NeuBase Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Months Ended December 31, 2021 and 2020

(Unaudited)


	Common Stock			Additional Paid-In		Accumulated		Total Stockholders’
	Shares	Amount		Capital		Deficit		Equity
Balance as of September 30, 2020	23,154,084	$	2,315	$	74,850,935	$	(43,558,602)	$	31,294,648
Stock-based compensation expense	—		—		1,176,585		—		1,176,585
Issuance of restricted stock for services	1,931		—		—		—		—
Exercise of stock options	21,576		2		112,444		—		112,446
Net loss	—		—		—		(4,066,431)		(4,066,431)
Balance as of December 31, 2020	23,177,591	$	2,317	$	76,139,964	$	(47,625,033)	$	28,517,248


Balance as of September 30, 2021	32,721,493	$	3,272	$	123,034,404	$	(68,967,903)	$	54,069,773
Stock-based compensation expense	—		—		793,204		—		793,204
Issuance of restricted stock for services	4,441		—		—		—		—
Exercise of stock options	42,250		4		38		—		42
Net loss	—		—		—		(7,728,816)		(7,728,816)
Balance as of December 31, 2021	32,768,184	$	3,276	$	123,827,646	$	(76,696,719)	$	47,134,203

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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NeuBase Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of ~~Stockholders’ Equity~~Cash Flows

~~For the Three and Six Months Ended March 31, 2021 and 2020~~(Unaudited)

~~(Unaudited)~~


	Three Months Ended
	December 31,
	2021		2020
Cash flows from operating activities
Net loss	$	(7,728,816)	$	(4,066,431)
Adjustments to reconcile net loss to net cash used in operating activities
Stock-based compensation		793,204		1,176,585
Change in fair value of warrant liabilities		0		(630,112)
Depreciation and amortization		181,490		68,117
Loss on marketable securities		30		14,970
Loss on disposal of fixed assets		7,595		0
Equity in losses on equity method investment		415,744		25,412
Non-cash expense from right-of-use assets		103,599		0
Changes in operating assets and liabilities
Prepaid insurance, other prepaid expenses and current assets		877,266		(25,132)
Long-term prepaid insurance		0		48,417
Security deposit		0		(253,565)
Other long-term assets		160,423		0
Accounts payable		(680,142)		(327,087)
Accrued expenses and other current liabilities		665,134		187,965
Operating lease liability		(63,973)		0
Net cash used in operating activities		(5,268,446)		(3,780,861)
Cash flows from investing activities
Purchase of laboratory and office equipment		(123,876)		(193,571)
Purchase of marketable securities		(14,986,818)		(15,003,771)
Sale of marketable securities		14,986,788		14,988,801

Net cash used in investing activities		(123,906)		(208,541)
Cash flows from financing activities
Principal payment of financed insurance		(148,385)		(138,557)
Principal payment of finance lease liability		(26,632)		0
Proceeds from exercise of stock options		42		112,446
Net cash used in financing activities		(174,975)		(26,111)
Net decrease in cash and cash equivalents		(5,567,327)		(4,015,513)
Cash and cash equivalents, beginning of period		52,893,387		31,992,283
Cash and cash equivalents, end of period	$	47,326,060	$	27,976,770

Supplemental disclosure of cash flow information:
Cash paid for interest	$	0	$	10,400
Cash paid for income taxes	$	0	$	0
Non-cash investing and financing activities:
Purchases of laboratory and office equipment in accounts payable	$	65,970	$	0

Common Stock Additional Total
Shares Amount Paid-In
Capital Accumulated
Deficit Stockholders’
Equity
Balance as of December 31, 2020 23,177,591 $ 2,317 $ 76,139,964 $ (47,625,033 ) $ 28,517,248
Stock-based compensation expense - - 942,108 - 942,108
Issuance of restricted stock for services 2,433 - - - -
Net loss - - - (5,521,569 ) (5,521,569 )
Balance as of March 31, 2021 23,180,024 $ 2,317 $ 77,082,072 $ (53,146,602 ) $ 23,937,787

Common Stock Additional Total
Shares Amount Paid-In
Capital Accumulated
Deficit Stockholders’
Equity
Balance as of September 30, 2020 23,154,084 $ 2,315 $ 74,850,935 $ (43,558,602 ) $ 31,294,648
Stock-based compensation expense - - 2,118,693 - 2,118,693
Issuance of restricted stock for services 4,364 - - - -
Exercise of stock options 21,576 2 112,444 - 112,446
Net loss - - - (9,588,000 ) (9,588,000 )
Balance as of March 31, 2021 23,180,024 $ 2,317 $ 77,082,072 $ (53,146,602 ) $ 23,937,787

Common Stock Additional Total
Shares Amount Paid-In
Capital Accumulated
Deficit Stockholders’
Equity
Balance as of December 31, 2019 17,077,873 $ 1,708 $ 37,705,984 $ (30,679,632 ) $ 7,028,060
Stock-based compensation expense - - 1,339,410 - 1,339,410
Issuance of restricted stock for services 2,752 - - - -
Net loss - - - (4,378,270 ) (4,378,270 )
Balance as of March 31, 2020 17,080,625 $ 1,708 $ 39,045,394 $ (35,057,902 ) $ 3,989,200

Common Stock Additional Total
Shares Amount Paid-In
Capital Accumulated
Deficit Stockholders’
Equity
Balance as of September 30, 2019 17,077,873 $ 1,708 $ 36,201,758 $ (26,174,082 ) $ 10,029,384
Stock-based compensation expense - - 2,843,636 - 2,843,636
Issuance of restricted stock for services 2,752 - - - -
Net loss - - - (8,883,820 ) (8,883,820 )
Balance as of March 31, 2020 17,080,625 $ 1,708 $ 39,045,394 $ (35,057,902 ) $ 3,989,200

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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NeuBase Therapeutics, Inc. and Subsidiaries

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Six Months ended March 31,
2021 2020
Cash flows from operating activities
     Net loss $ (9,588,000 ) $ (8,883,820 )
     Adjustments to reconcile net loss to net cash used in operating activities
   Stock-based compensation 2,118,693 2,843,636
   Change in fair value of warrant liabilities (720,709 ) 624,190
Depreciation and amortization 151,418 199,500
Loss on marketable security 15,006 -
Loss on disposal of fixed asset - 3,230
Equity in losses on equity method investment 61,539 117,351
Gain on sale of intellectual property (316,724 ) -
Changes in operating assets and liabilities
Prepaid insurance, other prepaid expenses and current assets 122,878 214,698
Long-term prepaid insurance 96,834 96,833
Security deposit (253,565 ) -
Accounts payable 436,646 186,911
Accrued expenses and other current liabilities 574,460 340,288
  Net cash used in operating activities (7,301,524 ) (4,257,183 )
Cash flows from investing activities
Purchase of laboratory and office equipment (402,890 ) (161,916 )
Purchase of marketable securities (29,996,904 ) -
Sale of marketable securities 29,981,898 -
Net cash used in investing activities (417,896 ) (161,916 )
Cash flows from financing activities
Principal payment of financed insurance (138,557 ) (122,919 )
Proceeds from exercise of stock options 112,446 -
Net cash used in financing activities (26,111 ) (122,919 )
Net decrease in cash and cash equivalents (7,745,531 ) (4,542,018 )
Cash and cash equivalents, beginning of period 31,992,283 10,313,966
Cash and cash equivalents, end of period $ 24,246,752 $ 5,771,948

Supplemental disclosure of cash flow information:
   Cash paid for interest $ 10,400 $ 1,668

Non-cash investing and financing activities:
Deferred offering costs, accrued but not yet paid $ - $ 196,724
Purchases of laboratory and office equipment in accounts payable $ 234,104 $ -
Preferred shares in DepYmed received as consideration for sale of intellectual property $ 316,724 $ -

~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~

~~NeuBase Therapeutics, Inc. and Subsidiaries~~
Notes to Condensed Consolidated Financial Statements
~~(Unaudited)~~

(Unaudited)

1. Organization and Description of Business

NeuBase Therapeutics, Inc. and subsidiaries (the “Company” or “NeuBase”) is developing a modular peptide-nucleic acid (“PNA”) antisense oligo (“PATrOL™”) platform to address genetic diseases, with a single, cohesive approach. The PATrOL™-enabled anti-gene therapies are designed to improve upon current genetic medicine strategies by combining the advantages of synthetic approaches with the precision of antisense technologies. NeuBase plans to use its platform to address diseases which have a genetic source, with an initial focus on Myotonic Dystrophy Type 1 (“DM1”) ~~and~~, Huntington’s Disease (“HD”)~~, as well as other genetic disorders~~ and ~~cancer.~~

oncology applications.

NeuBase is a ~~pre-clinical-stage~~preclinical-stage biopharmaceutical company and continues to develop its clinical and regulatory strategy with its internal research and development team with a view toward prioritizing market introduction as quickly as possible. NeuBase’s ~~lead~~ programs are ~~NT0100~~NT-0100 in HD, NT-0200 in DM1 and ~~NT0200.~~

~~The NT0100 program is a PATrOL™-enabled therapeutic program being developed to target the mutant expansion~~NT-0300 in the HD messenger ribonucleic acid (“mRNA”). The NT0100 program includes proprietary PNAs which have the potential to be highly selective for the mutant transcript vs. the wild-type transcribed allele and the expectation to be applicable for all HD patients as it directly targets the expansion itself, and has the potential to be delivered systemically. PATrOL™-enabled drugs also have the unique ability to open RNA secondary structures and bind to either the primary nucleotide sequences or the secondary and/or tertiary structures. KRAS-driven cancers:

●

The NT-0100 program is a PATrOL™-enabled therapeutic program being developed to target the mutant expansion in the HD messenger ribonucleic acid (“mRNA”). The NT-0100 program includes proprietary PNAs which have the potential to be highly selective for the mutant transcript vs. the wild-type transcribed allele and the expectation to be applicable for all HD patients as it directly targets the expansion itself and has the potential to be delivered systemically. PATrOL™-enabled drugs also have the unique ability to open RNA secondary structures and bind to either the primary nucleotide sequences or the secondary and/or tertiary structures.

●

The NT-0200 program is a PATrOL™-enabled therapeutic program being developed to target the mutant expansion in the DM1 disease mRNA. The NT-0200 program includes several proprietary PNAs which have the potential to be highly selective for the mutant transcript versus the wild-type transcribed allele and the expectation to be effective for nearly all DM1 patients as it directly targets the expansion itself.

●

The NT-0300 program is a PATrOL™-enabled therapeutic program being developed to target the mutated KRAS gene. The program is comprised of candidate compounds that target two activating mutations in the KRAS gene: G12D and G12V. NeuBase believes these candidate compounds, and subsequent further optimized compounds, have the potential to inhibit transcription and/or translation of the oncogenic mutations and slow or stop tumor growth.

NeuBase believes ~~the NT0100 program addresses an~~its three aforementioned programs address unmet ~~need~~needs for ~~a disease which~~diseases that currently ~~has~~have no effective therapeutics that target the ~~core etiology~~etiologies of ~~the condition.~~these conditions. NeuBase further believes there is a large opportunity in the U.S. and European markets for drugs in ~~this space.~~these areas.

Liquidity

The ~~NT0200 program is~~Company has had no revenues from product sales and has incurred operating losses since inception. As of December 31, 2021, the Company had $47.3 million in cash and cash equivalents, and during the three months ended December 31, 2021, incurred a ~~PATrOL™-enabled therapeutic program being developed~~net loss of $7.7 million and used $5.3 million of cash in operating activities.

The Company expects to ~~target~~continue to incur significant operating losses for the ~~mutant expansion in~~foreseeable future and may never become profitable. As a result, the ~~DM1 disease mRNA. The NT0200 program includes several proprietary PNAs which have~~Company will likely need to raise additional capital through one or more of the ~~potential~~following: the issuance of additional debt or equity or the completion of a licensing transaction for one or more of the Company’s pipeline assets. Management believes it has sufficient working capital on hand to fund operations through at least the next twelve months from the date these consolidated financial statements were available to be ~~highly selective for~~issued. There can be no assurance that the ~~mutant transcript versus~~Company will be successful in acquiring additional funding, that the ~~wild-type transcribed allele~~Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years.

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NeuBase Therapeutics, Inc. and ~~the expectation~~Subsidiaries

Notes to be effective for nearly all DM1 patients as it directly targets the expansion itself. NeuBase believes the NT0200 program addresses an unmet need for a disease which currently has no effective therapeutics that target the core etiology of the condition. NeuBase believes there is a large opportunity in the U.S. and European markets for drugs in this space.Condensed Consolidated Financial Statements

(Unaudited)

2. Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto as of and for the year ended September 30, ~~2020~~2021 included in the Company’s Annual Report on Form 10-K (the “Annual Report”) filed with the U.S. Securities and Exchange Commission (“SEC”) on December 23, ~~2020.~~2021. The consolidated financial statements include the accounts of the Company and its ~~wholly owned~~wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated during the consolidation process. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. In the opinion of management, the accompanying unaudited condensed consolidated financial statements for the periods presented reflect all adjustments, consisting of only normal, recurring adjustments, necessary to fairly state the Company’s financial position, results of operations and cash flows. The unaudited condensed consolidated financial statements for the interim periods are not necessarily indicative of results for the full year. The preparation of these unaudited condensed consolidated financial statements requires the Company to make estimates and judgments that affect the amounts reported in the financial statements and the accompanying notes. The Company’s actual results may differ from these estimates under different assumptions or conditions.

