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Table of Contents

As filed with the Securities and Exchange Commission on June 11, 2018.

Registration No. 333-225150


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment No. 1
to

FORM S-1
REGISTRATION STATEMENT
Under the Securities Act of 1933

APTINYX INC.
(Exact name of registrant as specified in its charter)



Delaware
(State or other jurisdiction of
incorporation or organization)
  2834
(Primary Standard Industrial
Classification Code Number)
  45-4626057
(I.R.S. Employer
Identification Number)



909 Davis Street, Suite 600
Evanston, IL 60201
(847) 871-0377
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)



Norbert G. Riedel
Chief Executive Officer and President
909 Davis Street, Suite 600
Evanston, IL 60201
(847) 871-0377
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

Mitchell S. Bloom, Esq.
Arthur R. McGivern, Esq.
Caitlin L. Murray, Esq.
Goodwin Procter LLP
100 Northern Avenue
Boston, Massachusetts 02210
(617) 570-1000

 

Ashish Khanna
Chief Financial Officer and
Chief Business Officer
Aptinyx Inc.
909 Davis Street, Suite 600
Evanston, IL 60201
(847) 871-0377

 

Deanna L. Kirkpatrick, Esq.
Marcel R. Fausten, Esq.
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, New York 10017
(212) 450-4000



Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o

Emerging growth company ý

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. o



CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Securities
to be Registered

  Amount to
be Registered(1)

  Proposed
Maximum Offering
Price Per Share (2)

  Proposed
Maximum Aggregate
Offering Price(2)

  Amount of
Registration
Fee(3)(4)

 

Common Stock, par value $0.01 per share

  6,133,332   $16.00   $98,133,312   $12,218

 

(1)    Includes 799,999 shares that the underwriters have an option to purchase.

(2)   Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.

(3)   Calculated pursuant to Rule 457(a) under the Securities Act of 1933, as amended, based on an estimate of the proposed maximum aggregate offering price.

(4)   $9,960 of this registration fee was previously paid by the Registrant in connection with the filing of its Registration Statement on Form S-1 on May 23, 2018.



The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   


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Subject to completion, dated June 11, 2018.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

5,333,333 Shares

LOGO

Common stock

We are offering 5,333,333 shares of our common stock to be sold in this offering. This is our initial public offering of our common stock. Prior to this offering, there has been no public market for our common stock. The estimated initial public offering price is between $14.00 and $16.00 per share. We have applied to list our common stock on The Nasdaq Global Market under the symbol "APTX."

We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our common stock involves a high degree of risk. These risks are described under the caption "Risk factors" that begins on page 11 of this prospectus.

 
   
   
 
 
  Per share
  Total
 

Initial public offering price

  $     $    

Underwriting discount(1)

 
$
 
$
 

Proceeds to us, before expenses

 
$
 
$
 

(1)    We have also agreed to reimburse the underwriters for certain FINRA-related expenses. See "Underwriting" for a description of all compensation payable to the underwriters.

We have granted the underwriters an option for a period of 30 days to purchase up to 799,999 additional shares on the same terms and conditions set forth above.

Certain of our existing stockholders, including certain affiliates of our directors, have indicated an interest in purchasing an aggregate of up to $30.0 million of shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no shares in this offering to any of these stockholders, or any of these stockholders may determine to purchase more, less or no shares in this offering.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities that may be offered under this prospectus, nor have any of these organizations determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The underwriters expect to deliver the shares to investors on                           , 2018.

J.P. Morgan   Cowen   Leerink Partners   BMO Capital Markets

                           , 2018


Table of Contents

Table of contents

 
  Page

Prospectus summary

  1

Risk factors

  11

Special note regarding forward-looking statements and market data

  68

Use of proceeds

  71

Dividend policy

  73

Capitalization

  74

Dilution

  76

Selected financial data

  79

Management's discussion and analysis of financial condition and results of operations

  81

Business

  95

Management

  157

Executive compensation

  166

Director compensation

  177

Certain relationships and related person transactions

  178

Principal stockholders

  184

Description of capital stock

  188

Shares eligible for future sale

  194

Certain material U.S. federal income and estate tax considerations to non-U.S. holders

  196

Underwriting

  200

Legal matters

  213

Experts

  213

Where you can find more information

  213

Index to financial statements

  F-1

Neither we nor the underwriters have authorized anyone to provide you with information other than that contained in this prospectus or any free writing prospectus prepared by or on behalf of us or to which we have referred you. We and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. The information contained in this prospectus is accurate only as of the date on the front cover page of this prospectus, or other earlier date stated in this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

We and the underwriters are offering to sell, and seeking offers to buy, common stock only in jurisdictions where offers and sales are permitted. No action is being taken in any jurisdiction outside the United States to permit a public offering of our common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable to that jurisdiction.

Until                             , 2018, all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

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Prospectus summary

This summary highlights information contained elsewhere in this prospectus. Before investing in our common stock, you should carefully read this entire prospectus, including our financial statements and the related notes included elsewhere in this prospectus, "Risk factors" and "Management's discussion and analysis of financial condition and results of operations." As used in this prospectus, unless the context otherwise requires, references to the "company," "we," "us" and "our" refer to Aptinyx Inc.

Overview

We are a clinical-stage biopharmaceutical company focused on the discovery, development, and commercialization of novel, proprietary, synthetic small molecules for the treatment of brain and nervous system disorders. We focus our efforts on targeting and modulating N-methyl-D-aspartate receptors, or NMDArs, which are vital to normal and effective function of the brain and nervous system. We believe leveraging the therapeutic advantages of the differentiated modulatory mechanism of our compounds will drive a paradigm shift in the treatment of disorders of the brain and nervous system.

We are currently studying our first product candidate, NYX-2925, in two Phase 2 studies in chronic pain. The first is in subjects with painful diabetic peripheral neuropathy, or DPN, and the second is in subjects with fibromyalgia. We expect to report top-line data from these studies in the first half of 2019. Our second product candidate, NYX-783, has been evaluated in Phase 1 clinical development. We intend to develop NYX-783 for the treatment of post-traumatic stress disorder, or PTSD, and plan to initiate a Phase 2 clinical study in the second half of 2018. For our third product candidate, NYX-458, we have received written clearance to proceed with clinical investigation from the U.S. Food and Drug Administration, or FDA, and plan to initiate a Phase 1 study in the second half of 2018. We intend to develop NYX-458 for the treatment of cognitive impairment associated with Parkinson's disease.

Our discovery platform and approach

Our discovery platform is based on extensive original research into a novel way of modulating NMDArs, which are critical to communication between neural cells. The ability of this neural cell communication to adapt and change is known as synaptic plasticity, which plays a key role in learning and memory processes. Abnormalities in learning and memory processes are implicated in multiple disorders of the brain and nervous system, such as cognitive impairment, PTSD, chronic pain, and depression. The role of NMDArs in learning and memory, as well as in maintaining normal brain function, has made them a target of drug development for decades. These efforts have yielded therapies that work in a unidirectional manner and turn the receptors either fully "on" or "off." Unidirectional approaches, known as agonism or antagonism, have narrow therapeutic windows, substantial side effects, and limited utility. Our molecules bind in a previously uncharacterized binding domain, or "pocket," on NMDArs that is distinct from that of other NMDAr-targeted therapies. This unique binding enables normalization of NMDAr function, ultimately leading to enhanced synaptic plasticity. Through the enhancement of synaptic plasticity, we believe our molecules address abnormalities in learning and memory processes, resulting in therapeutic potential across numerous disorders of the brain and nervous system.

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Product candidates from our discovery platform

The following table summarizes our pipeline and other product candidates generated from our NMDAr modulator discovery platform, or discovery platform:

GRAPHIC

Our first product candidate, NYX-2925, is a novel, oral, small-molecule NMDAr modulator currently in Phase 2 clinical development for the treatment of chronic pain. NYX-2925 works by enhancing synaptic plasticity, a mechanism that is differentiated from that of any therapy currently used for the treatment of chronic pain. This approach is uniquely suited for treating chronic pain. It is established that, when pain becomes chronic (especially neuropathic pain), it becomes a largely centralized disorder mediated by central learning and memory pathways. The development of NYX-2925 in painful DPN has been granted Fast Track designation by the FDA. We are currently studying NYX-2925 in a Phase 2 study in approximately 300 subjects with painful DPN across numerous U.S.-based sites. We are also conducting an exploratory efficacy and biomarker study of NYX-2925 in subjects with fibromyalgia. We anticipate reporting top-line data from these studies in the first half of 2019. In a Phase 1 study, NYX-2925 was well-tolerated with no drug-related serious adverse events and demonstrated a predictable, dose-dependent, and linear pharmacokinetic, or PK, profile with no accumulation after multiple daily doses. In addition, across numerous and various preclinical models of neuropathic pain, we have observed robust, rapid, and long-lasting analgesic effects of NYX-2925. Neuropathic pain affects more than 18 million people in the United States, of which we estimate DPN accounts for approximately 5.5 million. Approved therapies for neuropathic pain provide suboptimal efficacy and often come with substantial side effects and abuse liability. We estimate that fibromyalgia affects approximately 5 million people in the United States and also represents a patient population that is underserved by currently available therapies. We believe the therapeutic profile of NYX-2925 will allow us to expand the development of this molecule into multiple other chronic pain conditions.

Our second product candidate, NYX-783, is a novel, oral, small-molecule NMDAr modulator that has been evaluated in Phase 1 clinical development and we plan to initiate Phase 2 development in the second half of 2018. We intend to develop NYX-783 for the treatment of PTSD, which has been granted Fast Track designation by the FDA. To date, in the Phase 1 study, NYX-783 has been well-tolerated with no drug-related serious adverse events and demonstrates a predictable, dose-dependent, and linear PK profile with no accumulation after multiple daily doses. In preclinical models of contextual fear conditioning and

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extinction, NYX-783 appears to both accelerate fear extinction and inhibit spontaneous fear recovery, making it an ideal product candidate for the treatment of PTSD. Unlike currently used therapies, we believe NYX-783 has the potential to target the underlying cause of PTSD —learning and memory dysfunction associated with an inability to extinguish fear caused by trauma —as well as the core symptoms and comorbidities associated with the disorder. It is estimated that 8% to 10% of people that experience trauma will develop PTSD in their lifetime and we estimate approximately 8.5 million people currently suffer from PTSD in the United States. Many of these people are currently untreated or poorly treated due to the lack of safe and effective options.

Our third product candidate, NYX-458, has been evaluated in IND-enabling preclinical studies and we submitted an IND application to the FDA on May 18, 2018 for the treatment of Parkinson's disease dementia, a subset of Parkinson's disease cognitive impairment. We received written clearance to proceed with clinical investigation from the FDA on June 8, 2018. Mechanistic rationale and compelling preclinical data in a highly relevant and translatable non-human primate model of Parkinson's disease suggest NYX-458 may be optimally suited to treat the cognitive deficits caused by the disease. We plan to initiate a single- and multiple-ascending dose Phase 1 study to evaluate safety, tolerability, and PK in the second half of 2018. We estimate that there are more than 500,000 people in the United States with Parkinson's disease cognitive impairment.

Allergan plc, or Allergan, has advanced a compound, AGN-241751, from our discovery platform through our ongoing research collaboration. On May 16, 2018, Allergan exercised its option under our collaboration to acquire the exclusive rights to develop and commercialize this compound within a specified set of indications. Allergan has disclosed its plan to advance development of AGN-241751 for the treatment of major depressive disorder.

We are also evaluating our product candidates in clinical studies designed to explore NMDAr-dependent biomarkers in healthy human subjects. Using readily and rapidly measurable markers, these studies have the potential to further demonstrate that our small-molecule compounds can engage NMDArs and downstream pathways in the human brain in a dose-dependent and predictable way. Successful biomarker studies could aid in our understanding of clinical efficacy results and optimal dosing regimens, and allow us to optimize future clinical study design.

While all of our product candidates and the other molecules from our discovery platform modulate NMDArs, each one is a distinct chemical entity with unique pharmacologic properties. We evaluate the therapeutic implications of variations in these properties by interrogating our molecules across different preclinical models of brain and nervous system disorders. The data we collect from these preclinical studies indicate which molecules are better suited for different indications and inform our development decisions accordingly.

Our company and history

We have assembled a world-class management team with highly relevant scientific, clinical, regulatory, and commercial expertise. Many members of our management team worked together for several years at Naurex Inc., or Naurex, prior to the spin out of Aptinyx in 2015 in conjunction with the acquisition of Naurex by Allergan for up to $1.7 billion in total deal value, $560 million of which it agreed to pay up front. Our Chief Scientific Officer, Joseph Moskal, Ph.D., pioneered our NMDAr modulation approach, starting in the 1990s. He discovered a peptide compound, rapastinel, which Naurex ultimately evaluated in two Phase 2 studies in subjects with major depressive disorder. The data from those studies offered clinical validation of our unique mechanism of modulating NMDArs, informing Allergan's acquisition of Naurex and

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its advancement of rapastinel into Phase 3 development. Rapastinel has been granted breakthrough therapy designation by the FDA. Naurex scientists had also developed a separate new platform for discovering small-molecule compounds that bind to and modulate NMDArs in a fashion similar to that of rapastinel. This discovery platform was spun out into Aptinyx and formed the foundation of our company.

As part of the Naurex-Allergan transaction and spin out of Aptinyx, we entered into a research collaboration with Allergan around the discovery, screening, and profiling of novel NMDAr modulators from our discovery platform. In addition to fueling our own pipeline, this collaboration has enabled Allergan to advance a product candidate from our discovery platform, AGN-241751, into clinical development for the treatment of major depressive disorder. In May 2018, Allergan exercised its option under this collaboration to acquire the exclusive intellectual property rights specific to AGN-241751. For a discussion of this collaboration, see "Business—Research collaboration agreement with Allergan."

We are backed by a group of leading institutional life science investors, including Adage Capital, Adams Street Partners, Bain Capital Life Sciences, Frazier Healthcare Partners, HBM Healthcare Investments, Longitude Capital, Nan Fung Life Sciences, New Leaf Venture Partners, Osage University Partners, Partner Fund Management, and Rock Springs Capital, among others.

Our strategy

Advance the development of NYX-2925 as a novel treatment for chronic pain conditions. We believe positive results from our ongoing studies in painful DPN and fibromyalgia will establish NYX-2925, if approved, as a high-potential therapy for chronic pain with mechanistic innovations that address significant unmet medical needs. We expect efficacy data from these studies to be available in the first half of 2019 and to form the basis for future studies for regulatory approvals in not only painful DPN and fibromyalgia, but also additional chronic and centrally-mediated pain indications.

Advance the development of NYX-783 as a novel treatment for PTSD. We believe NYX-783, if approved, could represent a transformational treatment for PTSD that addresses the underlying learning and memory dysfunction associated with an inability to extinguish fear caused by trauma, as well as the disorder's core symptoms and major comorbidities.

Advance the development of NYX-458 as a novel treatment for Parkinson's disease cognitive impairment. Based on compelling data in a highly relevant and translatable non-human primate model, we believe NYX-458, if approved, may offer substantial improvements over existing treatments for Parkinson's disease cognitive impairment by working through the synaptic plasticity mechanisms that drive cognition, including attention, learning, and memory.

Continue to expand our pipeline by leveraging our discovery platform, building on and extending our leadership in NMDAr biology. We intend to use our discovery platform to develop a broad pipeline and product portfolio across an array of disorders of the brain and nervous system. Our pipeline is fueled by our library of over 800 unique, synthesized, small-molecule NMDAr modulators derived through our extensive original research and the discovery of a novel binding domain that we believe could allow for safe and effective enhancement of synaptic plasticity. We also plan to identify and use NMDAr-dependent biomarkers to expedite and inform the development of our current and future product candidates.

Optimize the development and commercial potential of our product candidates. Our primary strategy is to independently pursue the development and commercialization of our product candidates. As we continue to build and develop our product portfolio, we may opportunistically pursue strategic partnerships that maximize the value of our pipeline.

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Risks associated with our business

Our ability to implement our business strategy is subject to numerous risks, as more fully described in the section entitled "Risk factors" immediately following this prospectus summary. These risks include, among others, that:

We have incurred significant operating losses since our inception and anticipate that we will incur continued losses for the foreseeable future. Even if this offering is successful, we will need to raise additional funding to advance NYX-2925 through Phase 3 clinical studies, and such funding may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations.

We are heavily dependent on our discovery platform and the successful development of product candidates discovered through such discovery platform, including NYX-2925, NYX-783, and NYX-458, which are in the early stages of preclinical and clinical development. We cannot give any assurance that we will continue to create a pipeline of product candidates or that our product candidates will receive regulatory approval.

We have concentrated our research and development efforts on the treatment of disorders of the brain and nervous system, a field that has seen limited success in drug development. Further, our product candidates are based on new approaches and novel technology, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval.

Our product candidates may cause serious adverse events or other undesirable side effects that could delay their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following market approval, if any.

Failures or delays in the commencement or completion of, or ambiguous or negative results from, our ongoing or planned clinical studies of our product candidates could result in increased costs to us and could delay, prevent, or limit our ability to generate revenue and continue our business.

We depend on our collaboration with Allergan and may depend on collaborations with third parties for the research, development, and commercialization of certain of the product candidates we may develop. If any such collaborations are not successful, we may not be able to realize the market potential of those product candidates.

We rely, and expect to continue to rely, on third parties to conduct any clinical studies for our product candidates, on third-party suppliers to manufacture our clinical drug supplies for our product candidates, and on single-source suppliers for some of the components and materials used in our product candidates. If these third parties do not successfully carry out their contractual or legal duties or meet expected deadlines, we may not receive regulatory approval and our business could be substantially harmed.

Our executive officers, directors, principal stockholders, and their affiliates represent beneficial ownership, in the aggregate, of approximately 60% of our outstanding shares of common stock (excluding any shares of our common stock purchased in this offering) and will, acting together, be able to exercise significant control over our company after the initial public offering, which will limit the ability of our other stockholders to influence corporate matters, could delay or prevent a change in corporate control, and may adversely affect the market price of our common stock.

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Implications of being an emerging growth company

We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. As an "emerging growth company," we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced "Management's discussion and analysis of financial condition and results of operations" and "Selected financial data" disclosure;

reduced disclosure about our executive compensation arrangements;

no non-binding advisory votes on executive compensation or golden parachute arrangements; and

exemption from compliance with the auditor attestation requirement in the assessment of our internal control over financial reporting.

We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an "emerging growth company." We will continue to remain an "emerging growth company" until the earliest of the following: (i) the last day of the fiscal year following the fifth anniversary of the date of the completion of this offering; (ii) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.07 billion; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission, or the SEC. We may choose to take advantage of some but not all of these exemptions. We have taken advantage of reduced reporting requirements in this prospectus. Accordingly, the information contained herein may be different from the information you receive from other public companies in which you hold stock. We have elected to avail ourselves of the extended transition period for complying with new or revised financial accounting standards. As a result of the accounting standards election, we will not be subject to the same implementation timing for new or revised accounting standards as other public companies that are not emerging growth companies which may make comparison of our financials to those of other public companies more difficult. Additionally, because we have taken advantage of certain reduced reporting requirements, the information contained herein may be different from the information you receive from other public companies in which you hold stock.

Company and other information

We were incorporated under the laws of the State of Delaware in June 2015. Our principal executive office is located at 909 Davis Street, Suite 600, Evanston, IL 60201, and our telephone number is (847) 871-0377. Our website address is https://www.aptinyx.com. We do not incorporate the information on or accessible through our website into this prospectus, and you should not consider any information on, or that can be accessed through, our website as part of this prospectus.

We own various U.S. federal trademark applications and unregistered trademarks, including our company name. All other trademarks or trade names referred to in this prospectus are the property of their respective owners. Allergan® and its design are trademarks of Allergan, Inc. and are being used with permission in this prospectus. Solely for convenience, the trademarks and trade names in this prospectus are referred to without the symbols ® and ™, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.

