs, other performance and stock-based awards, and dividend equivalents.

As of December 31, 2021, there were 1.9 million shares of our common stock authorized under the 2020 Plan, of which 0.6 million shares remained
available for issuance as of  December 31, 2021.

The 2020 Plan is subject to automatic annual increases on January 1 of each year (beginning with January 1, 2022) of the lesser of (i) 4% of the number of
shares of our common stock issued and outstanding on the last day of the immediately preceding fiscal year, and (ii) such smaller number of shares as
determined by our board. The annual increase on January 1, 2022 was approximately 1.1 million shares. 

An administrative committee, currently the Compensation Committee of the Board of Directors, or Committee delegates,  may determine the types, the
number of shares covered by, and the terms and conditions of, such awards. Eligible participants may include any of our employees, directors, advisors or
consultants.

Stock options and RSUs outstanding and available for future issuance are as follows:

(in thousands)

Stock Options and RSUs Outstanding

2020 Plan
2011 Plan
Non-Plan
Total Outstanding

Available for Future Grants under 2020 Plan

December 31,

2021

2020

1,256     
1,567     
564     
3,387     

631     

- 
1,688 
215 
1,903 

230 

No SARs, RSAs, other performance and stock-based awards, or dividend equivalents have been granted under the 2020 Plan. Although individual grants
may vary, option awards generally are exercisable upon vesting, vest in a series of three successive, equal installments beginning with the first anniversary
of the grant date and have a 10-year term. Non-Plan stock options outstanding are in connection with the hiring of certain executive officers and other
employees. Inducement grants were awarded in accordance with Nasdaq Listing Rule 5635(c)(4) and the inducement grants vest in a series of three
successive, equal installments beginning with the first anniversary of the grant date and have a 10-year term.

A summary of activity under our long-term incentive plans is presented below:

(in thousands, except for weighted-average data)

Stock Options

Shares

Weighted-Average
Exercise Price

Weighted-Average
Remaining
Contractual Term
(In Yrs)

Outstanding at January 1, 2021

Granted
Forfeited or expired

Outstanding at December 31, 2021

Vested and exercisable at December 31, 2021

Vested and expected to vest at December 31, 2021

1,903    $
1,621     
(137)    
3,387    $

1,685    $

3,184    $

15.57     
4.88     
33.23     
9.74     

14.06     

9.78     

8.2 

7.4 

8.2 

During the year ended  December 31, 2020, 35,000 RSUs vested at a weighted-average grant date fair value of $11.85. As of  December 31, 2021 and
2020, there were no unvested RSUs.

Based upon application of the Black-Scholes option-pricing formula described below, the weighted-average grant-date fair value of options granted during
the years ended December 31, 2021 and 2020 was $4.03 and $5.98, respectively. There were no RSUs granted during the years ended December 31, 2021
and 2020. The total intrinsic value of options outstanding, vested, and exercisable as of December 31, 2021 are each $0.

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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

Stock-Based Compensation

We recognized stock-based compensation expense in accordance with ASC Topic 718 of $7.2 million and $5.7 million, respectively, for each of the years
ended December 31, 2021 and 2020.

Stock-based compensation expense was classified as follows:

(in thousands)

Research and development
General and administrative

Total

Year Ended December 31,
2020
2021

  $

  $

2,940    $
4,298     
7,238    $

2,098 
3,586 
5,684 

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing formula that uses assumptions noted in the
following table. Expected volatilities are based upon the historical volatility of our common stock and other factors. We also use historical data and other
factors to estimate option exercises, employee terminations and forfeiture rates. The risk-free interest rates are based upon the U.S. Treasury yield curve in
effect at the time of the grant.

Weighted average expected volatility
Weighted average expected term
Weighted average risk-free interest rate
Expected dividends

Year Ended December 31,
2020
2021

104%   
6.7 
0.49%   
- 

103%
7.0 
0.54%
- 

The total fair value of the underlying shares of the options vested during 2021 and 2020 is $6.7 million and $7.1 million, respectively. As of December 31,
2021, there was $4.2 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the
2020 Plan and the 2011 Plan. That cost is expected to be recognized over a weighted-average vesting period of 1.8 years.

Note 12 – Collaboration, Licensing and Research Funding Agreements

Collaboration Agreement

Battelle Memorial Institute

In October 2014, we entered into a Collaboration Agreement with Battelle, or, as amended, the Battelle Collaboration Agreement, for the development of
our new ADS for use in our phase 3 program. We had previously worked with Battelle, which has expertise in developing and integrating aerosol devices
using innovative and advanced technologies, in connection with development of our phase 2 ADS used in the AEROSURF phase 2b clinical trial. Under
the Battelle Collaboration Agreement, we and Battelle shared the costs of development for a three-stage development plan that included planning,
executing the project plan and testing and completing verification and documentation of a new phase 3 ADS, putting us in a position to manufacture a new
phase 3 ADS for use in the remaining AEROSURF development activities, including a potential phase 3 clinical program, and, if approved, initial
commercial activities. We retained final decision-making authority over all matters related to the design, registration, manufacture, packaging, marketing,
distribution and sale of the phase 3 ADS. We and Battelle shared the costs of the project plan equally. Battelle agreed to bear the cost of any cost overruns
associated with the project plan and we agreed to bear the cost of any increase in cost resulting from changes in the scope of the product requirements. We
also agreed that, if Battelle successfully completed the project plan in a timely manner, we would pay Battelle royalties equal to a low single-digit
percentage of the worldwide net sales and license royalties on sales of AEROSURF for the treatment of RDS in premature infants, up to an initial
aggregate limit of $25.0 million, which under a payment restructuring agreement (discussed below), was increased to $35.0 million. The Battelle
Collaboration Agreement will end at the time we fulfill our payment obligations to Battelle, unless sooner terminated by a party as provided therein.

Licensing and Research Funding Agreements

Lee’s Pharmaceutical (HK) Ltd.

In June 2017, we entered into the Asia License Agreement with Lee’s (HK), an affiliate of Lee’s Holdings, and thereafter amended it effective August
2017. Under the Asia License Agreement, as amended, we granted to Lee’s (HK) an exclusive license with a right to sublicense (i) to develop,
manufacture, and commercialize our KL4 surfactant products, including SURFAXIN, which was approved by the FDA in 2012 for RDS in premature
infants, SURFAXIN LS™, the lyophilized dosage form of SURFAXIN, and AEROSURF, including the ADS, and (ii) to register and manufacture
SURFAXIN and SURFAXIN LS for use in the licensed territory, which includes the People’s Republic of China, or China, Hong Kong, Thailand, Taiwan
and 12 other countries.

Under the Asia License Agreement, Lee’s (HK) made an upfront payment to us of $1.0 million. We also may receive up to $35.8 million in potential
clinical, regulatory and commercial milestone payments and will share in any sublicense income Lee’s (HK) may receive at a rate equal to low double
digits. In addition, Lee’s (HK) is responsible for all costs and expenses in and for the licensed territory related to development activities, including a
planned AEROSURF phase 3 clinical program, regulatory activities, and commercialization activities.

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We will be eligible to receive tiered royalties based on a percent of Net Sales (as defined in the Asia License Agreement),
depending on the product, in the range of high single to low-to-mid double-digit percentages. Royalties are payable on a country-
by-country basis until the latest of (i) the expiration of the last valid patent claim covering the product in the country of sale, (ii)
the expiration or revocation of any applicable regulatory exclusivity in the country of sale, and (iii) ten (10) years after the first
commercial sale in the country of sale. Thereafter, in consideration of licensed rights other than patent rights, royalties shall
continue for the commercial life of each product and, for the initial three years, shall be in the range of low-to-mid single digits.
In addition, in the event that one or more generic products are introduced, the royalty rates will be reduced, subject to certain
minimums if we are subject to continuing obligations at the time to pay royalties under our in-license agreements.

Under the Asia License Agreement, Lee’s (HK) is responsible for all activities related to development, regulatory approval and commercialization of KL4
surfactant and drug/medical device combination products in the licensed territory. Lee’s (HK) will hold the product licenses for all non-aerosolized
products in the licensed territory and will seek regulatory approval initially for SURFAXIN and SURFAXIN LS for RDS. We will hold the product license
in the licensed territory (except where prohibited by law) for all aerosolized products and will designate Lee’s (HK) our exclusive agent and representative
to develop and register AEROSURF and other aerosolized products in our name and on our behalf. Lee’s (HK) also has agreed that, except as provided in
the Asia License Agreement, for a period of ten (10) years beginning with the later of the first commercial sale of the first aerosolized product and the first
commercial sale of the first non-aerosolized product in China, it will not develop, register, manufacture, or commercialize any product for the prevention
and/or treatment of RDS in premature infants or other diseases and conditions in humans, in either case, that administers, utilizes or contains pulmonary
surfactant without our prior written consent.

The Asia License Agreement is accounted for in accordance with ASC Topic 606 and constitutes a contract with a customer. All revenue related to the $1.0
million upfront payment was recognized as of the second quarter of 2019 and no future material performance obligations are due. Regulatory and
commercialization milestones were excluded from the transaction price, as all milestone amounts were fully constrained under the guidance. Consideration
related to sales-based milestones and royalties will be recognized when the related sales occur, provided that the reported sales are reliably measurable and
that we have no remaining performance obligations, as such sales were determined to relate predominantly to the license granted to Lee’s (HK) and
therefore have also been excluded from the transaction price. We will re-evaluate the transaction price in each reporting period and as uncertain events are
resolved or other changes in circumstances occur.

On March 18, 2020, we entered into the Term Sheet with Lee’s (HK) pursuant to which Lee’s (HK) agreed to provide financing to fund the development of
AEROSURF for the period April 1, 2020 through September 30, 2020 and make payments of up to $3.9 million (which was reduced to $2.8 million under
specified circumstances) prior to September 1, 2020. In August 2020, we entered into a Project Financing Agreement with Lee’s (HK), or the PF
Agreement with Lee’s (HK), formalizing the terms of the Term Sheet, and under which we received payments totaling $2.8 million through October 2020.
Pursuant to the PF Agreement, Lee’s (HK) agreed to pay additional amounts to be set forth in an updated development budget to be agreed between the
parties by September 1, 2020 and updated every six months thereafter, to fund the continued development of AEROSURF and to be paid with the payment
schedule to be set forth in each updated development budget. In partial satisfaction of our obligations under the PF Agreement, we agreed to pay Lee’s
(HK) 50% of any Commercialization Net Revenues (as defined in the PF Agreement) up to an amount that is equal to 125% of the Project Expenses (as
defined in the PF Agreement) funded by Lee’s (HK). On November 12, 2020, Lee’s (HK) provided notice of termination of additional funding under the PF
Agreement, and we and Lee’s (HK) revised our plans for the continued development of AEROSURF. Lee’s (HK) agreed to continue the development of
AEROSURF in Asia at its own cost. Lee’s (HK) agreed to fund an additional $1.0 million to us in 2021 for certain transition and analytical services to be
provided by us with respect to the development of AEROSURF, which will be considered “Project Expenses” under the terms of the PF Agreement. In
2021, we received payments totaling $1.0 million from Lee’s (HK) and no further amounts are due under the PF Agreement as of December 31, 2021.

