(Registrant’s ~~Telephone Number, Including Area Code)~~telephone number, including area code)

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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 30, 2017,~~August 9, 2022, the registrant had ~~30,005,462~~2,497,450 shares of common stock, ~~($0.0001~~$0.0001 par ~~value)~~value, outstanding.

~~ITEM 1.~~

~~FINANCIAL STATEMENTS~~

	June 30, 2022			December 31, 2021
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	12,598		$	18,685
Restricted cash		400			400
Accounts receivable, net		88			165
Prepaid and other current assets		1,941			2,359
Total current assets		15,027			21,609
Property and equipment, net		510			399
Right-of-use asset		4,816			4,432
Other assets		692			805
Total assets	$	21,045		$	27,245
Liabilities and stockholders’ equity
Current liabilities
Accounts payable	$	534		$	1,393
Accrued liabilities		372			791
Current portion of lease liabilities		212			127
Current portion of deferred revenue		19			19
Total current liabilities		1,137			2,330
Lease liabilities, non-current		4,504			4,617
Noncurrent portion of deferred revenue		89			98
Finance lease liability, non-current		9			14
Total liabilities		5,739			7,059
Commitments and contingencies (Note 8)
Stockholders' Equity
Preferred stock, $0.0001 par value; 10,000,000 shares authorized at June 30, 2022 and December 31, 2021; 0 shares issued and outstanding at June 30, 2022 and December 31, 2021		—			—
Common stock, $0.0001 par value; 200,000,000 shares authorized at June 30, 2022 and December 31, 2021; 2,497,450 shares issued and outstanding at June 30, 2022 and December 31, 2021		5			5
Additional paid-in capital		98,037			98,839
Accumulated deficit		(81,713	)		(77,652	)
Total Histogen Inc. stockholders’ equity		16,329			21,192
Noncontrolling interest		(1,023	)		(1,006	)
Total equity		15,306			20,186
Total liabilities and stockholders’ equity	$	21,045		$	27,245

~~Conatus Pharmaceuticals Inc.~~See accompanying notes to the unaudited condensed consolidated financial statements.

~~Condensed Balance Sheets~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

September 30,

December 31,

2017

2016

Assets

Current assets:

Cash and cash equivalents

$
14,360,452

$
58,083,409

Marketable securities

70,823,435

18,931,715

Other receivables

—

2,500,000

Prepaid and other current assets

1,339,208

937,436

Total current assets

86,523,095

80,452,560

Property and equipment, net

204,914

261,446

Other assets

2,538,211

1,609,834

Total assets

$
89,266,220

$
82,323,840

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable and accrued expenses

$
10,937,851

$
5,311,093

Accrued compensation

1,810,919

2,351,703

Current portion of deferred revenue

19,454,795

30,897,192

Note payable

—

1,000,000

Total current liabilities

32,203,565

39,559,988

Deferred revenue, less current portion

12,673,762

20,803,762

Convertible note payable

12,968,493

—

Deferred rent

139,392

171,544

Stockholders’ equity:

Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares
   issued and outstanding
��

—

—

Common stock, $0.0001 par value; 200,000,000 shares authorized; 30,005,462 shares
   issued and outstanding at September 30, 2017; 26,118,722 shares issued
   and outstanding at December 31, 2016

3,001

2,612

Additional paid-in capital

194,951,562

172,424,531

Accumulated other comprehensive loss

(23,093
)

(6,145
)
Accumulated deficit

(163,650,462
)

(150,632,452
)
Total stockholders’ equity

31,281,008

21,788,546

Total liabilities and stockholders’ equity

$
89,266,220

$
82,323,840

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021

Revenue
Product revenue	$	—		$	—		$	—		$	306
License revenue		5			5			3,760			17
Grant revenue		—			—			—			113
Total revenue		5			5			3,760			436
Operating expense
Cost of product revenue		—			—			—			220
Research and development		1,093			2,376			3,025			4,528
General and administrative		2,306			1,822			4,812			4,154
Total operating expense		3,399			4,198			7,837			8,902
Loss from operations		(3,394	)		(4,193	)		(4,077	)		(8,466	)
Other income (expense)
Interest expense, net		—			(2	)		(1	)		(7	)
Other Income		—			475			—			475
Net loss		(3,394	)		(3,720	)		(4,078	)		(7,998	)
Loss attributable to noncontrolling interest		6			16			17			24
Deemed dividend - accretion of discount and redemption feature of redeemable convertible preferred stock		(488	)		—			(488	)		—
Net loss available to common stockholders	$	(3,876	)	$	(3,704	)	$	(4,549	)	$	(7,974	)
Net loss per share available to common stockholders, basic and diluted	$	(1.55	)	$	(1.99	)	$	(1.82	)	$	(4.64	)
Weighted-average number of common shares outstanding used to compute net loss per share, basic and diluted		2,497,450			1,859,770			2,497,450			1,719,925

See accompanying notes to the unaudited condensed consolidated financial statements.

	Redeemable Convertible Preferred Stock						Common Stock				Additional Paid-in			Accumulated			Total Histogen Inc. Stockholders’ Equity			Noncontrolling			Total Equity
	Shares			Amount			Shares		Amount		Capital			Deficit			(Deficit)			Interest			(Deficit)
Balance at December 31, 2021		—		$	—			2,497,450	$	5	$	98,839		$	(77,652	)	$	21,192		$	(1,006	)	$	20,186
Issuance of common stock, net of issuance costs		—			—			—		—		(9	)		—			(9	)		—			(9	)
Issuance of redeemable convertible preferred stock (mezzanine equity), net of issuance costs		5,000			4,296			—		—		—			—			—			—			—
Share-based compensation expense		—			—			—		—		165			—			165			—			165
Net loss		—			—			—		—		—			(673	)		(673	)		(11	)		(684	)
Balance at March 31, 2022		5,000		$	4,296			2,497,450	$	5	$	98,995		$	(78,325	)	$	20,675		$	(1,017	)	$	19,658
Issuance of redeemable convertible preferred stock, net of issuance costs		—			—			—		—		(119	)		—			(119	)		—			(119	)
Accretion of issuance costs, discount and redemption feature of redeemable convertible preferred stock		—			954			—		—		(954	)		—			(954	)		—			(954	)
Redemption of redeemable convertible preferred stock		(5,000	)		(5,250	)		—		—		—			—			—			—			—
Share-based compensation expense		—			—			—		—		115			—			115			—			115
Net loss		—			—			—		—		—			(3,388	)		(3,388	)		(6	)		(3,394	)
Balance at June 30, 2022		—		$	—			2,497,450	$	5	$	98,037		$	(81,713	)	$	16,329		$	(1,023	)	$	15,306

	Redeemable Convertible Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Histogen Inc. Stockholders’ Equity			Noncontrolling			Total Equity
	Shares		Amount		Shares		Amount		Capital		Deficit			(Deficit)			Interest			(Deficit)
Balance at December 31, 2020		—	$	—		751,537	$	1	$	70,561	$	(62,702	)	$	7,860		$	(947	)	$	6,913
Issuance of common stock, net of issuance costs		—		—		700,000		2		11,953		—			11,955			—			11,955
Issuance of common stock for warrant exercises		—		—		335,685		1		6,831		—			6,832			—			6,832
Share-based compensation expense		—		—		—		—		209		—			209			—			209
Net loss		—		—		—		—		—		(4,270	)		(4,270	)		(8	)		(4,278	)
Balance at March 31, 2021		—	$	—		1,787,222	$	4	$	89,554	$	(66,972	)	$	22,586		$	(955	)	$	21,631
Issuance of common stock, net of issuance costs		—		—		298,865		—		5,753		—			5,753			—			5,753
Issuance of common stock for warrant exercises		—		—		375		—		7		—			7			—			7
Share-based compensation expense		—		—		—		—		289		—			289			—			289
Net loss		—		—		—		—		—		(3,704	)		(3,704	)		(16	)		(3,720	)
Balance at June 30, 2021		—	$	—		2,086,462	$	4	$	95,603	$	(70,676	)	$	24,931		$	(971	)	$	23,960

See accompanying notes to the unaudited condensed consolidated financial statements.

Three Months Ended September 30,

Nine Months Ended September 30,

2017

2016

2017

2016

Revenues:

Collaboration revenue

$
9,565,890

$
—

$
26,572,397

$
—

Total revenues

9,565,890

—

26,572,397

—

Operating expenses:

Research and development

11,165,150

4,825,421

32,308,786

13,770,371

General and administrative

2,449,382

2,069,447

7,406,591

6,883,708

Total operating expenses

13,614,532

6,894,868

39,715,377

20,654,079

Loss from operations

(4,048,642
)

(6,894,868
)

(13,142,980
)

(20,654,079
)
Other income (expense):

Interest income

258,623

33,640

648,103

94,995

Interest expense

(189,041
)

(17,500
)

(473,354
)

(52,500
)
Other (expense) income

(21,318
)

11,818

(71,779
)

1,645

Total other income

48,264

27,958

102,970

44,140

Net loss

(4,000,378
)

(6,866,910
)

(13,040,010
)

(20,609,939
)
Other comprehensive income (loss):

Net unrealized (losses) gains on marketable securities

(455
)

(9,999
)

(16,948
)

12,885

Comprehensive loss

$
(4,000,833
)

$
(6,876,909
)

$
(13,056,958
)

$
(20,597,054
)
Net loss per share, basic and diluted

$
(0.13
)

$
(0.31
)

$
(0.46
)

$
(0.96
)
Weighted average shares outstanding used in computing
net loss per share, basic and diluted

30,004,037

22,410,702

28,104,199

21,527,993

	Six Months Ended June 30,
	2022			2021
Cash flows from operating activities
Net loss	$	(4,078	)	$	(7,998	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		65			46
Stock-based compensation		280			499
Forgiveness of the Payroll Protection Program Loan		—			(467	)
Changes in operating assets and liabilities:
Accounts receivable		77			26
Inventories		—			239
Prepaid expenses and other current assets		26			204
Other assets		113		—
Accounts payable		(868	)		47
Accrued liabilities		(418	)		(357	)
Right-of-use asset and lease liabilities, net		19			(127	)
Deferred revenue		(10	)		(39	)
Net cash used in operating activities		(4,794	)		(7,927	)
Cash flows from investing activities
Cash paid for property and equipment		(206	)		(45	)
Net cash provided by (used in) investing activities		(206	)		(45	)
Cash flows from financing activities
Proceeds from the issuance of common stock, net of issuance costs		—			17,708
Costs paid in connection with December 2021 financing		(9	)		—
Repayment of finance lease obligations		(5	)		(4	)
Issuance costs for redeemable convertible preferred stock		(585	)		—
Redemption payment for redeemable convertible preferred stock		(488	)		—
Payment on financing of insurance premiums		—			(193	)
Proceeds from the exercise of warrants		—			6,838
Net cash provided by (used in) financing activities		(1,087	)		24,349
Net increase (decrease) in cash, cash equivalents and restricted cash		(6,087	)		16,377
Cash, cash equivalents and restricted cash, beginning of period		19,085			6,773
Cash, cash equivalents and restricted cash, end of period	$	12,998		$	23,150
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets
Cash and cash equivalents	$	12,598		$	23,140
Restricted cash		400			10
Total cash, cash equivalents and restricted cash	$	12,998		$	23,150
Supplemental disclosure of cash flow information
Cash paid for interest	$	1		$	—
Noncash investing and financing activities
Issuance of redeemable convertible preferred stock, proceeds were held in escrow until redemption	$	4,762		$	—
Redemption payment of redeemable convertible preferred stock from escrow	$	(4,762	)	$	—
Fair value of warrants issued to Placement Agent	$	34		$	497

See accompanying notes to the unaudited condensed consolidated financial statements.

1. Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies

Nine Months Ended September 30,

2017

2016

Operating activities

Net loss

$
(13,040,010
)

$
(20,609,939
)
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

81,023

79,877

Stock-based compensation expense

3,049,181

2,456,196

Amortization of premiums and discounts on marketable securities, net

(13,260
)

6,323

Accrued interest included in convertible note payable

468,493

—

Changes in operating assets and liabilities:

Other receivables

2,500,000

—

Prepaid and other current assets

(458,038
)

844,647

Other assets

(872,111
)

—

Accounts payable and accrued expenses

5,617,193

(97,396
)
Accrued compensation

(540,784
)

175,197

Deferred revenue

(19,572,397
)

—

Deferred rent

(22,587
)

(13,313
)
Net cash used in operating activities

(22,803,297
)

(17,158,408
)
Investing activities

Maturities of marketable securities

57,257,000

30,847,000

Purchase of marketable securities

(109,152,408
)

(24,958,424
)
Capital expenditures

(24,491
)

(107,165
)
Net cash (used in) provided by investing activities

(51,919,899
)

5,781,411

Financing activities

Proceeds from issuance of convertible promissory note, net

12,500,000

—

Principal payment on promissory note

(1,000,000
)

—

Proceeds from issuance of common stock, net

30,609,789

11,781,626

Repurchase of common stock

(11,202,542
)

—

Proceeds from stock issuances related to exercise of stock options and
employee stock purchase plan

92,992

32,898

Net cash provided by financing activities

31,000,239

11,814,524

Net (decrease) increase in cash and cash equivalents

(43,722,957
)

437,527

Cash and cash equivalents at beginning of period

58,083,409

13,876,090

Cash and cash equivalents at end of period

$
14,360,452

$
14,313,617

Supplemental disclosure of cash flow information:

Cash paid for interest

$
4,861

$
52,500

(the “Company,” “Histogen,” “we,” or the “combined company”), formerly known as Conatus Pharmaceuticals Inc. ~~(the Company)~~(“Conatus”), was incorporated in the state of Delaware on July 13, 2005. The Company is a ~~biotechnology~~clinical-stage therapeutics company focused on developing potential first-in-class restorative therapeutics that ignite the ~~development~~body’s natural process to repair and ~~commercialization of novel medicines to treat liver disease.~~maintain healthy biological function.

~~As of September 30, 2017,~~Merger between Private Histogen and Conatus Pharmaceuticals Inc. and Name Change

On January 28, 2020, the Company, ~~has devoted substantially all~~then operating as Conatus, entered into an Agreement and Plan of Merger and Reorganization, as amended (the “Merger Agreement”), with privately-held Histogen, Inc. (“Private Histogen”) and Chinook Merger Sub, Inc., a wholly-owned subsidiary of the Company (“Merger Sub”). Under the Merger Agreement, Merger Sub merged with and into Private Histogen, with Private Histogen surviving as a wholly-owned subsidiary of the Company (the “Merger”). On May 26, 2020, the Merger was completed. Conatus changed its name to Histogen Inc., and Private Histogen, which remains as a wholly-owned subsidiary of the Company, changed its name to Histogen Therapeutics Inc. On May 27, 2020, the combined company’s common stock began trading on The Nasdaq Capital Market under the ticker symbol “HSTO”.

On June 2, 2022, the Company’s Board of Directors approved a one-for-twenty reverse stock split of its ~~efforts~~then outstanding common stock (the “Reverse Stock Split”) with any fractional shares resulting from the Reserve Stock Split rounded down to ~~product development~~the next whole share of common stock. The par value and ~~has~~the authorized shares of the common stock were not ~~realized product sales revenues from its planned principal operations.~~adjusted as a result of the Reverse Stock Split. All references to share and per share amounts for all periods presented in the condensed consolidated financial statements have been retrospectively restated to reflect this Reverse Stock Split. Additionally, all rights to receive shares of common stock under outstanding warrants, options, and restricted stock units (“RSUs”) were adjusted to give effect of the reverse stock split. Furthermore, remaining shares of common stock available for future issuance under share-based payment award plans and employee stock purchase plans were adjusted to give effect to the Reverse Stock Split.

The Company has ~~a limited~~incurred operating ~~history,~~losses and ~~the sales~~negative cash flows from operations and ~~income potential of the Company’s business and market are unproven. The Company has experienced net losses since its inception and, as of September 30, 2017,~~ had an accumulated deficit of ~~$163.7 million.~~$81.7 million as of June 30, 2022. The Company expects operating losses and negative cash flows from operations to continue for the foreseeable future. As of June 30, 2022, the Company had $12.6 million in cash and cash equivalents which excludes gross proceeds of approximately $5.0 million from a private placement financing closed in July 2022.

The Company has not yet established ongoing sources of revenues sufficient to cover its operating costs and will need to continue to ~~incur~~raise additional capital to support its future operating activities, including progression of its development programs, preparation for potential commercialization, and other operating costs. Management’s plans with regard to these matters include entering into a combination of additional debt or equity financing arrangements, strategic partnerships, collaboration and licensing arrangements, or other similar arrangements. There can be no assurance that the Company will be able to obtain additional financing on terms acceptable to the Company, on a timely basis or at all. Based on the Company’s current operating plan, management believes that existing cash and cash equivalents, including net ~~losses~~proceeds from a July 2022 financing, will be sufficient to fund the Company’s obligations for at least ~~the next several years. Successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support the Company’s cost structure. If~~12 months after these condensed consolidated financial statements are issued.

The condensed consolidated financial statements have been prepared assuming that the Company ~~is unable to generate revenues adequate to support its cost structure,~~will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

The condensed consolidated financial statements include the accounts of the Company ~~may need to raise additional equity or debt financing.~~

~~The accompanying unaudited interim condensed financial statements~~and its controlled subsidiaries, including Histogen Therapeutics, Inc., and have been prepared in accordance with ~~U.S.~~ generally accepted accounting principles ~~(GAAP)~~in the United States of America (“GAAP”). All intercompany balances and transactions have been eliminated upon consolidation.

The Company acquired Centro De Investigacion de Medicina Regenerativa, S.A. de C.V. (“CIMRESA”), a company in Mexico, during 2018 to facilitate a potential clinical development program for HST-001, or hair stimulating complex (“HSC”). This is a

wholly-owned subsidiary intended to pursue registration with the COFEPRIS (Mexico equivalent to Food and Drug Administration). CIMRESA had no operational or financial activity for the three and six months ended June 30, 2022 and 2021.

The Company holds a majority interest in Adaptive Biologix, Inc. (“AB”, formerly Histogen Oncology, LLC). AB was formed to develop and market applications for the treatment of cancer. The Company consolidates AB into its condensed consolidated financial statements.

The unaudited condensed consolidated financial statements for the three and six months ended June 30, 2022 and 2021 have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ~~(SEC) related to a quarterly report on Form 10-Q. Certain~~(“SEC”) and GAAP. Accordingly, these condensed consolidated financial statements do not include all of the information and ~~note disclosures normally included in annual~~footnotes required by GAAP for complete financial ~~statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The~~statements. In the opinion of Management, these unaudited interim condensed consolidated financial statements ~~reflect~~contain all adjustments ~~which, in the opinion~~necessary, all of ~~management, are necessary for a fair statement of the results for the periods presented. All such adjustments~~which are of a normal and recurring ~~nature. The operating~~nature, to present fairly the Company’s financial position, results ~~presented in these unaudited interim condensed financial statements~~of operations, and cash flows. Interim results are not necessarily indicative of ~~the~~ results ~~that may be expected~~ for ~~any~~a full year or future periods. These unaudited ~~interim~~ condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and ~~the~~related notes thereto for the year ended December 31, ~~2016~~2021 included in the ~~Company’s annual report~~Annual Report on Form 10-K that the Company filed with the SEC on March ~~16, 2017.~~10, 2022.

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, ~~and~~ liabilities and the disclosure of contingent assets and liabilities and contingencies at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the ~~reporting period.~~periods presented. Management believes that these estimates and assumptions are reasonable, however, actual results may differ and could have a material effect on future results of operations and financial position. Though the impact of the COVID-19 pandemic on the Company’s business and operating results presents additional uncertainty, Company’s management continues to use the best information available to them in their significant accounting estimates.

Significant estimates and assumptions include the useful lives of property and equipment, discount rates used in recognizing contracts containing leases, unrecognized tax benefits, reserves for excess or obsolete inventory, stock-based compensation, and best estimate of standalone selling price of revenue deliverables. Actual results ~~could~~may materially differ from those estimates.

The Company determined that AB is a variable interest entity (“VIE”) and that the Company is its primary beneficiary. The Company holds greater than 50% of the shares and has the authority to manage the business and affairs of the VIE. AB’s other shareholder does not have a controlling interest.

A VIE is typically an entity for which the Company has less than a 100% equity interest but controls the decision making over the business and affairs of the entity, directs the decisions driving the economic performance of such entity and participates in the profit and losses of such an entity. The Company weighed both quantitative and qualitative information about the different risks and reward characteristics of each entity and the significance of that entity to the consolidating group in the aggregate.

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker, the Interim President and Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The Company views its operations and manages its business as 1 operating segment.

The Company considers all highly liquid investments purchased with an original maturity date of ninety days or less to be cash equivalents. Cash and cash equivalents include cash in readily available checking, money market accounts and brokerage accounts.

The Company’s current restricted cash consists of cash held as collateral for a letter of credit issued as a security deposit for the lease of the Company’s headquarters and is required to be held throughout the lease term.

~~Financial instruments that potentially subject~~At certain times throughout the year, the Company ~~to significant concentrations of credit risk consist primarily of cash, cash equivalents and marketable securities. The Company maintains~~may maintain deposits in federally insured financial institutions in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its ~~cash. Additionally,~~cash balances due to the ~~Company established guidelines regarding approved investments~~financial position of the depository institutions in which those deposits are held.

During the three months ended June 30, 2022 and ~~maturities~~2021, one customer accounted for 100% of ~~investments, which are designed to maintain safety~~total revenues. During the six months ended June 30, 2022 and ~~liquidity.~~2021, one customer accounted for 100% and 72% of total revenues, respectively.

The ~~Company considers all highly liquid investments with~~cumulative effect of the COVID-19 outbreak and associated disruptions have had, and may continue to have, an ~~original maturity from the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents include cash in readily available checking and money market accounts.~~

The Company classifies its marketable securities as available-for-sale and records such assets at estimated fair value in the condensed balance sheets, with unrealized gains and losses, if any, reported as a component of other comprehensive income (loss) within the condensed statements of operations and comprehensive loss and as a separate component of stockholders’ equity. The Company classifies marketable securities with remaining maturities greater than one year as current assets because such marketable

~~securities are available to fund~~adverse impact on the Company’s ~~current~~business and its results of operations. The Company invests its excess cash balances primarily in corporate debt securities and money market funds with strong credit ratings. Realized gains and losses are calculated on the specific identification method and recorded as interest income. There were no realized gains and losses for the nine-month periods ended September 30, 2017 and 2016.

At each balance sheet date, the Company assesses available-for-sale securities in an unrealized loss position to determine whether the unrealized loss is other-than-temporary. The Company considers factors including: the significancefull impact of the ~~decline in value compared~~COVID-19 outbreak continues to the cost basis, underlying factors contributing to a decline in the prices of securities in a single asset class, the length of time the market value of the security has been less than its cost basis, the security’s relative performance versus its peers, sector or asset class, expected market volatility and the market and economy in general. When the Company determines that a decline in the fair value below its cost basis is other-than-temporary, the Company recognizes an impairment loss in the period in which the other-than-temporary decline occurred. There have been no other-than-temporary declines in the value of marketable securities, as it is more likely than not the Company will hold the securities until maturity or a recovery of the cost basis.

~~The carrying amounts of prepaid and other current assets, accounts payable and accrued expenses are reasonable estimates of their fair value because of the short maturity of these items.~~

~~Stock-based compensation expense for stock option grants under the Company’s stock option plans is recorded at the estimated fair value of the award~~evolve as of the ~~grant~~ date these condensed consolidated financial statements were available to be issued and ~~is recognized as expense~~will depend on ~~a straight-line basis over the requisite service period~~future developments that are highly uncertain and unpredictable, including efficacy and adoption of vaccines, future resurgences of the ~~stock-based award. Stock-based compensation expense for employee stock purchases under~~virus and its variants, the imposition of governmental lockdowns, and quarantine and physical distancing requirements. As such, it is uncertain as to the full magnitude that the pandemic will have on the Company’s ~~2013 Employee Stock Purchase Plan (the ESPP) is~~financial condition, liquidity, and future results of operations.

Accounts receivable are generally due within 30 days and are recorded at net realizable value, which is determined using historical experience. The Company maintains an allowance for doubtful accounts for potential credit losses. The allowance is based on an analysis of historical bad debt, current receivables aging, and expected future write-offs of uncollectible accounts, as well as an assessment of specific identifiable accounts considered at risk or uncollectible. Additions to the ~~estimated fair value of~~allowance for doubtful accounts include provisions for bad debt and deductions from the purchase as of the plan enrollment date and is recognized as expense on a straight-line basis over the applicable six-month ESPP offering period. The estimation of stock option and ESPP fair value requires management to make estimates and judgments about, among other things, employee exercise behavior, forfeiture rates and volatility of the Company’s common stock. The judgments directly affect the amount of compensation expense that will be recognized.allowance for doubtful accounts include customer write-offs. Provision for doubtful accounts was not material for all periods presented.

Property and equipment ~~which consists~~are reported net of accumulated depreciation and amortization and are comprised of office furniture and ~~fixtures, computers~~equipment, lab and ~~office~~manufacturing equipment, and leasehold ~~improvements,~~improvements. Ordinary maintenance and repairs are ~~stated at cost~~charged to expense, while expenditures that extend the physical or economic life of the assets are capitalized. Furniture and all equipment are depreciated over ~~the~~their estimated useful lives, ofor five years, using the ~~assets (three to five years)~~straight-line method. Software is amortized over its estimated useful lives, or three years, using the straight-line method. Leasehold improvements are amortized over ~~the shorter of~~ their estimated useful lives orand limited by the remaining term of the building lease, ~~term.~~using the straight-line method.

~~The Company regularly reviews the carrying value~~Long-lived assets to be held and ~~estimated lives of all of its long-lived assets,~~used, including property and equipment, ~~to determine whether indicators of~~are reviewed for impairment ~~may exist which warrant adjustments to carrying values~~whenever events or ~~estimated useful lives. The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow~~changes in ~~future periods, as well as the strategic significance of the assets to the Company’s business objective. Should an impairment exist, the impairment loss would be measured based on the excess of~~circumstances indicate that the carrying amount of the ~~asset’s fair value. The~~assets may not be recoverable. As of June 30, 2022, the Company has not recognized any impairment ~~losses through September 30, 2017.~~to long-lived assets.

In 2011, Private Histogen contracted for research services from EPS Global Research Pte. Ltd. (“EPS”) to conduct clinical trials and compile data from a study that took place in 2011 and 2013. The ~~Company recognizes revenue when each of~~unpaid amount due for the ~~following four criteria is met: (i) persuasive evidence of an arrangement exists; (ii) products are delivered or as~~ services ~~are rendered; (iii) the sales price is fixed or determinable;~~was approximately $0.3 million.

~~The Company recognizes revenue under its Option, Collaboration~~EPS entered into a Debt Settlement and ~~License~~Conversion Agreement (the Collaboration Agreement) with Novartis Pharma AG (Novartis) based on the relevant accounting literature. Under this guidance, multiple elements or deliverables may include (i) grants of licenses, or options to obtain licenses, to intellectual property, (ii) research(“Settlement Agreement”) whereby Private Histogen paid $50 thousand and development services, (iii) participation on joint research and/or joint development committees, and/or (iv) manufacturing or supply services. The payments entities may receive under these arrangements typically include one or more of the following: non-refundable, upfront license fees; option exercise fees; funding of research and/or development efforts; amounts due upon the achievement of specified objectives; and/or royalties on future product sales.issued EPS

~~Multiple-element arrangements require~~717 shares of Series D convertible preferred stock. The Company was required to repurchase the ~~separability~~shares at the greater of ~~deliverables included in an arrangement into different units~~the remaining balance due of ~~accounting~~approximately $0.3 million and the allocation of arrangement consideration to the units of accounting. The evaluation of multiple-element arrangements requires management to make judgments about (i) the identification of deliverables, (ii) whether such deliverables are separable from the other aspectsmarket price of the ~~contractual relationship, (iii)~~shares at the ~~estimated selling price~~time of ~~each deliverable, and (iv)~~repurchase, but in no event later than December 31, 2021. The Company had the ~~expected period~~sole option to repurchase the shares (which were converted from Series D convertible preferred stock into shares of ~~performance~~common stock upon the Merger) at any time on or before December 31, 2021.

On December 16, 2021, the Company repurchased from EPS 717 shares of common stock in exchange for ~~each deliverable.~~

~~To determine the units~~a cash payment of accounting under a multiple-element arrangement, management evaluates certain separation criteria, including whether the deliverables have stand-alone value, based on the relevant facts and circumstances for each arrangement. Management then estimates the selling price for each unit of accounting and allocates the arrangement consideration to each unit using the relative selling price method.approximately $0.3 million. The ~~allocated consideration for each unit of accounting is recognized based on the method most appropriate for that unit of account and in accordance with the revenue recognition criteria detailed above.~~

If there are deliverables in an arrangement that are not separable from other aspects of the contractual relationship, they are treated as a combined unit of accounting, with the allocated revenue for the combined unit recognized in a manner consistent with the revenue recognition applicable to the final deliverable in the combined unit. Payments received prior to satisfying the relevant revenue recognition criteria arerepurchased shares were recorded as ~~deferred revenue in the accompanying balance sheets~~treasury stock and ~~recognized~~retired as ~~revenue when the related revenue recognition criteria are met.~~

~~The Collaboration Agreement provides for non-refundable milestone payments. The Company recognizes revenue that is contingent upon the achievement~~ of a substantive milestone in its entirety in the period in which the milestone is achieved. A milestone is considered substantive when the consideration payable to the Company for such milestone (i) is consistent with the Company’s performance necessary to achieve the milestone or the increase in value to the collaboration resulting from the Company’s performance, (ii) relates solely to the Company’s past performance and (iii) is reasonable relative to all of the other deliverables and payments within the arrangement. In making this assessment, the Company considers all facts and circumstances relevant to the arrangement, including factors such as the scientific, regulatory, commercial and other risks that must be overcome to achieve the milestone, the level of effort and investment required to achieve the milestone and whether any portion of the milestone consideration is related to future performance or deliverables.

The Company periodically reviews the estimated performance periods under the Collaboration Agreement, which provides for non-refundable upfront payments and fees. The Company will adjust the periods over which revenue should be recognized when appropriate to reflect changes in assumptions relating to the estimated performance periods. The Company could accelerate revenue recognition in the event of early termination of programs or if the Company’s expectations change. Alternatively, the Company could decelerate revenue recognition if programs are extended or delayed. While such changes to the Company’s estimates have no impact on the Company’s reported cash flows, the amount of revenue recorded in future periods could be materially impacted.

The Company records revenues related to the reimbursement of costs incurred under the Collaboration Agreement where the Company acts as a principal, controls the research and development activities and bears credit risk. Under the Collaboration Agreement, the Company is reimbursed for associated out-of-pocket costs and for a certain amount of the Company’s full-time equivalent (FTE) costs based on an agreed-upon FTE rate. The gross amount of these pass-through reimbursed costs is reported as revenue in the accompanying statements of operations and comprehensive loss, while the actual expenses for which the Company is reimbursed are reflected as research and development costs.