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The offering

Common stock offered by us   5,333,333 shares.

Common stock to be outstanding immediately after this offering

 

31,469,559 shares (32,269,558 shares if the underwriters exercise their option to purchase additional shares in full).

Underwriters' option to purchase additional shares

 

We have granted a 30-day option to the underwriters to purchase up to an aggregate of 799,999 additional shares of common stock from us at the public offering price, less the underwriting discount, on the same terms as set forth in this prospectus.

Use of proceeds

  We estimate that we will receive net proceeds from the sale of 5,333,333 shares of our common stock in this offering of approximately $71.4 million, or $82.6 million if the underwriters exercise their option to purchase 799,999 additional shares in full, assuming an initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discount and estimated offering expenses payable by us. We anticipate that we will use the net proceeds from this offering, together with our existing cash and cash equivalents:

to fund our two ongoing Phase 2 clinical studies of NYX-2925 in subjects with painful DPN and subjects with fibromyalgia through completion;

to advance NYX-783 for the treatment of PTSD through completion of Phase 1 clinical development and our planned Phase 2 clinical study;

to advance NYX-458 for the treatment of Parkinson's disease cognitive impairment through completion of our planned Phase 1 clinical development and into our planned Phase 2 clinical study; and

the remainder, if any, to explore NMDAr-dependent biomarkers, to further develop any additional product candidates that we select, and for working capital and other general corporate purposes. For additional information, see "Use of proceeds."


Nasdaq Global Market symbol

 

"APTX"

Risk factors

 

You should carefully read the "Risk factors" section of this prospectus for a discussion of factors that you should consider before deciding to invest in our common stock.

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The number of shares of our common stock to be outstanding after this offering is based on 26,136,226 shares of our common stock (which includes 1,491,373 shares of restricted common stock) outstanding as of May 31, 2018, and gives effect to the conversion of all outstanding shares of our convertible preferred stock into an aggregate of 20,306,497 shares of our common stock upon the completion of this offering, and excludes:

3,412,054 shares of common stock issuable upon the exercise of stock options outstanding as of May 31, 2018 under our 2015 Stock Option and Grant Plan, or the 2015 Plan, at a weighted-average exercise price of $4.03 per share;

4,405,755 shares of our common stock that will be reserved for future issuance under our 2018 Stock Option and Incentive Plan, or the 2018 Plan, upon the effectiveness of the registration statement of which this prospectus is a part (which amount is comprised of (i) 3,900,709 shares of our common stock newly reserved plus (ii) 505,046 shares of our common stock reserved under our 2015 Plan which will become available for issuance under our 2018 Plan upon its effectiveness); and

314,697 additional shares of our common stock that will become available for future issuance under our 2018 Employee Stock Purchase Plan, or the 2018 ESPP, which will become effective upon the effectiveness of the registration statement of which this prospectus is a part.

Unless otherwise indicated, all information in this prospectus reflects or assumes the following:

the filing and effectiveness of our amended and restated certificate of incorporation upon the closing of this offering and the effectiveness of our amended and restated bylaws upon the effectiveness of the registration statement of which this prospectus is a part;

the conversion of all outstanding shares of convertible preferred stock into an aggregate of 20,306,497 shares of common stock upon the closing of this offering;

no exercise of outstanding options after May 31, 2018;

a one-for-27.58621 reverse split of our common stock effected on June 7, 2018; and

no exercise by the underwriters of their option to purchase up to 799,999 additional shares of common stock in this offering.

Indications of interest

At our request, the underwriters have reserved for sale at the initial public offering price per share up to 5% of the shares of common stock offered pursuant to this prospectus, to certain individuals through a directed share program, including employees, directors and other persons associated with us. The number of shares of common stock available for sale to the general public will be reduced by the number of reserved shares sold to these individuals. Any reserved shares not purchased by these individuals will be offered by the underwriters to the general public on the same basis as the other shares of common stock offered pursuant to this prospectus. See "Underwriting" beginning on page 200.

Certain of our existing stockholders, including certain affiliates of our directors, have indicated an interest in purchasing an aggregate of up to $30.0 million of shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no shares in this offering to any of these stockholders, or any of these stockholders may determine to purchase more, less or no shares in this offering.

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Summary financial data

You should read the following selected financial data together with the section captioned "Management's discussion and analysis of financial condition and results of operations" and our financial statements and the related notes appearing at the end of this prospectus. We have derived the statement of operations data for the years ended December 31, 2016 and 2017 and the balance sheet data as of December 31, 2017 from our audited financial statements appearing at the end of this prospectus. We have derived the statement of operations data for the three months ended March 31, 2017 and 2018 and the balance sheet data as of March 31, 2018 from our unaudited financial statements appearing at the end of this prospectus. The unaudited financial statements have been prepared on the same basis as our audited financial statements and include, in the opinion of management, all adjustments that management considers necessary for a fair presentation of the financial information set forth in those statements. Our historical results are not necessarily indicative of our future results and our interim results are not necessarily indicative of results to be expected for a full fiscal year or any other interim period.

 
  Year ended
December 31,
  Three months ended
March 31,
 
 
  2016
  2017
  2017
  2018
 

Collaboration and grant revenue

  $ 9,792   $ 4,962   $ 1,145   $ 2,464  

Operating expenses:

                         

Research and development

    22,743     31,644     8,662     12,224  

General and administrative

    4,766     5,551     1,232     2,049  

Total operating expenses

    27,509     37,195     9,894     14,273  

Loss from operations

    (17,717 )   (32,233 )   (8,749 )   (11,809 )

Other income

    2,239     165     52     137  

Net loss and comprehensive loss

  $ (15,478 ) $ (32,068 ) $ (8,697 ) $ (11,672 )

Net loss per share attributable to common stockholders, basic and diluted

  $ (3.16 ) $ (6.17 ) $ (1.71 ) $ (2.17 )

Weighted-average number of common shares outstanding, basic and diluted

    4,903     5,196     5,085     5,378  

Pro forma net loss per share, basic and diluted (unaudited)

        $ (1.91 )       $ (0.45 )

Pro forma weighted-average common shares outstanding, basic and diluted (unaudited)

          16,831           25,685  

(1)    See statement of operations and Note 13 to our financial statements appearing at the end of this prospectus for further details on the calculation of net loss per share, basic and diluted, attributable to common stockholders and weighted-average number of common shares used in the computation of the per share amounts and unaudited pro forma information.

 
  As of March 31, 2018  
(in thousands)
  Actual
  Pro forma(2)
  Pro forma
as adjusted(3)

 

Balance sheet data:

                   

Cash and cash equivalents

  $ 82,350   $ 82,350   $ 153,750  

Working capital(1)

    79,477     79,477     150,877  

Total assets

    88,810     88,810     158,967  

Convertible preferred stock

    132,386          

Total stockholders' (deficit) equity

    (50,866 )   81,520     152,920  

(1)    We define working capital as current assets less current liabilities. See our financial statements for further details regarding our current assets and current liabilities.

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(2)    Pro forma balance sheet data give effect to the automatic conversion of all outstanding shares of convertible preferred stock.

(3)    The pro forma as adjusted balance sheet data give further effect to our issuance and sale of 5,333,333 shares of our common stock in this offering, assuming an initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting the underwriting discount and estimated offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets and total stockholders' equity by approximately $5.0 million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discount and estimated offering expenses payable by us. An increase (decrease) of one million shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted amount of each of cash and cash equivalents, working capital, total assets, and total stockholders' equity by approximately $14.0 million, assuming an initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discount and estimated offering expenses payable by us.

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Risk factors

Investing in our common stock involves a high degree of risk. You should carefully consider the following risks and uncertainties, together with all other information in this prospectus, including our financial statements and related notes, before investing in our common stock. Any of the risk factors we describe below could adversely affect our business, financial condition, or results of operations. The market price of our common stock could decline if one or more of these risks or uncertainties actually occur, causing you to lose all or part of the money you paid to buy our common stock. Certain statements below are forward-looking statements. See "Special note regarding forward-looking statements and market data" in this prospectus.

Risks related to our business, financial position, and need for additional capital

We are a clinical-stage biopharmaceutical company with a very limited operating history and no products approved for commercial sale, which may make it difficult to evaluate our current business and predict our future success and viability.

We are a clinical-stage biopharmaceutical company with a limited operating history, focused on developing therapeutics for disorders of the brain and nervous system. We were incorporated in June 2015, have no products approved for commercial sale, and have not generated any revenue from product sales. Our operations to date have been limited primarily to organizing and staffing our company, raising capital, and conducting research and development activities for our product candidates.

To date, we have not obtained marketing approval for any product candidates, manufactured, on our own or through a third party, a commercial scale product, or conducted sales and marketing activities necessary for successful product commercialization. Our short operating history as a company makes any assessment of our future success and viability subject to significant uncertainty. We will encounter risks and difficulties frequently experienced by early-stage biopharmaceutical companies in rapidly evolving fields, and we have not yet demonstrated an ability to successfully overcome such risks and difficulties. If we do not address these risks and difficulties successfully, our business will suffer.

We have incurred significant operating losses since our inception and anticipate we will incur continued losses for the foreseeable future.

We have funded our operations to date through proceeds from collaborations, grants, and sales of convertible preferred stock. From our inception through March 31, 2018, we had received net proceeds of $155.6 million from such transactions. As of March 31, 2018, our cash and cash equivalents were $82.4 million. We have incurred net losses in each year since our inception, and we have an accumulated deficit of $63.9 million as of March 31, 2018.

Substantially all of our operating losses have resulted from costs incurred in connection with general and administrative costs associated with our operations, and our research and development programs, including for our preclinical and clinical product candidates and our N-methyl-D-aspartate receptor, or NMDAr, modulator platform. We expect to incur increasing levels of operating losses over the next several years and for the foreseeable future. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders' deficit and working capital. We expect our research and development expenses to significantly increase in connection with our clinical studies of our product candidates. In addition, if we obtain marketing approval for our product candidates, we will incur significant sales and marketing, legal, and outsourced-manufacturing expenses. Once we are a public company, we will incur additional costs associated with operating as a public company. As a result, we

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expect to continue to incur significant and increasing operating losses for the foreseeable future. Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the extent of any future losses or when we will become profitable, if at all. Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis.

Drug development is a highly uncertain undertaking and involves a substantial degree of risk. We have never generated any revenue from product sales, and we may never generate revenue or be profitable.

Our ability to become profitable depends upon the ability of our product candidates to generate revenue. To date, we have not generated any revenue from our product candidates and we do not know when, or if, we will do so. We do not expect to generate significant revenue unless and until we obtain marketing approval of, and begin to sell, our current or future product candidates. Our ability to generate revenue depends on a number of factors, including, but not limited to:

successfully completing preclinical and clinical development of our product candidates;

identifying, assessing, and/or developing new product candidates from our NMDAr modulator discovery platform, or discovery platform;

developing a sustainable and scalable manufacturing process for our product candidates, as well as establishing and maintaining commercially viable supply relationships with third parties that can provide adequate products and services to support clinical activities and commercial demand for our product candidates;

negotiating favorable terms in any collaboration, licensing, or other arrangements into which we may enter;

obtaining regulatory approvals and marketing authorizations for product candidates for which we successfully complete clinical development;

launching and successfully commercializing product candidates for which we obtain regulatory and marketing approval, either by establishing a sales, marketing, and distribution infrastructure or collaborating with a partner;

negotiating and maintaining an adequate price for our product candidates, both in the United States and in foreign countries where our products are commercialized;

obtaining market acceptance of our product candidates as viable treatment options;

building out new facilities or expanding existing facilities to support our ongoing development activity;

addressing any competing technological and market developments;

maintaining, protecting, expanding, and enforcing our portfolio of intellectual property rights, including patents, trade secrets, and know-how; and

attracting, hiring, and retaining qualified personnel.

Because of the numerous risks and uncertainties associated with drug development, we are unable to predict the timing or amount of our expenses, or when we will be able to generate any meaningful revenue or achieve or maintain profitability, if ever. In addition, our expenses could increase beyond our current expectations if we are required by the U.S. Food and Drug Administration, or FDA, or foreign

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regulatory agencies, to perform studies in addition to those that we currently anticipate, or if there are any delays in any of our or our future collaborators' clinical studies or the development of any of our product candidates. Even if one or more of our product candidates is approved for commercial sale, absent our entering into a collaboration or partnership agreement, we anticipate incurring significant costs associated with commercializing any approved product candidate and ongoing compliance efforts.

Even if we are able to generate revenue from the sale of any approved products, we may not become profitable and may need to obtain additional funding to continue operations. Revenue from the sale of any product candidate for which regulatory approval is obtained will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the product, the ability to get reimbursement at any price, and whether we own the commercial rights for that territory. The precise number of people with painful diabetic peripheral neuropathy, or DPN, fibromyalgia, post-traumatic stress disorder, or PTSD, and Parkinson's disease cognitive impairment is unknown. Our projections of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our drug candidates, are based on estimates. If the number of addressable patients is not as significant as we anticipate, the indication approved by regulatory authorities is narrower than we expect, or the reasonably accepted population for treatment is narrowed by competition, physician choice, or treatment guidelines, we may not generate significant revenue from sales of our product candidates, even if approved. Even 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, expand our business, maintain our research and development efforts, diversify our pipeline of product candidates, or continue our operations and cause a decline in the value of our common stock, all or any of which may adversely affect our viability.

Due to the significant resources required for the development of our discovery platform and pipeline, and depending on our ability to access capital, we must prioritize development of certain product candidates. Moreover, we may fail to expend our limited resources on product candidates or indications that may be more profitable or for which there is a greater likelihood of success.

We currently have three lead product candidates, NYX-2925, NYX-783, and NYX-458, which are at various stages of preclinical and clinical development. We seek to maintain a process of prioritization and resource allocation to maintain an optimal balance between aggressively advancing product candidates, such as NYX-2925 and NYX-783, and ensuring replenishment of our portfolio.

In July 2015, we entered into a research collaboration agreement with Allergan plc, or Allergan, pursuant to which we and Allergan have research, development, and commercial rights to compounds discovered using our discovery platform. Under the research collaboration, both we and Allergan have the right, exercisable during a specified period, to select an eligible compound for further investigation. Due to the terms of the collaboration agreement, we may not have the opportunity to select a desired eligible compound. We may also choose not to select an eligible compound based on the preliminary information available to us. As a result of such incomplete information or incorrect analysis by us, we may select an eligible compound that later proves to have less commercial potential than an alternative or none at all.

Due to the significant resources required for the development of our product candidates, we must focus on specific diseases and disease pathways and decide which product candidates to pursue and advance and the amount of resources to allocate to each. Our decisions concerning the allocation of research, development, collaboration, management, and financial resources toward particular product candidates or therapeutic areas may not lead to the development of any viable commercial product and may divert

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resources away from better opportunities. If we make incorrect determinations regarding the viability or market potential of any of our product candidates or misread trends in the biopharmaceutical industry, in particular for disorders of the brain and nervous system, our business, financial condition, and results of operations could be materially adversely affected. As a result, we may fail to capitalize on viable commercial products or profitable market opportunities, be required to forego or delay pursuit of opportunities with other product candidates or other diseases and disease pathways that may later prove to have greater commercial potential than those we choose to pursue, or relinquish valuable rights to such product candidates through collaboration, licensing, or other royalty arrangements in cases in which it would have been advantageous for us to invest additional resources to retain sole development and commercialization rights.

Even if this offering is successful, we will need to raise additional funding to advance NYX-2925 through Phase 3 clinical studies, which funding may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit, or terminate our product development efforts or other operations.

As of March 31, 2018, our cash and cash equivalents were $82.4 million. We estimate that the net proceeds from this offering will be approximately $71.4 million, assuming an initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and offering expenses payable by us. Based on our current plans, we expect that the net proceeds from this offering and our existing cash and cash equivalents will be sufficient to fund our operations through the first half of 2020. We will require additional funding to advance NYX-2925 through Phase 3 clinical studies. Our ability to secure this additional funding may be adversely impacted by negative or ambiguous results in our Phase 2 clinical development of NYX-2925, our Phase 1 clinical development of NYX-783, or our preclinical, or planned Phase 1 study of NYX-458.

We are currently advancing our product candidates through clinical development, with one product candidate in Phase 2 clinical development, one product candidate in Phase 1 clinical development, one product candidate in preclinical development, and several other potential product candidates in early-stage discovery and screening. The clinical development of a product candidate is lengthy, complicated, and expensive. In particular, conducting a Phase 3 clinical study is a complex process that differs from clinical studies conducted in earlier phases. While some of our employees have conducted Phase 3 clinical studies in the past while employed at different companies, we, as a company, have not conducted Phase 3 clinical studies before, and as a result, may require more time and incur greater costs than we anticipated. Moreover, developing small-molecule products is expensive, and we expect our discovery, research, and development expenses to increase substantially in connection with our ongoing activities, particularly as we advance our product candidates in clinical studies. We may also need to raise additional funds sooner if we choose to pursue additional indications and/or geographies for our product candidates or otherwise expand more rapidly than we presently anticipate.

In addition, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements, or a combination of these approaches. In any event, we will require additional capital to obtain regulatory approval for, and, if approved, to commercialize our product candidates. Raising funds in the current economic environment may present additional challenges. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

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Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and, if approved, commercialize our product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity or convertible securities would dilute all of our stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights, and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable and we may be required to relinquish rights to some of our technologies or product candidate or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results, and prospects.

If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay, or discontinue one or more of our research or development programs or the commercialization of any product candidate or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition, and results of operations.

Risks related to product development and commercialization

Research and development of biopharmaceutical products is inherently risky.

We are at an early stage of development of the product candidates currently in our pipeline and are continuing to discover additional potential product candidates leveraging our discovery platform. To date, we have devoted substantially all of our efforts and financial resources to identify, secure intellectual property for, and develop our discovery platform and our product candidates, including conducting multiple preclinical and clinical studies, and providing general and administrative support for these operations. Our business depends heavily on the successful preclinical and clinical development, regulatory approval, and commercialization of our lead product candidates, NYX-2925 which is in Phase 2 clinical development, NYX-783 which is in Phase 1 clinical development, and NYX-458 which is in preclinical development. None of our product candidates have advanced into late-stage development or a pivotal clinical study and it may be years before any such study is initiated, if at all. NYX-2925, NYX-783, and NYX-458 will require substantial additional clinical development, testing, and regulatory approval before we are permitted to commence their commercialization. Further, we cannot be certain that any of our product candidates will be successful in clinical studies.

Our future success is dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize our product candidates, and we may fail to do so for many reasons, including the following:

our product candidates may not successfully complete preclinical or clinical studies;

a product candidate may, upon further study, be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;

our competitors may develop therapeutics that render our product candidates obsolete or less attractive;

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our competitors may develop platform technologies that render our platform technology obsolete or less attractive;

the product candidates that we develop and our discovery platform may not be sufficiently covered by intellectual property for which we hold exclusive rights;

the market for a product candidate may change so that the continued development of that product candidate is no longer reasonable or commercially attractive;

a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all;

we may not be able to establish manufacturing capabilities or arrangements with third-party manufacturers for clinical and, if approved, commercial study;

even if a product candidate obtains regulatory approval, we may be unable to establish sales and marketing capabilities, or successfully market such approved product candidate, to gain market acceptance; and

a product candidate may not be accepted as safe or effective by patients, the medical community or third-party payors, if applicable.

If any of these events occur, we may be forced to abandon our development efforts for a product candidate or candidates, which would have a material adverse effect on our business and could potentially cause us to cease operations. For instance, if we observe harmful side effects or other characteristics that indicate one product candidate is unlikely to be effective or otherwise does not meet applicable regulatory criteria, these findings may implicate the discovery platform as a whole.