~~NeuBase Therapeutics, Inc. and Subsidiaries~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(Unaudited)~~

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. The most significant estimates in the Company’s unaudited condensed consolidated financial statements relate to the valuation of stock-based compensation, the valuation of licenses, the fair value of warrant liabilities and the valuation allowance of deferred tax assets resulting from net operating losses. These estimates and assumptions are based on current facts, historical experience and various other factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources.

The Company assesses and updates estimates each period to reflect current information, such as the economic considerations related to the impact that the novel coronavirus disease (“COVID-19”) could have on its significant accounting estimates (see Part II, Item 1A – Risk Factors—“Our operations may be adversely affected by the coronavirus outbreak, and we face risks that could impact our business” in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2020 for further discussion of the effect of the COVID-19 pandemic on the Company’s operations).estimates. Actual results may differ materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations will be affected.

Fair Value Measurements

Fair value measurements are based on the premise that fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the following three-tier fair value hierarchy has been used in determining the inputs used in measuring fair value:

Level 1 – Quoted prices in active markets for identical assets or liabilities on the reporting date.

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

Level 2 – Pricing inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Pricing inputs are generally unobservable and include situations where there is little, if any, market activity for the investment. The inputs into the determination of fair value require management’s judgment or estimation of assumptions that market participants would use in pricing the assets or liabilities. The fair values are therefore determined using factors that involve considerable judgment and interpretations, including but not limited to private and public comparables, third-party appraisals, discounted cash flow models, and fund manager estimates.

Financial instruments measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Management’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.

~~NeuBase Therapeutics, Inc. and Subsidiaries~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(Unaudited)~~

Marketable Securities

Marketable securities are classified as trading and are carried at fair value. The Company’s marketable securities consist of corporate bonds and highly liquid mutual funds and exchange-traded &and closed-end funds which are valued at quoted market prices. The Company had no0 marketable securities as of ~~March~~December 31, 2021 and September 30, ~~2020.~~2021.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of shares of common stock outstanding during each period. Diluted net loss per share includes the dilutive effect, if any, from the potential exercise or conversion of securities, such as convertible debt, warrants and stock options that would result in the issuance of incremental shares of common stock. In computing the basic and diluted net loss per share applicable to common stockholders, the weighted average number of shares remains the same for both calculations due to the fact that when a net loss exists, dilutive shares are not included in the calculation as the impact is anti-dilutive.

The following potentially dilutive securities outstanding as of ~~March~~December 31, 2021 and 2020 have been excluded from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:

	As of March 31,
	2021		2020

					As of December 31,
					2021	2020
Common stock purchase options		6,552,884		6,506,966	7,197,404	6,633,554
Unvested restricted stock		-		3,125
Restricted stock units					10,000	—
Common stock purchase warrants		820,939		715,939	875,312	820,939
		7,373,823		7,226,030
					8,082,716	7,454,493

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ~~This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early~~The adoption ~~permitted. The Company is currently evaluating the impact~~ of this standard ~~on its~~as of October 1, 2021, did not impact the Company's consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). This guidance introduces a new model for recognizing credit losses on financial

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NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

instruments based on an estimate of current expected credit losses. ASU 2016-13 also provides updated guidance regarding the impairment of available-for-sale debt securities and includes additional disclosure requirements. The new guidance is effective for public business entities that meet the definition of a Smaller Reporting Company as defined by the ~~Securities and Exchange Commission~~SEC for interim and annual periods beginning after December 15, 2022. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

~~NeuBase Therapeutics, Inc.~~In May 2021, the FASB issued ASU No. 2021-04, “Earnings Per Share (Topic 260), Debt-Modifications and ~~Subsidiaries~~
~~Notes~~Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2021-04”). This guidance reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. ASU 2021-04 provides guidance for a modification or an exchange of a freestanding equity-classified written call option that is not within the scope of another Topic. It specifically addresses: (1) how an entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; (2) how an entity should measure the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange; and (3) how an entity should recognize the effect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. ASU 2021-04 will be effective for all entities for fiscal years beginning after December 15, 2021. An entity should apply the amendments prospectively to ~~Condensed Consolidated Financial Statements~~
~~(Unaudited)~~

~~3. Liquidity~~

modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted, including adoption in an interim period. The Company ~~expects to continue to incur significant operating losses for~~is currently evaluating the ~~foreseeable future and may never become profitable. As a result, the Company will likely need to raise additional capital through one or more~~impact of ~~the following: issuance of additional debt or equity, or complete a licensing transaction for one or more of the Company’s pipeline assets. Management believes that it has sufficient working capital~~this standard on ~~hand to fund operations through at least the next twelve months from the date these unaudited condensed~~its consolidated financial statements were available to be issued. There can be no assurance that the Company will be successful in acquiring additional funding, that the Company’s projections of its future working capital needs will prove accurate, or that any additional funding would be sufficient to continue operations in future years.and related disclosures.

3. Other Prepaid Expenses and Other Current Assets

The Company’s prepaid expenses and other current assets consisted of the following:

	As of March 31,		As of September 30,
	2021		2020

					As of December 31,		As of September 30,
					2021		2021
Prepaid research and development expense	$	29,422	$	205,641	$	453,706	$	583,267
Prepaid rent		301,481		-		—		172,518
Other prepaid expenses and other current assets		105,491		88,999		390,698		780,401
Total	$	436,394	$	294,640	$	844,404	$	1,536,186

4. Equipment

The Company’s equipment consisted of the following:

	As of March 31,			As of September 30,
	2021			2020

							As of December 31,		As of September 30,
							2021		2021
Laboratory equipment	$	1,825,393		$	1,319,123		$	2,909,472	$	2,737,390
Office equipment		137,201			6,477			259,978		259,978
Leasehold improvements								10,128		—
Total		1,962,594			1,325,600			3,179,578		2,997,368
Accumulated depreciation		(310,084	)		(158,666	)		(714,935)		(533,486)
Property, plant and equipment, net	$	1,652,510		$	1,166,934		$	2,464,643	$	2,463,882

Depreciation expense for the three months ended ~~March~~December 31, 2021 and 2020 was approximately ~~$0.08~~$0.2 million and ~~$0.03~~$0.1 million, respectively. ~~Depreciation expense for the six months ended March 31, 2021 and 2020 was approximately $0.15 million and $0.05 million, respectively.~~

~~NeuBase Therapeutics, Inc. and Subsidiaries~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(Unaudited)~~5. Investment

~~6. Investment~~

The Company owns common and preferred shares of DepYmed Inc. (“DepYmed”), which ~~in aggregate~~ represents approximately ~~13%~~15% ownership of DepYmed. ~~In addition, the Company is entitled~~

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NeuBase Therapeutics, Inc. and Subsidiaries

Notes to ~~hold one of the six seats on DepYmed’s board of directors.~~Condensed Consolidated Financial Statements

(Unaudited)

In February 2021, the Company sold certain intellectual property to DepYmed in exchange for shares of Series A-4 preferred stock. The Company recognized a gain of $0.3 million related to the sale, which was recorded in Other income (expense) on the Company’s unaudited condensed consolidated statement of operations for the three and six months ended March 31, 2021.

The Company accounts for its investment in DepYmed common shares using the equity method of accounting and records its proportionate share of DepYmed’s net income and losses in the accompanying ~~unaudited condensed~~ consolidated statements of operations. Equity in losses for the three months ended March 31, 2021 and 2020 were approximately $0.04 million and $0.1 million, respectively. Equity in losses for the six months ended March 31, 2021 and 2020 were approximately $0.06 million and $0.1 million, respectively.

The Company accounts for its investment in preferred shares of DepYmed at cost, less any impairment, as the Company determined the preferred stock did not have a readily determinable fair value.

The carrying value of the Company’s investment in DepYmed common shares was reduced to zero, therefore, during the three months ended December 31, 2021, the Company recorded its share of equity losses to the extent of its investment in preferred shares of DepYmed. The Company will continue to monitor the operating results of DepYmed and will record equity in earnings when the equity in earnings exceeds the Company’s previously unrecognized losses.

~~As of March~~Equity in losses for the three months ended December 31, 2021 and ~~September 30,~~ 2020 ~~the~~were approximately $0.4 million and $0.03 million, respectively.

The carrying ~~amount~~value of the Company’s ~~aggregate~~total investment in DepYmed ~~was $0.6 million and $0.3 million, respectively.~~is as follows:


	As of December 31,		As of September 30,
	2021		2021
Carrying value of DepYmed common shares	$	—	$	—

Fair value of DepYmed preferred shares assumed in connection with acquisition of Ohr Pharmaceutical, Inc., a Delaware corporation that completed a Merger with NeuBase Therapeutics (“Ohr”)		—		99,020
DepYmed preferred shares received in sale of intellectual property		—		316,724
Total Investment	$	—	$	415,744

6. Accrued Expenses and Other Current Liabilities

The Company’s accrued expenses and other current liabilities consisted of the following:

	As of March 31,		As of September 30,
	2021		2020

					As of December 31,		As of September 30,
					2021		2021
Accrued compensation and benefits	$	153,688	$	88,527	$	1,095,617	$	880,707
Accrued consulting settlement		250,000		-		300,000		200,000
Accrued professional fees		167,829		241,755		203,816		299,557
Accrued research and development		217,701		41,313		720,875		297,047
Accrued franchise tax		79,088		155,865		77,120		30,720
Accrued patent expenses		258,331		24,716
Other accrued expenses		3,706		3,707		15,452		39,715
Total	$	1,130,343	$	555,883	$	2,412,880	$	1,747,746

~~8. Fair Value~~

7. Notes Payable

Insurance Note Payable

~~The following tables present the Company’s fair value hierarchy for its warrant liabilities measured at fair value on a recurring basis at March~~As of December 31, 2021 and September 30, ~~2020:~~2021, the Company had the following insurance note payable outstanding:

Fair Value Measurements
as of March 31, 2021
(Level 1) (Level 2) (Level 3) Total
Liabilities
Warrant liabilities $ - - 229,442 $ 229,442

Stated

Balance at

Maturity

Interest

Original

December 31,

September 30,

Date

Rate

Principal

2021

Insurance Note Payable

2021 Insurance Note

January 2022

4.99

391,625

—

148,385

Fair Value Measurements
as of September 30, 2020
(Level 1) (Level 2) (Level 3) Total
Liabilities
Warrant liabilities $ - - 950,151 $ 950,151

Table of Contents

NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

8.  Leases
In October 2020, the Company entered into a ten-year operating lease agreement with annual escalating rental payments for approximately 14,189 square feet of office and laboratory space in Pittsburgh, Pennsylvania. The leased premises will serve as the Company’s headquarters. The first and second amendments to the lease agreement were executed in December 2020 and April 2021, respectively (collectively with the lease agreement, referred to herein as the “Lease”). In November 2020, the Company prepaid rent of $0.3 million and paid a security deposit of $0.3 million for the Lease. The Lease commenced on May 1, 2021, and the Company was obligated to begin making rental payments on this date. The Company applied the prepaid amount toward the rental payments through December 2021. The Company is also entitled to use half of the security deposit towards rental payments in May and June 2022. The Company measured and recognized an initial right-of-use (“ROU”) asset and operating lease liability upon lease commencement. The Company has the right to extend the term of the Lease for an additional five-year term; however, this extension has not been included in the calculation of the lease liability and ROU asset at the lease inception as the exercise of the option was not reasonably certain.
The Company continued to operate under its operating lease in Pittsburgh until the Company moved into its new headquarters and laboratory space, which occurred in June 2021. The Company’s prior office and operating space was leased under operating leases with original terms of less than 12 months which expired at various dates through November 2021; therefore, the Company’s previous operating leases are not recognized as ROU assets on the consolidated balance sheet. The Company also maintained a short-term rental of office space in San Diego and New York, which expired in November 2021. . In October 2021, the Company commenced a one-year lease for the rental of office space in Boston, which extends through October 2022.
In August 2021, the Company entered into a two-year finance lease for certain laboratory equipment. The Company measured and recognized an initial right-of-use (“ROU”) asset and finance lease liability upon lease commencement.
At December 31, 2021 and September 30, 2021, ROU assets and lease liabilities were as follows:

As of December 31,

As of September 30,




2021

2021
Assets:

Classification

Operating lease right-of-use-asset

Operating lease asset

$
5,841,696

$
5,945,295
Financing lease right-of-use-asset

Equipment, net

188,252

216,490

$
6,029,948

$
6,161,785

Liabilities:






Current

Classification




Operating

Operating lease liability

$
429,507

$
382,576
Financing

Financing lease liability

111,513

107,632
Long-term






Operating

Long-term portion of operating leases liability

5,683,192

5,794,096
Financing

Long-term portion of financing leases liability

78,987

109,500

$
6,303,199

$
6,393,804

Table of Contents

NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following tables summarize quantitative information about the Company’s leases for the three months ended December 31, 2021 and 2020:

Three Months Ended December 31,


2021

2020
Operating cash flows - operating lease

176,578

$
0
Operating cash flows - financing leases

3,807

0
Financing cash flows - financing leases

26,632

0

Right-of-use asset obtained in exchange for operating lease liabilities

0

0
Finance lease assets obtained in exchange for finance lease liabilities

0

0

As of December 31,

2021
Weighted-average remaining lease term – operating lease (in years)
9.58

Weighted-average discount rate – operating lease
7.3
%
Weighted-average remaining lease term - financing leases (in years)

1.7

Weighted-average discount rate - financing leases

7.3
%

Three Months Ended

December 31,


2021

2020
Operating leases




Operating lease cost

$
216,204

$
0
Variable lease costs

0

0
Operating lease cost

216,204

0
Short-term lease rent expense

13,716

28,026
Financing leases

Amortization of leased assets

28,238

0
Interest on lease liabilities

3,807

0
Financing lease cost

32,045

0
Net lease cost

$
261,965

$
28,026

As of December 31, 2021, future minimum lease payments under the non-cancelable leases were as follows:

Operating

Financing


Lease

Leases
Nine Months Ending September 30, 2022

646,083

121,752
Year Ending September 30, 2023

867,367

111,606
Year Ending September 30, 2024

874,320

0
Year Ending September 30, 2025

881,391

0
Year Ending September 30, 2026

888,627

0
Thereafter

4,401,029

0
Total

8,558,817

233,358
Less present value discount

(2,446,118)

(42,858)
Operating lease liabilities

$
6,112,699

$
190,500

Table of Contents

NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

9.  Fair Value
As of December 31, 2021 and September 30, 2021, the fair value of warrants measured at fair value was $0. The fair value of the warrant liabilities ~~were~~was determined using level 3 inputs and the Black-Scholes option pricing model. The following assumptions were used in determining the fair value of the warrant liabilities:

As of December 31,

As of September 30,


2021

2021
Remaining contractual term (years)

0.3

0.2 - 0.5
Common stock price volatility

62.5%

60.6% - 62.5%
Risk-free interest rate

0.1%

0.04%
Expected dividend yield

—

—
As of March 31,
2021 2020
Remaining contractual term (years) 0.7 - 1.0 1.7 - 2.0
Common stock price volatility 69.5% - 71.4% 89.6% - 92.5%*
Risk-free interest rate 0.07 % 0.23 %
Expected dividend yield - -
* The Company was historically a private company and lacked company-specific historical and implied volatility information, therefore the Company estimated its expected stock volatility based on the historical volatility of a set of publicly traded peer companies.
~~During the three and six months ended March 31, 2021, the Company utilized its historical volatility in the valuation of warrant liabilities as it had sufficient trading history.~~

The change in fair value of the warrant liabilities for the three ~~and six~~ months ended ~~March~~December 31, ~~2021 and~~ 2020 ~~is as follows:~~
Fair value as of September 30, 2020 $ 950,151
Change in fair value (630,112 )
Fair value as of December 31, 2020 320,039
Change in fair value (90,597 )
Fair value as of March 31, 2021 $ 229,442
Fair value as of September 30, 2019 $ 496,343
Change in fair value 694,134
Fair value as of December 31, 2019 1,190,477
Change in fair value (69,944 )
Fair value as of March 31, 2020 $ 1,120,533
was $0.6 million.
As of ~~March~~December 31, 2021 and September 30, ~~2020,~~2021, the carrying value of cash and cash equivalents, accounts payable and the insurance note payable approximate fair value due to the short-term nature of these instruments.

9.10.  Stockholders’ Equity
Warrants
~~Warrants~~
Below is a summary of the Company’s issued and outstanding warrants as of ~~March~~December 31, 2021:

Warrants
Expiration date Exercise Price Warrants Outstanding

Exercise Price

Outstanding
December 13, 2021 $ 55.00 20,627
April 10, 2022 20.00 695,312

$
20.00

695,312
July 6, 2023 8.73 105,000

8.73

105,000
820,939
September 20, 2024

6.50

75,000

875,312

Weighted

Weighted

Average

Average

Remaining

Exercise

Contractual Life


Warrants

Price

(in years)
Outstanding as of September 30, 2021

895,939

$
18.35

Expired

(20,627)

55.00

Outstanding as of December 31, 2021

875,312

17.49

0.6
Exercisable as of December 31, 2021

837,812

$
17.98

0.5

10
12

Table of Contents

NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements
~~(Unaudited)~~

Warrants Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual Life
(in years)
Outstanding as of September 30, 2020 820,939 $ 19.44
Outstanding as of March 31, 2021 820,939 19.44 1.2
Exercisable as of March 31, 2021 820,939 19.44 1.2
(Unaudited)
~~10.~~

11.  Stock-Based Compensation
As of ~~March~~December 31, 2021, an aggregate of ~~4,709,277~~6,018,136 shares of common stock were authorized under the Company’s 2019 Stock Incentive Plan (the “2019 Plan”), subject to an “evergreen” provision that will automatically increase the maximum number of shares of common stock that may be issued under the term of the 2019 Plan. As of ~~March~~December 31, 2021, ~~1,294,956~~1,869,770 common shares were available for future grants under the 2019 Plan. As of ~~March~~December 31, 2021, 291,667 shares of common stock were authorized under the Company’s 2016 Consolidated Stock Incentive Plan (the “2016 Plan”) and 147,041 common shares were available for future grants under the 2016 Plan.
The Company recorded stock-based compensation expense in the following expense categories of its unaudited condensed consolidated statements of operations for the three ~~and six~~ months ended ~~March~~December 31, 2021 and 2020:

Three Months ended March 31, Six Months ended March 31,
2021 2020 2021 2020

Three Months Ended December 31,


2021

2020
General and administrative $ 448,880 $ 954,241 $ 1,291,159 $ 2,067,352

$
327,131

$
842,279
Research and development 493,228 385,169 827,534 776,284

466,073

334,306
Total $ 942,108 $ 1,339,410 $ 2,118,693 $ 2,843,636

$
793,204

$
1,176,585

Stock Options
Below is a table summarizing the options issued and outstanding as of and for the ~~six~~three months ended ~~March~~December 31, 2021:

Stock Options Weighted
Average
Exercise
Price Weighted Average Remaining Contractual Life (in years) Total Aggregate Intrinsic Value
Outstanding at September 30, 2020 6,190,790 $ 2.76

Weighted

Weighted

Average

Total

Average

Remaining

Aggregate

Exercise

Contractual Life

Intrinsic


Stock Options

Price

(in years)

Value
Outstanding at September 30, 2021

7,397,154

$
3.13




Granted 534,340 7.59

105,000

3.59




Exercised (21,576 ) 5.21

(42,250)

0.00

Forfeited (150,670 ) 5.68

(262,500)

5.07

Outstanding at March 31, 2021 6,552,884 3.08 8.1 $ 29,219,357
Exercisable as of March 31, 2021 4,575,375 1.65 7.7 $ 26,884,291
Outstanding at December 31, 2021

7,197,404

3.08

6.9

$
9,185,031
Exercisable as of December 31, 2021

5,360,067

$
2.33

6.2

$
9,184,698
11
~~NeuBase Therapeutics, Inc. and Subsidiaries~~
~~Notes to Condensed Consolidated Financial Statements~~
~~(Unaudited)~~

As of ~~March~~December 31, 2021, unrecognized compensation costs associated with the stock options of ~~$4.8~~$3.5 million will be recognized over an estimated weighted-average amortization period of ~~1.3~~1.4 years.
The intrinsic value of options exercised during the three months ended December 31, 2021 and 2020 was $0.1 million and $0.1 million, respectively.
The weighted average grant date fair value of options granted during the ~~six~~three months ended ~~March~~December 31, 2021 and 2020 was ~~$5.32~~$2.33 and ~~$4.78,~~$5.20, respectively.

Table of Contents

NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Key assumptions used to estimate the fair value of the stock options granted during the ~~six~~three months ended ~~March~~December 31, 2021 and 2020 included:

Six Months ended March 31,
2021 2020

Three Months Ended December 31,


2021

2020
Expected term of options (years) 5.5 - 7.0 7.0

5.1 - 6.1

6.0
Expected common stock price volatility 83% - 83.3% 78% - 83.5%

73.8% - 74.5%

83.1% - 83.3%
Risk-free interest rate 0.6% - 1.3% 0.9% - 1.8%

1.1% - 1.4%

0.6% - 0.7%
Expected dividend yield - -

—

—

During the ~~six months~~fiscal year ended ~~March 31,~~September 30, 2021, the Company granted a stock option to purchase 225,000 shares to a consultant, which was cancelled and reissued in June 2021 in recognition of future service to the Company as an employee. The exercisability and vesting of the stock ~~options~~option are subject to the consultant’s effective date of employment with the Company, which ~~has~~had not yet occurred as of ~~March~~December 31, 2021, and as a result, the grant-date of such option has not occurred under GAAP. Therefore, the number and fair value of the shares subject to this option are not reflected in the table summarizing the options issued and outstanding as of and for the ~~six~~three months ended ~~March~~December 31, 2021, and did not have an impact on unrecognized compensation costs or the estimated weighted-average amortization period above as of ~~March~~December 31, 2021.
Restricted Stock
A summary of the changes in the unvested restricted stock during the ~~six~~three months ended ~~March~~December 31, 2021 is as follows:

Unvested Restricted Stock Weighted Average
Grant Date
Fair Value
Price
Unvested as of September 30, 2020 - $ -

Weighted Average

  Grant Date


Unvested Restricted

Fair Value

Stock

Price
Unvested as of September 30, 2021

0

$
0
Granted 4,364 9.17

4,441

3.94
Vested (4,364 ) 9.17

(4,441)

3.94
Unvested as of March 31, 2021 - -
Unvested as of December 31, 2021

0

0
Total unrecognized expense remaining

$
0


Weighted-average years expected to be recognized over

—



~~11. Commitments~~Restricted Stock Units

Below is a table summarizing the restricted stock units granted and ~~Contingencies~~
~~Operating Leases~~
~~In October 2020, the Company entered into a ten-year lease agreement with annual escalating rental payments for approximately 14,189 square feet~~outstanding as of ~~office~~ and laboratory space in Pittsburgh, Pennsylvania. The first and second amendments to the lease agreement were executed in December 2020 and April 2021, respectively (collectively with the lease agreement, referred to herein as the “Lease”). The leased premises will serve as the Company’s headquarters upon the commencement of the lease. The initial term of the Lease commenced on May 1, 2021. On such date, the Company is obligated to begin making rental payments, provided that the Company may be entitled to a rental credit for certain periods based on the date the Landlord delivers possession of the office space and biology lab within the leased premises to the Company and the date the landlord substantially completes tenant improvements. The initial term of the Lease will extend approximately ten years from delivery of the leased premises to the Company, unless earlier terminated in accordance with the lease. The Company has the right to extend the term of the Lease for an additional five-year term. The Company will pay an escalating base rent over the life of the Lease of approximately $71,000 to $78,000 per month, and the Company will pay its pro rata portion of property expenses and operating expenses for the ~~property. The Company will measure and recognize the right-of-use (“ROU”) asset and operating lease liability upon lease commencement. During the six~~three months ended ~~March~~December 31, ~~2021, the Company prepaid rent of $0.3 million and paid a security deposit of $0.3 million for this Lease.~~2021:
12

Weighted Average

Grant Date

Restricted Stock

Fair Value


Units

Price
Unvested as of September 30, 2021

10,000

$
5.09
Granted

—

Unvested as of December 31, 2021

10,000

5.09
Total unrecognized expense remaining

$
35,580

Weighted-average years expected to be recognized over

1.7

14

Table of Contents

NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(Unaudited)

~~(Unaudited)~~12. Commitments and Contingencies

The Company currently leases its existing office and operating space under operating leases with original terms of less than 12 months and which expire at various dates through November 2021; therefore, the Company’s operating leases are not recognized as ROU assets on the unaudited condensed consolidated balance sheet as of March 31, 2021.

Rent expense under the Company’s operating leases totaled approximately $0.03 million and $0.02 million for the three months ended March 31, 2021 and 2020, respectively. Rent expense under the Company’s operating leases totaled approximately $0.06 million and $0.04 million for the six months ended March 31, 2021 and 2020, respectively.

The Company continues to operate under its current operating lease in Pittsburgh on a month-to-month basis and will continue to operate under the lease until the Company completes the move into its new headquarters and laboratory space, which is expected to occur in June 2021. All terms and conditions remain the same from the current lease.

~~In November 2020, the Company extended the term of its rental of office space in New York until November 2021.~~

Litigation

The Company has become involved in certain legal proceedings and claims which arise in the normal course of business. The Company believes that an adverse outcome is unlikely, and it cannot reasonably estimate the potential loss at this point. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the Company’s results of operations, prospects, cash flows, financial position and brand. Costs associated with the Company’s involvement in legal proceedings are expensed as incurred.

Securities Class Action Lawsuit

On February 14, 2018, plaintiff Jeevesh Khanna, commenced an action in the Southern District of New York, against Ohr Pharmaceutical, Inc. (“Ohr”) (which was the name of the Company prior to the completion of the merger with NeuBase Therapeutics, Inc., a Delaware corporation (“Legacy NeuBase”), in accordance with the terms of the Agreement and Plan of Merger and Reorganization entered into on January 2, 2019, as amended, pursuant to which (i) Ohr Acquisition Corp., a subsidiary of Ohr, merged with and into Legacy NeuBase, with Legacy NeuBase (renamed as “NeuBase Corporation”) continuing as a wholly-owned subsidiary of Ohr and the surviving corporation of the merger and (ii) Ohr was renamed as “NeuBase Therapeutics, Inc.” (the “Merger”)) and several current and former officers and directors, alleging that they violated federal securities laws between June 24, 2014 and January 4, 2018. On August 7, 2018, the lead plaintiffs, now George Lehman and Insured Benefit Plans, Inc., filed an amended complaint, stating the class period to be April 8, 2014 through January 4, 2018. The plaintiffs did not quantify any alleged damages in their complaint, but, in addition to attorneys’ fees and costs, they seek to maintain the action as a class action and to recover damages on behalf of themselves and other persons who purchased or otherwise acquired Ohr common stock during the putative class period and purportedly suffered financial harm as a result. We and the individuals dispute these claims and intend to defend the matter vigorously. On September 17, 2018, Ohr filed a motion to dismiss the complaint. On September 20, 2019, the district court entered an order granting the defendants’ motion to dismiss. On October 23, 2019, the plaintiffs filed a notice of appeal of that order dismissing the action and other related orders by the district court. After full briefing and oral argument, on October 9, 2020, the U.S. Court of Appeals for the Second Circuit issued a summary order affirming the district court’s order granting the motion to dismiss and remanding the action to the district court to make a determination on the record related to plaintiffs’ request for leave to file an amended complaint. On October 16, 2020, the district court requested the parties’ positions as to how they proposed to proceed in light of the Second Circuit’s decision. After letter briefing on this issue and plaintiffs’ alternative request for leave to file a second amended complaint, on November 16, 2020,remand, the district court denied plaintiffs’ subsequent request to amend and dismissed with prejudice plaintiffs’ claims. On December 16, 2020, plaintiffs filed a notice of appeal of that order denying plaintiffs leave to amend. ~~Briefing on~~On December 16, 2021, the Second Circuit affirmed the decision and order of the district court denying plaintiffs’ motion for leave to amend, thereby dismissing the appeal ~~is currently due~~and action in its entirety. Plaintiffs have not sought reconsideration of the ~~first half of 2021. This litigation could result in substantial costs and a diversion of management’s resources and attention, which could harm the Company’s business~~Second Circuit’s decision, and the ~~value~~current deadline for plaintiffs to file a writ of certiorari for review by the Supreme Court of the ~~Company’s common stock.~~United States is March 15, 2022.