~~See Note 8 – Collaboration and License Agreements for further information.~~

The Company’s policy related to accounting for uncertainty in income taxes prescribes a recognition threshold and measurement attribute criteria for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.December 31, 2021. As of December 31, ~~2016, there are no unrecognized tax benefits included in~~2021, all amounts due to EPS under the condensed balance sheet that would, if recognized, affect the Company’s effective tax rate, and the Company has noted no material changes through September 30, 2017. The Company has not recognized interest and penalties in the condensed balance sheets or condensed statements of operations and comprehensive loss. The Company is subject to U.S. and California taxation. As of December 31, 2016, the Company’s tax years beginning 2005 to date are subject to examination by taxing authorities.Settlement Agreement have been paid.

The Company is required to report all components of comprehensive ~~loss,~~income (loss), including net ~~loss,~~income (loss), in the accompanying condensed consolidated financial statements in the period in which they are recognized. Comprehensive ~~loss~~income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from ~~nonowner~~non-owner sources, including unrealized gains and losses on ~~marketable securities. Comprehensive gains (losses) have been reflected in the condensed statements of operations~~investments and foreign currency translation adjustments. Net loss and comprehensive loss were the same for all periods presented.

The Company records revenue in accordance with ASC 606, Revenue from Contracts with Customers, whereby revenue is recognized when a customer obtains control of promised goods or services in an ~~enterprise about which separate discrete financial information~~amount that reflects the consideration expected to be received in exchange for those goods or services. A five-step model is used to achieve the core principle: (1) identify the customer contract, (2) identify the contract’s performance obligations, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations and (5) recognize revenue when (or as) a performance obligation is satisfied. The Company applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in ~~making decisions regarding resource allocation~~exchange for the goods or services it transfers to the customer. Shipping charges billed to customers are included in product revenue and ~~assessing performance. To date,~~the related shipping costs are included in cost of product revenue. The Company applies the revenue recognition standard, including the use of any practical expedients, consistently to contracts with similar characteristics and in similar circumstances (See Note 4).

In March 2017, the National Science Foundation (“NSF”), a government agency, awarded the Company a research and development grant to develop a novel wound dressing for infection control and tissue regeneration. The Company has ~~viewed its operations~~concluded this government grant is not within the scope of ASC 606, as government entities generally do not meet the definition of a “customer” as defined by ASC 606. Payments received under the grant are considered conditional, non-exchange contributions under the scope of ASC 958-605, Not-for-Profit Entities – Revenue Recognition, and ~~managed its business~~are recorded as ~~one segment operating primarily~~revenue in the ~~United States.~~period in which such conditions are satisfied. In reaching the determination that such payments should be recorded as revenue, management considered a number of factors, including whether the Company is a principal under the arrangement, and whether the arrangement is significant to, and part of, the Company’s ongoing operations. As of June 30, 2022, the Company had completed all obligations under the NSF development grant and, as such, no longer generates any revenues in connection with the research and development grant.

In September 2020, the Company was approved for a grant award from the U.S. Department of Defense (“DoD”) in the amount of approximately $2.0 million to partially fund the Company’s planned Phase 1/2 clinical trial of HST-003 for regeneration of cartilage in the knee. The Company applies International Accounting Standard (“IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance, by analogy as there is no existing authoritative guidance under GAAP. Under the terms of the award, the DoD will reimburse the Company for certain allowable costs. The period of performance for the grant award substantially expires in September 2025 and is subject to annual and quarterly reporting requirements. As the DoD grant is a cost-type (reimbursement) grant, the Company must incur program expenses in accordance with the Statement of Work and approved budget in order to be reimbursed by the DoD. The Company will recognize funding received from the grant award as a reduction of research and development expenses in the period in which qualifying expenses have been incurred, as the Company is reasonably assured that the expenses will be reimbursed and the funding is collectible. For the three and six months ended June 30, 2022, qualifying expenses totaling $0.1 million and $0.3 million have been incurred with a corresponding reduction of research and development expenses related to the award, respectively. As of June 30, 2022 and December 31, 2021, $0.1 million and $0.2 million, respectively, was included in accounts receivable within the condensed consolidated balance sheets with respect to the award.

Cost of product revenue represents direct and indirect costs incurred to bring the product to saleable condition.

All research and development costs are charged to expense as incurred. Research and development expenses primarily include (i) payroll and related costs associated with research and development performed, (ii) costs related to clinical and preclinical testing of the Company’s technologies under development, and (iii) other research and development costs including allocations of facility costs, net of reimbursable research and development costs incurred under the DoD grant.

General and administrative expenses represent personnel costs for employees involved in general corporate functions, including finance, accounting, legal and human resources, among others. Additional costs included within general and administrative expenses consist of professional fees for legal (including patent costs), audit and other consulting services, travel and entertainment, recruiting, allocated facility and general information technology costs, depreciation and amortization, and other general corporate overhead expenses.

The Company expenses all costs as incurred in connection with patent applications (including direct application fees, and the legal and consulting expenses related to making such applications) and such costs are included in general and administrative expenses in the accompanying condensed consolidated statements of operations.

Income taxes are accounted for under the asset and liability method. Deferred income taxes are recorded for temporary differences between condensed consolidated financial statement carrying amounts and the tax basis of assets and liabilities. Deferred tax assets and liabilities reflect the tax rates expected to be in effect for the years in which the differences are expected to reverse. NaN income tax expense or benefit was recorded for the three and six months ended June 30, 2022 and 2021, due to the full valuation allowance on the Company’s net deferred tax assets. A valuation allowance is provided if it is more likely than not that some or all the deferred tax assets will not be realized.

The Company also follows the provisions of accounting for uncertainty in income taxes which prescribes a model for the recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides guidance on derecognition, classification, interest and penalties, disclosure, and transition.

The Company’s policy is to recognize interest or penalties related to income tax matters in income tax expense. Interest and penalties related to income tax matters were not material for the periods presented.

Basic net loss per share attributable to common stockholdersis ~~calculated~~computed by dividing ~~the~~ net loss attributable to common stockholders by the ~~weighted average number of~~weighted-average common shares outstanding during the ~~period.~~period, without consideration for potentially dilutive securities. Diluted net loss per shareattributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the ~~weighted average~~weighted-average number of common shares and ~~common share equivalents~~potentially dilutive securities outstanding for the period. ~~Common~~

Potentially dilutive common shares consist of shares issuable from warrants, stock ~~equivalents~~options, and redeemable convertible preferred stock. Potentially dilutive common shares issuable upon vesting of stock options and warrants are ~~only included when their effect is dilutive. The Company’s~~determined using the average share price for each period under the treasury stock method. In periods of net losses, the Company excludes all potentially dilutive ~~securities have been excluded~~common shares from the computation of diluted net loss per share infor the periods ~~in which they~~as the effect would be anti-dilutive.

For ~~all periods presented, there~~both the three and six months ended June 30, 2022 and 2021, diluted net loss per share attributable to common stockholders is ~~no difference in the number of shares used to compute basic and diluted shares outstanding due~~equal to the ~~Company’s~~basic net loss ~~position.~~per share attributable to common stockholders as common stock equivalent shares from stock options and warrants were anti-dilutive.

The following table sets forth ~~the~~ outstanding potentially dilutive ~~securities~~shares that have been excluded infrom the calculation of diluted net loss per share attributable to common stockholders because ~~to do so would be anti-dilutive.~~of their anti-dilutive effect (in common stock equivalents):

The Company recognizes stock-based compensation expense for service-based stock options and restricted stock units (“RSUs”) over the requisite service period on a straight-line basis. Employee and director stock-based compensation for service-based stock options is measured based on estimated fair value as of the grant date using the Black-Scholes option pricing model. The Company estimates the fair value of RSUs based on the closing price of the Company’s common stock on the date of issuance. The Company uses the following assumptions for estimating fair value of service-based option grants:

Fair Value of Common Stock – The fair value of common stock underlying the option grant is determined based on observable market prices of the Company’s common stock.

Expected Volatility – Volatility is a measure of the amount by which the Company’s share price has historically fluctuated or is expected to fluctuate (i.e., expected volatility) during a period. Due to the lack of an adequate history of a public market for the trading of the Company’s common stock and a lack of adequate company-specific historical and implied volatility data, volatility has been estimated and based on the historical volatility of a group of similar companies that are publicly traded. For these analyses, the Company has selected companies with comparable characteristics, including enterprise value, risk profiles, and position within the industry, and with historical share price information sufficient to meet the expected term of the stock-based awards.

Expected Term – This is the period of time during which the options are expected to remain unexercised. Options have a maximum contractual term of ten years. The Company estimates the expected term of stock options using the “simplified method”, whereby the expected term equals the average of the vesting term and the original contractual term of the underlying option.

Risk-Free Interest Rate – This is the observed yield on zero-coupon U.S. Treasury securities, as of the day each option is granted, with a term that most closely resembles the expected term of the option.

Stock-based compensation expense for performance-based options is recognized based on amortizing the fair market value as of the grant date over the periods during which the achievement of the performance is probable. Performance-based options require certain performance conditions to be achieved in order for these options to vest. These options vest on the date of achievement of the performance condition.

Stock-based compensation expense for market-based options is recognized on a straight-line basis over the derived service period, regardless of whether the market condition is satisfied. Market-based options subject to market-based performance targets require achievement of the performance target in order for these options to vest. The Company estimates the fair value of market-based options as of the grant date and expected term using a Monte Carlo simulation that incorporates option-pricing inputs covering the period from the grant date through the end of the derived service period.

In ~~May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606).~~ This guidance requires that an entity recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. For public companies, ASU No. 2014-09 is effective for annual reporting periods beginning after December 15, 2017 and interim periods within that reporting period. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. The Company is continuing to assess the impact of the new guidance on its accounting policies and procedures and is evaluating the new requirements as applied to existing revenue contracts. While this assessment is still in progress, the Company believes the most significant impact will relate to the timing of collaboration revenues, where the recognition of variable consideration such as milestone payments may be accelerated. In conjunction with its continuing assessment of the impact of the new guidance, the Company is also evaluating its method of adoption and reviewing and updating its internal controls over financial reporting to ensure that information required to implement the new standard is appropriately captured and recorded. The Company will implement any changes as required to facilitate adoption of the new guidance beginning in the first quarter of 2018.

~~In February 2016,~~August 2020, the FASB issued ASU No. ~~2016-02,~~ ~~Leases (Topic 842)~~2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). This new guidance ~~requires organizations that lease assets~~is intended to simplify the accounting for certain financial instruments with ~~lease terms~~characteristics of ~~more than 12 months to recognize~~liabilities and equity, including convertible instruments and contracts on ~~the balance sheet the assets and liabilities for the rights and obligations created by those leases. The~~an entity’s own equity. Entities may adopt ASU ~~also requires disclosures to give financial statement users information on the amount, timing and uncertainty~~2020-06 using either a partial retrospective or fully retrospective method of ~~cash flows arising from leases, including qualitative and quantitative information. For public companies,~~transition. This ASU ~~No. 2016-02~~ is effective for public business entities for fiscal years ~~and~~beginning after December 15, 2021, including interim periods within those fiscal years, ~~beginning after December 15, 2018. Early~~with early adoption is permitted. The Company ~~is currently evaluating the impact of the pending~~adopted ASU 2020-06 on January 1, 2022. The adoption of ~~ASU No. 2016-02~~this standard did not have a material impact on ~~its~~the Company’s condensed consolidated financial statements ~~and~~or related disclosures.

In ~~March 2016,~~November 2021, the FASB issued ASU No. ~~2016-09,~~ ~~Compensation—Stock Compensation~~2021-10, Government Assistance (Topic ~~718).~~ ~~This guidance changes~~832): Disclosure by Business Entities about Government Assistance (“ASU 2021-10”), which improves the transparency of government assistance received by certain business entities by requiring the disclosure of (1) the types of government assistance received; (2) the accounting for ~~certain aspects~~such assistance, and (3) the effect of ~~stock-based compensation, including income taxes, forfeitures, tax withholding and classification~~the assistance on the ~~statement of cash flows. For public companies,~~business entity’s financial statements. ASU ~~No. 2016-09~~2021-10 is effective for ~~annual and interim periods beginning after~~

December 15, 2016. The Company adopted this guidance effective March 31, 2017, as required. The adoption of this guidance had an immaterial impact on the Company’s financial statements and related disclosures.

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~. This guidance addresses the presentation and classification of certain cash flow items, including the classification of cash receipts and payments that have aspects of more than one class of cash flows, to reduce the existing diversity in practice. ASU 2016-15 is effective for fiscal years, and interim periods within those fiscal years beginning after December 15, ~~2017. Early~~2021, with early adoption is permitted. The Company ~~early~~ adopted ~~this guidance effective June 30, 2017.~~ASU 2021-10 on January 1, 2022. The adoption of this ~~guidance had no~~standard did not have a material impact on the Company’s condensed consolidated financial statements or related disclosures

Depreciation and amortization expense for the six months ended June 30, 2022 and 2021, were $65 thousand and $46 thousand, respectively.

The following is a summary description of the material revenue arrangements, including arrangements that generated revenues during the three and six months ended June 30, 2022 and 2021.

In ~~May~~ 2017, the ~~FASB issued ASU No. 2017-09,~~ ~~Compensation—Stock Compensation (Topic 718)~~Company entered into a series of agreements (collectively, the “2017 Allergan Agreement”), which ultimately transferred Suneva Medical, Inc.’s license and supply rights of Histogen’s cell conditioned medium (“CCM”) skin care ingredient in the medical aesthetics market to Allergan Sales LLC (“Allergan”) and granted Allergan an exclusive, royalty-free, perpetual, irrevocable, non-terminable and transferable license, including the right to sublicense to third parties, to use the Company’s CCM skin care ingredient in the medical aesthetics market. The 2017 Allergan Agreement also obligated the Company to deliver CCM to Allergan (the “Supply of CCM to Allergan”) in the future as well as share with Allergan any potential future improvements to the Company’s CCM skin care ingredients identified through the Company’s research and development efforts (“Potential Future Improvements”). ~~This guidance amends~~In consideration for the ~~scope~~execution of the agreements, Histogen received a cash payment of $11.0 million and a potential additional payment of $5.5 million if Allergan’s net sales of products containing the Company’s CCM skin care ingredient exceeds $60.0 million in any calendar year through December 31, 2027.

In March 2019, Histogen entered into a separate agreement with Allergan (the “2019 Allergan Amendment”) to amend the 2017 Allergan Agreement in exchange for a one-time payment of $7.5 million to the Company. The agreement broadened Allergan’s license rights, expanding Allergan’s access to certain sales channels where its products incorporating the CCM ingredient can be sold. Specifically, the license was broadened to provide Allergan the exclusive right to sell through the “Amazon Professional” website, or any website or digital platform owned or licensed by Allergan or under the Allergan brand name, and non-exclusive rights to sell on other websites and through brick-and-mortar medical spas and wellness centers (excluding websites and brick-and-mortar stores of luxury brands).

The Company evaluated the 2019 Allergan Amendment under ASC 606 and concluded that Allergan continues to be a customer and that the expanded license is distinct from the 2017 Allergan Agreement. The Company determined the expanded license under the 2019 Allergan Amendment to be functional intellectual property as Allergan has the right to utilize the Company’s CCM skin care ingredient, and that ingredient is functional to Allergan at the time the Company transferred the expanded license.

The standalone selling price of the expanded license was not readily observable since the Company has not yet established a price for this expanded license and the expanded license has not been sold on a standalone basis to any customer. The Company accounted for the 2019 Allergan Amendment as a modification ~~accounting~~to the 2017 Allergan Agreement. The contract modification was accounted for ~~share-based~~as if the 2017 Allergan Agreement had been terminated and the new contract included the expanded license as well as the remaining performance obligations that arose from the 2017 Allergan Agreement related to the Supply of CCM to Allergan and Potential Future Improvements.

The total transaction price for the new contract included the $7.5 million from the 2019 Allergan Amendment as well as the amounts deferred as of the 2019 Allergan Amendment execution date for each the Supply of CCM to Allergan and Potential Future Improvements.

The standalone selling price for the Supply of CCM to Allergan was determined based on comparable sales transactions. The standalone selling price of the Potential Future Improvements was estimated at the fully burdened rate of research and development employees cost plus a commercially reasonable markup. The amount of the total transaction price allocated to the expanded license was determined using the residual approach as a result of not having a standalone selling price for the expanded license; that is, the total transaction price less the standalone selling prices of the Supply of CCM to Allergan and Potential Future Improvements.

Revenue related to the Supply of CCM to Allergan has been deferred and recognized at the point in time in which deliveries are completed while revenue related to the Potential Future Improvements has been deferred and amortized ratably over the remaining 9-year life of the patent. The Supply of CCM to Allergan under the 2019 Allergan Amendment was entirely fulfilled during the year ended December 31, 2019. The $7.5 million residual amount of the total transaction price allocated to the expanded license was recognized as license revenue upon transfer of the license to Allergan in March 2019.

In January 2020, the Company further amended the 2019 Allergan Amendment in exchange for a one-time payment ~~arrangements~~of $1.0 million to the Company (the “2020 Allergan Amendment”). The 2020 Allergan Amendment further broadened Allergan’s exclusive and ~~addresses~~non-exclusive license rights to include products used for or in connection with microdermabrasion. In addition, the ~~types~~Company agreed to provide Allergan with an additional 200 kilograms of ~~changes~~CCM (the “Additional Supply of CCM to Allergan”).

The Company evaluated the 2020 Allergan Amendment under ASC 606 and concluded that Allergan continues to be a customer and that the expanded license is distinct from the 2019 Allergan Amendment. The Company determined the expanded license under the 2020 Allergan Amendment to be functional intellectual property as Allergan has the right to utilize the Company’s CCM skin care ingredient, and that ingredient is functional to Allergan at the time the Company transferred the expanded license.

The standalone selling price of the expanded license was not readily observable since the Company has not yet established a price for this expanded license and the expanded license has not been sold on a standalone basis to any customer. The Company accounted for the 2020 Allergan Amendment as a modification to the 2019 Allergan Amendment (which had modified the 2017 Allergan Agreement, as noted above). The contract modification was accounted for as if the 2019 Allergan Amendment had been terminated and the new contract included the expanded license and Additional Supply of CCM to Allergan, as well as the remaining performance obligation related to Potential Future Improvements.

The total transaction price for the new contract included the $1.0 million from the 2020 Allergan Amendment, the future payment for the Additional Supply of CCM to Allergan, as well as the amounts deferred as of the 2020 Allergan Amendment execution date for Potential Future Improvements.

The standalone selling price for the Additional Supply of CCM to Allergan was determined using the observable inputs of historical comparable sales transactions, including the margin from such sales. The Company also considered its reduced expected cost of satisfying this performance obligation based on the current efficiencies within its CCM manufacturing processes. Due to significant efficiencies in the Company’s CCM manufacturing processes, the forecasted cost of CCM production has decreased, while the applied margin was determined by comparison to similar sales transactions in prior years. The standalone selling price of the Potential Future Improvements was estimated at the fully burdened rate of research and development employees cost plus a commercially reasonable markup. The amount of the total transaction price allocated to the expanded license was determined using the residual approach, as a result of not having a standalone selling price for the expanded license; that is, the total transaction price less the standalone selling prices of the Additional Supply of CCM to Allergan and Potential Future Improvements.

Under the Amended and Restated License Agreement, as amended, Allergan will indemnify the Company for third party claims arising from Allergan’s breach of the agreement, negligence or willful misconduct, or the exploitation of products by Allergan or its sublicensees. The Company will indemnify Allergan for third party claims arising from the Company’s breach of the agreement, negligence or willful misconduct, or the exploitation of products by the Company prior to the effective date. Allergan may terminate the Agreement for convenience upon one business days’ notice to the Company.

Revenue related to the Additional Supply of CCM to Allergan was deferred and was recognized at the point in time in which deliveries were completed. All deliveries of Additional Supply of CCM to Allergan have been completed as of March 31, 2021. As such, there is 0 revenue for the three and six months ended June 30, 2022. Revenue for the three and six months ended June 30, 2021 was 0 and $0.3 million ($28 thousand of which was previously deferred).

Revenue of $0.2 million related to the Potential Future Improvements has been deferred and amortized ratably over the remaining 9-year life of the patent, for which $5 thousand and $10 thousand of previously deferred revenue was recognized in revenue during each of the three and six months ended June 30, 2022 and 2021, respectively.

The $0.9 million residual amount of the total transaction price allocated to the expanded license was recognized as license revenue upon transfer of the license to Allergan in January 2020.

In August 2021, unrelated to the Allergan Agreements, the Company agreed to a sale of CCM under a purchase order with Allergan. The CCM sold to Allergan was initially manufactured by the Company for research and development purposes in support of its product candidates. In September 2021, the Company recognized $0.6 million of product revenue related to the sale. The Company does not have any additional purchase orders with Allergan for fulfillment.

Pursuant to the 2017 Allergan Amendment, Histogen had the right to a potential milestone payment of $5.5 million if Allergan’s net sales of products containing the Company’s CCM skin care ingredient exceeds $60.0 million in any calendar year through December 31, 2027. In lieu of the potential milestone payment of $5.5 million, the Company entered into a letter agreement on March 18, 2022 (the “Letter Agreement”) with Allegan. In consideration for the execution of the Letter Agreement, Histogen received a one-time payment equal to $3.8 million (the “Final Payment”) in March 2022. In exchange, among other things, the Company agreed that the Final Payment represents a full and final satisfaction of all money due to the Company pursuant to the License Agreement. The Company evaluated the 2022 Allergan Letter Agreement under ASC 606 and concluded that the performance obligation has been satisfied and therefore used point in time recognition. The Company recognized $3.8 million of license revenue related to the Letter Agreement during the three and six months ended June 30, 2022. The Letter Agreement did not have an impact on the remaining performance obligation to share with Allergan any Potential Future Improvements to CCM identified through the Company’s research and development efforts.

The remaining performance obligation is the Company’s obligation to share with Allergan any Potential Future Improvements to CCM identified through the Company’s research and development efforts. Deferred revenue recorded for the Potential Future Improvements was $0.1 million as of both June 30, 2022 and December 31, 2021. Deferred revenue is classified in current portion of deferred revenue liabilities when the Company’s obligations to supply CCM or provide research for Potential Future Improvements are expected to be satisfied within twelve months of the balance sheet date.

In March 2017, the National Science Foundation (NSF), a government agency, awarded the Company a research and development grant to develop a novel wound dressing for infection control and tissue regeneration. NaN grant revenue was recognized during 2022. For the three and six months ended June 30, 2021, grant revenue recognized was 0 and $0.1 million, respectively. As of March 31, 2021, the Company has completed all obligations under the NSF development grant and no longer generates any revenues in connection with the research and development grant.

In October 2020, the Company entered into a Collaborative Development and Commercialization Agreement (the “Amerimmune Agreement”) with Amerimmune to jointly develop emricasan for the potential treatment of COVID-19. The FDA approved an investigational new drug application (IND) to initiate a Phase 1 study of emricasan in mild COVID-19 patients to assess safety and

tolerability in 2020. Under the Amerimmune Agreement, Amerimmune, at its expense and in collaboration with the Company, shall use commercially reasonable efforts to lead the development activities for emricasan. Amerimmune is responsible for conducting clinical trials and the Company agreed to provide reasonable quantities of emricasan for such purpose.

Pursuant to the terms of the Collaborative Agreement, each party shall retain ownership of their legacy intellectual property and responsibility for ongoing patent application prosecution and maintenance costs and will jointly own any intellectual property developed during the term of the agreement. In addition, the Company granted Amerimmune an exclusive option, subject to terms and conditions including completion of a Phase 2 clinical trial by Amerimmune during the research term, to obtain an exclusive license that, if granted by us, allows Amerimmune alone, or ~~conditions of share-based payment awards~~in conjunction with one or more strategic partners, to ~~which an entity would~~use its commercially reasonable efforts to develop, manufacture, and commercialize emricasan and other caspase modulators, including CTS-2090 and CTS-2096, and the Company will share the profits equally with Amerimmune. No consideration will be ~~required~~transferred to apply modification accounting under Topic 718. For public companies, ASU No. 2017-09 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. the Company until profits, as defined in the Amerimmune Agreement, are generated by Amerimmune from developing or commercializing products.

The Company ~~early adopted this guidance effective~~has identified multiple promises to deliver goods and services, which include at the inception of the agreement: (i) a license to technology and patents, information, and know-how; (ii) supply of emricasan, and (iii) collaboration, including the Company’s participation in a Joint Development Committee and Joint Partnering Committee. At inception and through June 30, ~~2017.~~2022, the Company has identified one performance obligation for all the deliverables under the Amerimmune Agreement since the delivered elements are either not capable of being distinct or are not distinct within the context of the contract. No upfront consideration was exchanged between the parties and any consideration received will be dependent on the successful execution of a qualifying strategic partnership, as defined, on the successful commercialization of emricasan, or upon a change in control of Amerimmune, as defined. Although the Company will recognize revenue upon the occurrence of one of these events, no such events have occurred as of June 30, 2022.

On January 19, 2022, the Company provided a notice of material breach in connection with Amerimmune’s non-performance under the Collaborative Agreement and, on March 3, 2022, filed a demand for arbitration (“Arbitration Demand”). On March 11, 2022, Judicial Arbitration and Mediation Services, Inc. (“JAMS”) issued a Notice of Commencement of Arbitration letter, confirming the commencement of the arbitration as of that date.

On March 8, 2022, Amerimmune provided written notice to exercise an option for additional license rights to develop additional products however, the Company has rejected Amerimmune’s election of the option and believes that Amerimmune no longer has the right to exercise the option based on, among other reasons, the Company’s belief that the Collaborative Agreement is properly terminated as set forth in Histogen’s Arbitration Demand (refer to Note 8 for further information).

On April 14, 2022, Amerimmune filed its answer to the Company’s Demand for Arbitration, and also asserted five counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with prospective economic relations, negligent interference with prospective economic relations, and declaratory relief that Amerimmune has the right to exclusive option. On April 21, 2022, the Company filed its answer to Amerimmune’s counterclaims. The ~~adoption~~parties are currently engaged in discovery, and the final hearing in the arbitration has been set for October 5-7, 2022.

On July 13, 2022, Amerimmune filed a complaint (the “Federal Complaint”) against the Company in the United States District Court for the Southern District of California. Amerimmune filed a two-count complaint seeking injunctive and declaratory relief relating to the purported exercise of the option as discussed above. On July 18, 2022, Amerimmune filed a second, separate complaint against the Company alleging the same facts and causes of action as the Federal Complaint, also seeking injunctive and declaratory relief relating to the purported exercise of the option, in the Superior Court for the County of San Diego (the “State Complaint”). The Company was served with the State Complaint on August 8, 2022, but has not yet been served with the Federal Complaint. The Company believes any claims related to the Collaborative Agreement are subject to the Arbitration proceeding and therefore, that both the Federal Complaint and the State Complaint were filed improperly and are subject to dismissal for this ~~guidance had no impact~~and additional reasons. Moreover, the Company denies the allegations set forth therein, and intends to vigorously defend against the litigations.

In April 2020, Private Histogen applied for and received loan proceeds in the amount of $0.5 million (the “PPP Loan”) under the PPP as government aid for payroll, rent, and utilities. The application for these funds required the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further required the Company to take into account its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The certification made by the Company did not contain any objective criteria and is subject to interpretation. Based in part on the Company’s assessment of other sources of liquidity, the uncertainty associated with future revenues created by the COVID-19 pandemic and related governmental responses, and the going concern uncertainty reflected in the Company’s condensed consolidated financial statements as of December 31, 2019, the Company believed in good faith that it met the eligibility requirements for the PPP Loan.

On June 5, 2020, the Paycheck Protection Program Flexibility Act was signed into law, extending the PPP Loan forgiveness period from eight weeks to twenty-four weeks after loan origination, extending the initial deferral period of principal and ~~related disclosures.~~interest payments from six months to ten months after the loan forgiveness period, reducing the required amount of payroll expenditures from 75% to 60%, removing the prior ban on borrowers taking advantage of payroll tax deferral after loan forgiveness, and allowing for the amendment of the maturity date on existing loans from two years to five years.

On March 8, 2021 the Company applied for PPP loan forgiveness with its lender and subsequently received approval from the lender on April 2, 2021. The Company, in good faith, believes it maintained compliance with the PPP program requirements. On May 21, 2021, the Small Business Administration granted its forgiveness of 100% of the loan, or $0.5 million, which was recorded by the Company in the second quarter of 2021. The gain on forgiveness is reported as a component of other income in the condensed consolidated statement of operations.

The ~~accounting guidance defines fair value, establishes a consistent framework for measuring fair value~~redeemable convertible preferred stock instruments were contingently redeemable preferred stock. Each series contained redemption features, limited voting rights, dividends, and ~~expands disclosure for each major asset and liability category measured at fair value~~conversion terms. The convertible preferred stock was presented on ~~either a recurring or nonrecurring basis. Fair value is defined~~the condensed consolidated balance sheets as 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 accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

~~Below is a summary of assets measured at fair value~~mezzanine equity as of ~~September~~March 31, 2022. All shares of redeemable convertible preferred stock were fully redeemed and are no longer outstanding as of June 30, ~~2017 and December 31, 2016.~~

The Company’s marketable securities, consisting principally of debt securities, are classified as available-for-sale, are stated at fair value, and consist of Level 2 financial instruments in the fair value hierarchy. The Company determines the fair value of its debt security holdings based on pricing from a service provider. The service provider values the securities based on using market prices from a variety of industry-standard independent data providers. Such market prices may be quoted prices in active markets for identical assets (Level 1 inputs) or pricing determined using inputs other than quoted prices that are observable either directly or indirectly (Level 2 inputs), such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures.2022.

The Company invests its excess cash in money market funds and debt instruments of financial institutions, corporations, government sponsored entities and municipalities. The following tables summarize the Company’s marketable securities:March 2022 Offering

In ~~July 2010,~~March 2022, the Company ~~issued to Pfizer Inc. (Pfizer)~~completed a ~~$1.0 million promissory note~~private placement offering (the ~~Pfizer Note). The Pfizer Note bore interest at a rate~~“March 2022 Offering”) of ~~7% per annum and was scheduled to mature on July 29, 2020. Interest was payable on a quarterly basis. In July 2013, the Pfizer Note was amended to become convertible into~~(i) 2,500 shares of the Company’s ~~common stock following the completion~~Series A Redeemable Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”), and (ii) 2,500 shares of the Company’s ~~initial public~~Series B Redeemable Convertible Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock” and together with the Series A Preferred Stock, the “Preferred Stock”), in each case, at an offering ~~(IPO),~~price of $952.38 per share, representing a 5% original issue discount to the stated value of $1,000 per share of Preferred Stock, for gross proceeds from the Offerings of approximately $4.76 million, before the deduction of the placement agent’s fee and other offering expenses. The shares of Series A Preferred Stock had a stated value of $1,000 per share and were convertible, at a conversion price of $20.00 per share, into 125,000 shares of common stock. The shares of Series B Preferred Stock had a stated value of $1,000 per share and were convertible, at a conversion price of $20.00 per share, into 125,000 shares of common stock. The closing occurred on March 25, 2022. The proceeds of $4.76 million were held in escrow and were only permitted to be disbursed to the Company upon conversion of the Series A and Series B Preferred Stock. Since the redeemable convertible preferred stock could have been redeemed at the option of the holder, but was not mandatorily redeemable, the redeemable preferred stock was classified as mezzanine equity and initially recognized at fair value of $4.76 million as mezzanine equity on the accompanying balance sheets.

