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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “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 ~~April 29, 2022,~~May 8, 2023, the number of outstanding shares of the registrant’s common stock, par value $0.001 per share, was ~~31,477,053.~~37,759,825.

	March 31, 2022			December 31, 2021			March 31, 2023			December 31, 2022
	(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	34,817		$	44,347		$	8,099		$	21,666
Short-term investments		—			2,504
Accounts receivable, net		564			1,818
Accounts and other receivables								5,000			5,000
Prepaid and other current assets		1,322			2,807			915			1,540
Total current assets		36,703			51,476			14,014			28,206
Long-term receivable from GCBP								4,550			—
Other assets, noncurrent		472			472			168			168
Right-of-use assets		2,242			2,744			17			66
Property and equipment, net		857			970			1			4
Total assets	$	40,274		$	55,662		$	18,750		$	28,444
Liabilities and stockholders’ equity
Liabilities, redeemable convertible preferred stock and stockholders’ deficit
Current liabilities:
Accounts payable	$	4,706		$	6,419		$	16		$	194
Accrued compensation		2,137			1,467			1,085			2,582
Deferred revenue		—			230
Other accrued liabilities		4,438			4,072			743			1,452
Dividends payable								—			7,558
CVR derivative liability								5,000			5,000
Operating lease liability		1,909			1,977			—			38
Total current liabilities		13,190			14,165			6,844			16,824
Operating lease liability, noncurrent		—			408
CVR derivative liability, noncurrent								4,550			—
Total liabilities		13,190			14,573			11,394			16,824
Commitments and Contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value, 5,000,000 shares authorized; 0 shares issued and outstanding		—		—
Common stock, $0.001 par value, 100,000,000 shares authorized; 31,477,053 and 31,409,707 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		31			31
Redeemable convertible preferred stock, $0.001 par value, 123,418 shares authorized; 12,340 shares issued and outstanding at March 31, 2023 and December 31, 2022								33,309			33,309
Stockholders’ deficit:
Common stock, $0.001 par value, 100,000,000 shares authorized; 37,759,825 and 37,756,574 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively								37			37
Additional paid-in capital		444,283			443,752			384,686			389,210
Accumulated deficit		(417,230	)		(402,694	)		(410,676	)		(410,936	)
Total stockholders’ equity		27,084			41,089
Total liabilities and stockholders’ equity	$	40,274		$	55,662
Total stockholders’ deficit								(25,953	)		(21,689	)
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit							$	18,750		$	28,444

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

Three Months Ended March 31,

2022

2021

Revenue:

License

$
—

$
—

Collaboration

794

1,467

License and collaboration revenue

794

1,467

Operating expenses:

Cost of license

—

—

Cost of collaboration

798

1,480

Research and development

9,703

17,013

General and administrative

4,994

5,412

Total operating expenses

15,495

23,905

Loss from operations

(14,701
)

(22,438
)
Interest and other income, net

165

—

Net loss and comprehensive loss

$
(14,536
)

$
(22,438
)
Net loss per share attributable to common
stockholders, basic and diluted

$
(0.46
)

$
(0.79
)
Shares used to compute net loss per share attributable to
common stockholders, basic and diluted

31,456,090

28,385,432

	Three Months Ended March 31,
	2023			2022
Revenue:
Collaboration	$	—		$	794

Operating expenses (income):
Cost of collaboration		—			798
Research and development		588			9,703
General and administrative		3,970			4,994
Gain on disposal of assets, net		(4,736	)		—
Total operating expenses (income)		(178	)		15,495
Income (loss) from operations		178			(14,701	)
Interest and other income, net		96			165
Income (loss) before income taxes		274			(14,536	)
Income tax expenses		14			—
Net income (loss)	$	260		$	(14,536	)
Net income (loss) per share attributable to common stockholders, basic	$	0.01		$	(0.46	)
Net income (loss) per share attributable to common stockholders, diluted	$	0.01		$	(0.46	)
Shares used to compute net income (loss) per share attributable to common stockholders, basic		37,758,416			31,456,090
Shares used to compute net income (loss) per share attributable to common stockholders, diluted		37,984,324			31,456,090

Cash dividends paid per common share	$	0.24		$	—
CVR cash dividends paid per common share	$	0.01		$	—

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

Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

																			Redeemable Convertible Preferred Stock				Common Stock				Additional Paid-In			Accumulated			Total Stockholders'
																			Shares		Amount		Shares		Amount		Capital			Deficit			Deficit
Balance at December 31, 2022																				12,340	$	33,309		37,756,574	$	37	$	389,210		$	(410,936	)	$	(21,689	)
Stock-based compensation expense																				—		—		—		—		210			—			210
Issuance of common stock from stock grants																				—		—		3,251		—		2			—			2
CVR cash dividends paid related to GCBP Agreement ($0.01 per share)																				—		—		—		—		(206	)		—			(206	)
CVR derivative liability																				—		—		—		—		(4,530	)		—			(4,530	)
Net income																				—		—		—		—		—			260			260
Balance at March 31, 2023																				12,340	$	33,309		37,759,825	$	37	$	384,686		$	(410,676	)	$	(25,953	)

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated Other Comprehensive		Accumulated			Total Stockholders'			Redeemable Convertible Preferred Stock				Common Stock				Additional Paid-In			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Income		Deficit			Equity			Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance at December 31, 2021		—	$	—		31,409,707	$	31	$	443,752	$	—	$	(402,694	)	$	41,089			—	$	—		31,409,707	$	31	$	443,752		$	(402,694	)	$	41,089
Stock-based compensation expense		—		—		32,684		—		515		—		—			515			—		—		32,684		—		515			—			515
Issuance of common stock from stock grants		—		—		34,662		—		16		—		—			16			—		—		34,662		—		16			—			16
Net loss		—		—		—		—		—		—		(14,536	)		(14,536	)		—		—		—		—		—			(14,536	)		(14,536	)
Balance at March 31, 2022		—	$	—		31,477,053	$	31	$	444,283	$	—	$	(417,230	)	$	27,084			—	$	—		31,477,053	$	31	$	444,283		$	(417,230	)	$	27,084

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated Other Comprehensive		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Income (Loss)		Deficit			Equity
Balance at December 31, 2020		—	$	—		22,097,820	$	22	$	390,803	$	5	$	(314,761	)	$	76,069
Stock-based compensation expense		—		—		10,149		—		1,026		—		—			1,026
Issuance of common stock for public offering, net of issuance costs of $3,563		—		—		9,185,000		9		49,241		—		—			49,250
Issuance of common stock from stock grants		—		—		38,058		—		182		—		—			182
Net loss		—		—		—		—		—		—		(22,438	)		(22,438	)
Balance at March 31, 2021		—	$	—		31,331,027	$	31	$	441,252	$	5	$	(337,199	)	$	104,089

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

	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023			2022
Operating Activities
Net loss	$	(14,536	)	$	(22,438	)
Adjustments to reconcile net loss to net cash used in operating activities:
Net income (loss)							$	260		$	(14,536	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation expense		515			1,026			210			515
Depreciation and amortization		113			45			3			113
Change in fair value of long-term receivables								(20	)		—
Change in fair value of derivative liabilities								20			—
Bad debt expense		200			—			—			200
Net gain on disposal of assets								(4,736	)		—
Changes in operating assets and liabilities:
Accounts receivable		1,054			2,307
Accounts and other receivables								—			1,054
Prepaid and other current assets		1,485			(1,671	)		625			1,485
Accounts payable		(1,713	)		(2,969	)		(178	)		(1,713	)
Accrued compensation and other accrued liabilities		1,036			(31	)		(2,411	)		1,036
Operating lease liability and right-of-use asset		26			26			11			26
Deferred revenue		(230	)		(651	)		—			(230	)
Net cash flows used in operating activities		(12,050	)		(24,356	)		(6,216	)		(12,050	)

Investing Activities
Proceeds from maturities of short-term investments		2,504			27,581			—			2,504
Proceeds from the sale of legacy rare bleeding disorder program to GCBP								1,000			—
Payment of transaction costs in connection with the sale of legacy rare bleeding disorder program to GCBP								(589	)		—
Net cash flows provided by investing activities		2,504			27,581			411			2,504

Financing Activities
Issuance of common stock for public offering, net of issuance costs		—			49,277
Payment of dividends								(7,764	)		—
Issuance of common stock from stock grants		16			182			2			16
Net cash flows provided by financing activities		16			49,459
Net increase (decrease) in cash and cash equivalents		(9,530	)		52,684
Net cash flows (used in) provided by financing activities								(7,762	)		16
Net decrease in cash and cash equivalents								(13,567	)		(9,530	)
Cash and cash equivalents at beginning of the period		44,347			30,360			21,666			44,347
Cash and cash equivalents at end of the period	$	34,817		$	83,044		$	8,099		$	34,817

Supplemental Disclosure on Non-Cash Investing and Financing Activities:
CVR derivative liability							$	4,530		$	—
Accrued transaction costs related to GCBP asset sale							$	205		$	—

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

Catalyst Biosciences, Inc. and its subsidiary (the “Company” or “Catalyst”) iswas a biopharmaceutical company with expertise in protease ~~engineering~~engineering. Prior to ceasing research and development activities in March 2022, the Company had several protease assets that ~~may~~were designed to address unmet medical needs in disorders of the complement or coagulation ~~and complement~~ systems. ~~The~~As discussed further below, the Company ~~is focused on the monetization of its assets and is exploring several strategic alternatives.~~ ~~The Company is located in South San Francisco, California and operates in 1 segment.~~

~~The Company had~~recently completed a ~~net loss of $14.5 million~~purchase agreement to acquire a clinical-stage drug candidate for the ~~three months ended March 31, 2022 and an accumulated deficit~~treatment of ~~$417.2 million as~~NASH (nonalcoholic steatohepatitis, a severe form of ~~March 31, 2022. As of March 31, 2022,~~nonalcoholic fatty liver disease). Concurrent with this purchase agreement, the Company ~~had $34.8 million of cash and cash equivalents.~~ ~~Its primary uses of cash are~~entered into a separate business combination agreement to fund operating and business development expenses and general and administrative expenditures. The Company believes that its existing cash and cash equivalents as of March 31, 2022 will be sufficient to fund its cash requirements for at least the next 12 months from the date of the filing of this report. The Company might raise funds through strategic collaborations, public or private financings or other arrangements. Such funding, if needed, may not be available on favorable terms, or at all.acquire an indirect controlling interest in a China-based pharmaceutical company. The Company will continue to evaluate the impact of the novel coronavirus disease (“COVID-19”) pandemic on its business, operations, and cash requirements.The Company is located in South San Francisco, California and operates in one segment.

On May 19, 2022, Catalyst entered into and closed on an asset purchase agreement with Vertex Pharmaceuticals Inc. (“Vertex”), pursuant to which Vertex acquired Catalyst’s complement portfolio, including CB 2782-PEG and CB 4332, as well as its complement-related intellectual property including the ProTUNE^TM and ImmunoTUNE^TM platforms. See Note 11, Restructuring.

On February 27, 2023, Catalyst entered into and closed on an asset purchase agreement with GC Biopharma Corp. (“GCBP”), pursuant to which GCBP acquired Catalyst’s legacy rare bleeding disorder program, including the coagulation related assets marzeptacog alfa (activated) (“MarzAA”), dalcinonacog alfa (“DalcA”), and CB-2679d-GT. See Note 11, Restructuring.

On December 26, 2022, the Company executed and closed an Asset Purchase Agreement, which was amended on March 29, 2023 (the “F351 Agreement”), with GNI Group Ltd. and GNI Hong Kong Limited (together “GNI”) to purchase all of the assets and intellectual property rights primarily related to the proprietary Hydronidone compound (collectively, the “F351 Assets”), other than such assets and intellectual property rights located in the People’s Republic of China. At the closing of the agreement on December 26, 2022, the Company paid $35.0 million in the form of 6,266,521 shares of Catalyst common stock and 12,340 shares of newly designated Series X redeemable convertible preferred stock (“Catalyst Convertible Preferred Stock”). Each share of Catalyst Convertible Preferred Stock is convertible into 10,000 shares of common stock, subject to stockholder approval under Nasdaq rules and subject to a beneficial ownership conversion blocker. For additional information, see Note 3, F351 Asset Acquisition.

