| Basis of preparation Statement of compliance | 2. Basis of preparation Statement of compliance These condensed consolidated interim financial
statements as of June 30, 2022 and for the six months ended June 30, 2022 have been prepared in accordance with International Accounting
Standard 34 Interim Financial Reporting These condensed consolidated interim financial
statements include all adjustments that are necessary to fairly state the results of the interim period. The Group believes that the disclosures
are adequate to make the information presented not misleading. Interim results are not necessarily indicative of results to be expected
for the full year. Management does not consider the business to be seasonal or cyclical. Certain information and footnote disclosures normally
included in consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”),
as issued by the International Accounting Standards Board, have been condensed or omitted as permitted by IAS 34. The condensed consolidated
statement of financial position as of December 31, 2021 was derived from the audited consolidated financial statements. The interim condensed
consolidated financial statements were authorized for issuance by the Company’s Audit Committee on November 28, 2022 Functional and reporting currency These interim condensed consolidated financial
statements are presented in Swiss Francs (“CHF”), which is the Company’s functional currency (“functional currency”)
and the Group’s reporting currency. Significant accounting policies The accounting policies applied by the Group in
these condensed consolidated interim financial statements are the same as those applied by the Group in its audited consolidated financial
statements as of and for the year ended December 31, 2021 and have been applied consistently to all periods presented in these condensed
consolidated interim financial statements, unless otherwise indicated. New standards, amendments and interpretations adopted by the Group
Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets - Onerous contracts – Costs of fulfilling a Contract
Amendments to IFRS 3 Business Combinations - Reference to the Conceptual Framework Annual Improvements to IFRS Standards 2018-2020 – Amendments
to IFRS 1, IFRS 9, IFRS 16, IAS 41 The application of these new standards, amendments
to standards and interpretations does not have material impact on the financial statements of the Group. Convertible loan The convertible loan obtained from FiveT Investment
Management Ltd. (see Note 5) is classified as a hybrid contract containing a host that is a financial liability and embedded derivatives
separated from the host and measured at fair value with all changes in fair value recognized in profit or loss. The embedded financial
derivatives are valued by an independent consultant initially and at period end at fair value, applying a simulation-based valuation approach. The carrying amount of the host contract at initial
recognition is the difference between the carrying amount of the hybrid contract and the fair value of the embedded derivatives. The host
is then subsequently measured at amortized cost, using the effective interest rate method. Intangible assets As of June 30, 2022, Intangible assets amounted
to CHF 15,851,501, compared to CHF 14,314,877 as of December 31, 2021. The increase is due to the capitalization of development costs
related to the AM-125 program. Going concern The Company has incurred recurring losses and
negative cash flows from operations since inception and it expects to generate losses from operations for the foreseeable future primarily
due to research and development costs for its potential product candidates. The Company believes its cash of CHF 372,647 at June 30, 2022,
together with revenues from Bentrio product sales, the receipt of grants, proceeds from the issuance of Common Shares under the A.G.P.
Sales Agreement and the 2020 Commitment Purchase Agreement of USD 2.2 million up to the reporting date as well as from further issuances
under the A.G.P. Sales Agreement and the 2022 Commitment Purchase Agreement, and the USD 2.2 million upfront payment it expects to receive
under the Share Purchase Agreement and Option Agreement, dated October 19, 2022 and amended on November 23, 2022 (as discussed below),
will fund the Company’s projected operations through the fourth quarter of 2022. We expect that our funding requirements for operations
and financial obligations until the end of 2023 will amount to CHF 22.0 to 25.0 million and to CHF 17.0 to 20 million if the convertible
loan provided by FiveT will be converted into Common Shares. To the extent that we will be unable to generate sufficient cash proceeds
from the planned divestiture or spin-off of our legacy assets or other partnering activities, we will need substantial additional financing
to meet these funding requirements both through the fourth quarter of 2022 and thereafter. These factors raise substantial doubt about
the Company’s ability to continue as a going concern. The financial statements have been prepared on a going concern basis, which
contemplates the continuity of normal activities and realisation of assets and settlement of liabilities in the normal course of business.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty. As is often the case with drug development companies,
the ability of the consolidated entity to continue its development activities as a going concern is dependent upon it deriving sufficient
cash from investors, from licensing and partnering activities, in particular the intended divestiture or spin-off of the Company’s
legacy assets in the fields of inner ear therapeutics and OTC consumer health products, and from other sources of revenue such as grant
funding. On October 21, 2022, the Company announced the
sale of (i) 90% of the share capital of its subsidiary Zilentin AG and (ii) an option to purchase the subsidiaries Auris Medical AG, Otolanum