The March 2022 Offering generated gross proceeds of $4.76 million and the Company incurred cash-based placement agent fees and other offering expenses of approximately $0.6 million. The proceeds were held in escrow and were only permitted to be disbursed to the Company upon conversion of the Series A and Series B Preferred Stock.

The Company’s placement agent was issued compensatory warrants to purchase up to 7.0% of the aggregate number of shares of Preferred Stock sold in the offering (on an as-converted to common stock basis), resulting in common stock warrants to purchase up to 17,501 shares of common stock, with an exercise price of 125% of the offering price, or $25.00 per share, which are exercisable 6 months after issuance on or after September 25, 2022, and expire five and a half (5.5) years following the date of issuance on September 25, 2027.

The placement agent warrants, which are recorded as a component of stockholders’ equity, were valued at an aggregate of $34 thousand dollars using the Black Scholes option pricing model based upon the following assumptions: expected volatility of 78.90%, risk-free interest rate of 2.40%, expected dividend yield of 0%, and an expected term of 5.5 years.

As of June 30, 2022, the Company had 17,501 shares of common stock reserved for issuance pursuant to the placement agent’s warrants issued by the Company in the March 2022 Offering at an exercise price of $25.00 per share.

The shares of Preferred Stock had no voting rights, except that they only have the right to vote, with the holders of common stock, as a single class on a proposal to approve an amendment to our certificate of incorporation to effect a reverse stock split of our issued and outstanding common stock within a range, to be determined by our board of directors and set forth in such proposal.

Each share of Series A Preferred Stock outstanding on April 14, 2022 (the “Record Date”) had a number of votes equal to the number of shares of Common Stock issuable upon conversion of such share (whether or not such shares are then convertible). Accordingly, as of the Record Date, each share of Series A Preferred Stock had 3,776 votes, which is determined by dividing $1,000, the stated value of one share of Series A Preferred Stock, by $0.2648, the NASDAQ Minimum Price as of the closing on March 25, 2022. The holders of the Series A Preferred Stock agreed to not transfer their shares of Series A Preferred Stock until after the Annual Meeting and to vote all shares of Series A Preferred Stock in favor of the Reverse Stock Split Proposal.

Each share of Series B Preferred Stock outstanding on the Record Date entitled the holder thereof to cast 30,000 votes on the Reverse Stock Split Proposal. The holders of the Series B Preferred Stock agreed to not transfer their shares of Series B Preferred Stock until after the Annual Meeting and to vote all shares of Series B Preferred Stock in the same proportion as the aggregate shares of Common Stock and Series A Preferred Stock are voted on the Reverse Stock Split Proposal. As an example, if 70% of the aggregate votes cast by Common Stock and Series A Preferred Stock voting on the Reverse Stock Split Proposal were voted in favor thereof and 30% of the aggregate votes cast by Common Stock and Series A Preferred Stock voting on the Reverse Stock Split Proposal were voted against such Proposal, then 70% of the votes entitled to be cast by Series B Preferred Stock would have been cast in favor of the proposal and 30% of such votes would have been cast against the proposal.

The holders of the redeemable convertible preferred stock were entitled to receive dividends on shares of Preferred Stock equal (on an as-if-converted-to-Common-Stock basis, disregarding for such purpose any conversion limitations hereunder) to and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. No other dividends were payable on shares of Preferred Stock.

Each share of Preferred Stock was convertible, at any time and from time to time from and after the Reverse Stock Split Date at the option of the Holder thereof, into that number of shares of Common Stock determined by dividing the stated value per share of preferred stock by the conversion price. The shares of Series A Preferred Stock had a stated value of $1,000 per share and were convertible, at a conversion price of $20.00 per share, into 125,000 shares of common stock. The shares of Series B Preferred Stock had a stated value of $1,000 per share and were convertible, at a conversion price of $20.00 per share, into 125,000 shares of common stock.

Each share of Preferred Stock was redeemable after (i) the earlier of (1) the receipt of authorized stockholder approval for the reverse stock split and (2) the date that was 90 days following the Original Issue Date of March 25, 2022, and (ii) before the date that was 120 days after the Original Issue Date or July 23, 2022 (the “Redemption Period”), each stockholder had the right to cause the Company to redeem all or part of such stockholder’s shares of Preferred Stock at a price per share equal to 105% of the ~~fair market~~stated value of $1,000 per share.

Between June 2, 2022, and June 29, 2022, at the request of the holders, the Company redeemed for cash proceeds totaling $5.25 million ($4.76 million payment from escrow and $488 thousand redemption payment by the Company), 2,500 outstanding shares of Series A Preferred Stock and 2,500 outstanding shares of Series B Preferred Stock based on the receipt of the Redemption Notices (the “Preferred Redemption”) at a price equal to 105% of the $1,000 stated value per share, which represented all outstanding shares of Preferred Stock. The approximately $1.0 million accretion of the Series A and Series B Preferred Stock to its redemption value was recorded as a reduction to additional paid-in capital. The Company recognized a portion of the accretion as a deemed dividend related to the accretion of the discount and redemption feature of approximately $0.5 million upon redemption of Preferred Stock on the condensed consolidated statement of operations.

On June 30, 2022, the Company filed a Certificate of Elimination with respect to the Series A Preferred Stock and Series B Preferred Stock (the “Series A Certificate of Elimination and the Series B Certificate of Elimination”), which upon filing with the Secretary of State of the State of Delaware (“Delaware Secretary”), eliminated from all matters set forth in the Certificates of Designation of Series A and Series B Preferred Stock.

As of June 30, 2022, all shares of the Series A Preferred Stock and Series B Preferred Stock are 0 longer outstanding and the Company’s only remaining class of outstanding stock is its common stock, onpar value $0.0001 per share.

In January 2021, the Company completed an S-1 offering (the “January 2021 Offering”) of an aggregate of 580,000 shares of common stock, pre-funded warrants to purchase up to 120,000 shares of its common stock, and common stock warrants to purchase up to an aggregate of 700,000 shares of common stock. To the extent that an investor determines, at their sole discretion, that they would beneficially own in excess of the Beneficial Ownership Limitations (or as such investor may otherwise choose), in lieu of purchasing shares of Common Stock and Common Warrants, such investor could have elected to purchase Pre-Funded Warrants and Common Warrants at the Pre-Funded Purchase Price in lieu of the shares of Common Stock and Common Warrants in such a manner to result in the same aggregate purchase price being paid by such investor to the Company. The combined purchase price of one share of common stock and the accompanying common stock warrant was $20.00, and the combined purchase price of one pre-funded warrant and accompanying common stock warrant was $19.998. The common stock warrants are exercisable for five (5) years at an exercise price of $20.00 per share. The pre-funded warrants are immediately exercisable at an exercise price of $0.002 per share and may be exercised at any time until all of the pre-funded warrants are exercised in full. Placement agent warrants were issued to purchase up to 35,000 shares of common stock, are immediately exercisable for an exercise price of $25.00 per share, and are exercisable for five (5) years following the date of ~~conversion. On January 24, 2017,~~issuance. The Company received gross proceeds of $14.0 million and incurred placement agent’s fees and other offering expenses of approximately $1.9 million.

The warrants and placement agent warrants were valued at $7.2 million and $0.3 million, respectively, using the ~~Company voluntarily prepaid~~Black-Scholes option pricing model based on the ~~entire balance~~following assumptions: expected volatility 80.08%, risk-free interest rate 0.38%, expected dividend yield 0%, and an expected term of ~~the outstanding principal and accrued and unpaid interest~~5.0 years.

As of ~~the Pfizer Note~~June 30, 2022 a total of 336,060 warrants issued in the ~~amount~~January 2021 Offering to purchase shares of ~~$1,004,861.~~

Prior to the prepayment of the Pfizer Note, the Company recorded the Pfizer Note on the balance sheet at face value. Based on borrowing rates available to the Company for loans with similar terms, the Company believed that the fair value of the Pfizer Note approximated its carrying value. The fair value measurement was categorized within Level 3 of the fair value hierarchy.

~~On February 15, 2017,~~common stock have been exercised and the Company issued ~~a convertible promissory note (the Novartis Note) in~~336,060 shares of its common stock. The Company received gross proceeds of approximately $6.8 million.

As of June 30, 2022, the ~~principal amount~~Company had 387,565 shares and 11,375 shares of ~~$15.0 million,~~common stock reserved for issuance pursuant to the ~~Investment Agreement entered into between~~warrants and placement agent’s warrants, respectively, issued by the Company in the January 2021 Offering, at an exercise price of $20.00 per share and ~~Novartis on December 19, 2016~~$25.00 per share, respectively.

In June 2021, the Company completed a registered direct offering (the ~~Investment Agreement). The Novartis Note bears interest on the unpaid principal balance~~“June 2021 Offering”) of an aggregate of 298,865 shares of common stock, together with accompanying warrants to purchase up to an aggregate of 239,093 shares of common stock, at a ~~rate~~public offering price of 6%$22.00 per ~~annum and has a scheduled maturity date of December 31, 2019.~~share. The ~~Company may prepay or convert all or part~~accompanying warrants permit the investor to purchase additional shares equal to 80% of the ~~Novartis Note into~~number of shares of the Company’s common stock ~~at its option, until December 31, 2019. Novartis has~~purchased by the ~~option~~investor. The warrants have an exercise price of $20.00 per share, are immediately exercisable, and expire five and a half (5.5) years following the date of issuance. In addition, the Company’s placement agent was issued compensatory warrants equal to ~~convert all~~5.0%, or ~~part~~14,946 shares, of the ~~Novartis Note into~~aggregate number of common stock sold in the offering, which are immediately exercisable for an exercise price of $27.50 and expire five (5) years following the date of issuance on June 7, 2026. The Company received gross proceeds of $6.6 million and incurred cash-based placement agent fees and other offering expenses of approximately $0.9 million.

The warrants and placement agent warrants were valued at $3.0 million and $0.2 million, respectively, using a Black-Scholes option pricing model with the following assumptions: expected volatility 81.44% and 80.15%, risk-free interest rate 0.88% and 0.77%, expected dividend yield 0% and 0%, and an expected term of 5.5 years or 5.0 years, respectively.

As of June 30, 2022, 0 warrants associated with the June 2021 Offering have been exercised.

As of June 30, 2022, the Company had 239,093 shares and 14,946 shares of common stock reserved for issuance pursuant to the warrants and placement agent’s warrants, respectively, issued by the Company in the June 2021 Offering, at an exercise price of $20.00 per share and $27.50 per share, respectively.

In December 2021, the Company completed a registered direct offering (the “December 2021 Offering”) of an aggregate of 411,764 shares of common stock and 411,766 warrants to purchase up to 411,766 shares of common stock, at a public offering price of $8.50 per share. The accompanying warrants permit the investor to purchase additional shares equal to the same number of shares of the Company’s common stock ~~upon~~purchased by the investor. The warrants have an exercise price of $8.50 per share, may be exercised any time on or after 6 months and one (1) day after the issuance date, and expire five and a ~~change in control~~half (5.5) years following the date of ~~the Company or termination of the Collaboration Agreement by Novartis pursuant to certain provisions. If converted, the principal and accrued interest under the Novartis Note will convert into~~issuance. In addition, the Company’s ~~common stock at a conversion price~~placement agent was issued compensatory warrants equal to ~~120%~~5.0%, or 20,590 shares, of ~~the 20-day trailing average closing price per share of the common stock immediately prior to the conversion date. In the event~~ the aggregate number of shares of common stock ~~issued upon~~sold in the

~~conversion would exceed~~ offering, which are immediately exercisable for an exercise price of $10.626 and expire five and a half (5.5) years following the ~~lesser~~date of ~~19.0%~~issuance on June 21, 2027. The Company received gross proceeds of $3.5 million and incurred cash-based placement agent fees and other offering expenses of approximately $0.5 million.

The placement agent warrants, which are recorded as a component of stockholders’ equity, were valued at an aggregate $0.1 million using the ~~Company’s outstanding shares on a fully-diluted basis (i) at the inception of the Investment Agreement or (ii)~~Black-Scholes option pricing model based on the ~~conversion date, then only~~following assumptions: expected volatility of 79.81%, risk-free interest rate of 1.21%, expected dividend yield of 0% and an expected term of 5.5 years.

As of June 30, 2022, 0 warrants associated with the ~~lesser amount shall convert into~~December 2021 Offering have been exercised.

As of June 30, 2022, the Company had 411,766 shares and 20,590 shares of common stock reserved for issuance pursuant to the warrants and ~~Novartis shall be repaid in cash for any remaining principal and unpaid interest after such conversion. Upon the occurrence of certain events of default, the Novartis Note requires~~placement agent’s warrants, respectively, issued by the Company in the December 2021 Offering, at an exercise price of $8.50 per share and $10.626 per share, respectively.

In July 2020, the Company entered into a common stock purchase agreement (the “2020 Purchase Agreement”) with Lincoln Park which provided that, upon the terms and subject to ~~repay~~ the ~~principal balance~~conditions and limitations in the 2020 Purchase Agreement, Lincoln Park is committed to purchase up to an aggregate of ~~the Novartis Note and any unpaid accrued interest. The ability to borrow and repay the debt at a discount using~~$10.0 million of shares of the Company’s common stock ~~was deemed~~at the Company’s request from time to ~~be additional, foregone revenue attributable to~~time during a 24 month period that began in July 2020 and at prices based on the ~~Collaboration~~market price of the Company’s common stock at the time of each sale. Upon execution of the 2020 Purchase Agreement, ~~which~~ the Company ~~imputed~~sold 16,425 shares of common stock at $60.88 per share to Lincoln Park for gross proceeds of $1.0 million. During the year ended December 31, 2020, the Company sold an additional 15,000 shares of common stock to Lincoln Park for gross proceeds of approximately $0.5 million. In addition, in consideration for entering into the 2020 Purchase Agreement and ~~recorded as both a receivable from Novartis and a liability (deferred revenue) of $2.5 million at~~concurrently with the ~~inception~~execution of the ~~Collaboration~~2020 Purchase Agreement, ~~and the Investment Agreement. On February 15, 2017,~~ the Company recorded the $15.0 million proceeds from the issuance of the Novartis Note as a convertible note payable in the amount of $12.5 million and a reduction of the outstanding receivable from Novartis of $2.5 million. The convertible note payable, along with the related accrued interest, totaled $13.0 million as of September 30, 2017.

The Company elected to account for the Novartis Note under the fair value option. At September 30, 2017, the Company concluded that the fair value of the Novartis Note remained at $13.0 million due to its conversion features. The fair value measurement is categorized within Level 3 of the fair value hierarchy.

~~In May 2017, the Company completed a public offering of 5,980,000~~issued 3,348 shares of its common stock ~~at a public offering price~~to Lincoln Park. During the three and six months ended June 30, 2022 the Company did not sell any shares of ~~$5.50 per share.~~ common stock to Lincoln Park.

The ~~shares were registered~~2020 Purchase Agreement expired automatically pursuant to ~~a registration statement on Form S-3 filed~~its term on August ~~14, 2014. The Company received net proceeds of $30.6 million, after deducting underwriting discounts~~1, 2022, and ~~commissions and offering-related transaction costs. Immediately following the offering,~~ the Company ~~used $11.2 million~~did not sell any additional shares of common stock to Lincoln Park through the date of expiration of the ~~net proceeds to repurchase and retire 2,166,836 shares of its common stock~~ ~~from funds affiliated with Advent Private Equity (collectively Advent) at a price of~~ ~~$5.17 per share, which is equal to the net proceeds per share that the Company received from the offering, before expenses, pursuant to a stock purchase agreement the Company entered into with Advent in May 2017.~~2020 Purchase Agreement.

In ~~2013, the Company~~2016, Private Histogen issued warrants ~~exercisable~~to purchase common stock as consideration for ~~1,124,026~~settlement of prior liability claims. The warrants for the purchase of up to 180 common shares ~~of Series B preferred stock,~~ at an exercise price of ~~$0.90~~$461.60 per share expired on July 31, 2021.

In addition, at June 30, 2022, warrants to ~~certain existing investors in conjunction with a private placement (the 2013 Warrants) and warrants exercisable for 111,112~~purchase 68 shares of ~~Series B preferred~~common stock atwith an exercise price of ~~$0.90~~$1,486.00 per share ~~to Oxford Finance LLC and Silicon Valley Bank~~remain outstanding that were issued by Conatus in ~~conjunction~~connection with obtaining financing in 2016. These warrants expire on July 3, 2023.

See warrant discussion above in connection with the ~~Company’s entry into a loan and security agreement (the Lender Warrants). Upon completion of~~January 2021 Offering, the ~~IPO, the 2013 Warrants~~June 2021 Offering, and the ~~Lender Warrants became exercisable for 136,236 and 13,468~~December 2021 Offering.

On December 18, 2017, Private Histogen established the Histogen Inc. 2017 Stock Plan (the “2017 Plan”). Under the 2017 Plan, Private Histogen was authorized to issue a maximum aggregate of 41,861 shares of common stock ~~respectively, at an exercise price~~with adjustments for unissued or forfeited shares under the predecessor plan (the Histogen Inc. 2007 Stock Plan). In April 2019, Private Histogen amended the 2017 Plan, which increased the number of ~~$7.43 per share.~~common stock available for grants by 16,336 shares. The ~~2013 Warrants~~2017 Plan permitted the issuance of incentive stock options (“ISOs”), non-statutory stock options (“NSOs”), and Stock Purchase Rights. NSOs could be granted to employees, directors, or consultants, while ISOs could be granted only to employees. Options granted vest over a maximum period of four years and expire ten years from the ~~Lender Warrants~~date of grant. In connection with the closing of the Merger, 0 further awards will ~~expire on~~be made under the 2017 Plan.

~~The following table summarizes the Company’s stock option activity under all stock option plans for the nine months ended September 30, 2017:~~

~~On August 31, 2017,~~2020, in connection with the ~~appointment~~closing of ~~its new Executive Vice President, Chief Operating Officer and Chief Financial Officer,~~ the ~~Company granted stock options to purchase 525,000~~Merger, the Company’s stockholders approved the Company’s 2020 Incentive Award Plan (the “2020 Plan”). The maximum number of shares of the Company’s common stock ~~outside~~available for issuance under the 2020 Plan equals the sum of ~~its~~(a) 42,500 shares; (b) any shares of common stock ~~option plans. The grant was made as an inducement that was a material component~~ of the ~~executive’s compensation~~Company which are subject to awards under the Conatus 2013 Equity Incentive Plan (the “Conatus 2013 Plan”) as of the effective date of the 2020 Plan which become available for issuance under the 2020 Plan after such date in accordance with its terms; and ~~acceptance~~(c) an annual increase on the first day of ~~employment~~each calendar year beginning with the ~~Company~~January 1 of the calendar year following the effectiveness of the 2020 Plan and ~~was granted as an employment inducement award pursuant~~ending with the last January 1 during the initial ten-year term of the 2020 Plan, equal to ~~NASDAQ Listing Rule 5635(c)(4). While granted outside~~the lesser of (i) 5 percent of the number of shares of the Company’s common stock ~~option plans,~~outstanding (on an as-converted basis) on the ~~terms~~final day of the immediately preceding calendar year, and ~~conditions~~(ii) such lesser number of ~~this award are consistent~~shares of the Company’s common stock as determined by the Company’s board of directors.

Additionally, in connection with the closing of the Merger, 0 further awards ~~granted~~will be made under the Conatus 2013 Plan. As of June 30, 2022, 4,896 fully vested options remain outstanding under the Conatus 2013 Plan with a weighted average exercise price of $858.05 per share.

The following summarizes the activity related to the Company’s ~~executive officers pursuant~~stock options under the 2017 Plan and the 2020 Plan for the six months ended June 30, 2022:

On January 24, 2019, the Company issued 22,909 stock options to its then newly appointed Chief Executive Officer. In accordance with the ~~Company’s 2013 Incentive Award Plan. The stock options~~

~~will vest over a four-year period, with a quarter~~original award agreement, 40% of the options would vest immediately upon an initial public offering or 45 days following a change in control, as defined in the award agreement, while the remaining 60% are subject to vesting, of which 25% vest on the first anniversary of the grant date and then ratably over the remaining 36 months.

On January 28, 2020, the award agreement was amended, which became effective upon the close of the Merger in May 2020, whereby the 40% of stock options (“Liquidity Option Shares”) subject to vesting upon an initial public offering or 45 days following a change in control will now vest immediately upon meeting certain performance and market condition-based criteria. The vesting of the Liquidity Option Shares is divided into four separate tranches, each vesting 25% of the Liquidity Option Shares, upon: (1) the closing of the proposed merger with Conatus; (2) the date that the market capitalization of the Company exceeds $200.0 million; (3) the date that the market capitalization of the Company exceeds $275.0 million, and; (4) the date that the market capitalization of the Company exceeds $300.0 million. Each vesting tranche represents a unique derived service period and therefore stock-based compensation expense for each vesting tranche is recognized on a straight-line basis over its respective derived service period. Additionally, in the event that the Chief Executive Officer’s employment with the Company is terminated without cause or he resigns for good reason, an additional portion of the stock options award will vest equal to the number of such options which would have vested in the 12 months following the date of ~~grant and~~such termination.

On May 26, 2020, in connection with the ~~remainder~~closing of the Merger, 2,426 options of the Liquidity Option Shares became fully vested as the performance condition was achieved.

In November 2021, the Company’s then President and Chief Executive Officer voluntarily resigned. NaN further stock-based compensation expense related to the market-based options will be recognized. As of June 30, 2022, the vested option awards expired unexercised.

In March 2021, in conjunction with a former Board Member’s voluntary resignation, the Company modified share-based payment awards by accelerating the vesting ~~monthly over~~of all awards that were unvested at the ~~subsequent three years.~~time of his voluntary resignation and by extending the exercise period through December 31, 2021. As a result of the modification, the Company recorded an immaterial amount of additional stock-based compensation expense during the year ended December 31, 2021. As of December 31, 2021, the awards expired unexercised.

In June 2021, in conjunction with a former employees’ voluntary resignation, the Company modified share-based payment awards by accelerating the vesting of all awards that were unvested at the time of the voluntary resignation and by extending the exercise period through August 29, 2023.

The following weighted-average assumptions were used to calculate the fair value of awards granted to employees, non-employees, and directors:

On November 8, 2021, the Company ~~recorded~~granted 23,423 restricted stock units to the Company’s Interim Chief Executive Officer, Chief Financial Officer, and Senior Vice President of Technical Operations. The fair value of the RSUs was $14.58 per share, which was the closing market price of the Company’s common stock on the date of grant. The RSUs vest in full upon the earlier of (1) 12 months following the grant date and (2) a change of control of the Company, as defined in the Company’s 2020 Plan, subject to continued service to the Company. In addition, the RSUs awarded to the Company’s Interim Chief Executive Officer are further accelerated in full upon the hiring of a permanent Chief Executive Officer. As of June 30, 2022, 18,279 restricted stock units remain outstanding.

The compensation cost that has been included in the accompanying condensed consolidated statements of operations for all stock-based compensation arrangements is detailed as follows (in thousands):

As of ~~$1.0~~June 30, 2022, total unrecognized compensation cost related to unvested options and RSUs was approximately $0.8 million ~~and $0.7 million for the three months ended September 30, 2017 and 2016, respectively, and $3.0 million and $2.5 million for the nine months ended September 30, 2017 and 2016, respectively.~~which is expected to be recognized over a weighted-average period of 2.4 years.

~~The following shares of common~~Common stock ~~were~~ reserved for future issuance ~~at September 30, 2017:~~is as follows:

In ~~December 2016,~~January 2020, Private Histogen entered into a long-term operating lease with San Diego Sycamore, LLC (“Sycamore”) for its headquarters which includes office and laboratory space. The lease commenced on March 1, 2020 and expires on August 31, 2031, with no options to renew or extend. The lease was accounted for as a modification of Private Histogen’s existing lease with Sycamore as the lease agreement did not grant Private Histogen an additional right-of-use asset.

The terms of the lease agreement include seven months of rent abatement at lease commencement and a tenant improvement allowance of up to $2.2 million. The tenant improvements are required to be permanently affixed to the leased office and laboratory space and do not constitute leasehold improvements of the Company. During the construction period of the tenant improvements, the lease agreement requires the Company to relocate its operations to a similar Sycamore property whereby monthly rent is substantially reduced for the duration of the construction period. The lease is subject to additional variable charges for common area maintenance, insurance, taxes, and other operating costs. At lease commencement, the Company recognized a right-of-use asset and operating lease liability totaling approximately $4.5 million. The Company used a discount rate based on its estimated incremental borrowing rate to determine the right-of-use asset and operating lease liability amounts to be recognized. The Company determined its incremental borrowing rate based on the term and lease payments of the new operating lease and what it would normally pay to borrow, on a collateralized basis, over a similar term for an amount equal to the lease payments. Operating lease expense is recognized on a straight-line basis over the lease term.The terms of the lease required the Company to provide the landlord a security deposit of $0.3 million as collateral for a letter of credit issued to be held throughout the lease term. This security deposit is shown as restricted cash on the accompanying condensed consolidated balance sheets.

In June 2021, the Company entered into the ~~Collaboration Agreement with Novartis, pursuant~~First Amendment to ~~which the Company granted Novartis an exclusive option to collaborate with the Company to develop products containing emricasan.~~Lease (the “Amendment”). Pursuant to the ~~Collaboration Agreement,~~Amendment, among other things, the Company ~~received a non-refundable upfront payment~~and Sycamore agreed (i) to substitute the temporary premises, (ii) to delay the start of ~~$50.0 million from Novartis.~~

~~In May 2017, Novartis exercised its option under~~construction and the Collaboration Agreement. In July 2017, the Company received a $7.0 million option exercise payment, at which time the license under the Collaboration Agreement became effective (the License Effective Date). Under the Collaboration Agreement, the Company will be eligible to receive up to an aggregate of $650.0 million in milestone payments over the termtiming of the Collaboration Agreement, contingent on the achievement of certain development, regulatory and commercial milestones, as well as royalties or profit and loss sharing on future product sales in the United States, if any.

~~Pursuant~~Company’s relocation to the ~~Collaboration Agreement,~~replacement temporary premises, (iii) to increase the tenant improvement allowance from $2.2 million to $2.3 million, (iv) to increase the letter of credit amount from $0.3 million to $0.4 million upon commencement of the tenant improvements, and (v) to review potential subsequent reductions to the security deposit and related letter of credit requirement at certain time intervals along the lease term provided that the Company is ~~responsible for completing its four ongoing Phase 2b trials. Novartis will generally pay 50%~~not in default. As a result of the ~~Company’s Phase 2b emricasan development costs pursuant~~modification, the lease liability was remeasured using the incremental borrowing rate at the modification date and a corresponding reduction of $0.3 million was recorded to ~~an agreed upon budget. Novartis will assume full responsibility for emricasan’s Phase 3 development~~both the lease liability and ~~all combination product development.~~right-of-use-asset.

~~Unless terminated earlier,~~In connection with the ~~Collaboration Agreement will remain in effect on a product-by-product and country-by-country basis until Novartis’ royalty obligations expire. Novartis has certain termination rights in~~closing of the event of a mandated clinical trial hold for any product containing emricasan as its sole active ingredient. Additionally, Novartis has the right to terminate the Collaboration Agreement without cause upon 180 days prior written notice to the Company. In such event, the license granted to Novartis will be terminated and revert to the Company. In the event Novartis terminates the Collaboration Agreement due to the Company’s uncured material breach or insolvency, the license granted to Novartis pursuant to the Collaboration Agreement will become irrevocable, and Novartis will be required to continue to make all milestone and royalty payments otherwise due toMerger, the Company under the Collaboration Agreement, provided that if the Company materially breaches the Collaboration Agreement such that the rights licensed to Novartis or the commercial prospects of the emricasan products are seriously impaired, the milestone and royalty payments will be reduced by 50%.

Under the relevant accounting literature, the Collaboration Agreement meets the definition of a collaborative arrangement and a multiple-element arrangement. The Company concluded that there were two significant deliverables under the Collaboration Agreement – the option to obtain the license and the research and development services – but that the license does not have stand-alone value as Novartis cannot obtain value from the license without the research and development services, which the Company is uniquely able to perform. As such, the Company expects to recognize as collaboration revenue a portion of the upfront payment received of $50.0 million, the option exercise fee of $7.0 million, and the imputed income from the Investment Agreement as described below on a straight-line basis between the inception of the agreement (or with respect to the option exercise fee, upon exercise of the option) through mid-2019 – the estimated period over which the Company expects to perform the research and development services. Due to the inherently unpredictable nature of product development activities, the Company periodically reviews the performance period of the research and development services and will adjust the period over which revenue is recognized when appropriate. The Company could accelerate revenue recognition in the event of early termination of programs or if the Company’s expectations change. Alternatively, the Company could decelerate revenue recognition if programs are extended or delayed. While

such changes to the Company’s estimates have no impact on the Company’s reported cash flows, the amount of revenue recorded in future periods could be materially impacted. Expense reimbursements for the Company’s Phase 2b emricasan development costs will be recognized as collaboration revenue when the related expenses are incurred.

Under the Investment Agreement, the Company is able to borrow up to $15.0 million at a rate of 6% per annum, under one or two notes, which will mature on December 31, 2019. The Company may elect at its sole discretion to convert all or part of the outstanding principal and accrued interest into fully paid shares of common stock, at 120% of the 20-day trailing average closing price per share of the common stock immediately prior to the conversion date. Novartis has the option to convert all or part of the note(s) into shares of the Company’s common stock upon a change in control of the Company or termination of the Collaboration Agreement by Novartis pursuant to certain provisions. In the event the conversion of the notes would exceed the lesser of 19.0% of the Company’s outstanding shares on a fully-diluted basis (i) at the inception of the Investment Agreement or (ii) on the conversion date, then only the lesser amount shall convert into shares of common stock and Novartis shall be repaid in cash for any remaining principal and unpaid interest after such conversion. This ability to borrow and repay the debt at a discount using shares of the Company’s common stock was deemed to be additional, foregone revenue attributable to the Collaboration Agreement, which the Company imputed and recorded as both a receivable from Novartis and a liability (deferred revenue) of $2.5 million at the inception of the Collaboration Agreement and the Investment Agreement. On February 15, 2017, the Company issued the Novartis Note in the principal amount of $15.0 million and recorded the $15.0 million proceeds as a convertible note payable in the amount of $12.5 million and a reduction of the outstanding receivable from Novartis of $2.5 million.

