On behalf of the board of directors of Vallon Pharmaceuticals, Inc., a Delaware corporation (“Vallon”), we are pleased to deliver this proxy statement/prospectus/information statement for a virtual special meeting of stockholders of Vallon (the “Vallon virtual special meeting”), in connection with the proposed merger between Vallon and GRI Bio, Inc., a Delaware corporation (“GRI”), pursuant to which Vallon Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of Vallon, will merge with and into GRI, with GRI surviving as a wholly-owned subsidiary of Vallon (the “Merger”) and the transactions contemplated by that certain securities purchase agreement, dated December 13, 2022, by and among Altium Growth Fund, LP (the “Investor”), GRI and Vallon (the “Equity Financing”) and any exercise of the Series T Warrants to be issued pursuant to the Equity Financing (the “Series T Warrant Exercises”) . The Vallon virtual special meeting will be held in a virtual-only format via live audio webcast on ____, 2023 at ____, Eastern Time, at ____, for the following purposes:

Please refer to the attached proxy statement/prospectus/information statement for further information with respect to the business to be transacted at the Vallon virtual special meeting. The board of directors of Vallon (the “Vallon Board”) has fixed ____, 2023, as the record date for the determination of stockholders entitled to notice of, and to vote at, the Vallon virtual special meeting and any adjournment or postponement thereof. Only holders of record of shares of Vallon Common Stock at the close of business on the record date are entitled to notice of, and to vote at, the Vallon virtual special meeting. At the close of business on the record date, Vallon had ____ shares of Vallon Common Stock outstanding and entitled to vote. A complete list of such stockholders entitled to vote at the Vallon virtual special meeting will be available for examination at the Vallon offices in Philadelphia, Pennsylvania during normal business hours for a period of ten days prior to the Vallon virtual special meeting.

If you have any questions or need assistance voting your shares, please contact __, our proxy solicitor, by calling __, or banks and brokers can call collect at __, or by emailing __. This notice of the Vallon virtual special meeting and the proxy statement/prospectus/information statement will be available at __.

This proxy statement/prospectus/information statement incorporates important business and financial information about Vallon that is not included in or delivered with this document. You may obtain this information without charge through the SEC website at www.sec.gov or upon your written or oral request by contacting Vallon Pharmaceuticals, Inc., Attn: Corporate Secretary, 100 N. 18th Street, Suite 300, Philadelphia, PA 19103, Phone: (267) 607-8255, or by email at info@vallon-pharma.com.

Except where specifically noted, the following information and all other information contained in this proxy statement/prospectus/information statement does not give effect to the proposed Reverse Split of Vallon Common Stock, as described in Proposal No. 2 of this proxy statement/prospectus/information statement.

The following section provides answers to frequently asked questions about the proposed merger transaction. This section, however, provides only summary information. For a more complete response to these questions and for additional information, please refer to the cross-referenced sections.

At the Effective Time, Vallon’s stockholders will continue to own and hold their existing shares of Vallon Common Stock, subject to adjustment in connection with the Reverse Split. As of immediately prior to the Effective Time, all outstanding, unvested and unexercised options to purchase shares of Vallon Common Stock will be canceled and have no further force and effect. All outstanding, vested and unexercised options to purchase shares of Vallon Common Stock will remain effective and outstanding. Each option to purchase shares of GRI Common Stock that is outstanding and unexercised immediately prior to the Effective Time, whether or not vested, will be converted into an option to purchase shares of Vallon Common Stock, with the number of shares and exercise price being adjusted by the Exchange Ratio. Each warrant to purchase GRI Common Stock outstanding and unexercised immediately prior to the Effective Time will be assumed by Vallon and will become a warrant to purchase shares of Vallon Common Stock, with the number of shares and exercise price being adjusted by the Exchange Ratio. Each GRI restricted stock award outstanding immediately prior to the Effective Time will be assumed by Vallon and will be converted into a restricted stock award of Vallon Common Stock, with the right to convert into Vallon Common Stock, with the number of shares being adjusted by the Exchange Ratio. Substantially concurrent with the completion of the Merger, Vallon will change its corporate name to “GRI Bio, Inc.” as required by the Merger Agreement.

In connection with signing the Merger Agreement, on December 13, 2022, GRI, Vallon and the Investor entered into a Securities Purchase Agreement (the “Equity SPA”), pursuant to which, among other things, the Investor agreed to invest approximately $12.25 million in cash and cancel any outstanding principal and interest on the Bridge Notes immediately prior to the closing of the Merger (the “Equity SPA Aggregate Purchase Price”) to fund the combined company following the Merger. In return, GRI will issue an amount of shares (the “Initial Shares”) of GRI Common Stock to the Investor equal to approximately 10.19% of the estimated Parent Fully Diluted Number (as defined in the Equity SPA) at a per share price obtained by dividing the Equity SPA Aggregate Purchase Price by the amount of Initial Shares (the “Closing Per Share Price”). The Equity Financing will close on the same date as the closing of the Merger. In addition, GRI will deposit a number of shares of GRI Common Stock equal to 400% of the number of Initial Shares (the “Additional Shares”) into escrow with an escrow agent, to be exchanged for Vallon Common Stock in the Merger based on the Exchange Ratio (the “Additional Shares”), and to be delivered, in whole or in part, based onpursuant to the Exchange Ratio.Equity SPA. As a result of the Merger, at the Effective Time, each Initial Share will automatically be converted into the right to receive a number of shares of Vallon Common Stock equal to the number of Initial Shares multiplied by the Exchange Ratio. Further, at the Effective Time, each Additional Share placed into escrow with the escrow agent will automatically be converted into the right to receive a number of shares of Vallon Common Stock equal to the number of Additional Shares multiplied by the Exchange Ratio. Subject to beneficial ownership limitations, Additional Shares shallwill be issued to the Investor upon certain specified reset dates underon or about each of the Equity SPA intenth trading day, the event that Vallon’s share priceforty-fifth calendar day, the ninetieth calendar day, and the one-hundred thirty-fifth calendar day immediately following the Closing (each, a “Reset Date”), if the Closing Per Share Price is less than 90% of the arithmetic average of the five lowest weighted average prices of the Vallon Common Stock overduring the ten trading day period immediately preceding the applicable periods set forth inReset Date (the “Reset Price”). On each Reset Date, if the Closing Per Share Price is less than the Reset Price, the Investor will receive such number of Additional Shares obtained by subtracting (i) the quotient determined by dividing (x) the Equity SPA.SPA Aggregate Purchase Price, by (y) the lower of (1) the Closing Per Share Price and (2) the lowest Reset Price related to all the Reset Date(s) preceding the applicable Reset Date, if any, from (ii) the quotient determined by dividing (x) the Equity SPA Aggregate Purchase Price, by (y) the Reset Price applicable to such Reset Date. The Equity SPA also provides that the Investor may, at any time from the fifth trading day immediately preceding any Reset Date, provide a written notice electing to receive Additional Shares on the first trading day immediately following the Investor’s delivery of that notice (instead of on the applicable Reset Date) in an amount calculated according to the formula described above, but using a Reset Price equal to 90% of the five lowest weighted average prices of Vallon Common Stock during the period beginning on the tenth trading day immediately preceding the applicable Reset Date and ending on the date the Investor delivers that notice. The combined company has no obligation to issue any Additional Shares in excess of the number of Additional Shares in escrow immediately after the Closing. On the final Reset Date, any Additional Shares in escrow that the Investor is not entitled to receive as described above will be delivered to persons and entities that were stockholders of GRI as of immediately prior to the Closing in proportion to their pro-rata ownership of GRI as of immediately prior to the Closing.

The following tables illustrate how the Exchange Ratio and post-Closing equity ownership of the combined company by the GRI stockholders, Vallon stockholders and the Investor as of immediately prior to the Closing may change if Vallon net cash is between negative $4.0 million and negative $2.0 million at the Closing and if the price per share of Vallon Common Stock as selected by Nasdaq for purposes of the Unrestricted Publicly Held Shares Requirement is $0.20 per share, $0.30 and $0.60 per share. We presently expect Vallon’s net cash at the Closing to be approximately negative $3.0 million. As of the date of this proxy statement/prospectus/information statement, the parties expect there to be a Nasdaq Adjustment and have assumed an Exchange Ratio that assumes a price per share of Vallon Common Stock of $0.30. There is no further adjustment to the Exchange Ratio as a result of Vallon’s net cash being less than $4.0 million. The illustrative post-Closing fully diluted ownership percentages below are calculated after giving effect to the Merger and the Equity Financing (including the issuance of the Series A-1, A-2, and T Warrants), the Series T Warrant Exercises (including the Series A-1 Warrants and Series A-2 Warrants issuable upon exercise of the Series T Warrants) and the issuance of common stock of the combined company upon the exercise of all of the Exchange Warrants and Series A-1, A-2 and T Warrants in accordance with their respective terms and assuming the Investor receives all escrowed shares. For a description of how the exercise prices of the Exchange Warrants and Series A-1, A-2 and T Warrants are calculated, see the sections titled “Questions and Answers about the Merger — How are the exercise prices of the Exchange Warrants and Series A-1, A-2 and T Warrants Calculated” and “Agreements Related to the Merger — Equity Financing and Series T Warrant Exercises” of this proxy statement/prospectus/information statement. The following percentages do not take into account any beneficial ownership limitations.

These percentages do not take in account any beneficial ownership limitations.

The Equity Warrants will have an initial exercise price per share equal to 20% of the Closing Per Share Price for the Series T Warrants, 22% of the Closing Per Share Price for the Series A-1 Warrants and Series A-1 Warrants issued upon exercise of the Series T Warrants and 24% of the quotient obtained by dividing the Equity SPA Aggregate Purchase Price by the number of Initial Shares (the “Closing Price Per Share”) for the Series A-2 Warrants and Series A-2 Warrants issued upon exercise of the Series T Warrants. In addition, the Equity Warrants have a cashless exercise provision providing that if on any trading day following the earlier of (i) 240 days following the closing of the Merger or (ii) the deadline under the Registration Rights Agreement (as defined below) for having a registration statement registering the underlying Series A-2 warrant shares for resale declared effective (such

Assuming an Exchange Ratio of 1.7759, the Exchange Warrants would have an exercise price of $0.18 per share, the Series T Warrants would have an exercise price of $0.15 per share, the Series A-1 Warrants and Series A-1 Warrants issued upon exercise of the Series T Warrants would have an exercise price of $0.17 and $0.18, respectively, per share, and the Series A-2 Warrants and Series A-2 Warrants issued upon exercise of the Series T Warrants would have an exercise price of $0.18 per share.

Proposal Nos. 1 through 5 described above are collectively the “Vallon Stockholder Matters,” and Proposal Nos. 1, 2, and 4 above are collectively the “Closing Vallon Stockholder Matters.” We do not expect that any matter other than Proposal Nos. 1 through 5 will be brought before the Vallon virtual special meeting.

If you are a stockholder of GRI, you are requested to sign and return the GRI written consent to (i) adopt the Merger Agreement and approve the transactions and actions contemplated by the Merger Agreement, (ii) acknowledge that your approval is irrevocable and that you are aware of your rights to demand appraisal for your shares pursuant to Section 262 of the DGCL or dissenters’ rights pursuant to Chapter 13 of the CGCL, if applicable, and that you have received and read a copy of Section 262 of the DGCL and Chapter 13 of the CGCL, and (iii) acknowledge that by your approval of the Merger you are not entitled to appraisal rights or dissenters’ rights with respect to your shares of GRI Common Stock in connection with the Merger and thereby waive any rights to receive payment of the fair value of your GRI Common Stock under the DGCL or CGCL, as applicable (items (i) through (iii), collectively, the “GRI Stockholder Matters”).

This document serves as: (x) a proxy statement of Vallon used to solicit proxies for the Vallon virtual special meeting, (y) a prospectus of Vallon used to offer shares of Vallon Common Stock (i) in exchange for shares of GRI Common Stock in the Merger and (ii) upon exercise of the warrants and options to purchase shares of Vallon Common Stock assumed in the Merger in exchange for the warrants and options to purchase shares of GRI Common Stock, and (z) an information statement of GRI used to solicit the written consent of its stockholders for the adoption of the Merger Agreement and the approval of the Merger and related transactions after the declaration of the effectiveness of the registration statement on the Registration Statement, of which this proxy statement/prospectus/information statement is a part.

Certain of GRI’s stockholders who in the aggregate own approximately 59.4% of the shares of GRI Common Stock on an as-converted basis, and certain of Vallon’s stockholders who in the aggregate own less than 20% of the shares of Vallon Common Stock, in each case, outstanding as of the date of the Merger Agreement, are parties to

Proposal Nos. 1, 2, and 4 are not conditioned upon Proposal Nos. 3 or 5 being approved. However, Proposal No. 4 is conditioned upon the consummation of the Merger. Proposal Nos. 1 through 5 are referred to collectively in this proxy statement/prospectus/information statement as “the Proposals.”

At the Effective Time, each warrant to purchase shares of Vallon Common Stock that is outstanding and unexercised immediately prior to the Effective Time will survive the closing of the Merger and remain outstanding in accordance with its terms.

The tax consequences to each GRI stockholder will depend on that stockholder’s particular circumstances. Each GRI stockholder should consult with his, her, or its tax advisor for a full understanding of the tax consequences of the Merger to that stockholder.

As a result of their termination in connection with a “change in control,” Vallon’s executive officers will receive payments in the aggregate of approximately $1.0 million.

Additionally, pursuant to the terms of the Merger Agreement, David Baker, who is currently a director of Vallon will continue as a director of the combined entity after the Closing of the Merger and will be eligible for certain compensation as a non-employee director.

As of January 15, 2023, GRI’s directors and executive officers (including affiliates) beneficially owned, in the aggregate approximately 62.39% of the outstanding shares of GRI capital stock.

If your shares of Vallon Common Stock are registered directly in your name with the Vallon transfer agent, you are considered to be the stockholder of record with respect to those shares, and the proxy materials and proxy card are being sent directly to you by Vallon. If you are a Vallon stockholder of record, you may attend the Vallon virtual special meeting and by accessing the meeting center at and entering the control number on the proxy card previously received.

If your shares of Vallon Common Stock are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in “street name,” and the proxy materials are being forwarded to you by your broker or other nominee together with a voting instruction card. As the beneficial owner, you are also invited to attend the Vallon virtual special meeting via live audio webcast. Because a beneficial owner is not the stockholder of record, you may not vote these shares at the Vallon virtual special meeting unless you obtain a proxy from the record holder of your shares and bring to the special meeting a letter from the bank, broker, trustee or nominee confirming its beneficial ownership of the shares and that the bank, broker, trustee or other nominee is not voting the shares at the special meeting.

All stockholders are invited to attend the Vallon virtual special meeting. In order to attend the Vallon virtual special meeting, go to __________ and enter the control number found on your proxy card, voting instruction form, or notice you previously received.

To attend the Vallon virtual special meeting, beneficial owners must obtain a legal proxy from the holder of record and submit proof of legal proxy reflecting the number of shares of Vallon Common Stock held as of the record date. Vallon stockholders will then receive a confirmation of registration and an individual link to access the Vallon virtual special meeting.

Your shares will be counted towards the quorum if you submit a valid proxy (or one is submitted on your behalf by your broker, bank, or other nominee), if you vote live at the Vallon virtual special meeting, or if you are a holder of record present at the Vallon virtual special meeting. Abstentions and broker non-votes, if applicable, will also be counted towards the quorum requirement. Because all of the matters to be submitted at the special meeting are non-routine, it is not anticipated that there will be any broker non-votes. If, however, brokers are entitled to vote uninstructed shares on a proposal at the special meetings, broker non-votes, if any, will also be counted toward the quorum requirement. If there is no quorum, the holders of a majority of shares at the meeting or represented by proxy may postpone or adjourn the meeting to another date. If there is no quorum, no business other than adjournment or recess may be transacted.

In addition, Vallon’s stockholders will receive written instructions, as applicable, from Vallon’s transfer agent, Broadridge Corporate Issuer Solutions, Inc., for exchanging their certificates representing shares Vallon Common Stock for new certificates giving effect to the Reverse Split, if effected. Vallon’s stockholders will also receive a cash payment in lieu of any fractional shares, determined by multiplying such fraction by the fair market value per share of Vallon’s Common Stock immediately prior to the effective time of the Reverse Split as determined by the Vallon Board.

If you are a stockholder of GRI, and would like additional copies, without charge, of this proxy statement/prospectus/information statement or if you have questions about the Merger, including the procedures for voting your shares, you should contact:

The relative proportion of the combined company that the Vallon stockholders will own when the Merger closes will be based on the valuations of Vallon and GRI and the Exchange Ratio as negotiated by the parties and as specified in the Merger Agreement. Under the Exchange Ratio formula described in the Merger Agreement, the equity holders of GRI immediately before the Closing (including the Investor in the Equity Financing) are expected to hold approximately between 83.0% to 96.7% of the aggregate number of outstanding shares of Vallon Common Stock immediately after the Closing and the equity holders of Vallon immediately prior to the Closing are expected to hold approximately between 17.0% to 3.3% of the aggregate number of outstanding shares of Vallon Common Stock immediately after the Closing, in each case as calculated on an adjusted fully diluted treasury stock method basis and after giving effect to the Equity Financing but before giving effect to the issuance of the Series A-1, A-2, and T Warrants. Assuming an Exchange Ratio of 1.7759 and without taking into account any beneficial ownership limitations, the outstanding equity of the combined company, as calculated on a fully diluted basis by including all shares underlying all options and warrants of the combined company after giving effect to the Merger, the Equity Financing (including the issuance of the Series A-1, A-2, and T Warrants), the Series T Warrant Exercises (including the Series A-1 Warrants and Series A-2 Warrants issuable upon exercise of the Series T Warrants) and assuming the Investor receives all escrowed shares, is expected to be held as follows: equity holders of GRI immediately prior to the Closing other than the Investor will hold approximately 12.5%; the Investor in the Equity Financing will hold approximately 84.7%; and the Vallon equity holders immediately prior to the Closing will hold approximately 2.7%. The Exchange Ratio formula is based upon a GRI valuation of $49.0 million and a Vallon valuation of $29.0 million, which is subject to adjustment based upon Vallon’s net cash on the Closing Date and any reduction to Vallon’s valuation required in order to meet the initial listing requirements of Nasdaq. The assumed Exchange Ratio of 1.7759 is calculated in accordance with the Exchange Ratio formula in the Merger Agreement after giving effect to the estimated Nasdaq Adjustment that would result if the price per share of Vallon Common Stock selected by Nasdaq for the purpose of determining whether the combined company will satisfy the Nasdaq initial listing standards is $0.30, and implies a GRI valuation of $62.3 million and a Vallon valuation of $12.7 million. Vallon anticipates that it will have approximately negative $3.0 million of net cash, as calculated pursuant to the Merger Agreement, at the Closing provided the Closing occurs on or about ____, 2023.

The Nasdaq Adjustment in the Merger Agreement provides that if, at the date of determination by Nasdaq of the market value of unrestricted publicly held shares of the combined company for the purpose of determining whether the combined company will satisfy the Nasdaq initial listing standards, the price per share of Vallon Common Stock as selected by Nasdaq for this purpose is insufficient to enable the combined company to satisfy the unrestricted publicly held shares requirement, then the GRI valuation shall be adjusted upward and the Vallon valuation will be adjusted downward (but not below $5.0 million) until the adjusted valuations enable the combined company to satisfy the Nasdaq’s unrestricted publicly held shares requirement based on the price per share of the Vallon Common Stock selected by Nasdaq for that determination, and the Exchange Ratio will be recalculated based on the adjusted valuations. The price per share of Vallon Common Stock is volatile and uncertain and any Nasdaq Adjustment resulting from a low price per share of Vallon Common Stock could result in the stockholders of Vallon bearing substantial dilution. As of the date of this proxy statement/prospectus/information statement, the parties expect there to be a Nasdaq Adjustment and have assumed an Exchange Ratio that assumes a price per share of Vallon Common Stock of $0.30.

The consummation of the Merger between Vallon and GRI is subject to a number of closing conditions, including approval by Vallon’s and GRI’s respective stockholders of the Closing Vallon Stockholder Matters and other customary closing conditions. The closing conditions may not be waived without the consent of GRI, Vallon, Merger Sub and, pursuant to the Equity SPA, the Investor. The parties are targeting a closing of the transaction in the first quarter of 2023, however, there can be no assurance that the Merger will be consummated within this desired timeframe, or at all.

If the Merger between Vallon and GRI is not consummated, Vallon and GRI may be subject to a number of material risks, and their respective business and Vallon’s stock price could be adversely affected, as follows:

In addition, if the Merger Agreement is terminated and the Vallon Board or the GRI Board determines to seek another business combination, there can be no assurance that either Vallon or GRI will be able to find a partner willing to provide equivalent or more attractive consideration than the consideration to be provided by each party in the Merger or any partner at all.

As of January 15, 2023, Vallon has only two full-time employees and GRI has only one full-time employee. Vallon’s ability to successfully complete the Merger depends in large part on Vallon’s ability to retain certain of its remaining personnel. Despite Vallon’s efforts to retain these employees, one or more may terminate their employment with Vallon on short notice. The loss of the services of any of these employees could potentially harm Vallon’s ability to consummate the Merger, to run Vallon’s day-to-day business operations, and to fulfill Vallon’s reporting obligations as a public company.

