Liquidity	12 Months Ended
Sep. 30, 2022
Liquidity
Liquidity	2. Liquidity The Company has incurred recurring losses and negative cash flows from operations since its inception and has an accumulated deficit of $408.9 million as of September 30, 2022. As of September 30, 2022, the Company had $11.1 million of principal and accrued interest due under an unsecured promissory note maturing on January 1, 2023 (“the November 2021 note”). As a result, there is substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty. Subsequent to September 30, 2022, the Company sold 895,391 shares of common stock under its "at-the-market" equity offering program (the "ATM Offering"). The Company received $1.1 million in net proceeds from the ATM Offering. In December 2022, in a registered direct equity offering to certain institutional and accredited investors, including GMS Ventures and Investments, or GMS Ventures, the Company’s largest stockholder, the Company issued 28,460,831 shares of common stock at a purchase price per share of $0.8784 for $24.0 million in net proceeds after payment of placement agent fees and other estimated offering costs. GMS Ventures purchased an aggregate of 14,230,418 shares of common stock in the registered direct equity offering at the offering price per share. In connection with the registered direct equity offering, the Company issued to M.S. Howells & Co., the placement agent, warrants to purchase up to an aggregate of 515,755 shares of common stock at an exercise price of $1.05 per share, which warrants have a three-year term. On December 22, 2022, the Company entered into a Securities Purchase Agreement and issued an unsecured convertible promissory note with a face amount of $31.8 million, (the “ Note”), to Streeterville Capital, LLC, or the Lender, the current holder of the Company’s outstanding unsecured promissory note maturing on January 1, 2023. The Note has an original issue discount of $1.8 million. The Company received net proceeds of $17.8 million upon the closing on December 28, 2022 after deducting the Lender’s transaction costs in connection with the issuance and a full payment of the remaining outstanding principal and accrued interest on the November 2021 Note. The November 2021 Note was cancelled upon repayment. The Note bears interest at 9.5% per annum and matures on January 1, 2024. The Note contains customary covenants, including a restriction on the Company’s ability to pledge certain of the Company’s assets, subject to certain exceptions, without the Lender’s consent. Beginning on April 1, 2023, the Lender will have the right to convert the Note at the Conversion Price (as defined below). The principal amount and conversion price of the Note are subject to adjustment upon certain triggering events. In addition, the Company has the right to convert all or any portion of the outstanding balance under the Note into shares of common stock at the Conversion Price if certain conditions have been met at the time of conversion, including if at any time after the six-month anniversary of the closing date, the daily volume-weighted average price of the common stock on Nasdaq equals or exceeds $2.50 per share (subject to adjustments for stock splits and stock combinations) for a period of 30 consecutive trading days. Upon the occurrence of certain events described in the Note, including, among others, the Company’s failure to pay amounts due and payable under the Note, events of insolvency or bankruptcy, failure to observe covenants contained in the Securities Purchase Agreement and the Note, breaches of representations and warranties in the Securities Purchase Agreement, and the occurrence of certain transactions without the Lender’s consent, each such event, a Trigger Event, the Lender shall have the right, subject to certain exceptions, to increase the balance of the Note by 10% for a Major Trigger Event (as defined in the Note) and 5% for a Minor Trigger Event (as defined in the Note). If a Trigger Event is not cured within ten (10) trading days of written notice thereof from the Lender, it will result in an event of default, such event, an Event of Default. Following an Event of Default, the Lender may accelerate the Note such that all amounts thereunder become immediately due and payable, and interest shall accrue at a rate of 22% annually until paid. Under the Note, “Conversion Price” means, prior to a Major Trigger Event, $2.00 per share (subject to adjustment for stock splits and stock combinations), and following a Major Trigger Event, the lesser of (i) $2.00 per share (subject to adjustment for stock splits and stock combinations), and (ii) 90% multiplied by the lowest closing bid price of the Company’s common stock in the three trading days prior to the date on which the conversion notice is delivered. While the Note is outstanding, the Lender will have a consent right on any future variable rate transactions or any debt. Lender will also have a 10% participation right in any future debt or equity financings. Management believes that the Company’s existing cash and cash equivalents as of September 30, 2022 together with the net proceeds of $17.8 million from the December 2022 issuance of the Note, $24.0 million from the December 2022 sale of shares of common stock in the registered direct equity offering, and $1.1 million in net proceeds from the sale of shares of common stock under the ATM Offering since September 30, 2022 are expected to fund its operations into the third calendar quarter of 2023. Additional financing will be needed by the Company to fund its operations in the future and to commercially launch ONS-5010 and develop any other product candidates. Management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may also include, but are not limited to, proceeds from potential licensing and/or marketing arrangements or collaborations with pharmaceutical or other companies, the issuance of equity securities, the issuance of additional debt, and revenues from potential future product sales, if any. There can be no assurance that these future funding efforts will be successful. The Company’s future operations are highly dependent on a combination of factors, including (i) the timely and successful completion of additional financing discussed above; (ii) the Company’s ability to successfully begin marketing of its product candidates or complete revenue-generating partnerships with other companies; (iii) the success of its research and development; (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies; and, ultimately, (v) regulatory approval and market acceptance of the Company’s proposed future products.