AG, Auris Medical Ltd. and Auris Medical Pty Ltd (the “Additional Subsidiaries”) – representing the Company’s
inner ear therapeutic assets – to a European family office (the “Buyer”) for a cash consideration of USD 1 million each,
for a total of USD 2 million (the “Zilentin Transaction”). Under the terms of the option agreement (the “Option”)
Zilentin will be entitled to purchase the Additional Subsidiaries for an upfront payment of USD 25. million plus potential milestone royalty
payments. The Option may be exercised for 30 days from October 19, 2022 (the “Closing Date”); beyond that period, Zilentin
will have a right of first refusal to acquire these companies until year end with the upfront payment increasing by USD 1 million per
month. There is no assurance that Buyer will exercise its option, triggering the additional upfront payment of USD 25 million. Due to
a delay in the closing of the Zilentin Transaction, the Company and the Buyer agreed on November 23, 2022 to amend their agreement, extending
the Closing Date to December 15, 2022 at the latest, increasing the share capital of Zilentin AG to be sold under the transaction from
90 to 100% and raising the amount of the initial payment for the purchase of Zilentin and for the option to purchase the Additional Subsidiaries
from USD 2 million to USD 2.2 million. The directors have considered the cash flow forecasts
and the funding requirements of the business and continue to explore grant funding, licensing opportunities and equity investment opportunities
in the Company. Apart from the inner ear therapeutic assets, the Company intends to spin off or divest also its OTC consumer health products
business, in order to focus on the development of its OligoPhore/SemaPhore RNA delivery platform. At the date of issuing these financial
statements, such plans have not yet been realized. Accordingly, the directors have prepared the financial
statements on a going concern basis. Should the above assumptions not prove to be appropriate, there is material uncertainty whether the
consolidated entity will continue as a going concern and therefore whether it will realize its assets and extinguish its liabilities in
the normal course of business and at the amounts stated in these financial statements. The Company plans to secure additional capital
in the future through equity or debt financings, partnerships, collaborations, or other sources to carry out the Company’s planned
development activities. If additional capital is not available when required, the Company may need to delay or curtail its operations
until such funding is received. Various internal and external factors will affect whether and when the Company’s product candidates
become approved for marketing and successful commercialization. The regulatory approval and market acceptance of the Company’s product
candidates, length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of
the approval process will materially affect the Company’s financial condition and future operations. Such matters are not within
the control of the Company and thus all associated outcomes are uncertain. Accounting for divestiture From the date of entering into the agreement for
the disposal of Zilentin and the sale of the purchase option for the Additional Subsidiaries, the respective assets and liabilities are
classified as held for sale and measured at the lower of carrying amount and fair value less costs to sell. As the agreement was entered
into after June 30, 2022, and consequently the criteria for held for sale were met only after the reporting period, the disposal group
is presented in the subsequent events and not yet as held for sale in the financial statements. The assets held for sale mainly comprise
capitalized development costs related to the AM-125 program, which amounted to CHF 12.0 million as of June 30, 2022. Adjustment of June 30, 2022 Revenue In the Company's Unaudited Condensed Consolidated
Interim Financial Statements as of June 30, 2022 and for the six months ended June 30, 2022, furnished with the SEC on November 30, 2022
with a Report of Foreign Private Issuer on Form 6-K (the “Original Form 6-K”), an upfront payment of $1 million (CHF 0.9 million)
related to the exclusive licensing and distribution agreement with Nuance Pharma for Bentrio® was incorrectly recorded as revenue.
In the audited financial statements as of December 31, 2022 included in the Company’s Annual Report on Form 20-F filed with the
SEC on May 16, 2023, the upfront payment was recorded as deferred income, following the correction of the identified misstatement. Adjustments
for this correction are reflected in these restated condensed consolidated interim financial statements as of June 30, 2022 and for the
six months ended June 30, 2022. The table below reflects the impact of the adjustments on key income statement and balance sheet line
items. Six months ended June 30, 2022 Adjusted consolidated Balance Sheet
As of June 30, 2022
As reported Adjustment Adjusted
Deferred income - 932,200 932,200
Total non-current liabilities 1,014,188 932,200 1,946,388
Total liabilities 10,804,712 932,200 11,736,912
Accumulated deficit (182,602,921 ) (932,200 ) (183,535,121 )
Total shareholders’ equity attributable to owners of the company 7,675,164 (932,200 ) 6,742,964 Adjusted consolidated Statement of Profit or Loss and Other Comprehensive
Loss
Half-Year ended June 30, 2022
As reported Adjustment Adjusted
Revenue 1,222,998 (932,200 ) 290,798
Gross profit 30,766 (932,200 ) (901,434 )
Operating loss (7,483,561 ) (932,200 ) (8,415,761 )
Loss before tax (7,352,403 ) (932,200 ) (8,284,603 )
Net loss attributable of owners of the Company (7,306,318 ) (932,200 ) (8,238,518 )
Total comprehensive loss attributable to owners of the Company (7,160,269 ) (932,200 ) (8,092,469 )
Basic and diluted loss per share (9.43 ) (1.20 ) (10.63 ) |