Derivative Lawsuit

On May 3, 2018, plaintiff Adele J. Barke, derivatively on behalf of Ohr, commenced an action against certain former directors of Ohr, including Michael Ferguson, Orin Hirschman, Thomas M. Riedhammer, June Almenoff and Jason S. Slakter in the Supreme Court, State of New York, alleging that the action was brought in the right and for the benefit of Ohr seeking to remedy their “breach of fiduciary duties, corporate waste and unjust enrichment that occurred between June 24, 2014 and the present.” It does not quantify any alleged damages. We and the individuals dispute these claims and intend to defend the matter vigorously. Such litigation has been stayed pursuant to a stipulation by the parties, which has been so ordered by the court, pending athe exhaustion of all appeals from the decision inof the Southern District ~~case on~~of New York dismissing the ~~motion to dismiss, but that status could change. This litigation~~Khanna action discussed above. These matters could result in substantial costs and a diversion of management’s resources and attention, which could harm our business and the value of our common stock.

Table of Contents

NeuBase Therapeutics, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements
~~(Unaudited)~~

(Unaudited)

Joint Proxy Statement Lawsuit

On March 20, 2019, a putative class action lawsuit was filed in the United States District Court for District of Delaware naming as defendants Ohr and its board of directors, Legacy NeuBase, and Ohr Acquisition Corp., captioned Wheby v. Ohr Pharmaceutical, Inc., et al., Case No. 1:19-cv-00541-UNA (the “Wheby Action”). The plaintiffs in the Wheby Action allege that the preliminary joint proxy/prospectus statement filed by Ohr with the SEC on March 8, 2019, contained false and misleading statements and omitted material information in violation of Section 14(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder, and further that the individual defendants are liable for those alleged misstatements and omissions under Section 20(a) of the Exchange Act. The complaint in the Wheby Action has not been served on, nor was service waived by, any of the named defendants in that action. The action seeks, among other things, to rescind the Merger or an award of damages, and an award of attorneys’ and experts’ fees and expenses. The defendants dispute the claims raised in the Wheby Action. Management believes that the likelihood of an adverse decision from the sole remaining action is unlikely; however, the litigation could result in substantial costs and a diversion of management’s resources and attention, which could harm our business and the value of our common stock.

~~12.~~

Note 13. Subsequent Events

~~Common Stock Offering~~

~~On April 26,~~Subsequent to December 31, 2021, the Company ~~closed an underwritten public offering of 9,200,000 shares of its common~~granted approximately 1.3 million stock ~~(inclusive of 1,200,000 shares that were sold pursuant~~options to ~~the underwriters’ full exercise of their option to purchase additional shares~~officers and employees of the ~~Company’s common stock), at a price to the public of $5.00 per share. The~~ Company ~~received net proceeds from the offering of approximately $42.6 million, after deducting the underwriting discounts and commissions and other estimated offering expenses payable by the Company.~~

~~Asset Purchase Agreement~~

On January 27, 2021, the Company entered into an Asset Purchase Agreement by and among the Company, NeuBase Corporation, its wholly owned subsidiary, and Vera Therapeutics, Inc. (“Vera”) as amended by the Amendment to Asset Purchase Agreement, dated as of April 20, 2021, by and between the Company and Vera (collectively, the “APA”) and the transaction closed on April 26, 2021. Pursuant to the terms of the APA, the Company acquired infrastructure, materials, and intellectual property for peptide-nucleic acid (“PNA”) scaffolds from Vera for total consideration of approximately $0.8 million in cash and 308,635 shares of common stock (of which 146,375 were to be issued to Vera and 162,260 will be held in escrow and released to Vera in accordance with the ~~terms~~2019 Plan. The grants have a weighted average exercise price of ~~an escrow agreement between NeuBase Corporation~~$2.07 per option and, ~~Vera~~).a contractual term of 10 years.

14

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Disclosures Regarding Forward-Looking Statements
The following should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes that appear elsewhere in this report as well as in conjunction with the Risk Factors section in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2020~~2021, as filed with the United States Securities and Exchange Commission (“SEC”) on December 23, ~~2020.~~2021. This report and our Form 10-K include forward-looking statements made based on current management expectations pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended.
This report includes “forward-looking statements” within the meaning of Section 21E of the Exchange Act. Those statements include statements regarding the intent, belief or current expectations of the Company and its subsidiaries and our management team. Any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ materially from those projected in the forward-looking statements. These risks and uncertainties include but are not limited to those risks and uncertainties set forth in Part II, Item 1A – Risk Factors of this Quarterly Report and in Part I, Item 1A – Risk Factors of our Annual Report on Form 10-K. In light of the significant risks and uncertainties inherent in the forward-looking statements included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K, the inclusion of such statements should not be regarded as a representation by us or any other person that our objectives and plans will be achieved. Further, these forward-looking statements reflect our view only as of the date of this report. Except as required by law, we undertake no obligations to update any forward-looking statements and we disclaim any intent to update forward-looking statements after the date of this report to reflect subsequent developments. Accordingly, you should also carefully consider the factors set forth in other reports or documents that we file from time to time with the SEC.
Summary
~~Overview~~NeuBase Therapeutics, Inc. (“NeuBase”, “Company”, “we”, “us” and “our”) is a biotechnology company focused on significantly reducing the burden of untreatable morbidity and mortality across the globe caused by rare and common diseases.
~~Recent Developments~~
~~December 2020 Announcement~~To achieve this goal, we have designed, built, and validated a new precision genetic medicines platform technology able to uniquely drug the double-stranded human genome and address disease at the root of ~~Positive Preclinical Data~~
~~On December 16, 2020, we announced additional positive preclinical data on our platform and DM1 program.~~ ~~In vitro~~ ~~data highlights in DM1 patient-derived fibroblasts include activity of an anti-gene (Compound A) that targets the CUG repeat in DM1:~~
• ~~Compound A traffics to the nucleus, engages and normalizes~~ ~~DMPK~~ ~~mRNA.~~
• ~~Compound A begins induction of rescue of mis-splicing of two key DM1 dysregulated transcripts (~~~~MBNL1~~ ~~and~~ ~~MBNL2~~~~) within two days after initial treatment. Notably, induction of rescue continues to improve through day 9, the latest time point analyzed.~~
~~Compound A significantly induces broad correction of global exon inclusion levels of mis-spliced transcripts.~~
○ ~~Statistically significant improvement in global splicing as measured by the human differential splice inclusion (hDSI) statistic.~~
○ ~~More than 175 dysregulated human transcripts achieved statistically significant improvement in splicing,~~causality without many ~~with completely normalized exon usage.~~
~~DMPK protein levels remain unchanged 5 days after a single Compound A dose, supporting the hypothesized mechanism of action maintaining DMPK.~~
15
~~In vivo~~ ~~data highlights in the HSA~~^LR ~~transgenic mouse model of DM1 that expresses high levels of mutant CUG-repeat-containing mRNA (~~~~ACTA1~~~~) in skeletal muscle:~~
• ~~A single intravenous (IV) injection of 29 mg/kg of Compound A traffics to the nucleus and engages~~ ~~ACTA1~~ ~~mRNA within 24 hours in tibialis anterior (TA) skeletal muscle.~~
• ~~A single intravenous (IV) injection of Compound A significantly induces broad correction of global exon inclusion levels of mis-spliced transcripts in HSA~~^LR ~~TA skeletal muscle at day 13.~~
~~Statistically significant improvement in global splicing as measured by the murine differential splice inclusion (mDSI) statistic.~~
○ ~~More than 50 unique dysregulated murine transcripts achieved statistically significant improvement in splicing post-treatment, with many achieving complete normalization of appropriate exon usage.~~
• ~~Compound A was well tolerated after single dose administration at the dose demonstrating activity~~ ~~in vivo~~.
~~Description~~ of the ~~Company~~
limitations of early precision genetic medicine technologies.
We are ~~a biotechnology company working towards accelerating~~poised to file our first Investigational New Drug (“INDs”) applications with the genetic revolution by developing a new class of synthetic medicines. Our modular peptide-nucleic acid antisense oligo (“PATrOL™”) platform which outputs “anti-gene” candidate therapies is designed to combine the specificity of genetic sequence-based target recognition with a modularity that enables use of various ~~in vivo~~ delivery technologies to enable broad and also selective tissue distribution capabilities. Given that every human disease may have a genetic component, we believe that our differentiated platform technology has the potential for broad impact by increasing, decreasing or changing gene function at either the DNA or RNA levels to resolve the progression to disease, as appropriate, in a particular indication. We plan to use our platform to address diseases driven by genetic variation and mutation, and we are initially focused on myotonic dystrophy type 1 (“DM1”) and Huntington’s disease (“HD”).
Globally, there are thousands of genetic diseases, most of which lack any therapeutic options. In addition, rare genetic diseases are often particularly severe, debilitating or fatal. Traditionally, therapeutic development for each rare genetic disorder has been approached with a unique strategy, which is inefficient, as there are thousands of diseases that need treatment solutions. The collective population of people with rare diseases stands to benefit profoundly from the emergence of a scalable and modular treatment development platform that allows for a more efficient discovery and delivery of drug product candidates to address these conditions cohesively.
Mutated proteins resulting from errors in deoxyribonucleic acid (“DNA”) sequences cause many rare genetic diseases and cancer. DNA in each cell of the body is transcribed into pre-RNA, which is then processed (spliced) into mRNA which is exported into the cytoplasm of the cell and translated into protein. This is termed the “central dogma” of biology. Therefore, when errors in a DNA sequence occur, they are propagated to RNAs and can become a damaging protein.
The field has learned that antisense oligonucleotides (“ASOs”) can inactivate target RNAs before they can produce harmful proteins by binding them in a sequence-specific manner, which can delay disease progression or even eliminate genetic disease symptoms. ASOs designed by others to target known disease-related mutant RNA sequences have been shown to be able to degrade these transcripts and have a positive clinical impact. Similarly, applications in modifying splicing of pre-RNA in the nucleus of the cell have been developed by others to exclude damaging exons from the final mRNA product and have been approved by theU.S. Food and Drug Administration (“FDA”). beginning in calendar year 2022 and intend to scale into additional indications with increasing speed and efficiency.
Overview
Most diseases remain undruggable with current therapeutic modalities, leaving millions of patients with limited options. These include rare diseases, cancers, common chronic and infectious diseases. Most diseases are genetic, in whole or in part, underscoring the critical importance of new medicines that can drug the human genome for the future of health. Yet the genome has been difficult to target with therapies due to its double-stranded structure, which evolved to protect the fidelity of this essential blueprint of life.
The complexity associated with drugging proteins, each of which is a unique and often dynamic molecular entity, has resulted in a drug development process that is commonly inefficient, time-consuming, and expensive with low probabilities of success. This strategy has, in part, resulted in high drug prices and a high remaining burden of unmet patient need.
These issues could potentially be resolved by targeting the genetic material itself instead of downstream protein products. Precision genetic medicines represent a relatively new class of therapies that target genetic sequences that are the root cause of diseases.

Table of Contents

We ~~plan~~have designed, built, and validated a new technology platform that can uniquely Drug the Genome™ to ~~extend upon these conceptual breakthroughs~~address the three disease-causing mechanisms (i.e., gain-of-function, change-of-function, or loss-of-function of a gene), without the limitations of early precision genetic medicines. The technology is predicated on synthetic peptide-nucleic acid (“PNA”) chemistry and can directly engage the genome in a sequence-specific manner and address root causality of diseases. These compounds operate by ~~utilizing~~temporarily engaging the genome (or single and double-stranded RNA targets, if desired) and interfering with cellular machinery that process mutant genes to halt their ability to manifest a disease. We have repeatedly demonstrated, in proof-of-concept preclinical animal studies across FY2020 and FY2021, the ability to address multiple disease-causing genes, and different causal mechanisms, to resolve the disease state without the limitations of early genetic medicine technologies. These limitations, and the data that illustrate that we have likely engineered them out of our platform to potentially unlock broad impact across many diseases, are:

●

Delivery. Most early precision genetic medicine technologies are large and heavily negatively charged, making it difficult for them to broadly distribute throughout the body to address tissues that are affected by many diseases. This often requires them to be locally injected such as into the brain, likely limiting their ability for broad-based impact. We have designed and developed a proprietary delivery technology that allows its small, neutral-charge and water-soluble compounds to be administered using a patient-friendly route such as subcutaneous injection and achieve broad biodistribution, including into the deep brain and nuclei of cells.