Concurrent with the F351 Asset acquisition, the Company signed a definitive agreement, as amended on March 29, 2023, with GNI Group Ltd., GNI Hong Kong Limited, GNI USA, Inc., Continent Pharmaceuticals Inc. and Shanghai Genomics, Inc. (collectively, “GNI”) and other minority stockholders to acquire an indirect controlling interest in Beijing Continent Pharmaceutical Co Ltd. (“BC”), a commercial-stage pharmaceutical company based in China and majority-owned subsidiary of GNI, in exchange for newly issued shares of common stock (the “Business Combination Agreement”). The closing of the transactions under the Business Combination Agreement will be subject to stockholder approval at a stockholder meeting expected to be held in the third quarter of 2023 and certain customary closing conditions. For additional information, see Note 9, Commitments and Contingencies.

Pursuant to the Business Combination Agreement, on December 26, 2022, Catalyst and the Rights Agent (as defined therein) executed a contingent value rights agreement, as amended on March 29, 2023 (the “CVR Agreement”), pursuant to which each holder of Catalyst common stock as of January 5, 2023 (the “CVR Holders”), excluding GNI, received one contractual contingent value right (a “CVR”) issued by the Company for each share of Catalyst common stock held by such holder. Each CVR entitles the holder thereof to receive certain cash payments in the future. For additional information, see Note 9, Commitments and Contingencies.

On January 12, 2023, the Company paid a one-time cash dividend of $0.24 per share to the Company’s common stockholders of record as of close of business on January 5, 2023, excluding GNI. The aggregate amount of the special dividend payment was approximately $7.6 million.

On March 8, 2023, the Company distributed the net cash proceeds received from the GCBP asset sale of $0.2 million, or $0.01 per share, to the CVR Holders, excluding GNI. See Note 11, Restructuring, for additional information regarding this distribution.

The Company had net income of $0.3 million for the three months ended March 31, 2023. As of March 31, 2023, the Company had an accumulated deficit of $410.7 million and cash and cash equivalents of $8.1 million. Its primary uses of cash are to fund operating expenses and general and administrative expenditures. As part of the F351 Agreement, the Company issued 12,340 shares of Catalyst Convertible Preferred Stock, which upon stockholder approval, will be converted to 123,400,000 shares of common stock, subject to applicable beneficial ownership limitations. The terms of the Catalyst Convertible Preferred Stock include a cash settlement feature which provide that, if the Company’s stockholders fail to approve the conversion of the Catalyst Convertible Preferred Stock by September 30, 2023, the Company could be required to make cash payments to the holders of Catalyst Convertible Preferred Stock significantly in excess of its current liquidity. The Company believes that stockholders who are entitled to vote on the conversion proposal at the Company’s 2023 Annual Meeting of Stockholders, which is expected to be held in the third quarter of 2023, will vote to approve the proposal. However, as the vote of the Company’s common stockholders is outside of the control of the Company, there is substantial doubt about its ability to continue as a going concern for at least 12 months following the issuance of these condensed consolidated financial statements. The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

The Company’s condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and following the requirements of the Securities and Exchange Commission (the “SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. These financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the Company’s financial information. These interim results and cash flows for any interim period are not necessarily indicative of the results to be expected for the year ending December 31, ~~2022,~~2023, or for any other future annual or interim period.

The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the consolidated financial statements filed with the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021 (“Annual~~2022 (the “Annual Report”).

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, allowance of doubtful accounts, long-term receivable, contingent value rights, operating lease right-of-use assets and liabilities, accrued expenses, income taxes and stock-based compensation. The Company bases its estimates on various assumptions that the Company believes to be reasonable under the circumstances. Actual results could differ from those estimates.

~~In May 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-04,~~ Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options. The amendments in ASU 2021-04 provide guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. The amendments in this ASU 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including interim periods within those fiscal years. The Company adopted ASU 2021-04 and related updates on January 1, 2022, and the adoption did not have a material impact on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The main objective of ASU 2016-13 is to provide financial statement users with more decision-useful information about an entity's expected credit losses on financial instruments and other commitments to extend credit at each reporting date. To achieve this objective, the amendments in this update replace the incurred loss impairment methodology currently used today with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to develop credit loss estimates. ASU 2016-13 ~~will be~~is effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, using a modified retrospective approach. ~~Early adoption is permitted.~~ The Company ~~plans to~~

~~adopt~~adopted ASU 2016-13 and related updates as of January 1, ~~2023. The Company will assess~~2023 and the ~~impact of~~ adoption ~~of this standard~~did not have a material impact on its condensed consolidated financial statements.

The Company determined that the hold-back from the GCBP asset sale in February 2023 qualified as a long-term receivable. The receivable is considered a loan held for investment since the Company has the intent and ability to hold to maturity. Catalyst has

elected to account for the receivable under the fair value option method of accounting and any changes in fair value are recorded in interest and other income, net on the condensed consolidated statement of operations. Refer to Note 4, Fair Value Measurements and Note 11, Restructuring, for additional information regarding the long-term receivable and GCBP asset sale.

The Company calculates basic and diluted net income (loss) per share attributable to common stockholders in conformity with the two-class method required for participating securities. The Catalyst Convertible Preferred Stock contractually entitles the holders of such shares to participate in dividends but such participation is contingent upon the completion of the merger with GNI. As a result, the Catalyst Convertible Preferred Stock is excluded from the basic EPS calculation, as these shares are not participating securities until the merger with GNI closes. As such, net income for the periods presented was not allocated to these securities. During periods of loss, the Company allocates no loss to participating securities because they have no contractual obligation to share in the losses of the Company.

Basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) by the weighted average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Participating securities are excluded from the basic weighted average common shares outstanding.

Diluted net income (loss) per share attributable to common stockholders is based on the weighted average number of common shares outstanding during the period, including potential dilutive common shares. For purposes of this calculation, outstanding stock options and warrants are considered potential dilutive common shares. The calculation of diluted EPS does not consider the effect of the Catalyst Convertible Preferred Stock since conversion is contingent upon the occurrence of a specified future event.

On December 26, 2022, the Company acquired the F351 Assets from GNI in accordance with the terms of the F351 Agreement as discussed in Note 1, Nature of Operations and Liquidity. Under the terms of the F351 Agreement, the Company issued 6,266,521 shares of common stock and 12,340 shares of Catalyst Convertible Preferred Stock.

The Company concluded that the F351 acquisition was not the acquisition of a business, as substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset, the intellectual property rights (outside of China) to a clinical stage drug candidate for the treatment of liver fibrosis, or the F351 Assets.

Subject to stockholder approval, each share of Catalyst Convertible Preferred Stock issued under the F351 Agreement is convertible into 10,000 shares of common stock. The Company is required to hold a stockholders’ meeting to request the approval of the conversion of the Catalyst Convertible Preferred Stock into shares of common stock in accordance with Nasdaq Listing Rule 5635(a) (the “Conversion Proposal”). The Company expects to hold its 2023 Annual Meeting of Stockholders in the third quarter of 2023 and will include the following matters as proposals to be voted on at the meeting: (i) the Conversion Proposal and (ii) if necessary or appropriate, the approval of an amendment to the Company’s certificate of incorporation to authorize sufficient shares of common stock for the conversion of the Catalyst Convertible Preferred Stock issued pursuant to the F351 Agreement.

In March 2023, the Company amended the F351 Agreement and the Catalyst Convertible Preferred Stock Certificate of Designation to extend the deadline for the cash settlement of the Catalyst Convertible Preferred Stock from June 26, 2023 to September 30, 2023. Under the amended terms, if the Company’s stockholders do not approve the conversion of the Catalyst Convertible Preferred Stock by September 30, 2023, then the Catalyst Convertible Preferred Stock would be redeemable at the option of the holders for cash equal to the closing price of the common stock on the last trading day prior to the holder’s redemption request. Using the closing price on May 8, 2023 of $0.21, if all the currently outstanding Catalyst Convertible Preferred Stock was redeemed for cash, the Company would be required to make a payment of approximately $25.9 million. The Company has insufficient liquidity to make such a payment, if required.

For a description of the fair value hierarchy and the Company’s fair value methodology, see “Part II - Item 8 - Financial Statements and Supplementary Data - Note 3 – Summary of Significant Accounting Policies” in the Company’s Annual Report. There were no significant changes in these methodologies during the three months ended March 31, ~~2022.~~2023.

The following tables present the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis as of March 31, ~~2022~~2023 and December 31, ~~2021~~2022 (in thousands):

	March 31, 2022								March 31, 2023
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial assets:
Money market funds⁽¹⁾	$	34,817	$	—	$	—	$	34,817
Money market funds⁽¹⁾									$	8,099	$	—	$	—	$	8,099
Long-term receivable from GCBP										—		—		4,550		4,550
Total financial assets	$	34,817	$	—	$	—	$	34,817	$	8,099	$	—	$	4,550	$	12,649

Financial liabilities:
CVR derivative liability									$	—	$	—	$	5,000	$	5,000
CVR derivative liability, noncurrent										—		—		4,550		4,550
Total financial liabilities									$	—	$	—	$	9,550	$	9,550

	December 31, 2021								December 31, 2022
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Financial assets:
Money market funds⁽¹⁾	$	44,347	$	—	$	—	$	44,347
U.S. government agency securities⁽²⁾		2,504		—		—		2,504
Money market funds⁽¹⁾									$	21,666	$	—	$	—	$	21,666
Total financial assets	$	46,851	$	—	$	—	$	46,851	$	21,666	$	—	$	—	$	21,666

Financial liabilities:
CVR derivative liability									$	—	$	—	$	5,000	$	5,000
Total financial liabilities									$	—	$	—	$	5,000	$	5,000

The carrying amounts of ~~cash~~accounts and ~~cash equivalents, accounts receivable,~~other receivables, accounts payable, and accrued liabilities approximate their fair values due to the short-term maturity of these instruments.

~~Cash equivalents~~Derivative Liabilities and ~~short-term investments (debt securities)~~Long-term Receivables

The CVR derivative liability relates to the CVR Agreement executed in connection with the Business Combination Agreement. The fair value of this derivative liability is based on significant unobservable inputs, which ~~are classified as available-for-sale debt securities, consisted~~represent Level 3 measurements within the fair value hierarchy. The estimated fair value of the CVR liability was determined based on the anticipated amount and timing of projected cash flows to be received from Vertex pursuant to the Vertex asset purchase agreement. As of March 31, 2023, the Company expects to receive a $5.0 million hold-back payment from Vertex in the second quarter of 2023, which will be distributed, net of expenses, to the holders of Catalyst common stock as of January 5, 2023 under the CVR Agreement. The CVR liability was initially recorded at $5.0 million at issuance on December 26, 2022 and there was no change in the estimated fair value as of March 31, 2023.

The long-term receivable and the corresponding CVR derivative liability, noncurrent relate to the asset purchase agreement with GCBP. The fair value of this long-term receivable and derivative liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The estimated fair value of the long-term receivable and CVR derivative liability, noncurrent was determined based on the anticipated amount and timing of projected cash flows to be received from GCBP pursuant to the GCBP asset purchase agreement discounted to their present values using an estimated discount rate of 5.05%. As of March 31, 2023, the Company expects to receive a $5.0 million hold-back payment from GCBP in the first quarter of 2025, which will be distributed, net of expenses, to the holders of Catalyst common stock as of January 5, 2023 under the CVR Agreement.

The following table sets forth the changes in the estimated fair value of the Company’s Level 3 financial assets and liabilities (in thousands):

~~There have been 0 material realized gains or losses on available-for-sale debt securities for the periods presented. As of March 31, 2022, the Company had 0 available-for-sale debt securities.~~

Operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. In calculating the present value of the lease payments, the Company has elected to utilize its incremental borrowing rate based on the original lease term and not the remaining lease term. The lease includes non-lease components (e.g., common area maintenance) that are paid separately from rent based on actual costs incurred and, therefore, were not included in the right-of-use asset and lease liability but are reflected as an expense in the period incurred.