We may not be successful in our efforts to further develop our discovery platform technology and current product candidates. We are not permitted to market or promote any of our product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval for any of our product candidates. Each of our product candidates is in the early stages of development and will require significant additional clinical development, management of preclinical, clinical, and manufacturing activities, regulatory approval, adequate manufacturing supply, a commercial organization, and significant marketing efforts before we generate any revenue from product sales, if at all.

The nonclinical and clinical studies for our product candidates are, and the manufacturing and marketing of our product candidates will be, subject to extensive and rigorous review and regulation by numerous government authorities in the United States, and in other countries where we intend to test and, if approved, market any product candidate. Before obtaining regulatory approvals for the commercial sale of any product candidate, we must, among other requirements, demonstrate through preclinical studies and clinical studies that the product candidate is safe and effective for use in each target indication. Drug development is a long, expensive, and uncertain process, and delay or failure can occur at any stage of any of our clinical studies. This process can take many years and may include post-marketing studies and surveillance, which will require the expenditure of substantial resources beyond the proceeds we raise in this offering. Of the large number of drugs in development in the United States, only a small percentage will successfully complete the FDA regulatory approval process and will be commercialized. Accordingly, even if we are able to obtain the requisite financing to continue to fund our development and preclinical studies and clinical studies, we cannot assure you that any of our product candidates will be successfully developed or commercialized.

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If any of our product candidates successfully complete clinical studies, we generally plan to seek regulatory approval to market our product candidates in the United States, the European Union, or EU, and in additional foreign countries where we believe there is a viable commercial opportunity and significant patient need. We have never commenced, compiled, or submitted an application seeking regulatory approval to market any product candidate. We may never receive regulatory approval to market any product candidates even if such product candidates successfully complete clinical studies, which would adversely affect our viability. To obtain regulatory approval in countries outside the United States, we must comply with numerous and varying regulatory requirements of such other countries regarding safety, efficacy, chemistry, manufacturing and controls, clinical studies, commercial sales, pricing, and distribution of our product candidates. We may also rely on collaborators or partners to conduct the required activities to support an application for regulatory approval, and to seek approval, for one or more of our product candidates. We cannot be sure that any collaborators or partners will conduct these activities or do so within the timeframe we desire. Even if we (or any collaborators or partners) are successful in obtaining approval in one jurisdiction, we cannot ensure that we will obtain approval in any other jurisdictions. If we are unable to obtain approval for our product candidates in multiple jurisdictions, our revenue and results of operations could be negatively affected.

Even if we receive regulatory approval to market any of our product candidates, we cannot assure you that any such product candidate will be successfully commercialized, widely accepted in the marketplace or more effective than other commercially available alternatives.

Investment in biopharmaceutical product development involves significant risk that any product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval, and become commercially viable. We cannot provide any assurance that we will be able to successfully advance any of our product candidates through the development process or, if approved, successfully commercialize any of our product candidates.

We may not be successful in our efforts to continue to create a pipeline of product candidates or to develop commercially successful products. If we fail to successfully identify and develop additional product candidates, our commercial opportunity may be limited.

One of our strategies is to identify and pursue clinical development of additional product candidates. We currently have several compounds in the research, discovery, screening, and preclinical stages of development. Identifying, developing, obtaining regulatory approval, and commercializing additional product candidates for the treatment of disorders of the brain and nervous system will require substantial additional funding beyond the net proceeds of this offering and is prone to the risks of failure inherent in drug development. We cannot provide you any assurance that we will be able to successfully identify or acquire additional product candidates, advance any of these additional product candidates through the development process, successfully commercialize any such additional product candidates, if approved, or assemble sufficient resources to identify, acquire, develop or, if approved, commercialize additional product candidates. If we are unable to successfully identify, acquire, develop, and commercialize additional product candidates, our commercial opportunity may be limited.

We may not be able to conduct, or contract others to conduct, animal testing in the future, which could harm our research and development activities.

Certain laws and regulations relating to drug development require us to test our product candidates on animals before initiating clinical studies involving humans. Animal testing activities have been the subject of controversy and adverse publicity. Animal rights groups and other organizations and individuals have attempted to stop animal testing activities by pressing for legislation and regulation in these areas and by

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disrupting these activities through protests and other means. To the extent the activities of these groups are successful, our research and development activities may be interrupted or delayed.

We have concentrated our research and development efforts on the treatment of disorders of the brain and nervous system, a field that has seen limited success in drug development. Further, our product candidates are based on new approaches and novel technology, which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval.

We have focused our research and development efforts on addressing disorders of the brain and nervous system, including painful DPN, PTSD, and Parkinson's disease cognitive impairment. Efforts by biopharmaceutical companies in the field of disorders of the brain and nervous system have seen limited successes in drug development. There are few effective therapeutic options available for patients with painful DPN, PTSD, or Parkinson's disease cognitive impairment. Our future success is highly dependent on the successful development of our discovery platform technology and our product candidates for treating disorders of the brain and nervous system. Developing and, if approved, commercializing our product candidates for treatment of disorders of the brain and nervous system subjects us to a number of challenges, including engineering product candidates and obtaining regulatory approval from the FDA and other regulatory authorities who have only a limited set of precedents to rely on.

Our approach to targeting the NMDAr is different from other antagonist and agonist agents currently being developed. Our proprietary compounds are designed to subtly modulate NMDArs. This strategy may not prove to be successful. We cannot be sure that our approach will yield satisfactory therapeutic products that are safe and effective, scalable, or profitable.

Moreover, public perception of drug safety issues, including adoption of new therapeutics or novel approaches to treatment, may adversely influence the willingness of subjects to participate in clinical studies, or if approved, of physicians to prescribe our products.

We may encounter difficulties in enrolling subjects in our clinical studies, thereby delaying or preventing development of our product candidates.

There is no precise method of establishing the actual number of people with disorders of the brain and nervous system in any geography over any time period. We estimate that neuropathic pain affects approximately 18 million people in the United States, and approximately 5.5 million of those suffer from painful DPN. It is estimated that over 8.5 million people suffer from PTSD. If the actual number of people with disorders of the brain and nervous system is lower than we believe, we may experience difficulty in enrolling subjects in our clinical studies, thereby delaying development of our product candidates. Furthermore, we may experience difficulties in subject enrollment in our clinical studies for a variety of other reasons, including:

the subject eligibility criteria defined in the protocol, including biomarker-driven identification and/or certain highly-specific criteria related to stage of disease progression, which may limit the patient populations eligible for our clinical studies to a greater extent than competing clinical studies for the same indication that do not have biomarker-driven patient eligibility criteria;

eligibility requirements mandated by regulatory agencies which may limit the number of eligible patients in a given disorder;

the size of the study population required for analysis of the study's primary endpoints;

the proximity of subjects to a study site;

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the design of the study;

our use of academic sites, which are less accustomed to running clinical studies and managing enrollment;

public perception of drug safety issues;

our ability to recruit clinical study investigators with the appropriate competencies and experience;

competing clinical studies for similar therapies or targeting patient populations meeting our patient eligibility criteria;

clinicians' and patients' perceptions as to the potential advantages and side effects of the product candidate being studied in relation to other available therapies and product candidates;

our ability to obtain and maintain patient consents; and

the risk that subjects enrolled in clinical studies will not complete such studies, for any reason.

For instance, we have experienced and may continue to experience slower than what may be considered typical durations for subject enrollment as a result of our strict enrollment criteria in our painful DPN and fibromyalgia studies. If we are unable to successfully enroll subjects in a timely way for the clinical studies for our product candidates, our clinical studies could be significantly delayed, which could materially affect our financial condition and results of operations.

Our clinical studies may fail to demonstrate adequate safety and efficacy of our product candidates, which would prevent, delay, or limit the scope of regulatory approval and commercialization.

Before obtaining regulatory approvals for the commercial sale of any of our product candidates, we must, among other requirements, demonstrate through lengthy, complex, and expensive preclinical studies and clinical studies that our product candidates are both safe and effective for use in each target indication. Each product candidate must demonstrate an adequate risk versus benefit profile in its intended patient population and for its intended use.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical study process. The results of preclinical studies of our product candidates may not be predictive of the results of early-stage or later-stage clinical studies, and results of early-stage clinical studies of our product candidates may not be predictive of the results of later-stage clinical studies. The results of clinical studies in one set of subject or disease indications may not be predictive of those obtained in another. In some instances, there can be significant variability in safety or efficacy results between different clinical studies of the same product candidate due to numerous factors, including changes in study procedures set forth in protocols, differences in the size and type of the patient populations, changes in and lack of adherence to the dosing regimen and other clinical study protocols, and the rate of dropout among clinical study participants. Product candidates in later stages of clinical studies may fail to show the desired safety and efficacy profile despite having progressed through preclinical studies and initial clinical studies. A number of companies in the biopharmaceutical industry have suffered significant setbacks in later-stage clinical studies due to lack of efficacy or safety issues, notwithstanding promising results in early-stage studies. This is particularly true in disorders of the brain and nervous system, where failure rates historically have been higher than in other disease areas. Most product candidates that begin clinical studies are never approved by regulatory authorities for commercialization.

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We have limited experience in designing clinical studies and may be unable to design and execute a clinical study to support marketing approval. We cannot be certain that our current clinical studies or any other future clinical studies will be successful. Additionally, any safety concerns observed in any one of our clinical studies in our targeted indications could limit the prospects for regulatory approval of our product candidates in those, and other indications, which could have a material adverse effect on our business, financial condition, and results of operations.

In addition, even if such clinical studies are successfully completed, we cannot guarantee that the FDA or foreign regulatory authorities will interpret the results as we do, and more studies could be required before we submit our product candidates for approval. To the extent that the results of the studies are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, we may be required to expend significant resources, which may not be available to us, to conduct additional studies in support of potential approval of our product candidates. Even if regulatory approval is secured for any of our product candidates, the terms of such approval may limit the scope and use of our product candidates, which may also limit their commercial potential.

Our product candidates may cause serious adverse events or other undesirable side effects that could delay or prevent their regulatory approval, limit the commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any.

Serious adverse events or other undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay, or halt clinical studies, and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA or other regulatory authorities.

Further, clinical studies by their nature utilize a sample of the potential patient population for a limited duration of exposure. Rare and severe side effects of a product candidate may only be uncovered with a significantly larger number of patients exposed to the product candidate. If our product candidates receive marketing approval and we or others identify undesirable side effects caused by such product candidates (or any other similar products) after such approval, a number of potentially significant negative consequences could result, including:

regulatory authorities may suspend, withdraw, or limit their approval of such products;

regulatory authorities may require the addition of labeling statements, such as a "boxed" warning or a contraindication;

we may be required to change the way such products are distributed or administered;

we may be required to conduct additional post-marketing studies and surveillance;

we may be required to implement a risk evaluation and mitigation strategy, or REMS, or create a medication guide outlining the risks of such side effects for distribution to patients;

we may be subject to regulatory investigations and government enforcement actions;

subjects in a clinical study may experience severe or unexpected drug-related side effects;

we may decide, or regulatory authorities may require us, to conduct additional clinical studies or abandon product development programs;

we may decide to remove such products from the marketplace;

we could be sued and held liable for injury caused to individuals exposed to or taking our products;

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the product may become less competitive; and

our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidates, could substantially increase the costs of commercializing our product candidates, and could significantly impact our ability to successfully commercialize our product candidates and generate revenues.

Failures or delays in the commencement or completion of, or ambiguous or negative results from, our ongoing or planned clinical studies of our product candidates could result in increased costs to us and could delay, prevent, or limit our ability to generate revenue and continue our business.

We do not know whether any of our ongoing or planned clinical studies will begin or be completed on schedule, if at all, as the commencement and completion of clinical studies can be delayed or prevented for a number of reasons, including, among others:

the FDA or other regulatory bodies may not authorize us or our investigators to commence our planned clinical studies or any other clinical studies we may initiate, or may suspend our clinical studies, for example, through imposition of a clinical hold;

delays in filing or receiving approvals of additional investigational new drug, or IND, applications that may be required;

lack of adequate funding to continue our clinical studies and preclinical studies;

negative results from our ongoing preclinical studies;

delays in reaching or failing to reach agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and study sites;

inadequate quantity or quality of a product candidate or other materials necessary to conduct clinical studies, for example delays in the manufacturing of sufficient supply of finished drug product;

difficulties obtaining ethics committee or Institutional Review Board, or IRB, approval to conduct a clinical study at a prospective site or sites;

challenges in recruiting and enrolling subjects to participate in clinical studies, the proximity of subjects to study sites, eligibility criteria for the clinical study, the nature of the clinical study protocol, the availability of approved effective treatments for the relevant disease, and competition from other clinical study programs for similar indications;

severe or unexpected drug-related side effects experienced by subjects in a clinical study;

we may decide, or regulatory authorities may require us, to conduct additional clinical studies or abandon product development programs;

delays in validating, or inability to validate, any endpoints utilized in a clinical study;

the FDA may disagree with our clinical study design and our interpretation of data from clinical studies, or may change the requirements for approval even after it has reviewed and commented on the design for our clinical studies;

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reports from preclinical or clinical testing of other NMDAr-dependent therapies that raise safety or efficacy concerns; and

difficulties retaining subjects who have enrolled in a clinical study but may be prone to withdraw due to rigors of the clinical studies, lack of efficacy, side effects, personal issues, or loss of interest.

Clinical studies may also be delayed or terminated as a result of ambiguous or negative interim results. In addition, a clinical study may be suspended or terminated by us, the FDA, the IRBs at the sites where the IRBs are overseeing a clinical study, a data and safety monitoring board, or DSMB, overseeing the clinical study at issue or other regulatory authorities due to a number of factors, including, among others:

failure to conduct the clinical study in accordance with regulatory requirements or our clinical protocols;

inspection of the clinical study operations or study sites by the FDA or other regulatory authorities that reveals deficiencies or violations that require us to undertake corrective action, including in response to the imposition of a clinical hold;

unforeseen safety issues, including any that could be identified in our ongoing preclinical or clinical studies, adverse side effects or lack of effectiveness;

changes in government regulations or administrative actions;

problems with clinical supply materials; and

lack of adequate funding to continue clinical studies.

Changes in regulatory requirements, FDA guidance, or unanticipated events during our nonclinical studies and clinical studies of our product candidates may occur, which may result in changes to nonclinical or clinical study protocols or additional nonclinical or clinical study requirements, which could result in increased costs to us and could delay our development timeline.

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

If, in the future, we are unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market any product candidates we may develop, we may not be successful in commercializing those product candidates if and when they are approved.

We do not currently have an infrastructure for the sales, marketing, and distribution of pharmaceutical products. In order to market our product candidates, if approved by the FDA or any other regulatory body, we must build our sales, marketing, managerial, and other non-technical capabilities, or make arrangements with third parties to perform these services. There are risks involved with both establishing our own commercial capabilities and entering into arrangements with third parties to perform these services. For example, recruiting and training a sales force or reimbursement specialists is expensive and

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time-consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing and other commercialization capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our commercialization personnel.

If we enter into arrangements with third parties to perform sales, marketing, commercial support, and distribution services, our product revenue or the profitability of product revenue may be lower than if we were to market and sell any products we may develop ourselves. In addition, we may not be successful in entering into arrangements with third parties to commercialize our product candidates or may be unable to do so on terms that are favorable to us. We may have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish commercialization capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates if approved.

If we are unable to establish adequate sales, marketing, and distribution capabilities, whether independently or with third parties, or if we are unable to do so on commercially reasonable terms, our business, results of operations, financial condition, and prospects will be materially adversely affected.

Even if we receive marketing approval for our product candidates, our product candidates may not achieve broad market acceptance by physicians, patients, healthcare payors, or others in the medical community, which would limit the revenue that we generate from their sales.

The commercial success of our product candidates, if approved by the FDA or other applicable regulatory authorities, will depend upon the awareness and acceptance of our product candidates among the medical community, including physicians, patients, and healthcare payors. If any of our product candidates are approved but do not achieve an adequate level of acceptance by physicians, patients, healthcare payors, and others in the medical community, we may not generate sufficient revenue to become or remain profitable. Market acceptance of our product candidates, if approved, will depend on a number of factors, including, among others:

the safety, efficacy, and other potential advantages of our approved product candidates compared to other available therapies;

limitations or warnings contained in the labeling approved for our product candidates by the FDA or other applicable regulatory authorities;

any restrictions on the use of our products together with other medications;

the prevalence and severity of any adverse effects associated with our product candidates;

inability of certain types of patients to take our products;

the clinical indications for which our product candidates are approved;

availability of alternative treatments already approved or expected to be commercially launched in the near future;

the potential and perceived advantages of our approved product candidates over current treatment options or alternative treatments, including future alternative treatments;

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the size of the target patient population, and the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

the strength of marketing and distribution support and timing of market introduction of competitive products;

publicity concerning our products or competing products and treatments;

pricing and cost effectiveness;

the effectiveness of our sales and marketing strategies;

our ability to increase awareness of our product candidates through sales and marketing efforts;

our ability to obtain sufficient third-party payor coverage or reimbursement; or

the willingness of patients to pay out-of-pocket in the absence of third-party payor coverage.

If our product candidates are approved but do not achieve an adequate level of acceptance by patients, physicians, and payors, we may not generate sufficient revenue from our product candidates to become or remain profitable. Before granting reimbursement approval, healthcare payors may require us to demonstrate that our product candidates, in addition to treating these target indications, also provide incremental health benefits to patients. Our efforts to educate the medical community and third-party payors about the benefits of our product candidates may require significant resources and may never be successful.

Even if we obtain regulatory approval for our product candidates, our products will remain subject to extensive regulatory scrutiny.

Even if we receive marketing approval for our product candidates, regulatory authorities may still impose significant restrictions on our product candidates, indicated uses or marketing, or impose ongoing requirements for potentially costly post-approval studies. If any of our product candidates are approved, they will be subject to ongoing regulatory requirements, including for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies, and submission of safety, efficacy, and other post-marketing information, including both federal and state requirements in the United States and requirements of comparable foreign regulatory authorities.

Manufacturers and manufacturers' facilities are required to comply with extensive requirements imposed by the FDA and comparable foreign regulatory authorities, including, for example, ensuring that quality control and manufacturing procedures conform to current Good Manufacturing Practice, or cGMP, regulations. As such, we and our contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP and adherence to commitments made in any new drug application, or NDA, or comparable marketing approval. 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.

The FDA has significant post-marketing authority, including, for example, the authority to require labeling changes based on new safety information and to require post-marketing studies or clinical studies to evaluate serious safety risks related to the use of a drug. The FDA also has the authority to require, as part of an NDA or post-approval, the submission of a REMS. Many chronic pain therapies have been recognized as drugs of abuse and require REMS. While NYX-2925 has been well tolerated in clinical studies to date and has shown low abuse potential in preclinical drug discrimination studies, the FDA may still

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determine that NYX-2925 requires a REMS program. Any REMS required by the FDA may lead to increased costs to assure compliance with new post-approval regulatory requirements and potential requirements or restrictions on the sale of approved products, all of which could lead to lower sales volume and revenue.

Any regulatory approvals that we receive for our product candidates will be subject to limitations on the approved indicated uses for which the product may be marketed and promoted or to the conditions of approval (including the requirement to implement a REMS), or contain requirements for potentially costly post-marketing testing. We will be required to report certain adverse reactions and production problems, if any, to the FDA and comparable foreign regulatory authorities. Any new legislation addressing drug safety issues could result in delays in product development or commercialization, or increased costs to assure compliance. The FDA and other agencies, including the U.S. Department of Justice, closely regulate and monitor the post-approval marketing and promotion of products to ensure that they are manufactured, marketed, and distributed only for the approved indications and in accordance with the provisions of the approved labeling. We will have to comply with requirements concerning advertising and promotion for our products. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product's approved label. As such, we may not promote our products for indications or uses for which they do not have approval. The holder of an approved NDA or comparable marketing approval must submit new or supplemental applications and obtain approval for certain changes to the approved product, product labeling, or manufacturing process. We could also be asked to conduct post-marketing studies or clinical studies to verify the safety and efficacy of our products in general or in specific patient subsets.