Competition among biotechnology companies for qualified employees is intense, and Vallon’s and GRI’s ability to retain their key employees is critical to their ability to effectively manage their resources and consummate the Merger. If Vallon or GRI develop new product candidates, such development would require expertise from a number of different disciplines, some of which are not widely available. The results of the Study to Evaluate the Abuse Liability, Pharmacokinetics, Safety and Tolerability of an Abuse-Deterrent d-Amphetamine Sulfate Immediate Release Formulation (“SEAL”) study of Abuse Deterrent Amphetamine Immediate Release (“ADAIR”) will likely make it more challenging for Vallon to retain qualified personnel and more difficult to recruit personnel in the future, if necessary. If Vallon or GRI fail to attract new personnel or fail to retain and motivate their current personnel, their business and future growth prospects and ability to consummate the Merger would be harmed.

While there have been no significant adverse effects to date, the pendency of the Merger could disrupt Vallon’s business in many ways, including:

Should they occur, any of these matters could adversely affect the trading price of Vallon’s Common Stock or harm Vallon’s business, financial condition, and prospects.

In general, either Vallon or GRI can refuse to complete the Merger if there is a material adverse change affecting the other party between the date of the Merger Agreement, and the closing of the Merger. However, certain types of changes do not permit either party to refuse to complete the Merger, even if such change could be said to have a material adverse effect on Vallon or GRI, including:

If adverse changes occur and Vallon and GRI still complete the Merger, the stock price of the combined company following the closing of the Merger may suffer. This in turn may reduce the value of the Merger to the stockholders of Vallon, GRI, or both.

Some officers and directors of Vallon and GRI are parties to arrangements that provide them with interests in the Merger that are different from the respective stockholders of Vallon and GRI, including, among others, service as an officer or director of the combined company following the closing of the Merger, severance benefits, the acceleration of equity award vesting, and continued indemnification.

The market price of Vallon Common Stock may decline as a result of the Merger for a number of reasons, including if:

After the completion of the Merger, the current securityholders of GRI and Vallon will own a smaller percentage of the combined company than their ownership in their respective companies prior to the Merger. Under the Exchange Ratio formula described in the Merger Agreement, the equity holders of GRI immediately before the Closing (including the Investor in the Equity Financing) are expected to hold approximately between 83.0% to 96.7% of the aggregate number of outstanding shares of Vallon Common Stock immediately after the Closing and the equity holders of Vallon immediately prior to the Closing are expected to hold approximately between 17.0% to 3.3% of the aggregate number of outstanding shares of Vallon Common Stock immediately after the Closing, in each case as calculated on an adjusted fully diluted treasury stock method basis and after giving effect to the Equity Financing but before giving effect to the issuance of the Series A-1, A-2, and T Warrants. Assuming an Exchange Ratio of 1.7759 and without taking into account any beneficial ownership limitations, the outstanding equity of the combined company, as calculated on a fully diluted basis by including all shares underlying all options and warrants of the combined company after giving effect to the Merger, the Equity Financing (including the issuance of the Series A-1, A-2, and T Warrants), the Series T Warrant Exercises (including the Series A-1 Warrants and Series A-2 Warrants issuable upon exercise of the Series T Warrants) and assuming the Investor receives all escrowed shares, is expected to be held as follows: equity holders of GRI immediately prior to the Closing other than the Investor will hold approximately 12.5%; the Investor in the Equity Financing will hold approximately 84.7%; and the Vallon equity holders immediately prior to the Closing will hold approximately 2.7%. The Exchange Ratio formula is based upon a GRI valuation of $49.0 million and a Vallon valuation of $29.0 million, which is subject to adjustment based upon Vallon’s net cash on the Closing Date and any reduction to Vallon’s valuation required in order to meet the initial listing requirements of Nasdaq. The assumed Exchange Ratio of 1.7759 is calculated in accordance with the Exchange Ratio formula in the Merger Agreement after giving effect to the estimated Nasdaq Adjustment that would result if the price per share of Vallon Common Stock selected by Nasdaq for the purpose of determining whether the combined company will satisfy the Nasdaq initial listing standards is $0.30, and implies a GRI valuation of $62.3 million and a Vallon valuation of $12.7 million. Vallon anticipates that it will have approximately negative $3.0 million of net cash, as calculated pursuant to the Merger Agreement, at the Closing provided the Closing occurs on or about ____, 2023. As of the date of this proxy statement/prospectus/information statement, the parties expect

Covenants in the Merger Agreement impede the ability of Vallon and GRI to make acquisitions, subject to specified exceptions relating to fiduciary duties, or complete other mergers, sales of assets, or other business combinations that are not in the ordinary course of business pending completion of the Merger. As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, initiating, encouraging, or entering into specified extraordinary transactions, such as a merger, sale of assets, or other business combination, with any third party, subject to specified exceptions, even if any such transaction could be favorable to such party’s stockholders.

The outstanding capital stock of GRI is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of GRI’s capital stock. Because the percentage of Vallon equity to be issued to GRI stockholders was determined based on negotiations between the parties, it is possible that the value of the Vallon Common Stock to be received by GRI stockholders will be less than the fair market value of GRI’s capital stock, or Vallon may pay more than the aggregate fair market value for GRI’s capital stock.

The combined company will incur significant transaction costs as a result of the Merger, including investment banking, legal, and accounting fees. In addition, the combined company will incur significant operating expenses which cannot be accurately estimated at this time. Actual transaction costs may substantially exceed the parties’ estimates and may have an adverse effect on the combined company’s financial condition and operating results.

As of December 31, 2021, Vallon had U.S. federal NOL carryforwards and state NOL carryforwards of $20.1 million and $20.4 million, respectively, As of September 30, 2022, GRI had U.S. federal NOL carryforwards and state NOL carryforwards of approximately $10.0 million each. Under Sections 382 and 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change” (within the meaning of Section 382 of the Code (“Section 382”)), the corporation’s NOL carryforwards and certain other tax attributes (such as research tax credits) arising before the ownership change are subject to limitation on use after the ownership change. In general, an ownership change occurs if there is a cumulative change in the corporation’s equity ownership by certain stockholders that exceeds fifty percentage points (by value) over a rolling three-year period. Similar rules may apply under state tax laws. The Merger will result in an ownership change for Vallon and, accordingly, Vallon’s NOL carryforwards and certain other tax attributes will be subject to limitations (or disallowance) on their use after the Merger. Vallon’s NOL carryforwards may also be subject to limitation as a result of prior shifts in equity ownership and/or the Merger. Additional ownership changes in the future could result in additional limitations on Vallon’s, GRI’s, and the combined company’s NOL carryforwards. Consequently, even if the combined company achieves profitability, it may not be able to utilize a material portion of Vallon’s, GRI’s or the combined company’s NOL carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, the combined company’s existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.

In the opinion of Mintz, counsel to GRI, the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Code. This opinion is based on facts and representations contained in representation letters provided by GRI and Vallon and on customary factual assumptions, and further assumes that the Merger is completed in the manner set forth in the Merger Agreement and the Registration Statement on Form S-4 of which this proxy statement/prospectusprospectus/information statement forms a part. If any assumption or representation is or becomes inaccurate, the U.S. federal income tax consequences of the Merger could be adversely affected.

The combined company’s stockholders may from time-to-time seek to acquire a controlling stake in the combined company, engage in proxy solicitations, advance stockholder proposals, or otherwise attempt to effect changes. Campaigns by stockholders to effect changes at publicly-traded companies are sometimes led by investors seeking to increase short-term stockholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases, or sales of assets or the entire company. Responding to proxy contests and

Vallon has filed an initial listing application with Nasdaq pursuant to Nasdaq’s “reverse merger” rules. In the event the application is not accepted by Nasdaq and the parties, including the Investor, waive the Nasdaq closing condition and proceed with the Merger, the combined company will be subject to delisting proceedings and could be delisted. In addition, if Vallon fails to obtain stockholder approval pursuant to Nasdaq Listing Rules 5635(a), 5635(b) and 5535(d), and the parties, including the Investor, waive the condition and proceed with the Merger, the combined company will be subject to delisting proceedings and could be delisted. If Vallon’s shares lose their status on The Nasdaq Capital Market, Vallon believes that its shares would likely be eligible to be quoted on the inter-dealer electronic quotation and trading system operated by OTC Markets Group Inc., such as the OTC Pink marketplace and now known as the OTCQB market. These markets are generally considered not to be as efficient as, and not as broad as, The Nasdaq Capital Market. If Vallon’s common stock is delisted, this would, among other things, substantially impair its ability to raise additional funds and could result in a loss of institutional investor interest and fewer development opportunities for Vallon. Additionally, investors would find it more difficult to buy and sell shares of Vallon Common Stock.

If Vallon’s common stock were to be delisted from trading on The Nasdaq Capital Market and the trading price of its common stock were below $5.00 per share on the date its common stock is delisted, trading in Vallon’s common stock would also be subject to the requirements of certain rules promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These rules require additional disclosure by broker-dealers in connection with any trades involving a stock defined as a “penny stock” and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors, generally institutions. These additional requirements may discourage broker-dealers from effecting transactions in securities that are classified as penny stocks, which could severely limit the market price and liquidity of such securities and the ability of purchasers to sell such securities in the secondary market. A penny stock is defined generally as any non-exchange listed equity security that has a market price of less than $5.00 per share, subject to certain exceptions.

On June 27, 2022, Vallon received notice from the Listing Qualifications Department of Nasdaq indicating that, because the closing bid price for Vallon Common Stock had fallen below $1.00 per share over the previous 30 consecutive business days, Vallon no longer complied with the minimum bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). Nasdaq’s notice had no immediate effect on the listing of the Vallon Common Stock on The Nasdaq Capital Market. Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), Nasdaq provided Vallon with an initial compliance period of 180 calendar days, or until December 27, 2022, to regain compliance with the Bid Price Rule.

On December 28, 2022, having not regained compliance with the Bid Price Rule, Vallon received a letter from the Staff notifying Vallon that, unless Vallon timely requests a hearing, the Vallon Common Stock would be scheduled for delisting from The Nasdaq Capital Market and would be suspended at the opening of business on January 6, 2023. According to the letter from Nasdaq, Vallon has not regained compliance with the Bid Price Rule and is not eligible for a second 180 day extension period because Vallon does not comply with the minimum $5,000,000 Stockholders’ Equity initial listing requirement for The Nasdaq Capital Market.

Accordingly, Vallon filed an appeal and requested a hearing before the Panel. The hearing request resulted in a stay of any suspension or delisting action pending the hearing and the expiration of any extension period granted by the Panel following the hearing. In that regard, the Panel has the right to grant Vallon an extension to regain compliance with the Bid Price Rule. The Panel has set a hearing date for February 16, 2023. However, there can be no assurance that the Panel will grant Vallon an extension to comply with the Bid Price Rule or, even if an extension is granted, that Vallon will be able to regain compliance with all applicable requirements for continued listing. If the trading of the Vallon Common Stock is suspended, the Vallon Common Stock will cease to be quoted on The Nasdaq Capital Market and, as a result, the Merger and the Equity Financing will not be consummated unless the related closing conditions under the Merger Agreement and the Equity SPA are waived by GRI, Vallon, Merger Sub and, pursuant to the Equity SPA, the Investor.

The principal purpose of the proposed Reverse Split is to increase the per share price of Vallon Common Stock in order to meet the Nasdaq Initial Listing Requirements. There is no assurance however that the per-share market price of Vallon Common Stock will remain at such increased level for any meaningful period of time. While the reduction in the number of outstanding shares of Vallon Common Stock should proportionally increase the market price of Vallon Common Stock, it cannot be assured that the proposed Reverse Split will increase the market price of Vallon Common Stock by a multiple of the proposed Reverse Split ratio, or result in any permanent or sustained increase in the market price of Vallon Common Stock, which is dependent upon many factors, including the combined company’s business and financial performance, general market conditions, and prospects for future success. Therefore, while the stock price of the combined company might meet the initial listing requirements for The Nasdaq Capital Market initially, it cannot be assured that it will continue to do so.

Although the Vallon Board believes that the anticipated increase in the market price of the combined company’s common stock after the proposed Reverse Split could encourage interest in its common stock and possibly promote greater liquidity for its stockholders, such liquidity could also be adversely affected by the reduced number of shares outstanding after the proposed Reverse Split. The reduction in the number of outstanding shares may lead to reduced trading and a smaller number of market makers for Vallon Common Stock.

Should the market price of the combined company’s common stock decline after the proposed Reverse Split, the percentage decline may be lower, due to the smaller number of shares outstanding, than it would have been prior to the proposed Reverse Split. A reverse stock split may be viewed negatively by the market and, consequently, can lead to a decrease in the combined company’s overall market capitalization. If the per share market price does not increase in proportion to the proposed Reverse Split ratio, then the value of the combined company, as measured by its stock capitalization, will be reduced. In some cases, the per-share stock price of companies that have effected reverse stock splits subsequently declined back to pre-reverse split levels, and accordingly, it cannot be assured that the total market value of Vallon Common Stock will remain the same after the proposed Reverse Split is effected, or that the proposed Reverse Split will not have an adverse effect on the stock price of Vallon Common Stock due to the reduced number of shares outstanding after the proposed Reverse Split.

Vallon has incurred and will continue to incur significant transaction costs in connection with the Merger. Vallon estimates that it will incur aggregate direct transaction costs of approximately $__ million associated with the Merger and approximately $__ million for its portion of shared transaction expenses, as well as additional costs associated with the commencement of the combined company’s operation as a public company, which cannot be estimated accurately at this time.

GRI has incurred and will continue to incur significant transaction costs in connection with the Merger. GRI estimates that it will incur aggregate direct transaction costs of approximately $__ million associated with the Merger and approximately $__ million for its portion of shared transaction expenses, as well as additional costs associated with the commencement of the combined company’s operation as a public company, which cannot be estimated accurately at this time.

Vallon is a biopharmaceutical company with a limited operating history. Investment in product development in the healthcare industry, including of biopharmaceutical products, is highly speculative because it entails substantial upfront capital expenditures and significant risk that any potential product candidate will fail to demonstrate adequate effect or an acceptable safety profile, gain regulatory approval and become commercially viable. Vallon has no products approved for commercial sale and has not generated any revenue from product sales to date. As a result, Vallon is not profitable and has incurred losses in each period since its inception. For the nine months ended September 30, 2022, Vallon reported a net loss of $5.4 million. As of September 30, 2022, Vallon had an accumulated deficit of $27.3 million.

To become and remain profitable, Vallon or any potential future collaborator must develop and eventually commercialize products with significant market potential at an adequate profit margin after cost of goods sold and other expenses. This will require Vallon to be successful in a range of challenging activities, including completing clinical trials, manufacturing, marketing and selling products for which Vallon may obtain marketing approval and satisfying any post-marketing requirements. Vallon may never succeed in any or all of these activities and, even if it does, it may never generate revenue that is significant enough to achieve profitability. If Vallon does achieve profitability, Vallon may not be able to sustain or increase profitability on a quarterly or annual basis. Vallon’s failure to become and remain profitable would decrease the value of Vallon and could impair its ability to raise capital, maintain its research and development efforts, expand its business or continue its operations.

Vallon may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect its business. The size of Vallon’s future net losses will depend, in part, on the rate of future growth of its expenses and its ability to generate revenue. Vallon’s prior losses and expected future losses have had and will continue to have an adverse effect on its stockholders’ equity and working capital.

Vallon does not expect to generate any significant revenues until it successfully completes development of its first product, including obtaining all required regulatory approvals, and Vallon is able to successfully commercialize the product through sales and licensing. As of the date of this proxy statement/prospectus/information statement, Vallon’s product candidates are still in development and have not been approved by the FDA.

Vallon has not yet demonstrated its ability to generate revenue, and it may never be able to produce revenues or operate on a profitable basis. Vallon incurred losses since its inception (January 11, 2018) and expects to experience operating losses and negative cash flow for the foreseeable future.

Vallon’s operations have consumed substantial amounts of cash since inception. While Vallon has significantly decreased its research and development expenses as it assesses the best path forward for ADAIR, Vallon expects to continue to spend a considerable amount of resources on pursuing strategic opportunities. Furthermore, to move forward with the development of ADAIR or any other product candidates, Vallon would be required to spend substantial amounts to conduct clinical trials of such programs, to validate the manufacturing process and specifications for any such product candidate, to seek regulatory approvals for such product candidate and to launch and commercialize any products for which Vallon receives regulatory approval, including potentially building Vallon’s own commercial organization. As of November 30, 2022, Vallon had approximately $4.5 million of cash, cash equivalents and marketable securities on hand. Vallon’s future capital requirements and the period for which Vallon’s existing resources will support its operations may vary significantly from what Vallon currently expects and may change if Vallon’s business plan changes from its current expected operating plan. Vallon’s monthly spending levels will vary based on development and corporate activities. Because of the uncertainty regarding our future development pathway, Vallon is unable to estimate the actual funds it will require for development of any potential product candidate and any approved marketing and commercialization activities. Vallon’s future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:

Vallon does not have any committed external source of funds or other support for Vallon’s development efforts, and Vallon cannot be certain that additional funding will be available on acceptable terms, or at all. Until Vallon can generate sufficient product or royalty revenue to finance Vallon’s cash requirements, which Vallon may never do, Vallon expects to finance its future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing or distribution arrangements. If Vallon raises additional funds through public or private equity offerings, the terms of these securities may include liquidation or other preferences that adversely affect Vallon’s stockholders’ rights. Further, to the extent that Vallon raises additional capital through the sale of common stock or securities convertible into or exchangeable for common stock, each existing investors’ ownership interest will be diluted. If Vallon raises additional capital through debt financing, Vallon would be subject to fixed payment obligations and may be subject to covenants limiting or restricting its ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends or acquiring or licensing intellectual property rights. If Vallon raises additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, Vallon may have to relinquish certain valuable rights to its product candidate, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to Vallon. Vallon also could be required to seek collaborators for one or more of Vallon’s current or future product candidates at an earlier stage than otherwise would be desirable or relinquish Vallon’s rights to product candidates or technologies that Vallon otherwise would seek to develop or commercialize itself. If Vallon is unable to raise additional capital in sufficient amounts or on terms acceptable to Vallon, Vallon may have to significantly delay, scale back or discontinue the development or commercialization of one or more of Vallon’s other research and development initiatives. Any of the above events could significantly harm Vallon’s business, prospects, financial condition and results of operations and cause the price of Vallon’s common stock to decline.

Vallon may experience significant changes in executive leadership, including the changes in executive leadership as a result of the Merger. Changes to company strategy, which can often times occur with the appointment of new executives, can create uncertainty, may negatively impact Vallon’s ability to execute quickly and effectively, and may ultimately be unsuccessful. In addition, executive leadership transition periods are often difficult as the new executives gain detailed knowledge of Vallon’s operations, and friction can result from changes in strategy and management style. Management transition inherently causes some loss of institutional knowledge, which can negatively affect strategy and execution. Until Vallon integrates new personnel, and unless they are able to succeed in their positions, Vallon may be unable to successfully manage and grow its business, and Vallon’s results of operations and financial condition could suffer as a result. In any event, changes in Vallon’s organization

Vallon has incurred losses since inception and has not demonstrated an ability to generate revenues from the sales of Vallon’s proposed products. The report of Vallon’s independent registered public accounting firm on its financial statements as of and for the year ended December 31, 2021 included an explanatory paragraph indicating that there is substantial doubt about its ability to continue as a going concern. Vallon has financed its working capital requirements to date by raising capital through private placements of shares of its common stock, issuing of short-term and convertible notes, and the proceeds from its initial public offering (“IPO”) completed in February 2021. Vallon’s ability to continue as a going concern is dependent on raising capital from the sale of its common stock and/or obtaining debt financing. Vallon’s cash, cash equivalents and short-term investment balance at November 30, 2022 was approximately $4.5 million. Based on Vallon’s current expected level of operating expenditures, Vallon expects to be able to fund its operations for more than four months from this filing after paying all current obligations. Vallon’s ability to remain a going concern is wholly dependent upon its ability to continue to obtain sufficient capital to fund its operations.

Despite Vallon’s ability to secure capital in the past, there can be no assurance that additional equity or debt financing will be available to it when needed or that it may be able to secure funding from any other sources. In the event that Vallon is not able to secure funding, it may be forced to curtail operations, delay or stop ongoing clinical trials, cease operations altogether, or file for bankruptcy.

Vallon’s current and future programs and product candidates will require additional discovery research, preclinical development, clinical development, regulatory approval to commercialize the product, manufacturing validation, obtaining manufacturing supply, capacity and expertise, building of a commercial and distribution organization, substantial investment and significant marketing efforts before Vallon generates any revenue from product sales. In addition, any drug product candidate must be approved for marketing by the FDA or certain other health regulatory agencies before Vallon may commercialize any product in the respective jurisdictions.

Vallon’s limited operating history may make it difficult to evaluate its, or any new, technology and industry and predict its future performance. Vallon’s short history as an operating company makes any assessment of its future success or viability subject to significant uncertainty. Vallon will encounter risks and difficulties frequently experienced by early-stage companies in evolving fields. If Vallon does not address these risks successfully, its business will suffer. Similarly, Vallon expects that its financial condition and operating results will fluctuate significantly from quarter to quarter and year to year due to a variety of factors, many of which are beyond Vallon’s control. As a result, Vallon’s stockholders should not rely upon the results of any quarterly or annual period as an indicator of future operating performance.