The Company leases office space for its corporate headquarters, located in South San Francisco, CA. The lease term is through April 30, 2023 and there are no stated renewal options. The Company currently has a month-to-month lease that will continue to be utilized following the expiration of the corporate headquarters lease.

In March 2022, the Company entered into a sublease agreement for ~~one of~~ its leased ~~facilities~~facility that commenced in April 2022. Under the terms of the sublease agreement, the Company will receive $0.2 million in base lease payments over the term of the sublease, which ends in April 2023. For the three months ended March 31, 2023,. the Company recognized sublease income of $38,000. The sublease agreement began in April 2022, so no sublease income was recognized during the three months ended March 31, 2022.

For the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, the Company’s operating lease expense was $0.1 million and $0.5 million, ~~and $0.2 million,~~ respectively.

The Company has historically prepaid one month’s worth of rent expense, therefore as of March 31, 2023, the Company does not have any remaining lease payments under its current lease agreement. The present value assumptions used in calculating the present value of the lease payments were as follows:

	March 31, 2022			December 31, 2021			March 31, 2023			December 31, 2022
Weighted-average remaining lease term	1.1 years			1.3 years			0 years			0.3 years
Weighted-average discount rate		4.8	%		4.8	%		0.0	%		4.3	%

~~The maturity of the Company’s operating lease liabilities as of March 31, 2022 were as follows~~ ~~(in thousands)~~:

Supplemental cash flow information related to operating leases was as follows (in thousands):

In June 2018, stockholders of the Company approved the Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”). The 2018 Plan had previously been approved by the Company’s Board of Directors (the “Board”) and the Compensation Committee (the “Committee”) of the Board, subject to stockholder approval. The 2018 Plan became effective on June 13, 2018. On June 9, 2021, the stockholders of the Company approved an amendment previously approved by the Board to increase the number of shares of common stock reserved for issuance under the 2018 Plan by 2,500,000 to a total of 5,300,000 shares. The amendment became effective immediately upon stockholder approval. After the option modification (as discussed below), the number of shares of common stock reserved for issuance under the 2018 Plan increased to a total of 31,456,403. As of March 31, 2023, there were 25,521,867 shares of common stock available for future grant.

In June 2022, the Committee approved the issuance of an option grant to purchase 400,000 shares (2,457,917 shares after the option modification discussed below) of common stock to the Chief Executive Officer pursuant to the 2018 Plan, which will vest upon (a) the achievement of a specified performance goal and (b) the grantee’s continued employment during the service period. During the three months ended March 31, 2023, this award was cancelled. Prior to cancellation, no expense has been recognized related to this award and no options have vested.

On January 12, 2023, the Company paid a special, one-time cash dividend of $7.6 million (or $0.24 per share) to the Company’s common stockholders of record as of the close of business on January 5, 2023. The Company determined, in accordance with the adjustment provision of the 2018 Plan, that the special cash dividend was unusual and non-recurring and that appropriate adjustment to the stock options to purchase shares of the Company’s common stock outstanding under the 2018 Plan was required. The Company treated this adjustment as a modification to the original stock option grants because the terms of the agreements were modified in order to preserve the value of the option awards after a large non-recurring cash dividend. These options were amended to decrease the exercise price and increase the number of shares subject to the stock option on a proportionate basis. No incremental value was provided to the option holders as a result of the modification and no additional compensation cost was recorded by the Company.

The following table summarizes stock option activity under the Company’s 2018 Plan and related information:

Number of Shares
Underlying
Outstanding
Options

Weighted-
Average Exercise
Price

Weighted-
Average
Remaining
Contractual Term
(Years)

Outstanding — December 31, 2021

2,603,630

$
7.70

7.46

Options granted

879,200

$
0.52

Options forfeited

(658,947
)

$
5.20

Options expired

(46,173
)

$
9.81

Outstanding — March 31, 2022

2,777,710

$
5.92

8.00

Exercisable — March 31, 2022

1,305,020

$
9.42

	Number of Shares Underlying Outstanding Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Outstanding — December 31, 2022		8,678,767		$	1.42		7.47
Options granted ⁽¹⁾		14,008,093		$	0.86
Options forfeited and cancelled ⁽¹⁾		(14,210,119	)	$	0.91
Options expired		(12,174	)	$	36.16
Outstanding — March 31, 2023		8,464,567		$	1.30		6.01
Exercisable — March 31, 2023		7,306,692		$	1.40

The Company estimated the fair value of stock options granted using the Black-Scholes option-pricing formula and a single option award approach. Due to its limited ~~history as a public company and limited number of sales of its common stock,~~relevant historical data, the Company estimated its volatility considering a number of factors including the use of the volatility of comparable public companies. The expected term of options granted under the Plan, all of which qualify as “plain vanilla” per SEC Staff Accounting Bulletin 107, is determined based on the simplified method due to the Company’s limited ~~operating~~relevant history. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option. This fair value is being amortized ratably over the requisite service periods of the awards, which is generally the vesting period.

The only options granted during the quarter ended March 31, 2023 were as a result of the option modification. Since no new stock options were granted during the quarter ended March 31, 2023, all weighted-average assumptions for the period were not applicable.

The fair value of employee stock options was estimated using the following weighted-average assumptions:

Total stock-based compensation expense recognized was as follows (in thousands):

	Three Months Ended March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
Research and development	$	128	$	369	$	66	$	128
General and administrative⁽¹⁾		387		657		144		387
Total stock-based compensation expense	$	515	$	1,026	$	210	$	515

~~As of March 31, 2022, 2,937,588 shares of common stock were available for future grant.~~

In October 2017, the Company entered into a strategic research collaboration with Mosaic Biosciences (“Mosaic”) to develop intravitreal anti-complement factor 3 (C3) products for the treatment of dry Age-related Macular Degeneration (AMD) and other retinal diseases. The Company subsequently amended this agreement in December 2018, December 2019 and May 2020.

Under the as amended Mosaic collaboration agreement, Mosaic is eligible to receive up to $4.0 million in potential future milestone payments related to regulatory and clinical development events for CB 2782-PEG and an additional anti-complement product candidate in lieu of the Company’s prior obligations to pay Mosaic a double-digit percentage of funds the Company

receives from Biogen or any other amounts the Company receives related to sublicense fees, research and development payments, or any other research, regulatory, clinical or commercial milestones and royalties on any other development candidates.

In December 2018, the Company entered into an amended and restated license agreement with ISU Abxis (the “A&R ISU Abxis Agreement”)~~, which amended and restated its previous license and collaboration agreement with ISU Abxis previously entered into in September 2013, as subsequently amended in October 2014 and December 2016~~ ~~(the “Original ISU Abxis Agreement”)~~. Under the A&R ISU Abxis Agreement, ISU Abxis will receive commercialization rights in South Korea to the Company’s engineered Factor IX dalcinonacog alfa - DalcA and the Company will receive clinical development and commercialization rights in the rest of world (excluding South Korea) and manufacturing development and manufacturing rights worldwide (including South Korea). The A&R ISU Abxis Agreement~~eliminates the profit-sharing arrangement in the Original ISU Abxis Agreement and~~ provides for a low single-digit royalty payment to ISU Abxis, on a country-by-country basis, for net product sales of DalcA by the Company or its affiliates in each country other than South Korea. Pursuant to the A&R ISU Abxis Agreement, the Company will also pay up to an aggregate of $19.5 million in milestone payments to ISU Abxis, including $2.5 million in regulatory and development milestone payments and up to $17.0 million in commercial milestone payments, if the applicable milestones are met. ~~As of March 31, 2022, 0 milestones have been met.~~

On December 18, 2019, the Company and Biogen International GmbH (“Biogen”) entered into a License and Collaboration Agreement (the “Biogen Agreement”), under which the Company granted Biogen a worldwide, royalty-bearing, exclusive, with the right to sublicense, license (“Exclusive License”) to develop and commercialize CB 2782-PEG and other anti-C3 proteases for potential treatment of dry AMD and other disorders. Pursuant to the Biogen Agreement, the Company performed certain pre-clinical and manufacturing activities (“Research Services”), and Biogen was solely responsible for funding the pre-clinical and manufacturing activities and performing IND-enabling activities, worldwide clinical development, and commercialization.

Under the terms of the Biogen Agreement, the Company received an up-front payment for the transfer of the Exclusive License (inclusive of certain know-how) of $15.0 million in January 2020. The Company was eligible to receive development milestones and sales milestones of up to $340.0 million. In addition, the Company was eligible to receive royalties in the range of single-digit to low double-digit percentage rates of annual net sales on a product-by-product and country-by-country basis. The Company also received reimbursements for costs associated with the performance of the Research Services.

The Company determined that the performance obligations under the Biogen Agreement were the Exclusive License and the Research Services. For the Exclusive License, the Company used the residual approach in determining the standalone selling price, or SSP, which includes the upfront payments, milestones and royalties. For the Research Services, the Company used the historical pricing approach for determining the SSP, which includes the reimbursement of personnel and out-of-pocket costs.

~~In March 2022, the Company received written notice from Biogen to terminate the Biogen Agreement which will be effective in May 2022.~~ As a result of the ~~termination, Biogen will no longer have~~sale of the ~~Exclusive License to develop, manufacture and commercialize CB 2782-PEG~~Company’s rare bleeding disorders programs, including DalcA and other ~~anti-C3 proteases for potential treatment~~assets, to GCBP in February 2023, the A&R ISU Abxis Agreement was transferred to GCBP. See Note 11, Restructuring. As of ~~dry AMD and other disorders. In March 2022, Biogen returned full rights to CB 2782-PEG.~~

~~For~~ the ~~three months ended March 31, 2022 and 2021, the Company recognized 0 license revenue from the Biogen Agreement.~~

For the three months ended March 31, 2022 and 2021, respectively, the Company recognized $0.8 million and $1.5 million in collaboration revenue for reimbursable out-of-pocket and personnel costs incurred related to Research Services.

~~For the three months ended March 31, 2022 and 2021, respectively, $0.7 million and $1.4 million~~date of ~~research and development expense was recorded as cost of collaboration revenue related to the Biogen Agreement.~~transfer, no milestones have been met.

~~For the three months ended March 31, 2022, the Company recognized $0.2 million of revenue from the beginning of period deferred revenue balance.~~

~~Since~~Potentially dilutive securities are excluded from the ~~Company was in a loss position for all periods presented,~~calculation of diluted net ~~loss~~income (loss) per share ~~is the same as basic net loss per share for all periods as the~~attributable to common stockholders if their inclusion ~~of all potential common shares outstanding would have been~~is anti-dilutive. Potentially dilutive securities that were not included in the diluted per share calculations because they would be anti-dilutive were as follows:

	Three Months Ended March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
Options to purchase common stock		2,777,710		3,208,145		8,249,500		2,777,710
Common stock warrants		85		85		—		85
Total		2,777,795		3,208,230		8,249,500		2,777,795

In addition, the Catalyst Convertible Preferred Stock has also been excluded from the computation of diluted net income (loss) per share attributable to common stockholders because the contingency for conversion of these shares has not been met.

The following is a reconciliation of the numerator (net income or loss) and denominator (number of shares) used in the calculation of basic and diluted net income (loss) per share attributable to common stockholders (in thousands, except share and per share data):

The Company signed an agreement with AGC Biologics, Inc. (“AGC”) to perform certain manufacturing services related to the Company’s collaboration agreement with Biogen, which includes firm work orders totaling $0.7 million. The payment obligations were fully paid off asAs of March 31, ~~2022.~~2023 and December 31, 2022, the Company had cash deposited in certain financial institutions in excess of federally insured levels. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed to any significant credit risk in cash and cash equivalents. However, in March and April 2023, certain U.S. government banking regulators took steps to intervene in the operations of certain financial institutions due to liquidity concerns, which caused general heightened uncertainties in financial markets. While these events have not had a material direct impact on the Company’s operations, if further liquidity and financial stability concerns arise with respect to banks and financial institutions, either nationally or in specific regions, the Company’s ability to access cash or enter into new financing arrangements may be threatened, which could have a material adverse effect on its business, financial condition and results of operations.