If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, or disagrees with the promotion, marketing or labeling of a product, such regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things:

issue warning or untitled letters that would result in adverse publicity;

impose civil or criminal penalties;

suspend or withdraw regulatory approvals;

suspend any of our ongoing clinical studies;

refuse to approve pending applications or supplements to approved applications submitted by us;

impose restrictions on our operations, including closing our contract manufacturers' facilities;

seize or detain products; or

request that we initiate a product recall.

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 our ability to commercialize and generate revenue from our products. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results will be adversely affected.

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We face significant competition in an environment of rapid technological and scientific change, and there is a possibility that our competitors may achieve regulatory approval before us or develop therapies that are safer, more advanced, or more effective than ours, which may negatively impact our ability to successfully market or commercialize any product candidates we may develop and ultimately harm our financial condition.

The development and commercialization of new drug products is highly competitive. Moreover, treating brain and nervous system disorders is characterized by strong and increasing competition, with a strong emphasis on intellectual property. We may face competition with respect to any product candidates that we seek to develop or commercialize in the future from major pharmaceutical companies, specialty pharmaceutical companies, and biotechnology companies worldwide. Potential competitors also include academic institutions, government agencies, and other public and private research organizations that conduct research, seek patent protection, and establish collaborative arrangements for research, development, manufacturing, and commercialization.

Companies that we are aware are developing NMDAr-targeted therapies include large companies with significant financial resources, such as Adamas Pharmaceuticals Inc., Allergan plc, AmKor Pharma, Inc., Avanir Pharmaceuticals Inc., Axsome Therapeutics, Inc., Biohaven Pharmaceutical Holding Co. Ltd., Cadent Therapeutics, Inc., Cerecor Inc., Eli Lilly and Company, Genentech Inc., Immune Pharmaceuticals Inc., Intra-Cellular Therapies, Inc., Janssen Pharmaceuticals, Inc., NeuroRx, Inc., Newron Pharmaceuticals S.p.A., Otonomy, Inc., Relmada Therapeutics, Inc., Sage Therapeutics, Inc., UCB S.A., and Vistagen Therapeutics, Inc.

Many of our current or potential competitors, either alone or with their strategic partners, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical studies, obtaining regulatory approvals, and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical study sites and patient registration for clinical studies, as well as in acquiring technologies complementary to, or necessary for, our programs. Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient, or are less expensive than any products that we may develop. Furthermore, currently approved products could be discovered to have application for treatment of disorders of the brain and nervous system indications, which could give such products significant regulatory and market timing advantages over any of our product candidates. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours and may obtain orphan product exclusivity from the FDA for indications our product candidates are targeting, which could result in our competitors establishing a strong market position before we are able to enter the market. Additionally, products or technologies developed by our competitors may render our potential product candidates uneconomical or obsolete, and we may not be successful in marketing any product candidates we may develop against competitors.

In addition, we could face litigation or other proceedings with respect to the scope, ownership, validity and/or enforceability of our patents relating to our competitors' products and our competitors may allege that our products infringe, misappropriate, or otherwise violate their intellectual property. The availability

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of our competitors' products could limit the demand, and the price we are able to charge, for any products that we may develop and commercialize. See "Risks related to our intellectual property rights."

Even if we receive marketing approval for our product candidates in the United States, we may never receive regulatory approval to market our product candidates outside of the United States.

In order to market any product outside of the United States, we must establish and comply with the numerous and varying safety, efficacy, and other regulatory requirements of other countries. Approval procedures vary among countries and can involve additional product candidate testing and additional administrative review periods. The time required to obtain approvals in other countries might differ from that required to obtain FDA approval. The marketing approval processes in other countries may implicate all of the risks detailed above regarding FDA approval in the United States as well as other risks. In particular, in many countries outside of the United States, products must receive pricing and reimbursement approval before the product can be commercialized. Obtaining this approval can result in substantial delays in bringing products to market in such countries. Marketing approval in one country does not ensure marketing approval in another, but a failure or delay in obtaining marketing approval in one country may have a negative effect on the regulatory process in others. Failure to obtain marketing approval in other countries or any delay or other setback in obtaining such approval would impair our ability to market our product candidates in such foreign markets. Any such impairment would reduce the size of our potential market, which could have a material adverse impact on our business, results of operations, and prospects.

Risks related to regulatory approval and other legal compliance matters

The regulatory approval processes of the FDA and comparable foreign regulatory authorities are lengthy, time-consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, we will be unable to generate product revenue and our business will be substantially harmed.

The time required to obtain approval by the FDA and comparable foreign regulatory authorities is unpredictable, typically takes many years following the commencement of clinical studies, and depends upon numerous factors, including the type, complexity, and novelty of the product candidates involved. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate's clinical development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve an application. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. Moreover, the FDA or other regulatory authorities may fail to approve companion diagnostics that we contemplate using with our therapeutic product candidates. We have not submitted for, or obtained regulatory approval for any product candidate, and it is possible that none of our existing product candidates or any product candidates we may seek to develop in the future will ever obtain regulatory approval.

Applications for our product candidates could fail to receive regulatory approval for many reasons, including but not limited to the following:

the FDA or comparable foreign regulatory authorities may disagree with the design, implementation, or results of our clinical studies;

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the FDA or comparable foreign regulatory authorities may determine that our product candidates are not safe and effective, only moderately effective, or have undesirable or unintended side effects, toxicities, or other characteristics that preclude our obtaining marketing approval or prevent or limit commercial use;

the population studied in the clinical program may not be sufficiently broad or representative to assure efficacy and safety in the full population for which we seek approval;

the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical studies;

the data collected from clinical studies of our product candidates may not be sufficient to support the submission of an NDA or other submission, or to obtain regulatory approval in the United States or elsewhere;

we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a product candidate's risk-benefit ratio for its proposed indication is acceptable;

the FDA or comparable foreign regulatory authorities may find deficiencies with or fail to approve the manufacturing processes, test procedures and specifications, or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and

the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

This lengthy approval process, as well as the unpredictability of the results of clinical studies, may result in our failing to obtain regulatory approval to market any of our product candidates, which would significantly harm our business, results of operations, and prospects.

We are subject to healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm, and diminished profits and future earnings.

Although we do not currently have any products on the market, once we begin commercializing our products, we may be subject to additional healthcare statutory and regulatory requirements and enforcement by the federal government and the states and foreign governments in which we conduct our business. Healthcare providers, physicians, and others will play a primary role in the recommendation and prescription of our product candidates, if approved. Our future arrangements with third-party payors will expose us to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell, and distribute our product candidates, if we obtain marketing approval. Restrictions under applicable federal and state healthcare laws and regulations include the following:

the federal Anti-Kickback Statute, or AKS, prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving, or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order, or recommendation of, any good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid;

the federal False Claims Act imposes criminal and civil penalties, including those from civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented,

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    to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government;

the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security, and transmission of individually identifiable health information;

the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact, or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items, or services;

the federal transparency requirements, sometimes referred to as the "Sunshine Act," under the Patient Protection and Affordable Care Act, or the ACA, require manufacturers of drugs, devices, biologics, and medical supplies that are reimbursable under Medicare, Medicaid, or the Children's Health Insurance Program to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests; and

analogous state laws and regulations, such as state anti-kickback and false claims laws and transparency laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers, and some state laws require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring drug manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and drug pricing.

Ensuring that our future business arrangements with third parties comply with applicable healthcare laws and regulations could be costly. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations, or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations, including anticipated activities to be conducted by our sales team, were found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal, and administrative penalties, damages, fines, and exclusion from government funded healthcare programs, such as Medicare and Medicaid, any of which could substantially disrupt our operations. If any of the physicians or other providers or entities with whom we expect to do business is found not to be in compliance with applicable laws, they may be subject to criminal, civil, or administrative sanctions, including exclusions from government funded healthcare programs.

If any of our product candidates obtain regulatory approval, additional competitors could enter the market with generic versions of such drugs, which may result in a material decline in sales of affected products.

Under the Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act, a pharmaceutical manufacturer may file an abbreviated new drug application, or ANDA, seeking approval of a generic copy of an approved, small-molecule innovator product. Under the Hatch-Waxman Act, a manufacturer may also submit an NDA, under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act that references the FDA's prior approval of the small-molecule innovator product. A 505(b)(2) NDA product may be for a new or improved version of the original innovator product. The Hatch-Waxman Act also provides for certain periods of regulatory exclusivity, which preclude FDA approval (or in some

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circumstances, FDA filing and reviewing) of an ANDA or 505(b)(2) NDA. These include, subject to certain exceptions, the period during which an FDA-approved drug is subject to orphan drug exclusivity. For example, a drug that is granted regulatory approval may be eligible for five years of marketing exclusivity in the United States following regulatory approval if that drug is classified as a new chemical entity, or NCE. A drug can be classified as a NCE if the FDA has not previously approved any other drug containing the same active moiety. While we believe there is a likelihood that the FDA would grant NCE status to both NYX-2925 and NYX-783 if both are granted regulatory approval, NYX-2925 and NYX-783 have the same structural formula but differ in spatial orientation, i.e., are separate stereoisomers of each other, and there can be no assurance that both will be granted NCE exclusivity.

In addition to the benefits of regulatory exclusivity, an innovator NDA holder may have patents claiming the active ingredient, product formulation or an approved use of the drug, which would be listed with the product in the FDA publication, "Approved Drug Products with Therapeutic Equivalence Evaluations," known as the "Orange Book." If there are patents listed in the Orange Book, a generic or 505(b)(2) applicant that seeks to market its product before expiration of the patents must include in the ANDA a "Paragraph IV certification," challenging the validity or enforceability of, or claiming non-infringement of, the listed patent or patents. Appropriate notice of the certification must be given to the innovator, too, and if within 45 days of receiving such notice the innovator sues to protect its patents, approval of the ANDA is stayed for 30 months, or as lengthened or shortened by the court.

Accordingly, if any of our product candidates are approved, competitors could file ANDAs for generic versions of our small-molecule drug products or 505(b)(2) NDAs that reference our small-molecule drug products, respectively. If there are patents listed for our small-molecule drug products in the Orange Book, those ANDAs and 505(b)(2) NDAs would be required to include a certification as to each listed patent indicating whether the ANDA applicant does or does not intend to challenge the patent. We cannot predict which, if any, patents in our current portfolio or patents we may obtain in the future will be eligible for listing in the Orange Book, how any generic competitor would address such patents, whether we would sue on any such patents, or the outcome of any such suit.

We may not be successful in securing or maintaining proprietary patent protection for products and technologies we develop or license. Moreover, if any of our owned or in-licensed patents that are listed in the Orange Book are successfully challenged by way of a Paragraph IV certification and subsequent litigation, the affected product could immediately face generic competition and its sales would likely decline rapidly and materially. See "Risks related to our intellectual property rights."

The FDA and other regulatory agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses. If we are found to have improperly promoted off-label uses, we may become subject to significant liability.

The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products, such as NYX-2925, NYX-783, and NYX-458, if approved. In particular, a product may not be promoted for uses that are not approved by the FDA or such other regulatory agencies as reflected in the product's approved labeling. For example, if we receive marketing approval for NYX-2925 as a treatment for painful DPN, physicians may nevertheless prescribe NYX-2925 to their patients in a manner that is inconsistent with the approved label. If we are found to have promoted such off-label uses, we may become subject to significant liability. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If we cannot successfully

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manage the promotion of our product candidates, if approved, we could become subject to significant liability, which would materially adversely affect our business and financial condition.

Even if approved, reimbursement policies could limit our ability to sell our product candidates.

Market acceptance and sales of our product candidates will depend on reimbursement policies and may be affected by healthcare reform measures. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels for those medications. Cost containment is a primary concern in the U.S. healthcare industry and elsewhere. Government authorities and these third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. We cannot be sure that reimbursement will be available for our product candidates and, if reimbursement is available, the level of such reimbursement. Reimbursement may impact the demand for, or the price of, our product candidates. If reimbursement is not available or is available only at limited levels, we may not be able to successfully commercialize our product candidates.

In some foreign countries, particularly in Canada and European countries, the pricing of prescription pharmaceuticals is subject to strict governmental control. In these countries, pricing negotiations with governmental authorities can take six to 12 months or longer after the receipt of regulatory approval and product launch. To obtain favorable reimbursement for the indications sought or pricing approval in some countries, we may be required to conduct a clinical study that compares the cost-effectiveness of our product candidates with other available therapies. If reimbursement for our product candidates is unavailable in any country in which we seek reimbursement, if it is limited in scope or amount, if it is conditioned upon our completion of additional clinical studies, or if pricing is set at unsatisfactory levels, our operating results could be materially adversely affected.

Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we may obtain.

In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay regulatory approval of our product candidates, restrict or regulate post-approval activities, and affect our ability to profitably sell any product candidates for which we obtain marketing approval.

Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality, and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives. In March 2010, President Obama signed into law the ACA, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry, and impose additional health policy reforms.

Among the provisions of the ACA of importance to our product candidates are the following:

an annual, nondeductible fee on any entity that manufactures or imports certain branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs;

a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted, or injected;

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an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the average manufacturer price for branded and generic drugs, respectively;

expansion of healthcare fraud and abuse laws, including the False Claims Act and the AKS, which include, among other things, new government investigative powers and enhanced penalties for non-compliance;

a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer's outpatient drugs to be covered under Medicare Part D;

extension of manufacturers' Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations;

expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals, thereby potentially increasing manufacturers' Medicaid rebate liability;

expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

the requirements under the federal open payments program and its implementing regulations;

a requirement to annually report drug samples that manufacturers and distributors provide to physicians; and

a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

Since its enactment, some of the provisions of the ACA have yet to be fully implemented, while certain provisions have been subject to judicial, congressional, and executive challenges. As a result, there have been delays in the implementation of, and action taken to repeal or replace, certain aspects of the ACA. The U.S. Supreme Court has upheld certain key aspects of the legislation, including a tax-based shared responsibility payment imposed on certain individuals who fail to maintain qualifying health coverage for all or part of a year, which is commonly known as the requirement that all individuals maintain health insurance coverage or pay a penalty, referred to as the "individual mandate." However, as a result of tax reform legislation passed in late December 2017, the individual mandate has been eliminated effective January 1, 2019. According to the Congressional Budget Office, the repeal of the individual mandate will cause 13 million fewer Americans to be insured in 2027 and premiums in insurance markets may rise.

Since January 2017, President Trump has signed two Executive Orders designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. One Executive Order directs federal agencies with authorities and responsibilities under the ACA to waive, defer, grant exemptions from, or delay the implementation of any provision of the ACA that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. The second Executive Order terminates the cost-sharing subsidies, or CSR, that reimburse insurers under the ACA. Several state Attorneys General filed suit to stop the administration from terminating the subsidies, but their request for a restraining order was denied by a federal judge in California on October 25, 2017. The loss of the CSR

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payments is expected to increase premiums on certain policies issued by qualified health plans under the ACA. In addition, the Centers for Medicare & Medicaid Services, or CMS, has recently proposed regulations that would give states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces, which may have the effect of relaxing the essential health benefits required under the ACA for plans sold through such marketplaces. Litigation and legislation over the ACA are likely to continue, with unpredictable and uncertain results. We continue to evaluate the effect that the ACA and its possible repeal and replacement has on our business.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes included aggregate reductions to Medicare payments to providers of 2% per fiscal year through 2027. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several providers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment methodologies and in additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payers. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.

Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for approved products. In addition, there have been several recent Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare and reform government program reimbursement methodologies for drugs. We cannot be sure whether additional legislative changes will be enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals of our product candidates, if any, may be. In addition, increased scrutiny by the U.S. Congress of the FDA's approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent labeling and post-marketing testing and other requirements.

It is likely that federal and state legislatures within the United States and foreign governments will continue to consider changes to existing health care legislation. We cannot predict the reform initiatives that may be adopted in the future or whether initiatives that have been adopted will be repealed or modified. The continuing efforts of the government, insurance companies, managed care organizations, and other health care payors of to contain or reduce costs of health care may adversely affect the demand for any product candidates for which we may obtain regulatory approval, our ability to set a price that we believe is fair for our products, our ability to obtain coverage and reimbursement approval for a product, our ability to generate revenue and achieve or maintain profitability; and the level of taxes that we are required to pay.

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Our future growth may depend, in part, on our ability to commercialize our product candidates in foreign markets, where we would be subject to additional regulatory burdens and other risks and uncertainties.

Our future profitability may depend, in part, on our ability to commercialize our product candidates in foreign markets for which we may rely on collaboration with third parties. If we commercialize our product candidates in foreign markets, we would be subject to additional risks and uncertainties, including:

our customers' ability to obtain reimbursement for our product candidates in foreign markets;

our inability to directly control commercial activities because we are relying on third parties;

the burden of complying with complex and changing foreign regulatory, tax, accounting, and legal requirements;

different medical practices and customs in foreign countries affecting acceptance in the marketplace;

import or export licensing requirements;

longer accounts receivable collection times;

longer lead times for shipping;

language barriers for technical training;

reduced protection of intellectual property rights in some foreign countries;

the existence of additional potentially relevant third-party intellectual property rights;

foreign currency exchange rate fluctuations; and

the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.

Foreign sales of our product candidates could also be adversely affected by the imposition of governmental controls, political and economic instability, trade restrictions, and changes in tariffs.

Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.

In order to market any product outside of the United States, however, we must establish and comply with the numerous and varying safety, efficacy, and other regulatory requirements of other countries. Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, but a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the regulatory approval process in others. For example, even if the FDA or other comparable foreign regulatory authority grants marketing approval of a product candidate, comparable regulatory authorities in foreign jurisdictions must also approve the manufacturing, marketing, and promotion of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from those in the United States, including additional preclinical studies or clinical studies as clinical studies conducted in one jurisdiction may not be accepted by regulatory authorities in other jurisdictions. The marketing approval processes in other countries may implicate all of the risks detailed above regarding FDA approval in the United States, as well as other risks. In many jurisdictions outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale

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in that jurisdiction. In some cases, the price that we intend to charge for our products is also subject to approval.

Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties, and costs for us and could delay or prevent the introduction of our products in certain countries. Failure to obtain marketing approval in other countries or any delay or other setback in obtaining such approval would impair our ability to market our product candidates in such foreign markets. Any such impairment would reduce the size of our potential market, which could have a material adverse impact on our business, results of operations, and prospects.

Our employees, independent contractors, consultants, commercial partners, and vendors may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

We are exposed to the risk of fraud, misconduct, or other illegal activity by our employees, independent contractors, consultants, commercial partners, and vendors. Misconduct by these parties could include intentional, reckless, and negligent conduct that fails to: comply with the laws of the FDA and other comparable foreign regulatory authorities; provide true, complete and accurate information to the FDA and other comparable foreign regulatory authorities; comply with manufacturing standards we have established; comply with healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws; or report financial information or data accurately or to disclose unauthorized activities to us. If we obtain FDA approval of any of our product candidates and begin commercializing those products in the United States, our potential exposure under such laws will increase significantly, and our costs associated with compliance with such laws are also likely to increase. In particular, sales, marketing, and other business arrangements in the healthcare industry are subject to extensive laws designed to prevent fraud, kickbacks, self-dealing, and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales and commission, certain customer incentive programs, and other business arrangements generally. Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical studies, which could result in regulatory sanctions and cause serious harm to our reputation. We have adopted a code of business conduct and ethics, but it is not always possible to identify and deter misconduct by employees and third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws. 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 imposition of significant fines or other sanctions.

If we or any contract manufacturers and suppliers we engage fail to comply with environmental, health, and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.

We and any contract manufacturers and suppliers we engage are subject to numerous federal, state, and local environmental, health, and safety laws, regulations, and permitting requirements, including those governing laboratory procedures; the generation, handling, use, storage, treatment, and disposal of hazardous and regulated materials and wastes; the emission and discharge of hazardous materials into the ground, air, and water; and employee health and safety. Under certain environmental laws, we could be held responsible for costs relating to any contamination at our current or past facilities and at third-party facilities. We also could incur significant costs associated with civil or criminal fines and penalties.