●

Tolerability. Most early precision genetic medicine technologies trigger the innate and/or acquired immune system, limiting their ability to achieve pharmacologic doses or to be used repeatedly. For example, delivery of negatively charged nucleic acid therapies often trigger the innate immune system and delivery of proteins often trigger the acquired immune system. Our technology is comprised of fully synthetic compounds that have been shown to be “immunologically inert”, potentially allowing them to be administered chronically to temporarily Drug the Genome™ over a patient’s lifetime.

●

Selectivity. Many technologies in the early precision genetic medicines industry cannot discriminate between mutant gene sequences and their healthy (“wild-type”) counterparts, nor between other highly similar target sequences in the cell. This potentially limits these technologies in their ability to address small disease-causing mutations such as single nucleotide changes (“point mutations”), which account for a large fraction of disease-causing mutations and functional variants. Our technology can discriminate point mutations, which increases the opportunity space. This capability comes from the “rigid” nature of the backbone which does not tolerate imperfect target engagement. In addition, this single-base selectivity reduces the likelihood that our compounds will engage with genes elsewhere in the genome that are similar but not identical, potentially reducing any adverse events triggered by off-target engagement (“OTEs”).

●

Manufacturability. Many technologies in the early precision genetic medicines industry require significant investments in custom manufacturing infrastructure, and thus are limited in their potential impact and scalability. Our technology utilizes established and fully commoditized manufacturing processes, both for small molecule and synthetic peptide synthesis (the combination of which are required to manufacture our compounds) that are available with high redundancy and at commercial scale.

●

Durability. Many technologies in the early precision genetic medicines industry can only be dosed a single time, are often cleared by the immune system, or are otherwise not durable in their efficacy.

●

Scalability. Many technologies in the early precision genetic medicines industry are not truly scalable across a variety of indications, for the reasons described above. As our goal is to provide solutions to those suffering from a wide variety of diseases across the globe, we have purpose-built a scalable platform. We always address a single target type for all therapeutic programs (the genome), utilize the same delivery shuttle enabling similar pharmacokinetics (“PK”), absorption distribution metabolism and excretion (“ADME”), dose, route and regimens across programs, utilize predominantly the same chemistry yielding similar therapeutic indices, are able to predict OTEs a priori using bioinformatics and engineer around them before beginning development, and leverage manufacturing process development across programs such that ongoing platform learnings have already created increasing speed and efficiency.

As further validation of our PATrOL™ platform’s capabilities, in FY2021, we described data illustrating that our first-in-class platform technology ~~which produces investigational therapies which are similar~~can address various types of causal insults by Drugging the Genome™ in ~~structure to ASOs in that they are comprised~~animal models of a ~~backbone onto which are tethered nucleobases that engage~~variety of human diseases after patient-friendly routes of administration and does so in a ~~genetic sequence~~well-tolerated manner.

Table of ~~interest using complementary base-pairing, but which~~Contents

Based on what we believe is a solid foundation, FY2021 marked a transition from a research-stage to a development-stage company. We established new research laboratories and administrative offices in Pittsburgh, PA, expanded our pipeline to include both rare disease and oncology, recruited clinical development and chemistry manufacturing and controls (“CMC”) teams, established offices in Cambridge, MA, nominated a development compound for our DM1 program, initiated good manufacturing practice (“GMP”) manufacturing scale up, finalized the formulation work for subcutaneous and intravenous routes, initiated PK/ADME studies with the DM1 development candidate, and initiated PK/pharmacodynamics (“PD”) studies to define the dosing regimen for initial human studies. In addition, we have ~~significant benefits~~ continued to optimize candidates for our HD and KRAS programs, illustrating pharmacology in ~~certain application areas to better resolve clinical disorders.~~

vivo in appropriate animal models of each. Additionally, in FY2021 we developed a proprietary genetic disease database with utility in prioritization of pipeline expansion and partnership opportunities.

We are developing ~~“anti-gene” therapies. Anti-genes~~precision genetic medicines targeting rare, monogenic diseases for which there are similar to, but distinct from, antisense oligonucleotides (ASOs). ASOs are short single strands of nucleic acids (traditionally thought of as single-stranded DNA molecules) which bind to defective RNA targets in cells and inhibit their ability to form defective proteins. We believe we are a leader in the discovery and development of anti-geneno approved therapies, a new class of investigational therapies derived from peptide-nucleic acids (“PNAs”). The key differentiator between ASOs and anti-genes is that the scaffold is not derived from a natural sugar-phosphate nucleic acid backbone, rather is a synthetic polyamide which is charge-neutral and characterized by high binding affinity to a nucleic acid target, high sequence specificity, high stability, and is relatively immunologically inert. These features provide potential advantages over ASOs and other genetic therapies for modulating disease-causing genes including increased unique disease target opportunities, improved target specificity and a reduction in both sequence-dependent and independent toxicities. In addition, as these anti-genes are manufactured via standard peptide synthesis methods, they efficiently leverage the advancements in the synthetic peptide industry to enable modulation of pharmacophore delivery, pharmacokinetics, sub-cellular placement and endosomal escape.

In addition to the scaffold, we have a kit of natural nucleobases, chemically modified nucleobases which add further precision to a nucleic acid target of interest, and proprietary bi-specific nucleobases (“janus” nucleobases) which can be added to the scaffold to enable more precise target engagement. These bi-specific nucleobases, in particular, have been shown to enable accessing double stranded RNA targets comprised of secondary structures such as hairpins (double stranded RNA targets which are folded upon themselves). This allows us to potentially access regions of the target transcript which may be unique in secondary structure to allow enhanced selectivity for the target (mutant) RNA as compared to the normal RNA. Enhanced selectivity for mutant RNAs as compared to normal RNAs is often important as normal RNAs are often required for effective functioning of the cell.

~~A third component of the modular platform is the ability to add delivery technology to the anti-gene pharmacophores so as to reach a desired cell or tissue upon~~ ~~in vivo~~ administration. There is flexibility to append various delivery technologies to the pharmacophore to allow either broad tissue distribution or narrow cell and/or tissue targeting if so desired based on targets. One such technology is a chemical moiety that can be used to decorate the scaffold directly and allows the anti-genes to penetrate cell membranes and into subcellular compartments where they act as well as ~~to distribute throughout the body when administered systemically.~~

Finally, in addition to the anti-gene scaffold, modified nucleobases and delivery technology, the platform toolkit also includes linker technology which, when added to both ends of the anti-genes, has been shown in early pre-clinical studies to allow cooperative binding between individual drug molecules once they are engaged with the nucleic acid target to form longer and more ~~tightly bound drugs.~~

~~This toolkit of components forms the PATrOL™ platform and allows us to manufacture gene and transcript-specific anti-genes.~~

We are currently focused on therapeutic areas in which we believe our drugs will provide the greatest benefit with a significant market opportunity. We intend to utilize our technology to build a pipeline of custom designed therapeutics for additional high-value disease targets. We are developing several preclinical programs using our PATrOL™ platform, including the NT0100 program, targeted at Huntington’s disease, a repeat expansion disorder, and the NT0200 program, targeted at myotonic dystrophy, type 1, a second repeat expansion disorder. Preclinical studies are being conducted to evaluate the PATrOL™ platform technology and program candidates in the areas of pharmacokinetics, pharmacodynamics and tolerability, and we reported results from certain of those studies in the first calendar quarter of 2020 and have extended upon certain of those studies in the fourth calendar quarter of 2020 which illustrated that our anti-gene technology can be administered to human patient-derived cell lines and systemically (via intravenous (IV) administration) into animals with DM1 (a genetically modified model accepted as representative of the human disease in skeletal muscle) and can address the causal genetic defect. We expect to present additional results from ongoing preclinical studies evaluating the PATrOL^TM platform and pipeline indications in June 2021. In addition, we believe that the emerging pipeline of other investigational therapies that target primary and secondary RNA structure and genomic DNA potentially allows a unique market advantage across a variety of rare diseases and oncology targets.

Overall, using our PATrOL™ platform, we believe we can create anti-gene therapies that may have distinct advantages over other chemical entities currently in the market or in development for genetic medicine applications to modulate mutant genes and improve a clinical trait or disorder. These potential advantages may differ by indication and can include, among others:

increased unique target opportunities, improved target specificity and a reduction in both sequence-dependent and independent toxicities by virtue of a synthetic polyamide scaffold which is charge-neutral and characterized by high binding affinity to a nucleic acid target, high sequence specificity, high stability, and is relatively immunologically inert;

~~potential long durability by nature of the relatively highly stable polyamide scaffold;~~

our anti-genes are manufactured via standard peptide synthesis methods and thus they efficiently leverage advances in the synthetic peptide industry to enable facile addition of known moieties enabling modulating pharmacophore delivery, pharmacokinetics, sub-cellular placement and endosomal escape; and

~~our anti-genes may be able to target double stranded structures in RNA, which may allow unique target opportunities that standard ASOs cannot access.~~

With these unique component parts and their advantages, we believe our PATrOL™ platform-enabled anti-gene therapies can potentially address a multitude of rare genetic diseases and cancer, among other indications.

We employ a rational approach to selecting disease targets, considering many scientific, technical, business and indication-specific factors before choosing each indication. We intend to build a diverse portfolio of therapies to treat a variety of health conditions, with an initial emphasis on rare genetic diseases and cancers. A key component of this strategy is continuing to improve the scientific understanding and optimization of our platform technology and programs, including how various components of our platform technology perform, and how our investigational therapies impact the biological processes of the target diseases, so that we can utilize this information to reduce risk in our future programs and indications. In addition, with our expertise in discovering and characterizing novel anti-gene investigational therapies, we believe that our scientists can optimize the properties of our PATrOL™-enabled drug candidates for use with particular targets that we determine to be of high value.

We believe the depth of our knowledge and expertise with PNAs, engineered nucleotides, genetics and genomics and therapeutic development of first-in-class modalities provides potential flexibility to determine the optimal development and commercialization strategy to maximize the near and longer-term value of our therapeutic programs.

We plan to employ distinct partnering strategies based on the specific drug candidate, therapeutic area expertise and resources potential partners may bring to a collaboration. For some drug candidates, we may choose to develop and, if approved, commercialize them ourselves or through our affiliates. For other drug candidates, we may form single or multi-asset partnerships leveraging our partners’ global expertise and resources needed to support large commercial opportunities.

We believe the breadth of the PATrOL™ platform gives us the ability to potentially address a multitude of inherited genetic diseases. The technology may allow us to target and inactivate gain-of-function and change-of-function mutations, and address targets in recessive disease and haploinsufficiencies by altering splicing to remove damaging exons/mutations or increasing expression of wild-type alleles by various means.

Modified scaffolds, optimized versions of traditional PNA scaffolds which we utilize, have demonstrated preclinical in vivo efficacy in several applications which we believe can be translated across many targets and into humans. For example, in oncology such scaffolds have reduced expression of an activated oncogene (the epidermal growth factor receptor of the EGFR gene) and have modified gene regulation by targeting microRNA to slow tumor growth. Such scaffolds have also demonstrated in vivo engagement with the double-stranded genome in studies done by others to perform in vivo single-base genome editing.

~~Product Pipeline~~

~~NT0100 Program - PATrOL™ Enabled Anti-Gene for Huntington’s Disease~~

HD is a devastating rare neurodegenerative disorder. After onset, symptoms such as uncontrolled movements, cognitive impairments and emotional disturbances worsen over time. HD is caused by toxic aggregation of mutant huntingtin protein, leading to progressive neuron loss in the striatum and cortex of the brain. The wild-type huntingtin gene (~~HTT~~) has a region in which a three-base DNA sequence, CAG, is repeated many times. When the DNA sequence CAG is repeated 26 or fewer times in this region, the resulting protein behaves normally. While the normal or wild-type function of HTT protein is largely uncharacterized, it is known to be essential for normal brain development. When the DNA sequence CAG is repeated 40 times or more in this region, the resulting protein becomes toxic and causes HD. Every person has two copies, or alleles, of the ~~HTT~~ ~~gene. Only one of the alleles (the “mutant” allele) needs to bear at least 40 CAG repeats for HD to occur. HD is one of many known repeat expansion disorders, which are a set of~~common genetic disorders, ~~caused by a mutation~~including cancers that ~~leads~~are resistant to a repeat of nucleotides exceeding the normal threshold. Current therapies for patients with HD can only manage individual symptoms. There is no approved therapy that has been shown to delay or halt disease progression. There are approximately 30,000 symptomatic patients in the U.S. and more than 200,000 at-risk of inheriting the disease globally.

~~One especially important advantage of the PATrOL™ platform that makes it promising~~current therapeutic approaches. Our pipeline includes therapeutic candidates for the treatment of ~~repeat expansion disorders like~~DM1, HD, and cancer-driving point mutations in KRAS, G12V and G12D, which are involved in many tumor types and have historically been “undruggable”.

Based on compelling results from in vitro and in vivo preclinical studies, we plan to file an IND application for our DM1 investigational therapy in the fourth quarter of CY2022. We are targeting CY2023 to file an IND application for an investigational therapy to treat Huntington’s disease. Both are devastating systemic diseases with no effective therapies. Our oncology program has recently been announced (FY2021), together with in vivo activity illustrating allele-selective engagement of mutant KRAS at the DNA and RNA levels, with abrogation of downstream hyperactive signaling through multiple RAS pathway members, resulting in anti-tumor activity. We continue to improve upon our platform while concurrently developing programs, resulting in next-generation compounds that continue to make their way through preclinical development in a parallel manner. We have recently finalized an analysis of the entire known mutational database and selected several additional high-value indications for screening and development.