Concurrent with the F351 Asset acquisition, as amended on March 29, 2023, the Company entered into ~~two separate agreements, one~~the Business Combination Agreement with GNI and other minority stockholders (“Sellers” and each a “Seller”) to acquire an indirect controlling interest in BC, a commercial-stage pharmaceutical company based in China and majority-owned subsidiary of GNI, in exchange for ~~additional clinical trial services for MarzAA,~~newly issued shares of Catalyst common stock. The closing of the transactions under the Business Combination Agreement will be subject to stockholder approval at a stockholder meeting expected to be held in the third quarter of 2023 and ~~another for~~certain customary closing conditions. If the ~~Company’s screening and natural history of disease clinical studies related to CFI deficiency, with~~transaction is approved by stockholders, the Company would issue at closing a total ~~payments~~ of up to ~~$3.2~~1,110,776,224 shares of Catalyst common stock for an indirect controlling interest in BC. Each Seller may elect to be issued Catalyst Convertible Preferred Stock in lieu of the Company’s common stock.

The Business Combination Agreement contains certain termination rights, including the right for Catalyst to terminate the Business Combination Agreement to enter into a definitive agreement for a superior proposal. Upon termination of the Business Combination Agreement under specified circumstances, the Company may be required to pay a termination fee of $2.0 million and ~~$6.5 million, respectively. The Company can terminate~~either party, as the ~~CFI agreement at its discretion~~case may be, may be required to reimburse the other party for reasonable out-of-pocket fees and ~~upon termination will be responsible~~expenses incurred by such party in connection with the Business Combination Agreement, up to ~~pay for those services incurred prior~~a maximum amount of $2.0 million.

~~On September 16, 2021,~~the Business Combination Agreement, on December 26, 2022, Catalyst and the Rights Agent (as defined therein) executed the CVR Agreement, as amended on March 29, 2023, pursuant to which the CVR Holders received one contractual CVR issued by the Company, ~~signed a Manufacturing~~subject to and ~~Research~~in accordance with the terms and ~~Development Studies~~conditions of the CVR Agreement, for each share of Catalyst common stock held by such holder. Each CVR entitles the holder thereof to ~~support~~receive (i) certain cash payments from the ~~lyophilized drug product, CB 4332. The agreement covers analytical method qualification to support good manufacturing practices (“GMP”) manufacturing. The Company currently has firm work orders~~net proceeds related to ~~this agreement totaling $0.3~~the disposition of the Company’s legacy assets (MarzAA, DalcA, and CB 2679d-GT), (ii) 100% of the excess cash (net of all current or contingent liabilities, including transaction-related expenses) retained by the Company in excess of $1.0 million ~~and the payment obligations remaining~~ as of ~~March 31, 2022 were $0.1 million.~~

~~In November 2021,~~the closing date of the transactions under the Business Combination Agreement, (iii) 100% of the amount actually received by the Company, net of expenses, pursuant to the Vertex asset purchase agreement and (iv) 100% of the excess, by which the preapproved costs to manage, negotiate, settle and finalize certain third party claims exceed the costs actually incurred with respect to such claims. The CVRs are not transferable, except in certain limited circumstances as provided ~~notice~~for in the CVR Agreement, will not be certificated or evidenced by any instrument, and will not be registered with the SEC or listed for trading on any exchange.

In February 2023, the Company recorded a $4.5 million long-term CVR derivative liability as a result of ~~intent~~the disposition of the Company’s legacy assets to ~~terminate its MarzAA manufacturing agreements and incurred charges~~GCBP. On March 8, 2023, the Company distributed the net cash proceeds received from the GCBP asset sale of ~~$3.8~~$0.2 million to ~~write-off prepaid manufacturing costs that will no longer be used~~the CVR Holders. Refer to Note 4, Fair Value Measurements andNote 11, Restructuring, for additional information regarding the ~~clinical development of MarzAA.~~CVR derivative liability and GCBP asset sale.

The current COVID-19 pandemic has presented a substantial public health and economic challenge around the world and is affecting the Company’s employees ~~potential trial participants~~ and business operations. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions taken to contain it or treat its impact and the economic impact on local, regional, national, and international markets. The COVID-19 pandemic may disrupt the ~~operations~~Company’s ability to conduct the clinical development and commercialization of ~~the Company’s manufacturers or disrupt supply logistics, which could impact the timing of deliveries and potentially increase expenses under the Company’s agreements. The Company~~ ~~is actively monitoring the impact of COVID-19 and the possible effects on its financial condition, liquidity, operations, clinical trials, suppliers, industry and workforce~~.Hydronidone in NASH fibrosis as planned.

During the three months ended March 31, 2023 and 2022, the Company recorded an income tax expense of $14,000 and zero, respectively. The ~~following table shows~~Company recorded no income tax benefits for the ~~detail~~net operating losses incurred or for the research and development tax credits generated in each period due to its uncertainty of ~~interest~~realizing a benefit from those items. All of the Company’s operating losses since inception have been generated in the United States.

As of March 31, 2023, after consideration of certain limitations (see below), the Company had approximately $194.1 million federal and ~~other~~$3.6 million state net operating loss carryforwards ("NOL") available to reduce future taxable income ~~net~~which, if unused, the majority will carry forward indefinitely for federal and will begin to expire in 2032 for state tax purposes.

If the Company experiences a greater than 50 percent aggregate change in ownership over a three-year period (a Section 382 ownership change), utilization of its pre-change NOL carryforwards are subject to annual limitation under Section 382 of the Internal Revenue Code (California has similar provisions). The annual limitation is determined by multiplying the value of the Company's stock at the time of such ownership change by the applicable long-term tax-exempt rate. Such limitations may result in expiration of a portion of the NOL carryforwards before utilization. The Company determined that ownership changes occurred on December 31, 2007, August 20, 2015, April 13, 2017, February 15, 2018, February 18, 2020, and December 26, 2022. The ability of the Company to use its remaining NOL and tax credit carry forwards may be further limited if the Company experiences a Section 382 ownership change as ~~follows (~~a result of future changes in ~~thousands~~):

In November 2021, the Board approved a restructuring of its business based on its decision to stop the clinical development of MarzAA and focus solely on its complement programs and protease medicines platform. The restructuring included a reduction-in-force whereby approximately 35% of employees were terminated. During the year ended December 31, 2021, the Company recorded charges of $0.4 million related to one-time severance costs and related expenses in connection with the workforce reduction, and charges of $3.8 million related to the write-off of prepaid manufacturing costs that will no longer be used for the clinical development of MarzAA. The remaining restructuring liability of $0.2 million will be paid during the second quarter of 2022.

In March 2022, the Board approved a further reduction of its workforce as part of its restructuring plan whereby 22 full-time employees were terminated. Following this reduction, the Company ~~will have 5~~had five full-time employees remaining. ~~As of~~During the quarter ended March 31, 2022, the Company recorded an additional ~~liability~~charges of $1.0 million for severance and other ~~charges~~costs related to the reduction-in-force, recognized as an operating expense within the condensed consolidated statements of operations, which the Company ~~expects~~paid during the second quarter of 2022.

In May 2022, the Company entered into an asset purchase agreement with Vertex, pursuant to ~~pay~~which Vertex purchased the Company’s complement portfolio, including CB 2782-PEG and CB 4332, as well as its complement-related intellectual property including the ProTUNE^TM and ImmunoTUNE^TM platforms for $60.0 million in cash consideration. Cash of $55.0 million was received upfront in May 2022 and the remaining $5.0 million will be paid one year after the closing upon satisfaction of certain post-closing indemnification obligations. The hold-back amount is recorded within accounts and other receivables on the condensed consolidated balance sheet. Once received, the net proceeds from the hold-back amount will be distributed to the CVR Holders pursuant to the CVR Agreement, see Note 9, Commitments and Contingencies. There were no carrying amounts associated with the intellectual property sold to Vertex, and, therefore, the Company recorded a gain of $57.4 million related to the disposal, net of $2.6 million of transaction costs during the second quarter of 2022.

In February 2023, Catalyst entered into an asset purchase agreement with GCBP, pursuant to which GCBP acquired the Company’s legacy rare bleeding disorders programs, including MarzAA, DalcA and CB-2679d-GT, for $6.0 million in cash consideration. Cash of $1.0 million was received upfront in February 2023 and the remaining $5.0 million will be paid two years after the closing upon satisfaction of certain post-closing indemnification obligations. The hold-back amount is recorded as a long-term receivable on the condensed consolidated balance sheet. In March 2023, the Company distributed the net cash proceeds received upfront of $0.2 million to the CVR Holders. Once received, the remaining net proceeds, net of expenses, from the hold-back amount will be distributed to the CVR Holders pursuant to the CVR Agreement, see Note 9, Commitments and Contingencies. There were no carrying amounts associated with the intellectual property sold to GCBP, and, therefore, Catalyst recorded a gain of $4.7 million related to the disposal, net of $0.8 million of transaction costs, which is included in gain on disposal of assets, net in the condensed consolidated statements of operations for the three months ended March 31, 2023.

On April 13, 2023, the Company entered into a Cost Sharing and Agency Agreement with GNI. Under this agreement, GNI will pay for certain costs related to the development of the F351 Assets in the U.S. incurred from December 26, 2022 until the Business Combination Agreement closes. After the Business Combination Agreement closes, the Company will be required to reimburse GNI for such costs. The Company has not incurred any expenses related to the development of the F351 Assets through March 31, 2023.

On April 18, 2023, the Company entered into two separate agreements to support the F351 Assets acquired from GNI. One agreement will cover analytical method process familiarization and validation to support good manufacturing practices (“GMP”) manufacturing, and the other agreement will cover non-GMP manufacturing services and clinical supply batch GMP manufacturing of the F351 Assets, with total payments of up to $0.3 million and $0.2 million, respectively. The Company can terminate these agreements at any time upon 90 days written notice. Upon termination, the Company will be responsible to pay for services incurred prior to termination and any non-cancellable obligations in connection with such services.

Unless otherwise indicated, in this Quarterly Report on Form 10-Q, references to “Catalyst,” “we,” “us,” “our” or the “Company” mean Catalyst Biosciences, Inc. and our subsidiary. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and related notes that appear in this Quarterly Report on Form 10-Q (this “Report”) and with the audited consolidated financial statements and related notes that are included as part of our Annual Report on Form 10-K for the year ended December 31, ~~2021 (“Annual~~2022 (the “Annual Report”).

In addition to historical information, this Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”). Forward-looking statements are identified by words such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “could,” “potentially” or the negative of these terms or similar expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. For example, forward-looking statements include any statements regarding the strategies, prospects, plans, expectations or objectives of management for future operations or the ~~progress, scope or duration~~distribution of ~~the development of product candidates or programs, clinical trial plans, timelines and potential results,~~cash to Company stockholders, the benefits that may be derived from product candidates or the commercial or market opportunity in any target indication, our ability to protect intellectual property rights, our anticipated operations, financial position, revenues, costs or expenses, statements regarding future economic conditions or performance, statements of belief and any statement of assumptions underlying any of the foregoing. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this report in Part II, Item 1A — “Risk Factors,” elsewhere in this Report and in Part I - Item 1A – “Risk Factors” in the Annual Report. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These statements, like all statements in this Report, speak only as of their date, and ~~we undertake~~Catalyst undertakes no obligation to update or revise these statements in light of future developments. ~~We caution~~Catalyst cautions investors that ~~our~~its business and financial performance are subject to substantial risks and uncertainties.