Vallon has a limited operating history from which to evaluate its business. As a result, its historical financial data is of limited value in estimating future operating expenses. In addition, although Vallon is a clinical-stage company, it has not yet completed all of the non-clinical safety studies for pivotal clinical trials. It also has not

Given the results of the SEAL Study and the required additional development activity necessary to gain regulatory approval of ADAIR, Vallon may never be able to out license or sell ADAIR to another pharmaceutical or biotechnology company even if it decides to pursue such efforts. ADMIR is based on similar technology to ADAIR and is not yet a clinical stage drug, therefore, it may be of no more interest to a potential acquiror than ADAIR. Vallon has a small number of employees and consultants who could be dedicated to an asset sale or out license effort.

If ADAIR, or any other future product, such as ADMIR, is approved for commercialization outside the United States, such as pursuant to the license agreement with MEDICE Arzneimittel Pütter GmbH & Co. KG (“Medice”), who is affiliated with one of Vallon’s principal stockholders, SALMON Pharma GmbH (“Salmon Pharma”), and represented by one member of the Vallon Board, Vallon will likely enter into agreements with third parties to market such product outside the United States. Vallon expects that it will be subject to additional risks related to entering into or maintaining international business relationships, including:

Any government investigation of alleged violations of law could require us to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect Vallon’s ability to commercialize and generate revenues from ADAIR or any other future product, such as ADMIR. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of Vallon and its operating results will be adversely affected.

An important part of Vallon’s business strategy is to continue to develop a pipeline of product candidates and products by acquiring or in-licensing products, businesses or technologies that Vallon believes are a strategic fit with its business. Future in-licenses or acquisitions, however, may entail numerous operational and financial risks, including:

Vallon has limited resources to identify and execute the acquisition or in-licensing of third-party products, businesses and technologies and integrate them into Vallon current infrastructure. In particular, Vallon may compete with larger biopharmaceutical companies and other competitors in Vallon’s efforts to establish new collaborations and in-licensing opportunities. These competitors likely will have access to greater financial resources than Vallon and may have greater expertise in identifying and evaluating new opportunities. Moreover, Vallon may devote

Vallon may choose to develop new products to offer. Vallon is currently developing an abuse deterrent formulation of Ritalin, ADMIR, another commonly prescribed product for the treatment of ADHD. Developing new products involves inherent risks, including Vallon’s inability to estimate demand for the new offerings, competition from more established market participants, and a lack of market understanding. In addition, expanding into new geographic areas and/or expanding product offerings will be challenging and may require integrating new employees into Vallon’s culture as well as assessing the demand in the applicable market.

Vallon’s business may bring it into conflict with licensees, licensors, or others with whom it has contractual or other business relationships or with its competitors or others whose interests differ from Vallon’s. If Vallon is unable to resolve these conflicts on terms that are satisfactory to all parties, it may become involved in litigation brought by or against such parties. Any litigation is likely to be expensive and may require a significant amount of management’s time and attention, at the expense of other aspects of Vallon’s business. The outcome of litigation is always uncertain, and in some cases, could include judgments against Vallon which could have a materially adverse effect on its business.

Because Vallon has limited financial and managerial resources, Vallon focuses on research programs and proposed products that Vallon identifies for specific indications. As a result, Vallon may forego or delay pursuit of opportunities with other proposed products, or for other indications, that later prove to have greater commercial potential. Vallon’s resource allocation decisions may cause Vallon to fail to capitalize on viable commercial products or profitable market opportunities. Vallon’s spending on current and future research and development programs and proposed products for specific indications may not yield any commercially viable products. If Vallon does not accurately evaluate the commercial potential or target market for a particular proposed product, Vallon may relinquish valuable rights to that proposed product through collaboration, licensing, or other royalty arrangements in cases in which it would have been more advantageous for Vallon to retain sole development and commercialization rights to such proposed product.

Vallon may experience a rapid growth in operations, which may place significant demands on Vallon’s management team and Vallon’s operational and financial infrastructure. As Vallon continues to grow, Vallon must effectively identify, integrate, develop and motivate new employees, and maintain the beneficial aspects of Vallon’s corporate culture. To attract top talent, Vallon believes that it will have to offer attractive compensation packages. The risks of over-hiring or overcompensating and the challenges of integrating a rapidly growing employee base may impact profitability.

Additionally, if Vallon does not effectively manage its growth, the quality of Vallon’s services could suffer, which could adversely affect Vallon’s business and reputation, results of operations, and financial condition. If operational, technology, and infrastructure improvements are not implemented successfully, Vallon’s ability to manage its growth will be impaired and Vallon may have to make significant additional expenditures to address these issues. To effectively manage Vallon’s growth, it will need to continue to improve its operational, financial, and management controls and its reporting systems and procedures. This will require that Vallon refine its information technology systems to maintain effective online services and enhance information and communication systems to ensure that Vallon’s employees effectively communicate with each other and Vallon’s growing base of customers. These system enhancements and improvements will require significant incremental and ongoing capital

Vallon’s key employees currently include Mr. David Baker, Vallon’s President and Chief Executive Officer, and Ms. Leanne Kelly, Vallon’s Chief Financial Officer, and consulting arrangements with individuals such as its Chief Medical Officer, Dr. Timothy Whitaker, who is responsible for overseeing clinical development of Vallon’s product candidates. Vallon’s future growth and success depend on its ability to recruit, retain, manage, and motivate its employees and key consultants. The loss of the services of its Chief Executive Officer, or any of its key employees or the inability to hire or retain experienced management personnel could adversely affect Vallon’s ability to execute its business plan and harm its operating results. Although Vallon has employment agreements in place with management, these agreements are terminable at will with minimal notice.

Because of the specialized scientific and managerial nature of Vallon’s business, Vallon relies heavily on its ability to attract and retain qualified scientific and technical consultants. Vallon may not be able to attract or retain qualified management and commercial, scientific, and clinical personnel in the future due to the intense competition for qualified personnel among biotechnology, pharmaceutical, and other businesses. In addition, the loss of one or more of its senior executive officers or key consultants could be detrimental to Vallon if it cannot recruit suitable replacements in a timely manner.

Vallon does not currently carry “key person” insurance on the lives of members of senior management. The competition for qualified personnel in the biopharmaceutical field is intense.

If Vallon is not able to attract and retain necessary personnel to accomplish its business objectives, it may experience constraints that will significantly impede the achievement of its development objectives, its ability to raise additional capital, and its ability to implement its business strategy.

Vallon’s directors, consultants, and advisors are not obligated to commit their time and attention exclusively to Vallon’s business and therefore they may encounter conflicts of interest with respect to the allocation of time and business opportunities between Vallon’s operations and those of other businesses.

Currently, Vallon’s full-time employees consist of David Baker, Vallon’s President and Chief Executive Officer, and Leanne Kelly, Vallon’s Chief Financial Officer. Our key consultants consist of Dr. Timothy Whitaker, our Chief Medical Officer, as well as consultants for bookkeeping, pre-clinical and formulation development, and clinical operations. Currently, consulting arrangements with individuals, such as Dr. Whitaker, only require them to devote an average of approximately 10 to 20 hours per week to Vallon’s business. In addition, Vallon’s consultants and advisors may have other clients or projects that grow in scope or they may acquire new clients and projects that require more of their time that may come at Vallon’s expense. Vallon also currently relies on consultants for clinical operations, statistical support, and preclinical development. If the execution of Vallon’s business plan demands more time than is currently committed by any of Vallon’s officers, directors, consultants or advisors, they will be under no obligation to commit such additional time, and their failure to do so may adversely affect Vallon’s ability to carry on its business and successfully execute its business plan.

Additionally, all of Vallon’s officers and directors, in the course of their other business activities, may become aware of investments, business opportunities, or information which may be appropriate for presentation to Vallon as well as to other entities to which they owe a fiduciary duty. They may also in the future become affiliated with entities that are engaged in business or other activities similar to those Vallon intends to conduct. As a result, they may have conflicts of interest in determining to which entity particular opportunities or information should be

Vallon is exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with FDA regulations, provide accurate information to the FDA, comply with manufacturing standards Vallon has established, comply with federal and state health-care fraud and abuse laws and regulations, report financial information or data accurately or disclose unauthorized activities to Vallon under the Federal Physician Payments Sunshine Act and similar state laws. In particular, sales, marketing, and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, kickbacks, self-dealing, making or contributing to the making of a false claim for reimbursement to federal, state or private payors, and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs, and other business arrangements. Employee misconduct could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to Vallon’s reputation. The precautions Vallon takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting Vallon from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations. If any such actions are instituted against Vallon, and Vallon is not successful in defending itself or asserting its rights, those actions could have a significant impact on Vallon’s business and results of operations, including the imposition of significant fines or other sanctions.

Vallon has entered into employment agreements with members of its senior management team. These agreements may require the payment of severance in the event one of these employees ceases to be employed. These provisions make the replacement of these employees very costly and could cause difficulty in effecting any required changes in management or a change in control.

The use of ADAIR and any other proposed product Vallon may license or acquire in clinical trials and the sale of any products for which Vallon obtains marketing approval expose Vallon to the risk of product liability claims. For example, Vallon may be sued if any product Vallon develops allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing, marketing, or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability, or a breach of warranties. Product liability claims might be brought against Vallon by consumers, health care providers, or others using, administering, or selling Vallon’s products. If Vallon cannot successfully defend itself against these claims, Vallon will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

Vallon will obtain limited product liability insurance coverage for any and all of Vallon’s clinical trials. However, Vallon’s insurance coverage may not reimburse Vallon or may not be sufficient to reimburse Vallon for any expenses or losses Vallon may suffer. Moreover, insurance coverage is becoming increasingly expensive, and, in the future, Vallon may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect Vallon against losses due to liability. When needed, Vallon intends to expand its insurance coverage to include the sale of commercial products if Vallon obtains marketing approval for ADAIR or any other future product in development, such as ADMIR, but Vallon may be unable to obtain commercially reasonable product liability insurance for any product approved for marketing. On occasion, large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. A successful product liability claim or series of claims brought against Vallon could cause its stock price to fall and, if judgments exceed Vallon’s insurance coverage, could decrease Vallon’s cash and adversely affect Vallon’s business.

Despite the implementation of security measures, Vallon’s internal computer systems and those of Vallon’s future CROs, manufacturers, and other contractors and consultants are vulnerable to damage from computer viruses and unauthorized access. Although to Vallon’s knowledge Vallon has not experienced any such material system failure or security breach to date, if such an event were to occur, it could result in a material disruption of Vallon’s development programs and Vallon’s business operations. For example, the loss of clinical trial data from future clinical trials could result in delays in Vallon’s regulatory approval efforts and significantly increase Vallon’s costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, Vallon’s data or applications, or inappropriate disclosure of confidential or proprietary information (such as individually identifiable health information), Vallon could incur significant liabilities and the further development and commercialization of ADAIR or any other future product, including ADMIR, could be delayed.

There is an increasing focus from certain customers, consumers, employees and other stakeholders concerning environmental, social and governance (“ESG”) matters, including corporate citizenship and sustainability. Additionally, public interest and legislative pressure related to public companies’ ESG practices continues to grow. If Vallon’s ESG practices fail to meet regulatory requirements or stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, Board of Director and employee diversity, human capital management, employee health and safety practices, corporate governance and transparency and employing ESG strategies in Vallon’s operations, Vallon’s brand, reputation and employee retention may be negatively impacted, and customers and suppliers may be unwilling to do business with Vallon.

If Vallon fails to adopt ESG standards or practices as quickly as stakeholders desire, fail, or be perceived to fail, in Vallon’s achievement of such initiatives or goals, or fail in fully and accurately reporting Vallon’s progress on such initiatives and goals, Vallon’s reputation, business, financial performance and growth may be adversely impacted. In addition, Vallon could be criticized for the scope of such initiatives or goals or perceived as not acting responsibly in connection with these matters. Vallon’s business could be negatively impacted by such matters. Any such matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on Vallon’s business.

As the COVID-19 pandemic continues around the globe, the pandemic may affect Vallon’s operations and certain other third parties on which it relies, including by causing disruptions in the supply of Vallon’s product candidates and the conduct of future clinical trials. Moreover, the COVID-19 pandemic may adversely affect the operations of the FDA and other health authorities, resulting in delays of reviews and approvals with respect to Vallon’s product candidates. While the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of the COVID-19 pandemic on the global financial markets may reduce Vallon’s ability to access capital, which could negatively impact Vallon’s short-term and long-term liquidity. In addition, the loss of any of Vallon’s employees as a result of COVID-19, or another pandemic, may adversely affect Vallon’s operations. The ultimate impact of the COVID-19 pandemic is highly uncertain, and Vallon does not yet know the full extent of potential delays or impacts that COVID-19 may have on its business, financing, or clinical trial activities.

Some examples of potential disruptions that may result from the COVID-19 pandemic, include, but are not limited to:

The COVID-19 global pandemic remains a public health threat and its ultimate impact on Vallon’s business and the global economy is uncertain. The extent to which the pandemic may affect Vallon’s clinical trials, business, financial condition, and results of operations will depend on future developments, which are highly uncertain and cannot be predicted at this time, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions, actions to contain the pandemic or treat its impact, such as social distancing and quarantines or lock-downs in the United States, and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease, and the ongoing worldwide vaccine rollout and implementation of vaccine mandates. Future developments in these and other areas present material uncertainty and risk with respect to Vallon’s clinical trials, business, financial condition, and results of operations.

Vallon has had three patents granted and one additional patent application directed to ADAIR for ADHD and narcolepsy filed in the United States, has had two patents granted in Europe, has one patent granted in Japan, and Vallon is seeking patent protection for ADAIR internationally in several foreign countries and territories, including Australia, Canada, and China. The U.S. patents will expire in 2037, and the European and Japanese patents will expire in 2038. It is impossible to predict whether or how Vallon’s PCT application will result in any issued patent. Even if the pending application issues, it may issue with claims significantly narrower than those Vallon currently seeks.

The patent position of biotechnology and biopharmaceutical companies is generally uncertain because it involves complex legal and factual considerations. The standards applied by the USPTO and foreign patent offices in granting patents are not always applied uniformly or predictably. For example, there is no uniform worldwide policy regarding patentable subject matter or the scope of claims allowable in biotechnology and biopharmaceutical patents. Consequently, a patent may not issue from Vallon’s pending patent applications. Therefore, Vallon does not know the degree of future protection that it will have on any proprietary product or technology that it has or may develop.

Vallon’s commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection in the United States and other countries with respect to ADAIR or any other future product, such as ADMIR, that Vallon may license or acquire and the methods it uses to manufacture them, as well as successfully defending these patents and trade secrets against third-party challenges. Vallon seeks to protect its proprietary position by filing patent applications in the United States and abroad related to its proposed products. Vallon will only be able to protect its technologies from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover them.

The patent prosecution process is expensive and time-consuming, and Vallon may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that Vallon will fail to identify patentable aspects of its research and development output before it is too late to obtain patent protection. If Vallon’s licensors or Vallon fail to obtain or maintain patent protection or trade secret protection for ADAIR or any other future product that Vallon may license and acquire, such as ADMIR, third parties could use Vallon’s proprietary information, which could impair its ability to compete in the market and adversely affect its ability to generate revenues and achieve profitability. Moreover, should Vallon enter into other

The patent position of biotechnology and biopharmaceutical companies generally is highly uncertain, involves complex legal and factual questions, and has in recent years been the subject of much litigation. In addition, no consistent policy regarding the breadth of claims allowed in biopharmaceutical or biotechnology patents has emerged to date in the United States. The patent situation outside the United States is even more uncertain. The laws of foreign countries may not protect Vallon’s rights to the same extent as the laws of the United States. For example, European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after a first filing, or in some cases at all. Therefore, Vallon cannot know with certainty whether it or its licensors were the first to make the inventions claimed in its owned or licensed patents or pending patent applications, or whether Vallon was the first to file for patent protection of such inventions. In the event that a third party has also filed a U.S. patent application relating to Vallon’s proposed products or a similar invention, Vallon may have to participate in interference proceedings declared by the USPTO to determine priority of invention in the United States. The costs of these proceedings could be substantial, and it is possible that Vallon’s efforts would be unsuccessful, resulting in a material adverse effect on Vallon’s U.S. patent position. As a result, the issuance, scope, validity, enforceability, and commercial value of Vallon’s patent rights are highly uncertain. Vallon’s pending and future patent applications may not result in patents being issued which protect Vallon’s technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of Vallon’s patents or narrow the scope of Vallon’s patent protection.

Moreover, Vallon may be subject to a third-party pre-issuance submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, inter parties review, post-grant review or interference proceedings challenging Vallon’s patent rights or the patent rights of others. An adverse determination in any such submission, patent office trial, proceeding or litigation could reduce the scope of, render unenforceable, or invalidate, Vallon’s patent rights, allow third parties to commercialize its technology or products and compete directly with Vallon, without payment to Vallon, or result in Vallon’s inability to manufacture or commercialize products without infringing third-party patent rights. In addition, if the breadth or strength of protection provided by Vallon’s patents and patent applications is threatened, it could dissuade companies from collaborating with Vallon to license, develop, or commercialize current or future product.

Even if Vallon’s patent applications issue as patents, they may not issue in a form that will provide Vallon with any meaningful protection, prevent competitors from competing with Vallon or otherwise provide Vallon with any competitive advantage. Vallon’s competitors may be able to circumvent Vallon’s owned or licensed patents by developing similar or alternative technologies or products in a non-infringing manner.

The issuance of a patent does not foreclose challenges to its inventorship, scope, validity or enforceability. Therefore, Vallon’s owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being

The degree of future protection for Vallon’s proprietary rights is uncertain, because legal means afford only limited protection and may not adequately protect Vallon’s rights or permit it to gain or keep its competitive advantage. For example:

Competitors may infringe Vallon’s issued patents or other intellectual property. To counter infringement or unauthorized use, Vallon may be required to file infringement claims, which can be expensive and time consuming. Any claims that Vallon asserts against perceived infringers could provoke these parties to assert counterclaims against Vallon alleging that it infringes their patents. In addition, in a patent infringement proceeding, a court may decide that a patent of Vallon’s is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that Vallon’s patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of Vallon’s patents at risk of being invalidated, rendered unenforceable, or interpreted narrowly.

Vallon’s ability to develop, manufacture, market, and sell ADAIR or any other future product, such as ADMIR, that it may license or acquire depends upon Vallon’s ability to avoid infringing the proprietary rights of third parties. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the general fields of ADHD and cover the use of numerous compounds and formulations in Vallon’s targeted markets. Because of the uncertainty inherent in any patent or other litigation involving proprietary rights, Vallon and its licensors may not be successful in defending intellectual property claims by third parties, which could have a material adverse effect on Vallon’s results of operations. Regardless of the outcome of any litigation, defending the litigation may be expensive, time-consuming and distracting to management. In addition, because patent applications can take many years to issue, there may be currently pending applications, unknown to Vallon, which

There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology and biopharmaceutical industries generally. If a third party claims that Vallon infringes on their patents or misappropriated their technology, Vallon could face a number of issues, including:

Even if resolved in Vallon’s favor, litigation or other legal proceedings relating to intellectual property claims may cause Vallon to incur significant expenses, and could distract Vallon’s technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of Vallon’s common stock. Such litigation or proceedings could substantially increase Vallon’s operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities. Vallon may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of Vallon’s competitors may be able to sustain the costs of such litigation or proceedings more effectively than Vallon can because of their greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could compromise Vallon’s ability to compete in the marketplace.

A third party may hold intellectual property, including patent rights that are important or necessary to the development and commercialization of ADAIR or any other future product, such as ADMIR. It may be necessary for Vallon to use the patented or proprietary technology of third parties to commercialize ADAIR or any other future product. If Vallon is unable to obtain a license from these third parties, or unable to obtain a license, on commercially reasonable terms, Vallon’s business could be harmed.

In the future, Vallon may become party to licenses that are important for product development and commercialization. If Vallon fails to comply with its obligations under current or future license and funding agreements, Vallon’s counterparties may have the right to terminate these agreements, in which event Vallon might not be able to develop, manufacture or market any product or utilize any technology that is covered by these agreements or may face other penalties under the agreements. Such an occurrence could materially and adversely affect the value of a proposed product being developed under any such agreement or could restrict Vallon’s drug discovery activities. Termination of these agreements or reduction or elimination of Vallon’s rights under these agreements may result in Vallon having to negotiate new or reinstated agreements with less favorable terms, or

As is common in the biotechnology and biopharmaceutical industry, Vallon employs individuals who were previously employed at other biotechnology or biopharmaceutical companies, including our competitors or potential competitors. Although no claims against Vallon are currently pending, Vallon may be subject to claims that these employees have or Vallon has inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers. Litigation may be necessary to defend against these claims. Even if Vallon is successful in defending against these claims, litigation could result in substantial costs and be a distraction to management.

In addition to seeking patent protection for ADAIR or any future product, such as ADMIR, Vallon also relies on trade secrets, including unpatented know-how, technology, and other proprietary information, to maintain its competitive position, particularly where Vallon does not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. Vallon limits disclosure of such trade secrets where possible, but it also seeks to protect these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who do have access to them, such as its employees, licensors, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors, and other third parties. Vallon also enters into confidentiality and invention or patent assignment agreements with its employees and consultants. Despite these efforts, any of these parties may breach the agreements and may unintentionally or willfully disclose Vallon’s proprietary information, including Vallon’s trade secrets, and Vallon may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. Moreover, if any of Vallon’s trade secrets were to be lawfully obtained or independently developed by a competitor, Vallon would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with Vallon. If any of Vallon’s trade secrets were to be disclosed to or independently developed by a competitor, Vallon’s competitive position would be harmed.