~~In February 2014, the Company entered into a~~assumed Conatus’ noncancelable operating lease agreement, ~~(the Lease)~~as amended, for certain office space with a lease term ~~from July 2014 through December~~that expired on September 30, 2020. Upon close of the Merger, the Company recognized a right-of-use asset and operating lease liability in the amount of $0.1 million and $0.2 million, respectively, related to the Conatus lease. Prior to the Merger, Conatus entered into a sub-lease agreement with a third party to lease the whole office space for the remainder of the lease term.

The Company leases certain office equipment that is classified as a finance lease. As of June 30, 2022, the weighted-average remaining term of the Company’s operating and finance lease was approximately 9.2 years and 2.0 years, respectively.

The Company recognizes right-of-use assets and lease liabilities at the lease commencement date based on the present value of future minimum lease payments over the lease term. The discount rate used to determine the present value of the lease payments is the rate implicit in the lease unless that rate cannot be readily determined, in which case, the Company utilizes its incremental borrowing rate in determining the present value of the future minimum lease payments. As of June 30, 2022, the weighted-average discount rate for the Company’s operating and finance lease was 12.2% and 10%, respectively.

The Company does not record leases with an initial term of 12 months or less on the condensed consolidated balance sheets. Expense for these short-term leases is recognized on a straight-line basis over the lease term. The Company has elected the practical expedient to combine lease and non-lease components into a single component for all classes of underlying assets.

At June 30, 2022, future minimum payments of lease liabilities were as follows (in thousands):

In April 2019, Private Histogen entered into a Settlement, Release and Termination Agreement (“PUR Settlement”) with PUR Biologics, LLC and its members which terminated the License, Supply and Operating Agreements between Private Histogen and PUR, eliminated Private Histogen’s membership interest in PUR and returned all in-process research and development assets to Private Histogen (the “Development Assets”). The agreement also provided indemnifications and complete releases by and among the parties. The acquisition of the Development Assets was accounted for as an asset acquisition in accordance with ASC 805-50-50, Acquisition of Assets Rather than a Business.

As consideration for the reacquisition of the Development Assets, Private Histogen compensated PUR with both equity and cash components, including 8,366 shares of Series D convertible preferred stock with a fair value of $1.75 million and a ~~renewal~~potential cash payout of up to $6.25 million (the “Cap Amount”). Private Histogen paid PUR $0.5 million in upfront cash, forgave approximately $22 thousand of accounts receivable owed by PUR to Private Histogen, and settled an outstanding payable of PUR of approximately $23 thousand owed to a third party. The Company is also obligated to make milestone and royalty payments, including (a) a $0.4 million payment upon the unconditional acceptance and approval of a New Drug Application or Pre-Market Approval Application by the FDA related to the Development Assets, (b) a $0.4 million commercialization milestone upon reaching gross sales (by the Company or licensee) of the $0.5 million of products incorporating the Development Assets, and (c) a five percent (5%) royalty on net revenues collected by Histogen from commercial sales (by the Company or licensee) of products incorporating the Development Assets. The aforementioned cash payments, along with any future milestone and royalty payments, are all applied against the Cap Amount. In accordance with authoritative guidance, amounts for the milestone and royalty payments will be recognized when it is probable that the related contingent liability has been incurred and the amount owed is reasonably estimated. NaN amounts for the milestone and royalty payments have been recorded during the three and six months ended June 30, 2022 and year ended December 31, 2021.

The Company is subject to claims and legal proceedings that arise in the ordinary course of business. Such matters are inherently uncertain, and there can be no guarantee that the outcome of any such matter will be decided favorably to the Company or that the resolution of any such matter will not have a material adverse effect upon the Company’s condensed consolidated financial statements. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. As of June 30, 2022, 0 accruals have been made and 0 liability recognized related to commitments and contingencies.

Directors, the Company’s former Chief Executive Officer, as well as three individuals that are currently employed by the Company. Although the complaint lists the “Histogen Board of Directors, a business entity form unknown” as a defendant, the complaint does not specifically list the names of the board members. The plaintiffs allege whistleblower status, retaliation, discrimination, unfair business practices, wrongful termination, violation of civil rights, and other California state law claims. The Company has tendered the complaint to its liability insurer and engaged outside litigation counsel, as approved by its carrier, to defend Histogen, the Board of Directors and the individuals in this matter. The Company objects to the naming of each of the defendants in this matter and denies each of the plaintiffs’ claims. The plaintiffs agreed to pre-arbitration mediation, which was conducted on May 4, 2022, as was required by the arbitration agreement executed by each of the plaintiffs. Considering that the parties did not resolve the matter through this mediation, the Company petitioned the San Diego Superior Court for an order that the matter be submitted to arbitration consistent with each of the plaintiff’s arbitration agreements. The hearing for the motion to compel arbitration is scheduled to be held on August 12, 2022. The Company believes that our defense costs, settlement monies, damages or any other awards would be covered by our liability insurance; provided, however, insurance may not cover all claims or could exceed our insurance coverage. The Company believes that there are substantial defenses to this lawsuit, and we intend to vigorously defend against each of these claims. While this litigation matter is in the early stages, the Company believes the action is without merit. Nonetheless, the ultimate outcome is unknown at this time.

Amerimmune Collaborative Development and Commercialization Agreement Arbitration

On March 3, 2022, the Company filed a demand for arbitration (“Arbitration Demand”) with JAMS in the county of San Diego, against Amerimmune LLC (“Amerimmune”) seeking a declaratory judgment that Amerimmune has materially breached the Collaborative Agreement entered into by and between the Company and Amerimmune on October 26, 2020, and that the Company is therefore entitled to terminate the Collaborative Agreement in accordance with its terms. The Company further brought the Arbitration Demand for breach of contract, seeking an award of specific performance requiring Amerimmune to comply with the terms of the Agreement, which provide that, in the event of termination for material breach, all rights and licenses granted to Amerimmune by the Company shall terminate, and Amerimmune shall cease any and all development, manufacture and commercialization activities under the Agreement, and any and all rights granted by the Company to Amerimmune revert to the Company. In the event that specific performance is not awarded, the Company is pursuing in the alternative a cause of action for breach of contract, seeking an award of damages for such breach in an amount to be determined at hearing. And finally, the Company is pursuing a claim for misappropriation of trade secrets, seeking an award of damages in an amount to be determined at hearing.

On March 8, 2022, Amerimmune provided written notice to exercise an option for an additional license rights to develop additional products. The Company has rejected Amerimmune’s election of the option and believes that Amerimmune no longer has the right to exercise the option based on, among other reasons, the Company’s belief that the Collaborative Agreement is properly terminated as set forth in Histogen’s Arbitration Demand. On March 11, 2022, JAMS issued a Notice of Commencement of Arbitration letter, confirming the commencement of the arbitration as of that date.

On April 14, 2022, Amerimmune filed its answer to the Company’s Demand for Arbitration, and also asserted five ~~years.~~counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with prospective economic relations, negligent interference with prospective economic relations, and declaratory relief that Amerimmune has the right to exclusive option. On April 21, 2022, the Company filed its answer to Amerimmune’s counterclaims. The parties are currently engaged in discovery, and the final hearing in the arbitration has been set for October 5-7, 2022. In ~~May 2015,~~the event that the Company is successful on its claims as set forth in the Company’s Arbitration Demand and the Agreement is terminated, the Company intends to develop emricasan for COVID-19 and other infectious and inflammatory diseases independently at its discretion.

On July 13, 2022, Amerimmune filed a complaint (the “Federal Complaint”) against the Company in the United States District Court for the Southern District of California. Amerimmune filed a two-count complaint seeking injunctive and declaratory relief relating to the purported exercise of the option as discussed above. On July 18, 2022, Amerimmune filed a second, separate complaint against the Company alleging the same facts and causes of action as the Federal Complaint, also seeking injunctive and declaratory relief relating to the purported exercise of the option, in the Superior Court for the County of San Diego (the “State Complaint”). The Company was served with the State Complaint on August 8, 2022, but has not yet been served with the Federal Complaint. The Company believes any claims related to the Collaborative Agreement are subject to the Arbitration proceeding and therefore, that both the Federal Complaint and the State Complaint were filed improperly and are subject to dismissal for this and additional reasons. Moreover, the Company denies the allegations set forth therein, and intends to vigorously defend against the litigations.

There can be no assurances that the Arbitration will result in the Company’s favor and the ultimate outcome of this Arbitration is unknown at this time.

Lordship, with its predecessor entities along with its principal owner, Jonathan Jackson, have invested and been affiliated with Private Histogen since 2010. As of June 30, 2022 and December 31, 2021, Lordship controlled approximately 4.7% of the Company’s outstanding voting shares and currently holds two Board of Director seats.

In November 2012, Private Histogen entered into a Strategic Relationship Success Fee Agreement with Lordship (the “Success Fee Agreement”). The Success Fee Agreement causes certain payments to be made from the Company to Lordship equal to 1% of certain product revenues and 10% of certain license and royalty revenues. The Success Fee Agreement also stipulates that, if the Company engages in a merger or sale of all or substantially all (defined as 90% or more) of its assets or equity to a third party, then the Company has the option to terminate the agreement by paying Lordship the fair market value of future payments with the minimum payment being at least equal to the most recent annual payments Lordship has received. The Success Fee Agreement was amended in January 2020, but continues to carry the same rights to certain payments. Histogen recognized $0 expense to Lordship for both the three months ended June 30, 2022 and 2021, and $375 thousand and $3 thousand for the six months ended June 30, 2022 and 2021, all of which is included in general and administrative expenses on the accompanying condensed consolidated statements of operations. As of June 30, 2022 and December 31, 2021, there was a balance of $11 thousand and $12 thousand, respectively, paid to Lordship included in other assets on the accompanying condensed consolidated balance sheet in connection with the deferral of revenue from the Allergan License Agreements.

On July 12, 2022, the Company entered into a ~~first amendment~~Securities Purchase Agreement (the “Purchase Agreement”) with a single healthcare-focused institutional investor for the sale by the Company of (i) a pre-funded warrant to purchase up to 1,774,309 shares of Common Stock (the “Pre-Funded Warrant”), (ii) a Series A warrant to purchase up to an aggregate of 1,774,309 shares of common stock (the “Series A Warrant”), and (iii) a Series B warrant to purchase up to an aggregate of 1,774,309 shares of common stock (the “Series B Warrant,” and together with the ~~Lease~~Pre-Funded Warrant and the Series A Warrant, the “Warrants”), in a private placement offering (the ~~First Lease Amendment) for additional office space starting in September 2015 through September 2020.~~“Offering”). The ~~First Lease Amendment also extended~~combined purchase price of one Pre-Funded Warrant and accompanying Series A Warrant and accompanying Series B Warrant was $2.818.

Subject to certain ownership limitations, the Series A Warrant becomes exercisable immediately after the issuance date at an exercise price equal to $2.568 per share of common stock, subject to adjustments as provided under the terms of the Series A Warrant, and has a term of five and one half years from the ~~Lease~~issuance date. Subject to ~~September 2020. The monthly base rent~~certain ownership limitations, the Series B Warrant will become exercisable immediately after the issuance date at an exercise price equal to $2.568 per share of common stock, subject to adjustments as provided under the Lease and the First Lease Amendment increases approximately 3% annually from $32,784 in 2015 to $39,268 in 2020. Future minimum payments under this noncancelable operating lease total $1.3 million at September 30, 2017.

~~Rent expense was $94,501 for each~~terms of the ~~three-month periods ended September 30, 2017~~Series B Warrant, and ~~2016~~has a term of eighteen months from the issuance date. Subject to certain ownership limitations described in the Pre-Funded Warrant, the Pre-Funded Warrant is immediately exercisable and ~~$283,504 for each~~may be exercised at an exercise price of ~~the nine-month periods ended September 30, 2017 and 2016.~~

~~In July 2010, the Company entered into a~~$0.0001 per share of common stock ~~purchase agreement with Pfizer, pursuant to which the Company acquired~~any time until all of the ~~outstanding stock of Idun Pharmaceuticals, Inc., which was subsequently spun off~~Pre-Funded Warrant is exercised in full.

The gross proceeds to the ~~Company’s stockholders in January 2013. Under~~Company were approximately $5 million, before deducting the ~~stock purchase agreement,~~placement agent’s fees and other offering expenses, and excluding the ~~Company may be required to make payments to Pfizer totaling $18.0 million upon~~proceeds, if any, from the ~~achievement~~exercise of ~~specified regulatory milestones.~~the Series A Warrant, the Series B Warrant, and Pre-Funded Warrant.

On August 1, 2022, the 2020 Purchase Agreement with Lincoln Park expired. See Note 7, Stockholder’s Equity.

The following discussion and analysis of our financial condition and ~~the unaudited interim condensed financial statements included in this quarterly report on Form 10-Q~~results of operations should be read in conjunction with ~~the~~(i) our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the period ended June 30, 2022 (this “Quarterly Report”). This information should also be read in conjunction with our audited historical consolidated financial statements which are included in our Form 10-K for the fiscal year ended December 31, ~~2016~~2021 (“Form 10-K”). References to the Company’s operating results prior to the Merger will refer to the operating results of Private Histogen. Except as otherwise indicated herein or as the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Histogen” “the Company,” “we,” “us” and “our” refer to Histogen Inc., a Delaware corporation, on a post-Merger basis, and the ~~related Management’s Discussion and Analysis~~term “Private Histogen” refers to the business of ~~Financial Condition and Results~~privately-held Histogen Inc. prior to completion of ~~Operations, both of which are contained in our annual report on Form 10-K filed with~~ the ~~Securities and Exchange Commission, or SEC, on March 16, 2017.~~Merger.

This ~~quarterly report on Form 10-Q~~Quarterly Report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended ~~or the Exchange Act.~~(the “Exchange Act”). All statements other than statements of historical facts contained in this ~~quarterly report,~~Quarterly Report are forward-looking statements, including statements regarding our future results of operations and financial position, business strategy, prospective products, product approvals, research and development costs, timing and likelihood of success, plans and objectives of management for future operations and future results of anticipated products, are forward-looking statements. regarding:

These statements involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, orand achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by ~~terms~~terminology such as “may,” “will,” “should,” ~~“expect,” “plan,” “anticipate,”~~ “could,” ~~“intend,~~“expects,” ~~“target,~~“intends,” ~~“project,~~“plans,” ~~“contemplate,~~“anticipates,” ~~“believe,~~“believes,” ~~“estimate,~~“estimates,” ~~“predict,~~“predicts,” ~~“potential” or “continue”~~“potential,” “continue,” or the negative of these terms or other ~~similar expressions. The~~comparable terminology. These forward-looking statements ~~in this quarterly report~~ are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this ~~quarterly report~~Quarterly Report and are subject to a number of risks, uncertainties, and assumptions, including those described in Part II, Item 1A, “Risk Factors.” The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

We have common law trademark rights in the unregistered marks “Histogen Inc.,” “Histogen Therapeutics Inc.,” “Histogen,” and the Histogen logo in certain jurisdictions. Solely for convenience, trademarks and tradenames referred to in this Quarterly Report appear without the ® and ™ symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trademarks and tradenames.

We are a ~~biotechnology~~clinical-stage therapeutics company focused on developing our proprietary hypoxia-generated growth factor technology platform and stem cell-free biologic products as potential first-in-class restorative therapeutics that ignite the body’s natural process to repair and maintain healthy biological function.

Our proprietary hypoxia-generated growth factor technology is based on the discovery that growing fibroblast cells under simulated embryonic conditions induces them to become multipotent with stem cell-like properties. The environment created by our proprietary process mimics the conditions within the womb — very low oxygen and suspension culture. When incubated under these conditions, the fibroblast cells generate biological materials, growth factors and proteins, that have the potential to stimulate a person’s own stem cells to activate and replace/regenerate damaged cells and tissue. Our proprietary manufacturing process provides targeted solutions that harness the body’s inherent regenerative power across a broad range of therapeutic indications including joint cartilage regeneration and spinal disc repair.

Our manufacturing process yields multiple biologic products from a single bioreactor, including cell conditioned medium (CCM) and human extracellular matrix (hECM), creating a spectrum of product candidates for a variety of markets from one core technology.

Under our biologics technology platform, our product candidates in development are HST-003, a treatment for joint cartilage repair, and ~~commercialization of novel medicines to treat liver disease. We are developing~~HST-004, a treatment for spinal disc repair. In addition, within our small molecule pipeline, our product candidates include emricasan, ~~a first-in-class, orally active pan-caspase protease inhibitor,~~CTS-2090 and CTS-2096. Emricasan is being developed both jointly with our collaboration partner, Amerimmune, for the treatment of COVID-19, and we are evaluating the use of emricasan for other infectious diseases, including for the treatment of methicillin-resistant staphylococcus aureus (“MRSA”). We also have preclinical product candidates, CTS-2090 and CTS-2096, novel, potent, orally bioavailable, and highly selective small molecule inhibitors of caspase-1 designed for the treatment of certain inflammatory diseases.

Prior to initiating the Arbitration Demand, we filed and received permission from the FDA for an IND to initiate a Phase 1 study of emricasan in mild COVID-19 patients to assess safety and tolerability. In June 2021, we along with ~~chronic liver disease. Emricasan is designed~~our partner, Amerimmune, announced top line results from the Phase 1 study of emricasan in mild symptomatic COVID-19 patients to ~~reduce~~assess safety, tolerability, and preliminary efficacy. The study demonstrated that emricasan was safe and well-tolerated during the ~~activities~~14 days of ~~human caspases, which are enzymes~~dosing and at the day 45 follow-up, as compared to placebo with no reports of serious adverse events. Patients who completed treatment with emricasan had a complete resolution of the symptoms most commonly associated with mild COVID-19, such as cough, headache, and fatigue at day 7 and continued through day 45. No patients in the placebo arm who completed the study experienced COVID-19 associated symptom resolution at any time point out to day 14. Some of the placebo patients did have COVID-19 symptom resolution at day 30 while others experienced symptoms that ~~mediate inflammation~~persisted at day 45. A total of 13 subjects were consented and ~~apoptosis.~~ randomized to receive either placebo or 25 mg emricasan orally, BID for 14 days. PK samples, taken at day 14 of the study to check for compliance, revealed that one patient in the treatment arm did not show any indications of emricasan or its known metabolites in plasma, leading to a reclassification of the patient for the subsequent analysis shown in Figure 1. Additionally, there were no serious adverse events reported, and the emricasan group had fewer adverse events compared to placebo; 33 vs 66%, respectively. As compared with placebo, the proportional odds of having a worse score on an eight-level ordinal scale (persistence of a score of 3) with emricasan was 0.1 (95% CI, 0.006 to 1.544) at day 14 and 0.12 (95% CI, 0 to 3.41) at days 30 and 45. The time to complete resolution of symptoms was shorter in the emricasan group compared to placebo (hazard ratio, 5.3, 95% CI, 1.005 to 27.9) (Figure 1).

Figure 1. Per-protocol analysis of time to complete resolution of symptoms. Symptoms were defined by the 14-point questionnaire recommended by the FDA for outpatient COVID-19 studies. For the first 14 days, patients had daily tele-visits. In-person follow up visits were conducted on days 14, 30 and 45. The Kaplan-Meier plots for time-to-recovery show faster recovery in patients treated with emricasan, with a median of 5 (interquartile range 4-6 days) vs 37 days (interquartile range of 30-45) for participants randomized to the placebo group. The mean number of days to recovery for patients was 4.8 days with a SD=0.83 in the emricasan arm and 37.5 days, SD=8.2 in the placebo arm (p=0.001).

We believe that Amerimmune has failed to undertake commercially reasonable efforts toward conducting and completing the Phase 2 study as required by ~~reducing~~ the ~~activity~~Collaborative Agreement. As part of ~~these enzymes, caspase inhibitors~~our Arbitration Demand, we have asked the ~~potential~~arbitrator to ~~interrupt~~terminate the ~~progression~~Collaborative Agreement so that we can choose to conduct and complete the Phase 2 study independently. There can be no assurances that the Arbitration Demand will result in our favor and terminate the Collaborative Agreement. The ultimate outcome of this Arbitration is unknown at this time.

Independently, we are exploring the feasibility of testing emricasan in animal studies of other infectious diseases, initially focused on MRSA. We anticipate completing the feasibility assessment in the third quarter of 2022.

Our caspase-1 pipeline include preclinical product candidates CTS-2090 and CTS-2096. The selection of product candidate, CTS-2090, as a lead compound is based on its preclinical profile, including high selectivity for caspase-1, and drug-like properties showing a high degree of drug exposure in the intestinal track after oral administration. Similarly, we intend to evaluate CTS-2096, as an additional caspase-1 inhibitor drug candidate, and are in the process of exploring its drug like properties.

On January 28, 2020, the Company, then operating as Conatus, entered into an Agreement and Plan of Merger and Reorganization, as amended (the “Merger Agreement”), with privately-held Histogen Inc. (“Private Histogen”) and Chinook Merger Sub, Inc., a wholly-owned subsidiary of Conatus (“Merger Sub”). Under the Merger Agreement, Merger Sub merged with and into Private Histogen, with

Private Histogen surviving as a wholly-owned subsidiary of the Company (the “Merger”). On May 26, 2020, the Merger was completed. Conatus changed its name to Histogen Inc., and Private Histogen, which remains as a wholly-owned subsidiary of the Company, changed its name to Histogen Therapeutics Inc. On May 27, 2020, the combined company’s common stock began trading on The Nasdaq Capital Market under the ticker symbol “HSTO.”

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a ~~variety~~new strain of ~~diseases.~~coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

The cumulative effect the associated disruptions have had, and may continue to ~~continue advancing toward initial registration~~have, an adverse impact on the Company’s business, clinical trials, and its results of ~~emricasan for patients with cirrhosis due~~operations. The full impact of the COVID-19 outbreak continues to ~~nonalcoholic steatohepatitis, or NASH, with parallel development toward registration~~evolve as of ~~emricasan for patients with NASH fibrosis. Our current clinical program for emricasan includes~~ the ~~following randomized, double-blind, placebo-controlled Phase 2b clinical trials:~~

~~In addition, we plan~~ to ~~initiate a post-treatment observational study pursuant to which subjects from the four trials above will be followed for long-term three-year safety follow-up.~~have, any material effect on our operations.

In ~~May~~July 2017, ~~Novartis Pharma AG, or Novartis, exercised its option under~~ the ~~Option, Collaboration~~Company and Allergan entered into a letter agreement to transfer Suneva Medical, Inc.’s Amended and Restated License ~~Agreement, or~~and Supply Agreements (collectively the ~~Collaboration Agreement,~~“Allergan Agreements”) to Allergan, which grants exclusive rights to commercialize our CCM skin care ingredient worldwide, excluding South Korea, China, and India, in exchange for royalty payments to us based on Allergan’s sales of product including the licensed ingredient. Through December 31, 2020, we entered into ~~with Novartis in December 2016. Pursuant~~several amendments to ~~such exercise,~~the Allergan Agreements to, among other things, expand Allergan’s license rights, identify exclusive and non-exclusive fields of use, and clarify responsibilities related to regulatory filings. For these amendments to the Allergan Agreements, we ~~granted Novartis an exclusive, worldwide license to our intellectual property rights relating to emricasan to collaborate with us and develop and commercialize emricasan~~have received cash payments of $19.5 million through June 30, 2022. The Allergan Agreements also include a potential future milestone payment of

$5.5 million if Allergan’s net sales of products containing ~~emricasan either~~our CCM skin care ingredient exceeds $60 million in any calendar year through December 31, 2027.

From time to time, we may improve our CCM skin care ingredient, and to the extent that these are within the field of use in the Allergan Agreements, we will provide the improvements to Allergan. The remaining performance obligations related to the Allergan Agreements from 2017 were our obligations to supply CCM and provide potential future improvements to Allergan, for which our obligation to supply CCM was satisfied during the fourth quarter of 2019.

On January 17, 2020, the Company and Allergan amended the Allergan Agreements, further clarifying the fields of use, the product definition, and rights to certain improvements, as well as us agreeing to supply additional CCM in 2020 and provide further technical assistance to Allergan (the cost of which was reimbursed to the Company), for a ~~single active ingredient or in combination with other Novartis compounds for liver cirrhosis or liver fibrosis, for~~one-time payment of $1.0 million. Our obligation to supply additional CCM to Allergan was satisfied during the ~~treatment, diagnosis and prevention~~first quarter of ~~disease in all indications in humans. The license became effective upon our receipt of a $7.0 million option exercise payment in July 2017.~~2021.

Pursuant to the ~~Collaboration Agreement, we are responsible for completing~~2017 Allergan Amendment, Histogen had the ~~three ENCORE trials and~~right to a potential milestone payment of $5.5 million if Allergan’s net sales of products containing the ~~POLT-HCV-SVR trial described above. We and Novartis will generally share the costs of these four Phase 2b trials and the planned observational study equally. Upon completion~~Company’s CCM skin care ingredient exceeds $60.0 million in any calendar year through December 31, 2027. In lieu of the ~~four Phase 2b trials, Novartis will assume 100%~~potential payment of $5.5 million, the Company entered into a Letter Agreement on March 18, 2022 with Allegan. In consideration for the execution of the ~~observational study costs. Novartis is responsible~~Letter Agreement, Histogen received a one-time payment equal to $3.8 million in March 2022. In exchange, among other things, the Company agreed that the final payment represents a full and final satisfaction of all money due to the Company pursuant to the Letter Agreement.

Under the Amended and Restated License Agreement, as amended, Allergan will indemnify the Company for ~~100%~~third party claims arising from Allergan’s breach of ~~certain expenses~~the agreement, negligence or willful misconduct, or the exploitation of products by Allergan or its sublicensees. We will indemnify Allergan for ~~required registration-supportive nonclinical activities. Novartis is also responsible~~third party claims arising from our breach of the agreement, negligence or willful misconduct, or the exploitation of products by us prior to the effective date. Allergan may terminate the agreement for convenience upon one business days’ notice to us.

In October 2020, the Company entered into a Collaborative Development and Commercialization Agreement (“the Collaborative Agreement”) with Amerimmune to jointly develop emricasan for the ~~development~~potential treatment of COVID-19. The FDA approved an investigational new drug application (IND) to initiate a Phase 1 study of emricasan ~~beyond~~in mild COVID-19 patients to assess safety and tolerability in 2020. Under the ~~four Phase 2b trials~~Collaborative Agreement, during the agreed upon research term, Amerimmune, at its own expense and ~~planned observational study described above, including~~in collaboration with the ~~Phase 3 development of emricasan single agent products and all development for emricasan combination products, and Novartis has agreed~~Company, is required to use commercially reasonable efforts to lead the development activities for emricasan, limited to the treatment of COVID-19.

Pursuant to the terms of the Collaborative Agreement, each party shall retain ownership of their legacy intellectual property and responsibility for ongoing patent application prosecution and maintenance costs and will jointly own any intellectual property developed during the term of the agreement. In addition, the Company granted Amerimmune an exclusive option, subject to terms and conditions including completion of a Phase 2 clinical trial by Amerimmune during the research term, to obtain an exclusive license that, if granted by the Company, allows Amerimmune alone, or in conjunction with one or more strategic partners, to use its commercially reasonable efforts to develop, manufacture, and commercialize emricasan and other caspase modulators, including CTS-2090 and CTS-2096, and the Company will share the profits equally with Amerimmune. No consideration will be transferred to the Company until profits, as defined in the Amerimmune Agreement, are generated by Amerimmune from developing or commercializing products. ~~A joint steering committee comprised~~

The Company identified multiple promises to deliver goods and services, which include at the inception of ~~representatives from our company~~the agreement: (i) a license to technology and ~~Novartis oversees~~patents, information, and know-how; (ii) supply of emricasan and (iii) collaboration, including the ~~collaboration, development~~Company’s participation in a Joint Development Committee and Joint Partnering Committee. At inception and through June 30, 2022, the Company identified one performance obligation for all the deliverables under the Amerimmune Agreement since the delivered elements are either not capable of being distinct or are not distinct within the context of the contract. No upfront consideration was exchanged between the parties and any consideration received will be dependent on the successful execution of a qualifying strategic partnership, as defined, on the successful commercialization of emricasan, ~~products.~~or upon a change in control of Amerimmune, as defined. Although the Company will recognize revenue upon the occurrence of one of these events, no such events have occurred as of June 30, 2022.

~~Under~~On January 19, 2022, we provided a notice of material breach in connection with Amerimmune’s non-performance under the ~~Collaboration~~Collaborative Agreement ~~Novartis paid us an upfront payment of $50.0 million~~ and, on March 3, 2022, we filed the Arbitration Demand. On March 8, 2022, Amerimmune provided written notice to exercise an option for additional license rights to develop additional products, provided, however, the Company has rejected Amerimmune’s election of the option and believes that Amerimmune no longer has the right to exercise ~~payment~~the option based on, among

other reasons, our belief that the Collaborative Agreement is properly terminated as set forth in our Arbitration Demand. On March 11, 2022, Judicial Arbitration and Mediation Services, Inc. (“JAMS”) issued a Notice of ~~$7.0 million. In addition, we~~Commencement of Arbitration letter, confirming the commencement of the arbitration as of that date.

On April 14, 2022, Amerimmune filed its answer to Histogen’s Demand for Arbitration, and also asserted five counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with prospective economic relations, negligent interference with prospective economic relations, and declaratory relief that Amerimmune has the right to exclusive option. On April 21, 2022, Histogen filed its answer to Amerimmune’s counterclaims. The parties are ~~eligible to receive up to an aggregate of $650.0 million~~currently engaged in ~~milestone payments, as well as royalties.~~

~~In June 2017,~~discovery, and the U.S. Food and Drug Administration granted Orphan Drug Designation to our preclinical product candidate IDN-7314, a pan-caspase inhibitor, for the treatment of primary sclerosing cholangitis, or PSC, a disease affecting bile ductsfinal hearing in the ~~liver, which can lead to cirrhosis and liver failure. In~~arbitration has been set for October ~~2017,~~5-7, 2022.

