2. STOCKHOLDERS’ EQUITY

June 2025 Warrant Inducement

On June 6, 2025, the Company, entered into definitive agreements for investors to immediately exercise certain outstanding warrants to purchase an aggregate of 276,044 shares of common stock, issued by the company on June 5, 2020, October 25, 2022 and July 21, 2024 (the “Existing Warrants”), at a reduced exercise price of $9.123 per share. The shares of common stock issuable upon exercise of the Existing Warrants are all registered, or their resale is registered, pursuant to effective registration statements. The company did not issue any new warrants as part of the agreements. The gross proceeds to the company from the exercise of the Existing Warrants was approximately $2.5 million, prior to deducting placement agent fees and offering expenses.

2025 Reverse Stock Split

At the annual stockholders’ meeting held on June 23, 2025, the Company’s stockholders approved an amendment to the Company’s certificate of incorporation to effect a reverse split of the Company’s common stock at a ratio between one-for-ten (1:10) to one-for-thirty (1:30) in order to satisfy requirements for the continued listing of the Company’s common stock on Nasdaq. The board of directors authorized the 1:30 ratio of the reverse split on June 18, 2025, and effective at the close of business on June 24, 2025, the Company’s certificate of incorporation was amended to effect a 1:30 reverse split of the Company’s common stock (the “Reverse Stock Split”). The Reverse Stock Split did not impact authorized shares. The accompanying consolidated financial statements and notes to consolidated financial statements give retroactive effect to the Reverse Stock Split for all periods presented.

July 2024 Warrant Inducement

On July 21, 2024, the Company, entered into a warrant exercise inducement (the “Inducement”) with certain holders of its September 2023 Tranche B warrants, pursuant to which the holders agreed to exercise the warrants to purchase 1,610 shares of the Company’s Series E-4 Convertible Voting Preferred Stock, par value $0.00001 per share (the “Series E-4 preferred stock”) which is convertible to 224,663 shares of the Company’s common stock in the aggregate, at a reduced, as-converted common stock price of $75.60 per share, in exchange for the Company’s issuance of new warrants (the “Inducement Warrants”), with varying termination dates and exercise prices. The Company received gross proceeds of $19.4 million and net proceeds of $17.5 million.

The Inducement Warrants have the following terms:

The warrants do not qualify under the equity classification guidance because of a cash settlement feature that requires cash settlement in event of a fundamental transaction that is outside the Company’s control resulting in a form of settlement inconsistent with that which would be received by other security holders. As a result, and in accordance with the guidance in ASC 815, the warrants issued in July 2024 are deemed to be liabilities. All such liabilities are required to be presented at fair value, with changes reflected in financial results for the period. See Note 3 for the related valuation.

In accordance with the guidance above, the Company recorded the Inducement Warrants and preferred stock at their respective fair values. Utilizing valuation techniques described in Note 3 below, the Company computed the fair value of the Inducement Warrants as $12.0 million and recorded the preferred stock at approximately $15.9 million, which represented its fair value of $17.0 million less allocated issuance costs. The value of the preferred stock and Inducement Warrants sold exceeded the proceeds received by the Company and the fair value of the Tranche B warrants that were exercised in the transaction, which was approximately $2.6 million at the time of exercise.

As of December 31, 2024, all of the Series E-4 preferred stock issued in the July 2024 financing has been converted into 224,663 shares of common stock.

September 2023 Private Placement

On September 8, 2023, in a private placement with certain institutional investors, the Company issued 1,225 shares of Series E-1 preferred stock, along with Tranche A warrants to purchase 2,205 shares of Series E-3 preferred stock and Tranche B warrants to purchase 1,715 shares of Series E-4 preferred stock. Shares of Series E preferred stock were issued at a fixed price of $20,000 per share, resulting in gross proceeds of $24.5 million and net proceeds of approximately $22.2 million after placement agent fees and other customary expenses.