There can be no assurance that the Merger will be completed. If the Merger is not completed, the Vallon Board may decide to pursue a dissolution and liquidation of Vallon. In such an event, the amount of cash available for distribution to Vallon’s stockholders will depend heavily on the timing of such decision and, ultimately, such liquidation, since the amount of cash available for distribution will continue to decrease as Vallon funds its operations while it evaluates its strategic alternatives. In addition, if the Vallon Board were to approve and recommend, and Vallon’s stockholders were to approve, a dissolution and liquidation of Vallon, Vallon would be required under Delaware corporate law to pay its outstanding obligations, as well as to make reasonable provisions for contingent and unknown obligations, prior to making any distributions in liquidation to its stockholders. Vallon’s commitments and contingent liabilities may include (i) regulatory and clinical obligations; (ii) obligations under employment and related agreements with certain employees that provide for severance and other payments following a termination of employment occurring for various reasons, including a change in control; and (iii) potential litigation against Vallon, and other various claims and legal actions arising in the ordinary course of business. As a result of this requirement, a portion of Vallon’s assets may need to be reserved pending the resolution of such obligations. In addition, Vallon may be subject to litigation or other claims related to a dissolution and liquidation of Vallon. If a dissolution and liquidation were pursued, the Vallon Board, in consultation with Vallon’s advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve. In the event of a dissolution or liquidation, there may be no cash to distribute in a wind down down and Vallon may owe more than it has at that time. Accordingly, holders of Vallon Common Stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution, or winding up of Vallon.

Vallon currently does not have any committed external source of funds and does not expect to generate any commercial revenue in the foreseeable future. Vallon has based its estimates on assumptions that may prove to be wrong, and it may use its available capital resources sooner than it currently expects if its operating plans change. If the Merger is not completed and Vallon decides to pursue further research and development activities, it will require substantial additional funding to operate. Additional funds may not be available when Vallon needs them on terms that are acceptable to Vallon, or may not be available at all.

To the extent that Vallon raises additional capital through the sale of equity or convertible debt, the ownership interests of its stockholders will be diluted. In addition, the terms of any equity or convertible debt Vallon agrees to issue may include liquidation or other preferences that adversely affect the rights of Vallon’s stockholders. Convertible debt financing, if available, may involve agreements that include covenants limiting or restricting Vallon’s ability to take specific actions, such as incurring additional debt, making capital expenditures, and declaring dividends, and may impose limitations on its ability to acquire, sell, or license intellectual property rights and other operating restrictions that could adversely impact its ability to conduct its business.

Furthermore, while the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the pandemic has resulted in a significant disruption of global financial markets, and the ongoing impact of the COVID-19 pandemic on the global financial markets may reduce Vallon’s access to capital, when and if needed. If adequate funds are not available to Vallon on a timely basis, it may be required to curtail or cease its operations.

If the Merger is not completed, raising additional funding through debt or equity financing could be difficult or unavailable altogether given the turbulent financial markets. The issuance of additional securities, whether equity or debt, by Vallon, or the possibility of such issuance, may cause the market price of the Vallon Common Stock to decline and existing stockholders may not agree with the financing plans or the terms of such financings.

Prior to Vallon’s initial public offering, there had been no public market for Vallon Common Stock. Vallon Common Stock only recently began trading on The Nasdaq Capital Market, but Vallon can provide no assurance that it will be able to develop and sustain an active trading market for the Vallon Common Stock. Even if an active trading market is developed, it may not be sustained. The lack of an active market may impair stockholders’ ability to sell their shares at the time they wish to sell them or at a price that they consider reasonable. An inactive market may also impair Vallon’s ability to raise capital by selling shares and may impair our ability to acquire other businesses or technologies using our shares as consideration, which, in turn, could materially adversely affect Vallon’s business.

Although the Vallon Common Stock is listed on The Nasdaq Capital Market, Vallon may be unable to continue to satisfy the listing requirements and rules, including: the director independence requirements; certain financial metrics for Vallon’s stockholders’ equity, market value of listed securities, and net income from continuing operations; and minimum bid price requirements. If Vallon is unable to satisfy The Nasdaq Capital Market criteria for maintaining its listing, its securities could be subject to delisting. If The Nasdaq Capital Market delists Vallon’s securities, Vallon could face significant consequences, including:

In addition, Vallon would no longer be subject to The Nasdaq Capital Market rules, including rules requiring it to have a certain number of independent directors and to meet other corporate governance standards.

The market prices for securities of biotechnology and biopharmaceutical companies have historically been highly volatile, and the market has from time-to-time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. In particular, the trading prices for pharmaceutical, biopharmaceutical, and biotechnology companies have been highly volatile as a result of the COVID-19 pandemic.

The market price of Vallon Common Stock is likely to be highly volatile and may fluctuate substantially due to many factors, including:

The trading market for Vallon Common Stock is influenced by the research and reports that industry or securities analysts may publish about Vallon, its business, its market, or its competitors. Vallon does not have any control over these analysts and analysts may not provide favorable coverage, or any coverage at all. If any of the analysts that do cover Vallon make an adverse recommendation regarding Vallon Common Stock, or provide more favorable relative recommendations about Vallon’s competitors, then Vallon’s stock price would likely decline. If any analyst who may cover Vallon were to cease coverage of Vallon or fail to regularly publish reports on Vallon, Vallon could lose visibility in the financial markets, which in turn could cause its share price or trading volume to decline.

Vallon has never declared or paid cash dividends on Vallon Common Stock. Vallon currently anticipates that it will retain future earnings for the development, operation, and expansion of its business and does not anticipate declaring or paying any cash dividends in the foreseeable future.

As of January 15, 2023, Vallon’s executive officers, directors, beneficial owners of 5% or more of its capital stock and their respective affiliates will, in the aggregate, beneficially own approximately 64.5% of the outstanding Vallon Common Stock, including Medice, through its affiliated entity, Salmon Pharma, and Arcturus Therapeutics, Ltd. (“Arcturus”), Vallon’s largest stockholders.

If Salmon Pharma, Arcturus, or any member of the Vallon Board or management acquires additional shares of Vallon Common Stock in the aftermarket or in privately negotiated transactions, this would increase their control. Factors that would be considered in making such additional purchases would include consideration of the current trading price of Vallon Common Stock.

Salmon Pharma and Arcturus’s large ownership stake may allow it to exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that stockholders’ do not support, including amendments to Vallon’s amended and restated certificate of incorporation, election of the Vallon Board, removal of any of Vallon’s directors, adoption of measures that could delay or prevent a change in control or impede a merger, takeover, or other business combination involving Vallon, and approval of other major corporate transactions. In addition, Salmon Pharma and Arcturus’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of Vallon, which in turn could reduce Vallon’s stock price or prevent its stockholders from realizing a premium over such stock price. Accordingly, Vallon’s stockholders other than Salmon Pharma and Arcturus may be unable to influence management and exercise control over Vallon’s business.

Certain provisions of Vallon’s amended and restated certificate of incorporation and its amended and restated bylaws and applicable provisions of Delaware law may delay or discourage transactions involving an actual or potential change in control or change in Vallon’s management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions that Vallon’s stockholders might otherwise deem to be in their best interests. The provisions in our amended and restated certificate of incorporation and amended and restated bylaws:

Furthermore, Vallon’s amended and restated certificate of incorporation specifies that, unless Vallon consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any state law claim for (i) any derivative action or proceeding brought on Vallon’s behalf, (ii) any action asserting a claim of breach of fiduciary duty owed by any of Vallon’s directors, officers, and employees to Vallon or Vallon’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the

In addition, Section 203 of the Delaware General Corporation Law may limit Vallon’s ability to engage in any business combination with a person who beneficially owns 15% or more of Vallon’s outstanding voting stock unless certain conditions are satisfied. This restriction lasts for a period of three years following the share acquisition. These provisions may have the effect of entrenching Vallon’s management team and may deprive stockholders’ of the opportunity to sell their shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a control premium could reduce the price of Vallon Common Stock.

As a publicly traded company, Vallon incurs significant legal, accounting, and other expenses that it did not incur as a privately held company prior to the completion of its initial public offering in February 2021. These reporting obligations associated with being a public company in the United States require significant expenditures and place significant demands on Vallon’s management and other personnel, including costs resulting from Vallon’s reporting obligations under the Exchange Act and the rules and regulations regarding corporate governance practices, including those under the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended, and the listing requirements of The Nasdaq Capital Market. These rules require the establishment and maintenance of effective disclosure and financial controls and procedures, internal control over financial reporting and changes in corporate governance practices, among many other complex rules that are often difficult to implement, monitor and maintain compliance with. Moreover, despite recent reforms made possible by the Jumpstart Our Business Startups Act (“JOBS Act”), the reporting requirements, rules, and regulations may make some activities more time-consuming and costly, particularly after Vallon is no longer an “emerging growth company.” In addition, Vallon expects these rules and regulations to make it more difficult and more expensive for Vallon to maintain director and officer liability insurance. Vallon’s management and other personnel need to devote a substantial amount of time to ensure that Vallon complies with all of these requirements and to keep pace with new regulations, otherwise Vallon may fall out of compliance and risk becoming subject to litigation or being delisted, among other potential problems.

If Vallon fails to comply with the rules under the Sarbanes-Oxley Act related to accounting controls and procedures in the future, or, if Vallon discovers additional material weaknesses and other deficiencies in its internal control and accounting procedures, Vallon’s stock price could decline significantly and raising capital could be more difficult. Section 404 of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of

We have incurred significant net losses since our inception and have financed our operations principally through equity and debt financing. We continue to incur significant research and development and other expenses related to our ongoing operations. Our net loss was $1.6 million and $2.5 million for the years ended December 31, 2021 and 2020, respectively. As of September 30, 2022, we had an accumulated deficit of $16.2 million We have devoted substantially all of our resources and efforts to research and development, and we expect that it will be several years, if ever, before we generate revenue from product sales. Even if we receive marketing approval for and commercialize one or more of our product candidates, we expect that we will continue to incur substantial research and development and other expenses in order to develop and, if approved, market additional potential product candidates.

We expect to continue to incur significant losses for the foreseeable future, and we anticipate that our expenses will increase substantially if, and as, we:

To become and remain profitable, we must develop and eventually commercialize products with significant market potential. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials, obtaining marketing approval for product candidates, manufacturing, marketing, and selling products for which we may obtain marketing approval and satisfying any post-marketing requirements. We may never succeed in any or all of these activities and, even if we do, we may never generate revenue that is significant enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business, or continue our operations.

Developing biotechnology and biopharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive, and uncertain process that takes years to complete. Our operations have consumed substantial amounts of cash since inception. We expect our expenses to increase in connection with our ongoing activities, particularly as we conduct our planned clinical trials of GRI-0621, GRI-0803 and any other product candidates that we may develop or seek regulatory approvals for and, if approved, launch and commercialize. In particular, we do not expect to be able to continue development of GRI-0124 or GRI-0729 without raising additional funds. We also expect to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in order to maintain our continuing operations. If we are unable to raise capital when needed or on acceptable terms, we may be forced to delay, reduce, or eliminate one or more of our research and drug development programs or future commercialization efforts.

As of September 30, 2022, we had approximately $0.1 million in cash. Based on our current operating plan and assuming completion of the Merger and the Equity Financing, not including the Series T Warrant Exercises, we believe that our existing cash will be sufficient to fund our operating expenses and capital expenditure requirements for at least the 12 months immediately following completion of the Merger and the Equity Financing, not including the Series T Warrant Exercises. We have based these estimates on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. Our future capital requirements and the period for which our existing resources will support our operations may vary significantly from what we expect, and we will require additional funding to recommence development of GRI-0124 and GRI-0729. Our spending levels will vary based on new and ongoing development and corporate activities. Because the length of time and activities associated with development of our product candidates is highly uncertain, we are unable to estimate the actual funds we will require for development, and assuming approval, marketing and commercialization activities.

We cannot be certain that additional funding will be available on acceptable terms, if at all. Until we can generate sufficient revenue to finance our cash requirements, which we may never do, we expect to finance our

We have incurred losses since inception and, to date, have financed our operations by issuing equity and debt securities. We anticipate that we will continue to incur losses and generate negative operating cash flows in the foreseeable future as we continue to develop its drug candidates and that we will require additional funding to support our planned operating activities. The report of our independent registered public accounting firm on our financial statements as of and for the year ended December 31, 2021 include an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. Until such time, if ever, in which we can generate substantial product revenue, we expect we may continue to fund our operations and capital funding needs through equity offerings, debt financings or other capital sources, including strategic licensing, collaboration or other similar agreements. If we are unable to secure adequate additional funding, we will need to reevaluate our operating plans and may be forced to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible, delay, scale back or eliminate some or all of our development programs, or relinquish rights to our technology on less favorable terms than it would otherwise choose. These actions could materially impact our business, results of operations and future prospects.

We currently have no products that are approved for commercial sale and may never be able to develop marketable products. Because GRI-0621 is our lead product candidate, if GRI-0621 encounters safety or efficacy problems, development delays, regulatory issues or other problems, our development plans and business would be significantly harmed. Before we can generate any revenue from sales of our lead product candidate, GRI-0621, or any of our other product candidates, we must undergo additional clinical development, regulatory review, and approval in one or more jurisdictions. These efforts will require substantial investment, and we may not have the financial resources to continue development of our product candidates.

We may experience setbacks that could delay or prevent regulatory approval of, or the extent of regulatory protection or our ability to commercialize, our product candidates, including:

We do not have complete control over many of these factors, including certain aspects of clinical development and the regulatory submission process, potential threats to our intellectual property rights and our manufacturing, marketing, distribution and sales efforts or that of any future collaborator. Delays in regulatory approvals or our failure to obtain regulatory approvals would harm our business, prospects and results of operations.

To obtain the requisite regulatory approvals to commercialize any product candidates, we must demonstrate through extensive preclinical studies and clinical trials that our product candidates are safe and effective in humans for their intended use(s). Clinical testing is expensive and can take many years to complete, and its outcome is

A product candidate can fail at any stage of testing, even after observing promising signals of activity in earlier preclinical studies or clinical trials. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. In addition, initial success in clinical trials may not be indicative of results obtained when such trials are completed. There is typically an extremely high rate of attrition from the failure of product candidates proceeding through clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy profile despite having progressed through

Product candidates that appear promising in the early phases of development may fail to reach the market for several reasons, including:

In addition, the standards that the FDA and comparable foreign regulatory authorities use when regulating our product candidates require judgment and can change, which makes it difficult to predict with certainty how they will be applied. Any analysis we perform of data from preclinical and clinical activities is subject to confirmation and interpretation by regulatory authorities, which could delay, limit or prevent regulatory approval. We may also encounter unexpected delays or increased costs due to new government regulations. Examples of such regulations include future legislation or administrative action, or changes in FDA policy during the period of product development and FDA regulatory review. We cannot predict whether legislative changes will be enacted, or whether FDA or foreign regulations, guidance or interpretations will be changed, or what the impact of such changes, if any, may be. The FDA may also require a panel of experts, referred to as an advisory committee, to deliberate on the adequacy of the safety and efficacy data to support approval. The opinion of the advisory committee, although not binding on the FDA, may have a significant impact on the agency’s decision-making process and our ability to obtain approval of any product candidates that we develop.

If we seek to conduct clinical trials in foreign countries or pursue marketing approvals in foreign jurisdictions, we must comply with numerous foreign regulatory requirements governing, among other things, the conduct of clinical trials, manufacturing and marketing authorization, pricing and third-party reimbursement. The foreign regulatory approval process varies among countries and may include all of the risks associated with FDA approval described above as well as risks attributable to the satisfaction of local regulations in foreign jurisdictions. Moreover, the time required to obtain approval may differ from that required to obtain FDA approval. Approval by the FDA does not ensure approval by regulatory authorities outside the United States and vice versa. Our competitors also may obtain FDA or regulatory approval from comparable foreign regulatory authorities for their product candidates more rapidly than we may obtain approval for ours, which could result in our competitors

Identifying and qualifying patients to participate in clinical studies of our product candidates is critical to our success. The timing of completion of our clinical studies depends in part on the speed at which we can recruit patients to participate in testing our product candidates, and we may experience delays in our clinical trials if we encounter difficulties in enrollment. We may not be able to initiate or continue clinical trials for our product

We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons. The timely completion of clinical trials in accordance with their protocols depends, among other things, on our ability to enroll a sufficient number of patients who remain in the trial until its conclusion. The enrollment of patients depends on many factors, including:

For example, when we evaluated GRI-0621 in a pilot Phase 2a trial in hepatically impaired chronic liver disease patients, the study was originally intended to evaluate 60 patients but due to recruitment challenges and updated guidance from the FDA regarding the design of NASH clinical studies we made the administrative decision to halt the study after enrolling 14 patients.

Additionally, we are initially developing GRI-0621 for the treatment of IPF, which is an orphan indication. As a result, we may encounter difficulties enrolling subjects in our clinical trials of GRI-0621 due, in part, to the small size of this patient population. In addition, our clinical trials will compete with other clinical trials for product candidates that are in the same therapeutic areas as our product candidates, and this competition may reduce the number and types of patients available to us, because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors. Since the number of qualified clinical investigators is limited, we expect to conduct some of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the number of patients who are available for our clinical trials in such clinical trial site.

Further, timely enrollment in clinical trials is reliant on clinical trial sites which may be adversely affected by global health matters, including, among other things, pandemics, supply and labor shortages and geopolitical events. These delays and potential delays to development timelines may adversely affect our business, prospects and results of operations.

From time to time, we may publicly disclose interim, preliminary or topline data from our clinical studies, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions

Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects. There can be no guarantee that a favorable interim analysis will result in a favorable final result at the completion of the clinical trial.

Likewise, in light of the fact that our evaluation of GRI-0621 in a pilot Phase 2a trial in hepatically impaired chronic liver disease patients was originally intended to evaluate 60 patients and that we made the administrative decision to halt the study after enrolling 14 patients due to recruitment challenges and updated guidance from the FDA regarding the design of NASH clinical studies, our disclosure that GRI-0621 was observed to be well tolerated and showed improvements in liver function tests, serum CK-18, and in NKT I cell activity in this limited number of patients is qualified by the fact that the study was underpowered to meet its endpoints with statistical significance. Our observations from this pilot Phase 2a trial may not be indicative of results from any potential future pre-clinical studies or clinical trials.

Changes in regulatory requirements, FDA guidance or unanticipated events during our preclinical studies and clinical studies may force us to amend preclinical studies and clinical study protocols. The FDA or comparable foreign regulatory authorities may also impose additional preclinical studies and clinical study requirements. Amendments or changes to our clinical study protocols would require resubmission to the FDA or comparable foreign regulatory authorities and IRBs for review and approval, which may increase the cost or delay the timing or successful completion of clinical studies. Similarly, amendments to our preclinical studies may increase the cost or delay the timing or successful completion of those preclinical studies. If we experience delays completing, or if we terminate, any of our preclinical or clinical studies, or if we are required to conduct additional preclinical or clinical studies, the commercial prospects for our product candidates may be harmed and our ability to recognize product revenue will be delayed.

We face an inherent risk of product liability as a result of testing GRI-0621 and any of our other product candidates in clinical trials and will face an even greater risk if we commercialize any products. For example, we may be sued if our product candidates cause or are perceived to cause injury or are found to be otherwise unsuitable

Our inability to obtain sufficient product liability insurance at an acceptable cost to protect against potential product liability claims could prevent or inhibit the commercialization of products we develop. We may be unable to obtain, or may obtain on unfavorable terms, clinical trial insurance in amounts adequate to cover any liabilities from any of our clinical trials. Our insurance policies may also have various exclusions, and we may be subject to a product liability claim for which we have no coverage. We may have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts. Even if our agreements with any future corporate collaborators entitle us to indemnification against losses, such indemnification may not be available or adequate should any claim arise.

We intend to develop and seek approval for GRI-0621, and potentially other candidates that we may develop, pursuant to the FDA’s 505(b)(2) pathway. If the FDA determines that we may not use this regulatory pathway, then we would need to seek regulatory approval via a “full” or “stand-alone” NDA under Section 505(b)(1) of the FDCA. This would require us to conduct additional clinical trials, provide additional safety and efficacy data and other information, and meet additional standards for regulatory approval including possibly nonclinical data. If this were to occur, the time and financial resources required to obtain FDA approval, as well as the development complexity

The Drug Price Competition and Patent Term Restoration Act of 1984, informally known as the Hatch-Waxman Act, added Section 505(b)(2) to the FDCA. Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies and information that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference. Section 505(b)(2), if applicable to us under the Federal Food, Drug, and Cosmetic Act (“FDCA”). This would allow an NDA we submit to the FDA to rely in part on data in the public domain or the FDA’s prior conclusions regarding the safety and effectiveness of approved compounds, which could expedite the development programs for GRI-0621.

Notwithstanding the approval of an increasing number of products by the FDA under Section 505(b)(2) over the last few years, certain brand-name pharmaceutical companies and others have objected to the FDA’s interpretation

Moreover, any delay resulting from our inability to pursue the FDA’s 505(b)(2) pathway could result in new competitive products reaching the market more quickly than our GRI-0621 product candidate, which may have a material adverse impact our competitive position and prospects. Even if we are allowed to pursue the FDA's 505(b)(2) pathway, we cannot assure you that GRI-0621 or any of our future product candidates will receive the requisite approvals for commercialization.