~~We are a biopharmaceutical company with expertise in protease engineering~~F351 Asset Acquisition

On December 26, 2022, Catalyst acquired the F351 Assets from GNI Group Ltd. and ~~several protease assets~~GNI Hong Kong Limited (the “Sellers”) pursuant to that ~~may address unmet medical needs in disorders~~certain F351 Agreement, by and among Catalyst and the Sellers. The F351 Assets include 15 issued or pending patents and patent applications outside of the ~~complement or coagulation systems. Proteases are an important class~~People’s Republic of ~~enzymes, which are key natural regulators~~China, with the last acquired issued patent expected to expire in August 2037. Under the terms of ~~many biological processes, including~~ the ~~complement system. Our complement pipeline includes~~F351 Agreement and upon the development candidates CB 4332 and CB 2782-PEG. CB 4332 is a wholly owned, first-in-class improved albumin-fused Complement Factor I (“CFI”) molecule intended for prophylactic subcutaneously (“SQ”) or intravitreal (“IVT”) administration in individualseffective time of the transactions contemplated by the F351 Agreement, Catalyst issued to the Sellers equity interests with an ~~imbalance~~aggregate value of $35.0 million in ~~complement homeostasis~~the form of: 6,266,521 shares of the Company’s common stock and 12,340 shares of newly designated Series X convertible preferred stock (“Catalyst Convertible Preferred Stock”), which Catalyst Convertible Preferred Stock is convertible, upon the approval of the stockholders of Catalyst (as further described herein) into shares of common stock at a ratio of one (1) share of Catalyst Convertible Preferred Stock to 10,000 shares of common stock.

Subject to stockholder approval, each share of Catalyst Convertible Preferred Stock issued under the F351 Agreement is convertible into 10,000 shares of common stock. Pursuant to the F351 Agreement, Catalyst has agreed to hold a stockholders’ meeting, which is expected to be held in the third quarter of 2023, to submit the following matters to the Company’s stockholders for their consideration: (i) the approval of the conversion of the Catalyst Convertible Preferred Stock into shares of common stock in accordance with Nasdaq rules, or ~~a CFI deficiency. CB 2782-PEG is a potential best-in-class component 3 (“C3”) degrader product candidate in preclinical development~~the Conversion Proposal, and (ii) if necessary or appropriate, the approval of an amendment to Catalyst’s certificate of incorporation to authorize sufficient shares of common stock for the ~~treatment of dry age-related macular degeneration (“AMD”). We have proteases from our ProTUNE™ C3b/C4b degrader and ImmunoTUNE™ C3a/C5a degrader platforms designed to target specific disorders~~conversion of the ~~complement or inflammatory pathways. These programs all target diseases caused by deficient regulation~~Catalyst Convertible Preferred Stock issued pursuant to the F351 Agreement. Following stockholder approval of the ~~complement system~~Conversion Proposal, each share of Catalyst Convertible Preferred Stock is convertible into shares of the Company’s common stock at any time at the option of the holder thereof, into 10,000 shares of its common stock, subject to certain limitations, including that a holder of Catalyst Convertible Preferred Stock is prohibited from converting shares of Catalyst Convertible Preferred Stock into shares of its common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (to be initially set at 9.99% and ~~inflammation. We have also used our protein engineering platform~~thereafter adjustable by the holder to ~~develop potential therapies for coagulation disorders, including marzeptacog alfa (activated) (“MarzAA”~~a number between 4.99% and 19.99%) of the total number of shares of Catalyst’s common stock issued and outstanding immediately after giving effect to such conversion.

On December 26, 2022, Catalyst, GNI USA, Inc., GNI Japan, GNI Hong Kong, Shanghai Genomics, Inc. (collectively the “Contributors”), ~~a SQ administered next-generation engineered coagulation Factor VIIa~~the individuals (collectively the “Minority Holders”) listed on an annex to that certain Business Combination Agreement, as amended (the “Business Combination Agreement”) and Continent Pharmaceuticals Inc. (“~~FVIIa”~~CPI”) ~~for~~entered into the ~~treatment~~Business Combination Agreement. The Business Combination Agreement contains the terms and conditions of ~~episodic bleeding and prophylaxis~~the proposed business combination pursuant to which Catalyst will acquire an indirect controlling interest in ~~subjects with rare bleeding disorders, and dalcinonacog alfa (“DalcA”), a next-generation SQ FIX, both~~BC. The closing of ~~which has shown sustained efficacy and safety in mid-stage clinical trials.As of March this year we ceased~~ the ~~development of our protease programs and are focused on~~transactions under the ~~monetization of our assets.~~

The product candidates generated by our protease engineering platform are designed to have improved functional properties such as longer half-life, improved specificity and targeting, higher potency, and increased bioavailability. These characteristics potentially allow for improved safety and efficacy for SQ administration of recombinant complement regulators, or less frequently dosed intravitreal products than current therapeutics in development.Business

~~The following table summarizes our current programs with their latest stage~~Combination Agreement will be subject to stockholder approval at a stockholder meeting expected to be held in the third quarter of ~~development.~~2023 and certain customary closing conditions. If the transaction is approved by stockholders, Catalyst would issue at closing a total of up to 1,110,776,224 shares of its common stock for an indirect controlling interest in BC.

The Business Combination Agreement contains certain termination rights, including the right for it to terminate the Business Combination Agreement to enter into a definitive agreement for a superior proposal. Upon termination of the Business Combination Agreement under specified circumstances, Catalyst may be required to pay a termination fee of $2.0 million and either party, as the case may be, may be required to reimburse the other party for reasonable out-of-pocket fees and expenses incurred by such party in connection with the Business Combination Agreement, up to a maximum amount of $2.0 million.

Concurrent with the signing of the Business Combination Agreement, Catalyst entered into the CVR Agreement, pursuant to which each common stockholder, excluding GNI, received one CVR issued by the Company, subject to and in accordance with the terms and conditions of the CVR Agreement, for each share of common stock held by such holder at the CVR Record Date. Each CVR entitles the holder thereof to receive (i) certain cash payments from the net proceeds, if any, related to (a) the disposition of its legacy assets within 90 calendar days after the remainder of the Holdback Amount (as defined in the CVR Agreement) is finally determined and received by Catalyst or (b) the resolution of certain legal claims; provided, however, such period will be automatically extended for any Claim (as defined in the CVR Agreement) for an additional one-year period to the extent any Claim is appealed during the initial term, (ii)100% of the excess cash (net of all current or contingent liabilities, including transaction-related expenses) retained by the Company in excess of $1.0 million as of the closing date of the transactions under the Business Combination Agreement, and (iii) 100% of the amount actually received (net of indemnity claims, if any) by Catalyst pursuant to the asset purchase agreement dated as of May 19, 2022, by and between Catalyst and Vertex. The contingent payments under the CVR Agreement, if they become payable, will become payable to the Rights Agent (as defined in the CVR Agreement) for subsequent distribution to the CVR Holders. In the event that no such proceeds are received, or the permitted deductions under the CVR Agreement are greater than any such proceeds, CVR Holders will not receive any payment pursuant to the CVR Agreement. There can be no assurance that CVR Holders will receive any amounts. The CVRs are not transferable, except in certain limited circumstances as provided for in the CVR Agreement, will not be certificated or evidenced by any instrument, and will not be registered with the SEC or listed for trading on any exchange.

Prior to the F351 acquisition, Catalyst was engaged in the research and development of product candidates from Catalyst’s protein engineering platform. In February 2022, weCatalyst announced that ~~we had~~it engaged Perella Weinberg Partners as a financial advisor to assist usCatalyst in exploring strategic alternatives to monetize ~~our~~its assets.

Our protease programs are designed to take advantage of nature’s natural complement regulators that restore complement homeostasis and potentially treat a variety of complement-mediated disorders. We have several protease programs currently in preclinical discovery or early non-clinical development. These programs target diseases caused by aberrant regulation of the complement system including both ocular programs, specifically for dry AMD, and systemic complement disorders, all of which are wholly owned by Catalyst.

~~The complement system is an enzyme-based~~ ~~innate immune~~ defense system with the primary role of protecting the body from pathogens. The system is naturally regulated by proteases which is the basis for our approach to addressing complement-driven diseases. Deficient or excessive activation of the complement system may lead to severe disorders, including microthrombotic, ~~autoimmune and/or immune-complex diseases~~, severe infectious diseases, and degenerative ophthalmic or neurologic diseases affecting a variety of tissues and organ systems. The absence of regulation can cause the complement system to become self-destructive or not provide the necessary protection when needed. The protease therapeutic candidates generated by our platforms are designed to correct or restore the missing balance in the complement system that drives several diseases.

Proteases are uniquely poised to regulate key biological functions such as the complement system, either by promoting or limiting the cascade of events that leads to eventual clearing of foreign and damaged proteins, inflammation, and formation of the membrane attack complex, which is deposited on the surface of cells and drives their destruction. Compared with antibodies and small molecule inhibitors that generally require a sustained excess of therapeutic compound over that of the target, Catalyst’s protease therapeutic candidates are based on natural regulatory proteins that are capable of rapidly engaging and modulating large quantities of target molecules, as each protease molecule can degrade many target molecules over their effective lifetime. This means that our proteases are ideal for regulating high abundancy targets such as complement proteins in a way antibodies and small molecule inhibitors cannot.

CB 2782-PEG is an engineered pegylated C3 degrader previously licensed to Biogen that we designed with a best-in-class anti-C3 profile for geographic atrophy (“GA”) in dry AMD. Dry AMD is an ocular disease that leads to vision loss and blindness for which there is currently no approved therapy. CB 2782-PEG degrades C3 in the eye reducing the steady state level of C3 activity. It is expected

that maintaining low C3 levels in the eye can significantly slow disease progression and vision loss in patients with dry AMD. We have demonstrated in preclinical non-human primate models that we have the potential to reduce C3 levels in humans based on modeling studies for up to 3 months with a single intravitreal injection. In September 2021, Apellis released the results of the DERBY and OAKS phase 3 trials for GA secondary to dry AMD, showing that once-monthly pegcetacoplan, a pegylated C3 targeted inhibitor, was safe and efficacious, meeting its primary endpoint in one trial and narrowly missing the primary endpoint in a second trial for reducing GA lesion growth over a 12-month period. Further subpopulation analyses demonstrated a greater effect of reducing GA lesion growth in those subjects with extrafoveal lesions at baseline. CB 2782-PEG provides a differentiated mechanism of action by degrading both C3 and one of its byproducts, C3a potentially offering not only less frequent dosing but a more efficacious mechanism than pegcetacoplan or other complement inhibitors in development for GA. In March 2022, ~~Biogen terminated the license~~Catalyst ceased research and development activities and in May 2022, Catalyst entered into an asset purchase agreement ~~and returned full rights~~with Vertex, pursuant to which Vertex purchased Catalyst’s complement portfolio, including CB ~~2782-PEG.~~

CB 4332 is an engineered albumin-fused version of the CFI protease with an extended half-life that can be dosed subcutaneously or intravitreally in individuals who would benefit from enhanced regulation of complement. CFI is the central regulator of the complement system2782-PEG and CB 4332, has the potential to address several mechanistically related diseases driven by complement imbalance such as: Lupus Nephritis (“LN”), Systemic Lupus Erythematosus (“SLE”), warm Autoimmune Hemolytic Anemia (“wAIHA”), atypical Hemolytic Uremic Syndrome (“aHUS”), C3 Glomerulonephritis (“C3G”), and Immune Complex Membranoproliferative Glomerulonephritis (“IC-MPGN”), dry AMD and complete CFI deficiency (“CFID”), a rare immunodeficiency primarily affecting children. These are severe, chronic, life-threatening diseases that result in a significantly decreased quality of life for the afflicted individual.

CB 4332 can be dosed subcutaneously for systemic diseases and has the potential for infrequent IVT injections for ophthalmic indications. As a key complement regulator, CFI has the potential to be used in several complement dysregulated diseases (~~e.g.~~, those associated with hyperactive complement) in which additional upstream regulation may prove more effective than inhibiting specific downstream targets such as C3 or C5, where many of current molecules in development are targeted.