On July 13, 2022, Amerimmune filed a complaint (the “Federal Complaint”) against the European Medicines Agency granted orphan designation to IDN-7314 for the treatment of PSC. We believe these orphan designations provide an opportunity to address an important unmet medical need and expand our development pipeline beyond emricasan. Pursuant to the Collaboration Agreement, Novartis will have a right of first negotiation prior to any offer for IDN-7314 by us to a third party, and we may not develop IDN-7314 in any pivotal registration clinical trials or commercialize IDN-7314 in liver disease until the earlier of five years after the first commercial sale of an emricasan productCompany in the United States ~~or major European market or ten years from~~District Court for the ~~execution date~~Southern District of California. Amerimmune filed a two-count complaint seeking injunctive and declaratory relief relating to the purported exercise of the ~~Collaboration Agreement. We will continue~~option as discussed above. On July 18, 2022, Amerimmune filed a second, separate complaint against the Company alleging the same facts and causes of action as the Federal Complaint, also seeking injunctive and declaratory relief relating to ~~evaluate~~ the ~~potential~~purported exercise of ~~IDN-7314 as a product candidate as a component~~the option, in the Superior Court for the County of San Diego (the “State Complaint”). The Company was served with the State Complaint on August 8, 2022, but has not yet been served with the Federal Complaint. The Company believes any claims related to the Collaborative Agreement are subject to the Arbitration proceeding and therefore, that both the Federal Complaint and the State Complaint were filed improperly and are subject to dismissal for this and additional reasons. Moreover, the Company denies the allegations set forth therein, and intends to vigorously defend against the litigations.

As part of our pipeline expansion plans. We also plan to expand our development pipeline by developing new product candidates based on our expertise in caspase inhibition or purchasing or in-licensing product candidates. In addition to liver disease, we may pursue the development of product candidates in other disease areas.

Since our inception, our primary activities have been organizational activities, including recruiting personnel, conducting research and development, including clinical trials, and raising capital. We have no products approved for sale, andArbitration Demand, we have ~~not generated~~requested that the Collaborative Agreement be terminated. We further brought the Arbitration Demand for breach of contract, seeking an award of specific performance requiring Amerimmune to comply with the terms of the Agreement, which provide that, in the event of termination for material breach, all rights and licenses granted to Amerimmune by us shall terminate, and any ~~revenues from product sales~~and all rights granted by us to ~~date. We have funded our operations since inception primarily through sales of equity securities and convertible promissory notes and payments made under the Collaboration Agreement, and~~Amerimmune revert to Histogen. If we have incurred significant operating losses since our inception. We have never been profitable and have incurred net losses of $29.7 million and $24.1 million for the years ended December 31, 2016 and 2015, respectively, and $13.0 million for the nine months ended September 30, 2017. As of September 30, 2017,are successful, we ~~had an accumulated deficit of $163.7 million.~~

~~We expect~~would regain full rights to ~~continue to incur significant operating losses and negative cash flows from operating activities for the foreseeable future as we continue the clinical development of~~ emricasan and ~~seek regulatory approval~~other caspase modulators, including CTS-2090 and CTS-2096. In that case, we intend to develop emricasan for COVID-19 and ~~if approved, pursue commercialization~~other infectious and inflammatory diseases independently at our discretion. There can be no assurances that the Arbitration Demand will result in our favor and terminate the Collaborative Agreement.

Components of ~~emricasan. In May 2017, we completed a public offering~~Results of 5,980,000 shares of our common stock at a public offering price of $5.50 per share. We received net proceeds of $30.6 million, after deducting underwriting discounts and commissions and offering-related transaction costs. Immediately following the offering, we used $11.2 million of the net proceeds to repurchase and retire 2,166,836 shares of our common stock from funds affiliated with Advent Private Equity, or Advent, at a price of $5.17 per share.Operations

As of September 30, 2017, we had cash, cash equivalents and marketable securities of $85.2 million. Although it is difficult to predict future liquidity requirements, we believe that our existing cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next 12 months from the date of the filing of this Form 10-Q. We will need to raise additional capital to fund further operations, including the development of product candidates other than emricasan. We may obtain additional financing in the future through the issuance of our common stock in future public offerings, through other equity or debt financings or through collaborations or partnerships with other companies.

Successful transition to profitability is dependent upon achieving a level of revenues adequate to support our cost structure. We cannot assure you that we will ever be profitable or generate sustained positive cash flow from operating activities and, unless and until we do, we will need to raise substantial additional capital through equity or debt financings or through collaborations or partnerships with other companies. We may not be able to raise additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could have a material adverse effect on our results of operations, financial condition and our ability to execute on our business plan.

In April 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an “emerging growth company.” As an “emerging growth company,” we are electing not to take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision not to take advantage of the extended transition period is irrevocable. In addition, we are in the process of evaluating the benefits of relying on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if as an “emerging growth company” we choose to rely on such exemptions, we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis) and (iv) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering, or IPO, or until we no longer meet the requirements of being an “emerging growth company,” whichever is earlier.Revenue

Our revenues to date have been generated primarily from the ~~Collaboration Agreement with Novartis. Under the terms~~sale of ~~the Collaboration Agreement, we received an upfront payment of $50.0 million. In May 2017, Novartis exercised its option,~~cosmetic ingredient products (“CCM”), license fees, and ~~we received~~ a ~~$7.0 million option exercise payment in July 2017. We are eligible to receive up to $650.0 million in additional payments for development, regulatory~~National Science Foundation grant award.

License and ~~commercial sales milestones, as well as royalties or profit~~Product Revenue

Our license and ~~loss sharing on future~~ product ~~sales in the United States, if any.~~

We currently have no products approved for sale, and we have not generated any revenues from product sales to date. We have not submitted any product candidate for regulatory approval. If we fail to achieve clinical success in the development of emricasan in a timely manner and/or obtain regulatory approval for this product candidate, or to successfully develop other product candidates, our ability to generate future revenues would be materially adversely affected.

~~The majority of our operating expenses~~revenue to date ~~have~~has been ~~incurred in~~generated primarily from payments received under the Allergan Agreements. As of March 31, 2022, no additional revenues under the Allergan Agreements are expected.

In March 2017, the National Science Foundation (“NSF”), a government agency, awarded us a research and development ~~activities. Starting~~grant to develop a novel wound dressing for infection control and tissue regeneration. As of March 31, 2021, we completed all obligations under the NSF grant and, as such, no longer generate any revenue in ~~late 2011,~~connection with the research and development ~~expenses have been focused on~~grant.

Cost of product revenue represents direct and indirect costs incurred to bring the ~~development~~product to saleable condition, including write-offs of emricasan. Since acquiring emricasan in 2010, we have incurred $98.5 million in the development of emricasan through September 30, 2017. Our business model is currently focused on the development of emricasan in various liver diseasesinventory.

Research and ~~is dependent upon our continuing to conduct research and a significant amount of clinical development. Our research~~Development

Research and development expenses consist primarily ~~of:~~of costs incurred for the preclinical and clinical development of our product candidates, which include:

~~Research~~clinical development activities. These employees work across multiple programs and, therefore, we do not track our costs by product candidate unless such costs are includable as subaward costs. The following table shows our research and development expenses by type of activity (in thousands):

We cannot determine with certainty the timing of initiation, the duration, or the completion costs ~~are expensed as incurred.~~

~~At this time,~~of current or future preclinical studies and clinical trials of our product candidates due to the inherently unpredictable nature of preclinical and clinical development, ~~we are unable to estimate with~~including any ~~certainty~~potential expanded dosing beyond the ~~costs we will incur~~original protocols based, in ~~the continued development of emricasan.~~part, on ongoing clinical success. Clinical and preclinical development timelines, the probability of success and development costs can differ materially from expectations.

~~The costs~~ We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each product candidate on an ongoing basis in response to the results of ongoing and future preclinical studies and clinical trials, ~~may vary significantly over the life~~regulatory developments, and our ongoing assessments of ~~a project owing~~each product candidate’s commercial potential. We will need to ~~factors that include but are not limited to the following:~~

~~We are currently focused on advancing emricasan in multiple indications, and our future research and development expenses will depend on its clinical success.~~future. In addition, we cannot forecast ~~with any degree of certainty~~which product candidates may be subject to future collaborations, when such arrangements will be secured, if at all, and to what ~~extent Novartis will develop~~degree such arrangements would affect our development plans and ~~commercialize emricasan.~~capital requirements.

General and administrative expenses consist primarily of personnel-related costs, insurance costs, facility costs, and professional fees for legal, patent, consulting, investor and public relations, accounting, and audit services. Personnel-related costs consist of salaries, benefits, and stock-based compensation. We expect our general and administrative expenses to increase substantially as we: (i) incur additional costs associated with being a public company, including audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and SEC requirements, director and officer insurance premiums, and investor relations costs, (ii) hire additional personnel, and (iii) protect our intellectual property.

Interest income consists of interest earned on our cash equivalents, which consist of money market funds. Our interest income has not been significant due to low interest earned on invested balances.

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

For both the three months ended June 30, 2022 and 2021, no product revenue was recognized. As of June 30, 2022, all obligations of the Company related to the additional supply of CCM to Allergan under the Allergan Agreements have been completed.

For the three months ended June 30, 2022 and 2021, we recognized license revenue of $5 thousand, respectively, associated with the Allergan Agreement amendments.

Research and development ~~expenditures will continue~~expenses for the three months ended June 30, 2022 and 2021 were $1.1 million and $2.4 million, respectively. The decrease of $1.3 million was primarily due to ~~be significant and will increase as we continue clinical development of emricasan over at least the next several years. We expect to incur significant~~decreases in development costs ~~as we conduct~~of our ~~ongoing Phase 2b trials of emricasan~~clinical and ~~develop~~pre-clinical product candidates ~~other than emricasan.~~

~~We do not expect emricasan to be commercially available, if at all, for at least the next several years.~~and personnel related expenses, partially offset by facility rent increases.

General and administrative expenses ~~consist principally~~for the three months ended June 30, 2022 and 2021 were $2.3 million and $1.8 million, respectively. The increase of ~~salaries~~$0.5 million was primarily due to increases in legal fees, outside services and rent increase, partially offset by reductions in personnel related expenses.

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

	Six Months Ended June 30,
	2022			2021			Change
Revenues
Product revenue	$	—		$	306		$	(306	)
License revenue		3,760			17			3,743
Grant revenue		—			113			(113	)
Total revenues		3,760			436			3,324
Operating expenses
Cost of product revenue		—			220			(220	)
Research and development		3,025			4,528			(1,503	)
General and administrative		4,812			4,154			658
Total operating expenses		7,837			8,902			(1,065	)
Loss from operations		(4,077	)		(8,466	)		4,389
Total other income (expense), net		(1	)		468			(469	)
Net loss	$	(4,078	)	$	(7,998	)	$	3,920

For the six months ended June 30, 2022 and 2021, we recognized product revenues of $0 and $0.3 million, respectively. The revenue for the first six months of 2021 was related to the additional supply of CCM to Allergan. As of March 31, 2021, all obligations of the Company related to the additional supply of CCM to Allergan under the Allergan Agreements have been completed.

For the six months ended June 30, 2022 and 2021, we recognized license revenue of $3.8 million and $17 thousand, respectively. The increase in the current period is due to a one-time payment of $3.8 million received in March 2022 as consideration for execution of the Allergan Letter Agreement.

For the six months ended June 30, 2022 and 2021, we recognized grant revenue of $0 and $0.1 million, respectively. The related revenue is associated with a research and development grant awarded to the Company from the NSF. As of March 31, 2021, all work required by the Company under the grant has been completed.

For the six months ended June 30, 2022 and 2021, we recognized $0 and $0.2 million, respectively, for cost of product sold to Allergan under the Allergan Agreements.

Research and development expenses for the six months ended June 30, 2022 and 2021 were $3.0 million and $4.5 million, respectively. The decrease of $1.5 million was primarily due to decreases in development costs ~~for~~of our clinical and pre-clinical product candidates and personnel ~~in executive, finance, business development~~related expenses, partially offset by facility rent increases.

General and administrative expenses for the six months ended June 30, 2022 and 2021 were $4.8 million and $4.2 million, respectively. The increase of $0.6 million was primarily due to increases in royalty expenses and legal fees, offset by reductions in personnel related expenses.

From inception through June 30, 2022, we had an accumulated deficit of $81.7 million and expect to incur operating losses and generate negative cash flows from operations for the foreseeable future. As of June 30, 2022, we had $12.6 million in cash and cash equivalentswhich excludes gross proceeds of approximately $5.0 million from a private placement financing closed in July 2022.

We have not yet established ongoing sources of revenues sufficient to cover our operating costs and will need to continue to raise additional capital to support our future operating activities, including progression of our development programs, preparation for potential commercialization, and other operating costs. Our plans with regard to these matters include ~~costs related~~entering into a combination of additional debt or equity financing arrangements, strategic partnerships, collaboration and licensing arrangements, or other similar arrangements. There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, on a timely basis or at all. Based on the Company’s current operating plan, management believes that existing cash and cash equivalents, including net proceeds from a July 2022 financing, will be sufficient to fund the Company’s obligations for at least 12 months after these condensed consolidated financial statements are issued.

The condensed consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

As described in Note 6 to the condensed consolidated financial statements, in March 2022, the Company completed a private placement offering (the “March 2022 Offering”) of Series A Preferred Stock and Series B Preferred Stock The proceeds of $4.76 million were held in escrow and were only permitted to be disbursed to the Company upon conversion of the Series A and Series B Preferred Stock.

Between June 2, 2022, and June 29, 2022, the Company redeemed for cash proceeds totaling $5,250,500, 2,500 outstanding shares of Series A Preferred Stock and 2,500 outstanding shares of Series B Preferred Stock based on the receipt of the Redemption Notices (the “Preferred Redemption”) at a price equal to 105% of the $1,000 stated value per share.

As of June 30, 2022, all shares of the Series A and B Preferred Stock are no longer outstanding and the Company’s only class of outstanding stock is its common stock. No proceeds will be received from the March 2022 Offering.

In January 2021, the Company completed an S-1 offering (the “January 2021 Offering”) of an aggregate of 580,00 shares of common stock, pre-funded warrants to purchase up to 120,00 shares of its common stock, and common stock warrants to purchase up to an aggregate of 700,000 shares of common stock. To the extent that an investor determines, at their sole discretion, that they would beneficially own in excess of the Beneficial Ownership Limitations (or as such investor may otherwise choose), in lieu of purchasing shares of Common Stock and Common Warrants, such investor could have elected to purchase Pre-Funded Warrants and Common Warrants at the Pre-Funded Purchase Price in lieu of the shares of Common Stock and Common Warrants in such a manner to result in the same aggregate purchase price being paid by such investor to the Company. The combined purchase price of one share of common stock and the accompanying common stock warrant was $20.00, and the combined purchase price of one pre-funded warrant and accompanying common stock warrant was $19.998. The common stock warrants are exercisable for five (5) years at an exercise price of $20.00 per share. The pre-funded warrants are immediately exercisable at an exercise price of $0.002 per share and may be exercised at any time until all of the pre-funded warrants are exercised in full. Placement agent warrants were issued to purchase up to 35,000 shares of common stock, are immediately exercisable for an exercise price of $25.00, and are exercisable for five (5) years following the date of issuance. The Company received gross proceeds of $14.0 million and incurred placement agent’s fees and other offering expenses of approximately $1.9 million.

As of June 30, 2022, a ~~public company, as well as insurance, facilities, travel, patent filing~~total of 336,060 warrants issued in the January 2021 Offering to purchase shares of common stock have been exercised and ~~maintenance, legal~~the Company issued 336,060 shares of its common stock. The Company received gross proceeds of approximately $6.8 million.

As of June 30, 2022, the Company had 387,565 shares and ~~consulting expenses.~~

~~If we exercise our option to co-commercialize emricasan~~11,375 shares of common stock reserved for issuance pursuant to the ~~Collaboration Agreement,~~warrants and placement agent’s warrants, respectively, issued by the Company in the January 2021 Offering, at an exercise price of $20.00 per share and $25.00 per share, respectively.

In June 2021, the Company completed a registered direct offering (the “June 2021 Offering”) of an aggregate of 298,865 shares of common stock, together with accompanying warrants to purchase up to an aggregate of 239,093 shares of common stock, at a public offering price of $22.00 per share. The accompanying warrants permit the investor to purchase additional shares equal to 80% of the number of shares of the Company’s common stock purchased by the investor. The warrants have an exercise price of $20.00 per share, are immediately exercisable, and expire five and a half (5.5) years following the date of issuance. In addition, the Company’s placement agent was issued compensatory warrants equal to 5.0%, or 14,946 shares, of the aggregate number of common stock sold in the offering, which are immediately exercisable for an exercise price of $27.50 and expire five (5) years following the date of issuance on June 7, 2026. The Company received gross proceeds of $6.6 million and incurred cash-based placement agent fees and other offering expenses of approximately $0.9 million.

As of June 30, 2022, no warrants associated with the June 2021 Offering have been exercised.

In December 2021, the Company completed a registered direct offering (the “December 2021 Offering”) of an aggregate of 411,764 shares of common stock and 411,766 warrants to purchase up to 411,766 shares of common stock, at a public offering price of $8.50 per share. The accompanying warrants permit the investor to purchase additional shares equal to the same number of shares of the Company’s common stock purchased by the investor. The warrants have an exercise price of $8.50 per share, may be exercised any time on or after 6 months and one (1) day after the issuance date, and expire five and a half (5.5) years following the date of issuance. In addition, the Company’s placement agent was issued compensatory warrants equal to 5.0%, or 20,590 shares, of the aggregate number of shares of common stock sold in the offering, which are immediately exercisable for an exercise price of $10.626 and expire five and a half (5.5) years following the date of issuance on June 21, 2027. The Company received gross proceeds of $3.5 million and incurred cash-based placement agent fees and other offering expenses of approximately $0.5 million.

As of June 30, 2022, no warrants associated with the December 2021 Offering have been exercised.

As of June 30, 2022, the Company had 411,766 shares and 20,590 shares of common stock reserved for issuance pursuant to the warrants and placement agent’s warrants, respectively, issued by the Company in the December 2021 Offering, at an exercise price of $8.50 per share and $10.626 per share, respectively.

In addition, at June 30, 2022, warrants to purchase 68 shares of common stock with an exercise price of $1,486.00 per share remain outstanding that were issued by Conatus in connection with obtaining financing in 2016. These warrants expire on July 3, 2023.

The following table shows a summary of our cash flows for the six months ended June 30, 2022 (in thousands):

Net cash used in operating activities was $4.8 million for the six months ended June 30, 2022, resulting from our net loss of $4.1 million, which included total non-cash charges of $0.3 million related to stock-based compensation, and depreciation and amortization, coupled with a $1.0 million change in our operating assets and liabilities.

Net cash used in operating activities was $7.9 million for the six months ended June 30, 2021, resulting from our net loss of $8.0 million, which included non-cash charges of $0.6 million related to stock-based compensation and PPP loan forgiveness of $0.5 million.

Net cash used by investing activities was $0.2 million for the six months ended June 30, 2022, which was related to the purchase of property and equipment.

Net cash used by investing activities was $45 thousand for the six months ended June 30, 2021, all of which was related to the purchase of property and equipment.

Net cash used by financing activities was $1.1 million for the six months ended June 30, 2022, primarily related to $0.6 million of issuance costs resulting from the issuance and sale of our redeemable convertible preferred stock in a private placement offering, and $0.5 million related to the redemption premium paid to repurchase the redeemable convertible preferred stock.

Net cash provided by financing activities was $24.3 million for the six months ended June 30, 2021, resulting primarily from the sales of our common stock through S-1 and S-3 offerings coupled with the exercise of warrants issued in connection with the S-1 offering. The $24.5 million in net proceeds from the offerings were offset by $0.2 million in payments made on financed insurance premiums. Net cash used in financing activities was $4 thousand for the six months ended June 30, 2020.

We are subject to a number of risks similar to those of clinical stage companies, including dependence on key individuals, uncertainty of product development and generation of revenues, dependence on outside sources of capital, risks associated with clinical trials of products, dependence on third-party collaborators for research operations, need for marketing authorization of products, risks associated with protection of intellectual property, and competition with larger, better-capitalized companies. We are closely monitoring ongoing developments in connection with the COVID-19 pandemic, which has resulted in disruptions to clinical trials and may negatively impact our ability to raise capital. To fully execute our business plan, we will need, among other things, to complete our research and development efforts and clinical and regulatory activities. These activities may take several years and will require significant operating and capital expenditures in the foreseeable future. We believe our existing cash and cash equivalents, including net proceeds from a July 2022 financing, will be sufficient to meet our anticipated cash requirements through December 31, 2023. However, our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect.

Until such time, if ever, as we can generate substantial product revenues to support our cost structure, we expect to finance our losses from operations and capital funding needs through a combination of equity offerings, debt financings, and other sources, including potentially collaborations, licenses and other similar arrangements. To the extent we raise additional capital through the sale of convertible debt or equity securities, the ownership interest of our stockholders will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise funds through collaborations, licenses and other similar arrangements with third parties, we may ~~incur expenses associated with activities related~~have to ~~commercializing emricasan. Some expenses~~relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds through debt or equity financings when needed, we may be ~~incurred prior~~required to ~~receiving regulatory approval~~delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such product candidates by ourselves. There can be no assurance that we will be able to obtain any sources of ~~emricasan.~~ financing on acceptable terms, or at all.

We ~~do not expect~~may be unable to ~~receive~~raise additional funds on acceptable terms or at all. As a result of the COVID-19 pandemic and actions taken to slow its spread, the global credit and financial markets have recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. If the equity and credit markets deteriorate, it may make any necessary debt or equity financing more difficult, more costly and more dilutive. If we are unable to raise additional funds, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our product candidates even if we would otherwise prefer to develop and market such ~~regulatory approval for at least the next several years.~~product candidates ourselves.

~~Interest income consists primarily of interest income earned on our cash, cash equivalents and marketable securities.~~

~~Interest expense consists of accrued interest on our $15.0 million convertible promissory note payable to Novartis and coupon interest on our $1.0 million promissory note payable to Pfizer Inc.~~

Other income (expense) includes non-operating transactions such as those caused by currency fluctuations between transaction dates and settlement dates and the conversion of account balances held in foreign currencies to U.S. dollars.

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles ~~generally accepted~~ in the United States. The preparation of ~~these~~the financial statements requires us to make estimates and ~~assumptions~~judgments that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported ~~revenues and~~ expenses incurred during the reporting periods. ~~These items~~

Our estimates are ~~monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base~~based on our ~~estimates on~~ historical experience, trends, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. ~~Changes in estimates are reflected in reported results for the period in which they become known.~~ Actual results may differ ~~materially~~ from these estimates under different assumptions or conditions.Though the impact of the COVID-19 pandemic to our business and operating results presents additional uncertainty, we continue to use the best information available to us in our critical accounting estimates.

~~There were no significant changes during the nine months ended September 30, 2017 to the~~We consider our critical accounting policies ~~described~~and estimates to be related to accrued research and development expenses and revenue recognition. There have been no material changes to our critical accounting policies and estimates during the six months ended June 30, 2022 from those disclosed in ~~“Item 7 –~~“Histogen’s Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies, ~~and Significant Judgments and Estimates”~~” included in ~~our~~the 2021 Annual Report on Form ~~10-K for the fiscal year ended December 31, 2016 filed with the SEC on March 16, 2017.~~10-K.

Total revenues were $9.6 million for the three months ended September 30, 2017, as compared to $0.0 million for the same period in 2016. For the three months ended September 30, 2017, total revenues consisted of collaboration revenue related to the Collaboration Agreement with Novartis, which was executed in December 2016.Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently recognize collaboration revenue on the license portion of deferred revenue on a straight-line basis between the inception of the agreement (or with respect to the option exercise fee, upon exercise of the option) through mid 2019 – the estimated period over which we expect to perform the research and development services. Due to the inherently unpredictable nature of product development activities, we periodically review the performance period of the research and development services and will adjust the period over which revenue is recognized when appropriate. Changes in the performance period could materially impact the timing of future revenue recognition.have, any off-balance sheet arrangements, as defined under SEC rules.

Research and development expenses were $11.2 million for the three months ended September 30, 2017, as compared to $4.8 million for the same period in 2016. The increase of $6.4 million was primarily due to the ramp up of our ENCORE-NF, ENCORE-PH and ENCORE-LF clinical trials.

General and administrative expenses were $2.4 million for the three months ended September 30, 2017, as compared to $2.1 million for the same period in 2016. The increase of $0.3 million was primarily due to higher personnel costs and professional fees.

Interest income was $259,000 for the three months ended September 30, 2017, as compared to $34,000 for the same period in 2016. Interest income consisted of interest earned on our cash, cash equivalents and marketable securities and fluctuates based on changes in investment balances and interest rates.

Interest expense was $189,000 for the three months ended September 30, 2017, as compared to $18,000 for the same period in 2016. The increase was due to higher interest expense related to the $15.0 million convertible promissory note issued to Novartis in February 2017, partially offset by lower interest expense related to the $1.0 million promissory note payable to Pfizer Inc., which was voluntarily prepaid in January 2017.

Other expense was $21,000 for the three months ended September 30, 2017, as compared to other income of $12,000 for the same period in 2016. Other expense represents non-operating transactions such as those caused by currency fluctuations between transaction dates and settlement dates and the conversion of account balances held in foreign currencies to U.S. dollars.

Total revenues were $26.6 million for the nine months ended September 30, 2017, as compared to $0.0 million for the same period in 2016. For the nine months ended September 30, 2017, total revenues consisted of collaboration revenue related to the Collaboration Agreement with Novartis, which was executed in December 2016.

Research and development expenses were $32.3 million for the nine months ended September 30, 2017, as compared to $13.8 million for the same period in 2016. The increase of $18.5 million was primarily due to the ramp up of our ENCORE-NF, ENCORE-PH and ENCORE-LF clinical trials.

General and administrative expenses were $7.4 million for the nine months ended September 30, 2017, as compared to $6.9 million for the same period in 2016. The increase of $0.5 million was primarily due to higher personnel costs and professional fees.

Interest income was $648,000 for the nine months ended September 30, 2017, as compared to $95,000 for the same period in 2016. Interest income consisted of interest earned on our cash, cash equivalents and marketable securities and fluctuates based on changes in investment balances and interest rates.

Interest expense was $473,000 for the nine months ended September 30, 2017, as compared to $53,000 for the same period in 2016. The increase was due to higher interest expense related to the $15.0 million convertible promissory note issued to Novartis in February 2017, partially offset by lower interest expense related to the $1.0 million promissory note payable to Pfizer Inc., which was voluntarily prepaid in January 2017.

Other expense was $72,000 for the nine months ended September 30, 2017, as compared to other income of $2,000 for the same period in 2016. Other expense represents non-operating transactions such as those caused by currency fluctuations between transaction dates and settlement dates and the conversion of account balances held in foreign currencies to U.S. dollars.

We have incurred losses since inception and negative cash flows from operating activities through December 31, 2015. For the year ended December 31, 2016, we had positive net cash flows from operating activities due to the upfront payment related to the Collaboration Agreement with Novartis. As of September 30, 2017, we had an accumulated deficit of $163.7 million. We anticipate that we will continue to incur net losses for the foreseeable future as we continue the development and potential commercialization of emricasan.

Prior to our IPO in July 2013, we funded our operations primarily through private placements of equity and convertible debt securities. In July 2013, we completed our IPO of 6,000,000 shares of common stock at an offering price of $11.00 per share. We received net proceeds of $58.6 million, after deducting underwriting discounts and commissions and offering-related transaction costs.

~~In August 2014, we entered into an At Market Issuance Sales Agreement, or the Sales Agreement, with MLV & Co. LLC, orMLV, pursuant to which we could sell from time to time, at our option, up to an aggregate of $50.0 million of shares of our common stock through MLV, as sales agent.~~ ~~We terminated the Sales Agreement in December 2016.~~ We sold 6,305,526 shares of our common stock pursuant to the Sales Agreement at a weighted average price per share of $2.35 and received net proceeds of $14.2 million, after deducting offering-related transaction costs and commissions.

In April 2015, we completed a public offering of 4,025,000 shares of our common stock at a public offering price of $5.75 per share. We received net proceeds of $21.4 million, after deducting underwriting discounts and commissions and offering-related transaction costs. In May 2017, we completed a public offering of 5,980,000 shares of our common stock at a public offering price of $5.50 per share. We received net proceeds of $30.6 million, after deducting underwriting discounts and commissions and offering-related transaction costs. Immediately following the offering, we used $11.2 million of the net proceeds to repurchase and retire 2,166,836 shares of our common stock from Advent at a price of $5.17 per share, which is equal to the net proceeds per share we received from the offering, before expenses, pursuant to a stock purchase agreement we entered into with Advent in May 2017.

In December 2016, we entered into the Collaboration Agreement with Novartis pursuant to which we granted Novartis an exclusive option to collaborate with us for the global development and commercialization of emricasan. Under the Collaboration Agreement, Novartis paid us an upfront payment of $50.0 million. In May 2017, Novartis exercised its option, and we received a $7.0 million option exercise payment in July 2017. Concurrent with the entry into the Collaboration Agreement, we entered into an Investment Agreement with Novartis whereby we agreed to sell and Novartis agreed to purchase, convertible promissory notes, in one or two closings, for an aggregate principal amount of up to $15.0 million. In February 2017, we issued to Novartis a convertible promissory note, or the Novartis Note, in the principal amount of $15.0 million. The maturity date of the Novartis Note is December 31, 2019. The Novartis Note bears interest on the unpaid principal balance at a rate of 6% per annum. We may prepay or convert the Novartis Note into shares of our common stock, at our option, until December 31, 2019. Novartis may convert the Novartis Note into shares of our common stock upon a change of control of our company or termination of the Collaboration Agreement by Novartis pursuant to certain provisions. If converted, the principal and accrued interest under the Novartis Note will convert into shares of our common stock at a conversion price equal to 120% of the 20-day trailing average closing price per share of the common stock immediately prior to the conversion date. Upon the occurrence of certain events of default, the Novartis Note requires us to repay the principal balance and any unpaid accrued interest.

At September 30, 2017, we had cash, cash equivalents and marketable securities of $85.2 million. We believe our existing cash, cash equivalents and marketable securities will be sufficient to fund our operations for at least the next 12 months from the date of the filing of this Form 10-Q. To fund further operations, we will need to raise additional capital. We plan to continue to fund losses from operations and capital funding needs through future equity and debt financing, as well as potential collaborations. The sale of additional equity or convertible debt could result in additional dilution to our stockholders. The incurrence of indebtedness would result in debt service obligations and could result in operating and financing covenants that would restrict our operations. No assurances can be provided that financing will be available in the amounts we need or on terms acceptable to us, if at all. If we are not able to secure adequate additional funding, we may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, and/or suspend or curtail planned programs. Any of these actions could materially harm our business, results of operations and future prospects.

~~The following table sets forth a summary of the net cash flow activity for each of the periods set forth below:~~

Net cash used in operating activities was $22.8 million and $17.2 million for the nine months ended September 30, 2017 and 2016, respectively. The primary use of cash was to fund our operations related to the development of emricasan.

Net cash used in investing activities was $51.9 million for the nine months ended September 30, 2017, which consisted primarily of cash used to purchase marketable securities, partially offset by proceeds from maturities of marketable securities. Net cash provided by investing activities was $5.8 million for the nine months ended September 30, 2016, which consisted primarily of proceeds from maturities of marketable securities, partially offset by cash used to purchase marketable securities.