If a product candidate is intended for the treatment of a serious condition and nonclinical or clinical data demonstrate the potential to address an unmet medical need for this condition, a product sponsor may apply for FDA Fast Track designation. If we seek Fast Track designation for a product candidate, we may not receive it from the FDA. However, even if we receive Fast Track designation, Fast Track designation does not ensure that we will receive marketing approval or that approval will be granted within any particular time frame. We may not experience a faster development or regulatory review or approval process with Fast Track designation compared to conventional FDA procedures. In addition, the FDA may withdraw Fast Track designation if the designation is no longer supported by data from our clinical development program. Fast Track designation alone does not guarantee qualification for the FDA’s priority review procedures.

If any of our product candidates are approved, we will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies and submission of safety, efficacy and other post-market information, including both federal and state requirements in the United States and requirements of comparable foreign regulatory authorities. In addition, we will be subject to continued compliance with cGMPs and GCPs for any clinical trials that we conduct post-approval.

Manufacturers and their facilities are required to comply with extensive FDA and comparable foreign regulatory authority requirements, including ensuring that quality control and manufacturing procedures conform to cGMPs and applicable tracking and tracing requirements. As such, we and our contract manufacturers will be subject to continual review and inspections to assess compliance with cGMPs and adherence to commitments made in any marketing application, and previous responses to inspection observations. Accordingly, we and others with whom we work must continue to expend time, money, and effort in all areas of regulatory compliance, including manufacturing, production and quality control.

Any regulatory approvals that we receive for our product candidates may be subject to limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials and surveillance to monitor the safety and efficacy of the product candidate. The FDA may also require a Risk Evaluation and Mitigation Strategies (“REMS”) program as a condition of approval of our product candidates, which could entail requirements for long-term patient follow-up, a medication guide, physician communication plans or additional

We must also comply with requirements concerning advertising and promotion for any of our product candidates for which we hope to obtain marketing approval. The FDA strictly regulates marketing, labeling, advertising, and promotion of products that are placed on the market. Products may be promoted only for the approved indications and in accordance with the provisions of the approved label. However, companies may share truthful and not misleading information that is not inconsistent with the labeling. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses and a company that is found to have improperly promoted off-label uses may be subject to significant liability.

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

Any government investigation of alleged violations of law would be expected to require us to expend significant time and resources in response and could generate adverse publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to develop and commercialize our products and our value and our operating results would be adversely affected. In addition, the policies of the FDA and of other regulatory authorities may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability.

Even if GRI-0621 or any other product candidate we develop receives marketing approval, it may nonetheless fail to gain sufficient market acceptance by physicians, patients and third-party payors, such as Medicare and Medicaid programs and managed care organizations, and others in the medical community. In addition, the availability of coverage by third-party payors may be affected by existing and future health care reform measures designed to reduce the cost of health care. If the product candidates we develop do not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become profitable.

The degree of market acceptance of any product candidate, if approved for commercial sale, will depend on a number of factors, including:

Sales of medical products also depend on the willingness of physicians to prescribe the treatment, which is likely to be based on a determination by these physicians that the products are safe, therapeutically effective and cost effective. In addition, the inclusion or exclusion of products from treatment guidelines established by various physician groups and the viewpoints of influential physicians can affect the willingness of other physicians to prescribe the treatment. We cannot predict whether physicians, physicians’ organizations, hospitals, other healthcare providers, government agencies or private insurers will determine that out products are safe, therapeutically effective and cost effective as compared with competing treatments. If any product candidate is approved but does not achieve an adequate level of acceptance by such parties, we may not generate or derive sufficient revenue from that product candidate and may not become or remain profitable. If government and other third-party payors do not provide coverage and adequate reimbursement levels for any products we commercialize, market acceptance and commercial success would be reduced.

The pricing, coverage, and reimbursement of our approved products, if any, must be sufficient to support our commercial efforts and other development programs, and the availability and adequacy of coverage and reimbursement by third-party payors, including governmental and private insurers, are essential for most patients to be able to afford medical treatments. Sales of our approved products, if any, will depend substantially, both domestically and abroad, on the extent to which the costs of our approved products, if any, will be paid for or reimbursed by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or government payors and private payors. If coverage and reimbursement are not available, or are

In addition, there is significant uncertainty related to the insurance coverage and reimbursement for newly approved products. In the United States, the principal decisions about coverage and reimbursement for new drugs are typically made by the Centers for Medicare and Medicaid Services (“CMS”), an agency within the United States Department of Health and Human Services, as CMS decides whether and to what extent a new drug will be covered and reimbursed under Medicare. Private payors tend to follow the coverage reimbursement policies established by CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for novel product candidates such as ours and what reimbursement codes our product candidates may receive if approved.

Outside the United States, international operations are generally subject to extensive governmental price controls and other price-restrictive regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada and other countries has and will continue to put pressure on the pricing and usage of prescription drugs. In many countries, the prices of drugs are subject to varying price control mechanisms as part of national health systems. Price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our products, if any. Accordingly, in markets outside the United States, the potential revenue may be insufficient to generate commercially reasonable revenue and profits.

Moreover, increasing efforts by governmental and private payors in the United States and abroad to limit or reduce healthcare costs may result in restrictions on coverage and the level of reimbursement for new drugs and, as a result, they may not cover or provide adequate payment for our products, if any. We expect to experience pricing pressures in connection with drugs due to the increasing trend toward managed healthcare, including the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, and prescription drugs in particular, has and is expected to continue to increase in the future. As a result, profitability of our products, if any, may be more difficult to achieve even if any of them receive regulatory approval.

In order to market any products outside of the United States, we must establish and comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy. Clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not mean that regulatory approval will be obtained in any other country. Approval procedures vary among countries and can involve additional product testing and validation and additional administrative review periods. Seeking foreign regulatory approvals could result in significant delays, difficulties, and costs for us and may require additional preclinical studies or clinical trials which would be costly and time consuming. Regulatory requirements can vary widely from country to country and could delay or prevent the introduction of our products in those countries. Satisfying these and other regulatory requirements is costly, time consuming, uncertain and subject to unanticipated delays. In addition, our failure to obtain regulatory approval in any country may delay or have negative effects on the process for regulatory approval in other countries. We do not have any product candidates approved for sale in any jurisdiction, including international markets, and we do not have experience in obtaining

We have no internal sales, marketing, or distribution capabilities. We have no prior experience as a company in the marketing, sale and distribution of pharmaceutical products and there are significant risks involved in building and managing a sales organization, including our ability to hire, retain and incentivize qualified individuals, generate sufficient sales leads, provide adequate training to sales and marketing personnel and effectively manage a geographically dispersed sales and marketing team. Any failure or delay in the development of our sales, marketing and distribution capabilities would adversely impact the commercialization of any product candidates that may obtain approval. We may also choose to collaborate with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems. We may not be able to enter into collaborations or hire consultants or external service providers to assist us in sales, marketing and distribution functions on acceptable financial terms, or at all. In addition, our product revenues and our profitability, if any, may be lower if we rely on third parties for these functions than if we were to market, sell and distribute any products that we develop ourselves. We likely will have little control over these third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we are not successful in commercializing any approved product candidates that we may have, either on our own or through arrangements with one or more third parties, we may not be able to generate any future product revenue and we would incur significant additional losses.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform. Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible investigations by government authorities, can be time- and resource-consuming and can divert a company’s attention from other aspects of its business.

It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other healthcare laws and regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the

Moreover, increasing efforts by governmental and third-party payors in the United States and abroad, including in Canada and Europe, to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for newly approved products and, as a result, they may not cover or provide adequate payment for our product candidates. There has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. Most recently, in August 2022, President Biden signed into the law the Inflation Reduction Act of 2022 (the “IRA”) which among other things, contains multiple provisions that may impact the prices of drug products that are both sold into the Medicare program and throughout the United States.

At the state level, legislatures are increasingly passing legislation and implementing regulations designed to control pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. Legally mandated price controls on payment amounts by third-party payors or other restrictions could harm our business, financial condition, results of operations and prospects. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs. This could reduce the ultimate demand for our products or put pressure on our product pricing, which could negatively affect our business, financial condition, results of operations and prospects. In addition, the U.S. Supreme Court held unanimously in December 2020 that federal law does not preempt the states’ ability to regulate pharmaceutical benefit managers (“PBMs”) and other members of the health care and pharmaceutical supply chain, an important decision that has led to further and more aggressive efforts by states in this area.

These laws, and future state and federal healthcare reform measures may be adopted in the future, any of which may result in additional reductions in Medicare and other healthcare funding and otherwise affect the prices we may obtain for any of our product candidates for which we may obtain regulatory approval or the frequency with which any such product candidate is prescribed or used. Additionally, we expect to experience pricing pressures in connection with the sale of any future approved product candidates due to the trend toward managed healthcare, the

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the SEC and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, over the last several years, including from December 22, 2018 through January 25, 2019, the U.S. government has shut down several times, and certain regulatory agencies, such as the FDA and the SEC, have had to furlough critical FDA, SEC, and other government employees and stop critical activities. Moreover, recent shutdowns or slowdowns caused by the federal response to the COVID-19 pandemic can increase the time needed for the agency to complete its review or make final approval or other administrative decisions. If a prolonged government shutdown or slowdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business. Further, future government shutdowns could impact our ability to access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.

Among other matters, U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations, which are collectively referred to as Trade Laws, prohibit companies and their employees, agents, clinical research organizations, legal counsel, accountants, consultants, contractors, and other partners from authorizing, promising, offering, providing, soliciting, or receiving directly or indirectly, corrupt or improper payments or anything else of value to or from recipients in the public or private sector. Violations of Trade Laws can result in substantial criminal fines and civil penalties, imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm, and other consequences. We have direct or indirect interactions with officials and employees of government agencies or government-affiliated hospitals, universities and other organizations. We also expect our non-U.S. activities to increase in time. We plan to engage third parties for clinical trials and/or to obtain necessary permits, licenses, patent registrations and other regulatory approvals and we can be held liable for the corrupt or other illegal activities of our personnel, agents, or partners, even if we do not explicitly authorize or have prior knowledge of such activities.

Our research and development activities and our third-party manufacturers’ and suppliers’ activities involve the controlled storage, use, and disposal of hazardous materials, including the components of our product candidates and other hazardous compounds. We and our manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, handling, and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers’ facilities pending their use and disposal. We cannot eliminate the risk of contamination, which could cause an interruption of our commercialization efforts, research and development efforts and business operations; environmental damage resulting in costly clean-up; and liabilities under applicable laws and regulations governing the use, storage, handling, and disposal of these materials and specified waste products. Although we believe that the safety procedures utilized by us and our third-party manufacturers for handling and disposing of these materials generally

Our business will depend in large part on obtaining and maintaining patent, trademark and trade secret protection of our proprietary technologies and our product candidates, their respective components, synthetic intermediates, formulations, combination therapies, methods used to manufacture them and methods of treatment, as well as successfully defending these patents against third-party challenges. Our ability to stop unauthorized third parties from making, using, selling, offering to sell or importing our product candidates is dependent upon the extent to which we have rights under valid and enforceable patents that cover these activities and whether a court would issue an injunctive remedy. If we are unable to secure and maintain patent protection for any product or technology we develop, or if the scope of the patent protection secured is not sufficiently broad, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to commercialize any product candidates we may develop may be adversely affected.

The patenting process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. The patenting process is subject to numerous risks and there can be no assurance that we will be successful in obtaining patents for which we have applied. In addition, we may not pursue, obtain, or maintain patent protection in all relevant markets. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from or license to third parties and are reliant on our licensors or licensees.

The strength of patents in the biotechnology and biopharmaceutical field involves complex legal and scientific questions and can be uncertain. The patent applications that we own or in-license may fail to result in issued patents with claims that cover our product candidates or uses thereof in the United States or in other foreign countries. Even if the patents do successfully issue, third parties may challenge the validity, enforceability, or scope thereof, which may result in such patents being narrowed, invalidated, or held unenforceable. Furthermore, even if they are unchallenged, our patents and patent applications may not adequately protect our technology, including our product candidates, or prevent others from designing around our claims. If the breadth or strength of protection provided by the patent applications we hold with respect to our product candidates is threatened, it could dissuade companies from collaborating with us to develop, and threaten our ability to commercialize, our product candidates. Further, if we encounter delays in our clinical trials, the period of time during which we could market our product candidates under patent protection would be reduced.

We cannot be certain that we were the first to file any patent application related to our technology, including our product candidates, and, if we were not, we may be precluded from obtaining patent protection for our technology, including our product candidates.

We cannot be certain that we were the first to invent the inventions covered by pending patent applications and, if we are not, we may be subject to priority disputes. Furthermore, for United States applications in which all claims are entitled to a priority date before March 16, 2013, an interference proceeding can be provoked by a third-party or instituted by the USPTO to determine who was the first to invent any of the subject matter covered by the patent claims of our applications. Similarly, for United States applications in which at least one claim is not entitled to a

We may be required to disclaim part or all of the term of certain patents or all of the term of certain patent applications. There may be prior art of which we are not aware that may affect the validity or enforceability of a patent or patent application claim. There also may be prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim, which may, nonetheless, ultimately be found to affect the validity or

The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.

In connection with our efforts to expand our pipeline of product candidates, we may enter into certain licenses or other collaboration agreements pertaining to the in-license of rights to additional product candidates. Such agreements may impose various diligence, milestone payment, royalty, insurance, or other obligations on us. If we fail to comply with these obligations, our licensor or collaboration partners may have the right to terminate the relevant agreement, in which event we would not be able to develop or market the products covered by such licensed intellectual property.

Moreover, disputes may arise regarding intellectual property subject to a licensing agreement, including:

In addition, the agreements under which we currently license intellectual property or technology from third parties are complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations, and prospects. Moreover, if disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse effect on our business, financial conditions, results of operations, and prospects.

In addition, we may have limited control over the maintenance and prosecution of these in-licensed patents and patent applications, or any other intellectual property that may be related to our in-licensed intellectual property. For example, we cannot be certain that such activities by any future licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents and other intellectual property rights. We have limited control over the manner in which our licensors initiate an infringement proceeding against a third-party infringer of the intellectual property rights or defend certain of the intellectual property that is

Our commercial success depends in part on our ability to develop, manufacture, market and sell our product candidates and use our proprietary technologies without infringing the proprietary rights of third parties. There is a substantial amount of litigation involving patents and other intellectual property rights in the biotechnology and biopharmaceutical industries, as well as administrative proceedings for challenging patents, including interference, derivation, inter partes review, post grant review, and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions. We may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual property rights alleging that our product candidates and/or proprietary technologies infringe their intellectual property rights. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing our product candidates. As the biotechnology and biopharmaceutical industries expand and more patents are issued, the risk increases that our product candidates may give rise to claims of infringement of the patent rights of others. Moreover, it is not always clear to industry participants, including us, which patents cover various types of drugs, products or their methods of use or manufacture. Thus, because of the large number of patents issued and patent applications filed in our fields, there may be a risk that third parties may allege they have patent rights encompassing our product candidates, technologies, or methods.

In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and, if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. This type of litigation or proceeding could substantially increase our operating losses and reduce our resources available for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of complex patent litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations or could otherwise have a material adverse effect on our business, results of operations, financial condition, and prospects. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrative proceedings, there is a risk that some of our confidential information could be compromised by disclosure.

There may be third-party patents of which we are currently unaware with claims to compositions of matter, materials, formulations, methods of manufacture or methods for treatment that encompass the composition, use or manufacture of our product candidates. There may be currently pending patent applications of which we are currently unaware which may later result in issued patents that our product candidates or their use or manufacture may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents. If any third-party patent were held by a court of competent jurisdiction to cover our product candidates, intermediates used in the manufacture of our product candidates or our materials generally, aspects of our formulations or methods of manufacture or use, the holders of any such patent may be able to block our ability to develop and commercialize the product candidate unless we obtained a license or until such patent expires or is finally determined to be held invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all. If we are unable to obtain a necessary license to a third-party patent on commercially reasonable terms, or at all, our ability to commercialize our product candidates may be

Parties making claims against us may seek and obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us, we may have to pay substantial damages, including treble damages and attorneys’ fees for willful infringement, obtain one or more licenses from third parties, pay royalties, or redesign our infringing products, which may be impossible or require substantial time and monetary expenditure. We cannot predict whether any such license would be available at all or whether it would be available on commercially reasonable terms. Furthermore, even in the absence of litigation, we may need to obtain licenses from third parties to advance our research or allow commercialization of our product candidates. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event, we would be unable to further develop and commercialize our product candidates, which could harm our business significantly.

As is common in the biotechnology and biopharmaceutical industries, we employ individuals who were previously employed at universities or other biotechnology or biopharmaceutical companies, including our competitors or potential competitors. Although no claims against us are currently pending, and although we try to ensure that our employees and consultants do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our employees, consultants or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and, if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock. This type of litigation or proceeding could substantially increase our operating losses and reduce our resources available for development activities. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their substantially greater financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other intellectual property related proceedings could adversely affect our ability to compete in the marketplace.

A third party may claim an ownership interest in one or more of our or our licensors’ patents or other proprietary or intellectual property rights. A third party could bring legal actions against us and seek monetary damages and/or enjoin clinical testing, manufacturing and marketing of the affected product or products. While we are presently unaware of any claims or assertions by third parties with respect to our patents or other intellectual property, we cannot guarantee that a third party will not assert a claim or an interest in any of such patents or intellectual property. If we become involved in any litigation, it could consume a substantial portion of our resources and cause a significant diversion of effort by our technical and management personnel. If any of these actions are successful, in addition to any potential liability for damages, we could be required to obtain a license to continue to manufacture or market the affected product, in which case we may be required to pay substantial royalties or grant cross-licenses to our patents. We cannot predict whether any such license will be available on commercially acceptable terms, if at all. Ultimately, we could be prevented from commercializing a product candidate or be forced

Because our programs may involve additional product candidates that may require the use of proprietary rights held by third parties, the growth of our business may depend in part on our ability to acquire, in-license or use these proprietary rights.

Our product candidates may also require specific formulations to work effectively and efficiently, and these rights may be held by others. We may develop products containing our compounds and pre-existing biotechnology and biopharmaceutical compounds. We may be unable to acquire or in-license any compositions, methods of use, processes, or other third-party intellectual property rights from third parties that we identify as necessary or important to our business operations. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all, which would harm our business. We may need to cease use of the compositions or methods covered by such third-party intellectual property rights and may need to seek to develop alternative approaches that do not infringe on such intellectual property rights which may entail additional costs and development delays, even if we were able to develop such alternatives, which may not be feasible. Even if we are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. In that event, we may be required to expend significant time and resources to develop or license replacement technology.

The licensing and acquisition of third-party intellectual property rights is a competitive area, and companies, which may be more established, or have greater resources than we do, may also be pursuing strategies to license or acquire third-party intellectual property rights that we may consider necessary or attractive in order to commercialize our product candidates. More established companies may have a competitive advantage over us due to their size, cash resources and greater clinical development and commercialization capabilities. There can be no assurance that we will be able to successfully complete such negotiations and ultimately acquire the rights to the intellectual property surrounding the additional product candidates that we may seek to acquire.

Competitors or other third parties such as chemical and reagent suppliers may infringe our patents or the patents of our current or future licensors. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that one or more of our patents is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question or for other reasons. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable, or interpreted narrowly and could put our patent applications at risk of not issuing. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business.

We may choose to challenge the patentability of claims in a third-party’s U.S. patent by requesting that the USPTO review the patent claims in an ex-parte re-examination, inter partes review or post-grant review proceedings. These proceedings are expensive and may consume our time or other resources. We may choose to challenge a third-party’s patent in patent opposition proceedings in the European Patent Office (“EPO”) or other foreign patent offices. The costs of these opposition proceedings could be substantial and may consume our time or other resources. If we fail to obtain a favorable result at the USPTO, EPO or other patent offices, we may be exposed to litigation by a third-party alleging that the patent may be infringed by our product candidates or proprietary technologies.

In addition, because some patent applications in the United States may be maintained in secrecy until the patents are issued, patent applications in the United States and many foreign jurisdictions are typically not published until 18 months after filing, and publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patent applications for technology covered by our owned and in-licensed issued patents or our pending applications, or that we or, if applicable, a licensor were the first to invent or first to file a

Interference or derivation proceedings provoked by third parties or brought by us or declared by the USPTO may be necessary to determine the priority of inventions with respect to our patents or patent applications or those of our licensors. An unfavorable outcome could result in a loss of our current patent rights and could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms or at all, or if a non-exclusive license is offered and our competitors gain access to the same technology. Litigation or interference proceedings may result in a decision adverse to our interests and, even if we are successful, may result in substantial costs and distract our management and other employees. We may not be able to prevent, alone or with our licensors, misappropriation of our trade secrets or confidential information, particularly in countries where the laws may not protect those rights as fully as in the United States.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common stock.

Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on our owned and in-licensed issued patents and patent applications are or will be due to be paid to the USPTO and foreign patent agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent application process and following the issuance of a patent. While an inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. In certain circumstances, even inadvertent noncompliance events may permanently and irrevocably jeopardize patent rights. In such an event, our competitors might be able to enter the market, which would have a material adverse effect on our business.