Individuals with complete or significant absence of endogenous CFI may present with a variety of disease manifestations, such as recurrent invasive infections with encapsulated bacteria, but these patients are also at risk of developing autoimmune and/or immune-complex diseases such as chronic inflammation of the blood vessels of the brain, spinal cord, heart, or kidneys. No CFI replacement therapy, including for prophylactic use, has been approved, and patients often receive supportive care with lifelong antibiotic treatment, which may cause a range of additional problems. We have received pre-IND guidance from the FDA as well as ~~Rare Pediatric Disease Designation of CB 4332 for treatment of CFI deficiency in January 2022.~~

~~Low circulating serum CFI levels have been shown to be associated with rare CFI genetic variants and all forms of AMD ranging from early to late-stage manifestations. Studies have estimated~~its complement-related intellectual property, including the prevalence rates of CFI deficiency in GA to be approximately 20%, suggesting that CFI is a prognostic biomarker for progression of GA. Approximately 1 million individuals globally are predicted to have low serum CFI levels and may potentially benefit from targeted CFI therapy. Gyroscope released interim results from its FOCUS phase 1/2a trial for patients with GA and having rare CFI variants, showing that gene therapy with GT005, an AAV-delivered CFI rebalanced the overactivation of complement observed in the vitreous with sustained expression of CFI. The FOCUS data also showed that AAV-delivered CFI reduced complement biomarkers in the broader GA population who do not have a rare CFI genetic variant.

~~We have additional early-stage complement discovery programs that target different proteins of the complement system including proteases from our ProTUNE™ C3b/C4b degrader~~ProTUNE™ and ImmunoTUNE™ ~~C3a/C5a degrader platforms. These proteases are designed~~platforms, for $60.0 million in cash consideration. $55.0 million was received upfront and the remaining $5.0 million was retained by Vertex as a hold-back until one year after the closing date to ~~target specific~~satisfy certain post-closing indemnification obligations. Any amounts received from Vertex with respect to this hold-back, net of expenses, will be distributed to the CVR Holders. On February 27, 2023, Catalyst signed an asset purchase agreement with GC Biopharma Corp. (“GCBP”) pursuant to which GCBP acquired Catalyst’s legacy rare bleeding disorders programs including marzeptacog alpha activated (“MarzAA”), dalcinonacog alpha (“DalcA”) and CB-2679d-GT for a total of $6.0 million in cash consideration, $1.0 million payable on signing and $5.0 million payable on February 28, 2025, subject to satisfaction of post-closing indemnification obligations. In March 2023, Catalyst distributed net proceeds of approximately $0.2 million to the ~~complement or inflammatory pathways. The ProTUNE™ platform generates optimized, next-generation engineered CFI molecules that are selectively enhanced for potency and target engagement.~~

MarzAA is a potent, subcutaneously administered, next-generation Factor VIIa variant. We commenced enrollment of a Phase 3 registrational trial of MarzAA for episodic treatment of spontaneous or traumatic bleeding episodes in adolescents and adults with congenital hemophilia A or hemophilia B with inhibitors in May 2021. We have discontinued this trial based on a number of factors, including challenges in enrollment resultingCVR Holders. Once received, any additional net proceeds from the ~~limited number of potential patients eligible~~transaction will be distributed to ~~enroll in this trial, competition from competing approved therapies, delays in enrollment resulting from COVID-19,~~ the ~~capital requirements~~CVR Holders. Catalyst is also pursuing certain legal claims against a third party related to ~~complete~~payments under a 2016 asset purchase agreement, and any net recoveries related to these claims will be distributed to the trial, and other factors. Patients enrolled in the study returned to their standard of care and completed all required safety assessments. In the patients enrolled to date, we have successfully treated bleeds with SQ MarzAA and have not observed any adverse events. We plan to report these data at an appropriate medical conference in the future. We had also begun enrollment of a Phase 1/2 trial of MarzAA for treatment of bleeding in individuals with Factor VII Deficiency, Glanzmann Thrombasthenia, and hemophilia A with inhibitors on emicizumab prophylaxis. We have discontinued this trial as well, in light of the difficulties in identifying and enrolling eligible patients,

the capital requirements to complete the trial and other factors. We believe that a SQ recombinant Factor VIIa therapy, like MarzAA, has the potential to be an important treatment option for patients with various bleeding disorders and are exploring opportunities to license or sell MarzAA to another party for further development.CVR Holders.

DalcA is a next-generation SQ Factor IX product candidate for the prophylactic treatment of individuals with hemophilia B. An open-label, Phase 2b study was completed in 2020, demonstrating that FIX plasma activity levels were raised from severe to mild hemophilia B levels and maintained throughout the course of the study. We have received guidance from the FDA on the design of the registrational Phase 3 clinical trial, have the necessary data to support its initiation, and are exploring opportunities to license or sell DalcA to another party for further development.

~~We have~~Catalyst has no drug products approved for commercial sale and ~~have~~has not generated any revenue from drug product sales. ~~From inception to~~

With the exception of the three months ended March 31, 2023 and June 30, 2022, we have raised net proceeds of approximately $510.1 million, primarily from private placements of convertible preferred stock since converted to common stock, proceeds from our merger with Targacept, issuances of shares of common stock and warrants, including $84.3 million in total cash receipts from our license and collaboration agreements.

~~We have~~Catalyst has never been profitable and ~~have~~has incurred significant operating losses in each year since inception. ~~Our~~Catalyst had net income of $0.3 million and net losses ~~were~~of $14.5 ~~million and $22.4~~ million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. As of March 31, ~~2022, we~~2023, Catalyst had an accumulated deficit of ~~$417.2 million. As of March 31, 2022, our~~$410.7 million and cash and cash equivalents ~~balance was $34.8~~of $8.1 million. Substantially all ~~our~~its operating losses were incurred in ~~our~~its research and development programs and in ~~our~~its general and administrative operations.

~~License and collaboration~~Collaboration revenue consists of revenue earned for performance obligations satisfied pursuant to ~~our license~~the License and ~~collaboration agreement~~Collaboration Agreement with Biogen which was entered into in December ~~2019. In consideration for the grant of an exclusive license~~2019 and ~~related know-how, we received an up-front license payment of $15.0 million~~terminated in ~~January 2020, which was recorded in license revenue during the year ended December 31, 2020. We~~May 2022 (the “Biogen Agreement”). Catalyst recognized collaboration revenue for reimbursable third-party vendor, out-of-pocket and personnel costs pertaining to the Biogen Agreement of $0.8 million ~~and $1.5 million~~ for the three months ended March 31, ~~2022 and 2021, respectively. In~~2022. No collaboration revenue was recognized for the three months ended March ~~2022, we received notice that Biogen is terminating the license and collaboration agreement. Under the terms of the Biogen Agreement, termination will be effective in May 2022.~~31, 2023.

~~We have~~Catalyst has not generated any revenue from the sale of any drug products and ~~we do~~Catalyst does not expect to generate any revenue from the sale of drug products until ~~we obtain~~Catalyst obtains regulatory approval of and ~~commercialize our~~commercializes its product candidates.

Cost of ~~license and~~ collaboration revenue consists of fees for research and development services payable to third-party vendors and personnel costs, corresponding to the recognition of ~~license and~~ collaboration revenue from Biogen. Cost of ~~license and~~ collaboration revenue does not include any allocated overhead costs. ~~In connection with the license revenue recognized from Biogen as discussed above in 2020, we paid~~ ~~Mosaic a $3.0 million sublicense fee and recorded such payment as cost of license. We~~Catalyst recognized third-party vendor, out-of-pocket and personnel costs, most of which were reimbursable, pertaining to the Biogen Agreement of $0.8 million ~~and $1.5 million~~ for the three months ended March 31, 2022, and ~~2021, respectively, and~~ recorded such costs as cost of collaboration revenue. No cost of collaboration revenue was recognized for the three months ended March 31, 2023.

As of March 2022, Catalyst ceased the development of certain programs and during the quarter ended June 30, 2022, Catalyst ceased all research and development activities. Research and development expenses represent costs incurred to conduct research, such as the discovery and development of ~~our~~its product candidates. ~~We recognize~~Catalyst recognizes all research and development costs as they are incurred. Nonrefundable advance payments for goods or services used in research and development are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered or services are performed, or until it is no longer expected that the goods or services will be delivered.

Research and development expenses ~~consist~~have traditionally consisted primarily of the following:

The table below details ~~our~~the Company’s internal and external costs for research and development for the period presented (in thousands). ~~See Overview and Program Status for further discussion of the current research and development programs.~~

	Three Months Ended March 31,				Three Months Ended March 31,
	2022		2021		2023		2022
Personnel and other	$	4,140	$	4,624	$	522	$	4,140
Stock-based compensation						66		128
Complement		3,383		4,650		—		3,383
Hemophilia		2,052		7,370		—		2,052
Stock-based compensation		128		369
Total research and development expenses	$	9,703	$	17,013	$	588	$	9,703

The largest component of ~~our~~ total operating expenses ~~has~~had historically been ~~our~~Catalyst’s investment in research and development activities, including the clinical and manufacturing development of ~~our~~its product candidates. Costs listed for ~~our~~its hemophilia and complement programs above consist of clinical trial, manufacturing and research costs. ~~Our~~Its internal resources, employees and infrastructure, identified above as personnel and other, are generally not directly tied to individual product candidates or development programs. As such, ~~we do~~Catalyst does not maintain information regarding these costs incurred for these research and development programs on a project-specific basis.

~~Since we have~~Catalyst has entered into a Cost Sharing and Agency Agreement with GNI USA, Inc. pursuant to which GNI USA, Inc. will be responsible for development expenses related to the F351 Assets until the closing of the transactions under the Business Combination Agreement. Accordingly, since Catalyst has ceased its other research and development activities, weit does not expect ~~our aggregate~~to incur material research and development expenses ~~will be minimal during~~until the ~~next year as we continue to explore strategic opportunities for the clinical and manufacturing development of our programs.~~

On May 20, 2016, we signed a development and manufacturing services agreement with AGC, pursuant to which AGC will conduct manufacturing development of agreed upon product candidates. We will own all intellectual property developed in such manufacturing development activities that are specifically related to our product candidates and will have a royalty-free and perpetual license to use AGC’s intellectual property to the extent reasonably necessary to make these product candidates, including commercial manufacturing. As of March 31, 2022, six GMP batches have been manufactured at AGC in addition to an engineering batch.

~~The initial term~~closing of the ~~agreement is ten years or, if later, until all stages~~transactions under ~~outstanding statements of work have been completed. Either party may terminate~~ the agreement in its entirety upon written notice of a material uncured breach or upon the other party’s bankruptcy, and we may terminate the agreement upon prior notice for any reason. In addition, each party may terminate the agreement in the event that the manufacturing development activities cannot be completed for technical or scientific reasons. We had firm work orders with AGC to manufacture MarzAA and DalcA to support clinical trials totaling $15.8 million. The payment obligations were fully paid off as of December 31, 2021. We also have firm work orders with AGC to perform certain manufacturing services related to our collaboration agreement with Biogen totaling $0.7 million and the payment obligations were fully paid off as of March 31, 2022.

In July 2021, we entered into two separate agreements, one for additional clinical trial services for MarzAA, and another for our screening and natural history of disease clinical studies related to CFI deficiency, with total payments of up to $3.2 million and $6.5 million, respectively. In November 2021, we provided notice of intent to terminate our MarzAA manufacturing agreements and incurred charges of $3.8 million to write-off prepaid manufacturing costs that will no longer be used for the clinical development of MarzAA. We can terminate the CFI agreement at our discretion and upon termination will be responsible to pay for those services incurred prior to termination plus reasonable wind-down expenses.

On September 16, 2021, we signed a Manufacturing and Research and Development Studies Agreement to support the lyophilized drug product, CB 4332. The agreement covers analytical method qualification to support GMP manufacturing. We have firm work orders related to this agreement totaling $0.3 million and the payment obligations remaining as of March 31, 2022 were $0.1 million.Business Combination Agreement.

We also have a long-term clinical supply services agreement with Catalent Indiana, LLC (“Catalent”). Catalent has facilities in the U.S. and Europe and conducts drug product development and manufacturing for MarzAA and DalcA. We successfully completed development work for a variety of vial sizes which supports flexible dosing.