Since the 2018 acquisition of CVie Investments Limited and CVie Therapeutics, istaroxime has become our primary focus for investment and execution
due to what we believe represents a greater potential value opportunity for us and our stockholders. Since completing our phase 2 study of lucinactant (KL4
surfactant) for patients with severe COVID-19 associated ARDS and lung injury in January 2022, in order to preserve resources for the highest priority
programs, we have begun to reduce costs not already transferred to our licensee in Asia, Lee’s (HK), under the terms of our Asia License Agreement. These
costs include certain reductions in headcount dedicated to KL4 surfactant and the decommissioning of both our analytical and technical support laboratory,
which previously conducted release testing of APIs and supportive research for our lyophilized and aerosolized KL4 surfactant, and our medical device
development laboratory, which was previously used to conduct development activities and testing for our ADS technologies. To support the future
development of our KL4 surfactant platform in markets outside of Asia, including the U.S., we are pursuing one or more licensing transactions.

To repay the funds provided under the terms of the PF Agreement, until such time as we have repaid 125% of the amounts funded by Lee’s (HK) for the
development of AEROSURF, we will pay to Lee’s (HK) 50% of all revenue amounts and payments received by us for any sale, divestiture, license or other
development and/or commercialization of the KL4/AEROSURF patent portfolio, excluding (i) payments for bona fide research and development services;
(ii) reimbursement of patent expenses and (iii) all amounts paid to us under the Asia License Agreement, minus certain deductions and certain reductions
for any payments made by us with respect to third party intellectual property not previously funded by Lee’s (HK).

As of December 31, 2021 and 2020, the liability balance related to the payments under the PF Agreement was $3.8 million and $2.8 million,
respectively, and is recorded in other liabilities.

We have determined that the Term Sheet and the PF Agreement are within the scope of ASC 730-20, Research and Development Arrangements, or ASC
730-20. We concluded that there has not been a substantive and genuine transfer of risk related to the Term Sheet or the PF Agreement as there is a
presumption that we are obligated to repay Lee’s (HK) based on the significant related party relationship that existed at the time the parties entered into the
Term Sheet and the PF Agreement, including Lee’s (HK)’s ownership of outstanding shares of our common stock.

We have determined that the appropriate accounting treatment under ASC 730-20 is to record the proceeds received from Lee’s (HK) as cash and cash
equivalents, as we have the ability to direct the usage of funds, and a long-term liability on our consolidated balance sheet when received. The liability will
remain on the balance sheet until we repay such amounts as a result of any revenues and payments received by us for any sale, divestiture, license or other
development and/or commercialization of the KL4/AEROSURF patent portfolio.

We have also determined that the Term Sheet and the PF Agreement are not in their entirety a derivative under the scope of ASC 815, due to the scope
exception under ASC 815-10-15-59, nor are there any embedded derivatives that require separate accounting.

 
 
 
 
 
 
 
 
 
 
 
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WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

Philip Morris USA Inc. and Philip Morris Products S.A.

Under license agreements with Philip Morris USA Inc., or PMUSA, and Philip Morris Products S.A., or PMPSA, we hold exclusive worldwide licenses to
the ADS technology for use with pulmonary surfactants (alone or in combination with any other pharmaceutical compound(s)) for all respiratory diseases
and conditions (the foregoing uses in each territory, the Exclusive Field), and an exclusive license in the U.S. for use with certain non-surfactant drugs to
treat specified respiratory indications in humans in designated hospital settings. We generally are obligated to pay royalties at a rate equal to a low single-
digit percent of sales of products sold in the Exclusive Field (as defined in the license agreements) in the territories, including sales of aerosol devices that
are not based on the ADS technology (unless we exercise our right to terminate the license with respect to a specific indication). While there is no legal
obligation under the agreements to make minimum royalty payments, in the event we do not make quarterly minimum royalty payments, PMUSA and
PMPSA can terminate the agreements. In making such payments, we are entitled to a reduction of future royalties in an amount equal to the excess of any
minimum royalty paid over royalties actually earned in prior periods.

Johnson & Johnson and Ortho Pharmaceutical Corporation

We, Johnson & Johnson, or J&J, and its wholly owned subsidiary, Ortho Pharmaceutical Corporation, are parties to a license agreement granting to us an
exclusive worldwide license to the J&J KL4 surfactant technology. Under the license agreement, we are obligated to pay fees of up to $2.5 million in the
aggregate upon our achievement of certain milestones, primarily upon receipt of marketing regulatory approvals for certain designated products. We have
paid $1.0 million to date for milestones that have been achieved. In addition, the license agreement requires that we make royalty payments at different
rates, depending upon type of revenue and country, in amounts in the range of a high single-digit percent of net sales (as defined in the license agreement)
of licensed products sold by us or sublicensees, or, if greater, a percentage of royalty income from sublicensees in the low double digits.

Laboratorios del Dr. Esteve, S.A.

We have a strategic alliance with Laboratorios del Dr. Esteve, S.A., or Esteve, for the development, marketing and sales of a broad portfolio of potential
KL4 surfactant products in Andorra, Greece, Italy, Portugal, and Spain. Antonio Esteve, Ph.D., a principal of Esteve, served as a member of our Board of
Directors from May 2002 until January 2013. Esteve will pay us a transfer price on sales of our KL4 surfactant products. We will be responsible for the
manufacture and supply of all of the covered products and Esteve will be responsible for all sales and marketing in the territory. Esteve is obligated to make
stipulated cash payments to us upon our achievement of certain milestones, primarily upon receipt of marketing regulatory approvals for the covered
products. In addition, Esteve has agreed to contribute to phase 3 clinical trials for the covered products by conducting and funding development performed
in the territory. As part of a 2004 restructuring in which Esteve returned certain rights to us in certain territories, or the Former Esteve Territories, we
agreed to pay Esteve 10% of any cash up front and milestone fees (up to a maximum aggregate of $20.0 million) that we receive in connection with any
strategic collaborations for the development and/or commercialization of certain of our KL4 surfactant products in the Former Esteve Territories.

Universita degli Studi di Milano-Bicocca

Effective April 13, 2015, CVie Therapeutics, entered into an Agreement for Scientific Collaboration with the Universita degli Studi di Milano-Bicocca, or
Bicocca, in Milan, Italy, focused on defining the role of SERCA2a and phospholamban, or PLN, in modulating cardiac contraction, and discovering new
small molecules to modulate SERCA2a activity or new drugs for treating chronic and acute human heart failure. The term of the collaboration agreement
would have expired after three years but was extended for approximately an additional year, with option for further renewal.

Under the collaboration agreement, intellectual property resulting from the collaboration, including patents and know-how, will be jointly owned by the
parties. For the development of any new SERCA2a compounds and diagnostic products suitable for further clinical development, we have the option to
purchase Bicocca’s interest for up to 12 months after the filing of a patent application. If the option is not exercised, then the parties shall remain joint
owners and each can use the intellectual property with consent of the other on terms to be defined. If we exercise an option, we have agreed to pay Bicocca
(corresponding to stage of development): (i) € 0.1 million upon completion and the proof of concept of biological efficacy for new compounds modulating
the SERCA2a activity caused by PLN mutations; and (ii) € 1.5 million upon obtaining marketing authorization in the U.S., EU, or China of new
compounds with the corresponding companion diagnostic assay. We have also agreed to pay royalties for any purchased intellectual property arising out of
the collaboration in the range of a low- to mid-single digit percent of net sales for any products sold in any country for a period of ten years from the date of
the first commercial sale.

On March 19, 2021, we entered into an Agreement for Scientific Collaboration, or the New SERCA2a Agreement, with Bicocca, which extends our
collaboration. The New SERCA2a Agreement amends and restates the recently expired terms of the prior collaboration agreement. Under the New
SERCA2a Agreement, we will provide Bicocca with approximately € 0.2 million for research activities and to cover laboratory space and operation costs.
Results obtained from the collaboration will be jointly owned by the parties. However, Bicocca will assign to us its interest in patent applications and
patents covering any new SERCA2a compounds and diagnostic products suitable for further clinical development. We have agreed to pay Bicocca
(corresponding to stage of development): (i) € 25,000 for execution of an assignment to us of Bicocca’s interest in the patent at issue, (ii) € 75,000 for new
SERCA2a compounds developed up to phase 1 studies in humans upon the completion and availability of the proof of concept of biological efficacy of
new compounds on modulating the SERCA2a activity in cell-free systems, or its functional counterpart in isolated cells and (iii) € 1.5 million upon
obtaining marketing authorization in the U.S., EU, or China of new compounds with the corresponding companion diagnostic assay. We have also agreed to
pay royalties on products generated from the collaboration in the range of a fraction of a single digit to a low single digit percent of net sales for any
products sold in any country for a period of ten years from the date of the first commercial sale or until the expiry of patent(s) covering the products. In
connection with our research activities, Bicocca agreed to provide us exclusive use of a research laboratory for the collaboration, and nonexclusive access
to a physiology laboratory within the university. Bicocca serves as our primary location in Milan.

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Note 13 – Related Party Transactions

Lee’s Pharmaceutical Holdings Limited

As of December 31, 2021 and 2020, Lee’s Holdings beneficial ownership of our issued and outstanding shares of common stock was 17% and 29%,
respectively.

We entered into the following transactions with Lee’s Holdings during 2021 and 2020:

●

●

●

In March 2020, we entered into the Term Sheet, with Lee’s (HK), pursuant to which Lee’s (HK) had agreed to provide financing for the
development of AEROSURF. In August 2020, we entered into the PF Agreement with Lee’s (HK), formalizing the terms of the Term
Sheet, under which we received payments of $2.8 million in 2020 and payments of $1.0 million in 2021. As of December 31, 2021 and
2020, the liability balance related to the payments under the PF Agreement was $3.8 million and $2.8 million, respectively, and is
recorded in other liabilities. The liability will remain on the balance sheet until we repay such amounts as a result of any revenues and
payments received by us for any sale, divestiture, license or other development and/or commercialization of the KL4/AEROSURF patent
portfolio. No further amounts are due under the PF Agreement as of December 31, 2021 (see, Note 12 – Collaboration, Licensing and
Research Funding Agreements – Lee’s Pharmaceutical (HK) Ltd.);

We incurred $0.2 million in research and development expenses for services provided by an affiliate of Lee’s Holdings to our wholly
owned subsidiary, CVie Therapeutics, during 2020; and

On December 31, 2021, we entered into a Master Manufacturing and Supply Agreement with an affiliate of Lee’s Holdings for the
manufacture of our istaroxime drug product candidate.

Panacea Venture

As of December 31, 2021 and 2020, Panacea’s beneficial ownership of our issued and outstanding shares of common stock was 8% and 14%, respectively.

James Huang, who in connection with the CVie Acquisition in December 2018 was appointed as a director and Chairman of our Board, is a founding and
Managing Partner to Panacea Venture, or Panacea.

During 2020, we entered into the following transactions with Panacea:

●

In May 2020, Panacea was an investor of $2.0 million in the May 2020 Offering (see, Note 10 – Stockholders’ Equity – May 2020 Public
Offering);

Note 14 – Litigation

We are not aware of any pending or threatened legal actions that would, if determined adversely to us, have a material adverse effect on our business and
operations.