The conversion prices for the preferred stock are as follows: for the Series E-1 or E-2 preferred stock, $54.60 per share of common stock, or a total of 448,717 shares of common stock; for the Series E-3 preferred stock, $95.55 per share of common stock, or a total of 461,538 shares of common stock; and for the Series E-4 preferred stock, $143.325 per share of common stock, or a total of 239,316 shares of common stock, in each case subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization. The warrants were exercisable as follows:

As of December 31, 2023, the Tranche A and Tranche B warrants did not qualify as derivatives; however, they did not meet the requirements necessary to be considered indexable in the Company’s stock. As a result, and in accordance with the guidance in FASB ASC 815, the warrants were deemed to be liabilities. The Tranche B warrants do not qualify as derivatives and meet the requirements necessary to be considered indexable in the Company’s stock. The warrants do not qualify under the equity classification guidance Due to because of a cash settlement feature that requires cash settlement in event of a fundamental transaction that is outside the Company’s control resulting in a form of settlement inconsistent with that which would be received by other security holders. As a result, and in accordance with the guidance in ASC 815, the Tranche B warrants continue to be deemed liabilities. All such liabilities are required to be presented at fair value, with changes reflected in financial results for the period. As discussed above, the majority of the Tranche B warrants were exercised in July 2024. See Note 3 for the related valuation.

The net proceeds from the September 2023 Private Placement were allocated first to the fair value of the Tranche A and Tranche B warrants, which had a fair value upon issuance of $4,800,000, with the remainder, or $17,820,000, allocated to the Series E-1 preferred stock. Upon stockholder approval of the transaction, the entire amount that had been assigned to mezzanine equity was reclassified to Series E-2 preferred stock and is a component of permanent equity, as is reflected in the financial statements. As a result of the stockholder approval, Series E-1 preferred stock was fully extinguished in accordance with the terms of the financing. The outstanding shares of Series E preferred stock were classified as permanent equity upon issuance.

During the twelve months ended December 31, 2024, 284.16 shares of Series E-2 preferred stock were converted into 104,087 shares of common stock. There remain 35.60 shares of Series E-2 preferred stock outstanding as of June 30, 2025.

In January 2024, the Company released topline data from its pivotal, Phase 2b CLOVER WaM trial. In accordance with the terms of the Tranche A warrant, the warants’ expiration accelerated to 10 trading days after the topline data release. Warrant holders exercised the Tranche A warrants in their entirety, resulting in the Company issuing 2,205.00 shares of Series E-3 preferred stock, which were convertible to common stock at the stated rate of $95.55 per share, and receiving gross proceeds of $44.1 million and net proceeds of $42.8 million (see Note 3).

As of June 30, 2025, all of the Series E-3 preferred stock has been converted into 461,538 shares of common stock.

October 2022 Public Offering and Private Placement

On October 25, 2022, the Company completed a registered direct offering of 109,171 shares of the Company’s common stock at $62.55 per share and warrants to purchase up to an aggregate of 109,171 shares of common stock in a concurrent private placement priced at-the-market under Nasdaq rules. In a separate concurrent private placement transaction, the Company offered and sold pre-funded warrants to purchase an aggregate of 62,531 shares of common stock and warrants to purchase an aggregate of 62,531 shares of common stock. The warrants are immediately exercisable at an exercise price of $58.80 per share and will expire on the fifth anniversary of the closing date. Each pre-funded warrant had a purchase price of $62.5497, is immediately exercisable at an exercise price of $0.00001 per share and will not expire until exercised in full. The registered direct offering and private placements resulted in total gross proceeds of approximately $10.7 million with net proceeds to the Company of approximately $9.6 million after deducting estimated offering expenses.

During the twelve months ended December 31, 2024, 35,971 pre-funded warrants, which was the entirety of the quantity still outstanding, were converted into 35,971 shares of common stock, and 18,239 warrants issued in October 2022 were exercised for net proceeds of approximately $1.1 million. See the June 2025 Warrant Inducement caption above for exercises of these warrants during 2025.

The following table summarizes information with regard to outstanding warrants to purchase stock as of June 30, 2025:

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All warrants in the table above are liability-classified.