Liquidity

12 Months Ended

Sep. 30, 2022

2. Liquidity

The Company has incurred recurring losses and negative cash flows from operations since its inception and has an accumulated deficit of $408.9 million as of September 30, 2022. As of September 30, 2022, the Company had $11.1 million of principal and accrued interest due under an unsecured promissory note maturing on January 1, 2023 (“the November 2021 note”). As a result, there is substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Subsequent to September 30, 2022, the Company sold 895,391 shares of common stock under its "at-the-market" equity offering program (the "ATM Offering"). The Company received $1.1 million in net proceeds from the ATM Offering.

In December 2022, in a registered direct equity offering to certain institutional and accredited investors, including GMS Ventures and Investments, or GMS Ventures, the Company’s largest stockholder, the Company issued 28,460,831 shares of common stock at a purchase price per share of $0.8784 for $24.0 million in net proceeds after payment of placement agent fees and other estimated offering costs. GMS Ventures purchased an aggregate of 14,230,418 shares of common stock in the registered direct equity offering at the offering price per share. In connection with the registered direct equity offering, the Company issued to M.S. Howells & Co., the placement agent, warrants to purchase up to an aggregate of 515,755 shares of common stock at an exercise price of $1.05 per share, which warrants have a three-year term.

On December 22, 2022, the Company entered into a Securities Purchase Agreement and issued an unsecured convertible promissory note with a face amount of $31.8 million, (the “ Note”), to Streeterville Capital, LLC, or the Lender, the current holder of the Company’s outstanding unsecured promissory note maturing on January 1, 2023. The Note has an original

issue discount of $1.8 million. The Company received net proceeds of $17.8 million upon the closing on December 28, 2022 after deducting the Lender’s transaction costs in connection with the issuance and a full payment of the remaining outstanding principal and accrued interest on the November 2021 Note. The November 2021 Note was cancelled upon repayment. The Note bears interest at 9.5% per annum and matures on January 1, 2024. The Note contains customary covenants, including a restriction on the Company’s ability to pledge certain of the Company’s assets, subject to certain exceptions, without the Lender’s consent. Beginning on April 1, 2023, the Lender will have the right to convert the Note at the Conversion Price (as defined below). The principal amount and conversion price of the Note are subject to adjustment upon certain triggering events. In addition, the Company has the right to convert all or any portion of the outstanding balance under the Note into shares of common stock at the Conversion Price if certain conditions have been met at the time of conversion, including if at any time after the six-month anniversary of the closing date, the daily volume-weighted average price of the common stock on Nasdaq equals or exceeds $2.50 per share (subject to adjustments for stock splits and stock combinations) for a period of 30 consecutive trading days. Upon the occurrence of certain events described in the Note, including, among others, the Company’s failure to pay amounts due and payable under the Note, events of insolvency or bankruptcy, failure to observe covenants contained in the Securities Purchase Agreement and the Note, breaches of representations and warranties in the Securities Purchase Agreement, and the occurrence of certain transactions without the Lender’s consent, each such event, a Trigger Event, the Lender shall have the right, subject to certain exceptions, to increase the balance of the Note by 10% for a Major Trigger Event (as defined in the Note) and 5% for a Minor Trigger Event (as defined in the Note). If a Trigger Event is not cured within ten (10) trading days of written notice thereof from the Lender, it will result in an event of default, such event, an Event of Default. Following an Event of Default, the Lender may accelerate the Note such that all amounts thereunder become immediately due and payable, and interest shall accrue at a rate of 22% annually until paid. Under the Note, “Conversion Price” means, prior to a Major Trigger Event, $2.00 per share (subject to adjustment for stock splits and stock combinations), and following a Major Trigger Event, the lesser of (i) $2.00 per share (subject to adjustment for stock splits and stock combinations), and (ii) 90% multiplied by the lowest closing bid price of the Company’s common stock in the three trading days prior to the date on which the conversion notice is delivered. While the Note is outstanding, the Lender will have a consent right on any future variable rate transactions or any debt. Lender will also have a 10% participation right in any future debt or equity financings.

Management believes that the Company’s existing cash and cash equivalents as of September 30, 2022 together with the net proceeds of $17.8 million from the December 2022 issuance of the Note, $24.0 million from the December 2022 sale of shares of common stock in the registered direct equity offering, and $1.1 million in net proceeds from the sale of shares of common stock under the ATM Offering since September 30, 2022 are expected to fund its operations into the third calendar quarter of 2023. Additional financing will be needed by the Company to fund its operations in the future and to commercially launch ONS-5010 and develop any other product candidates. Management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may also include, but are not limited to, proceeds from potential licensing and/or marketing arrangements or collaborations with pharmaceutical or other companies, the issuance of equity securities, the issuance of additional debt, and revenues from potential future product sales, if any. There can be no assurance that these future funding efforts will be successful.

The Company’s future operations are highly dependent on a combination of factors, including (i) the timely and successful completion of additional financing discussed above; (ii) the Company’s ability to successfully begin marketing of its product candidates or complete revenue-generating partnerships with other companies; (iii) the success of its research and development; (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies; and, ultimately, (v) regulatory approval and market acceptance of the Company’s proposed future products.