We have from time to time been involved in disputes and proceedings arising in the ordinary course of business, including in connection with the conduct
of our clinical trials. In addition, as a public company, we are also potentially susceptible to litigation, such as claims asserting violations of securities laws.
Any such claims, with or without merit, if not resolved, could be time-consuming and result in costly litigation. There can be no assurance that an adverse
result in any future proceeding would not have a potentially material adverse effect on our business, results of operations and financial condition.

Note 15 – Income Taxes

The components of the benefit for income taxes for the years ended December 31, 2021 and 2020 is as follows:

(in thousands)
Current expense (benefit):

Federal
State
Foreign

Total current expense (benefit)

Deferred expense (benefit):

Federal
State
Foreign

Total deferred expense (benefit)
Total income tax expense (benefit)

December 31,

2021

2020

  $

  $

-    $
-     
-     
-     

-     
-     
(9,987)    
(9,987)    
(9,987)   $

- 
- 
- 
- 

- 
- 
- 
- 
- 

For the year ended December 31, 2021, we recorded a deferred income tax benefit of $10.0 million. The deferred income tax benefit recorded for
this period relates solely to the reduction of the deferred tax liabilities as a result of the loss on impairment of intangible assets related to rostafuroxin.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
     
       
 
   
   
   
 
     
       
 
     
       
 
   
   
   
   
 
 
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The reconciliation of the income tax benefit computed at the federal statutory rates to our recorded tax benefit for the years ended December 31, 2021 and
2020 is as follows:

(in thousands)

Income tax benefit, statutory rates
State taxes on income, net of federal benefit
Net operating loss expirations
Research and development tax credit
Foreign rate differential
Employee related and other
Interest related
Income tax expense / (benefit), statutory rates
Valuation allowance
Income tax benefit, net

December 31,

2021

2020

$

$

(16,301) $
(1,390)  
2,184   
94   
462   
(186)  
-   
(15,137)  
5,150   
(9,987) $

(6,837)
(125)
1,835 
(1,213)
22 
193 
34 
(6,091)
6,091 
- 

The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities as of  December 31, 2021 and 2020, are as follows:

(in thousands)

Long-term deferred assets:

Net operating loss carryforwards (federal and state)
Research and development tax credit
Compensation expense on stock
Other accrued
Depreciation

Total long-term deferred tax assets
Long-term deferred liabilities:

IPR&D

Total long-term deferred tax liabilities
Valuation allowance
Deferred tax liabilities, net

December 31,

2021

2020

  $

  $

187,905    $
18,538     
4,568     
2,006     
115     
213,132     

(7,114)    
(7,114)    
(213,132)    
(7,114)   $

183,793 
18,632 
3,525 
1,811 
112 
207,873 

(16,778)
(16,778)
(207,873)
(16,778)

We are in a net deferred tax liability position as of  December 31, 2021 and 2020. Because we have never realized a profit, management has fully reserved
the net deferred tax asset since realization is not assured. It is our policy to classify interest and penalties recognized on uncertain tax positions as a
component of income tax expense. There was neither interest nor penalties accrued as of December 31, 2021 and 2020, nor were any incurred in 2021 or
2020.

At December 31, 2021 and 2020, we had available carryforward net operating losses for federal tax purposes of $644.6 million and $631.9 million,
respectively, research and development tax credit carryforward of $17.4 million and $17.2 million, respectively and orphan drug tax credit carryforwards
of $1.1 million and $1.4 million, respectively. Of the of $644.6 million of federal net operating loss carryforwards, $80.8 million can be carried forward
indefinitely. The remaining Federal net operating loss, research and development tax credit carryforwards and orphan drug credit carryforward will
continue to expire through 2040.

At December 31, 2021 and 2020, we had available carryforward losses of approximately $598.9 million and $585.3 million, respectively, for state tax
purposes. Of the $598.9 million state tax carryforward losses, $595.4 million is associated with the state of Pennsylvania, with the remainder associated
with the other seven (7) states within which we have established tax nexus.

Future realization of the tax benefits of existing temporary differences and net operating loss carryforwards ultimately depends on the existence of
sufficient taxable income within the carryforward period. As of December 31, 2021 and 2020, we performed an evaluation to determine whether a
valuation allowance was needed. We considered all available evidence, both positive and negative, which included the results of operations for the current
and preceding years. We determined that it was not possible to reasonably quantify future taxable income and determined that it is more likely than not that
all of the deferred tax assets will not be realized. Accordingly, we maintained a full valuation allowance as of December 31, 2021 and 2020.

Under Internal Revenue Code Section 382, if a corporation undergoes an “ownership change,” the corporation’s ability to use its pre-change NOL
carryforwards and other pre-change tax attributes to offset its post-change income may be limited. We have not completed a study to assess whether an
“ownership change” has occurred or whether there have been multiple ownership changes since we became a “loss corporation” as defined in Section 382.
Future changes in our stock ownership, which may be outside of our control, may trigger an “ownership change.” In addition, future equity offerings or
acquisitions that have equity as a component of the purchase price could result in an “ownership change.” If an “ownership change” has occurred or does
occur in the future, utilization of the NOL carryforwards or other tax attributes may be limited, which could potentially result in increased future tax
liability to us.

Utilization of net operating loss, or NOL, and research and development, or R&D, credit carryforwards may be subject to a substantial annual limitation
under Section 382 of the Internal Revenue Code of 1986 due to ownership change limitations that have occurred previously or that could occur in the
future. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset future taxable income
and tax, respectively. There also could be additional ownership changes in the future, which may result in additional limitations in the utilization of the
carryforward NOLs and credits.

F- 23

 
 
 
 
 
 
 
 
   
     
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
     
       
 
     
       
 
   
   
   
   
   
     
       
 
   
   
   
 
 
 
 
 
 
 
Table of Contents

WINDTREE THERAPEUTICS, INC. AND SUBSIDIARIES

A full valuation allowance has been provided against our deferred tax assets and, if a future assessment requires an adjustment,
an adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the consolidated
balance sheets or statements of operations if an adjustment were required.

Note 16 – Leases

Our operating leases consist primarily of facility leases for our operations in Warrington, Pennsylvania and Taipei, Taiwan.

We maintain our corporate headquarters and operations in Warrington, Pennsylvania. The facility serves as the main operating facility for drug and device
development, regulatory, analytical technical services, research and development, and administration. We also maintain offices in Taipei, Taiwan where we
perform certain manufacturing development and preclinical activities related to our cardiovascular drug product candidates.

In January 2021, we entered into a lease amendment to extend the term of our Warrington, Pennsylvania lease for a period of five years commencing on
March 1, 2022 and expiring on February 28, 2027.

Throughout the term of our leases, we are responsible for paying certain variable lease costs, in addition to the rent, as specified in the lease, including a
proportionate share of applicable taxes, operating expenses and utilities.

The following table contains a summary of the lease costs recognized under ASC 842 and other information pertaining to our operating leases for the
years ended December 31, 2021 and 2020:

(in thousands)

Operating lease cost
Variable lease cost
Total lease cost

Other Information
Operating cash flows used for operating leases
Operating lease liabilities arising from obtaining right-of-use assets
Weighted average remaining lease term (in years)
Weighted average incremental borrowing rate

Year Ended December 31,
2020
2021

  $

  $

  $
  $

857 
45 
902 

  $

  $

  $
  $

734 
2,141 
4.8 
7.12%   

826 
29 
855 

895 
249 
1.3 
9.00%

Future minimum lease payments under our non-cancelable operating leases as of December 31, 2021, are as follows:

(in thousands)

  December 31, 2021  

2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less imputed interest
Total operating lease liabilities at December 31, 2021

Note 17 – Subsequent Events

  $

  $

689 
575 
560 
570 
581 
97 
3,072 
(473)
2,599 

In January 2022, in order to focus our resources on the development of our istaroxime pipeline, we began to reduce costs related to KL4 surfactant that
were not already transferred to our licensee in Asia, Lee’s (HK), under the terms of our Asia License Agreement. These costs include certain reductions in
headcount dedicated to KL4 surfactant and the decommissioning of both our analytical and technical support laboratory, which previously conducted
release testing of APIs and supportive research for our lyophilized and aerosolized KL4 surfactant, and our medical device development laboratory, which
was previously used to conduct development activities and testing for our ADS technologies. The total severance cost for impacted employees is
approximately $0.4 million and is expected to be paid through September 30, 2022. In addition, we have approximately $0.7 million of net book value
related to manufacturing and laboratory equipment related to KL4 surfactant, and we are currently evaluating the disposition or alternative future use of
these assets.

F-24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     
 
     
 
   
   
 
     
 
     
 
     
 
     
 
   
   
   
 
 
 
     
 
   
   
   
   
   
   
   
 
 
 
 
EMPLOYMENT AGREEMENT

Exhibit 10.54

This  Employment  Agreement  (the  “Agreement")  is  made  as  of  July  1,  2021,  by  and  between  WINDTREE  THERAPEUTICS,  INC.,  a  Delaware
corporation (the “Company”), and DIANE CARMAN (“Executive”), subject to the terms and conditions defined in this Agreement.

WHEREAS, the Company and Executive desire that Executive be employed by the Company to act as the Company’s General Counsel, subject to the
terms and conditions set forth in this Agreement. Executive’s employment shall also be subject to such policies and procedures as the Company may from
time to time implement so long as such policies are not less favorable to Executive than the terms of this Agreement;

NOW, THEREFORE, in consideration of the covenants contained herein, and for other valuable consideration, the Company and Executive hereby agree
as follows:

1.            Certain Definitions. Certain definitions used herein shall have the meanings set forth on Exhibit A attached hereto.

2.          Term of the Agreement. The term (“Term”) of this Agreement shall commence on the date first above written and shall continue until
terminated  as  provided  in  Section  7  hereof.  Upon  the  occurrence  of  a  Change  of  Control  during  the  term  of  this  Agreement,  including  any  extensions
hereof,  this  Agreement  shall  automatically  be  extended  until  the  end  of  the  Effective  Period.  On  the  Date  of  Termination,  Executive  acknowledges
Executive shall immediately be deemed to have resigned all employment and related job duties and responsibilities with the Company, including, without
limitation  any  and  all  positions  on  any  committees  or  boards  of  the  Company  or  any  affiliated  company.  Executive  agrees  to  sign  all  reasonable
documentation evidencing the foregoing as may be presented to Executive for signature by the Company.

3.            Executive’s Duties and Obligations.

duties customarily associated with a General Counsel in a publicly-traded company.

(a)     Duties. Executive shall serve as the Company’s Senior Vice President & General Counsel. Executive shall be responsible for all

(b)      Location of Employment. Executive’s principal place of business shall be at the Company’s headquarters. In addition, Executive
acknowledges and agrees the performance by Executive of Executive’s duties shall require frequent travel including, without limitation, overseas travel
from time to time.

(c)    Proprietary Information and Inventions Matters.  In  consideration  of  the  covenants  contained  herein,  Executive  has  executed  and
agrees  to  be  bound  by  the  Company’s  standard  form  of  Proprietary  Information,  Inventions,  Non-Solicitation  and  Non-Competition  Agreement  (the
“Confidentiality Agreement”), which is attached to this Agreement as Exhibit B. Executive shall comply at all times with the terms and conditions of the
Confidentiality Agreement and all other reasonable policies of the Company governing its confidential and proprietary information.