Figure 4. The initial pipeline in rare disease and oncology, with platform learnings increasing the efficiency and speed additional undisclosed programs, both internally developed and in discussions for co-development with partners.

We are poised to file a series of IND applications for indications with large unmet needs such as DM1, which is expected to reach IND application filing by the ~~ability~~end of CY2022, HD expected to reach IND application in CY2023 and cancers (KRAS G12V and G12D mutations) likely thereafter.

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In advance of our ~~small anti-genes to potentially target~~first IND application filing in the ~~RNA hairpin. This allows~~fourth quarter of CY2022 and our ~~therapies to potentially inactivate mutant~~ ~~HTT~~ ~~mRNA before it can be translated into a harmful protein via selective binding to the expanded CAG repeats while leaving the normal~~ ~~HTT~~ mRNA largely unbound to drug and producing functional protein. Achieving mutant allele selectivity would be a key advantage for any RNA-based approach aiming to treat HD. In March of 2020, we illustrated the ability of our anti-gene technology to enrich for translational inhibition and resultant reduction of mutant protein formation in human patient-derived cell lines versus wild-type protein production. We illustrated that our anti-genes can inhibit ribosomal elongation via high-affinity bindingsubsequent planned transition to a ~~target RNA.~~

~~The PATrOL™-enabled NT0100 program is currently~~clinical stage company in ~~preclinical development for~~our combined Phase 1/2 clinical trial in DM1, the ~~treatment of HD. We expect to initiate scale up and toxicology activities in calendar year 2022, with a target IND filing in calendar year 2023.~~

~~NT0200 Program- PATrOL™ Enabled Anti-Gene for Myotonic Dystrophy Type 1~~

Our pipeline also contains a second potentially transformative medicine, which we believe has significant potential for Myotonic dystrophy, type 1, a severe dominantly inherited genetic disease. DM1 is characterized clinically by myotonia (an inability to relax a muscle after contraction), muscle weakness and wasting, cardiac conduction defects and cognitive deficits. DM1 is caused by an expansion of a CUG trinucleotide repeat in the 3’ untranslated region (“UTR”), a noncoding region of the myotonic dystrophy protein kinase gene (~~DMPK~~~~) transcript. Diagnosis is confirmed by molecular genetic testing of the length of a trinucleotide repeat expansion~~. Repeat length exceeding 34 repeats is abnormal and often patients have hundreds or thousands of repeat units. Molecular genetic testing detects pathogenic variants in nearly 100% of affected individuals. It is estimated that the global prevalence of DM1 is approximately 1 in 20,000 individuals. Our recentfollowing data ~~illustrates that we~~sets are ~~able to systemically deliver our anti-genes intravenously in a DM1 genetic mouse model, engage the target in the skeletal muscles of the animals, and induce rescue of the causal splice defects.~~

The trinucleotide repeat expansion in the transcript causes disease by forming an aberrant hairpin structure in the nucleus of patient cells that captures and sequesters proteins that have critical functions in the nucleus related to appropriate splicing of hundreds of transcripts. These sequestered proteins cannot then fulfill their normal functions. In addition, it has been documented that sequestration of the mutant ~~DMPK~~ ~~transcripts in the nucleus results in their inability~~planned to be ~~translated and potentially results in haploinsufficiency, a situation where 50% of the protein in not enough to maintain normal function. Mice with both copies of their~~ ~~Dmpk~~ ~~gene knocked out manifest a cardiac conduction defect (Berul CI, Maguire CT, Aronovitz MJ, Greenwood J, Miller C, Gehrmann J, Housman D, Mendelsohn ME, Reddy S.~~ ~~Dpmk~~ dosage alterations result in atrioventricular conduction abnormalities in a mouse myotonic dystrophy model. J Clin Invest. 1999 Feb;103(4):R1-7. doi: 10.1172/JCI5346. PMID: 10021468; PMCID: PMC408103.) and a CNS phenotype characterized by abnormal long-term potentiation (Schulz PE, McIntosh AD, Kasten MR, Wieringa B, Epstein HF. A role for myotonic dystrophy protein kinase in synaptic plasticity. J Neurophysiol. 2003 Mar;89(3):1177-86. doi: 10.1152/jn.00504.2002. Epub 2002 Nov 13. PMID: 12612014.) hypothesized to be due to inappropriate cytoskeletal remodeling. We propose that our mechanism of action is via direct engagement of our anti-gene with the expanded CUG repeat hairpin structure in the 3’ UTR of the mutant transcript, invasion and opening of the hairpin structure, and release of the sequestered CUG-repeat binding proteins. This release of sequestered proteins which are normally involved in developmentally appropriate pre-mRNA splicing in the nucleus resolves the generalized splice defect and thus the major causal event. Our DM1 anti-gene is designed to not specifically degrade the mutant transcript, rather to release these RNA-protein aggregates through steric displacement, which could also resolve any potential haploinsufficiency and as a result may improve endophenotypes of the clinical condition, such as in the heart and brain (contingent on delivering effective concentrations of anti-gene to these tissues).disseminated:


Program	Calendar Year	Data Set	Relevance
DM1	1H2022	Development candidate PK / ADME and bioavailability in wild-type model(s)	Defines the exposures in muscle, heart, and brain after systemic administration to enable correct dosing for a whole-body solution
		Development candidate PK / PD in transgenic murine model(s)	Defines the relationship between tissue exposures of the development candidate and molecular / functional rescue of the disease to enable dose, route, and regimen in the clinic
		Development candidate exploratory toxicology in murine and NHP models	Illustrates the safety of the development candidate and defines the maximum tolerated dose; broader platform tolerability validation for other programs
	2H2022	GLP toxicology	Formalizes and extends upon the exploratory toxicology work to enable the IND filing
		Mechanistic studies including blood-brain barrier transit	Articulates details of the mechanism by which the development compound acts and is differentiated
	4Q2022	IND filing with FDA	We have confidence that the pharmacology and tolerability data warrant a review by the FDA ideally enabling first-in-human studies within 30 days
HD	1H2022	Reduction in mutant HTT aggregates in the brain of transgenic murine models(s) with systemic route	Further proves passage across the blood-brain barrier in sufficient quantities and CNS distribution to reduce or eliminate the disease-causing neuronal HTT aggregates via a systemic route of administration
	2H2022	Functional rescue of transgenic murine models(s) with systemic route	Connects the reduction of mutant HTT protein and reduction in neuronal aggregates to a reduction in the progress of the disease after a systemic route
		Development candidate nomination	We believe the pharmacology and tolerability data support investment into CMC scale up and IND-enabling activities
	2023	IND filing with FDA	We have confidence that the pharmacology and tolerability data warrant a review by the FDA ideally enabling first-in-human studies within 30 days
KRAS	2022	Optimization of candidates and mechanistic studies	The properties of target engagement have been optimized for potency and selectivity including temporal dynamics of mutant KRAS reduction
		In vivo pharmacology in xenograft murine models	Articulates that systemic delivery confers beneficial pharmacologic and tolerability profiles and sets the stage for development candidate nomination

The PATrOL™-enabled NT0200 program is currently in preclinical development for the treatment of DM1. We expect to initiate scale up and toxicology activities beginning in the middle of calendar year 2021, with an IND filing planned during calendar year 2022.

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~~Additional Indications~~

~~In addition, we are in the process~~Table of ~~building an early stage pipeline of other therapies that focus on the unique advantages of our technology across a variety of diseases with an underlying genetic driver.~~Contents

Critical Accounting Estimates and Policies

The preparation of financial statements in accordance with United States generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in our unaudited condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience, market and other conditions, and various other assumptions it believes to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, the estimation process is, by its nature, uncertain given that estimates depend on events over which we may not have control. If market and other conditions change from those that we anticipate, our unaudited condensed consolidated financial statements may be materially affected. In addition, if our assumptions change, we may need to revise our estimates, or take other corrective actions, either of which may also have a material effect in our unaudited condensed consolidated financial statements. We review our estimates, judgments, and assumptions used in our accounting practices periodically and reflect the effects of revisions in the period in which they are deemed to be necessary. We believe that these estimates are reasonable; however, our actual results may differ from these estimates.

Our critical accounting policies and estimates are discussed in our Annual Report on Form 10-K for the fiscal year ended September 30, ~~2020~~2021, and there have been no material changes to such policies or estimates during the ~~six~~three months ended ~~March~~December 31, 2021.

Recent Accounting Pronouncements

Please refer to Note 2, Significant Accounting Policies—Recent Accounting Pronouncements, in Item 1, Financial Statements, for a discussion of recent accounting pronouncements.

Results of Operations

Results of operations for the ~~quarter~~three months ended ~~March~~December 31, 2021, reflect the following changes from the ~~quarter~~three months ended ~~March~~December 31, 2020:

	Three Months ended March 31,
	2021			2020			Change

										Three Months Ended December 31,
										2021		2020		Change
OPERATING EXPENSES
General and administrative	$	2,721,640		$	2,739,021		$	(17,381	)	$	2,935,710	$	2,641,470	$	294,240
Research and development		3,174,129			1,616,009			1,558,120			4,369,257		2,019,924		2,349,333
TOTAL OPERATING EXPENSES		5,895,769			4,355,030			1,540,739			7,304,967		4,661,394		2,643,573
LOSS FROM OPERATIONS		(5,895,769	)		(4,355,030	)		(1,540,739	)		(7,304,967)		(4,661,394)		(2,643,573)
OTHER INCOME (EXPENSE)
Interest expense		(6,460	)		(342	)		(6,118	)		(15,219)		(9,737)		(5,482)
Interest income		9,466			-			9,466			1,254		—		1,254
Change in fair value of warrant liabilities		90,597			69,944			20,653			—		630,112		(630,112)
Equity in losses on equity method investment		(36,127	)		(92,842	)		56,715			(415,744)		(25,412)		(390,332)
Other income		316,724			-			316,724
Total other expenses, net		374,200			(23,240	)		397,440
Other income, net											5,860		—		5,860
Total other (expense) income, net											(423,849)		594,963		(1,018,812)
NET LOSS	$	(5,521,569	)	$	(4,378,270	)	$	(1,143,299	)	$	(7,728,816)	$	(4,066,431)	$	(3,662,385)

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During the ~~quarter~~three months ended ~~March~~December 31, 2021, our operating loss increased by ~~$1.5~~$2.6 million compared to the ~~quarter~~three months ended ~~March~~December 31, 2020. Our net loss increased by ~~$1.1~~$3.7 million for the ~~quarter~~three months ended ~~March~~December 31, 2021, as compared to the ~~quarter~~three months ended ~~March~~December 31, 2020. Until we are able to generate revenue from product sales, our management expects to continue to incur net losses.

General and Administrative Expenses

General and administrative expenses consist primarily of legal and professional fees, wages and stock-based ~~compensation and insurance.~~compensation. General and administrative expenses ~~decreased~~increased by ~~$0.02~~$0.3 million for the ~~quarter~~three months ended ~~March~~December 31, 2021, as compared to the ~~quarter~~three months ended ~~March~~December 31, 2020, primarily due to ~~decreases~~increases in professional fees, settlement costs, and administrative expenses, partially offset by a decrease in stock-based compensation ~~expense, accounting and legal costs, offset by increases in patent fees, settlement costs, professional fees, and employee head count.~~expense.

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Research and Development Expenses

Research and development expenses consist primarily of professional fees, research, development, and manufacturing expenses, and wages and stock-based compensation. Research and development expenses increased by ~~$1.6~~$2.3 million for the ~~quarter~~three months ended ~~March~~December 31, 2021, as compared to the ~~quarter~~three months ended ~~March~~December 31, 2020, primarily due to increases in manufacturing expenses, professional fees, employee head count, and the ramp up of research and development ~~activities and professional fees.~~activities.

Change in Fair Value of Warrant Liabilities

Change in fair value of warrant liabilities reflects the changes in the fair value of outstanding warrants which is primarily driven by changes in our stock price. The fair value of warrant liabilities was $0 at December 31, 2021 and September 30, 2021, therefore, no change in fair value was recognized during the three months ended December 31, 2021. We recognized a gain of ~~$0.09~~$0.6 million from the change in fair value of warrant liabilities for the ~~quarter~~three months ended ~~March 31, 2021, as compared to a gain of $0.07 million for the quarter ended March~~December 31, 2020.

Equity in Losses on Equity Method Investment

We account for our investment in DepYmed common shares using the equity method of accounting and record our proportionate share of DepYmed’s net income and losses. ~~Equity in losses was $0.04 million for the quarter ended March 31, 2021, as compared to $0.09 million for the quarter ended March 31, 2020.~~

~~Other Income~~

We recognized other income of $0.3 million during the quarter ended March 31, 2021 related to the sale of certain intellectual property to DepYmed in exchange for shares of Series A-4 preferred stock. There was no other income recognized during the quarter ended March 31, 2020.