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We could be adversely affected by violations of the U.S. Foreign Corrupt Practices Act, or FCPA, and other worldwide anti-bribery laws.

We are subject to the FCPA, which prohibits companies and their intermediaries from making payments in violation of law to non-U.S. government officials for the purpose of obtaining or retaining business or securing any other improper advantage. We have an ongoing relationship with Sai Life Sciences Ltd., or Sai, a non-U.S. company, as a third-party supplier of custom chemical synthesis of the compounds used in our product candidates such as spiro-beta lactam. Our significant reliance on a foreign supplier demands a high degree of vigilance in preventing our employees and consultants from participation in corrupt activity, because this supplier could be deemed our agent, and we could be held responsible for its actions. The FCPA and similar anti-bribery laws to which we may be subject are complex and far-reaching in nature, and, as a result, we cannot assure you that we would not be required in the future to alter one or more of our practices to be in compliance with these laws or any changes in these laws or the interpretation thereof. Any violations of these laws, or allegations of such violations, could disrupt our operations, involve significant management distraction, and involve significant costs and expenses, including legal fees. We could also suffer severe penalties, including criminal and civil penalties, disgorgement, and other remedial measures.

Risks related to collaborations with third parties

We depend on our collaboration with Allergan and may depend on collaborations with third parties for the research, development, and commercialization of certain of the product candidates we may develop. If any such collaborations are not successful, we may not be able to realize the market potential of those product candidates.

In July 2015, we entered into a research collaboration agreement with Allergan, focused on the research and discovery of small molecules that modulate NMDArs. Under the research collaboration agreement, Allergan and we may exercise the right to pick certain product candidates from a pool of eligible compounds (which were selected based upon the results of a mutually agreed set of screening assays of molecules from our drug discovery platform) in alternating fashion. On May 16, 2018, Allergan exercised its option to acquire the compound designated AGN-241751, triggering payment of a $1.0 million option fee in connection with such exercise. Allergan may also exercise its option to acquire up to two more of its selected compounds and must pay an option exercise fee for each such compound. The collaboration involves a complex allocation of rights. Under this agreement, each time Allergan exercises its option right with respect to a particular compound, Allergan will exclusively own the intellectual property rights specific to such compound and we will not be permitted to develop or commercialize such compound. When Allergan exercises one of its options with respect to a particular compound, we will not be entitled to any milestones, royalties, or other downstream revenue with respect to that compound other than the $1.0 million exercise fee. When Allergan exercises its option on a compound that ultimately generates any revenue, we are not entitled to receive any of the resulting revenue from such product candidate and, as a result, may not realize the economic benefits of a compound we generated from our discovery platform. We cannot provide any assurance that this collaboration will enhance our business or that we will achieve significant benefits from the collaboration. Moreover, we cannot provide any assurance with respect to the success of the collaboration. See "Business—Research collaboration agreement with Allergan" for more detail.

We may seek third-party collaborators for the research, development, and commercialization of certain of the product candidates we plan to develop. Our likely collaborators for any other collaboration arrangements include large and mid-size pharmaceutical companies, biotechnology companies, or academic institutions. If we enter into any such arrangements with any third parties, we will likely have shared or

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limited control over the amount and timing of resources that our collaborators dedicate to the development or potential commercialization of any product candidates we may seek to develop with them. Our ability to generate revenue from these arrangements will depend on our collaborators' abilities to successfully perform the functions assigned to them in these arrangements. We cannot predict the success of any collaboration that we enter into.

Collaborations involving our research programs, or any product candidates we may develop, pose the following risks to us:

collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations. For example, under our collaboration agreement with Allergan, Allergan funds a certain amount for costs associated with our medicinal chemistry, screening, and profiling efforts;

collaborators may not properly obtain, maintain, enforce, or defend intellectual property or proprietary rights relating to our product candidates or research programs or may use our proprietary information in such a way as to expose us to potential litigation or other intellectual property related proceedings, including proceedings challenging the scope, ownership, validity, and enforceability of our intellectual property;

collaborators may own or co-own intellectual property covering our product candidates or research programs that results from our collaboration with them, and in such cases, we may not have the exclusive right or any right to commercialize such intellectual property or such product candidates or research programs;

we may need the cooperation of our collaborators to enforce or defend any intellectual property we contribute to or that arises out of our collaborations, which may not be provided to us;

disputes may arise between the collaborators and us that result in the delay or termination of the research, development, or commercialization of our product candidates or research programs or that result in costly litigation or arbitration that diverts management attention and resources;

collaborators may decide not to pursue development and commercialization of any product candidates we develop or may elect not to continue or renew development or commercialization programs based on clinical study results, changes in the collaborator's strategic focus or available funding, or external factors such as an acquisition that diverts resources or creates competing priorities;

collaborators may delay clinical studies, provide insufficient funding for a clinical study program, stop a clinical study or abandon a product candidate, repeat or conduct new clinical studies, or require a new formulation of a product candidate for clinical testing;

collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates or research programs if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

collaborators with marketing and distribution rights to one or more product candidates may not commit sufficient resources to the marketing and distribution of such product candidates;

we may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a change of control;

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collaborators may undergo a change of control and the new owners may decide to take the collaboration in a direction which is not in our best interest;

collaborators may become bankrupt, which may significantly delay our research or development programs, or may cause us to lose access to valuable technology, know-how, or intellectual property of the collaborator relating to our products, product candidates, or research programs;

key personnel at our collaborators may leave, which could negatively impact our ability to productively work with our collaborators;

collaborations may require us to incur short and long-term expenditures, issue securities that dilute our stockholders, or disrupt our management and business;

collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable product candidates or our discovery platform; and

collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner or at all. If a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our development or commercialization program under such collaboration could be delayed, diminished, or terminated.

In addition, the terms and conditions of collaboration agreements, including our research collaboration with Allergan, involve complex legal, business and scientific issues, and certain provisions may be susceptible to multiple interpretations. As with any complex contractual arrangement, disputes may arise between us and our collaborators regarding the terms and conditions of these agreements, including with respect to the scope of rights granted to, or restrictions placed on, each party under these agreements. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights under the agreement, or increase what we believe to be our obligations under the relevant agreement, either of which could materially harm our business, financial condition, results of operations, and prospects.

Moreover, we may face significant competition in seeking appropriate collaborations. Recent business combinations among biotechnology and pharmaceutical companies have resulted in a reduced number of potential collaborators. In addition, the negotiation process is time-consuming and complex, and we may not be able to negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the product candidate for which we are seeking to collaborate, 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 capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further develop product candidates or bring them to market and generate product revenue.

If we enter into collaborations to develop and potentially commercialize any product candidates, we may not be able to realize the benefit of such transactions if we or our collaborator elects not to exercise the rights granted under the agreement or if we or our collaborator are unable to successfully integrate a product candidate into existing operations and company culture. In addition, if our agreement with any of our collaborators terminates, our access to technology and intellectual property licensed to us by that

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collaborator may be restricted or terminate entirely, which may delay our continued development of our product candidates utilizing the collaborator's technology or intellectual property or require us to stop development of those product candidates completely. We may also find it more difficult to find a suitable replacement collaborator or attract new collaborators, and our development programs may be delayed or the perception of us in the business and financial communities could be adversely affected. Many of the risks relating to product development, regulatory approval, and commercialization described in this "Risk factors" section also apply to the activities of our collaborators and any negative impact on our collaborators may adversely affect us.

Our drug development programs and the potential commercialization of our product candidates will require substantial additional cash to fund expenses. For some of our product candidates, we may decide to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of those product candidates.

Whether we reach a definitive agreement for a collaboration will depend, among other things, upon our assessment of the collaborator's resources and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator's evaluation of a number of factors. Those factors may include the design or results of clinical studies, the likelihood of approval by the FDA or similar regulatory authorities outside the United States, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such product candidate to patients, the potential of competing products, the existence of uncertainty with respect to our ownership of technology, which can exist if there is a challenge to such ownership without regard to the merits of the challenge, and industry and market conditions generally. The collaborator may also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than the one with us for our product candidate. The terms of any collaborations or other arrangements that we may establish may not be favorable to us.

In addition, any future collaborations that we enter into may not be successful. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these collaborations. Disagreements between parties to a collaboration arrangement regarding clinical development and commercialization matters can lead to delays in the development process or commercializing the applicable product candidate and, in some cases, termination of the collaboration arrangement. These disagreements can be difficult to resolve if neither of the parties has final decision-making authority. Collaborations with pharmaceutical or biotechnology companies and other third parties often are terminated or allowed to expire by the other party. Any such termination or expiration would adversely affect us financially and could harm our business reputation.

Exclusivity and other governance provisions within our agreements with Allergan may prevent us from pursuing alternative product candidates and exercising complete control over our product candidates' development.

Pursuant to our research collaboration agreement with Allergan, during the research term defined therein, we cannot, directly or indirectly, whether alone, or with a third party, engage in any activities to identify, generate, discover, or develop small-molecule compounds that modulate NMDArs, including any collaboration compounds, except as set forth in the agreement. In addition, during the exclusivity period defined in the research collaboration agreement, we may not alone, or with a third party, directly or indirectly engage in (a) the research or preclinical development of any compound or any product for the purpose of the treatment, prevention or diagnosis of any disorders or conditions in a specified field, which

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is defined as any therapeutic, prophylactic, or diagnostic use for certain delineated psychiatric or neurocognitive disorders or conditions, and which we refer to as Allergan's Field, (b) the clinical development of any compound or any product for the treatment, prevention or diagnosis of any disorders and conditions in Allergan's Field, or the manufacture of such compound or product for such purpose, or (c) the commercialization of any compound or any product labelled, or approved or licensed by any regulatory authority, for the treatment, prevention, or diagnosis of any disorders or conditions in Allergan's Field, or the manufacture of such compound or product. We are bound by a similar set of restrictions on our research, development, and commercialization activities with respect to compounds and products in Allergan's Field under an asset contribution agreement that we entered into with Allergan in connection with Allergan's acquisition of Naurex. Except with respect to the compounds for which Allergan exercises its option under the Allergan Collaboration Agreement, Allergan is not precluded under the Allergan Collaboration Agreement or the asset contribution agreement from competing with us outside of Allergan's Field.

Further, our collaboration with Allergan is supervised by a joint steering committee, or JSC. Subject to limitations specified in the agreement, if the JSC is unable to make a decision by consensus and the parties are unable to resolve the issue after referring the matter to designated executive officers of the parties, then such disputed matter shall remain deadlocked until mutual agreement, provided that each party will have the right to make the final decision with respect to any matter concerning its respective selected compounds. These exclusivity and governance provisions may inhibit our development efforts and may materially harm our business, financial condition, results of operations, and prospects.

Risks related to our reliance on third parties

We rely, and expect that we will continue to rely, on third parties to conduct any clinical studies for our product candidates. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.

We do not have the ability to independently conduct clinical studies. We rely on medical institutions, clinical investigators, contract laboratories, and other third parties, such as CROs, to conduct clinical studies on our product candidates. For example, we have entered into a sponsored research agreement with Northwestern University, or Northwestern, through which Northwestern furnishes the laboratory facilities and equipment necessary to conduct certain research projects and related clinical studies. We enter into agreements with third-party CROs to provide monitors for and to manage data for our ongoing clinical studies. We rely heavily on these parties for execution of clinical studies for our product candidates and control only certain aspects of their activities. As a result, we have less direct control over the conduct, timing, and completion of these clinical studies and the management of data developed through clinical studies than would be the case if we were relying entirely upon our own staff. Communicating with outside parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating activities. Outside parties may:

have staffing difficulties;

fail to comply with contractual obligations;

experience regulatory compliance issues;

undergo changes in priorities or become financially distressed; or

form relationships with other entities, some of which may be our competitors.

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These factors may materially adversely affect the willingness or ability of third parties to conduct our clinical studies and may subject us to unexpected cost increases that are beyond our control. Nevertheless, we are responsible for ensuring that each of our clinical studies is conducted in accordance with the applicable protocol, legal, regulatory, and scientific requirements and standards, and our reliance on CROs does not relieve us of our regulatory responsibilities. We and our CROs are required to comply with regulations and guidelines, including Good Clinical Practices, or GCPs, for conducting, monitoring, recording, and reporting the results of clinical studies to ensure that the data and results are scientifically credible and accurate, and that the study patients are adequately informed of the potential risks of participating in clinical studies. These regulations are enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities for any products in clinical development. The FDA enforces GCP regulations through periodic inspections of clinical study sponsors, principal investigators and study sites. If we or our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical studies may be deemed unreliable and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical studies before approving our marketing applications. We cannot assure you that, upon inspection, the FDA will determine that any of our clinical studies comply with GCPs. In addition, our clinical studies must be conducted with product candidates produced under cGMP regulations and will require a large number of test patients. Our failure or the failure of our CROs to comply with these regulations may require us to repeat clinical studies, which would delay the regulatory approval process and could also subject us to enforcement action up to and including civil and criminal penalties.

Although we do design our clinical studies for our product candidates, CROs conduct all of the clinical studies. As a result, many important aspects of our drug development programs are outside of our direct control. In addition, the CROs may not perform all of their obligations under arrangements with us or in compliance with regulatory requirements, but we remain responsible and are subject to enforcement action that may include civil penalties and criminal prosecution for any violations of FDA laws and regulations during the conduct of our clinical studies. If the CROs do not perform clinical studies in a satisfactory manner, breach their obligations to us, or fail to comply with regulatory requirements, the development and commercialization of our product candidates may be delayed or our development program materially and irreversibly harmed. We cannot control the amount and timing of resources these CROs devote to our program or our clinical products. If we are unable to rely on clinical data collected by our CROs, we could be required to repeat, extend the duration of, or increase the size of our clinical studies and this could significantly delay commercialization and require significantly greater expenditures.

If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs. For example, the sponsored research agreement with Northwestern may be terminated by either party upon 60 days' written notice to the other party. If our collaboration is delayed or terminated or our ability to continue to use the current research space is terminated as a result of conflicts of interest, we may not be able to continue our planned research projects and related clinical studies on the expected timeline and may need to spend significant time and efforts to secure alternative lab facilities and equipments. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, any clinical studies such CROs are associated with may be extended, delayed, or terminated, and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. As a result, we believe that our financial results and the commercial prospects for our product candidates in the subject indication would be harmed, our costs could increase and our ability to generate revenue could be delayed.

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The manufacture of our product candidates, particularly those that utilize our discovery platform, is complex and we may encounter difficulties in production. If we or any of our third-party manufacturers encounter such difficulties, or fail to meet rigorously enforced regulatory standards, our ability to provide supply of our product candidates for clinical studies or our products for patients, if approved, could be delayed or stopped, or we may be unable to maintain a commercially viable cost structure.

The processes involved in manufacturing our drug product candidates, particularly those that utilize our discovery platform, are complex, expensive, highly-regulated, and subject to multiple risks. Further, as product candidates are developed through preclinical studies to late-stage clinical studies towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods, are altered along the way in an effort to optimize processes and results. Such changes carry the risk that they will not achieve these intended objectives, and any of these changes could cause our product candidates to perform differently and affect the results of planned clinical studies or other future clinical studies.

In addition, the manufacturing process for any products that we may develop is subject to FDA and other comparable foreign regulatory authority approval processes and continuous oversight, and we will need to contract with manufacturers who can meet all applicable FDA and foreign regulatory authority requirements, including, for example, complying with cGMPs, on an ongoing basis. If we or our third-party manufacturers are unable to reliably produce products to specifications acceptable to the FDA or other regulatory authorities, we may not obtain or maintain the approvals we need to commercialize such products. Even if we obtain regulatory approval for any of our product candidates, there is no assurance that either we or our contract manufacturers will be able to manufacture the approved product to specifications acceptable to the FDA or other regulatory authorities, to produce it in sufficient quantities to meet the requirements for the potential launch of the product, or to meet potential future demand. Any of these challenges could delay completion of clinical studies, require bridging clinical studies or the repetition of one or more clinical studies, increase clinical study costs, delay approval of our product candidate, impair commercialization efforts, increase our cost of goods, and have an adverse effect on our business, financial condition, results of operations, and growth prospects.

We rely completely on third-party suppliers to manufacture our clinical drug supplies for our product candidates, and we intend to rely on third parties to produce preclinical, clinical, and commercial supplies of any future product candidates.

We do not currently have, nor do we plan to acquire, the infrastructure or capability to internally manufacture our clinical drug supply of our product candidates, or any future product candidates, for use in the conduct of our preclinical studies and clinical studies, and we lack the internal resources and the capability to manufacture any product candidates on a clinical or commercial scale. The facilities used by our contract manufacturers to manufacture the active pharmaceutical ingredient and final drug product must complete a pre-approval inspection by the FDA and other comparable foreign regulatory agencies to assess compliance with applicable requirements, including cGMPs, after we submit our NDA or relevant foreign regulatory submission to the applicable regulatory agency.

We do not control the manufacturing process of, and are completely dependent on, our contract manufacturers to comply with cGMPs for manufacture of both active drug substances and finished drug products. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or applicable foreign regulatory agencies, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. In addition, we have no direct control over our contract manufacturers' ability to maintain adequate quality control, quality assurance, and qualified personnel. Furthermore, all of our contract manufacturers are

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engaged with other companies to supply and/or manufacture materials or products for such companies, which exposes our manufacturers to regulatory risks for the production of such materials and products. For example, our product candidates are spiro-beta lactams which may require our manufacturers to manufacture them in specifically isolated facilities. If our contract manufacturers cannot successfully manufacture material, such as spiro-beta lactams, that conforms to our specifications and the strict regulatory requirements of the FDA or applicable foreign regulatory agencies, they will not be able to secure and/or maintain regulatory approval for their manufacturing facilities. As a result, failure to satisfy the regulatory requirements for the production of those materials and products may affect the regulatory clearance of our contract manufacturers' facilities generally. If the FDA or an applicable foreign regulatory agency determines now or in the future that these facilities for the manufacture of our product candidates are noncompliant, we may need to find alternative manufacturing facilities, which would adversely impact our ability to develop, obtain regulatory approval for or market our product candidates. Our reliance on contract manufacturers also exposes us to the possibility that they, or third parties with access to their facilities, will have access to and may appropriate our trade secrets or other proprietary information.

We do not have long-term supply agreements in place with our contractors, and each batch of our product candidates is individually contracted under a quality and supply agreement. If we engage new contractors, such contractors must complete an inspection by the FDA and other applicable foreign regulatory agencies. We plan to continue to rely upon contract manufacturers and, potentially, collaboration partners to manufacture commercial quantities of our product candidates, if approved. Our current scale of manufacturing is adequate to support all of our needs for preclinical studies and clinical study supplies.

We are dependent on single-source suppliers for some of the components and materials used in, and the processes required to develop, our product candidates.

We currently depend on single-source suppliers for our active ingredients used in, and processes required to develop, our product candidates. In particular, we rely on Sai to produce custom chemical synthesis of the compounds used in our product candidates such as spiro-beta lactam. We cannot ensure that our suppliers will remain in business, have sufficient capacity or supply to meet our needs, or that they will not be purchased by one of our competitors or another company that is not interested in continuing to work with us. Our use of single-source suppliers of raw materials, components, key processes, and finished goods exposes us to several risks, including disruptions in supply, price increases, or late deliveries. There are, in general, relatively few alternative sources of supply for substitute components. In particular, given our use of the compound spiro-beta lactam, Sai will need to comply with certain regulatory and contractual requirements which significantly limit our ability to find alternative sources of supply. There are a limited number of suppliers that have the requisite facilities that comply with the required regulatory standards, which may lead to a supply gap in the unexpected event that Sai is unable to provide our products. These new vendors may be unable or unwilling to meet our future demands for our clinical studies or commercial sale. Any disruption in supply from Sai or any other single-source supplier or service provider could lead to supply delays or interruptions which would damage our business, financial condition, results of operations, and prospects. If we have to switch to a replacement supplier, the manufacture and delivery of our compounds could be interrupted for an extended period, adversely affecting our business.