4.            Devotion of Time to Company’s Business.

(a)          Full-Time Efforts.  During  Executive’s  employment  with  the  Company,  Executive  shall  devote  substantially  all  of  Executive’s
business  time,  attention  and  efforts  to  the  proper  performance  of  Executive’s  implicit  and  explicit  duties  and  obligations  hereunder  to  the  reasonable
satisfaction of the Company.

(b)    No Other Employment or Providing Services. During Executive’s employment with the Company, Executive shall not, except as
otherwise provided herein, directly or indirectly, render any services of a commercial or professional nature to any other person or organization, whether for
compensation or otherwise, without the prior written consent of the Executive Committee or the Board of Directors of the Company (the “Board”).

5.            Compensation and Benefits.

(a)        Base  Compensation.  During  the  Term,  the  Company  shall  pay  to  Executive  base  annual  compensation  (“Base  Salary”)  of
$375,000.00  payable  in  accordance  with  the  Company’s  regular  payroll  practices  and  less  all  required  withholdings.  Executive’s  Base  Salary  shall  be
reviewed  annually  and  may  be  increased  based  on  an  assessment  of  Executive’s  performance,  the  performance  of  the  Company,  inflation,  the  then
prevailing  salary  scales  for  comparable  positions  and  other  relevant  factors;  provided, however,  any  increase  in  Base  Salary  shall  be  solely  within  the
discretion  of  the  Company.  Executive’s  Base  Salary  shall  not  be  subject  to  reduction  from  the  level  in  effect  hereunder  from  time  to  time,  other  than
pursuant to a salary reduction program of general application to contract executives of the Company, which absent mutual agreement shall not to exceed
20% of salary.

(b)    Annual Bonuses. During the Term, Executive shall be eligible for such year-end bonus, which may be paid in either cash or equity,
or both, based upon a target Annual Bonus Amount of 40% of Base Salary, as may be awarded solely at the discretion of the Compensation Committee of
the  Board  after  consultation  with  the  Company’s  Chief  Executive  Officer,  provided,  the  Company  shall  be  under  no  obligation  whatsoever  to  pay  such
discretionary  year-end  bonus  for  any  year.  Any  such  equity  bonus  shall  contain  such  rights  and  features  as  are  typically  afforded  to  other  Company
employees of a similar level in connection with comparable equity bonuses awarded by the Company. For clarification, Executive’s bonus shall not be pro-
rated for 2021, and Executive shall receive the bonus she would have received had she started with the Company on January 1, 2021. Except as otherwise
provided in Section 7, in order for the Executive to receive payment of any such annual bonus, the Executive must be employed by the Company as of the
date the annual bonus is paid.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(c)    Equity.     As  soon  as  practicable,  the  Company  will  recommend  to  the  Compensation  Committee  of  the  Board  of  Directors  (the
“Committee”) that Executive be granted an option to acquire 150,000 shares of WINT stock (the “Option”).  One-third of the number of shares of Common
Stock subject to the Option shall vest and become exercisable on the first anniversary of the date Executive commences her employment with the Company
(the “Start Date”), another one-third of the Option shall vest and become exercisable on the second anniversary of the Start Date, and the final one-third of
the Option shall vest and become exercisable on the third Anniversary of the Start Date, all subject to Executive’s continuing employment on the stated
Start Date anniversaries.  In addition, the Executive shall be eligible for annual option or other stock grants as may be awarded solely at the discretion of
the Board of Directors or Committee, provided that neither the Board of Directors nor Committee shall be under any obligation whatsoever to grant such
discretionary options awards.  Any options issued to Executive after the Option shall be governed by the Company’s 2020 Long-Term Incentive Plan and
the Employee Option Agreement(s) under the 2020 Long-Term Incentive Plan or any amendments thereto by which they are issued. The Option award is
an “inducement” material to Executive’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the NASDAQ Marketplace
Rules, and will be granted outside of the Company’s 2020 Long-Term Incentive Plan pursuant to an award agreement, but will be governed in all respects
as if issued under the 2020 Long-Term Incentive Plan.

($5,000).

(d)    Signing Bonus. Upon execution of this Agreement, Company will pay you a signing bonus in the amount of five thousand dollars

(e)    Benefits. During the Term, Executive shall be entitled to participate in all employee benefit plans, programs and arrangements made
available generally to the Company’s senior executives or to its employees on substantially the same basis such benefits are provided to such executives of
a  similar  level  or  to  other  employees  (including,  without  limitation,  profit-sharing,  savings  and  other  retirement  plans  (e.g.  a  401(k)  plan)  or  programs,
medical,  dental,  hospitalization,  vision,  short-term  and  long-term  disability  and  life  insurance  plans  or  programs,  accidental  death  and  dismemberment
protection, travel accident insurance, and any other employee welfare benefit plans or programs may be sponsored by the Company from time to time,
including any plans or programs that supplement the above-listed types of plans or programs, whether funded or unfunded); provided, however, nothing in
this Agreement shall be construed to require the Company to establish or maintain any such plans, programs or arrangements.

(f)    Vacations. During the Term, Executive shall be entitled to 20 days paid vacation per year, or such greater amount as may be earned
under the Company’s standard vacation policy, to be earned ratably throughout the year. Vacation days may only be carried from one year to the next in
accordance with the Company vacation policy. Executive will also be granted up to five (5) personal days per year and six (6) sick days per year, which
will accrue on a monthly basis in accordance with company policy and be prorated in year one based upon your date of hire.

(g)   Reimbursement of Business Expenses. Executive is authorized to incur reasonable expenses in carrying out Executive’s duties and
responsibilities  under  this  Agreement  and  the  Company  shall  reimburse  Executive  for  all  such  expenses,  in  accordance  with  reasonable  policies  of  the
Company.

6.           Change of Control Benefits. Notwithstanding any provision to the contrary in any of the Company’s long-term incentive plans or in any
stock  option  or  restricted  stock  agreement  between  the  Company  and  Executive,  all  shares  of  stock  and  all  options  to  acquire  Company  stock  held  by
Executive shall accelerate and become fully vested and, with respect to restricted stock, all restrictions shall be lifted upon the Change of Control Date,
provided Executive is actively employed by the Company on such Change of Control Date.

7.            Termination of Employment.

(a)    Termination by the Company for Cause or Termination by Executive without Good Reason, Death or Disability.

(i)     In the event of a termination of Executive’s employment by the Company for Cause, a termination by Executive without
Good  Reason,  or  in  the  event  this  Agreement  terminates  by  reason  of  the  death  or  Disability  of  Executive,  Executive  shall  be  entitled  to  any  unpaid
compensation  accrued  through  the  last  day  of  Executive’s  employment,  a  lump  sum  payment  in  respect  of  all  accrued  but  unused  vacation  days  at
Executive’s Base Salary in effect on the date such vacation was earned, and payment of any other amounts owing to Executive but not yet paid, less any
amounts owed by Executive to the Company. Executive shall not be entitled to receive any other compensation or benefits from the Company whatsoever
(except as and to the extent the continuation of certain benefits is required by law).

(ii)    In the case of a termination due to death or Disability, notwithstanding any provision to the contrary in any stock option or
restricted  stock  agreement  between  the  Company  and  Executive,  all  shares  of  stock  and  all  options  to  acquire  Company  stock  held  by  Executive  shall
accelerate and become fully vested upon the Date of Termination (and all options shall thereupon become fully exercisable) and the Company will pay any
earned but unpaid annual bonus for the fiscal year preceding the Termination Date.

(b)    Termination by the Company without Cause or by Executive for Good Reason. If (x) Executive’s employment is terminated by the
Company other than for Cause, death or Disability (i.e., without Cause) or (y) Executive terminates employment with Good Reason, then Executive will
receive the amounts set forth in Section 7(a)(i), any other additional benefits then due or earned in accordance with generally applicable employee benefit
plans and programs of the Company, and, on the condition the Executive signs a separation agreement containing a plenary release of claims in a form
acceptable to the Company within fifty (50) days after the Date of Termination (or such shorter period specified in such plenary release) and such plenary
release becomes final, binding and irrevocable, the Executive shall also be entitled to receive the following from the Company:

(i)      Any earned but unpaid annual bonus for the fiscal year preceding the Termination Date and a pro rata bonus equal to the
Annual  Bonus  Amount  multiplied  by  the  fraction  obtained  by  dividing  the  number  of  days  in  the  year  through  the  Date  of  Termination  by  365,  which
amount shall be paid when the Company’s other employment contract executives are paid;

(ii)     An amount equal to the Executive’s Base Salary then in effect (determined without regard to any reduction in such Base
Salary constituting Good Reason), payable in equal installments in accordance with the Company’s regular payroll schedule, from the Date of Termination
to the date that is 12 months after the Date of Termination (the “Severance Period”); provided, however, each installment payable before the plenary release
becomes final, binding and irrevocable shall not be paid to the Executive until such plenary release becomes final, binding and irrevocable;

2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(iii)    During the Severance Period, if Executive elects to continue Company medical benefits through the Consolidated Omnibus
Budget Reconciliation Act of 1985 (“COBRA”), the Company shall continue to pay the Company’s costs of such benefits as if Executive continued under
the  same  plans  and  on  the  same  terms  and  conditions  as  an  active  employee  of  the  Company.  Company’s  obligation  under  this  Section  7(b)(iii)  shall
terminate if Executive becomes eligible for group health plan benefits under a subsequent employer’s plan or a spouse’s employer plan; and

(iv)    Upon the date the plenary release becomes final, binding and irrevocable, notwithstanding any provision to the contrary in
any stock option or restricted stock agreement between the Company and the Executive, all vested stock options to acquire Company stock and all other
similar equity awards held by the Executive as of the Date of Termination shall continue to be exercisable during the Severance Period, subject to earlier
exercise in the event of a Change of Control pursuant to the plan governing such awards.

Notwithstanding the foregoing, if Executive engages in a material breach of any provision of this Agreement or the Executive’s Confidentiality Agreement
during the Severance Period, and such breach is not cured within 5 business days, then the Company’s continuing obligations under this Section 7(b) shall
cease as of the date of the breach and the Executive shall be entitled to no further payments hereunder.