Net cash provided by financing activities was $31.0 million for the nine months ended September 30, 2017, which consisted primarily of net proceeds from our public offering in May 2017 and proceeds from the issuance of the $15.0 million Novartis Note in February 2017, partially offset by the repurchase of shares from Advent in May 2017 and voluntary prepayment of the $1.0 million promissory note payable to Pfizer Inc. in January 2017. Net cash provided by financing activities was $11.8 million for the nine months ended September 30, 2016, which consisted primarily of net proceeds from sales of common stock pursuant to the Sales Agreement.

~~As of September 30, 2017, there~~There have been no material changes ~~outside~~during the ~~ordinary course of~~six months ended June 30, 2022 to our ~~business to the~~ contractual obligations ~~we reported~~disclosed in ~~“Item 7 – Management’s~~our “Management’s Discussion and Analysis of Financial Condition and Results of ~~Operations – Contractual Obligations and Commitments”~~Operations” included in ~~our annual report~~the 2021 Annual Report on Form ~~10-K for the year ended December 31, 2016 filed with the SEC on March 16, 2017.~~

We do not have any off-balance sheet arrangements (as defined by applicable regulations of the SEC) that are reasonably likely to have a current or future material effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

As of September 30, 2017, there have been no material changes in our market risk from that described in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our annual report on Form 10-K for the year ended December 31, 2016 filed with the Securities and Exchange Commission on March 16, 2017.

~~Conclusion Regarding~~We are a smaller reporting company, as defined by Rule 12b-2 of the ~~Effectiveness~~Exchange Act and are not required to provide the information required under this item.

~~Our~~We maintain disclosure controls and procedures designed to provide reasonable assurance of achieving the objective that information in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified and pursuant to the requirements of the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by SEC Rule 13a-15(b), we carried out an evaluation, with the participation of our ~~principal executive officer~~Management, including our Chief Executive Officer and ~~principal financial officer, has evaluated~~Chief Financial Officer, of the effectiveness of our disclosure controls and procedures as ~~defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act~~ of ~~1934, as amended, as of~~June 30, 2022, the end of the period covered by this ~~quarterly report on Form 10-Q.~~report. Based ~~on such evaluation,~~upon the foregoing, our ~~principal executive officer~~Chief Executive Officer and ~~principal financial officer have~~Chief Financial Officer concluded that ~~as of such date,~~ our disclosure controls and procedures were ~~effective.~~effective at a reasonable assurance level as of June 30, 2022.

~~Inherent Limitations of Disclosure Controls and Procedures and~~Changes in Internal Control ~~Over~~over Financial Reporting

~~Our management, including our principal executive officer and our principal financial officer, does not expect that our disclosure controls and procedures or~~There were no changes in our internal control over financial reporting ~~will prevent all error and all fraud. A~~during our last fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

Management recognizes that a control system, no matter how well ~~conceived~~designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, ~~within our company~~ have been detected. These inherent limitations include the realities that judgments in ~~decision-making~~decision making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the ~~control.~~controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future ~~conditions. Over~~conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with ~~the~~ policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

~~Changes in Internal Control Over Financial Reporting~~PART II — OTHER INFORMATION

There has been no change in our internal control over financial reporting during the quarter ended September 30, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.Item 1. Legal Proceedings.

On or about February 17, 2022, two former employees, each of whom separately resigned and terminated their employment with Histogen, filed a complaint in the Superior Court of California, County of San Diego against us, our Board of Directors, our former Chief Executive Officer, as well as three individuals that are currently employed by the Company. Although the complaint lists the “Histogen Board of Directors, a business entity form unknown” as a defendant, the complaint does not specifically list the names of the board members. The plaintiffs allege whistleblower status, retaliation, discrimination, unfair business practices, wrongful termination, violation of civil rights, and other California state law claims. We have tendered the complaint to our liability insurer and engaged outside litigation counsel, as approved by our carrier, to defend Histogen, the Board of Directors and the individuals in this matter. We object to the naming of each of the defendants in this matter and deny each of the plaintiffs’ claims. The plaintiffs agreed to pre-arbitration mediation, which was conducted on May 4, 2022, as was required by the arbitration agreement executed by each of the plaintiffs. . Considering that the parties did not resolve the matter through this mediation, the Company petitioned the San Diego Superior Court for an order that the matter be submitted to arbitration consistent with each of the plaintiff’s arbitration agreements. The hearing for the motion to compel arbitration is scheduled to be held on August 12, 2022. We believe that our defense costs, settlement monies, damages or any other awards would be covered by our liability insurance; provided, however, insurance may not cover all claims or could exceed our insurance coverage. We believe that there are substantial defenses to this lawsuit, and we intend to vigorously defend against each of these claims. While this litigation matter is in the early stages, we believe the action is without merit. Nonetheless, the ultimate outcome is unknown at this time.

Amerimmune Collaborative Development and Commercialization Agreement Arbitration

On March 3, 2022, we filed a demand for arbitration (“Arbitration Demand”) with JAMS in the county of San Diego, against Amerimmune LLC (“Amerimmune”) seeking a declaratory judgment that Amerimmune has materially breached the Collaborative Agreement entered into by and between us and Amerimmune on October 26, 2020, and that the Company is therefore entitled to terminate the Collaborative Agreement in accordance with its terms. We further brought the Arbitration Demand for breach of contract, seeking an award of specific performance requiring Amerimmune to comply with the terms of the Agreement, which provide that, in the event of termination for material breach, all rights and licenses granted to Amerimmune by us shall terminate, and Amerimmune shall cease any and all development, manufacture and commercialization activities under the Agreement, and any and all rights granted by us to Amerimmune revert to the Company. In the event that specific performance is not awarded, we are pursuing in the alternative a cause of action for breach of contract, seeking an award of damages for such breach in an amount to be determined at hearing. And finally, we are pursuing a claim for misappropriation of trade secrets, seeking an award of damages in an amount to be determined at hearing.

On April 14, 2022, Amerimmune filed its answer to the Company’s Demand for Arbitration, and also asserted five counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with prospective economic relations, negligent interference with prospective economic relations, and declaratory relief that Amerimmune has the right to exclusive option. On April 21, 2022, the Company filed its answer to Amerimmune’s counterclaims. The parties are currently engaged in discovery, and the final hearing in the arbitration has been set for October 5-7, 2022. The Company intends to vigorously defend against Amerimmune’s counterclaims.

In the event that we are successful on our claims as set forth in our Arbitration Demand and the Agreement is terminated, we intend to develop emricasan for COVID-19 and other infectious and inflammatory diseases independently at our discretion.

There can be no assurances that the Arbitration will result in our favor. If the Collaborative Agreement is not terminated and the rights granted by us to Amerimmune do not revert back to us, we expect that we will continue to jointly develop emricasan pursuant to the terms of the Collaborative Agreement. The ultimate outcome of this Arbitration is unknown at this time.

~~PART II. OTHER~~ ~~INFORMATION~~On July 13, 2022, Amerimmune filed a complaint (the “Federal Complaint”) against the Company in the United States District Court for the Southern District of California. Amerimmune filed a two-count complaint seeking injunctive and declaratory relief relating to the purported exercise of the option as discussed above. On July 18, 2022, Amerimmune filed a second, separate complaint against the Company alleging the same facts and causes of action as the Federal Complaint, also seeking injunctive and declaratory relief relating to the purported exercise of the option, in the Superior Court for the County of San Diego (the “State Complaint”). The Company was served with the State Complaint on August 8, 2022, but has not yet been served with the Federal Complaint. The Company believes any claims related to the Collaborative Agreement are subject to the Arbitration proceeding and therefore, that both the Federal Complaint and the State Complaint were filed improperly and are subject to dismissal for this and additional reasons. Moreover, the Company denies the allegations set forth therein, and intends to vigorously defend against the litigations.

We are providing the following summary of the risk factors contained in this Quarterly Report on Form 10-Q to enhance the readability and accessibility of our risk factor disclosures. This summary does not address all of the risks that we face. We encourage you to carefully review the full risk factors contained in this Quarterly Report on Form 10-Q in their entirety for additional information regarding the material factors that make an investment in our securities speculative or risky. The primary categories by which we classify risks include those related to: (i) our business and FDA Regulation, (ii) our intellectual property, and (iii) owning our common stock. Set forth below within each of these categories is a summary of the principal factors that make an investment in our common stock speculative or risky.

~~We are currently not a party~~Risks Related to ~~any material legal proceedings.~~

Investing in our securities involves a high degree of risk. You should carefully consider the following risks factors, together with all of the other information included or incorporated by reference in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The risks described below are material risks currently known, expected or reasonably foreseeable by us. However, the risks described below are not the only ones that we face. Additional risks not presently known to us or that we currently deem immaterial may also affect our business, operating results, prospects, or financial condition. If any of these risks actually materialize, our business, prospects, financial condition, and results of operations could be seriously harmed. This could cause the trading price of our common stock to decline, resulting in a loss of all or part of your investment.

We must raise additional funds to finance our operations to remain a going concern.

As of June 30, 2022, the Company has an accumulated deficit of $81.7 million and expects to incur operating losses and generate negative cash flows from operations for the foreseeable future. As of June 30, 2022, we had approximately $12.6 million in cash and cash equivalents which excludes gross proceeds of approximately $5.0 million from a private placement financing closed in July 2022. Based on our current business plan and related operating budget, management believes that existing cash and cash equivalents will be sufficient to fund our obligations through December 31, 2023.

We have not yet established ongoing sources of revenues sufficient to cover our ongoing operating costs and will need to continue efforts to raise additional capital to support our future operating activities, including progression of our development programs, preparation for commercialization, and other operating costs. Management’s plans with regard to these matters include entering into a combination of debt or additional equity financing arrangements, strategic partnerships, collaboration and licensing arrangements, or other similar arrangements. There can be no assurance that we will be able to obtain additional financing on terms acceptable to us, on a timely basis or at all. In addition, changing circumstances may cause us to increase our spending significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. We may need to raise additional funds sooner than we anticipate if we choose to expand more rapidly than we presently anticipate. Based

on the Company’s current operating plan, management believes that existing cash and cash equivalents, including net proceeds from a July 2022 financing, will be sufficient to fund the Company’s obligations for at least 12 months after these condensed consolidated financial statements are issued.

The condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business.

We will require additional capital for the further development and, if approved, commercialization of our product candidates. Additional capital may not be available when we need it, on terms acceptable to us or at all. If adequate capital is not available to us on a timely basis, we may be required to significantly delay, scale back or discontinue our research and development programs or the commercialization of any product candidates, if approved, or be unable to continue or expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition, results of operations, growth prospects and cause the price of our common stock to decline.

We will need to raise additional capital; however, it may be unavailable to us or, even if capital is obtained, may cause dilution or place significant restrictions on our ability to operate our business.

Our operations have required substantial amounts of cash since inception. To date, we have funded our operations primarily through the sale of our preferred and common stock. We are currently advancing two product candidates through clinical development, and have other product candidates in preclinical development, as well as early-stage research projects. Developing our product candidates is expensive, and we expect to continue to spend substantial amounts as we fund our early-stage research projects and continue to advance our programs through preclinical and clinical development. Even if we are successful in developing our product candidates, obtaining regulatory approvals and potentially launching and commercializing any product candidate will require substantial additional funding. Since we will be unable to generate sufficient, if any, cash flow to fund our operations for the foreseeable future, we will need to seek additional equity or debt financing to provide the capital required to maintain or expand our operations.

There can be no ~~material changes~~assurance that we will be able to raise sufficient additional capital on acceptable terms or at all. If such additional financing is not available on satisfactory terms, or is not available in sufficient amounts, we may be required to significantly delay, scale back or discontinue our research and development programs or the commercialization of any product candidates, if approved, or be unable to continue or expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition, results of operations, growth prospects and cause the price of our common stock to decline. In addition, we may be required to grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Our inability to fund our business could lead to the loss of your investment.

Our future capital requirements will depend on many factors, including, but not limited to:

If we raise additional capital by issuing common stock, or any other equity securities or securities convertible into equity, the percentage ownership of our existing stockholders may be reduced, and accordingly these stockholders may experience substantial dilution. We may also issue equity securities that provide for rights, preferences and privileges senior to those of our common stock. Given our need for cash and that equity issuances are the most common type of fundraising for similarly situated companies, the risk ~~factors included in “Item 1A. Risk Factors” in~~of dilution is particularly significant for our ~~annual report~~stockholders.

Further, SEC regulations limit the amount of funds we can raise during any 12-month period pursuant to our shelf registration statement on Form S-3. We are currently subject to General Instruction I.B.6 to Form S-3, or the Baby Shelf Rule, and the amount of funds we can raise through primary public offerings of securities in any 12-month period using our registration statement on Form S-3 is limited to one-third of the aggregate market value of the voting and non-voting common equity held by non-affiliates. We are currently limited by the Baby Shelf Rule as of the filing of this Annual Report on Form 10-K, until such time as our public float exceeds $75 million. If we are required to file a new registration statement on another form, we may incur additional costs and be subject to delays due to review by SEC staff.

If we fail to retain current members of our senior management and scientific personnel, or to attract and keep additional key personnel, we may be unable to successfully develop or commercialize our product candidates.

Our ability to compete in the highly competitive biotechnology and pharmaceutical industries depends on our continued ability to attract, retain, and motivate highly qualified management and scientific personnel. Competition for qualified personnel is intense. We may not be successful in attracting qualified personnel to fulfill our current or future needs and there is no guarantee that any of these individuals will join us on a full-time employment basis, or at all. Additionally, if we are unable to raise capital, this may further harm our ability to attract and retain key personnel. In the event we are unable to fill critical open employment positions, we may need to delay our operational activities and goals, including the development of our product candidates, and may have difficulty in meeting our obligations as a public company. We do not maintain “key person” insurance on any of our employees.

In addition, competitors and others are likely in the future to attempt to recruit our employees. The loss of the services of any of our key personnel, the inability to attract or retain highly qualified personnel in the future or delays in hiring such personnel, particularly senior management, and other technical personnel, could materially and adversely affect our business, financial condition, and results of operations. In addition, the replacement of key personnel likely would involve significant time and costs, and may significantly delay or prevent the achievement of our business objectives.

On November 8, 2021, Richard Pascoe stepped down from his position as our President and Chief Executive Officer and as a member of our Board. The Board appointed Steven J. Mento, Ph.D., a current member of the Company’s Board of Directors, as Executive Chairman and Interim President and Chief Executive Officer as of November 8, 2021. On February 22, 2022, we announced the Board’s decision to postpone any search for a permanent President and Chief Executive Officer at this time. We may also have to take additional measures to retain existing executives and other personnel.

From time to time, our management seeks the advice and guidance of certain scientific advisors and consultants regarding clinical and regulatory development programs and other customary matters. These scientific advisors and consultants are not our employees and may have commitments to, or consulting or advisory contracts with, other entities that may limit their availability to us. In addition, our scientific advisors may have arrangements with other companies to assist those companies in developing products or technologies that may compete with ours.

Our common stock may be delisted from Nasdaq if we fail to comply with Nasdaq’s continued listing requirements, the failure of which could lead to the delisting of our common stock from Nasdaq and our common stock trading, if at all, only on the over-the-counter market, or OTC market.

We must continue to satisfy the Nasdaq Capital Market’s continued listing requirements, including, among other things, the corporate governance requirements, and the minimum closing bid price requirement. If we fail to satisfy the continued listing requirements of Nasdaq, which we have in the past. Nasdaq may take steps to delist our common stock. Such a delisting would likely have a negative effect on the price of our common stock and would impair your ability to sell or purchase our common stock when you wish to do so.

On August 18, 2021, we received a letter from the Listing Qualifications Department of the Nasdaq Stock Market, or Nasdaq, indicating that, based upon the closing bid price of our common stock for the 30 consecutive business day period between July 7, 2021, through August 17, 2021, we did not meet the minimum bid price of $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2), or the Bid Price Rule. The letter also indicated that we will be provided with a compliance period of 180 calendar days, or until February 14, 2022, or the Compliance Period, in which to regain compliance pursuant to Nasdaq Listing Rule 5810(c)(3)(A).

On June 17, 2022, we received written notice from the Listing Qualifications Department of the Nasdaq Stock Market (“Nasdaq”) stating that the Company has regained compliance with the Nasdaq minimum bid price continued listing requirement by maintaining a minimum bid price for its common stock of at least $1.00 for the last ten (10) consecutive business days, from June 3 through June 16, 2022 and the matter is now closed.While we have regained compliance with the Nasdaq listing rules, if we fail in the future to comply with Nasdaq listing rules, it could lead to the delisting of our common stock from Nasdaq and our common stock trading, if at all, only on the over-the-counter market, or OTC market.

We will need to increase the size of our organization and may not successfully manage our growth.

We are a clinical-stage biopharmaceutical company with a small number of employees, and our management systems currently in place are not likely to be adequate to support our future growth plans. Our ability to grow and to manage our growth effectively will require us to hire, train, retain, manage and motivate additional employees and to implement and improve our operational, financial and management systems. These demands also may require the hiring of additional senior management personnel or the development of additional expertise by our senior management personnel. Hiring a significant number of additional employees, particularly those at the management level, would increase our expenses significantly. Moreover, if we fail to expand and enhance our operational, financial and management systems in conjunction with our potential future growth, it could have a material adverse effect on our business, financial condition and results of operations.

We are a clinical-stage development company, have a very limited operating history, are not currently profitable, do not expect to become profitable in the near future and may never become profitable.

We are a clinical-stage biopharmaceutical company, have no approved products and have generated minimal revenues from the sale of products. We are focused on developing our proprietary hypoxia-generated growth factor technology platform and stem cell-free biologic products as potential first-in-class restorative therapeutics that ignite the body’s natural process to repair and maintain healthy biological function. We also have a pipeline of clinical and preclinical small molecule pan-caspase and caspase selective inhibitors focused on treatments for infectious and inflammatory diseases that we intend to develop.

Our operations to date have been limited to organizing, staffing, and financing our company, applying for patent rights, manufacturing on a clinical scale, undertaking clinical trials of our product candidates, and engaging in research and development. As a result, we have limited historical operations upon which to evaluate our business and prospects and have not yet demonstrated an ability to obtain marketing approval for any of our product candidates or successfully overcome the risks and uncertainties frequently encountered by companies in the biopharmaceutical industry. We also have generated limited revenues from licensing agreements or product sales to date and continue to incur significant research and development and other expenses. As a result, we have not been profitable and have incurred significant operating losses in every reporting period since our inception, except for the year ended December 31, ~~2016~~2017. For the six months ended June 30, 2022 and for the years ended December 31, 2021 and 2020, we reported net losses of $4.1 million, $15.0 million, and $18.8 million, respectively, and had an accumulated deficit of $81.7 million as of June 30, 2022.

For the foreseeable future, we expect to continue to incur losses, which will increase significantly from historical levels as we expand our drug development activities, seek regulatory approvals for our product candidates and begin to commercialize them if they are approved by the U.S. Food and Drug Administration (the “FDA”) or comparable foreign regulatory authorities. Even if we succeed in developing and commercializing one or more product candidates, we may never become profitable.

We are dependent on the success of one or more of our current product candidates, which are in early stages of clinical development, and we cannot be certain that any of them will receive regulatory approval or be commercialized.

We currently have two product candidates in development, HST-003 for the treatment of articular cartilage defects in the knee and HST-004 for the treatment of spinal disc repair. To date, we have spent significant time, money, and effort on the development of our product candidates, HST-003, HST-004, emricasan, and other pre-clinical assets. To date, no pivotal clinical trials designed to provide clinically and statistically significant proof of efficacy, or to provide sufficient evidence of safety to justify approval, have been completed with any of our product candidates. Success in preclinical studies and early clinical trials does not ensure that later clinical trials will generate adequate data to demonstrate the efficacy and safety of a therapeutic candidate.

There is no guarantee that any future clinical trials will be started or completed in a timely fashion or succeed. Further, we have experienced delays in enrollment of patients in our clinical trials due to the COVID-19 pandemic, which could result in material delays and complications with respect to our research and development programs and clinical trials. Our ability ultimately to reach profitability is critically dependent on our future success in obtaining regulatory approval and/or commercialization for our product

candidates. However, there can be no guarantee that any future clinical trials will be timely commenced, successful, or that regulators will approve our product candidates in a timely manner, or at all. None of our product candidates have been approved for marketing or are being marketed or commercialized at this time.

We do not anticipate that any of our current product candidates will be eligible to receive regulatory approval from the FDA or comparable foreign authorities and begin commercialization for a number of years, if ever. Even if we ultimately receive regulatory approval for any of these product candidates, we or our current or potential future partners, if any, may be unable to commercialize them successfully for a variety of reasons. These include, for example, the availability of alternative treatments, lack of cost-effectiveness, the cost of manufacturing the product on a commercial scale and competition with other drugs or therapies. The success of our product candidates may also be limited by the prevalence and severity of any adverse side effects. If we fail to commercialize one or more of our current product candidates, we may be unable to generate sufficient revenues to attain or maintain profitability, and our financial condition and stock price may decline.

We are involved, and may become involved in the future, in disputes and other legal or regulatory proceedings that, if adversely decided or settled, could materially and adversely affect our business, financial condition and results of operations.

We are, and may in the future become, party to litigation, arbitration, regulatory proceedings or other disputes. In general, claims made by or against us in disputes and other legal or regulatory proceedings can be expensive and time consuming to bring or defend against, requiring us to expend significant resources and divert the efforts and attention of our management and other personnel from our business operations. These potential claims include, but are not limited to, personal injury claims, class action lawsuits, intellectual property claims, employment litigation and regulatory investigations and causes of action relating to the advertising and promotional claims about our products.

On January 19, 2022, we provided a notice of material breach in connection with Amerimmune’s non-performance under the Collaborative Agreement and, on March 3, 2022, we filed the Arbitration Demand. On March 11, 2022, JAMS issued a Notice of Commencement of Arbitration letter, confirming the commencement of the arbitration as of that date. As part of our Arbitration Demand, we are seeking a declaratory judgment that Amerimmune has materially breached the Collaborative Agreement, and we are therefore entitled to terminate the Collaborative Agreement. In the event of termination for material breach, all rights and licenses granted to Amerimmune by us shall terminate, and any and all rights granted by us to Amerimmune revert to the Company. If we are successful, we expect that we would regain full rights to emricasan and other caspase modulators, including CTS-2090 and CTS-2096. In that case, we intend to develop emricasan for COVID-19 and other infectious and inflammatory diseases independently at our discretion. In the event that a declaratory judgment to terminate the Collaborative Agreement is not awarded, we are also pursuing in the alternative a cause of action for breach of contract, seeking an award of damages for such breach.

On March 8, 2022, Amerimmune provided written notice to exercise an option for additional license rights to develop additional products. However, the Company has rejected Amerimmune’s election of the option and believes that Amerimmune no longer has such right to exercise the option based on, amongst other reasons, our belief that the Agreement has been terminated as set forth in our Arbitration Demand. On April 14, 2022, Amerimmune filed its answer to the Company’s Demand for Arbitration, and also asserted five counterclaims for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with prospective economic relations, negligent interference with prospective economic relations, and declaratory relief that Amerimmune has the right to exclusive option. On April 21, 2022, the Company filed its answer to Amerimmune’s counterclaims. The parties are currently engaged in discovery, and the final hearing in the arbitration has been set for October 5-7, 2022. The Company intends to vigorously defend against Amerimmune’s counterclaims.

On July 13, 2022, Amerimmune filed a complaint (the “Federal Complaint”) against the Company in the United States District Court for the Southern District of California. Amerimmune filed a two-count complaint seeking injunctive and declaratory relief relating to the purported exercise of the option as discussed above. On July 18, 2022, Amerimmune filed a second, separate complaint against the Company alleging the same facts and causes of action as the Federal Complaint, also seeking injunctive and declaratory relief relating to the purported exercise of the option, in the Superior Court for the County of San Diego (the “State Complaint”). The Company was served with the ~~Securities~~State Complaint on August 8, 2022, but has not yet been served with the Federal Complaint. The Company believes any claims related to the Collaborative Agreement are subject to the Arbitration proceeding and ~~Exchange Commission~~therefore, that both the Federal Complaint and the State Complaint were filed improperly and are subject to dismissal for this and additional reasons. Moreover, the Company denies the allegations set forth therein, and intends to vigorously defend against the litigations.

There can be no assurances that the Arbitration Demand or the related litigation matters will result in our favor. We may not receive a declaratory award to terminate the Collaborative Agreement. Amerimmune may be successful in exercising the option under the Agreement providing for additional licenses to commercialize additional products in various fields pursuant to the terms of the Agreement. If the Collaborative Agreement is not terminated, the arbitrator or judge may decide alternative outcomes such as Amerimmune having the ability to commercialize emricasan on ~~March 16, 2017,~~its own or other outcomes that are undeterminable at this time, but,

ultimately, have a material adverse impact on the Company and our future viability. We also may not be successful in receiving an award of damages in the Arbitration or related litigation matters.

Two former employees of the Company filed a complaint in the Superior Court of California, County of San Diego, alleging certain employment-related claims, described in more depth in the following risk factor titled “Employee litigation and unfavorable publicity could negatively affect our future business.”.

Any adverse determination against us in these proceedings, or even the allegations contained in the claims, regardless of whether they are ultimately found to be without merit, may also result in settlements, injunctions or damages that could have a material adverse effect on our business, financial condition and results of operations.

Employee litigation and unfavorable publicity could negatively affect our future business.

From time to time, companies become involved in employment related litigation, including claims of age discrimination, sexual harassment, gender discrimination, creating a hostile workplace, retaliation, wrongful termination, immigration violations, or other local, state, and federal labor law violations. In recent years, there has been an increase in the number of discrimination and harassment claims generally. Coupled with the expansion of social media platforms and similar devices that allow individuals access to a broad audience, these claims have had a significant negative impact on some businesses. Certain companies that have faced employment or harassment related lawsuits have had to terminate management or other key personnel, and have suffered reputational harm that has negatively impacted their business. Any employment-related claim could negatively affect our business.

On or about February 17, 2022, two former employees, each of whom separately resigned and terminated their employment with Histogen, filed a complaint in the Superior Court of California, County of San Diego against us, our Board of Directors and certain other of our current and prior employees. The former non-executive employees of the Company have asserted causes of action for whistleblower status, retaliation, discrimination, unfair business practices, wrongful termination, violation of civil rights, and other California state law claims. The Company objects to the naming of each of the defendants in this matter and denies each of the plaintiffs’ claims. The plaintiffs agreed to pre-arbitration mediation, which was conducted on May 4, 2022, as was required by the arbitration agreement executed by each of the plaintiffs. Considering that the parties did not resolve the matter through this mediation, the Company petitioned the San Diego Superior Court for an order that the matter be submitted to arbitration consistent with each of the plaintiff’s arbitration agreements. The hearing for the motion to compel arbitration is scheduled to be held on August 12, 2022. The Company believes that our defense costs, settlement monies, damages or any other awards would be covered by our liability insurance; provided, however, insurance may not cover all claims or could exceed our insurance coverage. The Company believes that there are substantial defenses to this lawsuit, and we intend to vigorously defend against each of these claims. While this litigation matter is in the early stages, the Company believes the action is without merit.

However, because of the uncertain nature of litigation, the outcome of these claims or any other such employment related actions and proceedings cannot be predicted with certainty and an unfavorable resolution of one or more of them could have a material adverse effect on our business, financial condition, results of operations, cash flows, reputation, brand identity and the trading price of our securities. Any such litigation, with or without merit, could also result in substantial expenditures of time and money, and divert attention of our management team from other tasks important to the success of our business.

Clinical drug development involves uncertain outcomes, and results of earlier studies and trials may not be predictive of future trial results.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical trial process. The results of preclinical studies and early clinical trials relating to our product candidates may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. A number of companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to lack of efficacy or safety profiles, notwithstanding promising results in earlier trials. We cannot be certain that any of our current or future clinical trials will be successful and support regulatory approval in any jurisdiction. Failure in one indication may have negative consequences for the development of our product candidates for other indications. Any such failure may harm our business, prospects, and financial condition.

If development of our product candidates does not produce favorable results, we, and our collaborators, may be unable to commercialize these products.

To receive regulatory approval for the commercialization of our product candidates, HST-003, HST-004, emricasan, being developed jointly with Amerimmune for the treatment of COVID-19 and evaluated by us for other infectious diseases, including for the treatment

of MRSA, and our other preclinical product candidates, CTS-2090 and CTS-2096, or any other product candidates that we may develop, adequate and well-controlled clinical trials must be conducted to demonstrate safety and efficacy in humans to the satisfaction of the FDA and comparable foreign regulatory authorities. In order to support marketing approval, these agencies typically require successful results in one or more Phase 3 clinical trials, which our current product candidates have not yet reached and may never reach. In addition to the risks described above under “Clinical drug development involves uncertain outcomes, and results of earlier studies and trials may not be predictive of future trial results,” we may experience numerous unforeseen events during, or as a result of, the development process that could delay or prevent commercialization of our current or future product candidates, including the following:

In the future, we or our collaborators will be responsible for establishing the targeted endpoints and goals for development of our product candidates. These targeted endpoints and goals may be inadequate to demonstrate the safety and efficacy levels required for regulatory approvals. Even if we believe data collected during the development of our product candidates are promising, such data may not be sufficient to support marketing approval by the FDA or comparable foreign authorities. Further, data generated during development can be interpreted in different ways, and the FDA or comparable foreign authorities may interpret such data in different ways than us or our collaborators. Our failure to adequately demonstrate the safety and efficacy of our product candidates would prevent our receipt of regulatory approval, and ultimately the potential commercialization of these product candidates.

In addition, since we do not currently possess the resources necessary to complete development and commercialize our product candidates or any other product candidates that we may develop, we have entered into and may seek to enter into license agreements to assist in the development and potential future commercialization of some or all of our product candidates as a component of our strategic plan. For example, we entered into a Collaborative Development and Commercialization Agreement with Amerimmune, pursuant to which Amerimmune, at its expense and in collaboration with us, shall use commercially reasonable efforts to lead the development activities for emricasan for COVID-19. See “Risk Factor – “We expect to depend on collaborations with third parties for the research, development and commercialization of certain of the product candidates we may develop. If any such collaborations are not successful, we may not be able to realize the market potential of those product candidates”.

We expect to continue to incur significant research and development expenses, which may make it difficult for us to attain profitability.

We expect to expend substantial funds in research and development, including preclinical studies and clinical trials of our product candidates, and to manufacture and market any product candidates in the event they are approved for commercial sale. We also may need additional funding to develop or acquire complementary companies, technologies and assets, as well as for working capital requirements and other operating and general corporate purposes. Moreover, our planned increases in staffing will dramatically increase our costs in the near and long-term. Because of the numerous risks and uncertainties associated with drug development, we are unable to predict the timing or amount of our expenses, or when we will be able to generate any meaningful revenue or achieve or maintain profitability, if ever. In addition, our expenses could increase beyond our current expectations if we are required by the FDA, or foreign regulatory agencies, to perform studies in addition to those that we currently anticipate, or if there are any delays in any of our or our future collaborators’ clinical trials or the development of any of our product candidates. Even if one or more of our product candidates is approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved product candidate and ongoing compliance efforts.