General and administrative expenses consist of personnel costs, allocated expenses, ~~and other~~ expenses for outside professional services, including legal, human resources, audit and accounting ~~services.~~services, and other general expenses. Personnel costs consist of salaries, ~~bonus,~~bonuses, benefits and stock-based compensation. ~~We incur~~Catalyst incurs expenses associated with operating as a public company, including expenses related to compliance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and Nasdaq Stock Market LLC (“Nasdaq”), insurance expenses, audit expenses, investor relations activities, Sarbanes-Oxley compliance expenses and other administrative expenses and professional services. ~~We expect such expenses~~

Gain on disposal of assets resulted from the sale of Catalyst’s legacy rare bleeding disorder program, including MarzAA, DalcA and CB-2679d-GT to ~~fluctuate as we continue to explore strategic opportunities for our programs.~~GCBP in February 2023. The gain is presented net of the direct costs incurred in connection with the transaction.

The following table set forth ~~our~~the Company’s results of operations data for the periods presented (in thousands):

Three Months Ended March 31,

2022

2021

Change ($)

Change (%)

Revenue:

License

$
—

$
—

$
—

*

Collaboration

794

1,467

(673
)

46
%
License and collaboration revenue

794

1,467

(673
)

46
%
Operating expenses:

Cost of license

—

—

—

*

Cost of collaboration

798

1,480

(682
)

46
%
Research and development

9,703

17,013

(7,310
)

43
%
General and administrative

4,994

5,412

(418
)

8
%
Total operating expenses

15,495

23,905

(8,410
)

35
%
Loss from operations

(14,701
)

(22,438
)

7,737

34
%
Interest and other income, net

165

—

165

*

Net loss and comprehensive loss

$
(14,536
)

$
(22,438
)

$
7,902

35
%

	Three Months Ended March 31,
	2023			2022			Change ($)			Change (%)
Revenue:
Collaboration	$	—		$	794		$	(794	)		(100	)%
Operating expenses (income):
Cost of collaboration		—			798			(798	)		(100	)%
Research and development		588			9,703			(9,115	)		(94	)%
General and administrative		3,970			4,994			(1,024	)		(21	)%
Gain on disposal of assets, net		(4,736	)		—			(4,736	)		100	%
Total operating expenses (income)		(178	)		15,495			(15,673	)	*
Income (loss) from operations		178			(14,701	)		14,879		*
Interest and other income, net		96			165			(69	)		(42	)%
Income (loss) before income taxes		274			(14,536	)		14,810		*
Income tax expenses		14			—			14			100	%
Net income (loss)	$	260		$	(14,536	)	$	14,796		*

~~License and~~Collaboration revenue for the three months ended March 31, 2022 consisted of reimbursable collaboration expenses from the Biogen Agreement. No collaboration revenue was ~~$0.8~~recognized for the three months ended March 31, 2023.

Cost of collaboration revenue for the three months ended March 31, 2022 primarily related to reimbursable third-party vendor and personnel costs incurred pertaining to the Biogen Agreement. No cost of collaboration revenue was recognized for the three months ended March 31, 2023.

Research and development expenses were $0.6 million and ~~$1.5~~$9.7 million during the three months ended March 31, ~~2022~~2023 and ~~2021, respectively. In the three months ended March 31,~~ 2022, ~~and 2021, revenue consisted primarily of reimbursable collaboration expenses from our Biogen Agreement.~~

Cost of license and collaboration revenue was $0.8 million and $1.5 million during the three months ended March 31, 2022 and 2021, respectively. Cost of collaboration for the three months ended March 31, 2022 and 2021 was primarily reimbursable third-party vendor and personnel costs we incurred pertaining to the Biogen Agreement.

~~Research and development expenses were $9.7 million and $17.0 million during the three months ended March 31, 2022 and 2021,~~ respectively, a decrease of ~~$7.3~~$9.1 million, or ~~43%~~(94)%. The decrease was due primarily to a decrease of ~~$5.3~~$3.6 million in ~~hemophilia-related~~personnel-related costs, a decrease of ~~$1.3~~$3.4 million in complement-related ~~costs, a decrease of $0.5 million in personnel-related~~ costs, and a decrease of ~~$0.2~~$2.1 million in ~~stock-based compensation expense.~~hemophilia-related costs. Research and development expenses for the three months ended March 31, 2022 include approximately $0.6 million of severance and other costs related to ~~our~~its reduction-in-force.

General and administrative expenses were ~~$5.0~~$4.0 million and ~~$5.4~~$5.0 million during the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively, a decrease of ~~$0.4~~$1.0 million, or 8%(21)%. The decrease was due primarily to a decrease of ~~$0.6~~$0.7 million in professional services and a $0.4 million decrease in personnel-related costs, partially offset by an increase of ~~$0.2~~$0.1 million ~~related to our allowance for doubtful accounts.~~in facilities and overhead costs. General and administrative expenses for the three months ended March 31, 2022 include approximately $0.4 million of severance and other costs related to ~~our~~its reduction-in-force.

Gain on disposal of assets, net was $4.7 million for the three months ended March 31, 2023, which related to the sale of Catalyst’s legacy rare bleeding disorder program to GCBP in February 2023.

The ~~$0.2~~$0.1 million ~~increase~~decrease in interest and other income, net for the three months ended March 31, ~~2022~~2023 compared to the three months ended March 31, ~~2021~~2022 was primarily due to a gain on extinguishment of $0.2 million ~~gain~~ recognized ~~upon~~in the ~~extinguishment~~first quarter of ~~a liability.~~2022 where there was no comparable activity in the first quarter of 2023, partially offset by an increase in interest income of $0.1 million.

Refer to “Accounting Pronouncements Recently Adopted” included in Note 2, Summary of Significant Accounting Policies, in the “Notes to the Condensed Consolidated Financial Statements” in this ~~Form 10-Q.~~Report.

On January 12, 2023, Catalyst paid a one-time cash dividend of $0.24 per share, or approximately $7.6 million, to holders of the Company’s common stock, excluding GNI.

On March 8, 2023, the Company distributed the net cash proceeds received from the GCBP asset sale of $0.2 million, or $0.01 per share, to holders of the Company’s common stock, excluding GNI.

As of March 31, ~~2022, we~~2023, Catalyst had ~~$34.8~~$8.1 million of cash and cash equivalents. For the three months ended March 31, ~~2022, we~~2023, Catalyst had ~~a $14.5~~net income of $0.3 million ~~net loss~~ and ~~$12.1~~$6.2 million cash used in operating activities. ~~We have~~Catalyst had an accumulated deficit of ~~$417.2~~$410.7 million as of March 31, 2022. Our primary uses of cash are to fund operating and business development expenses and general and administrative expenditures. Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable and accrued expenses.

~~We believe~~2023. Catalyst expects that ~~our~~its existing ~~capital resources, including~~ cash and cash equivalents ~~will be~~are sufficient to ~~meet our projected~~support its operating ~~requirements for~~expenses through at least the next 12 months from the date of this ~~filing. We have~~filing, assuming the Company’s stockholders approve the Conversion Proposal. Catalyst’s estimate as to how long the Company expects its cash and cash equivalents to be able to fund its operations is based ~~this estimate~~ on assumptions that may prove to be wrong, and weit could ~~utilize our~~use the Company’s available capital resources sooner than weit currently ~~expect. We plan~~expects. Further, changing circumstances, some of which may be beyond Catalyst’s control, could cause it to consume capital significantly faster than currently anticipated, and the Company may need to seek additional funds sooner than planned.

In connection with the F351 Agreement, Catalyst issued Catalyst Convertible Preferred Stock to GNI. Catalyst is obligated to seek stockholder approval for the conversion of the Catalyst Convertible Preferred Stock into common stock. In the event that the Company fails to timely hold the stockholders’ meeting or fails to obtain stockholder approval of the Conversion Proposal, then the holders of the Catalyst Convertible Preferred Stock would be entitled to require Catalyst to redeem, in cash, the shares of common stock underlying its Catalyst Convertible Preferred Stock at a price per share equal to the fair value of the common stock. If Catalyst is forced to redeem a significant amount of shares underlying the Catalyst Convertible Preferred Stock, it could, among other things, materially affect the Company’s results of operations and cash usage forecasts, require Catalyst to raise additional capital and impact its ability to raise additional capital. Also, while Catalyst cannot predict the amount with any level of certainty, there is a level of cash settlement at which, if it is exceeded, could require Catalyst to make redemption payments in excess of its current liquidity. Catalyst believes that its stockholders who are entitled to vote on the Conversion Proposal at its 2023 Annual Meeting of Stockholders, which is expected to be held in the third quarter of 2023, will vote to approve the proposal. However, as the vote of the Company’s stockholders is outside of its control, there is substantial doubt about Catalyst’s ability to continue as a going concern within one year from the filing of this Report.

Catalyst expects to ~~fund losses from operations and capital funding~~finance any future cash needs through ~~future~~a combination of divestitures of its product candidates or other assets, equity ~~and/or~~offerings, debt financings, ~~as well as potential additional asset sales,~~collaborations, strategic alliances and licensing transactions, collaborations or strategic partnerships with other companies. At the year ended March 31, 2022, we had effective registration statements on Form S-3 that enable us to sell up to $150.0 million in securities subject to limitations under SEC rules. 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. Licensing transactions, collaborations or strategic partnerships may result in us relinquishing valuable rights. Wearrangements. There can ~~provide~~be no assurance ~~that~~as to the timing, terms or consummation of any divestiture or financing, ~~will be available in~~and the ~~amounts we need~~terms of any such financing may adversely affect the Company’s stockholders’ rights. If Catalyst raises funds through collaborations, strategic alliances or licensing arrangements with third parties, it may have to relinquish valuable rights to its technologies, product candidates or to grant licenses on terms ~~acceptable~~that may not be favorable to us, if at all. If we are not able to secure adequate additional funding we may be forced to delay, 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.the Company.

The following table summarizes ~~our~~the Company’s cash flows for the periods presented (in thousands):

	Three Months Ended March 31,						Three Months Ended March 31,
	2022			2021			2023			2022
Cash used in operating activities	$	(12,050	)	$	(24,356	)	$	(6,216	)	$	(12,050	)
Cash provided by investing activities		2,504			27,581			411			2,504
Cash provided by financing activities		16			49,459
Net (decrease) increase in cash and cash equivalents	$	(9,530	)	$	52,684
Cash (used in) provided by financing activities								(7,762	)		16
Net decrease in cash and cash equivalents							$	(13,567	)	$	(9,530	)

Cash used in operating activities for the three months ended March 31, 2023 was $6.2 million. The most significant component of the Company’s cash used was net loss of $4.4 million excluding the net gain of $4.7 million from the sale of its legacy rare bleeding disorder program. The net loss included non-cash stock-based compensation expense of $0.2 million. In addition, net cash outflow of $2.0 million was attributable to the change in its net operating assets and liabilities primarily as a result of a $2.4 million decrease in accrued compensation and other accrued liabilities and a $0.2 million decrease in accounts payable, partially offset by a $0.6 million decrease in prepaid and other current assets.

Cash used in operating activities for the three months ended March 31, 2022 was $12.1 million. The most significant component of ~~our~~the Company’s cash used was a net loss of $14.5 million. This included non-cash expense related to stock-based compensation of $0.5 million, bad debt expense of $0.2 million and depreciation and amortization of $0.1 million. In addition, cash inflow of $1.7 million was attributable to the change in ~~our~~its net operating assets and liabilities primarily as a result of a $1.5 million decrease in prepaid and other current assets, a $1.1 million decrease in accounts receivable, and a $1.0 million increase in accrued compensation and other accrued liabilities, partially offset by a $1.7 million decrease in accounts payable and a $0.2 million decrease in deferred revenue related to the Biogen Agreement.

Cash provided by investing activities for the three months ended March 31, ~~2021~~2023 was ~~$24.4~~$0.4 million, due ~~primarily~~ to ~~a net loss~~$1.0 million in cash proceeds from the sale of ~~$22.4~~the Company’s legacy rare bleeding disorder program to GCBP, offset by $0.6 million ~~and the change~~ in our net operating assets and liabilities of $3.0 million. The change in our net operating assets and liabilities is due primarily to a $1.7 million increase in prepaid and other assets, a $3.0 million decrease in accounts payable, and a $0.7 million decrease in deferred revenuetransaction costs related to the ~~Biogen Agreement, offset by a $2.3 million decrease in accounts receivable. Non-cash charges~~sale of ~~$1.0 million were recorded for stock-based compensation.~~

~~Cash Flows from Investing Activities~~its legacy rare bleeding disorder program to GCBP.