~~Results of operations for the six months ended March 31, 2021 reflect the following changes from the six months ended March 31, 2020:~~

Six Months ended March 31,
2021 2020 Change
OPERATING EXPENSES
General and administrative $ 5,363,110 $ 5,293,701 $ 69,409
Research and development 5,194,053 2,843,695 2,350,358
TOTAL OPERATING EXPENSES 10,557,163 8,137,396 2,419,767
LOSS FROM OPERATIONS (10,557,163 ) (8,137,396 ) (2,419,767 )
OTHER INCOME (EXPENSE)
Interest expense (16,197 ) (1,653 ) (14,544 )
Interest income 9,466 - 9,466
Change in fair value of warrant liabilities 720,709 (624,190 ) 1,344,899
Equity in losses on equity method investment (61,539 ) (117,351 ) 55,812
Other income (expense) 316,724 (3,230 ) 319,954
Total other expenses, net 969,163 (746,424 ) 1,715,587
NET LOSS $ (9,588,000 ) �� $ (8,883,820 ) $ (704,180 )
During the six months ended March 31, 2021, our operating loss increased by $2.4 million compared to the six months ended March 31, 2020. Our net loss increased by $0.7 million for the six months ended March 31, 2021, as compared to the six months ended March 31, 2020. Until we are able to generate revenue from product sales, our management expects to continue to incur net losses.
~~General and Administrative Expenses~~
General and administrative expenses consist primarily of legal and professional fees, wages, stock-based compensation and insurance. General and administrative expenses increased by $0.07 million for the six months ended March 31, 2021, as compared to the six months ended March 31, 2020, primarily due to increases in patent fees, professional fees, settlement costs, and employee head count, and mostly offset by decreases in stock-based compensation and accounting expenses.
~~Research and Development Expenses~~
Research and development expenses consist primarily of professional fees, research, development, and manufacturing expenses, and wages and stock-based compensation. Research and development expenses increased by $2.4 million for the six months ended March 31, 2021, as compared to the six months ended March 31, 2020, primarily due to increases in manufacturing expenses, employee head count, and the ramp up of research and development activities.
22
~~Change in Fair Value of Warrant Liabilities~~
~~Change in fair~~The carrying value of warrant liabilities reflects the changes in the fair value of outstanding warrants which is primarily driven by changes in our stock price. We recognized a gain of $0.7 million from the change in fair value of warrant liabilities for the six months ended March 31, 2021, as compared to a loss of $0.6 million for the six months ended March 31, 2020.
~~Equity in Losses on Equity Method Investment~~
~~We account for~~ our investment in DepYmed common shares ~~using~~was reduced to zero, therefore, during the three months ended December 31, 2021, we recorded our share of equity losses to the extent of our investment in preferred shares of DepYmed. We will continue to monitor the operating results of DepYmed and will record equity in earnings when the equity ~~method of accounting and record~~in earnings exceeds our ~~proportionate share of DepYmed’s net income and~~previously unrecognized losses. ~~Equity in losses was $0.06 million for the six months ended March 31, 2021, as compared to $0.1 million for the six months ended March 31, 2020.~~
~~Other Income (Expense)~~
We recognized other income of $0.3 million during the six months ended March 31, 2021 related to the sale of certain intellectual property to DepYmed in exchange for shares of Series A-4 preferred stock. There was an immaterial amount of other expense recognized during the six months ended March 31, 2020.
Liquidity, Capital Resources and Financial Condition
We have had no revenues from product sales and have incurred operating losses since inception. As of ~~March~~December 31, 2021, we had ~~an accumulated deficit~~cash and cash equivalents of ~~$53.1~~$47.3 million. We have historically funded our operations through the sale of common stock and the issuance of convertible notes and warrants. We received $33.3 million in net proceeds from our follow-on underwriting public offering of common stock in April 2020 and $42.6 million in net proceeds from our April 2021 follow-on underwriting public offering of common stock.
We expect to continue to incur significant operating losses for the foreseeable future and may never become profitable. As a result, we will likely need to raise additional capital through one or more of the following: the issuance of additional debt or equity or the completion of a licensing transaction for one or more of our pipeline assets.
Net working capital decreased from September 30, ~~2020~~2021 to ~~March~~December 31, 2021 by ~~$8.3~~$6.4 million (to ~~$21.4~~$44.3 million from ~~$29.7~~$50.7 million). Our quarterly cash burn has increased compared to prior periods due to increased research and development and corporate activities, and we expect it to continue to increase in future periods. We expect that our existing cash and cash equivalents ~~together with expected and committed cash from our existing collaboration,~~ will be sufficient to fund our operations for at least the next twelve months ~~and into calendar 2023.~~following the issuance of December 31, 2021 financial statements. We have based this expectation on assumptions that may prove to be incorrect, and we may use our available capital resources sooner than we currently expect. In addition, we may elect to raise additional funds before we need them if the conditions for raising capital are favorable due to market conditions or strategic considerations, even if we expect we have sufficient funds for our current or future operating plans.
At present, we have no bank line of credit or other fixed source of capital reserves. Should we need additional capital in the future, we will be primarily reliant upon a private or public placement of our equity or debt securities, or a strategic transaction, for which there can be no warranty or assurance that we may be successful in such efforts. If we are unable to maintain sufficient financial resources, our business, financial condition and results of operations will be materially and adversely affected. This could affect future development and business activities and potential future clinical studies and/or other future ventures. Failure to obtain additional equity or debt financing will have a material adverse impact on our business operations. There can be no assurance that we will be able to obtain the financing needed ~~financing~~ to achieve our goals on acceptable terms or at all.

2322

Table of Contents

Cash Flow Summary

The following table summarizes selected items in our unaudited condensed consolidated statements of cash flows:

	Six Months ended March 31,
	2021			2020

							Three Months Ended December 31,
							2021		2020
Net cash used in operating activities	$	(7,301,524	)	$	(4,257,183	)	$	(5,268,446)	$	(3,780,861)
Net cash used in investing activities		(417,896	)		(161,916	)		(123,906)		(208,541)
Net cash used in financing activities		(26,111	)		(122,919	)		(174,975)		(26,111)
Net decrease in cash and cash equivalents	$	(7,745,531	)	$	(4,542,018	)	$	(5,567,327)	$	(4,015,513)

Operating Activities

Net cash used in operating activities was approximately ~~$7.3~~$5.3 million for the ~~six~~three months ended ~~March~~December 31, 2021, as compared to approximately ~~$4.3~~$3.8 million for the ~~six~~three months ended ~~March~~December 31, 2020. Net cash used in operating activities in the ~~six~~three months ended ~~March~~December 31, 2021, was primarily the result of our net loss ~~the change~~and a decrease in the fair value of warrant liabilities, gain on sale of intellectual property and cash used for the security deposit and prepayment of rent under our new operating lease for office and laboratory space,accounts payable, partially offset by ~~our~~ stock-based compensation expense, depreciation and ~~increases~~amortization expenses, a decrease in ~~accounts payable~~prepaid expenses and other current assets and an increase in accrued expenses. Net cash used in operating activities in the ~~six~~three months ended ~~March~~December 31, 2020, was primarily the result of our net loss ~~offset by our stock-based compensation expense~~ and the change in fair value of warrant ~~liabilities.~~liabilities, partially offset by our stock-based compensation expense, depreciation and amortization expense and the loss on equity method investment.

Investing Activities

Net cash used in investing activities was approximately ~~$0.4~~$0.1 million for the ~~six~~three months ended ~~March~~December 31, 2021, as compared to $0.2 million for the ~~six~~three months ended ~~March~~December 31, 2020. Net cash used in investing activities for ~~both periods~~the three months ended December 31, 2021 and 2020 was primarily due to the ~~result of purchases~~purchase of laboratory and office equipment.

Financing Activities

Net cash used in financing activities was approximately ~~$0.03~~$0.2 million for the ~~six~~three months ended ~~March~~December 31, 2021, as compared to ~~$0.1~~$0.03 million for the ~~six~~three months ended ~~March~~December 31, 2020. Net cash used in financing activities for both the ~~six months~~three month periods ended ~~March~~December 31, 2021 ~~reflects~~and 2020 primarily reflect the principal payments of financed insurance, ~~and net~~partially offset by the proceeds received from the exercise of stock options. ~~Net cash used in financing activities for the six months ended March 31, 2021 reflects the principal payments of financed insurance.~~

~~Off-Balance Sheet Arrangements~~

~~As of March 31, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to provide the information required under this item.

ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~March~~December 31, 2021. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of ~~March~~December 31, 2021, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.
24
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the quarterly period ended ~~March~~December 31, 2021.
25
23

Table of Contents

PART II.
ITEM 1. LEGAL PROCEEDINGS
~~We have~~The Company has become involved in certain legal proceedings and claims which arise in the normal course of business. The Company believes that an adverse outcome is unlikely, and it cannot reasonably estimate the potential loss at this point. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on our results of operations, prospects, cash flows, financial position and brand. Costs associated with the Company’s involvement in legal proceedings are expensed as incurred.
Securities Class Action Lawsuit
On February 14, 2018, plaintiff Jeevesh Khanna, commenced an action in the Southern District of New York, against Ohr ~~Pharmaceutical, Inc. (“Ohr”)~~ (which was the name of the Company prior to the completion of the merger with NeuBase Therapeutics, Inc., a Delaware corporation, ~~(“Legacy NeuBase”),~~ in accordance with the terms of the Agreement and Plan of Merger and Reorganization entered into on January 2, 2019, as amended, pursuant to which (i) Ohr Acquisition Corp., a subsidiary of Ohr, merged with and into Legacy NeuBase, with Legacy NeuBase (renamed as “NeuBase Corporation”) continuing as a wholly-owned subsidiary of Ohr and the surviving corporation of the merger and (ii) Ohr was renamed as “NeuBase Therapeutics, Inc.” ~~(the “Merger”))~~ and several current and former officers and directors, alleging that they violated federal securities laws between June 24, 2014 and January 4, 2018. On August 7, 2018, the lead plaintiffs, now George Lehman and Insured Benefit Plans, Inc., filed an amended complaint, stating the class period to be April 8, 2014 through January 4, 2018. The plaintiffs did not quantify any alleged damages in their complaint but, in addition to attorneys’ fees and costs, they seek to maintain the action as a class action and to recover damages on behalf of themselves and other persons who purchased or otherwise acquired Ohr common stock during the putative class period and purportedly suffered financial harm as a result. We and the individuals dispute these claims and intend to defend the matter vigorously. On September 17, 2018, Ohr filed a motion to dismiss the complaint. On September 20, 2019, the district court entered an order granting the defendants’ motion to dismiss. On October 23, 2019, the plaintiffs filed a notice of appeal of that order dismissing the action and other related orders by the district court. After full briefing and oral argument, on October 9, 2020, the U.S. Court of Appeals for the Second Circuit issued a summary order affirming the district court’s order granting the motion to dismiss and remanding the action to the district court to make a determination on the record related to plaintiffs’ request for leave to file an amended complaint. On October 16, 2020, the district court requested the parties’ positions as to how they proposed to proceed in light of the Second Circuit’s decision. After letter briefing on this issue and plaintiffs’ alternative request for leave to file a second amended complaint, on November 16, 2020,remand, the district court denied plaintiffs’ subsequent request to amend and dismissed with prejudice plaintiffs’ claims. On December 16, 2020, plaintiffs filed a notice of appeal of that order denying plaintiffs leave to amend. ~~Briefing on~~On December 16, 2021, the Second Circuit affirmed the decision and order of the district court denying plaintiffs’ motion for leave to amend, thereby dismissing the appeal ~~is currently due~~and action in its entirety. Plaintiffs have not sought reconsideration of the ~~first half of 2021. This litigation could result in substantial costs and a diversion of management’s resources and attention, which could harm our business~~Second Circuit’s decision, and the ~~value~~current deadline for plaintiffs to file a writ of ~~our common stock.~~certiorari for review by the Supreme Court of the United States is March 15, 2022.
Derivative Lawsuit
On May 3, 2018, plaintiff Adele J. Barke, derivatively on behalf of Ohr, commenced an action against certain former directors of Ohr, including Michael Ferguson, Orin Hirschman, Thomas M. Riedhammer, June Almenoff and Jason S. Slakter in the Supreme Court, State of New York, alleging that the action was brought in the right and for the benefit of Ohr seeking to remedy their “breach of fiduciary duties, corporate waste and unjust enrichment that occurred between June 24, 2014 and the present.” It does not quantify any alleged damages. We and the individuals dispute these claims and intend to defend the matter vigorously. Such litigation has been stayed pursuant to a stipulation by the parties, which has been so ordered by the court, pending athe exhaustion of all appeals from the decision inof the Southern District ~~case on~~of New York dismissing the ~~motion to dismiss, but that status could change. This litigation could result~~Khanna action discussed above. These matters couldresult in substantial costs and a diversion of management’s resources and attention, which could harm our business and the value of our common stock.

Table of Contents

Joint Proxy Statement Lawsuit

On March 20, 2019, a putative class action lawsuit was filed in the United States District Court for District of Delaware naming as defendants Ohr and its board of directors, Legacy NeuBase and Ohr Acquisition Corp., captioned Wheby v. Ohr Pharmaceutical, Inc., et al., Case No. 1:19-cv-00541-UNA (the “Wheby Action”). The plaintiffs in the Wheby Action allege that the preliminary joint proxy/prospectus statement filed by Ohr with the SEC on March 8, 2019 contained false and misleading statements and omitted material information in violation of Section 14(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder, and further that the individual defendants are liable for those alleged misstatements and omissions under Section 20(a) of the Exchange Act. The complaint in the Wheby Action has not been served on, nor was service waived by, any of the named defendants in that action. The action seeks, among other things, to rescind the Merger or an award of damages, and an award of attorneys’ and experts’ fees and expenses. The defendants dispute the claims raised in the Wheby Action. Management believes that the likelihood of an adverse decision from the sole remaining action is unlikely; however, the litigation could result in substantial costs and a diversion of management’s resources and attention, which could harm our business and the value of our common stock.