Establishing additional or replacement suppliers for the components or processes used in our product candidates, if required, may not be accomplished quickly. If we are able to find a replacement supplier, the replacement supplier would need to be qualified and may require additional regulatory authority approval, which could result in further delay. For example, the FDA could require additional supplemental data and clinical study data if we rely upon a new supplier for the compounds used in our product candidates. While we seek to maintain adequate inventory of the single-source components and materials used in our

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products, any interruption or delay in the supply of components or materials, or our inability to obtain components or materials from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to cancel orders.

In addition, as part of the FDA's approval of our product candidates, submission of manufacturing information and a satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities where our product candidates are produced is required to assess compliance with cGMPs and assure that the facilities, methods, and controls are adequate to preserve the product candidates' identity, strength, quality, and purity. Such inspections may include inspection of the manufacturers of the individual components of our process, which include the manufacturing processes and facilities of our single-source suppliers. Our current single-source suppliers have not undergone this process nor have they had any components included in any product approved by the FDA.

Our reliance on single-source suppliers subjects us to a number of risks that could harm our reputation, business, and financial condition, including, among other things:

delays to the development timelines for our product candidates;

interruption of supply resulting from modifications to or discontinuation of a supplier's operations;

delays in product shipments resulting from uncorrected defects, reliability issues, or a supplier's variation in a component;

a lack of long-term supply arrangements for key components with our suppliers;

inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms;

difficulty and cost associated with locating and qualifying alternative suppliers for our components in a timely manner;

production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications;

delay in delivery due to our suppliers prioritizing other customer orders over ours;

damage to our reputation caused by defective components produced by our suppliers;

increased cost of our warranty program due to product repair or replacement based upon defects in components produced by our suppliers; and

fluctuation in delivery by our suppliers due to changes in demand from us or their other customers.

If any of these risks materialize, costs could significantly increase and our ability to meet demand for our products could be impacted.

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Risks related to our intellectual property rights

If we are unable to adequately protect our proprietary technology, or obtain and maintain issued patents that are sufficient to protect our product candidates, others could compete against us more directly by developing and commercializing products similar or identical to ours, which would have a material adverse impact on our business, results of operations, financial condition, and prospects.

Our success will depend significantly on our ability to obtain and maintain patent and other proprietary protection in the United States and other countries for commercially important technology, inventions, and know-how related to our business, defend and enforce our patents, should they issue, preserve the confidentiality of our trade secrets, and operate without infringing the valid and enforceable patents and proprietary rights of third parties. We strive to protect and enhance the proprietary technologies that we believe are important to our business, including seeking patents intended to cover our products and compositions, their methods of use, and any other inventions that are important to the development of our business. Our owned patents and patent applications relate to NYX-2925, NYX-783, NYX-458, and other NMDAr modulators. We also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

We currently have no issued patents covering our clinical-stage product candidate NYX-458. We cannot provide any assurances that any of our pending patent applications will mature into issued patents in any particular jurisdiction and, if they do, that such patents will include claims with a scope sufficient to protect our product candidates or otherwise provide any competitive advantage. The patent application and approval process is expensive, complex, and time-consuming. We 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 we will fail to identify patentable aspects of our research and development output in time to obtain patent protection. If we are unable to obtain or maintain patent protection with respect to any of our proprietary products and technology we develop, our business, financial condition, results of operations, and prospects could be materially harmed.

The patent positions of biotechnology and pharmaceutical companies, including our patent position, involve complex legal and factual questions, which in recent years have been the subject of much litigation, and, therefore, the issuance, scope, validity, enforceability, and commercial value of any patent claims that we may obtain cannot be predicted with certainty. No consistent policy regarding the breadth of claims allowed in biotechnology and pharmaceutical patents has emerged to date in the United States or in many foreign jurisdictions. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection. The laws of some foreign countries do not protect our proprietary rights to the same extent as the laws of the United States, and we may encounter significant problems in protecting our proprietary rights in these countries.

Patent applications are generally maintained in confidence until publication. In the United States, for example, patent applications are typically maintained in secrecy for up to 18 months after their filing. Similarly, publication of discoveries in scientific or patent literature often lags behind actual discoveries. Consequently, we cannot be certain that we were the first to file patent applications on our product candidates. There is also no assurance that all of the potentially relevant prior art relating to our patents and patent applications has been found, which could be used by a third party to challenge the validity of our patents, should they issue, or prevent a patent from issuing from a pending patent application. Any of the foregoing could harm our competitive position, business, financial condition, results of operations, and prospects.

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Moreover, our patents, if issued, may be challenged, deemed unenforceable, invalidated, or circumvented in the United States and abroad. U.S. patents and patent applications may also be subject to interference, derivation, ex parte reexamination, post-grant review, or inter partes review proceedings, supplemental examination and challenges in district court. Patents may also be subjected to opposition, post-grant review, or comparable proceedings lodged in various foreign, both national and regional, patent offices or courts. An adverse determination in any such proceeding could result in either loss of the patent or denial of the patent application, or loss or reduction in the scope of one or more of the claims of the patent or patent application, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and products. In addition, such proceedings may be costly. Thus, any patents, should they issue, that we may own or exclusively license may not provide any protection against competitors. Furthermore, an adverse decision in an interference proceeding can result in a third party receiving the patent right sought by us, which in turn could affect our ability to develop, market, or otherwise commercialize our product candidates.

Furthermore, though a patent, if it were to issue, is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability and it may not provide us with adequate proprietary protection or competitive advantages against competitors with similar products. Even if a patent issues and is held to be valid and enforceable, competitors may be able to design around or circumvent our patents, such as using pre-existing or newly developed technology or products in a non-infringing manner. Other parties may develop and obtain patent protection for more effective technologies, designs, or methods. If these developments were to occur, they could have a material adverse effect on our business, financial condition, results of operations, and prospects.

Our ability to enforce our patent rights depends on our ability to detect infringement. It is difficult to detect infringers who do not advertise the components that are used in their products. Moreover, it may be difficult or impossible to obtain evidence of infringement in a competitor's or potential competitor's product. Any litigation to enforce or defend our patent rights, even if we were to prevail, could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded if we were to prevail may not be commercially meaningful.

In addition, proceedings to enforce or defend our patents, if and when issued, could put our patents at risk of being invalidated, held unenforceable, or interpreted narrowly. Such proceedings could also provoke third parties to assert claims against us, including that some or all of the claims in one or more of our patents are invalid or otherwise unenforceable. If any of our patents, if and when issued, covering our product candidates are invalidated or found unenforceable, our financial position and results of operations would be materially and adversely impacted. In addition, if a court found that valid, enforceable patents held by third parties covered our product candidates, our financial position and results of operations would also be materially and adversely impacted.

We will incur significant ongoing expenses in maintaining our patent portfolio. Should we lack the funds to maintain our patent portfolio or to enforce our rights against infringers, we could be adversely impacted.

The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:

any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our product candidates or any other products or product candidates;

any of our pending patent applications will issue as patents at all;

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we will be able to successfully commercialize our product candidates, if approved, before our relevant patents expire;

we were the first to make the inventions covered by each of our patents and pending patent applications;

we were the first to file patent applications for these inventions;

others will not develop similar or alternative technologies that do not infringe our patents;

others will not use pre-existing technology to effectively compete against us;

any of our patents, if issued, will be found to ultimately be valid and enforceable;

any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties;

we will develop additional proprietary technologies or product candidates that are separately patentable; or

that our commercial activities or products will not infringe upon the patents or proprietary rights of others.

Moreover, some of our future owned and licensed patents may be co-owned with third parties. If we are unable to obtain an exclusive license to any such third-party co-owner's interest in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any such co-owners of our patents in order to enforce such patents against third parties, and such cooperation may not be provided to us.

If we breach any of the agreements under which we license rights, we could lose license rights that are important to our business. For example, in connection with Allergan's acquisition of Naurex, we entered into a license agreement with Allergan, pursuant to which, among other things, Allergan granted us a non-exclusive license to certain intellectual property rights retained by Allergan in connection with such acquisition. In addition, we are party to a sublicense agreement with Allergan, pursuant to which Allergan granted us a sublicense for certain intellectual property rights that Allergan licenses from Northwestern. We may also need to obtain additional licenses to advance the development and commercialization of other product candidates we may develop. Our existing sublicense agreement with Northwestern imposes, and we expect that future license agreements will impose upon us various development and commercial diligence obligations, payment of milestones and/or royalties and other obligations. If we fail to comply with our obligations under certain of these agreements, we may be liable for damages, and the licensor may have the right to terminate the license, in which event we would not be able to develop, market, or otherwise commercialize products covered by the license. Our business could suffer, for example, if any current or future licenses terminate, if the licensors fail to abide by the terms of the license, if the licensed patents or other rights are found to be invalid or unenforceable, or if we are unable to enter into necessary licenses on acceptable terms.

If we are unable to protect the confidentiality of our trade secrets, our business and competitive position may be harmed.

We also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. Additionally, we rely on unpatented know-how, continuing

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technological innovation to develop, strengthen, and maintain the proprietary and competitive position of our product candidates, which we seek to protect, in part, by confidentiality agreements with our employees and our collaborators and consultants. However, trade secrets are difficult to protect. For example, we may be required to share our trade secrets with third-party licensees, collaborators, consultants, contractors, or other advisors and we have limited control over the protection of trade secrets used by such third parties. Although we use reasonable efforts to protect our trade secrets, including by entering into confidentiality agreements, our employees, consultants, contractors, outside scientific collaborators, and other advisors may unintentionally or willfully disclose our trade secrets and proprietary information to competitors and we may not have adequate remedies for any such disclosure. Enforcing a claim that a third party illegally obtained and used, disclosed, or misappropriated any of our trade secrets is difficult, expensive, and time-consuming, and the outcome is unpredictable. Furthermore, we may not obtain these agreements in all circumstances, and the employees and consultants who are parties to these agreements may breach or violate the terms of these agreements, thus we may not have adequate remedies for any such breach or violation, and we could lose our trade secrets through such breaches or violations. In addition, trade secret laws in the United States vary, and some U.S. courts as well as courts outside the United States are sometimes less willing or unwilling to protect trade secrets. Moreover, it is possible that technology relevant to our business will be independently developed by a person that is not a party to such an agreement. Further, our trade secrets could otherwise become known or be independently discovered by our competitors or other third parties. We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets by consultants, vendors, former employees, and current employees. If our trade secrets or confidential or proprietary information is divulged to or acquired by third parties, including our competitors, our competitive position in the marketplace, business, financial condition, results of operations, and prospects may be materially adversely affected.

We may be sued for infringing the intellectual property rights of others, which may be costly and time-consuming and may prevent or delay our product development efforts and stop us from commercializing or increase the costs of commercializing our product candidates, if approved.

Our success will depend in part on our ability to operate without infringing, misappropriating, or otherwise violating the intellectual property and proprietary rights of third parties. We cannot assure you that our business, products, and methods do not or will not infringe the patents or other intellectual property rights of third parties. We may in the future become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our product candidates and technologies we use in our business.

The pharmaceutical industry is characterized by extensive litigation regarding patents and other intellectual property rights. Other parties may allege that our product candidates or the use of our technologies infringes or otherwise violates patent claims or other intellectual property rights held by them or that we are employing their proprietary technology without authorization. As we continue to develop and, if approved, commercialize our current product candidates and future product candidates, competitors may claim that our technology infringes their intellectual property rights as part of business strategies designed to impede our successful commercialization. There may be third-party patents or patent applications with claims to compositions, materials, formulations, methods of manufacture or methods for treatment related to the use or manufacture of our product candidates. Because patent applications can take many years to issue and may be confidential for 18 months or more after filing, and because patent claims can be revised before issuance, third parties may have currently pending patent applications which may later result in issued patents that our product candidates may infringe, or which such third parties claim are infringed by our technologies. If a patent holder believes one or more of our product candidates infringes its patent

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rights, the patent holder may sue us even if we have received patent protection for our technology. Moreover, we may face patent infringement claims from non-practicing entities that have no relevant drug revenue and against whom our own patent portfolio may thus have no deterrent effect.

The outcome of intellectual property litigation is subject to uncertainties that cannot be adequately quantified in advance. The coverage of patents is subject to interpretation by the courts, and the interpretation is not always uniform. If we are sued for patent infringement, we would need to demonstrate that our product candidates, products or methods either do not infringe the patent claims of the relevant patent or that the patent claims are invalid or unenforceable, and we may not be able to do this. Even if we are successful in these proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel could be diverted in pursuing these proceedings, which could have a material adverse effect on our business and operating results. In addition, we may not have sufficient resources to bring these actions to a successful conclusion.

Patent and other types of intellectual property litigation can involve complex factual and legal questions, and their outcome is uncertain. If we are found to infringe a third party's intellectual property rights, we could be required to obtain a license from such third party to continue developing and marketing our product candidates and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all. Even if we were to obtain a license, it could be granted on non-exclusive terms, thereby providing our competitors and other third parties access to the same technologies licensed to us. In addition, if any such claim were successfully asserted against us and we could not obtain such a license, we may be forced to stop or delay developing, manufacturing, selling or otherwise commercializing our product candidates. Any claim relating to intellectual property infringement that is successfully asserted against us may require us to pay substantial damages, including treble damages and attorney's fees if we are found to be willfully infringing another party's patents, for past use of the asserted intellectual property and royalties and other consideration going forward if we are forced to take a license.

Even if we are successful in these proceedings, we may incur substantial costs and divert management time and attention in pursuing these proceedings, which could have a material adverse effect on us. There could also be public announcements of the results of the hearing, motions, or other interim proceedings or developments and if securities analysts or investors perceive those results to be negative, it could cause the price of shares of our common stock to decline. If we are unable to avoid infringing the patent rights of others, we may be required to seek a license, defend an infringement action, or challenge the validity of the patents in court, or redesign our products. Patent litigation is costly and time-consuming. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, intellectual property litigation or claims could force us to do one or more of the following:

cease developing, selling or otherwise commercializing our product candidates;

pay substantial damages for past use of the asserted intellectual property;

obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all; and

in the case of trademark claims, redesign, or rename, some or all of our product candidates to avoid infringing the intellectual property rights of third parties, which may not be possible and, even if possible, could be costly and time-consuming.

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Any of these risks coming to fruition could have a material adverse effect on our business, results of operations, financial condition, and prospects.

We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.

We enter into confidentiality and intellectual property assignment agreements with our employees, consultants, outside scientific collaborators, sponsored researchers, and other advisors. These agreements generally provide that inventions conceived by the party in the course of rendering services to us will be our exclusive property. However, these agreements may not be honored and may not effectively assign intellectual property rights to us. The assignment of intellectual property rights under these agreements may not be automatic upon the creation of the intellectual property or the assignment agreements may be breached, and we may be forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. For example, even if we have a consulting agreement in place with an academic advisor pursuant to which such academic advisor is required to assign any inventions developed in connection with providing services to us, such academic advisor may not have the right to assign such inventions to us, as it may conflict with his or her obligations to assign all such intellectual property to his or her employing institution.

Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

Periodic maintenance fees, renewal fees, annuity fees, and various other government fees on our owned and in-licensed patents and patent applications are or will be due to be paid to the U.S. Patent and Trademark Office, or USPTO, in several stages and various government patent agencies outside of the United States over the lifetime of such patents and patent applications and any patent rights we may own or license in the future. We have systems in place to remind us to pay these fees, and we employ outside firms to remind us or our licensors to pay annuity fees due to foreign patent agencies on our foreign patents and pending foreign patent applications. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment, and other similar provisions over the lifetime of our owned patents and applications. In some cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. However, 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. In such an event, competitors or other third parties might be able to enter the market earlier than would otherwise have been the case and this circumstance could have a material adverse effect on our business, financial condition, results of operations, and prospects.

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We may be involved in lawsuits or other proceedings to protect or enforce our intellectual property, which could be expensive, time-consuming, and unsuccessful.

Even if our patent applications are issued, competitors and other third parties may infringe, misappropriate, or otherwise violate our patents and other intellectual property rights. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming and divert the attention of our management and key personnel from our business operations. Furthermore, many of our adversaries in these proceedings may have the ability to dedicate substantially greater resources to prosecuting these legal actions than we can. Our ability to enforce our patent rights also depends on our ability to detect infringement. It is difficult to detect infringers who do not advertise the components that are used in their products. Moreover, it may be difficult or impossible to obtain evidence of infringement in a competitor's or potential competitor's product.

In an infringement proceeding, a court may disagree with our allegations and 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 may decide that a patent of ours is invalid, unenforceable or not infringed. An adverse result in any litigation, defense or post-grant proceedings could result in one or more of our patents being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing. If any of our patents, if and when issued, covering our product candidates are invalidated or found unenforceable, our financial position and results of operations would be materially and adversely impacted. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded if we were to prevail may not be commercially meaningful.

Interference proceedings provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications. An unfavorable outcome 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. Our involvement in litigation or interference proceedings may fail and, even if successful, may result in substantial costs, and distract our management and other employees. We may not be able to prevent infringement, misappropriation of, or other violations of our intellectual property rights, 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. There could also 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 material adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities. We may not have sufficient financial or other resources to conduct such litigation or proceedings adequately. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.

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Issued patents covering our product candidates could be found invalid or unenforceable if challenged.

If we initiated legal proceedings against a third party to enforce a patent, if and when issued, covering one of our product candidates, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. The outcome of any such proceeding is generally unpredictable.

In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge include alleged failures to meet any of several statutory requirements, including lack of novelty, obviousness or non-enablement. Grounds for unenforceability assertions of a patent include allegations that someone connected with prosecution of the patent application that matured into the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution of the patent application. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, inter partes review, post grant review and equivalent proceedings in foreign jurisdictions, e.g., opposition proceedings. Such proceedings could result in revocation or amendment of our patents in such a way that they no longer cover our product candidates or competitive products. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to validity, for example, we cannot be certain that there is no invalidating prior art, of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on our product candidates. Such a loss of patent protection would have a material adverse impact on our business.

We may not seek to protect our intellectual property rights in all jurisdictions throughout the world and we may not be able to adequately enforce our intellectual property rights even in the jurisdictions where we seek protection.

Filing and prosecuting patent applications, and defending patents on product candidates in all countries and jurisdictions throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States could be less extensive than those in the United States, assuming that rights are obtained 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. In addition, the statutory deadlines for pursuing patent protection in individual foreign jurisdictions are based on the priority date of each of our patent applications and we may not timely file foreign patent applications. For the patent families related to NYX-458, as well as for many of the patent families that we own, the relevant statutory deadlines have not yet expired. Thus, for each of the patent families that we believe provide coverage for our lead product candidates, we will need to decide whether and where to pursue protection outside the United States. For patent families relating to NYX-2925 and NYX-783, we have chosen to pursue patent protection in only the United States, Mexico, Canada, and certain jurisdictions in Europe, Asia, Australia, and South America.

Competitors may use our technologies in jurisdictions where we do not pursue and obtain patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our products and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing. Even if we pursue and obtain issued patents in particular jurisdictions, our patent claims or other intellectual property rights may not be effective or sufficient to prevent third parties from so competing.

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The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. The legal systems of some countries, particularly developing countries, do not favor the enforcement of patents and other intellectual property protection, especially those relating to biotechnology or pharmaceuticals. This could make it difficult for us to stop the infringement of our patents, if obtained, or the misappropriation of or marketing of competing products in violation of our other intellectual property rights. For example, many foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, many countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

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, could put 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.