If we or one of our licensors initiate legal proceedings against a third-party to enforce a patent covering one of our product candidates, the defendant could counterclaim that the patent covering our product candidate, as

Our earliest patents may expire before, or soon after, our first product achieves marketing approval in the United States or foreign jurisdictions. Upon the expiration of our current patents, we may lose the right to exclude others from practicing these inventions. The expiration of these patents could also have a similar material adverse effect on our business, results of operations, financial condition and prospects. We own pending patent applications covering our proprietary technologies or our product candidates that if issued as patents are expected to expire from 2032 through 2035, without taking into account any possible patent term adjustments or extensions. However, we cannot be assured that the USPTO, EPO or other relevant foreign patent offices will grant any of these patent applications.

Changes in either the patent laws or interpretation of the patent laws in the United States or in foreign jurisdictions could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. Assuming that other requirements for patentability are met, prior to March 16, 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. On March 16, 2013, under the Leahy-Smith America Invents Act (the “America Invents Act”), the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third party was the first to invent the claimed invention. A third party that files a patent application in the USPTO on or after March 16, 2013, but before us could therefore be awarded a patent covering an invention of ours even if we had made the invention before it was made by such third party. This will require us to be cognizant of the time from invention to filing of a patent application. Since patent applications in the United States and most other countries are confidential for a period of time after filing or until issuance, we cannot be certain that we or our licensors were the first to either (i) file any patent application related to our product candidates or (ii) invent any of the inventions claimed in our or our licensor’s patents or patent applications.

The America Invents Act also includes a number of significant changes that affect the way patent applications will be prosecuted and also may affect patent litigation. These include allowing third party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTO procedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action. Therefore, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our owned or in-licensed patent applications and the enforcement or defense of our owned or in-licensed issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

In addition, the patent positions of companies in the development and commercialization of biotechnology and biopharmaceuticals are particularly uncertain. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available in certain circumstances and weakened the rights of patent owners in certain situations. This combination of events has created uncertainty with respect to the validity and enforceability of patents, once

We have limited intellectual property rights outside the United States. Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but where enforcement is not as strong as that in the United States. These products may compete with our products in jurisdictions where we do not have any issued patents and our patent claims or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of, and may require a compulsory license to, patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology and biopharmaceutical products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products against third parties in violation of our proprietary rights generally. The initiation of proceedings by third parties to challenge the scope or validity of our patent rights in foreign jurisdictions could result in substantial cost and divert our efforts and attention from other aspects of our business. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. Depending upon the timing, duration, and specifics of any FDA marketing approval of any product candidates we may develop, one or more of our U.S. patents may be eligible for limited patent term extension under the Drug Price Competition and Patent Term Restoration Action of 1984, also known as the Hatch-Waxman Amendments. The Hatch-Waxman Amendments permit a patent term extension of up to five years as compensation for patent term lost during the FDA regulatory review process. A patent term extension cannot extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only one patent may be extended and only those claims covering the approved drug, a method for using it, or a method for manufacturing it may be extended. However, we may not be granted an extension because of, for example, failure to exercise due diligence during the testing phase or regulatory review process, failure to apply within applicable deadlines, failure to apply prior to expiration of relevant patents, or

We have relied upon and plan to continue to rely upon third-party CROs to conduct, monitor and manage our clinical programs. We rely on these parties for execution of clinical trials and we manage and control only some aspects of their activities. We remain responsible for ensuring that each of our trials is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities. We and our CROs and other vendors are required to comply with all applicable laws, regulations and guidelines, including those required by the FDA and comparable foreign regulatory authorities for all of our product candidates in clinical development. If we, or any of our CROs or vendors, fail to comply with applicable laws, regulations or guidelines, the results generated in our clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. We cannot be assured that our CROs or other vendors will meet these requirements, or that upon inspection by any regulatory authority, such regulatory authority will determine that efforts, including any of our clinical trials, comply with applicable requirements. Our failure to comply with these laws, regulations or guidelines may require us to repeat clinical trials, which would be costly and delay the regulatory approval process.

If any of our relationships with these third-party CROs terminates, or they otherwise are subject to quarantines, shelter-in-place orders, shutdowns or other restrictions and must scale back their operations unexpectedly we may not be able to enter into arrangements with alternative CROs in a timely manner or do so on commercially reasonable terms. In addition, our CROs may not prioritize our clinical trials relative to those of other customers, and any turnover in personnel or delays in the allocation of CRO employees by the CRO may negatively affect our clinical trials. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, our clinical trials may be delayed or terminated, and we may not be able to meet our current plans with respect to our product candidates. CROs also may involve higher costs than anticipated, which could negatively affect our financial condition and operations.

In addition, we rely on third-party manufacturers to produce our clinical-stage product candidates, and their responsibilities often include purchasing from third-party suppliers the materials necessary to produce our product candidates for our clinical trials and regulatory approval. We expect there to be a limited number of suppliers for some of the raw materials that we expect to use to manufacture our product candidates, and we may not be able to identify alternative suppliers to prevent a possible disruption of the manufacture of our product candidates for our clinical trials, and, if approved, ultimately for commercial sale.

Although we generally do not expect to begin a clinical trial unless we believe we have a sufficient supply of a product candidate to complete the trial, any significant delay or discontinuity in the supply of a product candidate, or the raw materials or other material components in the manufacture of the product candidate, could delay completion of our clinical trials and potential timing for regulatory approval of our product candidates, which would harm our business and results of operations. We do not yet have sufficient information to reliably estimate the cost of the

In addition, our reliance on third-party manufacturers exposes us to the following additional risks:

Each of these risks could delay our clinical trials, the approval, if any, of our product candidates, or the commercialization of our product candidates or result in higher costs or deprive us of potential product revenue. In addition, we rely on third parties to perform release testing on our product candidates prior to delivery to subjects in our clinical trials. If these tests are not appropriately conducted and test data are not reliable, subjects in our clinical trials, or patients treated with our product candidates, if any are approved in the future, could be put at risk of serious harm, which could result in product liability suits.

We are exposed to the risk that our employees, independent contractors, principal investigators, CROs, consultants or vendors may engage in fraudulent or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violates: FDA regulations, including those laws requiring the reporting of true, complete and accurate information to the FDA; manufacturing standards; federal and state healthcare fraud and abuse laws and regulations; or laws that require the true, complete and accurate reporting of financial information or data. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials or creating fraudulent data in our preclinical studies or clinical trials, which could result in regulatory sanctions and serious harm to our reputation.

It is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged

We rely on third-party contract manufacturers to manufacture our product candidates for preclinical studies and clinical trials. We do not own manufacturing facilities for producing any clinical trial product supplies. There can be no assurance that our preclinical and clinical development product supplies will not be limited or interrupted, or that they will be of satisfactory quality or continue to be available at acceptable prices. The manufacturing process for a product candidate is subject to FDA and foreign regulatory authority review. Suppliers and manufacturers must meet applicable manufacturing requirements and undergo rigorous facility and process validation tests required by regulatory authorities in order to comply with regulatory standards, such as cGMPs. In the event that any of our manufacturers fails to comply with these requirements or to perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials becomes limited or interrupted for other reasons, we may be forced to manufacture the materials ourselves, for which we currently do not have the capabilities or resources, or enter into an agreement with another third party, which we may not be able to do on reasonable terms, if at all. In either scenario, our clinical trials could be delayed significantly as we establish alternative supply sources. In some cases, the technical skills or technology required to manufacture our product candidates may be unique or proprietary to the original manufacturer and we may have difficulty, or there may be contractual restrictions prohibiting us from, transferring such skills or technology to a back-up or alternative supplier, or we may not be able to transfer such skills or technology at all. Furthermore, a manufacturer may possess technology related to the manufacture of our product candidate that such manufacturer owns independently. These factors would increase our reliance on such manufacturer or require us to obtain a license from such manufacturer in order to have another third party manufacture our product candidates.

We rely on a sole supplier or, in some cases, a limited number of suppliers, for the manufacture of GRI-0621 and our other product candidates. If these suppliers are unable to supply to us in the quantities we require, or at all, or otherwise default on their supply obligations to us, we may not be able to obtain alternative supplies from other suppliers on acceptable terms, in a timely manner, or at all. Moreover, in the event any of these suppliers breach their contracts with us, our legal remedies associated with such a breach may be insufficient to compensate us for any damages we may suffer. In addition, if we are required to change manufacturers for any reason, we will be required to verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all applicable regulations and guidelines. We will also need to verify, such as through a manufacturing comparability study, that any new manufacturer or manufacturing process will produce our product candidate according to the specifications previously submitted to the FDA or another regulatory authority. We may be unsuccessful in demonstrating the comparability of clinical supplies which could require the conduct of additional clinical trials. The delays associated with the verification of a new manufacturer could negatively affect our ability to develop product candidates in a timely manner or within budget.

We expect to continue to rely on third-party manufacturers if we receive regulatory approval for GRI-0621 or any other product candidate. To the extent that we have existing, or enter into future, manufacturing arrangements with third parties, we will depend on these third parties to perform their obligations in a timely manner consistent with contractual and regulatory requirements, including those related to quality control and assurance. If we are unable to obtain or maintain third-party manufacturing for product candidates, or to do so on commercially reasonable terms, we may not be able to develop and commercialize our product candidates successfully.

A part of our strategy is to consider partnerships in indications and geographies where we believe partners can add significant commercial and/or development capabilities. Further, we do not yet have any capability for commercialization. Accordingly, we have and may in the future enter into collaborations with other companies to provide us with important technologies and funding for our programs and technology. Any future collaborations we enter into may pose a number of risks, including that collaborators have significant discretion in determining the efforts and resources that they will apply and may not perform their obligations as expected, collaborators may not provide us with timely and accurate information regarding development progress and activity under any future license agreement, which could adversely impact our ability to report progress to our investors and otherwise plan development of our product candidates, we may have disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development, might cause delays or terminations of the research, development or commercialization of product candidates, might lead to additional responsibilities for us with respect to product candidates, or might result in litigation or arbitration, any of which would be time-consuming and expensive and collaborations may be terminated by the collaborator, and, if terminated, we could be required to raise additional capital to pursue further development or commercialization of the applicable product candidates.

We face significant competition in seeking appropriate collaborators for our product candidates, and the negotiation process is time-consuming and complex. In order for us to successfully establish a collaboration for one or more of our product candidates, potential collaborators must view these product candidates as economically valuable in markets they determine to be attractive in light of the terms that we are seeking and other available products for licensing by other companies. Collaborations are complex and time-consuming to negotiate and document. If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms, or at all, we may have to curtail the development of a product candidate, reduce or delay its development program or one or more of our other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to obtain additional expertise and additional capital, which may not be available to us on acceptable terms, or at all. If we fail to enter into future collaborations or do not have sufficient funds or expertise to undertake the necessary development and commercialization activities, we may not be able to further develop our product candidates, bring them to market and generate revenue from sales of drugs or continue to develop our technology, and our business may be materially and adversely affected. Even if we are successful in our efforts to establish new strategic collaborations, the terms that we agree upon may not be favorable to us, and we may not be able to maintain such strategic collaborations if, for example, development or approval of a product candidate is delayed or sales of an approved product are disappointing. Any delay in entering into new strategic collaboration agreements related to our product candidates could delay the development and commercialization of our product candidates and reduce their competitiveness even if they reach the market.

Our ability to compete in the highly competitive biotechnology and biopharmaceutical industries depends upon our ability to attract and retain highly qualified managerial, scientific, and medical personnel. We are highly dependent on our management, scientific and medical personnel, including W. Marc Hertz, our President and Chief Executive Officer, Vipin Kumar Chaturvedi, our Chief Scientific Officer and Albert Agro, our Chief Medical Officer. The loss of the services of any of our executive officers, other key employees and other scientific and medical advisors, and our inability to find suitable replacements could result in delays in product development and harm our business.

We conduct our operations at our facility in La Jolla, California. This region is headquarters to many other biotechnology companies, biopharmaceutical companies, and research institutions. Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms or at all.

To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have provided equity awards that vest over time. The value to employees of equity awards that vest over time may be significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract more lucrative offers from other companies. Despite our efforts to retain valuable employees, members of our management, scientific and development teams may terminate their employment with us on short notice. Our key employees are at-will employees, which means that any of our employees could leave our employment at any time, with or without notice. There is no guarantee that any “key person” insurance policy we have or may enter into would adequately compensate us for the loss of any key employee. Our success also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level and senior scientific and medical personnel.

Our internal computer systems and those of any future collaborators and other contractors or consultants are vulnerable to damage from computer viruses, phishing or other unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. If such an event were to occur and cause interruptions in our operations, it could result in a disruption of our development programs and our business operations, financial loss, a loss of our trade secrets or other proprietary information and damage to our reputation and otherwise negatively impact us. For example, the loss of clinical trial data from future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed.

We rely on our third-party providers to implement effective security measures and identify and correct for any such failures, deficiencies or breaches. If we or our third-party providers fail to maintain or protect our information

Our current operations are located in our facilities in La Jolla, California. Any unplanned event, such as flood, fire, explosion, earthquake, extreme weather condition, medical epidemics, power shortage, telecommunication failure or other natural or manmade accidents or incidents that result in us being unable to fully utilize our facilities, or the manufacturing facilities of our third-party contract manufacturers, may have a material and adverse effect on our ability to operate our business, particularly on a daily basis, and have significant negative consequences on our financial and operating conditions. Some of these natural events may be exacerbated by climate change. Loss of access to these facilities may result in increased costs, delays in the development of our product candidates or interruption of our business operations. Earthquakes or other natural disasters could further disrupt our operations and have a material and adverse effect on our business, financial condition, results of operations and prospects. In addition, global climate change could result in certain types of natural disasters occurring more frequently or with more intense effects. If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as our research facilities or the manufacturing facilities of our third-party contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time.

The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which, could have a material adverse effect on our business. As part of our risk management policy, we maintain insurance coverage at levels that we believe are appropriate for our business. However, in the event of an accident or incident at these facilities, we cannot assure you that the amounts of insurance will be sufficient to satisfy any damages and losses. If our facilities, or the manufacturing facilities of our third-party contract manufacturers, are unable to operate because of an accident or incident or for any other reason, even for a short period of time, any or all of our research and development programs may be harmed.

In determining whether you should vote approve the proposals contained in this proxy statement/prospectus/information statement, you should carefully read the following risk factors in addition to the risks described above.

The combined company will require substantial additional funds to conduct the costly and time-consuming clinical efficacy trials necessary to pursue regulatory approval of any product candidates. The combined company’s future capital requirements will depend upon a number of factors, including: the number and timing of future product candidates in the pipeline; progress with and results from preclinical testing and clinical trials; the ability to manufacture sufficient drug supplies to complete preclinical and clinical trials; the costs involved in preparing, filing, acquiring, prosecuting, maintaining, and enforcing patent and other intellectual property claims; and the time and costs involved in obtaining regulatory approvals and favorable reimbursement or formulary acceptance. In addition, there is no guarantee that the Series T Warrant Exercises will take place, as they are subject to several terms and conditions in order for it to be consummated. As a result, the combined company may not have the benefit of the proceeds from the Series T Warrant Exercises thereby requiring even more capital to be raised.

Raising additional capital may be costly or difficult to obtain and could significantly dilute stockholders’ ownership interests or inhibit the combined company’s ability to achieve its business objectives. If the combined company raises additional funds through public or private equity offerings, the terms of these securities may include liquidation or other preferences that adversely the rights of its common stockholders. Further, to the extent that the combined company raises additional capital through the sale of common stock or securities convertible or exchangeable into common stock, its stockholder’s ownership interest in the combined company will be diluted. In addition, any debt financing may subject the combined company to fixed payment obligations and covenants limiting or restricting its ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If the combined company raises additional capital through marketing and distribution arrangements or other collaborations, strategic alliances, or licensing arrangements with third parties, the combined company may have to relinquish certain valuable intellectual property or other rights to its product candidates, technologies, future revenue streams, or research programs or grant licenses on terms that may not be favorable to it. Even if the combined company were to obtain sufficient funding, there can be no assurance that it will be available on terms acceptable to the combined company or its stockholders.

If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the Merger, Vallon stockholders and GRI stockholders will have experienced substantial dilution of their ownership interests in their respective companies, including as a result of the Equity Financing and Series T Warrant Exercises, without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the Merger, the Equity Financing, and the Series T Warrant Exercises.

The combined company’s business could be adversely affected by the effects of health pandemics (including the COVID-19 pandemic) or epidemics in regions where it has concentrations of clinical trial sites or other business operations, and could cause significant disruption in the operations of third-party manufacturers and CROs upon whom it relies. Such pandemics or epidemics may negatively impact productivity, disrupt business and delay clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of any restrictions and other limitations placed on its ability to conduct business in the ordinary course as a result of any such pandemic or epidemic. These and similar disruptions in operations could negatively impact the combined company’s business, operating results and financial condition.

Quarantines, stay at home and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases, may impact personnel at third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which could disrupt the combined company’s supply chain. While many of these materials may be obtained by more than one supplier, restrictions resulting from the COVID-19 pandemic may disrupt GRI’s supply chain or limit its ability to obtain sufficient materials for its product candidates.

In addition, the combined company’s clinical trials may be affected by the COVID-19 pandemic. Clinical site initiation and patient enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Some patients may not be able or willing to comply with clinical trial protocols if quarantines interrupt healthcare services, particularly surgical services. Similarly, the combined company’s ability to recruit and retain patients, principal investigators and site staff (who as healthcare providers may have heightened exposure to COVID-19) may be hindered, which would adversely affect clinical trial operations. In addition, the COVID-19 pandemic may cause interruption or delays in the operation of the FDA or other regulatory authorities which could negatively affect the combined company’s planned clinical trials.

The spread of COVID-19, which has caused a broad impact globally, may materially affect the combined company economically. While the potential economic impact brought by, and the duration of, the COVID-19 pandemic may be difficult to assess or predict, it has resulted and may in the future again result in significant disruption of global financial markets. Any such disruption, if sustained or recurrent, could make it more difficult for the combined company to access capital, which could in the future negatively affect its liquidity. In addition, a recession or market correction resulting from the spread of COVID-19 could materially affect the combined company’s business and the value of its common stock.

The market price of shares of the combined company following the Merger could be subject to significant fluctuations. Market prices for securities of biotechnology and other life sciences companies historically have been particularly volatile subject even to large daily price swings. Some of the factors that may cause the market price of shares of the combined company to fluctuate include, but are not limited to:

Moreover, the stock markets in general have experienced substantial volatility in the biotech industry that has often been unrelated to the operating performance of individual companies or a certain industry segment. These broad market fluctuations may also adversely affect the trading price of the combined company’s shares.

In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm the combined company’s profitability and reputation. In addition, such securities litigation often has ensued after a reverse merger or other merger and acquisition activity of the type engaged in here by GRI with Vallon. Such litigation, if brought, could impact negatively the combined company’s business.

Pursuant to the Merger Agreement, some of the stockholders of Vallon are not required to agree to restrictions on selling their stock. As such, the former Vallon stockholders may sell their stock of the combined company after the Merger, with the exception of officers, directors and stockholders of Vallon who entered into Lock-Up Agreements, which could lead to a decline in the market value of the combined company’s stock and could negatively impact future issuances of the combined company’s equity securities.

Following the Merger, the combined company is expected to have a public float of less than $250 million and therefore will qualify as a smaller reporting company under the rules of the SEC. As a smaller reporting company, the combined company will be able to take advantage of reduced disclosure requirements, such as simplified executive compensation disclosures and reduced financial statement disclosure requirements in its SEC filings. Decreased disclosures in the combined company’s SEC filings due to its status as a smaller reporting company may make it harder for investors to analyze its results of operations and financial prospects. We cannot predict if investors will find the combined company’s common stock less attractive if it relies on these exemptions. If some investors find its common stock less attractive as a result, there may be a less active trading market for its common stock and its stock price may be more volatile. The combined company may take advantage of the reporting exemptions applicable to a smaller reporting company until it is no longer a smaller reporting company, which status would end once it has a public float greater than $250.0 million. In that event, the combined company could still be a smaller reporting company if its annual revenues were below $100.0 million and it has a public float of less than $700.0 million.

The current expectation is that the combined company will retain its future earnings to fund the development and growth of the company’s business. As a result, capital appreciation, if any, of the shares of the combined company will be your sole source of gain, if any, for the foreseeable future.

The biotech industry has experienced a high rate of turnover in recent years. The combined company’s ability to compete in the highly competitive biopharmaceuticals industry depends upon the ability to attract, retain, and motivate highly skilled and experienced personnel with scientific, medical, regulatory, manufacturing, and management skills and experience. The combined company may not be able to attract or retain qualified personnel in the future due to the intense competition for a limited number of qualified personnel among biopharmaceutical companies. Many of the other biopharmaceutical companies against which the combined company will compete have greater financial and other resources, different risk profiles, and a longer history in the industry. The combined company’s competitors may provide higher compensation, more diverse opportunities, and/or better opportunities for career advancement. Any or all of these competing factors may limit the combined company’s ability to continue

The rules dealing with U.S. federal, state and local income taxation are constantly under review by the IRS, the U.S. Treasury Department, and other governmental bodies. Changes to tax laws (which changes may have retroactive application) could adversely affect the combined company or holders of its common stock. In recent years, many such changes have been made and changes are likely to continue to occur in the future. Future changes in tax laws could have a material adverse effect on the combined company’s business, cash flow, financial condition, or results of operations.