(c)    Termination in connection with a Change of Control. If Executive’s employment is terminated by the Company without Cause or by
Executive for Good Reason during the Effective Period, and on the condition the Executive signs a separation agreement containing a plenary release of
claims in a form acceptable to the Company within fifty (50) days after the Date of Termination (or such shorter period specified in such plenary release)
and such plenary release becomes final, binding and irrevocable, then Executive shall be entitled to receive the following from the Company:

accordance with generally applicable employee benefit plans and programs of the Company;

(i)            All  amounts  and  benefits  described  in  Section  7(a)(i)  above  and  any  other  additional  benefits  then  due  or  earned  in

Termination Date;

(ii)          Within  10  days  after  the  Date  of  Termination,  any  earned  but  unpaid  annual  bonus  for  the  fiscal  year  preceding  the

(iii)    Within 10 days after the Date of Termination, a lump sum cash payment in an amount equal to 1.5 times the sum of (A)
Executive’s  Base  Salary  then  in  effect  (determined  without  regard  to  any  reduction  in  such  Base  Salary  constituting  Good  Reason)  and  (B)  the  Annual
Bonus Amount; provided, however, if Executive’s employment is terminated prior to the consummation of a Change of Control but under circumstances
that would cause the Change of Control Date to precede the date the Change of Control is consummated, such amount will be paid in equal installments in
accordance with the Company’s regular payroll schedule over the Severance Period described in Section 7(b)(ii);

(iv)    If Executive elects to continue Company medical benefits under COBRA, for a period of 18 months following the Date of
Termination (the “Benefit Period”), the Company shall continue to pay the Company’s costs of such benefits as Executive elects to continue under the same
plans and on the same terms and conditions as such benefits are provided to active employees of the Company. Company’s obligation under this Section
7(b)(iii) shall terminate if Executive becomes eligible for group health plan benefits under a subsequent employer’s plan or a spouse’s employer plan;

(v)    Notwithstanding any provision to the contrary in any stock option or restricted stock agreement between the Company and
Executive,  all  shares  of  stock  and  all  options  to  acquire  Company  stock  held  by  Executive  shall  accelerate  and  become  fully  vested  upon  the  Date  of
Termination (and all options shall thereupon become fully exercisable), and all stock options shall continue to be exercisable for the remainder of their
stated terms, subject to earlier exercise pursuant to the plan governing such awards.

Notwithstanding the foregoing, if Executive engages in a material breach of any provision of this Agreement or Executive’s Confidentiality Agreement
during the Severance Period, and such breach is not cured within five business days after receipt from the Company of notice thereof, then the Company’s
continuing obligations under this Section 7(c) shall cease as of the date of the breach and the Executive shall be entitled to no further payments or benefits
hereunder.

8.            Notice of Termination.

(a)    Any termination of Executive’s employment by the Company for Cause, or by Executive for Good Reason shall be communicated
by a Notice of Termination to the other party hereto given in accordance with Section 12. For purposes of this Agreement, a “Notice of Termination” means
a  written  notice  which:  (i)  is  given  at  least  10  days  prior  to  the  Date  of  Termination  (at  least  30  days  in  the  case  of  Notice  of  Termination  given  by
Executive  for  Good  Reason),  (ii)  indicates  the  specific  termination  provision  in  this  Agreement  relied  upon,  (iii)  to  the  extent  applicable,  sets  forth  in
reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated, and
(iv)  specifies  the  employment  termination  date.  The  failure  to  set  forth  in  the  Notice  of  Termination  any  fact  or  circumstance  which  contributes  to  a
showing of Good Reason or Cause will not waive any right of the party giving the Notice of Termination hereunder or preclude such party from asserting
such fact or circumstance in enforcing its rights hereunder.

(b)        A  termination  of  employment  of  Executive  will  not  be  deemed  to  be  for  Good  Reason  unless  Executive  gives  the  Notice  of
Termination  provided  for  herein  within  30  days  after  Executive  has  actual  knowledge  of  the  act  or  omission  of  the  Company  constituting  such  Good
Reason and Executive gives the Company a 30-day cure period to rectify or correct the condition or event that constitutes Good Reason and Executive
terminates her employment within 30 days of the date Company’s failure to cure deadline has expired.

9.           Mitigation of Damages. Executive will not be required to mitigate damages or the amount of any payment or benefit provided for under
this Agreement by seeking other employment or otherwise. Except as otherwise provided in Sections 7(b)(iv) and 7(c)(iv), the amount of any payment or
benefit provided for under this Agreement will not be reduced by any compensation or benefits earned by Executive as the result of self-employment or
employment by another employer or otherwise.

3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10.          Excess Parachute Excise Tax.

(a)       Anything  in  this  Agreement  to  the  contrary  notwithstanding,  in  the  event  it  shall  be  determined  any  payment,  award,  benefit  or
distribution (including any acceleration) by the Company or any entity which effectuates a transaction described in Section 280G(b)(2)(A)(i) of the Code to
or for the benefit of Executive (whether pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments
required under this Section 10) (a “Payment”)  would  be  subject  to  the  excise  tax  imposed  by  Section  4999  of  the  Code  or  any  interest  or  penalties  are
incurred with respect to such excise tax by Executive (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to
as the “Excise Tax”), the Company will automatically reduce such Payments to the extent, but only to the extent, necessary so no portion of the remaining
Payments  will  be  subject  to  the  Excise  Tax,  unless  the  amount  of  such  Payments  the  Executive  would  retain  after  payment  of  the  Excise  Tax  and  all
applicable  Federal,  state  and  local  income  taxes  without  such  reduction  would  exceed  the  amount  of  such  Payments  the  Executive  would  retain  after
payment of all applicable Federal, state and local taxes after applying such reduction. Unless otherwise elected by the Executive, to the extent permitted
under  Code  Section  409A,  the  Company  shall  reduce  or  eliminate  the  payments  by  first  reducing  or  eliminating  any  cash  severance  benefits  (with  the
payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of stock options or similar awards,
then  by  reducing  or  eliminating  any  accelerated  vesting  of  restricted  stock  or  similar  awards,  then  by  reducing  or  eliminating  any  other  remaining
Payments;  provided,  no  such  reduction  or  elimination  shall  apply  to  any  non-qualified  deferred  compensation  amounts  (within  the  meaning  of  Section
409A of the Code) to the extent such reduction or elimination would accelerate or defer the timing of such payment in a manner that does not comply with
Section 409A of the Code.

(b)        All  determinations  required  to  be  made  under  this  Section  10,  including  the  assumptions  to  be  utilized  in  arriving  at  such
determination,  shall  be  made  by  the  Company’s  independent  auditors  or  such  other  professional  firm  or  certified  public  accounting  firm  of  national
standing  reasonably  as  may  be  designated  by  the  Company  (the  “Accounting  Firm”)  which  shall  provide  detailed  supporting  calculations  both  to  the
Company and Executive within 15 business days of the receipt of notice from Executive there has been a Payment, or such earlier time as is requested by
the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. If the Accounting Firm determines no Excise Tax is
payable  by  Executive,  it  shall  furnish  Executive  with  a  written  opinion  to  such  effect,  and  to  the  effect  that  failure  to  report  the  Excise  Tax,  if  any,  on
Executive’s applicable federal income tax return will not result in the imposition of a negligence or similar penalty. Any determination by the Accounting
Firm shall be binding upon the Company and Executive.

11.                  Legal Fees.  All  reasonable  legal  fees  and  related  expenses  (including  costs  of  experts,  evidence  and  counsel)  paid  or  incurred  by
Executive pursuant to any claim, dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Company if Executive
is successful on the merits pursuant to a legal judgment or arbitration. Except as provided in this Section 11, each party shall be responsible for its own
legal fees and expenses in connection with any claim or dispute relating to this Agreement.

12.       Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly
given if delivered by hand or mailed within the continental United States by first class certified mail, return receipt requested, postage prepaid, addressed as
follows:

If to the Board or the Company:

Windtree Therapeutics, Inc.

2600 Kelly Road, Suite 100

Warrington, PA 18976 USA

Attention: President

If to Executive:

Diane Carman

162 Brooklea Road

Bryn Mawr, PA 19010

With a copy to: Legal@windtreetx.com 

With a copy to: Dcarman610@gmail.com

Addresses may be changed by written notice sent to the other party at the last recorded address of that party.

13.          Withholding. The Company shall be entitled to withhold from payments due hereunder any required federal, state or local withholding or

other taxes.

14.                  Entire Agreement.  This  Agreement  contains  the  entire  agreement  between  the  parties  with  respect  to  the  subject  matter  hereof  and

supersedes the Offer Letter and all other prior agreements, written or oral, with respect thereto.

15.          Arbitration.

(a)    If the parties are unable to resolve any dispute or claim relating directly or indirectly to this Agreement or any dispute or claim
between Executive and the Company or its officers, directors, agents, or employees (a “Dispute”), then either party may require the matter to be settled by
final  and  binding  arbitration  by  sending  written  notice  of  such  election  to  the  other  party  clearly  marked  “Arbitration  Demand.”  Such  Dispute  shall  be
arbitrated in accordance with the terms and conditions of this Section 15. Notwithstanding the foregoing, either party may apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary injunction, or other equitable relief to preserve the status quo or prevent irreparable harm.

(b)        The  Dispute  shall  be  resolved  by  a  single  arbitrator  in  an  arbitration  administered  by  the  American  Arbitration  Association  in
accordance with its Employment Arbitration Rules and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The decision of the arbitrator shall be final and binding on the parties, and specific performance giving effect to the decision of the arbitrator may
be ordered by any court of competent jurisdiction.

(c)        Nothing  contained  herein  shall  operate  to  prevent  either  party  from  asserting  counterclaim(s)  in  any  arbitration  commenced  in
accordance  with  this  Agreement,  and  any  such  party  need  not  comply  with  the  procedural  provisions  of  this  Section  15  in  order  to  assert  such
counterclaim(s).

(d)        The  arbitration  shall  be  filed  with  the  office  of  the  American  Arbitration  Association  (“AAA”)  located  in  Philadelphia,
Pennsylvania or such other AAA office as the parties may agree upon (without any obligation to so agree). The arbitration shall be conducted pursuant to
the  Employment  Arbitration  Rules  of  AAA  as  in  effect  at  the  time  of  the  arbitration  hearing,  such  arbitration  to  be  completed  in  a  60-day  period.  In
addition, the following rules and procedures shall apply to the arbitration:

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4

 
(i)            The  arbitrator  shall  have  the  sole  authority  to  decide  whether  or  not  any  Dispute  between  the  parties  is  arbitrable  and
whether the party presenting the issues to be arbitrated has satisfied the conditions precedent to such party’s right to commence arbitration as required by
this Section 15.

(ii)     The decision of the arbitrator, which shall be in writing and state the findings, the facts and conclusions of law upon which
the decision is based, shall be final and binding upon the parties, who shall forthwith comply after receipt thereof. Judgment upon the award rendered by
the arbitrator may be entered by any competent court. Each party submits itself to the jurisdiction of any such court, but only for the entry and enforcement
to judgment with respect to the decision of the arbitrator hereunder.

performance) and award compensatory and punitive damages if authorized by applicable law.

(iii)        The  arbitrator  shall  have  the  power  to  grant  all  legal  and  equitable  remedies  (including,  without  limitation,  specific

any Dispute pursuant to this Section 15, and the costs of the arbitrator(s) shall be equally divided between the parties.

(iv)    Except as provided in Section 11, the parties shall bear their own costs in preparing for and participating in the resolution of

(v)    Except as provided in the last sentence of Section 15(a), the provisions of this Section 15 shall be a complete defense to any
suit,  action  or  proceeding  instituted  in  any  federal,  state  or  local  court  or  before  any  administrative  tribunal  with  respect  to  any  Dispute  arising  in
connection with this Agreement. Any party commencing a lawsuit in violation of this Section 15 shall pay the costs of the other party, including, without
limitation, reasonable attorney’s fees and defense costs.

16.          Miscellaneous.

(a)   Governing Law. This Agreement shall be interpreted, construed, governed and enforced according to the laws of the Commonwealth

of Pennsylvania without regard to the application of choice of law rules.

signed by the parties hereto.