However, our spending on current and future research and development programs and product candidates for therapeutic indications may not yield any commercially viable products. Due to our limited financial and managerial resources, we must focus on a limited

number of research programs and product candidates and on specific therapeutic indications. Our resource allocation decisions may cause us to fail to capitalize on viable product candidates or profitable market opportunities.

Because the successful development of our product candidates is uncertain, we are unable to precisely estimate the actual funds we will require to develop and potentially commercialize them. In addition, we may not be able to generate sufficient revenue, even if we are able to commercialize any of our product candidates, to become profitable.

We currently depend on collaborations with third parties for the research, development and commercialization of certain of the product candidates we may develop and may in the future depend on collaborations with third parties. If any such collaborations are not successful, we may not be able to realize the market potential of those product candidates.

We anticipate seeking third-party collaborators for the research, development, and commercialization of certain of the product candidates we may develop. For example, we entered into an agreement with Amerimmune under which we and Amerimmune are jointly developing emricasan for the treatment of COVID-19.

In October 2020, we entered into a Collaborative Agreement with Amerimmune to jointly develop emricasan for the potential treatment of COVID-19. The FDA approved an investigational new drug application (IND) to initiate a Phase 1 study of emricasan in mild COVID-19 patients to assess safety and tolerability in 2020. Under the Collaborative Agreement, during the agreed upon research term, Amerimmune, at its own expense and in collaboration with us, is required to use commercially reasonable efforts to lead the development activities for emricasan, limited to the treatment of COVID-19. We believe that, for numerous reasons set forth in our arbitration demand, Amerimmune has failed to undertake commercially reasonable efforts towards the development of emricasan as required by the Collaborative Agreement. Therefore, we are currently seeking to terminate the Collaborative Agreement and have the rights to independently proceed with the development of emricasan for the treatment of COVID-19 and other infectious and inflammatory diseases at our discretion. At this time, we continue to operate under the terms of the existing Collaborative Agreement for the joint development of emricasan for the treatment of COVID-19.

The process of establishing and maintaining collaborative relationships is difficult, time-consuming and involves significant uncertainty, such as:

If any collaborator fails to fulfill its responsibilities in a timely manner, or at all, our research, clinical development, manufacturing or commercialization efforts related to that collaboration could be delayed or terminated, or it may be necessary for us to assume

responsibility for expenses or activities that would otherwise have been the responsibility of our collaborator. If we are unable to establish and maintain collaborative relationships on acceptable terms or to successfully transition terminated collaborative agreements, we may have to delay or discontinue further development of one or more of our product candidates, undertake development and commercialization activities at our own expense or find alternative sources of capital.

For any such arrangements with third parties, we will likely have shared or limited control over the amount and timing of resources that our collaborators dedicate to the development or potential commercialization of any product candidates we may seek to develop with them. Our ability to generate revenue from these arrangements with commercial entities will depend on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements. We cannot predict the success of any collaboration that we enter into.

In addition, we may face significant competition in seeking appropriate collaborations and the negotiation process is time-consuming and complex, and we may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop product candidates or bring them to market and generate product revenue.

Our product candidates may cause undesirable side effects that could delay or prevent their regulatory approval or commercialization or have other significant adverse implications on our business, financial condition and results of operations.

Undesirable side effects observed in clinical trials or in supportive preclinical studies with our product candidates could interrupt, delay or halt their development and could result in the denial of regulatory approval by the FDA or comparable foreign authorities for any or all targeted indications or adversely affect the marketability of any such product candidates that receive regulatory approval. In turn, this could eliminate or limit our ability to commercialize our product candidates.

Our product candidates may exhibit adverse effects in preclinical toxicology studies and adverse interactions with other drugs. There are also risks associated with additional requirements the FDA or comparable foreign authorities may impose for marketing approval with regard to a particular disease.

Our product candidates may require a risk management program that could include patient and healthcare provider education, usage guidelines, appropriate promotional activities, a post-marketing observational study, and ongoing safety and reporting mechanisms, among other requirements. Prescribing could be limited to physician specialists or physicians trained in the use of the drug, or could be limited to a more restricted patient population. Any risk management program required for approval of our product candidates could potentially have an adverse effect on our business, financial condition and results of operations.

Undesirable side effects involving our product candidates may have other significant adverse implications on our business, financial condition and results of operations. For example:

In addition, if any of our product candidates receive marketing approval and we or others later identify undesirable side effects caused by the product:

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, financial condition, results of operations, and growth prospects. We cannot predict whether our product candidates will cause toxicities in humans that would preclude or lead to the revocation of regulatory approval based on nonclinical studies or early-stage clinical trials.

Delays in the commencement or completion of clinical trials could result in increased costs to us and delay our ability to establish strategic license agreements.

Delays in the commencement or completion of clinical trials could significantly impact our drug development costs. We do not know whether planned clinical trials will begin on time or be completed on schedule, if at all.

The commencement of clinical trials can be delayed for a variety of reasons, including, but not limited to, delays related to:

In addition, once a clinical trial has begun, it may be suspended or terminated by us, our licensees, the institutional review boards or data safety monitoring boards charged with overseeing our clinical trials, the FDA or comparable foreign authorities due to a number of factors, including:

The progress of clinical trials and clinical studies also may be affected by significant global public health matters such as the current novel coronavirus outbreak. For example, our most current HST-003 study has experienced enrollment delays due to reduced frequency of elective procedures related to COVID-19. Factors related to the novel coronavirus outbreak that may impact the timing and conduct of our clinical trials and clinical studies include:

In addition, if patients or subjects participating in our clinical trials or studies were to contract COVID-19, there could be an adverse impact on the trials or studies. For example, such patients may be unable to participate further or may need to limit participation in a clinical trial or study; the results and data recorded for such patients may differ from those that would have been recorded if the patients had not been affected by COVID-19; or such patients could experience adverse events that could be attributed to the drug product under investigation.

If we experience delays in the completion or termination of any clinical trial of our product candidates, the commercial prospects of our product candidates will be harmed, and our ability to commence product sales and generate product revenues from any of our product candidates will be delayed. In addition, any delays in completing our clinical trials will increase our costs and slow down our product candidate development and approval process. Delays in completing our clinical trials could also allow our competitors to obtain marketing approval before we do or shorten the patent protection period during which we may have the exclusive right to commercialize our product candidates. Any of these occurrences may harm our business, financial condition and prospects significantly. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidates.

Results of earlier clinical trials may not be predictive of the results of later-stage clinical trials.

The results of preclinical studies and early clinical trials of product candidates may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy results despite having progressed through preclinical studies and initial clinical trials. Many companies in the biopharmaceutical industry have suffered significant setbacks in advanced clinical trials due to adverse safety profiles or lack of efficacy, notwithstanding promising results in earlier studies. Similarly, our future clinical trial results may not be successful for these or other reasons.

This product candidate development risk is heightened by any changes in the planned clinical trials compared to the completed clinical trials. As product candidates are developed through preclinical and early-stage to late-stage clinical trials towards approval and commercialization, it is customary that various aspects of the development program, such as manufacturing and methods of administration, are altered along the way in an effort to optimize processes and results. While these types of changes are common and are intended to optimize the product candidates for late-stage clinical trials, approval and commercialization, such changes carry the risk ~~factors below.~~that they will not achieve these intended objectives.

Any of these changes could make the results of our planned clinical trials or other future clinical trials we may initiate less predictable and could cause our product candidates to perform differently, including causing toxicities, which could delay completion of our clinical trials, delay approval of our product candidates, and/or jeopardize our ability to commence product sales and generate revenues.

If we experience delays in the enrollment of patients in our clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented.

We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or other regulatory authorities. Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating, as well as the impact of the COVID-19 pandemic.

If we fail to enroll and maintain the number of patients for which the clinical trial was designed, the statistical power of that clinical trial may be reduced, which would make it harder to demonstrate that the product candidate being tested in such clinical trial is safe and effective. Additionally, enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause our value to decline and limit our ability to obtain ~~orphan drug exclusivity for emricasan or IDN-7314~~additional financing. Our inability to enroll a sufficient number of patients for any ~~indication.~~of our current or future clinical trials would result in significant delays or may require us to abandon one or more clinical trials altogether.

~~In the United States, under the Orphan Drug Act, the U.S. Food and Drug Administration,~~A pandemic, epidemic or outbreak of an infectious disease, such as COVID-19, or the ~~FDA,~~perception of their effects, may ~~grant orphan designation to a drug~~materially and adversely affect our business, operations and financial condition.

Outbreaks of epidemic, pandemic or ~~biological product intended to treat a rare disease or condition. Such~~contagious diseases, and conditions are those that affect fewer than 200,000 individuals in the United States, or if they affect more than 200,000 individuals in the United States, there is no reasonable expectation that the cost of developing and making a drug product available in the United States for these types of diseases or conditions will be recovered from sales of the product. Orphan Drug Designation must be requested before submitting an NDA. If the FDA grants Orphan Drug Designation, the identity of the therapeutic agent and its potential orphan use are disclosed publicly by that agency. Orphan Drug Designation does not convey any advantage in or shorten the duration of the regulatory review and approval process, but it can lead to financial incentives, such as ~~opportunities~~COVID-19, have and may continue to significantly disrupt our business. Such outbreaks pose the risk that we or our employees, contractors, suppliers, and other partners may be prevented from conducting business activities for ~~grant funding toward clinical trial costs, tax advantages and user-fee waivers.~~

~~If a drug that has orphan designation subsequently receives the first FDA approval for~~an indefinite period of time due to spread of the disease, or ~~condition for which it has such designation, the drug is entitled~~due to orphan drug marketing exclusivity for a period of seven years. Orphan drug marketing exclusivity generally prevents the FDA from approving another application, including a full NDA, to market the same drug or biological product for the same indication for seven years, except in limited circumstances, including if the FDA concludesshutdowns that the later drug is safer, more effective or makes a major contribution to patient care. For purposes of small molecule drugs, the FDA defines “same drug” as a drug that contains the same active chemical entity and is intended for the same use as the drug in question. A designated orphan drug may not receive orphan drug marketing exclusivity if it is approved for a use that is broader than the indication for which it received orphan designation. Orphan drug marketing exclusivity rights in the United States may be ~~lost if the FDA later determines that the request for designation was materially defective~~requested or ~~if the manufacturer is unable to assure sufficient quantity of the drug to meet the needs of patients with the rare disease or condition.~~

~~The criteria for designating an orphan medicinal product in the European Union, or the EU, are similar in principle to those in~~mandated by federal, state and local governmental authorities both within and outside the United States. ~~Under Article 3~~Business disruptions could include disruptions or restrictions on our ability to travel, as well as temporary closures of ~~Regulation (EC) 141/2000, a medicinal product may be designated as orphan if (1)~~our facilities and the facilities of clinical trial sites, service providers, suppliers or contract manufacturers. While it is ~~intended for~~not possible at this time to estimate the diagnosis, prevention or treatment of a life-threatening or chronically debilitating condition; (2) either (a) such condition affects no more than five in 10,000 persons in the EU when the application is made, or (b) the product, without the benefits derived from orphan status, would not generate sufficient return in the EU to justify investment; and (3) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected by the condition, as defined in Regulation (EC) 847/2000. Orphan medicinal products are eligible for financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization, entitled to ten years of market exclusivity for the approved therapeutic indication. The application for orphan designation must be submitted before the application for marketing authorization. The applicant will receive a fee reduction for the marketing authorization application if the orphan designation has been granted, but not if the designation is still pending at the time the marketing authorization is submitted. Orphan designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.

~~The ten-year market exclusivity in the EU may be reduced to six years if, at the end of the fifth year, it is established~~overall impact that the ~~product no longer meets~~COVID-19 pandemic could have on our business, the ~~criteria for orphan designation, for example, if the product is sufficiently profitable not to justify maintenance~~continued rapid spread of ~~market exclusivity. Additionally, marketing authorization may be granted to a similar product for the same indication at any time if:~~

~~We originally applied for Orphan Drug Designation for emricasan for the treatment of fibrosis in HCV-POLT patients in~~COVID-19, both across the United States and through much of the ~~EU. In late 2013,~~world, and the ~~FDA granted an Orphan Drug Designation~~measures taken by the governments of countries and local authorities has disrupted and could delay advancing our product pipeline, could delay our clinical trials, and could delay our overall development activities. Any of these effects could adversely affect our ability to obtain regulatory approval for ~~emricasan for~~and to commercialize our product candidates, increase our operating expenses and have a material adverse effect on our business, prospects and financial condition.

We continue to evaluate the treatment of POLT patients with reestablished fibrosis to delay the progression to cirrhosis and end-stage liver disease. In the EU, we withdrew the application based on feedback from the applicable regulatory body that emricasanimpact COVID-19 may have efficacy in fibrosis outside of the HCV-POLT patient population. In June 2017, the FDA granted Orphan Drug Designation for IDN-7314 for the treatment of primary sclerosing cholangitis, or PSC. In October 2017, the European Medicines Agency, or EMA, granted orphan designationon our ability to ~~IDN-7314 for the treatment of PSC. We cannot assure you~~effectively conduct our business operations as planned while taking into account regulatory, institutional, and government guidance and policies, but there can be no assurance that we will be able to avoid part or all of any impact from the spread of COVID-19 or its consequences. Any shutdowns or other business interruptions could result in material and negative effects to our ability to conduct our business in the manner and on the timelines presently planned, which could have a material adverse effect on our business, prospects and financial condition.

We intend to rely on third parties to conduct our preclinical studies and clinical trials and perform other tasks. If these third parties do not successfully carry out their contractual duties, meet expected deadlines, or comply with regulatory requirements, we may not be able to obtain ~~orphan drug exclusivity~~regulatory approval for ~~emricasan~~ or ~~IDN-7314~~commercialize our product candidates and our business, financial condition and results of operations could be substantially harmed.

We intend to rely upon third-party CROs, medical institutions, clinical investigators and contract laboratories to monitor and manage data for our ongoing preclinical and clinical programs. Nevertheless, we maintain responsibility for ensuring that each of our clinical trials and preclinical studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific standards and our reliance on these third parties does not relieve us of our regulatory responsibilities. We and our CROs and other vendors are required to comply with current requirements on good manufacturing practices (“CGMP”), good clinical practices (“GCP”) and good laboratory practice (“GLP”) which are a collection of laws and regulations enforced by the FDA, and comparable foreign authorities for all of our product candidates in clinical development. Regulatory authorities enforce these regulations through periodic inspections of preclinical study and clinical trial sponsors, principal investigators, preclinical study and clinical trial sites, and other contractors. If we or any ~~jurisdiction for~~of our CROs or vendors fails to comply with applicable regulations, the ~~target indications~~data generated in our preclinical studies and clinical trials may be deemed unreliable and the FDA, or comparable foreign authorities may require us to perform additional preclinical studies and clinical trials before approving our marketing applications. We cannot assure you that upon inspection by a ~~timely manner~~given regulatory authority, such regulatory authority will determine that any of our clinical trials comply with GCP regulations. In addition, our clinical trials must be conducted with products produced consistent with CGMP regulations. Our failure to comply with these regulations may require us to repeat clinical trials, which would delay the development and regulatory approval processes.

We may not be able to enter into arrangements with CROs on commercially reasonable terms, or at ~~all or that a competitor~~all. In addition, our CROs will not ~~obtain orphan drug exclusivity that could block the regulatory approval of emricasan or IDN-7314~~be our employees, and except for ~~several years. If we are unable~~remedies available to ~~obtain Orphan Drug Designation in the United States or in the EU,~~us under our agreements with such CROs, we will not ~~receive market exclusivity, which might affect~~be able to control whether or not they devote sufficient time and resources to our ongoing preclinical and clinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the data, they obtain is compromised due to the failure to adhere to our protocols, regulatory requirements, or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. CROs may also generate higher costs than anticipated. As a result, our business, financial condition and results of operations and the commercial prospects for our product candidates could be materially and adversely affected, our costs could increase, and our ability to generate ~~sufficient revenues.~~revenue could be delayed.

Switching or adding additional CROs, medical institutions, clinical investigators or contract laboratories involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work replacing a previous CRO. As a result, delays occur, which can materially impact our ability to meet our desired clinical development timelines. There can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse effect on our business, financial condition or results of operations.

The FDA regulatory approval process is lengthy and time-consuming and we could experience significant delays in the clinical development and regulatory approval of our product candidates.

We may experience delays in commencing and completing clinical trials of our product candidates. We do not know whether planned clinical trials will begin on time, need to be redesigned, enroll patients on time or be completed on schedule, if at all. Any of our future clinical trials may be delayed for a variety of reasons, including delays related to:

Patient enrollment, a significant factor in the timing of clinical trials, is affected by many factors including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the clinical trial, the design of the clinical trial, competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating. In addition, significant numbers of patients who enroll in our clinical trials may drop out during the clinical trials for various reasons. We believe it appropriately accounts for such increased risk of dropout rates in our trials when determining expected clinical trial timelines, but we cannot assure you that our assumptions are correct, or that it will not experience higher numbers of dropouts than anticipated, which would result in the delay of completion of such trials beyond our expected timelines.

We could encounter delays if physicians encounter unresolved ethical issues associated with enrolling patients in clinical trials of our product candidates in lieu of prescribing existing treatments that have established safety and efficacy profiles. Further, a clinical trial may be suspended or terminated by us, the IRBs in the institutions in which such trials are being conducted, the data monitoring committee for such trial, or by the FDA or other regulatory authorities due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. If ~~a competitor is able to obtain orphan exclusivity that would block emricasan’s~~we experience termination of, or ~~IDN-7314’s regulatory approval,~~delays in the completion of, any clinical trial of our product candidates, the commercial prospects for such product candidate will be harmed, and our ability to generate product revenues ~~could~~will be ~~significantly reduced, which could~~delayed. In addition, any delays in completing our clinical trials will increase our costs, slow down our product development and approval process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may harm our business, prospects, financial condition and results of ~~operations.~~operations significantly. Furthermore, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of a product candidate.

We ~~may~~cannot assure you that any future clinical trial for our product candidates will be ~~unable~~started or completed on schedule, or at all. Any failure or significant delay in completing clinical trials for our product candidates would harm the commercial prospects for such product candidate and adversely affect our financial results. Difficulties and failures can occur at any stage of clinical development, and we cannot assure you that it will be able to ~~maintain or effectively utilize orphan drug exclusivity for emricasan or IDN-7314 for~~successfully complete the development and commercialization of any product candidate in any indication.

~~We received Orphan Drug Designation from the FDA~~Changes in funding for ~~emricasan for the treatment of POLT patients with reestablished fibrosis to delay the progression to cirrhosis and end-stage liver disease. We also received Orphan Drug Designation from~~ the FDA and ~~orphan designation~~other government agencies could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new products and services from being developed or commercialized in a timely manner, which could negatively impact our business.

The ability of the ~~EMA~~FDA to review and approve new products can be affected by a variety of factors, including (i) government budget and funding levels, (ii) the ability to hire and retain key personnel and accept the payment of user fees and (iii) statutory, regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable.

Disruptions at the FDA and other agencies may also slow the time necessary for ~~IDN-7314~~new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect its business. For example, over the last several years, including for 35 days beginning on December 22, 2018, the ~~treatment~~U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly impact the ability of ~~PSC.~~ the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

We are subject to a multitude of manufacturing risks, any of which could substantially increase our costs and limit supply of our product candidates.

The process of manufacturing our product candidates is complex, highly regulated, and subject to several risks. For example, the process of manufacturing our product candidates is extremely susceptible to product loss due to contamination, equipment failure or improper installation or operation of equipment, or vendor or operator error. Even minor deviations from normal manufacturing processes for any of our product candidates could result in reduced production yields, product defects, and other supply disruptions. If microbial, viral, or other contaminations are discovered in our product candidates or in the manufacturing facilities in which our product candidates are made, such manufacturing facilities may need to be ~~unable~~closed for an extended period of time to ~~obtain regulatory approval~~investigate and remedy the contamination. In addition, the manufacturing facilities in which our product candidates are made could be adversely affected by equipment failures, labor shortages, natural disasters, public health crises, pandemics and epidemics, such as the ongoing COVID-19 pandemic, power failures and numerous other factors.

In addition, any adverse developments affecting manufacturing operations for ~~emricasan~~our product candidates may result in shipment delays, inventory shortages, lot failures, withdrawals or ~~IDN-7314~~recalls, or other interruptions in the supply of our product candidates. We also may need to take inventory write-offs and incur other charges and expenses for ~~these orphan populations~~product candidates that fail to meet specifications, undertake costly remediation efforts, or ~~any other orphan population,~~seek costlier manufacturing alternatives.

We intend to rely primarily on third parties to manufacture our preclinical and clinical drug supplies, and our business, financial condition and results of operations could be harmed if those third parties fail to provide us with sufficient quantities of drug product or fail to do so at acceptable quality levels or prices.

We currently have the infrastructure or capability internally to manufacture certain of our preclinical and clinical drug supplies for use in our clinical trials, but we ~~may be unable to successfully commercialize emricasan or IDN-7314~~have engaged a contract manufacturing organization and once the technology transfer process is complete, we will rely completely on third parties for such ~~orphan populations due~~manufacturing. We lack the resources and the capability to ~~risks~~manufacture any of our product candidates on a late-stage clinical or commercial scale. We will rely on our manufacturers to purchase from third-party suppliers the materials necessary to produce our product candidates for our clinical trials. There are a limited number of suppliers for raw materials that ~~include:~~

~~If we are unable to obtain~~ potential regulatory approval ~~for emricasan or IDN-7314 for any orphan population or are unable to successfully commercialize emricasan or IDN-7314 for such orphan population, it~~of our product candidates, which could harm our business, ~~prospects,~~ financial condition and results of operations.

We ~~entered into the Collaboration Agreement with Novartis,~~ and we may form or seek additional strategic alliances or collaborations in the future. Such alliances and collaborations may inhibit future opportunities, and we may not realize the benefits of such collaborations or alliances.

We entered into the Collaboration Agreement with Novartis for the development of emricasan, and we may form or seek strategic alliances, joint ventures or collaborations or enter into licensing arrangements with other third parties that we believe will complement or augment our ~~development and commercialization efforts~~contract manufacturers are subject to significant regulation with respect to ~~future~~manufacturing our product candidates. The manufacturing facilities on which we rely may not continue to meet regulatory requirements.

All entities involved in the preparation of therapeutics for clinical trials or commercial sale, including our contract manufacturers for our product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or used in late-stage clinical trials must be manufactured in accordance with CGMP. These regulations govern manufacturing processes and procedures and the implementation and operation of quality systems to control and assure the quality of investigational products and products approved for sale. Poor control of production processes can lead to the introduction of contaminants or to inadvertent changes in the properties or stability of our product candidates that we may ~~develop. In connection~~not be detectable in final product testing. We or our contract manufacturers must supply all necessary documentation in support of a BLA, NDA, or PMA or MAA on a timely basis and must adhere to GLP and CGMP regulations enforced by the FDA or comparable foreign authorities through their facilities inspection program. Some of our contract manufacturers may not have produced a commercially approved pharmaceutical product and therefore may not have obtained the requisite regulatory authority approvals to do so. The facilities and quality systems of some or all of our third-party contractors must pass a pre-approval inspection for compliance with ~~entering into~~ the ~~Collaboration Agreement, we incurred non-recurring and~~applicable regulations as a condition of regulatory approval of our product candidates or any of our other ~~charges and issued a convertible note in the amount of $15.0 million.~~potential products. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of our product candidates or any of our other potential products or the associated quality systems for compliance with the ~~period from~~regulations applicable to the ~~execution date~~activities being conducted. Although we plan to oversee the contract manufacturers, we cannot control the manufacturing process of, and are completely dependent on, our contract manufacturing partners for compliance with the regulatory requirements. If these facilities do not pass a pre-approval plant inspection, regulatory approval of the ~~Collaboration Agreement~~products may not be granted or may be substantially delayed until any violations are corrected to the ~~earlier~~satisfaction of ~~five years after~~ the ~~first~~regulatory authority, if ever.

The regulatory authorities also may, at any time following approval of a product for sale, audit the manufacturing facilities of our third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly or time consuming for us or a third party to implement, and that may include the temporary or permanent suspension of a clinical trial or commercial ~~sale~~sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business, financial condition and results of operations.

If we or any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or comparable foreign authorities can impose regulatory sanctions including, among other things, refusal to approve a pending application for a product candidate, withdrawal of an ~~emricasan product~~approval, or suspension of production. As a result, our business, financial condition and results of operations may be materially and adversely affected.

Additionally, if supply from one manufacturer is interrupted, an alternative manufacturer would need to be qualified through a BLA, NDA, or PMA supplement or MAA variation, or equivalent foreign regulatory filing, which could result in further delay. The regulatory agencies may also require additional studies or trials if a new manufacturer is relied upon for commercial production.

Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.

These factors could cause us to incur higher costs and could cause the ~~United States~~delay or ~~major European market or ten years from the execution date~~termination of ~~the Collaboration Agreement, we have agreed not to develop in any pivotal registration~~ clinical trials, regulatory submissions, required approvals, or ~~commercialize any pan-caspase inhibitors in liver disease. Further, Novartis will have~~commercialization of our product candidates. Furthermore, if our suppliers fail to meet contractual requirements and we are unable to secure one or more replacement suppliers capable of production at a ~~right of first negotiation prior to any offer by us to any third party for future pan-caspase inhibitors~~substantially equivalent cost, our clinical trials may be delayed, or we could lose potential revenue.

Any license agreement that we may develop or acquire for the treatment of liver diseases or for certain retained pan-caspase inhibitors, provided that any license or collaboration that we enter into or propose to enter into must be on terms and conditions in the aggregate no more favorable to such third party than those last offered to Novartis. These provisions and similar provisions in agreements we may enter into in the future may ~~inhibit~~not be successful, which could adversely affect our ability to develop and commercialize ~~other pan-caspase inhibitors, including IDN-7314,~~our current and potential future product candidates.

We may seek license agreements with biopharmaceutical companies for the development or commercialization of our current and potential future product candidates. To the extent that we decide to enter into license agreements, we will face significant competition in seeking appropriate licensees. Moreover, license agreements are complex and time consuming to negotiate, execute and implement. We may not be successful in our efforts to establish and implement license agreements or other alternative arrangements should we choose to enter into such arrangements, and the terms of the arrangements may not be favorable to us. If and when we enter into additional license agreements with a third party for development and commercialization of a product candidate, we can expect to relinquish some or all of the control over the future ~~alliances~~success of that product candidate to the third party. The success of our license agreements will depend heavily on the efforts and activities of our licensees. Licensees generally have significant discretion in determining the efforts and resources that they will apply to the product candidate.

Disagreements between parties to a license arrangement can lead to delays in developing or ~~collaborations~~commercializing the applicable product candidate and can be difficult to ~~develop~~resolve in a mutually beneficial manner. In some cases, licenses with biopharmaceutical companies and other third parties are terminated or ~~commercialize~~allowed to expire by the other ~~pan-caspase inhibitors,~~party. Any such termination or expiration would adversely affect our business, financial condition and results of operations.

If we face allegations of noncompliance with the law and encounter sanctions, our reputation, revenues and liquidity may suffer, and any of our product candidates that are ultimately approved for commercialization could be subject to restrictions or withdrawal from the market.

Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to generate revenues from any of our product candidates that are ultimately approved for commercialization. If regulatory sanctions are applied or if regulatory approval is withdrawn, our business, financial condition and results of operations will be adversely affected. Additionally, if we are unable to generate revenues from product sales, our potential for achieving profitability will be diminished and our need to raise capital to fund our operations will increase.

We are exposed to product liability, non-clinical and clinical liability risks, which could place a substantial financial burden upon us, should lawsuits be filed against us.

Our business exposes us to potential product liability and other liability risks that are inherent in the testing, manufacturing and marketing of pharmaceutical formulations and products. In addition, the use in our clinical trials of pharmaceutical products and the subsequent sale of these products by us or our potential licensees may cause us to bear a portion of or all product liability risks. A successful liability claim or series of claims brought against us could have a material adverse effect on our business, financial condition and results of operations.

Our research and development activities involve the use of hazardous materials, which subject us to regulation, related costs and delays and potential liabilities.

Our research and development activities involve the controlled use of hazardous materials, chemicals and various radioactive compounds. If an accident occurs, we could be held liable for resulting damages, which could be substantial. We are also subject to numerous environmental, health and workplace safety laws and regulations, including ~~IDN-7314.~~those governing laboratory procedures, exposure to blood-borne pathogens and the handling of biohazardous materials. Additional federal, state and local laws and regulations affecting our operations may be adopted in the future. We may incur substantial costs to comply with, and substantial fines or penalties if we violate any of these laws or regulations.

~~Future~~We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business effectively.

Despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. System failures, accidents or security breaches could cause interruptions in our operations and could result in a material disruption of our drug development and clinical activities and business operations, in addition to possibly requiring substantial expenditures of resources to remedy. The loss of drug development or clinical trial data could result in delays in our regulatory approval efforts ~~for additional alliances~~and significantly increase our costs to recover or ~~collaborations~~reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and our development programs and the development of our product candidates could be delayed.

Our employees and consultants may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk of employee or consultant fraud or other misconduct. Misconduct by our employees or consultants could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards, comply with federal and state healthcare fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commissions, customer incentive programs and other business arrangements. Employee and consultant misconduct also could involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify and deter such misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending itself or asserting our rights, those actions could have a material adverse effect on our business, financial condition and results of operations, and result in the imposition of significant fines or other sanctions against us.

Business disruptions such as natural disasters could seriously harm our future revenues and financial condition and increase our costs and expenses.

We and our suppliers may experience a disruption in their business as a result of natural disasters. A significant natural disaster, such as an earthquake, hurricane, flood or fire, could severely damage or destroy our headquarters or facilities or the facilities of our manufacturers or suppliers, which could have a material and adverse effect on our business, financial condition and results of operations. In addition, terrorist acts or acts of war targeted at the U.S., could cause damage or disruption to us, our employees, facilities, partners and suppliers, which could have a material adverse effect on our business, financial condition and results of operations.

We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.

From time to time, we may consider strategic transactions, such as acquisitions of companies, asset purchases and out-licensing or in-licensing of products, product candidates or technologies. Additional potential transactions that we may consider include a variety of different business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations and investments. Any such transaction may require us to incur non-recurring ~~and~~or other charges, may increase our near- and long-term expenditures ~~issue securities that dilute our existing stockholders~~and may pose significant integration challenges or disrupt our management or business, which could adversely affect our business, financial condition and ~~business.~~results of operations. For example, these transactions may entail numerous operational and financial risks, including:

Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions of the nature described above, any transactions that we do complete may be subject to the foregoing or other risks and could have a material adverse effect on our business, financial condition and results of operations.