Prior to the Merger, there had been no public market for GRI’s common stock. An active trading market for the combined company’s shares of common stock may never develop or be sustained. If an active market for its common stock does not develop or is not sustained, it may be difficult for its stockholders to sell their shares at an attractive price or at all.

The trading market for the combined company’s common stock will be influenced by the research and reports that equity research analysts publish about it and its business. Equity research analysts may elect not to provide research coverage of the combined company’s common stock after the completion of the Merger, and such lack of research coverage may adversely affect the market price of its common stock. In the event it does have equity research analyst coverage, the combined company will not have any control over the analysts, or the content and opinions included in their reports. The price of the combined company’s common stock could decline if one or more equity research analysts downgrade its stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of the combined company or fails to publish reports on it regularly, demand for its common stock could decrease, which in turn could cause its stock price or trading volume to decline.

The combined company will have discretion over the use of proceeds from the Equity Financing and the Series T Warrant Exercises. Its stockholders may not agree with the combined company’s decisions, and its use of the

The combined company will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of Nasdaq. The Sarbanes-Oxley Act requires, among other things, that the combined company maintain effective disclosure controls and procedures and internal control over financial reporting. The combined company must perform system and process evaluation and testing of its internal control over financial reporting to allow management to report on the effectiveness of its internal controls over financial reporting in its Annual Report on Form 10-K filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. As a private company, GRI has never been required to test its internal controls within a specified period. This will require that the combined company incur substantial professional fees and internal costs to expand its accounting and finance functions and that it expends significant management efforts. The combined company may experience difficulty in meeting these reporting requirements in a timely manner.

The combined company may discover weaknesses in its system of internal financial and accounting controls and procedures that could result in a material misstatement of its financial statements. The combined company’s internal control over financial reporting will not prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

If the combined company is not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if it is unable to maintain proper and effective internal controls, the combined company may not be able to produce timely and accurate financial statements. If that were to happen, the market price of its common stock could decline and it could be subject to sanctions or investigations by Nasdaq, the SEC, or other regulatory authorities.

This proxy statement/prospectus/information statement and the documents incorporated by reference into this proxy statement/prospectus/information statement contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements related to the anticipated consummation of the proposed transactions, and other statements that are not historical facts. These forward-looking statements are based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements should not be relied upon as predictions of future events as it cannot be assured that the events or circumstances reflected in these statements will be achieved or will occur. You can identify forward-looking statements by the use of forward-looking terminology including “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “pro forma,” “should,” “will,” “would,” or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. All statements other than statements of historical fact are statements that could be deemed forward-looking statements. For example, forward-looking statements include, but are not limited to statements about:

If any of these risks or uncertainties materializes or any of these assumptions proves incorrect, the results of Vallon, GRI, or the combined company following completion of the Merger could differ materially from the forward-looking statements. All forward-looking statements in this proxy statement/prospectus/information statement are current only as of the date on which the statements were made. Except as required by law, Vallon and GRI each expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Vallon’s or GRI’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

The virtual special meeting of Vallon stockholders will be held in a virtual-only webcast at __________, Eastern Time, on ____, 2023 at __________, unless postponed or adjourned to a later date. Vallon is sending this proxy statement/prospectus/information statement to its stockholders in connection with the solicitation of proxies by Vallon’s Board for use at the Vallon virtual special meeting and any adjournments or postponements of the special meeting. This proxy statement/prospectus/information statement is first being furnished to stockholders of Vallon on or about __________, 2023.

It could become necessary to change the date, time, location and/or means of holding the Vallon virtual special meeting. If such a change is made, Vallon will announce the change in advance, and details on how to participate will be issued by press release, posted on Vallon’s website, and filed as additional proxy materials.

The purposes of the Vallon virtual special meeting are as follows:

Vallon will transact no other business at the Vallon virtual special meeting except such business as may properly be brought before the Vallon virtual special meeting or any adjournment or postponement thereof. Proposal Nos. 1 through 5 described above are collectively the “Vallon Stockholder Matters,” and Proposal Nos. 1, 2, and 4 above are collectively the “Closing Vallon Stockholder Matters.”

The Vallon Board has unanimously determined that the Vallon Stockholder Matters are fair to, advisable and in the best interests of Vallon and its stockholders. The Vallon Board recommends that Vallon’s common stockholders vote “FOR” each of Proposal Nos. 1, 2, 3, 4, and 5.

The proxy accompanying this proxy statement/prospectus/information statement is solicited on behalf of the Vallon Board for use at the Vallon virtual special meeting.

If you are a stockholder of record of Vallon as of the record date referred to above, you may vote live at the Vallon virtual special meeting or vote by proxy. Whether or not you plan to attend the Vallon virtual special meeting, Vallon urges you to vote by proxy to ensure your vote is counted. You may still attend the Vallon virtual special meeting and vote live if you have already voted by proxy. As a stockholder of record you may vote in any of the following ways:

If your shares of Vallon Common Stock are held by your broker as your nominee, that is, in “street name,” the enclosed voting instruction card is sent by the institution that holds your shares. Please follow the instructions included on that voting instruction card regarding how to instruct your broker to vote your shares of Vallon Common Stock. If you do not give instructions to your broker, your broker cannot vote your shares of Vallon Common Stock with respect to “non-routine” items, such as all of the Proposals, and, as a result, absent specific instructions from the beneficial owner of such shares, brokers are not empowered to vote those shares. Routine items are proposals considered routine under certain rules applicable to brokers on which your broker may vote shares held in “street name” in the absence of your voting instructions. On non-routine items for which you do not give your broker instructions, your shares of Vallon Common Stock will be treated as “broker non-votes.” All of the Proposals are non-routine, and accordingly, it is not anticipated that there will be any broker non-votes. If, however, brokers are entitled to vote uninstructed shares on any proposal at the special meeting, broker non-votes, if any, will be treated as shares that are present at the Vallon virtual special meeting for purposes of determining whether a quorum exists. Broker non-votes, if any, would have no effect on the outcome of Proposal Nos. 1, 4, or 5, but they would have the effect of votes against Proposal Nos. 2 and 3.

Vallon’s common stockholders of record, other than those Vallon stockholders who have executed support agreements, may change their vote at any time before their proxy is voted at the Vallon virtual special meeting in one of three ways. First, a stockholder of record of Vallon can send a written notice to the Secretary of Vallon stating that the stockholder would like to revoke its proxy. Second, a stockholder of record of Vallon can submit new proxy instructions either on a new proxy card or by telephone or via the Internet. Third, a stockholder of record of Vallon can attend the Vallon virtual special meeting and vote live. Attendance alone will not revoke a proxy. If a Vallon stockholder who owns shares of Vallon Common Stock in “street name” has instructed a broker to vote its shares of Vallon Common Stock, the stockholder must follow directions received from its broker to change those instructions.

The presence, live or represented by proxy, at the Vallon virtual special meeting of the holders of one-third of the shares of Vallon Common Stock outstanding and entitled to vote at the Vallon virtual special meeting is necessary to constitute a quorum at the meeting. Abstentions will be counted towards a quorum. Because each of the Proposals is non-routine, it is not anticipated that there will be any broker non-votes. If, however, brokers are entitled to vote uninstructed shares on any proposal at the special meeting, broker non-votes, if any, will also count toward a quorum. Approval of Proposal Nos. 2 and 3 require the affirmative vote of holders of a majority of Vallon Common Stock having voting power outstanding on the record date for the Vallon virtual special meeting. Approval of Proposal Nos. 1, 4, and 5 requires the affirmative vote of a majority of votes cast, either affirmatively or negatively, on the proposal at the Vallon virtual special meeting.

Votes will be counted by the inspector of election appointed for the Vallon virtual special meeting, who will separately count “FOR” and “AGAINST” votes, abstentions and, if applicable, broker non-votes. Abstentions will have the same effect as votes “AGAINST” Proposal Nos. 2 and 3, but will have no effect on the outcome of Proposal Nos. 1, 4, and 5. Broker non-votes (if applicable) will have no effect on the outcome of Proposal Nos. 1, 4, and 5, but would have the effect of a vote “AGAINST” Proposal Nos. 2 and 3.

Each of Proposal Nos. 1, 2, and 4 is a condition to the consummation of the Merger. Therefore, the Merger cannot be consummated without the approval of Proposal Nos. 1, 2, and 4. Proposal Nos. 3 and 5 are not a condition to the consummation of the Merger. Proposal Nos. 1, 2, and 4 are not conditioned on Proposal Nos. 3 and 5 being approved. Proposal No. 4 is conditioned upon completion of the Merger, which means that it is conditioned upon approval of each of Proposal Nos. 1 and 2.

As of January 15, 2023, the directors and executive officers of Vallon and other stockholders who signed support agreements collectively beneficially owned less than 20% of the outstanding shares of Vallon Common Stock entitled to vote at the Vallon virtual special meeting. Pursuant to the support agreements, each such director, executive officer and other signatory stockholder has agreed to be present (at the meeting or by proxy) at the Vallon virtual special meeting to vote all shares of Vallon Common Stock owned by him or her as of the record date in favor of the Vallon Stockholder Matters. Additionally, each such stockholder has agreed, solely in his, her or its capacity as a stockholder of Vallon, to vote against any competing acquisition proposal and any action, proposal or

In addition to solicitation by mail, the directors, officers, employees, and agents of Vallon may solicit proxies from Vallon’s common stockholders by personal interview, telephone, email, or otherwise. GRI will bear the costs of printing and filing this proxy statement/prospectus/information statement and proxy card. Arrangements will also be made with brokerage firms and other custodians, nominees, and fiduciaries who are record holders of Vallon Common Stock for the forwarding of solicitation materials to the beneficial owners of Vallon Common Stock. In addition, Vallon has engaged ___ to assist in the solicitation of proxies and to provide related advice and information support, for a services fee and the reimbursement of customary disbursements, which are not expected to exceed $_____ in the aggregate. 50% of the fees paid to the SEC in connection with filing the statement/prospectus/information statement, and any amendments and supplements thereto, with the SEC will be paid by each of Vallon and GRI.

As of the date of this proxy statement/prospectus/information statement, the Vallon Board does not know of any business to be presented at the Vallon virtual special meeting other than as set forth in the notice accompanying this proxy statement/prospectus/information statement. If any other matters should properly come before the Vallon virtual special meeting, it is intended that the shares represented by proxies will be voted with respect to such matters in accordance with the judgment of the persons voting the proxies.

The terms of the Merger Agreement are the result of extensive arm’s-length negotiations among members of the Vallon management team and the management team of GRI, along with their respective advisors and under the guidance of each company’s board of directors. Vallon followed a careful process assisted by experienced outside financial and legal advisors to rigorously examine potential transactions and transaction candidates through broad outreach to life sciences companies and a thorough evaluation process of prospective strategic partners. With respect to the following discussions, reference to: (i) Vallon’s management team refers to Vallon’s senior management consisting of its Chief Executive Officer, Chief Medical Officer, and Chief Financial Officer and (ii) GRI management team refers to GRI’s senior management consisting of its Chief Executive Officer, Chief Scientific Officer, and Chief Medical Officer.

In April 2022, at the direction of the Vallon Board, Vallon’s senior management commenced a strategic assessment of Vallon’s programs and strategic alternatives including exploring the possibility of in-licensing assets and technologies, a company acquisition, or a reverse merger.

In April 2022, Vallon evaluated the possible engagement of three potential investment banks, including, among others, Ladenburg. Ladenburg was chosen by the Vallon Board because of its deep expertise in mergers such as the Transaction and previous experience of Vallon’s Senior Management working with Ladenburg in a previous transaction.

On September 11, 2020, GRI presented information about its business, pipeline, and capital needs to the Investor. On September 23, 2020, GRI received a term sheet proposal from the Investor to invest in GRI in connection with a business combination with a Nasdaq or NYSE-listed company. Following negotiations, a non-binding term sheet was executed on October 27, 2020.

Between October 2020 and March 2021, GRI met with management teams from several public companies to evaluate potential reverse-merger transaction opportunities. On March 18, 2021, GRI and the Investor updated the term sheet to reflect a new expiration date with no material changes to the terms. Between March 2021 and April 2022, GRI continued to evaluate potential merger transactions and meet with management teams from potential counterparties. Throughout these discussions, the Investor and GRI were in regular contact regarding the Investor’s potential investment in GRI.

In February 2021, Vallon successfully completed an initial public offering, raising gross proceeds of $18.0 million with the intention of using the proceeds for the clinical development of ADAIR for the treatment of ADHD, ADMIR for the treatment of ADHD, and other potential products which would leverage Vallon’s abuse deterrent technology platform.

Vallon has developed ADAIR as a clinical-stage product since successfully opening an IND in July 2018. Four human clinical trials have been completed.

In late 2021, the Company hired an outside business development consultancy to identify CNS assets for potential in-licensing to add to Vallon’s product pipeline.

In January 2022, the Company engaged a business development consultant to assist in evaluating and negotiating for the acquisition of CNS assets for in-licensing and/or potential US partners for ADAIR

In March 2022, the Company initiated discussions with Company A about the potential to acquire and advance its lead asset for the treatment of a rare genetic condition. The company was initially introduced to Vallon and Ladenburg by Ofir Levi, who was a Vallon Board member at the time of introduction. Discussions took place throughout March 2022, however, Vallon chose not to advance discussions based on its assessment of challenges in the regulatory pathway for the asset.

On March 21, 2022, Vallon issued a press release announcing the topline results of its pivotal SEAL study for its lead development program, ADAIR, for the Treatment of ADHD indicating that the study had failed to achieve the primary endpoint of the study.

Starting in late March 2022, Vallon engaged regulatory and clinical consultants to discuss the findings of the SEAL study and potential paths forward for the future development of ADAIR. As a result of these discussions, Vallon’s management concluded that further advancement of the ADAIR program would likely require redesigning and conducting an additional human abuse liability study which would likely take 12–18 months following reaching an agreement with the FDA on the new study design. Therefore, in April 2022, Vallon management recommended, and the Vallon Board agreed, to focus efforts on strategic alternatives including in licensing new assets, a company acquisition, or a reverse merger.

On March 29, 2022, as part of a special Vallon Board meeting, eight different companies that were known to Vallon management were discussed as potential merger candidates and Vallon management subsequently engaged in discussions with four of those companies. In addition, as part of that discussion on March 29, 2022, Vallon management and the Vallon Board also discussed the potential to hire bankers to support a formal strategic alternative evaluation process.

From April 2022 through November 2022, Vallon engaged several companies in discussions about potentially acquiring ADAIR through an out license or asset sale. Vallon management held partnering meetings with multiple companies at the BIO International Conference in June 2022 to discuss the potential acquisition of ADAIR and/or ADMIR and its associated technology. As of December 2022, the Vallon management team has not found a potential acquirer of ADAIR.

During April 2022, Vallon management evaluated and rejected unsolicited merger or asset acquisition proposals from four additional companies based on the quality of the product pipeline, financial resources, potential for short term investment into the Company, and/or general public company readiness.

Beginning on April 5, 2022, Vallon management met with Ladenburg, with whom they had prior good experience, seeking advice on how to best explore strategic options. At the same time, Vallon management considered two other investment banks with whom management had familiarity to support exploration of strategic options.

Based on these discussions, on April 14, 2022, Vallon management recommended to the Vallon Board that the Vallon engage Ladenburg in light of the strength of their experience in these transactions, the quality of the team, and Vallon management’s previous experience with Ladenburg. The Vallon Board approved this recommendation.

On April 19, 2022, Vallon engaged Ladenburg to act as a strategic advisor to Vallon. It was determined that Ladenburg would manage the process to find a merger counterparty, or a counterparty interested in acquiring Vallon’s assets. Ladenburg immediately began its broad outreach in April 2022, reaching out to companies that may be interested in acquiring Vallon as a whole and/or its assets, as well as counterparties interested in a reverse merger placing a premium on Vallon’s public listing and assets.

On April 22, 2022, the Company announced its engagement of Ladenburg and its plans to streamline operations in order to preserve its capital and cash resources, while continuing to evaluate the best path forward for the ADAIR program. This included reducing one full-time position, two contract positions, and a reduction in activities of other contractors and consultants.

From April 22, 2022 through mid-May 2022, in the strategic process to find a merger counterparty, Ladenburg contacted approximately 244 companies on behalf of Vallon. Ladenburg made outreach to a broad selection of private and public companies in the life sciences industry. These companies consisted of private companies in the IPO queue, private companies not in the IPO queue, private companies that had failed in earlier attempts at an IPO, publicly traded ex-US companies seeking a Nasdaq listing and also public companies in the US that were believed to have a strategic fit with Vallon or were seeking a merger transaction as a de facto financing event.

On April 29, 2022, Ladenburg contacted GRI as part of its outreach efforts on behalf of Vallon. Between April 29, 2022 and December 10, 2022, GRI and the Investor discussed the opportunity for GRI to pursue a potential reverse-merger transaction with Vallon and the terms of the Investors potential investment in GRI, including the bridge and primary equity investment amounts, terms specific to the pricing, warrant agreements, lock-up agreements, budgets, and use of proceeds.

In evaluating potential merger partners, the following criteria were considered: little financing risk at the closing, strong product pipeline with multiple mid-to-late or commercial-stage assets, strong news flow, experienced management team, high-quality existing investors or new investors willing to support a transaction, clean capital structure (no debt or clear path to restructuring current debt), and audited financial statements or ability to produce audited financial statements for last two fiscal years.

On May 6, 2022, at a regularly scheduled Vallon Board meeting, Vallon management provided an update to the Vallon Board on the status of the merger outreach process which was currently underway as well as the status of discussions with two other companies with which Vallon had previously been in discussions about the potential for a merger or asset acquisition.

On May 15, 2022, the Company completed a registered direct financing that raised $3.9 million in order to provide additional funding to fully support a thorough and rigorous reverse merger evaluation process and create a stronger balance sheet as potential partners were evaluating Vallon.

On May 16, 2022, at a special meeting of the Vallon Board, Vallon management provided an update of the final details of the registered direct financing and the status of and description of the merger proposals that Ladenburg had received to date or were expecting to receive in the coming days.

On May 18, 2022, Vallon management, Vallon business development advisors, and Vallon legal counsel, Thompson Hine LLP (“Thompson Hine”), met in New York and by videoconference to review formal merger proposals that had been submitted to Vallon by 15 companies as a result of Ladenburg’s broad outreach. Five finalists were invited to present to the Vallon executive team, business development advisors, legal counsel, Vallon Board and Ladenburg on May 23, 2022, May 25, 2022, and May 26, 2022.

On May 26, 2022, the Vallon Board selected two candidate companies to move forward in the merger process: GRI and Company B (the “Finalists”). Diligence and term sheet negotiations began with the Finalists and continued over the course of the next several weeks including access to confidential data rooms, formal diligence inquiries and followup, and technical assessment by Vallon management and advisors. At this point in time, GRI initially proposed a valuation of $107.5 million, inclusive of proceeds from the equity financing concurrent with the Merger. In GRI’s initial proposal, GRI anticipated the continued development of its entire clinical development pipeline, including three main later-stage programs as well as a diversified pipeline of additional follow-on programs.

On May 27, 2022, Vallon introduced Ladenburg to Company A (described above under product licensing efforts) in order to determine if Company A might be open to a merger/acquisition and might be a viable addition to the Finalists selected on May 26, 2022.

On June 9, 2022, at a special meeting of the Vallon Board was held during which Vallon management presented an update of the merger evaluation process and outlined pros and cons of a potential merger with Company A, Company B, or GRI.

Between May 27, 2022, and June 10, 2022, GRI negotiated term sheets regarding the Bridge Financing and Equity Financing with the Investor and on June 10, 2022 GRI and the Investor executed such term sheets.

On June 13, 2022, a draft term sheet was submitted to Company A, however, discussions were discontinued and a term sheet was not signed.

On June 14, 2022, Vallon’s CEO met with GRI’s CEO at their headquarters near San Diego, California during the BIO International convention.

On June 23, 2022, a special meeting of the Vallon Board was held during which Vallon management presented an update to the Vallon Board on the merger process and discussions with Company A, Company B, and GRI. Vallon management recommended and the Vallon Board agreed that Company B should be the priority partner for merger based on its development pipeline and expected near term milestones, commitment to a private placement investment from multiple existing institutional investors, and willingness to pursue a sign and close merger structure.

On June 25, 2022, a term sheet was signed with Company B. Discussions and due diligence with Company B continued until August 2022, however, discussions were discontinued in mid-August because Company B was not able to secure commitments to a private placement investment at the levels agreed upon in the term sheet which Vallon determined would leave a merger company underfunded to pursue their development programs as a public company.

For several reasons, including discussions with regulatory consultants leading Vallon to have greater confidence in Company A’s ability to execute on its development program, Vallon re-engaged in discussions with Company A and submitted a revised term sheet to Company A on September 2, 2022, however, the companies were not able to reach a mutual agreement on the terms of the merger, in particular the post-merger ownership split and Vallon pre-money valuation, and discontinued discussions in mid-September 2022

In mid-September 2022, Ladenburg and Vallon re-engaged in discussions with GRI. Over the next two weeks, Vallon’s management and other advisors reinitiated and conducted additional due diligence on GRI through access to a confidential data room, review of the scientific literature, phone calls and e-mail correspondence between Vallon and GRI, review of legal, financial, budgetary and other diligence materials, making diligence inquiries and follow-ups and assessments of the competitive landscape.