(b)    Amendments.  No  amendment  or  modification  of  the  terms  or  conditions  of  this  Agreement  shall  be  valid  unless  in  writing  and

(c)        Severability.  If  one  or  more  provisions  of  this  Agreement  are  held  to  be  invalid  or  unenforceable  under  applicable  law,  such
provisions shall be construed, if possible, so as to be enforceable under applicable law, or such provisions shall be excluded from this Agreement and the
balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

(d)   Binding Effect.  This  Agreement  shall  be  binding  upon  and  inure  to  the  benefit  of  the  beneficiaries,  heirs  and  representatives  of
Executive (including the Beneficiary) and the successors and assigns of the Company. The Company shall require any successor (whether direct or indirect,
by  purchase,  merger,  reorganization,  consolidation,  acquisition  of  property  or  stock,  liquidation,  or  otherwise)  to  all  or  substantially  all  of  its  assets  to
assume and agree to perform this Agreement in the same manner and to the same extent the Company would be required to perform this Agreement if no
such succession had taken place. Regardless whether such agreement is executed, this Agreement shall be binding upon any successor of the Company in
accordance with the operation of law and such successor shall be deemed the Company for purposes of this Agreement.

(e)    Successors and Assigns. Except as provided in Section16(d) in the case of the Company, or to the Beneficiary in the case of the
death of Executive, this Agreement is not assignable by any party and no payment to be made hereunder shall be subject to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance or other charge.

(f)     Remedies Cumulative; No Waiver. No remedy conferred upon either party by this Agreement is intended to be exclusive of any
other  remedy,  and  each  and  every  such  remedy  shall  be  cumulative  and  shall  be  in  addition  to  any  other  remedy  given  hereunder  or  now  or  hereafter
existing at law or in equity. No delay or omission by either party in exercising any right, remedy or power hereunder or existing at law or in equity shall be
construed as a waiver thereof, and any such right, remedy or power may be exercised by such party from time to time and as often as may be deemed
expedient or necessary by such party in such party’s sole discretion.

(g)        Survivorship.  Notwithstanding  anything  in  this  Agreement  to  the  contrary,  all  terms  and  provisions  of  this  Agreement  by  their

nature extend beyond the termination of this Agreement shall survive such termination.

herein and supersedes all prior agreements, promises, covenants or arrangements, whether oral or written, with respect thereto.

(h)    Entire Agreement. This Agreement sets forth the entire agreement of the parties hereto with respect to the subject matter contained

(i)    Counterparts. This Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of

which, when taken together, shall constitute one document.

17.          No Contract of Employment. Nothing contained in this Agreement will be construed as a right of Executive to be continued in the

employment of the Company, or as a limitation of the right of the Company to discharge Executive with or without Cause.

18.         Section 409A of the Code. The intent of the parties is that payments and benefits under this Agreement comply with, or be exempt from,
Section 409A of the Code and, accordingly, to the maximum extent permitted, this Agreement shall be construed and interpreted in accordance with such
intent. Executive’s termination of employment (or words to similar effect) shall not be deemed to have occurred for purposes of this Agreement unless such
termination  of  employment  constitutes  a  “separation  from  service”  within  the  meaning  of  Code  Section  409A  and  the  regulations  and  other  guidance
promulgated thereunder.

5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a)    Notwithstanding any provision to the contrary in this Agreement, if Executive is deemed on the date of Executive’s termination to
be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B) and using the identification methodology selected by the
Company from time to time, or if none, the default methodology set forth in Code Section 409A, then with regard to any payment or the providing of any
benefit  constitutes  “non-qualified  deferred  compensation”  pursuant  to  Code  Section  409A  and  the  regulations  issued  thereunder  is  payable  due  to
Executive’s separation from service, to the extent required to be delayed in compliance with Code Section 409A(a)(2)(B), such payment or benefit shall not
be made or provided to Executive prior to the earlier of (i) the expiration of the six (6) month period measured from the date of Executive’s separation from
service, and (ii) the date of Executive’s death (the “Delay Period”). On the first day of the seventh month following the date of Executive’s separation from
service or, if earlier, on the date of Executive’s death, all payments delayed pursuant to this Section 18(a) shall be paid or reimbursed to Executive in a
lump  sum,  and  any  remaining  payments  and  benefits  due  to  Executive  under  this  Agreement  shall  be  paid  or  provided  in  accordance  with  the  normal
payment dates specified for them herein.

(b)    To the extent any reimbursement of costs and expenses provided for under this Agreement constitutes taxable income to Executive
for Federal income tax purposes, such reimbursements shall be made no later than December 31 of the calendar year next following the calendar year in
which the expenses to be reimbursed are incurred. With regard to any provision herein that provides for reimbursement of expenses or in-kind benefits,
except as permitted by Code Section 409A, (i) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit,
and (ii) the amount of expenses eligible for reimbursement, or in-kind benefits, provided during any taxable year shall not affect the expenses eligible for
reimbursement, or in-kind benefits to be provided, in any other taxable year.

(c)    If any amount under this Agreement is to be paid in two or more installments, for purposes of Code Section 409A each installment

shall be treated as a separate payment.

19.         Executive Acknowledgement. Executive hereby acknowledges (a) Executive has read and understands the provisions of this Agreement,
(b) Executive has been given the opportunity for Executive’s legal counsel to review this Agreement, (c) the provisions of this Agreement are reasonable,
and (d) Executive has received a copy of this Agreement.

[signature page to follow]

6

 
 
 
 
 
 
 
IN WITNESS WHEREOF, the parties hereto have caused this Employment Agreement to be executed as of the date first above written.

WINDTREE THERAPEUTICS, INC.

DIANE CARMAN

/s/ Craig E. Fraser

By:
Name:  Craig E. Fraser 
Title: President and CEO
Date:

/s/ Diane Carman
Diane Carman, Executive

Dated:  

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                  
 
 
(a)          “Annual Bonus Amount” means the current year’s target annual bonus amount for the Executive.

EXHIBIT A

(b)          “Beneficiary” means any individual, trust or other entity named by Executive to receive the payments and benefits payable

hereunder in the event of the death of Executive. Executive may designate a Beneficiary to receive such payments and benefits by completing a form
provided by the Company and delivering it to the General Counsel of the Company. Executive may change her designated Beneficiary at any time (without
the consent of any prior Beneficiary) by completing and delivering to the Company a new beneficiary designation form. If a Beneficiary has not been
designated by Executive, or if no designated Beneficiary survives Executive, then the payment and benefits provided under this Agreement, if any, will be
paid to Executive’s estate, which shall be deemed to be Executive’s Beneficiary.

(c)          “Cause” means: (i) Executive’s willful and continued neglect of Executive’s duties with the Company (other than as a result of

Executive’s incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to Executive by the Company
which specifically identifies the manner in which the Company believes Executive has neglected her duties; (ii) the final conviction of Executive of, or an
entering of a guilty plea or a plea of no contest by Executive to, a felony; (iii) Executive’s willful engagement in illegal conduct or gross misconduct which
is materially and demonstrably injurious to the Company; or (iv) the debarment of Executive by the FDA.

For purposes of this definition, no act or failure to act on the part of Executive shall be considered “willful” unless it is done, or omitted
to be done, by Executive in bad faith or without a reasonable belief the action or omission was in the best interests of the Company. Any act, or failure to
act, based on authority given pursuant to a resolution duly adopted by the Board, or the advice of counsel to the Company, will be conclusively presumed to
be done, or omitted to be done, by Executive in good faith and in the best interests of the Company.

(d)          “Change of Control” means the occurrence of any one of the following events:

(i)     any “person” (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”)), other

than the Company, any trustee or other fiduciary holding securities under an employee benefit plan of the Company, an underwriter temporarily holding
securities pursuant to an offering of such securities or any corporation owned, directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company, directly or indirectly (x) acquires “beneficial ownership” (as defined in Rule 13d-3 under the
Exchange Act) of securities representing more than 50% of the combined voting power of the Company’s then outstanding securities or; (y) acquires within
a 12 consecutive month period “beneficial ownership” (as defined in Rule 13d-3 under the Exchange Act) of securities representing 35% of the combined
voting power of the Company’s then outstanding securities;

appointment or election is not endorsed by a majority of the members of the Board before the date of such appointment or election;

(ii)     persons who comprise a majority of the Board are replaced during any 12 consecutive month period by directors whose

(iii)     the consummation of a reorganization, merger, statutory share exchange, consolidation or similar corporate transaction

(each, a “Business Combination”) other than a Business Combination in which all or substantially all of the individuals and entities who were the beneficial
owners of the Company’s voting securities immediately prior to such Business Combination beneficially own, directly or indirectly, 50% or more of the
combined voting power of the voting securities of the entity resulting from such Business Combination (including, without limitation, an entity which as a
result of the Business Combination owns the Company or all or substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership of the Company’s voting securities immediately prior to such Business Combination;
or

the Company within any 12 consecutive month period.

(iv)     any “person” (as defined in Sections 13(d) and 14(d) of the Exchange Act) acquires all or substantially all of the assets of

Notwithstanding the foregoing, none of the foregoing events shall constitute a Change of Control of the Company unless such event also constitutes a
change in ownership of the Company within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(v), a change in the effective control of the
Company within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(vi) or a change in ownership of a substantial portion of the assets of the
Company within the meaning of Treasury Regulation Section 1.409A-3(i)(5)(vii).

(e)          “Change of Control Date” means any date after the date hereof on which a Change of Control occurs; provided, however, if a
Change of Control occurs and if Executive’s employment with the Company is terminated or an event constituting Good Reason (as defined below) occurs
prior to the Change of Control, and if it is reasonably demonstrated by Executive that such termination or event (i) was at the request of a third party who
has taken steps reasonably calculated to effect the Change of Control, or (ii) otherwise arose in connection with or in anticipation of the Change of Control
then, for all purposes of this Agreement, the Change of Control Date shall mean the date immediately prior to the date of such termination or event.

(f)           “Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

date as an active employee of the Company before a termination of employment due to death, Disability or other reason, as the case may be.

(g)          “Date of Termination” means the date specified in a Notice of Termination pursuant to Section 8 hereof, or Executive’s last

A-1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(h)          “Disability” means a condition entitling Executive to benefits under the Company’s long term disability plan, policy or

arrangement; provided, however, if no such plan, policy or arrangement is then maintained by the Company and applicable to the Executive, “Disability”
will mean a mental or physical condition that renders Executive substantially incapable of performing her duties and obligations under this Agreement,
after taking into account provisions for reasonable accommodation, as determined by a medical doctor (such doctor to be mutually determined in good faith
by the parties) for three or more consecutive months or for a total of six months during any 12 consecutive months.

related Change of Control.

(i)           “Effective Period” means the period beginning on the Change of Control Date and ending 24 months after the date of the

(j)           “Good Reason” means, unless Executive has consented in writing thereto, the occurrence of any of the following: (i) the

assignment to Executive of any duties materially inconsistent with Executive’s position, including any change in title, authority, duties or responsibilities or
any other action which results in a material diminution in such, title, authority, duties or responsibilities; (ii) a material reduction in Executive’s Base Salary
by the Company other than in accordance with Section 5(a); (iii) the relocation of Executive’s office to a location more than 30 miles from Warrington,
Pennsylvania; (iv) a material breach of this Agreement by the Company; or (v) the failure of the Company to obtain the assumption in writing of the
Company’s obligation to perform this Agreement by any successor to all or substantially all of the assets of the Company within 15 days after a Business
Combination or a sale or other disposition of all or substantially all of the assets of the Company.