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

One or more of our programs may require the use of proprietary rights held by third parties. We may need to acquire or in-license additional intellectual property in the future with respect to other product candidates. Moreover, we may be unable to acquire or in-license any compositions, methods of use, processes, or other intellectual property rights from third parties that we identify as necessary for our product candidates. We face competition with regard to acquiring and in-licensing third-party intellectual property rights, including from a number of more established companies. These established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license intellectual property rights to us. We also may be unable to acquire or in-license third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment.

We may enter into license agreements with U.S. and foreign academic institutions to accelerate development of our current or future preclinical product candidates. Typically, these agreements include an option for the company to negotiate a license to the institution’s resulting intellectual property rights. Even with such an option, we ~~face~~may be unable to negotiate a license within the specified timeframe or under terms that are acceptable to us. If we are unable to license rights from the institution, the institution may offer the intellectual property rights to other parties, potentially blocking our ability to pursue our desired program.

If we are unable to successfully obtain required third-party intellectual property rights or maintain our existing intellectual property rights, we may need to abandon development of the related program and our business, financial condition and results of operations could be materially and adversely affected.

We may not be able to protect our proprietary or licensed technology in the marketplace.

We depend on our ability to protect our proprietary or licensed technology. We rely on trade secret, patent, copyright and trademark laws, and confidentiality, licensing, and other agreements with employees and third parties, all of which offer only limited protection. Our success depends in large part on our ability and any licensor’s or licensee’s ability to obtain and maintain patent protection in the U.S. and other countries with respect to our proprietary or licensed technology and products. We currently in-license some of our intellectual property rights to develop our product candidates and may in-license additional intellectual property rights in the future. We cannot be certain that patent enforcement activities by our current or future licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents or other intellectual property rights. We also cannot be certain that our current or future licensors will allocate sufficient resources or prioritize their or our enforcement of such patents. Even if we are not a party to these legal actions, an adverse outcome could prevent us from continuing to license intellectual property that we may need to operate our business, which would have a material adverse effect on our business, financial condition, and results of operations.

We believe we will be able to obtain, through prosecution of patent applications covering our owned technology and technology licensed from others, adequate patent protection for our proprietary drug technology, including those related to our in-licensed intellectual property. If we are compelled to spend significant ~~competition~~time and money protecting or enforcing our licensed patents and future patents we may own, designing around patents held by others or licensing or acquiring, potentially for large fees, patents or other proprietary rights held by others, our business, financial condition and results of operations may be materially and adversely affected. If we are unable to effectively protect the intellectual property that we own or in-license, other companies may be able to offer the same or similar products for sale, which could materially adversely affect our business, financial condition and results of operations.

The patents of others from whom we may license technology, and any future patents we may own, may be challenged, narrowed, invalidated or circumvented, which could limit our ability to stop competitors from marketing the same or similar products or limit the length of term of patent protection that we may have for our products.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection for licensed patents, pending patent applications and potential future patent applications and patents could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or patent applications will be due to be paid to the U.S. Patent and Trademark Office (“USPTO”) and various governmental patent agencies outside of the U.S. in ~~seeking appropriate strategic partners,~~several stages over the lifetime of the applicable patent and/or patent application. The USPTO and various non-U.S. governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the ~~negotiation process~~patent application process. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If this occurs with respect to our in-licensed patents or patent applications we may file in the future, our competitors might be able to use our technologies, which would have a material adverse effect on our business, financial condition, and results of operations.

The patent positions of pharmaceutical products are often complex and uncertain. The breadth of claims allowed in pharmaceutical patents in the U.S. and many jurisdictions outside of the U.S. is ~~time-consuming~~not consistent. For example, in many jurisdictions, the support standards for pharmaceutical patents are becoming increasingly strict. Some countries prohibit method of treatment claims in patents. Changes in either the patent laws or interpretations of patent laws in the U.S. and ~~complex. Furthermore,~~other countries may diminish the value of our licensed or owned intellectual property or create uncertainty. In addition, publication of information related to our current product candidates and potential products may prevent us from obtaining or enforcing patents relating to these product candidates and potential products, including without limitation composition-of-matter patents, which are generally believed to offer the strongest patent protection.

Patents that we currently license and patents that we may own or license in the future do not necessarily ensure the protection of our licensed or owned intellectual property for a number of reasons, including, without limitation, the following:

Our competitors may be able to circumvent our licensed patents or future patents we may own by developing similar or alternative technologies or products in a non-infringing manner. Our competitors may seek to market generic versions of any approved products by submitting abbreviated new drug applications to the FDA in which our competitors claim that our licensed patents or any future

patents we may own are invalid, unenforceable, or not infringed. Alternatively, our competitors may seek approval to market their own products similar to or otherwise competitive with our products. In these circumstances, we may need to defend or assert our licensed patents or any future patents we may own, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or other agency with jurisdiction may find our licensed patents or any future patents we may own invalid or unenforceable. We may also fail to identify patentable aspects of our research and development before it is too late to obtain patent protection. Even if we own or in-license valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives.

The issuance of a patent is not conclusive as to our inventorship, scope, ownership, priority, validity, or enforceability. In this regard, third parties may challenge our licensed patents or any future patents we may own in the courts or patent offices in the U.S. and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated, or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical technology and products or limit the duration of the patent protection of our technology and potential products. In addition, given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized.

We may infringe the intellectual property rights of others, which may prevent or delay our drug development efforts and prevent us from commercializing or increase the costs of commercializing our products, if approved.

Our commercial success depends significantly on our ability to operate without infringing the patents and other intellectual property rights of third parties. For example, there could be issued patents of which we are not aware that our current or potential future product candidates infringe. There also could be patents that we believe we do not infringe, but that we may ultimately be found to infringe.

Moreover, patent applications are in some cases maintained in secrecy until patents are issued. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications were filed. Because patents can take many years to issue, there may be currently pending applications of which we are unaware that may later result in issued patents that our product candidates or potential products infringe. For example, pending applications may exist that claim or can be amended to claim subject matter that our product candidates or potential products infringe. Competitors may file continuing patent applications claiming priority to already issued patents in the form of continuation, divisional, or continuation-in-part applications, in order to maintain the pendency of a patent family and attempt to cover our product candidates.

Third parties may assert that we are employing their proprietary technology without authorization and may sue us for patent or other intellectual property infringement. These lawsuits are costly and could adversely affect our business, financial condition and results of operations and divert the attention of managerial and scientific personnel. If we are sued for patent infringement, we would need to demonstrate that our product candidates, potential products, or methods either do not infringe the claims of the relevant patent or that the patent claims are invalid, and we may not be able to ~~realize~~do this. Proving invalidity is difficult. For example, in the ~~benefit~~U.S., proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issued patents. Even if we are successful in these proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could have a material adverse effect on us. In addition, we may not have sufficient resources to bring these actions to a successful conclusion. If a court holds that any third-party patents are valid, enforceable and cover our products or their use, the holders of any of these patents may be able to block our ability to commercialize our products unless we acquire or obtains a license under the applicable patents or until the patents expire.

We may not be able to enter into licensing arrangements or make other arrangements at a reasonable cost or on reasonable terms. Any inability to secure licenses or alternative technology could result in delays in the introduction of our products or lead to prohibition of the manufacture or sale of products by us. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, in any such proceeding or litigation, we could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially and adversely affect our business, financial condition, and results of operations. Any claims by third parties that we have misappropriated their confidential information or trade secrets could have a similar material and adverse effect on our business, financial condition, and results of operations. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

Any claims or lawsuits relating to infringement of intellectual property rights brought by or against us will be costly and time consuming and may adversely affect our business, financial condition, and results of operations.

We may be required to initiate litigation to enforce or defend our licensed and owned intellectual property. Lawsuits to protect our intellectual property rights can be very time consuming and costly. There is a substantial amount of litigation involving patent and other intellectual property rights in the biopharmaceutical industry generally. Such litigation or proceedings could substantially increase our operating expenses and reduce the resources available for development activities or any future sales, marketing, or distribution activities.

In any infringement litigation, any award of monetary damages we receive may not be commercially valuable. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. Moreover, there can be no assurance that we will have sufficient financial or other resources to file and pursue such infringement claims, which typically last for years before they are resolved. Further, any claims we assert against a perceived infringer could provoke these parties to assert counterclaims against us alleging that we have infringed their patents. Some of our competitors may be able to sustain the costs of such ~~transactions~~litigation or proceedings more effectively than we can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to develop our product candidates.

In addition, our licensed patents and patent applications, and patents and patent applications that we may apply for, own or license in the future, could face other challenges, such as interference proceedings, opposition proceedings, re-examination proceedings and other forms of post-grant review. Any of these challenges, if successful, could result in the invalidation of, or in a narrowing of the scope of, any of our licensed patents and patent applications and patents and patent applications that we may apply for, own or license in the future subject to challenge. Any of these challenges, regardless of their success, would likely be time consuming and expensive to defend and resolve and would divert our management and scientific personnel’s time and attention.

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

As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity and is costly, time-consuming, and inherently uncertain. For example, the U.S. previously enacted and is currently implementing wide-ranging patent reform legislation. Specifically, on September 16, 2011, the Leahy-Smith America Invents Act (the “Leahy-Smith Act”) was signed into law and included a number of significant changes to U.S. patent law, and many of the provisions became effective in March 2013. However, it may take the courts years to interpret the provisions of the Leahy-Smith Act, and the implementation of the statute could increase the uncertainties and costs surrounding the prosecution of our licensed and future patent applications and the enforcement or defense of our licensed and future patents, all of which could have a material adverse effect on our business, financial condition, and results of operations.

In addition, the U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce patents that we might obtain in the future.

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

Filing, prosecuting and defending patents on product candidates throughout the world would be prohibitively expensive. Competitors may use our licensed and owned technologies in jurisdictions where we have not licensed or obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we may obtain or license patent protection, but where patent enforcement is not as strong as that in the U.S. These products may compete with our products in jurisdictions where we do not have any issued or licensed patents and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our licensed patents and future patents we may own, or marketing of competing products in violation of our proprietary rights generally. Further, the laws of some foreign countries do not protect proprietary rights to the same extent or in the

same manner as the laws of the U.S. As a result, we may encounter significant problems in protecting and defending our licensed and owned intellectual property both in the U.S. and abroad. For example, China currently affords less protection to a company’s intellectual property than some other jurisdictions. As such, the lack of strong patent and other intellectual property protection in China may significantly increase our vulnerability regarding unauthorized disclosure or use of our intellectual property and undermine our competitive position. Proceedings to enforce our future patent rights, if any, in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business.

We may be unable to adequately prevent disclosure of trade secrets and other proprietary information.

In order to protect our proprietary and licensed technology and processes, we rely in part on confidentiality agreements with our corporate partners, employees, consultants, manufacturers, outside scientific advisors and sponsored researchers and other advisors. These agreements may not effectively prevent disclosure of our confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover our trade secrets and proprietary information. Failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

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

We employ individuals who were previously employed at other biopharmaceutical companies. Although we have no knowledge of any such claims against us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed confidential information of our employees’ former employers or other third parties. Litigation may be necessary to defend against these claims. There is no guarantee of success in defending these claims, and even if we are successful, litigation could result in substantial cost and be a distraction to our management and other employees. To date, none of our employees have been subject to such claims.

We may be subject to claims challenging the inventorship of our licensed patents, any future patents we may own and other intellectual property.

Although we are not currently experiencing any claims challenging the inventorship of our licensed patents or our licensed or owned intellectual property, we may in the future be subject to claims that former employees, licensees or other third parties have an interest in our licensed patents or other licensed or owned intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business, financial condition, and results of operations. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

If we do not obtain additional protection under the Hatch-Waxman Amendments and similar foreign legislation extending the terms of our licensed patents and any future patents we may own, our business, financial condition and results of operations may be materially and adversely affected.

Depending upon the timing, duration, and specifics of FDA regulatory approval for our product candidates, one or more of our licensed U.S. patents or future U.S. patents that we may license or own may be eligible for limited patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent restoration term of up to five years as compensation for patent term lost during drug development and the FDA regulatory review process. This period is generally one-half the time between the effective date of an investigational new drug application (“IND”) (falling after issuance of the patent), and the submission date of an NDA, plus the time between the submission date of an NDA and the approval of that application. Patent term restorations, however, cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval by the FDA.

The application for patent term extension is subject to approval by the USPTO, in conjunction with the FDA. It takes at least six months to obtain approval of the application for patent term extension. We may not be granted an extension because of, for example, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than our requests. If we are unable to ~~successfully integrate them with~~obtain patent term extension or restoration or the term of any such extension is less than our ~~existing operations and company culture. We cannot be certain that, following a strategic transaction or license,~~requests, the period during which we will ~~achieve~~have the right to exclusively market our product will be shortened and our competitors may obtain earlier approval of competing products, and our ability to generate revenues ~~or specific net income that justifies such transaction.~~could be materially adversely affected.

The market price of our common stock has been and may continue to be volatile. Our stock price could be subject to wide fluctuations in response to a variety of factors, including the following:

In addition, the stock market, in general, and small biopharmaceutical companies, in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. Further, a decline in the financial markets and related factors beyond our control may cause our stock price to decline rapidly and unexpectedly.

If we were to be delisted from Nasdaq and begin to be quoted on the OTC market, the quotation of our common stock on the OTC market does not assure that a meaningful, consistent and liquid trading market currently exists, and in recent years such market has experienced extreme price and volume fluctuations that have particularly affected the market prices of many smaller companies like us. Our common stock would be subject to this volatility. Sales of substantial amounts of common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock and our stock price may decline substantially in a short time and our stockholders could suffer losses or be unable to liquidate their holdings.

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

We may seek additional capital through a combination of public and private equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect the rights of our stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidate, or grant licenses on terms unfavorable to us.

Our board of directors has in the past issued and may in the future issue one or more series of preferred stock without stockholder approval with the effect of diluting existing stockholders and impairing their voting and other rights.

Our amended and restated certificate of incorporation authorizes the issuance of up to 10,000,000 shares of “blank check” preferred stock, with designations, rights and preferences as may be determined from time to time by our board of directors without stockholder approval. In March 2022, we entered into a securities purchase agreement with certain investors, pursuant to which we issued and sold 2,500 shares of our newly designated Series A Convertible Redeemable Preferred Stock and 2,500 shares of our newly designated Series B Convertible Redeemable Preferred Stock (collectively the Preferred Stock) in a private placement transaction. In June 2022, all shares of Preferred Stock were redeemed and no shares of Preferred Stock are currently outstanding. If our board of directors without stockholder approval, issues one or more additional series of preferred stock with dividend, liquidation, conversion, supermajority voting, redemption or other rights, it could dilute the interest of, or impair the voting power of, our common stockholders.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our management.

Provisions in our certificate of incorporation and bylaws may delay or prevent an acquisition or a change in management. These provisions include a classified board of directors, a prohibition on actions by written consent of the combined organization’s stockholders and the ability of the board of directors to issue preferred stock without stockholder approval. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”), which prohibits stockholders owning in excess of 15% of our outstanding voting stock from merging or combining with us. Although we believe these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our board of directors, they would apply even if the offer may be considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove then current management by making it more difficult for stockholders to replace members of the board of directors, which is responsible for appointing the members of management.

If our common stock is not listed on a national securities exchange, compliance with applicable state securities laws may be required for subsequent offers, transfers and sales of the shares of common stock offered hereby.

The securities offered hereby are being offered pursuant to one or more exemptions from registration and qualification under applicable state securities laws. Because our common stock is listed on Nasdaq, we are not required to register or qualify in any state the subsequent offer, transfer or sale of the common stock. If our common stock is delisted from Nasdaq and is not eligible to be listed on another national securities exchange, subsequent transfers of the shares of our common stock offered hereby by U.S. holders may not be exempt from state securities laws. In such event, it will be the responsibility of the holder of shares or warrants to register or qualify the shares for any subsequent offer, transfer or sale in the United States or to determine that any such offer, transfer or sale is exempt under applicable state securities laws.

Sales of a substantial number of shares of our common stock by our stockholders in the public market could cause our stock price to fall.

Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur could significantly reduce the market price of our common stock and impair our ability to raise adequate capital through the sale of additional equity securities. We are unable to predict the effect that such sales may have on the prevailing market price of our common stock. As of June 30, 2022, we have outstanding warrants to purchase an aggregate of approximately 1.2 million shares of our common stock, and options to purchase an aggregate of approximately 133 thousand shares of our common stock, which, if exercised,

may further increase the number of shares of our common stock outstanding and the number of shares eligible for resale in the public market.

Our internal control over financial reporting may not meet the standards required by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act, could have a material adverse effect on our business and share price.

Our management is required to report on the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation.

We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition, results of operations or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness or significant deficiency in our internal control over financial reporting once that firm begins our Section 404 reviews, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

Our executive officers, directors and principal stockholders own a significant percentage of our stock and, if they choose to act together, will be able to exert control or significantly influence over matters subject to stockholder approval.

As of June 30, 2022, our executive officers, directors and greater than 5% stockholders, in the aggregate, own approximately 4.7% of our outstanding common stock. As a result, such persons, or their appointees to our board of directors, acting together, will be able to exert control or significantly influence over all matters submitted to our board of directors or stockholders for approval, including the appointment of our management, the election and removal of directors and approval of any significant transaction, as well as our management and business affairs. This concentration of ownership may have the effect of delaying, deferring, or preventing a change in control, impeding a merger, consolidation, takeover or other business combination involving us, or discouraging a potential acquiror from making a tender offer or otherwise attempting to obtain control of our business, even if such a transaction would benefit other stockholders.

~~Issuer Purchases of Equity Securities~~Item 3. Defaults Upon Senior Securities.

~~A list of exhibits is set forth on the Exhibit Index immediately preceding the signature page of this quarterly report on Form 10-Q and is incorporated herein by reference.~~

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.

Delaware		20-3183915
(State or ~~Other Jurisdiction~~other jurisdiction of ~~Incorporation~~incorporation or ~~Organization)~~organization)		(~~I.R.S.~~IRS Employer Identification No.)

~~16745 W. Bernardo Dr., Suite 200~~
10655 Sorrento Valley Road, Suite 200, San Diego CA	~~92127~~	92121
(Address of ~~Principal Executive Offices)~~principal executive offices)		(Zip Code)

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

~~Non-accelerated filer~~	☒ ~~(Do not check if a smaller reporting company)~~	~~Smaller reporting~~Emerging growth company	☐

PART I.I - FINANCIAL INFORMATION

~~ITEM~~Item 1.	~~FINANCIAL STATEMENTS~~Condensed Consolidated Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Mezzanine and Stockholders’ Equity (Deficit)	5
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43

		~~Condensed Balance Sheets~~	3

	~~Condensed Statements of Operations and Comprehensive Loss~~	4

	~~Condensed Statements of Cash Flows~~	5

	~~Notes to Condensed Financial Statements~~	6

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

~~ITEM 3.~~	~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~	22

~~ITEM 4.~~	~~CONTROLS AND PROCEDURES~~	22

PART ~~II.~~II - OTHER INFORMATION

~~ITEM~~Item 1.	~~LEGAL PROCEEDINGS~~Legal Proceedings	2344
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
Item 3.	Defaults Upon Senior Securities	70
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	70
Item 6.	Exhibits	71

~~ITEM 1A.~~	~~RISK FACTORS~~Signatures	23

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

~~ITEM 3.~~	~~DEFAULTS UPON SENIOR SECURITIES~~	25

~~ITEM 4.~~	~~MINE SAFETY DISCLOSURES~~	25

~~ITEM 5.~~	~~OTHER INFORMATION~~	25

~~ITEM 6.~~	~~EXHIBITS~~	25

~~EXHIBIT INDEX~~		26

~~SIGNATURES~~		27

		73

	September 30,
	2017		2016
Warrants to purchase common stock		149,704		149,704
Common stock options issued and outstanding		4,910,557		3,496,826
Shares issuable upon conversion of convertible note payable		2,297,138		—
Common stock subject to repurchase		—		6,316
ESPP shares pending issuance		7,514		7,415
Total		7,364,913		3,660,261

	June 30, 2022		June 30, 2021
Common stock options issued and outstanding		133,257		136,043
Warrants to purchase common stock		1,203,819		754,133
Total anti-dilutive shares		1,337,076		890,176

		September 30,			December 31,
		2017			2016
Assets
Current assets:
Cash and cash equivalents		$	14,360,452		$	58,083,409
Marketable securities			70,823,435			18,931,715
Other receivables			—			2,500,000
Prepaid and other current assets			1,339,208			937,436
Total current assets			86,523,095			80,452,560
Property and equipment, net			204,914			261,446
Other assets			2,538,211			1,609,834
Total assets		$	89,266,220		$	82,323,840
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses		$	10,937,851		$	5,311,093
Accrued compensation			1,810,919			2,351,703
Current portion of deferred revenue			19,454,795			30,897,192
Note payable			—			1,000,000
Total current liabilities			32,203,565			39,559,988
Deferred revenue, less current portion			12,673,762			20,803,762
Convertible note payable			12,968,493			—
Deferred rent			139,392			171,544
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued and outstanding	��		—			—
Common stock, $0.0001 par value; 200,000,000 shares authorized; 30,005,462 shares issued and outstanding at September 30, 2017; 26,118,722 shares issued and outstanding at December 31, 2016			3,001			2,612
Additional paid-in capital			194,951,562			172,424,531
Accumulated other comprehensive loss			(23,093	)		(6,145	)
Accumulated deficit			(163,650,462	)		(150,632,452	)
Total stockholders’ equity			31,281,008			21,788,546
Total liabilities and stockholders’ equity		$	89,266,220		$	82,323,840

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Collaboration revenue	$	9,565,890		$	—		$	26,572,397		$	—
Total revenues		9,565,890			—			26,572,397			—
Operating expenses:
Research and development		11,165,150			4,825,421			32,308,786			13,770,371
General and administrative		2,449,382			2,069,447			7,406,591			6,883,708
Total operating expenses		13,614,532			6,894,868			39,715,377			20,654,079
Loss from operations		(4,048,642	)		(6,894,868	)		(13,142,980	)		(20,654,079	)
Other income (expense):
Interest income		258,623			33,640			648,103			94,995
Interest expense		(189,041	)		(17,500	)		(473,354	)		(52,500	)
Other (expense) income		(21,318	)		11,818			(71,779	)		1,645
Total other income		48,264			27,958			102,970			44,140
Net loss		(4,000,378	)		(6,866,910	)		(13,040,010	)		(20,609,939	)
Other comprehensive income (loss):
Net unrealized (losses) gains on marketable securities		(455	)		(9,999	)		(16,948	)		12,885
Comprehensive loss	$	(4,000,833	)	$	(6,876,909	)	$	(13,056,958	)	$	(20,597,054	)
Net loss per share, basic and diluted	$	(0.13	)	$	(0.31	)	$	(0.46	)	$	(0.96	)
Weighted average shares outstanding used in computing net loss per share, basic and diluted		30,004,037			22,410,702			28,104,199			21,527,993

	June 30, 2022			December 31, 2021
Lab and manufacturing equipment	$	937		$	943
Office furniture and equipment		224			42
Software		48			48
Total		1,209			1,033
Less: accumulated depreciation and amortization		(699	)		(634	)
Property and equipment, net	$	510		$	399

	June 30, 2022		December 31, 2021
Insurance	$	1,144	$	691
Tenant improvement reimbursement receivable		237		1,057
Prepaid rent		78		132
Pre-clinical and clinical related expenses		195		158
Prepaid materials		167		138
Other		120		183
Total	$	1,941	$	2,359

	June 30, 2022		December 31, 2021
Current portion of finance lease liabilities	$	9	$	9
Accrued compensation		144		346
Clinical study related expenses		48		103
Legal fees		128		144
Other		43		189
Total	$	372	$	791

~~Level 1:~~	~~Includes financial instruments for which quoted market prices for identical instruments are available in active markets.~~

~~Level 2:~~	Includes financial instruments for which there are inputs other than quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets with insufficient volume or infrequent transaction (less active markets) or model-driven valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

~~Level 3:~~	~~Includes financial instruments for which fair value is derived from valuation techniques in which one or more significant inputs are unobservable, including management’s own assumptions.~~

			Fair Value Measurements Using
	September 30, 2017		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money market funds	$	12,875,586	$	12,875,586	$	—	$	—
Corporate debt securities		70,823,435		—		70,823,435		—
Total	$	83,699,021	$	12,875,586	$	70,823,435	$	—

			Fair Value Measurements Using
	December 31, 2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Money market funds	$	45,523,208	$	45,523,208	$	—	$	—
Corporate debt securities		27,702,317		—		27,702,317		—
Total	$	73,225,525	$	45,523,208	$	27,702,317	$	—

	Total Options			Weighted- Average Exercise Price
Balance at December 31, 2016		3,393,813		$	5.10
Granted		1,702,600			4.91
Exercised		(62,944	)		1.19
Cancelled		(122,912	)		4.67
Balance at September 30, 2017		4,910,557		$	5.10

	Options Outstanding			Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2021		111,418		$	37.62		6.78	$	—
Granted		67,300			4.54
Cancelled / Forfeited		(50,357	)		38.71
Outstanding at June 30, 2022		128,361		$	19.84		7.29	$	—
Vested and exercisable at June 30, 2022		34,412		$	42.58		6.61	$	—

~~Warrants to purchase common stock~~			~~149,704~~
~~Common stock options issued and outstanding~~			~~4,910,557~~
~~Common stock authorized for future option grants~~			~~545,503~~
~~Common stock authorized for the ESPP~~			~~544,578~~
~~Shares issuable upon conversion of convertible note payable~~			~~2,297,138~~
~~Total~~			~~8,447,480~~

	As of June 30,
	2022		2021
Common stock warrants		1,203,819		754,133
Common stock options issued and outstanding		133,257		136,043
Common stock available for issuance under stock plans		90,560		10,571
Total		1,427,636		900,747

	Operating Lease			Finance Lease
2022 (Remaining 6 months)	$	380		$	5
2023		780			11
2024		803			4
2025		827			—
2026		853			—
Thereafter		4,330			—
Total minimum lease payments		7,973			20
Less: imputed interest		(3,257	)		(2	)
Total future minimum lease payments		4,716			18
Less: current obligations under leases		(212	)		(9	)
Noncurrent lease obligations	$	4,504		$	9

Exhibit Number		Description of Exhibit

~~3.1(1)~~3.1		Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 1, 2013).

~~3.2(1)~~3.2		~~Amended~~Certificate of Amendment (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and ~~Restated Bylaws~~Exchange Commission on May 27, 2020).

~~4.1(2)~~3.3		~~Specimen Common Stock~~ Certificate of Amendment (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 27, 2020).

~~4.2(3)~~3.4		~~First Amended~~Certificate of Amendment, filed June 1, 2022 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and ~~Restated Investor Rights Agreement, dated February 9, 2011~~Exchange Commission on June 2, 2022).

~~4.3(3)~~3.5		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form ~~of Warrant issued to investors in~~8-K filed with the ~~Registrant’s 2013 bridge financing~~Securities and Exchange Commission on May 27, 2020).

~~4.4(2)~~3.6		Bylaw Amendment (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form ~~of Warrant issued to lenders under~~8-K filed with the ~~Loan~~Securities and ~~Security Agreement, dated July 3, 2013, by and among the Registrant, Oxford Finance LLC, Silicon Valley Bank and the other lenders party thereto~~Exchange Commission on March 25, 2022).

~~10.1(4)~~3.7		~~Employment Agreement, dated August 31, 2017,~~Certificate of Designation of Preferences, Rights and Limitations of Series A Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Securities and ~~between Keith W. Marshall, Ph.D. and the Registrant~~Exchange Commission on March 25, 2022).

~~10.2(4)~~3.8		~~Non-Qualified Inducement~~Certificate of Designation of Preferences, Rights and Limitations of Series B Redeemable Convertible Preferred Stock ~~Option Grant Notice~~(incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed with the Securities and ~~Stock Option Agreement, dated August 31, 2017, by and between Keith W. Marshall, Ph.D. and the Registrant~~Exchange Commission on March 25, 2022).

~~23.1~~3.9		~~Consent~~Certificate of ~~Ernst & Young LLP, Independent Registered Public Accounting Firm~~Elimination relating to the Certificate of Designations of Preferences, Rights and Limitations of Series A Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2022).

~~31.1~~3.10		Certificate of Elimination relating to the Certificate of Designations of Preferences, Rights and Limitations of Series B Redeemable Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 30, 2022).
4.1		Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Quarterly Report on Form10-Q filed with the Securities and Exchange Commission on August 13, 2020).
4.2		Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 12, 2022).
4.3		Form of Series A Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 12, 2022).
4.4		Form of Series B Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 12, 2022).
4.5		Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 12, 2022).
10.1		Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 12, 2022).
10.2		Form of Registration Rights Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 12, 2022).
10.3		Form of Warrant Amendment (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 12, 2022).
31.1*		Certification of Principal Executive Officer ~~pursuant~~Pursuant to Rules ~~13a-14~~13a-14(a) and ~~15d-14 promulgated pursuant to~~15d-14(a) under the Securities Exchange Act of 1934, as ~~amended~~Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
~~31.2~~31.2*		Certification of Principal Financial Officer ~~pursuant~~Pursuant to Rules ~~13a-14~~13a-14(a) and ~~15d-14 promulgated pursuant to~~15d-14(a) under the Securities Exchange Act of 1934, as ~~amended~~Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Principal Executive Officer ~~pursuant~~Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002~~2002.
32.2*		Certification of Principal Financial Officer ~~pursuant~~Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002~~2002.
101.INS		Inline XBRL Instance ~~Document~~
		Document.
101.SCH		Inline XBRL Taxonomy Extension Schema ~~Document~~
		Document.
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document~~
		Document.
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase ~~Document~~
		Document.
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase ~~Document~~
		Document.
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document~~Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

	~~CONATUS PHARMACEUTICALS INC.~~Histogen Inc.

Date: ~~November 2, 2017~~August 11, 2022	By:	/s/ Steven J. Mento, Ph.D.
		Steven J. Mento, Ph.D.
		Interim President, ~~and~~ Chief Executive Officer, and Executive Director (Principal Executive Officer)
	~~(principal executive officer)~~

Date: ~~November 2, 2017~~August 11, 2022	~~/s/ Keith W. Marshall, Ph.D.~~
By:	~~Keith W. Marshall, Ph.D.~~
	~~Executive Vice President, Chief Operating Officer and Chief Financial Officer~~
	~~(principal financial officer)~~/s/ Susan A. Knudson
		Susan A. Knudson Executive Vice President, Chief Financial Officer, Chief Compliance Officer & Corporate Secretary
		(Principal Financial Officer)