26

ITEM 1A. RISK FACTORS
We operate in a dynamic and rapidly changing environment that involves numerous risks and uncertainties. Certain factors may have a material adverse effect on our business, prospects, financial condition and results of operations, and you should carefully consider them. Accordingly, in evaluating our business, in addition to other information contained in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed under the caption “Risk Factors” that appear in Item 1A of our Annual Report on Form 10-K for the year ended September 30, ~~2020,~~2021, filed with the U.S. Securities and Exchange Commission (“SEC”) on December 23, ~~2020.~~2021. Other events that we do not currently anticipate or that we currently deem immaterial may also affect our business, prospects, financial condition and results of operations. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended September 30, ~~2020.~~2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.

ITEM 5. OTHER INFORMATION
Not applicable.
27
25

Table of Contents

ITEM 6. EXHIBITS

Incorporated by Reference

Incorporated by Reference
Exhibit
Number Description Form File
Number Filing Date Exhibit

Description

Form

File
Number

Filing Date

Exhibit
2.1+ Agreement and Plan of Merger and Reorganization, dated as of January 2, 2019, by and among Ohr Pharmaceutical, Inc., Ohr Acquisition Corp. and NeuBase Therapeutics, Inc. 8-K 001-35963 1/3/2019 2.1

Agreement and Plan of Merger and Reorganization, dated as of January 2, 2019, by and among Ohr Pharmaceutical, Inc., Ohr Acquisition Corp. and NeuBase Therapeutics, Inc.

8-K

001-35963

1/3/2019

2.1

2.2 First Amendment to the Agreement and Plan of Merger and Reorganization, dated as of June 27, 2019, by and among Ohr Pharmaceutical, Inc., Ohr Acquisition Corp. and NeuBase Therapeutics, Inc. 8-K 001-35963 7/3/2019 2.1

First Amendment to the Agreement and Plan of Merger and Reorganization, dated as of June 27, 2019, by and among Ohr Pharmaceutical, Inc., Ohr Acquisition Corp. and NeuBase Therapeutics, Inc.

8-K

001-35963

7/3/2019

2.1

3.1 Amended and Restated Certificate of Incorporation of the Company. 8-K 001-35963 7/12/2019 3.1

Amended and Restated Certificate of Incorporation of the Company.

8-K

001-35963

7/12/2019

3.1

3.2 Amended and Restated Bylaws of the Company. 8-K 001-35963 9/23/2019 3.1

Amended and Restated Bylaws of the Company.

8-K

001-35963

9/23/2019

3.1

4.1

Form of Series A Warrant issued to investors pursuant to the Securities Purchase Agreement, dated December 7, 2016, by and among Ohr Pharmaceutical, Inc. and the purchasers listed therein.

8-K

001-35963

12/8/2016

4.1

4.2 Form of Series A Warrant issued to investors pursuant to the Securities Purchase Agreement, dated December 7, 2016, by and among Ohr Pharmaceutical, Inc. and the purchasers listed therein. 8-K 001-35963 12/8/2016 4.1

Form of Warrant issued to investors pursuant to the Securities Purchase Agreement, dated as of April 5, 2017, by and among Ohr Pharmaceutical, Inc. and the purchasers listed therein.

8-K

001-35963

4/6/2017

4.1

4.3 Form of Warrant issued to investors pursuant to the Securities Purchase Agreement, dated as of April 5, 2017, by and among Ohr Pharmaceutical, Inc. and the purchasers listed therein. 8-K 001-35963 4/6/2017 4.1

Form of Common Stock Certificate.

S-8

333-233346

8/16/2019

4.17

4.4 Form of Common Stock Certificate. S-8 333-233346 8/16/2019 4.17

31.1^* Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2^* Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1^* Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

10.1+

Offer Letter of Employment, dated January 10, 2022, by and between NeuBase Therapeutics, Inc. and Todd Branning

8-K

0001-35963

1/10/2022

10.1

31.1*

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

101.INS*

XBRL Instance Document.
101.SCH*

XBRL Taxonomy Extension Schema Document.
101.CAL*

XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*

XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*

XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*

XBRL Taxonomy Extension Presentation Linkbase Document.
*Filed herewith.
101.INS* ~~XBRL Instance Document.~~
101.SCH* ~~XBRL Taxonomy Extension Schema Document.~~
101.CAL* ~~XBRL Taxonomy Extension Calculation Linkbase Document.~~
101.DEF* ~~XBRL Taxonomy Extension Definition Linkbase Document.~~
101.LAB* ~~XBRL Taxonomy Extension Label Linkbase Document.~~
101.PRE* ~~XBRL Taxonomy Extension Presentation Linkbase Document.~~
#Management compensatory plan or arrangement.
* ~~Filed herewith.~~
# ~~Management compensatory plan or arrangement.~~
+All schedules and exhibits to the agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.
28
26

Table of Contents

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

NeuBase Therapeutics, Inc.
Date: ~~May 13, 2021~~February 10, 2022
/s/ ~~Sam Backenroth~~Todd Branning
~~Sam Backenroth~~
Todd Branning
Chief Financial Officer
(Principal Financial ~~and Accounting~~ Officer)

2927

Delaware		46-5622433
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


Title of each class		Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	~~NBSE~~	NBSE	The Nasdaq Stock Market LLC


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

		March 31,			September 30,
		2021			2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	24,246,752		$	31,992,283
Prepaid insurance			256,985			521,617
Other prepaid expenses and current assets			436,394			294,640
Total current assets			24,940,131			32,808,540

EQUIPMENT, net			1,652,510			1,166,934

OTHER ASSETS
Investment			578,742			323,557
Long-term prepaid insurance			48,416			145,250
Security deposit			253,565			-
Total other assets			880,723			468,807

TOTAL ASSETS		$	27,473,364		$	34,444,281

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		$	2,175,792		$	1,505,042
Accrued expenses and other current liabilities			1,130,343			555,883
Warrant liabilities			229,442			950,151
Insurance note payable			-			138,557
Total liabilities			3,535,577			3,149,633

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY	��
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of March 31, 2021 and September 30, 2020			-			-
Common stock, $0.0001 par value; 250,000,000 shares authorized; 23,180,024 and 23,154,084 shares issued and outstanding as of March 31, 2021 and September 30, 2020, respectively			2,317			2,315
Additional paid-in capital			77,082,072			74,850,935
Accumulated deficit			(53,146,602	)		(43,558,602	)
Total stockholders’ equity			23,937,787			31,294,648

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	27,473,364		$	34,444,281


	December 31,		September 30,
	2021		2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	47,326,060	$	52,893,387
Prepaid insurance		313,577		499,061
Other prepaid expenses and current assets		844,404		1,536,186
Total current assets		48,484,041		54,928,634

EQUIPMENT, net		2,464,643		2,463,882

OTHER ASSETS
Investment		0		415,744
Right-of-use asset, operating lease asset		5,841,696		5,945,295
Security deposit		253,615		253,615
Other long-term assets		0		160,423
Total other assets		6,095,311		6,775,077

TOTAL ASSETS	$	57,043,995	$	64,167,593

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	1,193,713	$	1,807,885
Accrued expenses and other current liabilities		2,412,880		1,747,746
Insurance note payable		0		148,385
Operating lease liabilities		429,507		382,576
Finance lease liabilities		111,513		107,632
Total current liabilities		4,147,613		4,194,224

Long-term operating lease liability		5,683,192		5,794,096
Long-term finance lease liability		78,987		109,500
TOTAL LIABILITIES		9,909,792		10,097,820

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding as of December 31, 2021 and September 30, 2021		0		0
Common stock, $0.0001 par value; 250,000,000 shares authorized; 32,768,184 and 32,721,493 shares issued and outstanding as of December 31, 2021 and September 30, 2021, respectively		3,276		3,272
Additional paid-in capital		123,827,646		123,034,404
Accumulated deficit		(76,696,719)		(68,967,903)
Total stockholders’ equity		47,134,203		54,069,773

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	57,043,995	$	64,167,593


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


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

~~PART I~~	1
PART I.		1
~~ITEM 1.~~	~~FINANCIAL STATEMENTS~~	1
ITEM 1.	FINANCIAL STATEMENTS	1

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	15 17

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	24 23

ITEM 4.	CONTROLS AND PROCEDURES	24 23

PART II.		26 24

ITEM 1.	LEGAL PROCEEDINGS	26 24

ITEM 1A.	RISK FACTORS	27 25

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	27 25

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	27 25

ITEM 4.	MINE SAFETY DISCLOSURES	27 25

ITEM 5.	OTHER INFORMATION	27 25

ITEM 6.	EXHIBITS	28 26

SIGNATURES		29 27

	Common Stock				Additional					Total
	Shares		Amount		Paid-In Capital		Accumulated Deficit			Stockholders’ Equity
Balance as of December 31, 2020		23,177,591	$	2,317	$	76,139,964	$	(47,625,033	)	$	28,517,248
Stock-based compensation expense		-		-		942,108		-			942,108
Issuance of restricted stock for services		2,433		-		-		-			-
Net loss		-		-		-		(5,521,569	)		(5,521,569	)
Balance as of March 31, 2021		23,180,024	$	2,317	$	77,082,072	$	(53,146,602	)	$	23,937,787

	Fair Value Measurements as of March 31, 2021
	(Level 1)		(Level 2)		(Level 3)		Total
Liabilities
Warrant liabilities	$	-		-		229,442	$	229,442


	As of December 31,
	2021
Weighted-average remaining lease term – operating lease (in years)	9.58
Weighted-average discount rate – operating lease	7.3	%
Weighted-average remaining lease term - financing leases (in years)	1.7
Weighted-average discount rate - financing leases	7.3	%


	Operating		Financing
	Lease		Leases
Nine Months Ending September 30, 2022		646,083		121,752
Year Ending September 30, 2023		867,367		111,606
Year Ending September 30, 2024		874,320		0
Year Ending September 30, 2025		881,391		0
Year Ending September 30, 2026		888,627		0
Thereafter		4,401,029		0
Total		8,558,817		233,358
Less present value discount		(2,446,118)		(42,858)
Operating lease liabilities	$	6,112,699	$	190,500

Fair value as of September 30, 2020	$	950,151
Change in fair value		(630,112	)
Fair value as of December 31, 2020		320,039
Change in fair value		(90,597	)
Fair value as of March 31, 2021	$	229,442

Fair value as of September 30, 2019	$	496,343
Change in fair value		694,134
Fair value as of December 31, 2019		1,190,477
Change in fair value		(69,944	)
Fair value as of March 31, 2020	$	1,120,533


							Warrants
Expiration date	Exercise Price		Warrants Outstanding		Exercise Price		Outstanding
December 13, 2021	$	55.00		20,627
April 10, 2022		20.00		695,312	$	20.00	695,312
July 6, 2023		8.73		105,000		8.73	105,000
				820,939
September 20, 2024						6.50	75,000
							875,312


				Weighted
		Weighted		Average
		Average		Remaining
		Exercise		Contractual Life
	Warrants	Price		(in years)
Outstanding as of September 30, 2021	895,939	$	18.35
Expired	(20,627)		55.00
Outstanding as of December 31, 2021	875,312		17.49	0.6
Exercisable as of December 31, 2021	837,812	$	17.98	0.5

	Warrants		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)
Outstanding as of September 30, 2020		820,939	$	19.44
Outstanding as of March 31, 2021		820,939		19.44		1.2
Exercisable as of March 31, 2021		820,939		19.44		1.2

	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Total Aggregate Intrinsic Value
Outstanding at September 30, 2020		6,190,790		$	2.76

													Weighted
											Weighted		Average	Total
											Average		Remaining	Aggregate
											Exercise		Contractual Life	Intrinsic
										Stock Options	Price		(in years)	Value
Outstanding at September 30, 2021										7,397,154	$	3.13
Granted		534,340			7.59					105,000		3.59
Exercised		(21,576	)		5.21					(42,250)		0.00
Forfeited		(150,670	)		5.68					(262,500)		5.07
Outstanding at March 31, 2021		6,552,884			3.08		8.1	$	29,219,357
Exercisable as of March 31, 2021		4,575,375			1.65		7.7	$	26,884,291
Outstanding at December 31, 2021										7,197,404		3.08	6.9	$	9,185,031
Exercisable as of December 31, 2021										5,360,067	$	2.33	6.2	$	9,184,698

	Unvested Restricted Stock			Weighted Average Grant Date Fair Value Price
Unvested as of September 30, 2020		-		$	-

								Weighted Average
								Grant Date
						Unvested Restricted		Fair Value
						Stock		Price
Unvested as of September 30, 2021							0	$	0
Granted		4,364			9.17		4,441		3.94
Vested		(4,364	)		9.17		(4,441)		3.94
Unvested as of March 31, 2021		-			-
Unvested as of December 31, 2021							0		0
Total unrecognized expense remaining						$	0
Weighted-average years expected to be recognized over							—


			Weighted Average
			Grant Date
	Restricted Stock		Fair Value
	Units		Price
Unvested as of September 30, 2021		10,000	$	5.09
Granted		—
Unvested as of December 31, 2021		10,000		5.09
Total unrecognized expense remaining	$	35,580
Weighted-average years expected to be recognized over		1.7

101.INS*	~~XBRL Instance Document.~~
101.SCH*	~~XBRL Taxonomy Extension Schema Document.~~
101.CAL*	~~XBRL Taxonomy Extension Calculation Linkbase Document.~~
101.DEF*	~~XBRL Taxonomy Extension Definition Linkbase Document.~~
101.LAB*	~~XBRL Taxonomy Extension Label Linkbase Document.~~
101.PRE*	~~XBRL Taxonomy Extension Presentation Linkbase Document.~~


	NeuBase Therapeutics, Inc.

Date: ~~May 13, 2021~~February 10, 2022	/s/ ~~Sam Backenroth~~Todd Branning
	~~Sam Backenroth~~ Todd Branning
	Chief Financial Officer
	(Principal Financial ~~and Accounting~~ Officer)