A-2

 
 
 
 
 
EXHIBIT B

FORM OF PROPRIETARY INFORMATION, INVENTIONS,
NON‑SOLICITATION AND NON-COMPETITION AGREEMENT

The following is an agreement (“Agreement”) between WINDTREE THERAPEUTICS, INC., a Delaware corporation, and any successor in interest (the
“Company”) and me, DIANE CARMAN, and this Agreement is a material part of the consideration for my employment by the Company:

1.         Job Title and Responsibility: I understand my job title with the Company will be Senior Vice President and General Counsel and the

Company may change this title at any time with my written consent. My job duties and responsibilities will be those reasonably assigned to me by the
Company from time to time consistent with the position of General Counsel of a publicly-traded company.

2.         Consideration. I understand the consideration to me for entering into this Agreement is my employment with the Company, my base

compensation, eligibility to earn bonuses, be granted incentive equity and eligibility to receive severance benefits, and I agree this consideration is fully
adequate to support this Agreement.

3.         Proprietary Information. I recognize the Company is engaged in a continuous program of research, development and production. I also

recognize the Company possesses or has rights to secret, private, confidential information and processes (including processes and information developed by
me during my employment by the Company) which are valuable, special and unique assets of the Company and which have commercial value in the
Company’s business (“Proprietary Information”). By way of illustration, this Proprietary Information includes, but is not limited to, information and details
regarding the Company’s business, trade or business secrets, inventions, intellectual property, systems, policies, records, reports, manuals, documentation,
models, data and data bases, products, processes, operating systems, manufacturing techniques, research and development techniques and processes,
devices, methods, formulas, compositions, compounds, projects, developments, plans, research, financial data, personnel data, internal business
information, strategic and staffing plans and practices, business, marketing, promotional or sales plans, practices or programs, training practices and
programs, costs, rates and pricing structures and business methods, computer programs and software, customer and supplier identities, information and
lists, confidential information regarding customers and suppliers, and contacts at or knowledge of Company suppliers and customers or of prospective or
potential customers of the Company.

4.         Obligation of Confidentiality. I understand and agree my employment creates a relationship of confidence and trust between the Company
and me with respect to (i) all Proprietary Information, and (ii) the confidential information of others with which the Company has a business relationship.
At all times, both during my employment by the Company and after the termination of my employment (whether voluntary or involuntary), I will keep in
confidence and trust all such information, and I will not use, reveal, communicate, or disclose any such Proprietary Information or confidential information
to anyone or any entity, without the written consent of the Company, unless I am ordered to make disclosure by a court of competent jurisdiction.

Notwithstanding the foregoing, I understand nothing in this Agreement prohibits me from initiating communications directly with, responding to
any inquiries from, providing testimony before, providing confidential information to, reporting possible violations of law or regulation to, or from filing a
claim or assisting with an investigation directly with a self-regulatory authority or a government agency or entity, including the U.S. Equal Employment
Opportunity Commission, the Department of Labor, the National Labor Relations Board, the Department of Justice, the Securities and Exchange
Commission, the Congress, and any agency Inspector General (collectively, the “Regulators”), or from making other disclosures that are protected under
the whistleblower provisions of state or federal law or regulation. In connection with any such activity, I must identify any information that is confidential
and ask the Regulator for confidential treatment of such information. Despite the foregoing, I am not permitted to reveal to any third party, including any
governmental, law enforcement, or regulatory authority, information employee came to learn during the course of my employment with the Company that
is protected from disclosure by any applicable privilege, including but not limited to the attorney-client privilege, attorney work product doctrine and/or
other applicable legal privileges. The Company does not waive any applicable privileges or the right to continue to protect its privileged attorney-client
information, attorney work product, and other privileged information. Notwithstanding any other provisions of this Agreement, pursuant to 18 USC Section
1833(b), I shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret of the Company that is
made: (a) confidentially to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of
reporting or investigating a suspected violation of law; or (b) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made
under seal. If I file a lawsuit for retaliation by the Company for reporting a suspected violation of law, I may disclose a trade secret of the Company to my
attorney and use the trade secret information in related court proceedings, provided I file any document containing the trade secret information under seal
and does not disclose the trade secret, except pursuant to court order.

5.         Ownership, Disclosure and Assignment of Proprietary Information and Inventions. In addition, I hereby agree as follows:

(a)        Ownership and Assignment. All Proprietary Information is, and shall be, the sole and exclusive property of the Company and its assigns,

and the Company and its assigns shall be the sole and exclusive owner of all Proprietary Information, including, but not limited to, trade secrets, inventions,
patents, trademarks, copyrights, and all other rights in connection with such Proprietary Information. I agree I have no rights in such Proprietary
Information. I hereby assign, and shall assign, to the Company and its assigns any and all rights, title and interest I may have or acquire in such Proprietary
Information. Any copyrightable work prepared in whole or in part by me in the course of my employment shall be deemed “a work made for hire” under
applicable copyright laws, and the Company and its assigns shall own all of the rights in any copyright.

(b)        Return of Materials and Property. All documents, records, apparatus, equipment, data bases, data and information stored in computers or
on electronic disks, and other electronic, computer, intellectual, and physical property (“Materials and Property”), whether or not pertaining to Proprietary
Information, furnished to me by the Company or produced by me or others in connection with employment, shall be and remain the sole and exclusive
property of the Company. I shall return to the Company all such Materials and Property as and when requested by the Company. Even if the Company does
not so request, I shall return all such Materials and Property upon termination of employment by me or by the Company for any reason, and I will not take
with me any such Materials or Property, or any reproduction thereof, upon such termination.

B-1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(c)        Notification. During the Term of my employment and for one (1) year thereafter, I will promptly disclose to the Company, or any persons

designated by it, all improvements, inventions, intellectual property, works of authorship, formulas, ideas, processes, techniques, discoveries,
developments, designs, innovations, know‑how and data, and creative works in which copyright and/or unregistered design rights will subsist in various
media (all collectively called herein, "Inventions"), whether or not such Inventions are patentable, which I make or conceive, contribute to, reduce to
practice, or learn, either alone or jointly with others.

(d)        Ownership of Inventions. I agree and acknowledge all Inventions which I make, conceive, develop, or reduce to practice (in whole or in

part, either alone or jointly with others) at any time during my employment by the Company, and (i) which were created using the equipment, supplies,
facilities or trade secret information of the Company, or (ii) which were developed during the hours for which I was compensated by the Company, or (iii)
which relate, at the time of conception, creation, development or reduction to practice, to the business of the Company or to its actual or demonstrably
anticipated research and development, or (iv) which result from any work performed by me for the Company, shall be the sole and exclusive property of the
Company and its assigns (and to the fullest extent permitted by law shall be deemed works made for hire), and the Company and its assigns shall be the
sole and exclusive owner of all Inventions, patents, copyrights and all other rights in connection therewith. I hereby assign to the Company any and all
rights I may have or acquire in such Inventions. I agree any Invention required to be disclosed under paragraph (c), above, within one (1) year after the
termination of my employment shall be presumed to have been conceived or made during my employment with the Company and will be assigned to the
Company unless and until I prove and establish to the contrary.

(e)         Assistance and Cooperation. With respect to Inventions described in paragraph (d), above, I will assist the Company in every proper way

(but at the Company’s expense) to obtain, and from time to time enforce, patents, copyrights or other rights on these Inventions in any and all countries,
and will execute all documents reasonably necessary or appropriate for this purpose. This obligation shall survive the termination of my employment. In
the event the Company is unable for any reason whatsoever to secure my signature to any document reasonably necessary or appropriate for any of the
foregoing purposes (including renewals, extensions, continuations, divisions or continuations in part), I hereby irrevocably designate and appoint the
Company, and its duly authorized officers and agents, as my agents and attorneys-in-fact to act for and in my behalf and instead of me, but only for the
purpose of executing and filing any such document and doing all other lawfully permitted acts to accomplish the foregoing purposes with the same legal
force and effect as if executed by me.

(f)         Exempt Inventions. I understand this Agreement does not require assignment of an Invention for which no equipment, supplies, facilities,
resources, or trade secret information of the Company was used and which was developed entirely by me on my own time, unless the invention relates, (i)
directly to the business of the Company, or (ii) to the Company’s actual or demonstrably anticipated research or development. However, I will disclose to
the Company any Inventions I claim are exempt, as required by paragraph (c), above, in order to permit the Company to determine such issues as may
arise. Such disclosure shall be received in confidence by the Company.

6.         Prior Inventions. As a matter of record, I attach hereto as Schedule 1 a complete list of all inventions or improvements relevant to the

subject matter of my employment by the Company which have been made or conceived or first reduced to practice by me, alone or jointly with others, prior
to my employment with the Company, I desire to remove from the operation of this Agreement, and I covenant such list is complete. If no such list is
attached to this Agreement, I represent I have no such inventions and improvements at the time of my signing this Agreement.

7.         Other Business Activities. So that the Company may be aware of the extent of any other demands upon my time and attention, I will

disclose to the Company (such disclosure to be held in confidence by the Company) the nature and scope of any other business activity in which I am or
become engaged during the term of my employment. During the term of my employment, I will not engage in any business activity or employment which
is in competition with, or is related to, the Company’s business or its actual or demonstrably anticipated research and development, or that will affect in any
manner my ability to perform fully all of my duties and responsibilities for the Company.

8.         Non-Interference and Non-Solicitation of Employees, Customers and Others. I will not now or at any time in the future, anywhere in the
world, disrupt, damage, impair or interfere with the business of the Company, whether by way of interfering with or raiding its employees, disrupting its
relationships with customers, agents, vendors, distributors or representatives, or otherwise. During my employment with the Company and for eighteen
(18) months thereafter, I will not directly or indirectly solicit, encourage, induce or endeavor to entice away from the Company, or otherwise interfere with
the relationship of the Company with, any person who is employed or engaged by the Company as an employee, consultant or independent contractor or
who was so employed or engaged at any time during the six (6) months preceding the termination of my employment; provided, nothing herein shall
prevent me from engaging in discussions regarding employment, or employing, any such employee, consultant or independent contractor (i) if such person
shall voluntarily initiate such discussions without any such solicitation, encouragement, enticement or inducement prior thereto on my part or (ii) if such
discussions shall be held as a result of, or any employment shall be the result of, the response by any such person to a written employment advertisement
placed in a publication of general circulation, general solicitation conducted by executive search firms, employment agencies or other general employment
services, not directed specifically at any such employee, consultant or independent contractor.

9.         Non-Competition During and After Employment. During my employment with the Company or at any time within a period of one (1) year

after the termination of my employment, I shall not, directly or indirectly, anywhere in the world, without the prior written consent of the Company, either
as an employee, employer, consultant, agent, principal, partner, stockholder, corporate officer, director, or in any other individual or representative capacity
compete with the Company in the business of developing or commercializing (i) pulmonary surfactants or any other category of compounds which form
the basis of the Company’s material drug products, or (ii) any material medical device products under development by the Company, including without
limitation the Company’s capillary aerosol generator, series of aerosol-conducting airway connectors and related componentry, and similar medical devices,
in each case, as determined in good faith by the Company on the termination date of my employment. Notwithstanding the foregoing, the Company and I
acknowledge and agree that I may engage in the practice of law without limitation, including, but not limited to, serving as a general and/or in-house
counsel to any company, subsequent to the termination of my employment for any reason, subject to my compliance with applicable ethical requirements.