On September 23, 2022, a special meeting of the Vallon Board was held during which Managementmanagement provided andan update on the merger process including an update on discussions with GRI outlining what had changed since GRI’s original proposal. These changes included (i) a clarification and revision to the clinical development program with a revised focus on GRI-0621 for pulmonary fibrosis as the lead program, (ii) a revised budget reflecting the potential achievement of certain milestones, which included conducting a Phase 2A trial for GRI‑0621, opening an IND for GRI‑0803, conducting a Phase 1 trial of GRI‑0803 and that could achieve major milestones with less pending than originally proposed,delayed spending on other potential pipeline projects, (iii) a willingness to revise relative valuation and ownership in the merged company, and (iv) a willingness to complete a merger even if Vallon had a negative cash balance upon close after accounting for transaction costs. Vallon management recommended, and the Vallon Board approved finalizing and signing a term sheet with GRI.

On September 29, 2022, after discussions regarding the revised development program for GRI’s pipeline and further exploration of the terms of their committed investment from Altium, the companies signed a term sheet. GRI’s proposed equity value was $84.0 million which included a $25.0 million pre-closing financing. The decrease in valuation from $107.5 million was primarily attributed to the reprioritization of capital raised to fund GRI’s lead programs while pausing development and associated spending on less advanced pipeline assets.

Between September 21,2022, and October 27, 2022, GRI and the Investor re-negotiated certain aspects of the Investor’s potential investment in GRI, including pre-money valuation, investment amount, timing, and a leak-out agreement. On October 27, 2022, GRI and the Investor executed updated term sheets with respect to the Bridge Financing and the Equity Financing.

During October and November 2022, Vallon management, legal counsel, and IP counsel conducted additional due diligence assessment of GRI through access to a confidential data room, due diligence inquiries, and follow-up.

On October 14, 2022, Vallon provided to GRI a draft definitive merger agreement. Over the ensuing weeks, GRI and Vallon exchanged markups to the draft definitive merger agreement, disclosure schedules, and support

On November 2, 2022, the Investor provided drafts of the Bridge Financing transaction documents to GRI.

On November 3, 2022, a regularly scheduled Vallon Board meeting was held, during which Vallon management provided an update on the merger process, the status of negotiations of the definitive merger agreement with GRI, and an outlined of the projected timetable to the signing and closing of a merger between Vallon and GRI.

On November 4, 2022, the Investor provided drafts of the Equity Financing transaction documents to GRI. Between November 2, 2022 and December 13, 2022, GRI (in consultation with Vallon and its representatives and advisors) and the Investor and their respective representatives and advisors negotiated the terms and exchanged markups of the Bridge Financing and Equity Financing transaction documents. These negotiations addressed terms including certain aspects of the amounts, timing, and contingencies of certain funding mechanics, representations and warranties, and lock-up agreements. The negotiations with the Investor did not impact the relative valuations of GRI or Vallon for purposes of determining the Exchange Ratio under the Merger Agreement.

Between October 14, 2022 and December 6, 2022, Vallon and GRI and their respective representatives and advisors negotiated terms and exchanged markups of the Merger Agreement and related transaction documents. These negotiations addressed terms including the formula for the Exchange Ratio, including the Nasdaq Adjustment, which is intended to reduce the risk that the combined company would fail to satisfy certain Nasdaq initial listing standards.

On December 7, 2022, the Vallon Board held a meeting in which representatives of management, counsel and Ladenburg were present. At the meeting, Vallon’s counsel, Thompson Hine, engaged in further discussion with the Vallon Board on key provisions of the transaction documents that had been previously discussed and reviewed the fiduciary duties of directors in connection with the transaction. At this meeting, representatives of Ladenburg discussed the proposed transaction and went over various analyses and other materials that were presented to the Vallon Board, and then delivered to the Vallon Board its opinion, to the effect that and subject to the various assumptions, qualifications and limitations set forth in its opinion, as of that date, the consideration to be paid in the transaction was fair, from a financial point of view, to the Vallon stockholders. The Vallon Board engaged in extensive discussions relating to GRI, its business, the Altium investment, and the terms of the proposed transaction.

On December 13, 2022, the Vallon Board held another meeting in which representatives of management, counsel and Ladenburg were present. After updates to certain of the deal terms and the fairness opinion of Ladenburg was presented, the Vallon Board engaged in discussion and subsequently unanimously determined that it was advisable and fair to, and in the best interests of the Company and the Company’s stockholders for the Company to enter into the Merger Agreement, and, accordingly, the Vallon Board approved the Merger Agreement and the proposed transaction. GRI’s final valuation subject to the Nasdaq Adjustment, was negotiated to $49.0 million based upon Altium’s investment(which was consistent with the Investor’s pre-money valuation of GRI used in connection with the determination of the number of Bridge Warrant shares originally issued by GRI in the Bridge Financing) and the negotiated ownership percentagepercentages of 83% for the equityholders of GRI (including the Investor) and 17% for the equityholders of Vallon immediately after the Closing, and after giving effect to the Equity Financing but before giving effect to the issuance of the Series A-1, A-2, and T Warrants (subject to the Nasdaq Adjustment), which the Vallon Board had agreed upon.

Under the Merger Agreement, Merger Sub, a wholly-owned subsidiary of Vallon formed in connection with the Merger, will merge with and into GRI, with GRI surviving as a wholly-owned subsidiary of Vallon. Substantially concurrent with the completion of the Merger, Vallon will be renamed “GRI Bio, Inc.” and expects to trade on Nasdaq under the symbol “GRI.”

At a meeting held on December 13, 2022, among other things, the Vallon Board unanimously (i) determined that the Merger and the transactions contemplated by the Merger are fair to, advisable and in the best interests of Vallon and its stockholders, (ii) approved and declared advisable the Merger Agreement and the transactions contemplated by the Merger and Merger Agreement, including the authorization and issuance of shares of Vallon Common Stock to the stockholders of GRI pursuant to the terms of the Merger Agreement, the change of control of

The Vallon Board considered the following reasons in reaching its conclusion to approve the Merger Agreement and the Merger, all of which the Vallon Board viewed as supporting its decision to approve the business combination with GRI:

The Vallon Board also reviewed various reasons impacting the financial condition, results of operations and prospects of Vallon, including:

The Vallon Board also reviewed the terms and conditions of the Merger Agreement and related transactions, as well as the safeguards and protective provisions included therein intended to mitigate risks, including:

In the course of its deliberations, the Vallon Board also considered a variety of risks and other countervailing factors related to entering into the Merger, including:

The foregoing information and factors considered by the Vallon Board are not intended to be exhaustive but are believed to include all of the material factors considered by the Vallon Board. In view of the wide variety of reasons considered in connection with its evaluation of the Merger and the complexity of these matters, the Vallon Board did not find it useful to attempt, and did not attempt, to quantify, rank or otherwise assign relative weights to these

The following discussion sets forth material factors considered by the GRI Board, in consultation with GRI’s senior management, financial advisors and legal counsel, in reaching its determination to authorize the Merger Agreement and approve the Merger; however, it may not include all of the factors considered by the GRI Board. In light of the number and wide variety of factors considered in connection with its evaluation of the Merger Agreement and the Merger, the GRI Board did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its determination. The GRI Board viewed its position and determinations as being based on all of the information available and the factors presented to and considered by it.

The GRI Board reviewed a significant amount of information and considered a number of factors, including, among others: 

The GRI Board also considered a number of uncertainties and risks in its deliberations concerning the Merger and the other transactions contemplated by the Merger Agreement, including the following: 

The GRI Board weighed the benefits, advantages and opportunities of a potential transaction against the uncertainties and risks described above, as well as the possible diversion of management attention for an extended period of time. After taking into account these and other factors, the GRI Board approved and authorized the Merger Agreement and the transactions contemplated thereby, including the Merger.

As stated above, pursuant to an engagement letter dated April 19, 2022, Vallon retained Ladenburg to act as a financial advisor in connection with the Merger and to render an opinion to the Vallon Board as to the fairness of the Exchange Ratio, from a financial point of view, to the holders of Vallon Common Stock. On December 13, 2022, at the request of the Vallon Board, Ladenburg rendered its oral opinion to the Vallon Board, subsequently confirmed in writing in the Initial Opinion, that as of the date of such Initial Opinion and based upon the various assumptions, qualifications and limitations set forth therein, the Exchange Ratio (assumed, at the time, to be 0.6819) was fair, from a financial point of view, to the holders of Vallon Common Stock.

Recognizing that the post-Closing ownership split was subject to change after the date of the Initial Opinion based upon the future share price of Vallon’s Common Stock, it was contemplated that if there was a material change to the post-Closing ownership split and the Exchange Ratio, including a change resulting from the Nasdaq Adjustment set forth in the Merger Agreement, Ladenburg would deliver a new opinion at that later point in time. The Vallon Board agreed to this approach given that it had the assurance from Ladenburg that it would receive a

In connection with the Opinion, Ladenburg took into account an assessment of general economic, market and financial conditions as well as its experience in connection with similar transactions and securities valuations generally and, among other things:

In conducting its review and arriving at its Opinion, Ladenburg has, with Vallon’s consent, assumed and relied, without independent verification or investigation, upon the accuracy and completeness of all financial and other information provided to or discussed with Ladenburg by Vallon and GRI, respectively (or their respective employees, representatives or affiliates), or which is publicly available or was otherwise reviewed by Ladenburg. Ladenburg has not undertaken any responsibility for the accuracy, completeness or reasonableness of, or

Ladenburg expressly disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting it’s Opinion of which Ladenburg become aware after the date hereof. Ladenburg has assumed there were no material changes in the assets, liabilities, financial condition, results of operations, business or prospects of Vallon or GRI since the date of the last financial statements made available to Ladenburg. Ladenburg has not obtained any independent evaluations, valuations or appraisals of the assets or liabilities of Vallon or GRI, nor has Ladenburg been furnished with such materials. In addition, Ladenburg has not evaluated the solvency or fair value of Vallon or GRI under any state or federal laws relating to bankruptcy, insolvency or similar matters. The Opinion

Ladenburg did not consider any potential legislative or regulatory changes currently being considered or recently enacted by the United States or any foreign government, or any domestic or foreign regulatory body, or any changes in accounting methods or generally accepted accounting principles that may be adopted by the Securities and Exchange Commission, the Financial Accounting Standards Board (“FASB”), or any similar foreign regulatory body or board. For purposes of rendering its Opinion Ladenburg assumed in all respects material to its analysis, that the representations and warranties of each party contained in the Merger Agreement were true and correct, that each party would perform all of the standards of the covenants and agreements required to be performed by it under the Merger Agreement and that all conditions to the consummation of the Merger would be satisfied without waiver or amendment of any term or condition thereof. Ladenburg also assumed that all governmental, regulatory and other consents and approvals contemplated by the Merger Agreement or otherwise required for the transactions contemplated thereby would be obtained and that in the course of obtaining any of those consents no restrictions would be imposed or waivers made that would have an adverse effect on Vallon, GRI or the contemplated benefits of the Merger. Ladenburg assumed that the Merger would be consummated in a manner that complied with the applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and all other applicable federal and state statutes, rules and regulations. Ladenburg noted that the Vallon Board had informed it, and it had assumed, that the Merger was intended to constitute a reorganization within the meaning of Section 368(a) of the Code and the Treasury Regulations promulgated thereunder.

Ladenburg’s Opinion was intended for the benefit and use of the Vallon Board in its consideration of the financial terms of the Merger and, except as set forth in Ladenburg’s engagement letter with Vallon, dated as of April 19, 2022 (the “Engagement Letter”), may not be used for any other purpose or reproduced, disseminated, quoted or referred to at any time, in any manner or for any purpose without Ladenburg’s prior written consent, unless pursuant to applicable law or regulations or required by other regulatory authority by the order or ruling of a court or administrative body, except that the Opinion may be included in its entirety in any filing related to the Merger to be filed with the Securities and Exchange Commission and the proxy statement to be mailed to the holders of Vallon Common Stock.

Ladenburg’s Opinion does not constitute a recommendation to the Vallon Board of whether or not to approve the Merger or to any holder of Vallon Common Stock or any other person as to how to vote with respect to the Merger or to take any other action in connection with the Merger or otherwise. The Opinion does not address Vallon’s underlying business decision to proceed with the Merger or the relative merits of the Merger compared to other alternatives available to Vallon. Ladenburg expressed no opinion as to the prices or ranges of prices at which shares or the securities of any person, including Vallon, will trade at any time, including following the announcement or consummation of the Merger. Ladenburg was not requested to opine as to, and the Opinion does not in any manner address, the amount or nature of compensation to any of the officers, directors or employees of any party to the Merger, or any class of such persons, relative to the compensation to be received by the holders of Vallon Common Stock in connection with the Merger or with respect to the fairness of any such compensation. The issuance of the Opinion was approved by a fairness opinion committee of Ladenburg.

The following is a summary of the principal financial analyses performed by Ladenburg to arrive at its Opinion. Some of the summaries of financial analyses include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data set forth in the tables without

The Board of Directors has requested Ladenburg’s opinion as to the fairness, from a financial point of view and as of the date hereof, of the Exchange Ratio to the holders of Vallon Common Stock. For the purposes of Ladenburg’s Opinion, the Board of Directors has instructed Ladenburg to assume that the Vallon Valuation is $5 million. Based on this assumption, following the consummation of the Merger, the holders of Company Outstanding Shares immediately prior to the Merger are expected to own approximately 96.7% of the fully-diluted shares of Vallon Common Stock outstanding immediately following the Merger and the holders of Vallon Outstanding Shares immediately prior to the Merger are expected to own approximately 3.3% of the aggregate number of outstanding shares of Vallon Common Stock immediately after the Closing, in each case as calculated on an adjusted fully diluted treasury stock method basis and after giving effect to the Equity Financing and to the issuance of the Series A-1, A-2, and T Warrants.

Ladenburg derived an implied valuation for GRI by adding the $15.6 million Company Financing (including the original issue discount from the bridge note as negotiated in the transaction) to the negotiated GRI equity value of $70.0 million for a total GRI valuation of $85.6 million.

Based on its experience and professional judgment and using financial screening sources and databases to find companies that share similar business characteristics to GRI within the biopharmaceutical industry, Ladenburg selected financial data of 20 publicly traded companies (referred to as the “Selected Publicly Traded Companies”). Each of the Selected Publicly Traded Companies had a lead candidate in the Phase 2 stage of clinical development and focused on the inflammation / fibrosis / autoimmune space. Although the companies referred to below were used for comparison purposes, none of those companies is directly comparable to GRI. Accordingly, an analysis of the results of such a comparison is not purely mathematical but instead involves complex considerations and judgments concerning differences in historical and projected financial and operating characteristics of the selected

The Selected Publicly Traded Companies had implied total enterprise values between negative $19.5 million and $5.3 billion. Ladenburg derived a median implied total enterprise value of $161.6 million for the Selected Publicly Traded Companies. Using the 25th percentile and the 75th percentile of the implied total enterprise values, Ladenburg then calculated a range of implied total equity values for GRI (by adding an estimated $14.8 million in proceeds at closing inclusive of the Altium Concurrent Investment Amount and the Bridge Loan Cash Amount), which was $41.8 million to $673.0 million. This compares to GRI’s implied equity value as per the Merger

Ladenburg reviewed certain publicly available information for the IPOs of 9 biopharmaceutical companies focused on inflammation / fibrosis / autoimmune diseases which have completed an IPO since January 2018 and whose lead product at the time of IPO was in a Phase 2 stage of clinical development. Although the companies referred to below were used for comparison purposes, none of these companies are directly comparable to GRI. Accordingly, an analysis of the results of such a comparison is not purely mathematical, but instead involves complex considerations and judgments concerning differences in historical and projected financial and operating characteristics of the selected companies below. These companies, which are referred to as the “Selected Precedent IPO Companies,” were:

The total enterprise value at IPO is defined as the pre-money equity value plus indebtedness, liquidation value of preferred stock and non-controlling interest, minus cash and cash equivalents at the time of its IPO. The Selected Precedent IPO Companies had total enterprise values between $40.0 million and $889.1 million. Ladenburg derived a median total enterprise value of $189.2 million for the Selected Precedent IPO Companies. Using the 25th percentile and the 75th percentile of the implied total enterprise values, Ladenburg then calculated a range of implied total equity values for GRI (by adding an estimated $14.8 million in proceeds at closing inclusive of the Altium Concurrent Investment Amount and the Bridge Loan Cash Amount), which was $195.0 million to $264.7 million. This compares to GRI’s implied equity value as per the Merger Agreement of approximately $85.6 million (inclusive of the Altium Concurrent Investment Amount and Bridge Loan Principal Amount).

Ladenburg reviewed the financial terms, to the extent the information was publicly available, of the 11 most recent qualifying merger transactions of companies in the biopharmaceutical industry, which had a lead candidate in the Phase 2 stage of clinical development and focused on the inflammation / fibrosis / autoimmune space (referred to as the “Selected Precedent M&A Transactions”). Although the precedent transactions referred to below were used for comparison purposes, none of the target companies is directly comparable to GRI. Accordingly, an analysis of the results of such a comparison is not purely mathematical, but instead involves complex considerations and judgments concerning differences in historical and projected financial and operating characteristics of the companies involved and other factors that could affect the merger value of such companies and GRI to which they are being compared. Ladenburg reviewed the total enterprise values of the target companies (including downstream milestone payments). These transactions, including the date each was closed, were as follows below.

The Selected Precedent M&A Transactions had total implied enterprise values between $22.0 million and $723.6 million. Ladenburg derived a median total enterprise value of $325.0 million for the Selected Precedent M&A Transactions. Using the 25th percentile and the 75th percentile of the implied total enterprise values, Ladenburg then calculated a range of implied total enterprise values for GRI (by adding an estimated $14.8 million in proceeds at closing inclusive of the Altium Concurrent Investment Amount and the Bridge Loan Cash Amount), which was $134.8 million to $417.3 million. This compares to GRI’s implied equity value as per the Merger Agreement of approximately $85.6 million (inclusive of the Altium Concurrent Investment Amount and Bridge Loan Principal Amount).

Ladenburg estimated a range of total enterprise values for GRI based upon the present value of GRI’s estimated after-tax unlevered free cash flows. In order to estimate the after-tax unlevered free cash flows of GRI, Ladenburg reviewed and analyzed the revenue and expense projections for GRI as prepared by the management of Vallon.GRI in late September 2022, which were then reviewed and further revised by Vallon management team. These projections were modified by Vallon in mid-October 2022 after reviewing and modifying certain assumptions and projections that GRI had provided to Vallon in order for the Vallon management to be comfortable with a forecast to support a discounted cash flow analysis. The projections, as modified by the Vallon management team in mid-October 2022, still reflect the Vallon management team’s current views on the future performance of GRI. These projections were built on certain assumptions, including that timing of approval of GRI-0621 and GRI-0803 would be 2029 and 2033, respectively, that commercial availability would be in the same year as approval, that peak market share would be less than 20% for each product after considering the competitive landscape, that market growth would be equal to the rate of population growth, and the assumptions discussed below.

Vallon provided certain assumptions that supported the market opportunity including market penetration data and launch years for GRI-0621 and GRI-0803. Only the US and European markets were considered in the financial analysis or projections by Vallon. GRI’s remaining programs GRI-0729 and GRI-0124 were excluded from the financial analysis or projections based on the expected development plans of the combined company. The yearly revenue assumptions were derived by Vallon based on their assumptions regarding the potential market for GRI-0621 and GRI-0803, an analysis of the competitive landscape and data from various databases. After arriving at a set of projections, Vallon further adjusted downward the revenue assumptions in the years 2029 to 2038 by 17.5% to account for the probability of success given the clinical phase of development of Vallon’s products. This adjustment was determined by analyzing the “Estimation of clinical trial success rates and related parameters” white

In performing its discounted cash flow analysis, Ladenburg utilized discount rates ranging from 16.8% to 21.8%, which were selected based on the capital asset pricing model and the estimated weighted average cost of capital of the Selected Publicly Traded Companies, which was approximately 19.3%. This discounted cash flow analysis assumed that GRI will have no terminal value after 2038, does not take into account GRI’s available net operating losses, if any, and assigns no value to revenues beyond 2038.

Using a range of discount rates of 16.8% to 21.8%, Ladenburg then calculated a range of implied total equity values for GRI (by adding an estimated $14.8 million in proceeds at closing inclusive of the Altium Concurrent Investment Amount and the Bridge Loan Cash Amount), which was $72.5 million to $146.0 million. This compares to GRI’s implied equity value as per the Merger Agreement of approximately $85.6 million (inclusive of the Altium Concurrent Investment Amount and Bridge Loan Principal Amount).

The following table presents a summary of the Vallon-prepared GRI financial projections that were made available to Ladenburg and the Vallon Board. The inclusion of information about these projections in this proxy statement/ prospectus/information statement should not be regarded as an indication that Vallon or any other recipient of this information considered, or now considers, this information to be predictive of actual future results.

Neither Vallon nor GRI, as a matter of course, publicly discloses forecasts, internal projections as to future performance, revenues, earnings or other results of operations due to the inherent unpredictability and subjectivity of underlying assumptions and projections.

The projections were prepared for internal use, and were not prepared with a view toward public disclosure, or with a view toward compliance with published guidelines of the SEC regarding projections, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or GAAP. Neither GRI nor GRI's or Vallon's independent registered public accounting firm, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the prospective financial information included below, or expressed any opinion or any other form of assurance with respect thereto or the achievability of the results reflected in such projections, and none of the foregoing assumes any responsibility for such information.