If we do not obtain additional protection under the Hatch-Waxman Act and similar foreign legislation by extending the patent terms and obtaining data exclusivity for our product candidates, our business may be materially harmed.

Patents have a limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent is generally 20 years from its earliest U.S. non-provisional filing date in its chain of priority. Various extensions may be available, but the life of a patent, and the protection it affords, is limited. Even if patents covering our product candidates are obtained, once the patent life has expired for a product candidate, we may be open to competition from competitive medications, including generic medications. Given the amount of time required for the development, testing, and regulatory review of new product candidates, patents protecting such product candidates might expire before or shortly after such product candidates are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to exclude others from commercializing product candidates similar or identical to ours.

Depending upon the timing, duration, and specifics of FDA marketing approval of our product candidates, one or more of the U.S. patents we own may be eligible for a limited patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act. The Hatch-Waxman Act permits 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, failing to apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection afforded could be less than we request. If we are unable to obtain a patent term extension or the term of any such extension is less than we request, the duration of patent protection we obtain for our product candidates may not provide us with any meaningful commercial or competitive

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advantage, our competitors may obtain approval of competing products earlier than they would otherwise be able to do so, and our ability to generate revenues could be materially adversely affected.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

As is the case with other biotechnology companies, our success is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing patents in the biotechnology industry involve both technological and legal complexity, and is therefore costly, time-consuming, and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-ranging patent reform legislation: the Leahy-Smith America Invents Act. The America Invents Act includes a number of significant changes to U.S. patent law. After March 2013, under 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. The America Invents Act also includes provisions that affect the way patent applications will be prosecuted and that may also affect patent litigation. It is not yet clear what, if any, impact the America Invents Act will have on the operation of our business. However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any patents that may issue from our patent applications, all of which could have a material adverse effect on our business and financial condition.

In addition, 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. The full impact of these decisions is not yet known. For example, on March 20, 2012, in Mayo Collaborative Services, DBA Mayo Medical Laboratories, et al. v. Prometheus Laboratories, Inc., the Court held that several claims drawn to measuring drug metabolite levels from patient samples and correlating them to drug doses were not patentable subject matter. The decision appears to impact diagnostics patents that merely apply a law of nature via a series of routine steps and it has created uncertainty around the ability to obtain patent protection for certain inventions. Additionally, on June 13, 2013, in Association for Molecular Pathology v. Myriad Genetics, Inc., the Court held that claims to isolated genomic DNA are not patentable, but claims to complementary DNA molecules are patent eligible because they are not a natural product. The effect of the decision on patents for other isolated natural products is uncertain. However, on March 4, 2014, the USPTO issued a memorandum to patent examiners providing guidance for examining claims that recite laws of nature, natural phenomena or natural products under the Myriad and Prometheus decisions. This guidance did not limit the application of Myriad to DNA but rather applied the decision to other natural products.

In addition to increasing uncertainty with regard to our ability to obtain future patents, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on these and other decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce any patents that may issue in the future.

We may be subject to damages resulting from claims that we or our employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers.

Our employees have been previously employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors. We also engage advisors and consultants who are concurrently employed at universities or who perform services for other entities.

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Although we try to ensure that our employees, consultants, and advisors do not use the proprietary information or know-how of others in their work for us, and although we are not aware of any claims currently pending against us, we may be subject to claims that we or our employees, advisors, or consultants have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of a former employer or other third party. We have and may in the future also be subject to claims that an employee, advisor, or consultant performed work for us that conflicts with that person's obligations to a third party, such as an employer, and thus, that the third party has an ownership interest in the intellectual property arising out of work performed for us. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and be a distraction to management. If we fail in defending such claims, in addition to paying money claims, we may lose valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our ability to commercialize our product candidates, which would materially adversely affect our commercial development efforts.

Numerous factors may limit any potential competitive advantage provided by our intellectual property rights.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, provide a barrier to entry against our competitors or potential competitors, or permit us to maintain our competitive advantage. Moreover, if a third party has intellectual property rights that cover the practice of our technology, we may not be able to fully exercise or extract value from our intellectual property rights. The following examples are illustrative:

others may be able to develop and/or practice technology that is similar to our technology or aspects of our technology but that is not covered by the claims of patents, should such patents issue from our patent applications;

we might not have been the first to make the inventions covered by a pending patent application that we own;

we might not have been the first to file patent applications covering an invention;

others may independently develop similar or alternative technologies without infringing our intellectual property rights;

pending patent applications that we own or license may not lead to issued patents;

patents, if issued, that we own or license may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors;

third parties may compete with us in jurisdictions where we do not pursue and obtain patent protection;

we may not be able to obtain and/or maintain necessary or useful licenses on reasonable terms or at all;

third parties may assert an ownership interest in our intellectual property and, if successful, such disputes may preclude us from exercising exclusive rights over that intellectual property;

we may not develop or in-license additional proprietary technologies that are patentable; and

the patents of others may have an adverse effect on our business.

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Should any of these events occur, they could significantly harm our business and results of operations.

General company-related risks

We will need to develop and expand our company, and we may encounter difficulties in managing this development and expansion, which could disrupt our operations.

As of May 31, 2018, we had 64 full-time employees and no part-time employees, and in connection with becoming a public company, we expect to increase our number of employees and the scope of our operations. To manage our anticipated development and expansion, we must continue to implement and improve our managerial, operational, and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel. Also, our management may need to divert a disproportionate amount of its attention away from its day-to-day activities and devote a substantial amount of time to managing these development activities. Due to our limited resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. This may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees, and reduced productivity among remaining employees. The physical expansion of our operations may lead to significant costs and may divert financial resources from other projects, such as the development of our product candidates. If our management is unable to effectively manage our expected development and expansion, our expenses may increase more than expected, our ability to generate or increase our revenue could be reduced and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize our product candidates, if approved, and compete effectively will depend, in part, on our ability to effectively manage the future development and expansion of our company.

Our future success depends on our ability to retain our management team and to attract, retain, and motivate qualified personnel.

Our ability to compete in the highly competitive biotechnology and biopharmaceuticals industries depends upon our ability to attract and retain highly qualified managerial, scientific, and medical personnel. In order to induce valuable employees to continue their employment with us, we have provided stock options that vest over time. The value to employees of stock options that vest over time is 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.

We are highly dependent on our management, scientific and medical personnel, including our Chief Executive Officer, Norbert G. Riedel, Ph.D. Despite our efforts to retain valuable employees, members of our management, scientific, and development teams may terminate their employment with us on short notice. The loss of the services of any of our executive officers, including Dr. Riedel, other key employees and other scientific and medical advisors, and an inability to find suitable replacements could result in delays in product development and harm our business. Pursuant to their employment arrangements, each of our executive officers, and other employees may voluntarily terminate their employment at any time, with or without notice. Our success also depends on our ability to continue to attract, retain, and motivate highly skilled junior, mid-level, and senior managers as well as junior, mid-level, and senior scientific and medical personnel.

We may not be able to attract or retain qualified management and scientific personnel in the future due to the intense competition for a limited number of qualified personnel among biopharmaceutical, biotechnology, pharmaceutical, and other businesses. Many of the other pharmaceutical companies that we compete against for qualified personnel have greater financial and other resources, different risk profiles,

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and a longer history in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. Some of these characteristics may be more appealing to high quality candidates than what we may be able to offer. We also experience competition for the hiring of scientific personnel from universities and research institutions. If we are unable to continue to attract and retain high quality personnel, the rate and success at which we can develop and commercialize product candidates will be limited.

We face potential product liability exposure, and, if claims are brought against us, we may incur substantial liability.

The use of our product candidates in clinical studies and the sale of our product candidates, if approved, exposes us to the risk of product liability claims. Product liability claims might be brought against us by patients, healthcare providers, or others selling or otherwise coming into contact with our product candidates. For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during product 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, including as a result of interactions with alcohol or other drugs, negligence, strict liability, and a breach of warranties. Claims could also be asserted under state consumer protection acts. If we become subject to product liability claims and cannot successfully defend ourselves against them, we could incur substantial liabilities. In addition, regardless of merit or eventual outcome, product liability claims may result in, among other things:

withdrawal of subjects from our clinical studies;

substantial monetary awards to patients or other claimants;

decreased demand for our product candidates or any future product candidates following marketing approval, if obtained;

damage to our reputation and exposure to adverse publicity;

increased FDA warnings on product labels;

litigation costs;

distraction of management's attention from our primary business;

loss of revenue; and

the inability to successfully commercialize our product candidates or any future product candidates, if approved.

We maintain product liability insurance coverage for our clinical studies with a $5.0 million annual aggregate coverage limit. Nevertheless, our insurance coverage may be insufficient to reimburse us for any expenses or losses we may suffer. Moreover, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses, including if insurance coverage becomes increasingly expensive. If and when we obtain marketing approval for our product candidates, we intend to expand our insurance coverage to include the sale of commercial products; however, we may not be able to obtain this product liability insurance on commercially reasonable terms. Large judgments have been awarded in class action lawsuits based on drugs that had unanticipated side effects. The cost of any product liability litigation or other proceedings, even if resolved in our favor, could be substantial, particularly in light of the size of our business and financial resources. A product liability

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claim or series of claims brought against us could cause our stock price to decline and, if we are unsuccessful in defending such a claim or claims and the resulting judgments exceed our insurance coverage, our financial condition, business, and prospects could be materially adversely affected.

We will incur increased costs as a result of operating as a public company, and our management team will be required to devote substantial time to new compliance initiatives.

As a public company, and particularly after we are no longer an "emerging growth company," we will incur significant legal, accounting, and other expenses that we did not incur as a private company. In addition, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and rules subsequently implemented by the SEC and The Nasdaq Stock Market have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, we will be required to furnish a report by our management on our internal control over financial reporting, including an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. However, while we remain an "emerging growth company," we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants, and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.

If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could result in sanctions or other penalties that would harm our business.

After the completion of this offering, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, the Sarbanes-Oxley Act, and the rules and regulations of The Nasdaq Global Market. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting. Commencing with our fiscal year ending the year after this offering is completed, we must perform system and process design evaluation and testing of the effectiveness of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Form 10-K filing for that year, as required by Section 404 of the Sarbanes-Oxley Act. This will require that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that we expend significant management efforts. Prior to this offering, we have never been required to test our internal controls within a specified period and, as a result, we may experience difficulty in meeting these reporting requirements in a timely manner.

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We may discover weaknesses in our system of internal financial and accounting controls and procedures that could result in a material misstatement of our financial statements. Our 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 we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we are unable to maintain proper and effective internal controls over financial reporting, we may not be able to produce timely and accurate financial statements. If that were to happen, our investors could lose confidence in our reported financial information, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities.

In order to satisfy our obligations as a public company, we will need to hire additional qualified accounting and financial personnel with appropriate public company experience.

As a newly public company, we will need to establish and maintain effective disclosure and financial controls and make changes in our corporate governance practices. We will need to hire additional accounting and financial personnel with appropriate public company experience and technical accounting knowledge, and it may be difficult to recruit and maintain such personnel. Even if we are able to hire appropriate personnel, our existing operating expenses and operations will be impacted by the direct costs of their employment and the indirect consequences related to the diversion of management resources from product development efforts.

Changes in tax law, including the recently passed comprehensive tax reform bill, could adversely affect our business and financial condition.

The rules dealing with U.S. federal, state, and local income taxation are constantly under review by persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury Department. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock. In recent years, many such changes have been made and changes are likely to continue to occur in the future. On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, or the TCJA, which significantly reforms the Internal Revenue Code of 1986, as amended, or the Code. The TCJA, among other things, contains significant changes to corporate taxation, including reduction of the corporate tax rate from a top marginal rate of 35% to a flat rate of 21%, limitation of the tax deduction for net interest expense to 30% of adjusted earnings (except for certain small businesses), limitation of the deduction for net operating losses to 80% of current year taxable income and elimination of net operating loss carrybacks, in each case, for losses arising in taxable years beginning after December 31, 2017 (though any such net operating losses may be carried forward indefinitely), and modifying or repealing many business deductions and credits (including reducing the business tax credit for certain clinical testing expenses incurred in the testing of certain drugs for rare diseases or conditions generally referred to as "orphan drugs"). We continue to examine the impact this tax reform legislation may have on our business. However, the effect of the TCJA on our business, whether adverse or favorable, is uncertain, and may not become evident for some period of time. We urge investors to consult with their legal and tax advisers regarding the implications of the TCJA and other changes in tax laws on an investment in our common stock.

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Our ability to use our net operating loss carryforwards and certain tax credit carryforwards may be subject to limitation.

As of December 31, 2017, we had federal and state net operating loss, or NOL, carryforwards of $48.8 million and $4.6 million, respectively, which begin to expire in 2027. Under Section 382 of the Code changes in our ownership may limit the amount of our net operating loss carryforwards and research and development tax credit carryforwards that could be utilized annually to offset our future taxable income, if any. This limitation would generally apply in the event of a cumulative change in ownership of our company of more than 50% within a three-year period. Any such limitation may significantly reduce our ability to utilize our net operating loss carryforwards and research and development tax credit carryforwards before they expire. The completion of this offering, together with private placements and other transactions that have occurred since our inception, may trigger such an ownership change pursuant to Section 382. Any such limitation, whether as the result of this offering, prior private placements, sales of our common stock by our existing stockholders, or additional sales of our common stock by us after this offering, could have a material adverse effect on our results of operations in future years. We have not yet completed a Section 382 analysis, and therefore, there can be no assurances that the NOL is already not limited. In addition, the reduction of the corporate tax rate under the TCJA may cause a reduction in the economic benefit of our NOL carryforwards and other deferred tax assets available to us.

Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. The recent global financial crisis caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn, such as the recent global financial crisis, could result in a variety of risks to our business, including, weakened demand for our product candidates and our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our services. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.

We, or the third parties upon whom we depend, may be adversely affected by earthquakes or other natural disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

Earthquakes or other natural disasters could severely disrupt our operations, and have a material adverse effect on our business, results of operations, financial condition, and prospects. 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 the manufacturing facilities of our third-party contract manufacturers and suppliers, 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, particularly when taken together with our lack of earthquake insurance, could have a material adverse effect on our business.

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Our internal computer systems, or those of our third-party CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our product candidates' development programs.

Despite the implementation of security measures, our internal computer systems and those of our third-party CROs and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failures. While we have not experienced any such system failure, accident, or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our programs. For example, the loss of clinical study data for our product candidates 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 results in a loss of or damage to our data or applications or other data or applications relating to our technology or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and the further development of our product candidates could be delayed.

We may acquire businesses or products, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions.

We may acquire additional businesses or products, form strategic alliances, or create joint ventures with third parties that we believe will complement or augment our existing business. If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of acquiring such businesses if we are unable to successfully integrate them with our existing operations and company culture. We may encounter numerous difficulties in developing, manufacturing, and marketing any new products resulting from a strategic alliance or acquisition that delay or prevent us from realizing their expected benefits or enhancing our business. We cannot provide assurance that, following any such acquisition, we will achieve the synergies expected in order to justify the transaction.

Risks related to our common stock

Market volatility may affect our stock price and the value of your investment.

Following this offering, the market price for our common stock is likely to be volatile, in part because our common stock has not been previously traded publicly. In addition, the market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including, among others:

plans for, progress of, or results from preclinical studies and clinical studies of our product candidates;

the failure of the FDA to approve our product candidates;

announcements of new products, technologies, commercial relationships, acquisitions, or other events by us or our competitors;

the success or failure of other therapies for disorders of the brain and nervous system;

regulatory or legal developments in the United States and other countries;

failure of our product candidates, if approved, to achieve commercial success;

fluctuations in stock market prices and trading volumes of similar companies;

general economic, industry, and market conditions and overall fluctuations in U.S. equity markets;

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variations in our quarterly operating results or those of companies that are perceived to be similar to us;

changes in our financial guidance or securities analysts' estimates of our financial performance;

changes in accounting principles;

our ability to raise additional capital and the terms on which we can raise it;

sales of large blocks of our common stock, including sales by our executive officers, directors, and significant stockholders;

additions or departures of key personnel;

discussion of us or our stock price by the press and by online investor communities;

market conditions in the pharmaceutical and biotechnology sectors; and

other risks and uncertainties described in these risk factors.

In recent years, the stock market in general, and the market for pharmaceutical and biotechnology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to changes in the operating performance of the companies whose stock is experiencing those price and volume fluctuations. Broad market and industry factors may seriously affect the market price of our common stock, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our stock shortly following this offering. Following periods of such volatility in the market price of a company's securities, securities class action litigation has often been brought against that company. Because of the potential volatility of our stock price, we may become the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management's attention and resources from our business.

An active trading market for our common stock may not develop, and you may not be able to resell your shares at or above the initial public offering price.

Prior to this offering, there has been no public market for shares of our common stock. Although we anticipate that our common stock will be approved for listing on The Nasdaq Global Market, an active trading market for our shares may never develop or be sustained following this offering. The initial public offering price of our common stock will be determined through negotiations between us and the underwriters. This initial public offering price may not be indicative of the market price of our common stock after this offering. Further, certain of our directors and executive officers, friends and family of our directors or officers, and certain of our other non-executive officer employees have the opportunity to purchase up to 5% of the shares of our common stock offered in this offering at the initial public offering price in a directed share program. To the extent these directors and officers purchase shares in this offering, fewer shares may be actively traded in the public market because these stockholders will be restricted from selling the shares by restrictions under applicable securities laws and the lock-up agreements described in the "Shares eligible for future sale" and "Underwriting" sections of this prospectus, which would reduce the liquidity of the market for our common stock. In the absence of an active trading market for our common stock, investors may not be able to sell their common stock at or above the initial public offering price or at the time that they would like to sell.

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If you purchase our common stock in this offering, you will incur immediate and substantial dilution in the book value of your shares.

You will suffer immediate and substantial dilution in the net tangible book value of the common stock you purchase in this offering. Assuming an initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, purchasers of common stock in this offering will experience immediate dilution of $10.08 per share in net tangible book value of the common stock. In addition, investors purchasing common stock in this offering will contribute 35.4% of the total amount invested by stockholders since inception but will only own 17.2% of the shares of common stock outstanding. In the past, we issued securities to acquire common stock at prices significantly below the initial public offering price. To the extent these outstanding securities are ultimately exercised, investors purchasing common stock in this offering will sustain further dilution. See "Dilution" for a more detailed description of the dilution to new investors in the offering.

Our executive officers, directors, principal stockholders, and their affiliates will continue to exercise significant control over our company after this offering, which will limit your ability to influence corporate matters and could delay or prevent a change in corporate control.

Immediately following the completion of this offering, and disregarding any shares of common stock that they purchase in this offering, the existing holdings of our executive officers, directors, principal stockholders, and their affiliates, including investment funds affiliated with Bain Capital Life Sciences, Adams Street, New Leaf Ventures, Longitude, and Frazier, will represent beneficial ownership, in the aggregate, of approximately 60% of our outstanding common stock, assuming no exercise of the underwriters' option to acquire additional common stock in this offering and assuming we issue the number of shares of common stock as set forth on the cover page of this prospectus. Certain of our directors and executive officers, friends and family of our directors or officers and certain of our other non-executive officer employees also have the opportunity to purchase an aggregate of up to 5% of the shares of our common stock offered in this offering at the initial public offering price in a directed share program. As a result, these stockholders, if they act together, will be able to influence our management and affairs and control the outcome of matters submitted to our stockholders for approval, including the election of directors and any sale, merger, consolidation, or sale of all or substantially all of our assets. These stockholders acquired their shares of common stock for substantially less than the price of the shares of common stock being acquired in this offering, and these stockholders may have interests, with respect to their common stock, that are different from those of investors in this offering and the concentration of voting power among these stockholders may have an adverse effect on the price of our common stock. In addition, this concentration of ownership might adversely affect the market price of our common stock by:

delaying, deferring, or preventing a change of control of us;

impeding a merger, consolidation, takeover, or other business combination involving us; or

discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of us.