10.        Obligations to Former Employers. I represent my execution of this Agreement, my employment with the Company, and my performance

of my duties and proposed duties to the Company will not violate any obligations or agreements I have, or may have, with any former employer or any
other third party, including any obligations and agreements requiring me not to compete or to keep confidential any proprietary or confidential information.
I have not entered into, and I will not enter into, any agreement which conflicts with this Agreement or would, if performed by me, cause me to breach this
Agreement. I further represent I have no knowledge of any pending or threatened litigation to which the Company may become a party by virtue of my
association with the Company. I further agree to immediately inform the Company of any such pending or threatened litigation should it come to my
attention during the course of my employment. I also agree I provided to the Company for its inspection before I signed this Agreement all confidentiality,
non-compete, non-solicitation, and all other employment-related agreements that I am party to or which involve me, that would impact my ability to
perform my obligations to the Company.

 
 
 
 
 
 
 
 
 
 
B-2

 
11.        Confidential Information of, and Agreements with, Former Employers. In the course of performing my duties to the Company, I will not
utilize any trade secrets, proprietary or confidential information of or regarding any former employer or business affiliate, nor violate any written or oral,
express or implied agreement with any former employer or business affiliate.

12.        United States Government Obligations. I acknowledge the Company from time to time may have agreements with other persons or with
the United States Government, or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course
of work under such agreements or regarding the confidential nature of such work. I agree to be bound by all such obligations and restrictions which are
made known to me and to take all action necessary to discharge the obligations of the Company under such agreements.

13.        Remedies. I acknowledge my failure to comply with, or my breach of, any of the terms and conditions of this Agreement may irreparably

harm the Company, and money damages may not adequately compensate the Company for this harm. Accordingly, I acknowledge in the event of a
threatened or actual breach by me of any provision of this Agreement, in addition to any other remedies the Company may have at law, the Company shall
be entitled to seek equitable relief in the form of specific performance, temporary restraining order, temporary or permanent injunction or any other
equitable remedy then available, without requiring the Company to post any bond. I agree nothing herein contained shall be construed as prohibiting the
Company from pursuing any other remedies available to it for such threatened or actual breach, including money damages.         

14.        Not an Employment Agreement. I acknowledge and agree this Agreement is not a contract of employment, it should not be construed as a

guarantee of my employment for any period of time, and that I am employed by the Company at will and my employment may be terminated by the
Company for any lawful reason or no reason.

15.        Miscellaneous.

(a)         Reformation and Severability. If any provision of this Agreement is held to be invalid or unenforceable under applicable law,
such provision shall be reformed and/or construed, if possible, to be enforceable under applicable law; otherwise, such provision shall be excluded from
this Agreement and the balance of the Agreement shall remain fully enforceable and valid in accordance with its terms. To the extent the restrictions
imposed by Sections 8 and 9 are interpreted by any court to be unreasonable in geographic and/or temporal scope, such restrictions shall be deemed
automatically reduced to the extent necessary to coincide with the maximum geographic and/or temporal restrictions deemed by such court not to be
unreasonable.

(b)         No Waiver. No delay or omission by the Company in exercising any right hereunder will operate as a waiver of that or any other

right. A waiver or consent given by the Company on any one occasion is effective only in that instance and will not be construed as a bar to or waiver of
any right on any other occasion.

(c)         Reassignment. I expressly consent to be bound by the provisions of this Agreement for the benefit of the Company or any
subsidiary or affiliate thereof to whose employment I may be transferred, without the necessity that this Agreement be reassigned at the time of such
transfer.

(d)         Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of

Pennsylvania (but not the law or principles of conflict of laws), and the parties submit to the jurisdiction of the courts of Pennsylvania.

(e)         Effective Date. This Agreement shall be effective as of the first day of my employment by the Company, shall be binding upon

me, my heirs, executors, assigns and administrators, and shall inure to the benefit of the Company, its successors and assigns.

be waived, changed, extended or discharged except by an agreement in writing signed by both parties.

(f)         Entire Agreement. This Agreement contains the entire agreement of the parties relating to the subject matter herein, and may not

I acknowledge and agree I have fully read and understand all of the terms and provisions of this Agreement, I have had the opportunity to consult with an
attorney and to discuss this Agreement with an attorney, I have had any questions regarding the effect of this Agreement or the meaning of its terms
answered to my satisfaction, and, intending to be legally bound hereby, I freely and voluntarily sign this Agreement.

Accepted and Agreed to: 

WINDTREE THERAPEUTICS, INC.

/s/ Diane Carman

By:
Name:  Diane Carman
Date:
SS#:

x9360

/s/ Craig E. Fraser

By: 
Name:  Craig E. Fraser
Title: President and CEO
Date:

B-3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
            
SCHEDULE 1

Windtree Therapeutics, Inc.
2600 Kelly Road, Suite 100
Warrington, PA 18976

Attn: Craig E. Fraser         

1.         The following is a complete list of all inventions or improvements relevant to the subject matter of my employment by Windtree
Therapeutics, Inc. (the “Company”) that have been made or conceived or first reduced to practice by me, alone or jointly with others, prior to my
employment by the Company I desire to remove from the operation of the Company’s Proprietary Information and Inventions and Non‑Solicitation
Agreement.

   X             No inventions or improvements.

_____         See below. Any and all inventions regarding

_____         Additional sheets attached.

2.         I propose to bring to my employment the following materials and documents of a former employer:

    X            No materials or documents.

_____         See below.

Diane Carman

Date

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                                                    
 
 
                                                                                                    
 
 
 
Exhibit 23.1

We consent to the incorporation by reference in the following Registration Statements:

Consent of Independent Registered Public Accounting Firm

1. Registration  Statement  (Form  S-1  No.  333-217161,  Form  S-1  No.  333-231128,  Form  S-1  No.  333-235977,  and  Form  S-1  333-236085)  of

Windtree Therapeutics, Inc. and in related Prospectuses,

2. Registration Statement (Form S-3 No. 333-248874) of Windtree Therapeutics, Inc. and in related Prospectuses,

3. Registration Statement (Form S-3 No. 333-261878) of Windtree Therapeutics, Inc. and in related Prospectuses;

4. Registration Statement (Form S-8 No. 333-180497, Form S-8 No. 333-184277, Form S-8 No. 333-189966, Form S-8 No. 333-197139, Form S-8
No.  333-209141,  Form  S-8  No.  333-224338,  and  Form  S-8  No.  333-230907)  pertaining  to  the  Windtree  Therapeutics,  Inc.  2011  Long-Term
Incentive Plan,

5. Registration Statement (Form S-8 No. 333-148028) pertaining to the Windtree Therapeutics, Inc. 2007 Long-Term Incentive Plan,

6. Registration Statement (Form S-8 No. 333-33900, Form S-8 No. 333-55900, Form S-8 No. 333-67422, Form S-8 No. 333-100824, Form S-8 No.
333-109274, Form S-8 No. 333-116268, Form S-8 No. 333-127790, Form S-8 No. 333-138476, Form S-8 No. 333-208879, Form S-8 No. 333-
209141 and Form S-8 No. 210464) pertaining to the Amended and Restated 1998 Stock Incentive Plan of Windtree Therapeutics, Inc.,

7. Registration Statement (Form S-8 No. 333-59945) pertaining to the Amended and Restated 1998 Stock Incentive Plan of Windtree Therapeutics,
Inc.,  the  1996  Stock  Option/Stock  Issuance  Plan  of  Windtree  Therapeutics,  Inc.,  and  the  1996  Stock  Option/  Stock  Issuance  Plan  of  Acute
Therapeutics, Inc.,

8. Registration Statement (Form S-8 No. 333-110412, Form S-8 No. 333-137643, Form S-8 No. 333-156443, Form S-8 No. 333-164470, Form S-8
No.  333-165809,  Form  S-8  No.  333-169662,  Form  S-8  No.  333-173259,  Form  S-8  No.333-180497,  Form  S-8  No.  333-187486,  Form  S-8  No.
333-191502, Form S-8 No. 333-197139, Form S-8 No. 333-201478, Form S-8 No. 333-208879, and S-8 No. 333-209141) pertaining to the 401(k)
Plan of Windtree Therapeutics, Inc.,

9. Registration Statement (Form S-8 No. 333-253065) pertaining to the Windtree Therapeutics, Inc. 2020 Equity Incentive Plan, and

10. Registration Statement (Form S-8 No. 333-253067) pertaining to certain Non-Qualified Stock Option Inducement Awards;

of our report dated March 31, 2022, with respect to the consolidated financial statements of Windtree Therapeutics, Inc. and subsidiaries included in this
Annual Report (Form 10-K) of Windtree Therapeutics, Inc. and subsidiaries for the year ended December 31, 2021.

/s/ Ernst & Young LLP

Philadelphia, Pennsylvania
March 31, 2022

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 31.1

I, Craig E. Fraser, certify that:

CERTIFICATION

1.

2.

3.

4.

I have reviewed this Annual Report on Form 10-K of Windtree Therapeutics, Inc.;

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;

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;

The registrant’s other certifying officers and I are 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 reports (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f) for the registrant and have:

(a)

(b)

(c)

(d)

designed  such  disclosure  controls  and  procedures,  or  caused  such  disclosure  controls  and  procedures  to  be  designed  under  our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared;

designed  such  internal  control  over  financial  reporting,  or  caused  such  internal  control  over  financial  reporting  to  be  designed
under  our  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;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 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

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.

The registrant’s other certifying officers and I have disclosed, based on our 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 function):

(a)

(b)

Date: March 31, 2022

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

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.

/s/ Craig E. Fraser
Craig E. Fraser
President and Chief Executive Officer
(Principal Executive Officer)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 31.2

I, John P. Hamill, certify that:

CERTIFICATION

1.

2.

3.

4.

I have reviewed this Annual Report on Form 10-K of Windtree Therapeutics, Inc.;

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;

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;

The registrant’s other certifying officers and I are 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)

(b)

(c)

(d)

designed  such  disclosure  controls  and  procedures,  or  caused  such  disclosure  controls  and  procedures  to  be  designed  under  our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared;

designed  such  internal  control  over  financial  reporting,  or  caused  such  internal  control  over  financial  reporting  to  be  designed
under  our  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;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our 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

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.

The registrant’s other certifying officers and I have disclosed, based on our 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 function):

(a)

(b)

Date: March 31, 2022

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

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.

/s/ John P. Hamill
John P. Hamill
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.1

In connection with the Annual Report of Windtree Therapeutics, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2021, as
filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of the Company certifies, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to such officer’s knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The  information  contained  in  the  Report  fairly  presents,  in  all  material  respects,  the  financial  condition  and  results  of  operations  of  the
Company.

Date: March 31, 2022

/s/ Craig E. Fraser
Craig E. Fraser
President and Chief Executive Officer
(Principal Executive Officer)

/s/ John P. Hamill
John P. Hamill
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)