Cash provided by investing activities for the three months ended March 31, 2022 was $2.5 million, due primarily to proceeds from maturities of investments.

Cash used in financing activities for the three months ended March 31, ~~2021~~2023 was ~~$27.6~~$7.8 million, due primarily to the special dividend paid in January 2023 and the distribution of net proceeds ~~from maturities of investments.~~

~~Cash Flows from Financing Activities~~related to the GCBP Agreement to the CVR Holders.

Cash provided by financing activities for the three months ended March 31, 2022 was due to the issuance of stock grants.

Cash provided by financing activities for the three months ended March 31, 2021 was $49.5 million, due to $49.3 million in net proceeds from the issuance of common stock related to our public offering in the first quarter of 2021 and $0.2 million in stock grants.

There have been no significant changes to ~~our~~Catalyst’s critical accounting policies since December 31, ~~2021.~~2022. For a description of critical accounting policies that affect ~~our~~its significant judgments and estimates used in the preparation of ~~our~~its unaudited condensed consolidated financial statements, refer to Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in ~~our~~the Annual ~~Report on Form 10-K.~~Report.

Management, with the participation of our Chief Executive Officer and our Interim Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, ~~2022.~~2023. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ~~ensure~~provide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to ~~our~~the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on ~~the~~their evaluation of our disclosure controls and procedures as of March 31, ~~2022,~~2023, our Chief Executive Officer and Interim Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were ~~not~~ effective ~~due to an unremediated material weakness in our internal control over financial reporting.~~

~~As we continue to evaluate our internal control over financial reporting, we may determine that additional measures should be taken to address~~at the identified control deficiency or other deficiencies, and/or that we should modify the remediation plan described below. Notwithstanding the identified material weakness in our internal control over financial reporting, we have concluded that the consolidated financial statements and other financial information included in this Quarterly Report on Form10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows as of, and for, the periods presented.

~~A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a~~ reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis. In connection with management’s assessment of our internal control over financial reporting described above, management concluded that, as of March 31, 2022, a material weakness existed in our internal control over financial reporting.

We did not design and maintain effective controls related to the review of certain contracts, including the proper application of U.S. GAAP. Specifically, we did not design and maintain controls to properly review the retention bonuses granted to our employees in November 2021 after our reduction in workforce to assess the appropriate accounting treatment under U.S. GAAP.

To address our material weakness, we have implemented internal control activity over our accounting policy for monitoring and reviewing personnel contracts so that contracts with a significant impact are reviewed and U.S. GAAP is properly applied. We have formalized our internal control documentation and strengthened supervisory reviews by our management. While these actions and planned actions are subject to ongoing management evaluation and will require validation and testing of the design and operating effectiveness of internal controls over a sustained period to ensure proper seasoning and implementation, we are committed to continuous improvement and will continue to diligently review our internal control over financial reporting.assurance level.

~~We are taking actions to remediate the material weakness relating to our internal control over financial reporting as described above. Except as described above, there were~~There has been no ~~changes~~change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified during the quarter ended March 31, ~~2022~~2023 that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.

~~The risk factors disclosed in~~ ~~“Part I - Item 1A - Risk Factors”~~ of~~our Annual Report on Form 10-K for the fiscal year ended~~ December 31, 2021, filed with the Securities and Exchange Commission on March 31, 2022, disclose risk and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our common stock, and are incorporated herein by reference.

You should carefully consider the ~~risks and uncertainties disclosed as~~factors discussed in Part I, Item 1A., “Risk Factors” in our Annual Report for the fiscal year ended December 31, 2022, which could materially affect our business, financial position, or future results of operations. The risks described in our Annual Report for the fiscal year ended December 31, 2022, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial position, or future results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC. The risk factor set forth below supplements and updates the risk factors previously disclosed and should be read together with ~~all~~the risk factors described in our Annual Report for the fiscal year ended December 31, 2022 and with any risk factors we may include in subsequent periodic filings with the SEC.

As previously reported, on November 2, 2022, Catalyst Biosciences, Inc., a Delaware corporation (the “Company” or “Catalyst”), received a letter from the Listing Qualifications Department of The Nasdaq Stock Market, LLC (“Nasdaq”) informing the Company that, because the closing bid price for the Company’s common stock listed on Nasdaq was below $1.00 for 30 consecutive trading days, the Company was not in compliance with the minimum bid price requirement for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Marketplace Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). The Company was granted 180 calendar days, or until May 1, 2023, to regain compliance with the Minimum Bid Price Requirement.

On May 2, 2023, the Company was notified by the Listing Qualifications Staff (the “Staff”) of Nasdaq that the Company did not meet the Minimum Bid Price Requirement and was not eligible for a second 180-day period. As previously reported, on April 4, 2023, the Staff notified the Company that it failed to comply with Nasdaq’s $2,500,000 minimum stockholders’ equity requirement for continued listing as set forth in Listing Rule 5550(b)(1) (the “Equity Requirement”). The deficiency with regards to the Equity Requirement serves as an additional and separate basis for delisting. The Company timely submitted a hearing request to Nasdaq’s Hearings Department. The hearing request stays the suspension of the ~~other information~~Company’s common stock pending the panel’s conclusion of the hearing process. The Company believes that completion of the pending transactions under the Business Combination Agreement and reverse stock split as described in ~~this Report, including~~ the ~~section titled~~ ~~“Part I - Financial Information - Item 2 - Management’s Discussion~~preliminary proxy statement (the “Preliminary Proxy Statement”) filed with the U.S. Securities and ~~Analysis~~Exchange Commission (the “SEC”) on March 30, 2023 will enable the combined company following the transactions under the Business Combination Agreement to meet the applicable Nasdaq initial listing requirements, providing a basis for suspension of ~~Financial Condition~~delisting. There can be no assurance that the Company will succeed in its hearing and ~~Results~~that the panel will grant the Company’s request for a suspension of ~~Operations”~~ delisting or continued listing on The Nasdaq Capital Market, or that the combined company will meet Nasdaq’s initial listing requirements.

Delisting of our common stock from The Nasdaq Capital Market could materially adversely impact the liquidity and value of our common stock and could prevent the closing of the transactions contemplated by the Business Combination Agreement. Catalyst’s ability to publicly or privately sell equity securities and the ~~condensed consolidated financial statements~~liquidity of its common stock could be adversely affected if it is delisted from The Nasdaq Capital Market or if it is unable to transfer its listing to another stock market. If Catalyst’s common stock is delisted by Nasdaq, it could lead to a number of negative implications, including an adverse effect on the price of its common stock, increased volatility in its common stock, limited availability of market quotations for its common stock, reduced liquidity in its common stock, the loss of federal preemption of state securities laws and ~~related notes.~~ greater difficulty in issuing additional securities and obtaining financing. In addition, delisting of Catalyst’s common stock could deter broker-dealers from making a market in or otherwise seeking or generating interest in its common stock, could result in a loss of current or future coverage by certain sell-side analysts and might deter certain institutions and persons from investing in its securities at all. Delisting could also cause a loss of confidence of Catalyst’s customers, collaborators, vendors, suppliers and employees, which could harm its business and future prospects.

See Index to Exhibits at the end of this Report, which is incorporated by reference here. The Exhibits listed in the accompanying Index to Exhibits are filed as part of this Report.

§Portions of this exhibit (indicated by “[***]”) have been redacted in accordance with Regulation S-K Item 601(b)(10)(iv).

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.

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock		CBIO		NASDAQ

		Page No.

PART I. FINANCIAL INFORMATION			3

Item 1.	Financial Statements:		3

	Condensed Consolidated Balance Sheets as of March 31, ~~2022~~2023 (unaudited) and December 31, 20212		3

	Condensed Consolidated Statements of Operations ~~and Comprehensive Loss~~ for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (unaudited)		4

	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (unaudited)		5

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (unaudited)		6

	Notes to the Unaudited Interim Condensed Consolidated Financial Statements		7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		1417

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		2122

Item 4.	Controls and Procedures		2223

PART II. OTHER INFORMATION			2324

Item 1.	Legal Proceedings		2324

Item 1A.	Risk Factors		2324

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		2324

Item 3.	Defaults Upon Senior Securities		2324

Item 4.	Mine Safety Disclosures		2325

Item 5.	Other Information		2325

Item 6.	Exhibits		2325

Exhibit Index			2426

Signatures		2528

Year Ending December 31,	Amount
Remaining in 2022	$	1,543
2023		410
Total undiscounted lease payments		1,953
Less imputed interest		(44	)
Total operating lease liability	$	1,909

	Three Months Ended March 31,
	2022			2021
Employee Stock Options:
Risk-free interest rate		1.87	%		0.69	%
Expected term (in years)		6.1			6.1
Dividend yield		0			0
Volatility		91.54	%		93.83	%
Weighted-average fair value of stock options granted	$	0.39		$	4.70

Exhibit Number	~~Description~~Exhibit Title	Form	File No.	Filing Date	Filed or Furnished herewith

2.1	Amendment to Business Combination Agreement, dated as of March 29, 2023, by and among Catalyst, GNI USA, GNI Group, GNI HK, Shanghai Genomics, the Minority Holders and CPI.	8-K	000-51173	March 30, 2023

2.2	Agreement and Amendment to Asset Purchase Agreement, dated as of March 29, 2023, by and among Catalyst, GNI Group and GNI HK.	8-K	000-51173	March 30, 2023

2.3	Contingent Value Rights Agreement, dated as of December 26, 2022, between Catalyst and American Stock Transfer & Trust Company, LLC				X

2.4	Amendment to Contingent Value Rights Agreement, dated as of March 29, 2023, executed by Catalyst.	8-K	000-51173	March 30, 2023

10.1§	Asset Purchase Agreement dated as of February 27, 2023 by and between Catalyst Biosciences, Inc. and GC Biopharma Corp.	8-K	000-51173	March 2, 2023

10.2**	Waiver Agreement between Catalyst Biosciences, Inc. and Dr. Nassim Usman, dated January 17, 2023.				X

10.3**	Waiver Agreement between Catalyst Biosciences, Inc. and Dr. Grant Blouse, dated January 14, 2023.				X

10.4**	Waiver Agreement between Catalyst Biosciences, Inc. and Ms. Seline Miller, dated January 17, 2023.				X

31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

31.2	Certification of the Interim Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X

32.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

32.2	Certification of the Interim Chief Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X

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

March 31, 2022	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Money market funds (cash equivalents)	$	34,817	$	—	$	—	$	34,817
Total financial assets	$	34,817	$	—	$	—	$	34,817
Classified as:
Cash and cash equivalents							$	34,817
Total							$	34,817

	Long-term receivable		CVR derivative
	from GCBP		liability, noncurrent
Balance at December 31, 2022	$	—	$	—
Additions in the period		4,530		4,530
Changes in fair value		20		20
Balance at March 31, 2023	$	4,550	$	4,550

101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2022,~~2023, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of March 31, ~~2022~~2023 (unaudited) and December 31, ~~2021;~~2022; (ii) the Condensed Consolidated Statements of Operations ~~and Comprehensive Loss~~ for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (unaudited); (iii) the Condensed Consolidated Statement of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) as of March 31, ~~2022~~2023 and March 31, ~~2021~~2022 (unaudited); (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2022~~2023 and ~~2021~~2022 (unaudited); and (v) the Notes to Unaudited Interim Condensed Consolidated Financial Statements.	X

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

		CATALYST BIOSCIENCES, INC.

Date: May ~~9, 2022~~15, 2023		/s/ Nassim Usman, Ph.D.
		Nassim Usman, Ph.D.
		President and Chief Executive Officer
		(Principal Executive Officer)

Date: May ~~9, 2022~~15, 2023		/s/ Seline Miller
		Seline Miller
		Interim Chief Financial Officer
		(Interim Financial and Principal Accounting Officer)