See "Principal stockholders" in this prospectus for more information regarding the ownership of our outstanding common stock by our executive officers, directors, principal stockholders and their affiliates.

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Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.

If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market after the lock-up and other legal restrictions on resale discussed in this prospectus lapse, the market price of our common stock could decline. Based upon the number of shares of common stock, on an as-converted basis, outstanding as of May 31, 2018, upon the completion of this offering, we will have outstanding a total of 31,469,559 shares of common stock, assuming no exercise of the underwriters' option to purchase additional shares. Of these shares, as of the date of this prospectus, approximately 1,841,514 shares of our common stock, plus the shares sold in this offering, will be freely tradable, without restriction, in the public market immediately following this offering.

The lock-up agreements pertaining to this offering will expire 180 days from the date of this prospectus. The lock-up agreements contain important exceptions that govern their applicability. After the lock-up agreements expire, based upon the number of shares of common stock, on an as-converted basis, outstanding as of May 31, 2018, substantially all the shares of common stock will be eligible for sale in the public market, 60% of which shares are held by directors, executive officers, and other affiliates and will be subject to Rule 144 under the Securities Act of 1933, as amended, or the Securities Act. The representatives of the underwriters, however, may, in their sole discretion, permit our officers, directors, and other stockholders who are subject to these lock-up agreements to sell shares prior to the expiration of the lock-up agreements.

In addition, 8,132,506 shares of common stock that are either subject to outstanding options or reserved for future issuance under our equity incentive plans will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, the lock-up agreements and Rule 144 and Rule 701 under the Securities Act. If these additional shares of common stock are sold, or if it is perceived that they will be sold, in the public market, the market price of our common stock could decline.

After this offering, the holders of approximately 20,306,497 shares of our common stock will be entitled to rights with respect to the registration of their shares under the Securities Act, subject to the lock-up agreements described above. Registration of these shares under the Securities Act would result in the shares becoming freely tradable without restriction under the Securities Act, except for shares purchased by affiliates. Any sales of securities by these stockholders could have a material adverse effect on the market our common stock.

We have broad discretion in how we use the proceeds of this offering and may not use these proceeds effectively, which could affect our results of operations and cause our stock price to decline.

We will have considerable discretion in the application of the net proceeds of this offering. We intend to use the net proceeds from this offering together with our existing cash and cash equivalents, to fund our ongoing Phase 2 clinical study of NYX-2925 in subjects with painful DPN through completion, to fund our ongoing Phase 2 exploratory clinical study of NYX-2925 in subjects with fibromyalgia through completion, to advance NYX-783 for the treatment of PTSD through completion of Phase 1 clinical development and our planned Phase 2 clinical study, to advance NYX-458 for the treatment of Parkinson's disease cognitive impairment through completion of our planned Phase 1 clinical development and into our planned Phase 2 clinical study, and to fund clinical studies designed to explore NMDAr-dependent biomarkers, to further develop any additional product candidates that we select, and for working capital and other general corporate purposes, which will include expanding our internal research and development capabilities, hiring of additional personnel, capital expenditures and the costs of operating as a public company. As a result, investors will be relying upon management's judgment with only limited information about our specific

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intentions for the use of the balance of the net proceeds of this offering. We may use the net proceeds for purposes that do not yield a significant return or any return at all for our stockholders. In addition, pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value.

After the completion of this offering, we may be at an increased risk of securities class action litigation.

Historically, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and pharmaceutical companies have experienced significant stock price volatility in recent years. If we were to be sued, it could result in substantial costs and a diversion of management's attention and resources, which could harm our business.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, even one that may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and amended and restated bylaws may delay or prevent an acquisition of us or a change in our management. These provisions include a classified board of directors, a prohibition on actions by written consent of our stockholders, and the ability of our board of directors to issue preferred stock without stockholder approval. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us. Although we believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by requiring potential acquirers to negotiate with our board of directors, they would apply even if an offer rejected by our board were considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.

Our bylaws contain an exclusive forum provision, which may limit a stockholder's ability to bring a claim in a judicial forum it finds favorable and may discourage lawsuits with respect to such claims.

Our amended and restated bylaws, which will become effective upon the effectiveness of the registration statement of which this prospectus is a part, will provide that the United States District Court for the Northern District of Illinois will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. In addition, our amended and restated bylaws will provide that any person or entity purchasing or otherwise acquiring any interest in shares of our common stock is deemed to have notice of and consented to the foregoing provisions. We have chosen the United States District Court for the Northern District of Illinois as the exclusive forum for such causes of action because our principal executive offices are located in Evanston, Illinois. Some companies that have adopted similar federal district court forum selection provisions are currently subject to a suit in the Court of Chancery of the State of Delaware brought by stockholders who assert that the federal district court forum selection provision is not enforceable. We recognize that the federal district court forum selection clause may impose additional litigation costs on stockholders who assert the provision is not enforceable and may impose more general additional litigation costs in pursuing any such claims, particularly if the stockholders do not reside in or near the State of Illinois. Additionally, the forum selection clauses in our amended and restated bylaws may limit our stockholders' ability to obtain a favorable judicial forum for disputes with us. Alternatively, if the federal district court forum selection provision is found inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur

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additional costs associated with resolving such matters in other jurisdictions, which could have an adverse effect on our business, financial condition or results of operations. The United States District Court for the Northern District of Illinois may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments may be more or less favorable to us than our stockholders.

We are an "emerging growth company," and as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, our common stock may be less attractive to investors.

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If we choose not to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, our auditors will not be required to attest to the effectiveness of our internal control over financial reporting. As a result, investors may become less comfortable with the effectiveness of our internal controls and the risk that material weaknesses or other deficiencies in our internal controls go undetected may increase. If we choose to provide reduced disclosures in our periodic reports and proxy statements while we are an "emerging growth company," investors would have access to less information and analysis about our executive compensation, which may make it difficult for investors to evaluate our executive compensation practices. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longer an "emerging growth company." We will continue to remain an "emerging growth company" until the earliest of the following: (1) the last day of the fiscal year following the fifth anniversary of the date of the completion of this offering, (2) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.07 billion, (3) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years, or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

In addition, as an "emerging growth company" the JOBS Act allows us to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We have elected to use this extended transition period under the JOBS Act. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make comparison of our financials to those of other public companies more difficult.

We do not intend to pay dividends on our common stock and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

We have never declared or paid any cash dividend on our common stock and do not currently intend to do so in the foreseeable future. We currently anticipate that we will retain future earnings for the development, operation, and expansion of our business, and do not anticipate declaring or paying any cash dividends in the foreseeable future. Therefore, the success of an investment in shares of our common stock

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will depend upon any future appreciation in their value. There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which you purchased them.

If securities or industry analysts do not publish or cease publishing research or reports or publish misleading, inaccurate, or unfavorable research about us, our business or our market, our stock price, and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that securities or industry analysts publish about us, our business, our market, or our competitors. We do not currently have and may never obtain research coverage by securities and industry analysts. If no or few securities or industry analysts cover our company, the trading price and volume of our stock would likely be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of the analysts who covers us downgrades our stock or publishes inaccurate or unfavorable research about our business, or provides more favorable relative recommendations about our competitors, our stock price would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price or trading volume to decline.

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Special note regarding forward-looking statements and market data

This prospectus, including the sections entitled "Prospectus summary," "Risk factors," "Management's discussion and analysis of financial condition and results of operations," and "Business," contains express or implied forward-looking statements that are based on our management's belief and assumptions and on information currently available to our management. These statements involve risks, uncertainties, and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance, and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Forward-looking statements in this prospectus include, but are not limited to, statements about:

the timing, progress, and results of preclinical studies and clinical studies for NYX-2925, NYX-783, NYX-458, and any future product candidates we may develop, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the studies will become available, and our research and development programs;

undesirable side effects or other properties relating to our product candidates that could delay or prevent their regulatory approval, limit their commercial potential, or result in significant negative consequences following any potential marketing approval;

the potential for our identified research priorities to advance our technologies;

the potential benefits of, and our ability to maintain our collaboration with, Allergan plc, and establish or maintain future collaborations or strategic relationships or obtain additional funding;

the potential for substantial delays in our clinical studies or our failure to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities;

our ability to obtain and maintain regulatory approval of our product candidates, NYX-2925, NYX-783, NYX-458, and any other future product candidates, and any related restrictions, limitations and/or warnings in the label of an approved product candidate;

our intellectual property position, including the scope of protection we are able to establish and maintain for intellectual property rights covering NYX-2925, NYX-783, NYX-458, and any additional product candidates we may develop, and our ability not to infringe, misappropriate, or otherwise violate any third-party intellectual property rights;

our ability and the potential to successfully manufacture our product candidates for clinical studies and for commercial use, if approved;

our ability to commercialize our products in light of the intellectual property rights of others;

our ability to obtain funding for our operations, including funding necessary to complete further development and commercialization of our product candidates;

our plans to research, develop, and commercialize our product candidates;

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our ability to attract collaborators with development, regulatory, and commercialization expertise;

the size and growth potential of the markets for our product candidates and our ability to serve those markets;

the rate and degree of market acceptance and clinical utility of NYX-2925, NYX-783, NYX-458, and any future product candidates we may develop, if approved;

the pricing and reimbursement of NYX-2925, NYX-783, NYX-458, and any future product candidates we may develop, if approved;

regulatory developments in the United States and foreign countries;

our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;

the success of competing therapies that are or may become available;

our ability to retain the continued service of our key professionals and to identify, hire, and retain additional qualified professionals;

the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;

the impact of laws and regulations;

our expectations related to the use of proceeds from this offering; and

our expectations regarding the time during which we will be an "emerging growth company" under the Jumpstart Our Business Startups Act.

In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under "Risk factors" and elsewhere in this prospectus. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events, or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance. You should read this prospectus and the documents that we reference in this prospectus and have filed with the SEC as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from any future results expressed or implied by these forward-looking statements.

The forward-looking statements in this prospectus represent our views as of the date of this prospectus. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we have no current intention of doing so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this prospectus.

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The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, governmental publications, reports by market research firms, or other independent sources that we believe to be reliable sources. While we are not aware of any misstatements regarding any third-party information presented in this prospectus, their estimates, in particular, as they relate to projections, involve numerous assumptions, are subject to risks and uncertainties, and are subject to change based on various factors, including those discussed under the section titled "Risk factors" and elsewhere in this prospectus. Some data are also based on our good faith estimates.

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Use of proceeds

We estimate that our net proceeds from the sale of shares of our common stock in this offering will be approximately $71.4 million, or $82.6 million if the underwriters exercise in full their option to purchase additional shares, assuming an initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

A $1.00 increase (decrease) in the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our net proceeds to us from this offering by $5.0 million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discount and estimated offering expenses payable by us. An increase of one million shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) our net proceeds from this offering by $14.0 million, assuming no change in the assumed initial public offering price per share and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. An increase of one million shares in the number of shares offered by us together with a concomitant $1.00 increase in the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase the net proceeds to us from this offering by $19.8 million after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Conversely, a decrease of one million shares in the number of shares offered by us together with a concomitant $1.00 decrease in the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, would decrease the net proceeds to us from this offering by $18.0 million after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We do not expect that a change in the offering price or the number of shares by these amounts would have a material effect on our intended uses of the net proceeds from this offering, although it may impact the amount of time prior to which we may need to seek additional capital.

We are undertaking this offering in order to access the public capital markets and to increase our liquidity. We anticipate that we will use the net proceeds received by us in this offering, together with our existing cash and cash equivalents, as follows:

approximately $15.0 million to fund our ongoing Phase 2 clinical study of NYX-2925 for the treatment of painful DPN and our ongoing Phase 2 exploratory clinical study of NYX-2925 in subjects with fibromyalgia through completion;

approximately $13.0 million to advance NYX-783 for the treatment of PTSD through completion of Phase 1 clinical development and through completion of our planned Phase 2 clinical study;

approximately $30.0 million to advance NYX-458 for the treatment of Parkinson's disease cognitive impairment through completion of our planned Phase 1 clinical development and into our planned Phase 2 clinical study; and

the remainder, if any, to fund clinical studies designed to explore NMDAr-dependent biomarkers, to further develop any additional product candidates that we select, and for working capital and other general corporate purposes, which will include expanding our internal research and development capabilities, hiring of additional personnel, capital expenditures and the costs of operating as a public company.

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Based on our current plans, we believe our cash and cash equivalents, together with the net proceeds to us from this offering, will be sufficient to fund our operations through the first half of 2020. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect. We will need to raise substantial additional funds to complete registration trials for NYX-2925 and NYX-783, and before we can expect to commercialize any products, if approved. We will also require additional funds to complete development of NYX-458 for the treatment of Parkinson's disease cognitive impairment, including for the completion of our planned Phase 2 clinical study, the amounts of which will depend on the ultimate clinical development paths we pursue. We may satisfy our future cash needs through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements, or a combination of these approaches.

The expected use of the net proceeds from this offering represents our intentions based upon our current plans and business conditions. As of the date of this prospectus, we cannot predict with certainty all of the particular uses for the net proceeds to be received upon the completion of this offering or the amounts that we will actually spend on the uses set forth above. The amounts and timing of our actual expenditures and the extent of clinical development may vary significantly depending on numerous factors, including the progress of our development efforts, the status of and results from preclinical studies or clinical studies we may commence in the future, as well as our existing collaboration with Allergan and any other collaborations that we may enter into with third parties for NYX-2925, NYX-783, NYX-458, or any future product candidates or business development opportunities we may engage in for our programs and any unforeseen cash needs. As a result, our management will retain broad discretion over the allocation of the net proceeds from this offering.

Pending these uses, we intend to invest the net proceeds in high-quality, investment-grade, short-term fixed income instruments, which include corporate, financial institution, federal agency or U.S. government obligations, or hold them in cash.

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Dividend policy

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings, if any, to fund the development and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be made at the discretion of our board of directors and will depend on various factors, including applicable laws, our results of operations, financial condition, future prospects, then applicable contractual restrictions, and any other factors deemed relevant by our board of directors. Investors should not purchase our common stock with the expectation of receiving cash dividends.

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Capitalization

The following table sets forth our cash and cash equivalents and capitalization as of March 31, 2018:

on an actual basis;

on a pro forma basis to give effect to:

the automatic conversion of all outstanding shares of our convertible preferred stock into an aggregate of 20,306,497 shares of common stock upon the completion of this offering; and

the filing and effectiveness of our amended and restated certificate of incorporation upon the closing of this offering; and

on a pro forma as adjusted basis to give further effect to our issuance and sale of 5,333,333 shares of common stock in this offering at an assumed initial public offering price of $15.00 per share, the midpoint of the range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The pro forma as adjusted information below is illustrative only, and our capitalization following the completion of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. You should read the following table together with "Selected financial data," "Management's discussion and analysis of financial condition and results of operations," "Description of capital stock," and the financial statements and related notes appearing elsewhere in this prospectus.

 
   
   
   
 
 
  As of March 31, 2018
 
(in thousands, except per share data)
  Actual
  Pro forma
  Pro forma
as adjusted

 

Cash and cash equivalents

  $ 82,350   $ 82,350   $ 153,750  

Convertible preferred stock—Series A-1, $0.01 par value, 151,773 shares authorized, issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    22,650          

Convertible preferred stock—Series A-2, $0.01 par value, 173,453 shares authorized, issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    39,979          

Convertible preferred stock—Series B, $0.01 par value, 234,955 shares authorized, issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted

    69,757          

Stockholders' (deficit) equity:

                   

Preferred stock, $0.01 par value, no shares authorized, issued or outstanding, actual; 10,000 shares authorized, no shares issued or outstanding, pro forma and pro forma as adjusted

             

Common stock, $0.01 par value, 900,000 shares authorized, 5,415 issued and outstanding, actual; 150,000 shares authorized, 25,722 shares issued and outstanding, pro forma; 150,000 shares authorized, 31,055 shares issued and outstanding, pro forma as adjusted

    54     257     311  

Additional paid-in capital

    13,009     145,192     216,538  

Accumulated deficit

    (63,929 )   (63,929 )   (63,929 )

Total stockholders' (deficit) equity

  $ (50,866 ) $ 81,520   $ 152,920  

Total capitalization

  $ 81,520   $ 81,520   $ 152,920  

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The actual, pro forma, and pro forma as adjusted information set forth in the table excludes:

3,275,342 shares of common stock, issuable upon the exercise of stock options outstanding as of March 31, 2018, at a weighted-average exercise price of $3.86 per share;

4,405,755 shares of our common stock that will be reserved for future issuance under our 2018 Stock Option and Incentive Plan, or the 2018 Plan, upon the effectiveness of the registration statement of which this prospectus is a part (which amount is comprised of (i) 3,900,709 shares of our common stock newly reserved plus (ii) 505,046 shares of our common stock reserved under our 2015 Plan which will become available for issuance under our 2018 Plan upon its effectiveness); and

314,697 additional shares of common stock reserved for future issuance under our 2018 ESPP, which will become effective upon the effectiveness of the registration statement of which this prospectus is a part.

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Dilution

If you invest in our common stock in this offering, your ownership interest will be diluted immediately to the extent of the difference between the initial public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering.

Our historical net tangible book value (deficit) as of March 31, 2018 was $(50.9) million, or $(9.39) per share of our common stock. Our historical net tangible book value (deficit) is the amount of our total tangible assets less our total liabilities and convertible preferred stock, which is not included within our stockholders' (deficit) equity. Historical net tangible book value (deficit) per share represents historical net tangible book value (deficit) divided by the number of shares of our common stock outstanding as of March 31, 2018.

Our pro forma net tangible book value (deficit) as of March 31, 2018 was $81.5 million, or $3.17 per share of our common stock. Pro forma net tangible book value (deficit) represents the amount of our total tangible assets less our total liabilities, after giving effect to the automatic conversion of all outstanding shares of our convertible preferred stock into an aggregate of 20,306,497 shares of common stock upon the completion of this offering. Pro forma net tangible book value per share represents pro forma net tangible book value divided by the total number of shares outstanding as of March 31, 2018, after giving effect to the automatic conversion of all outstanding shares of our convertible preferred stock into an aggregate of 20,306,497 shares of our common stock upon the completion of this offering.

After giving further effect to our sale of 5,333,333 shares of common stock in this offering at an assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of March 31, 2018 would have been approximately $152.9 million, or approximately $4.92 per share. This represents an immediate increase in pro forma as adjusted net tangible book value per share of $1.75 to our existing stockholders and an immediate dilution in pro forma as adjusted net tangible book value per share of approximately $10.08 to new investors purchasing common stock in this offering. Dilution per share to new investors purchasing common stock in this offering is determined by subtracting pro forma as adjusted net tangible book value per share after this offering from the assumed initial public offering price per share paid by new investors. The following table illustrates this dilution on a per share basis:

 
   
   
 

Assumed initial public offering price per share

        $ 15.00  

Historical net tangible book value (deficit) per share as of March 31, 2018

  $ (9.39 )      

Increase in historical net tangible book value (deficit) per share attributable to pro forma adjustments described above

    12.56        

Pro forma net tangible book value (deficit) per share as of March 31, 2018

  $ 3.17        

Increase in pro forma as adjusted net tangible book value per share attributable to new investors purchasing shares in this offering

    1.75        

Pro forma as adjusted net tangible book value per share after this offering

          4.92  

Dilution per share to new investors purchasing shares in this offering

        $ 10.08  

A $1.00 increase (decrease) in the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the pro forma as adjusted net tangible book value per share after this offering by $0.16 per share and the dilution to new

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investors purchasing common stock in this offering by $9.92 per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated expenses payable by us. An increase of one million shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase the pro forma as adjusted net tangible book value per share after this offering by $0.32 and decrease the dilution per share to new investors participating in this offering by $0.32, assuming no change in the assumed initial public offering price and after deducting estimated underwriting discounts and commissions. A decrease of one million shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would decrease the pro forma as adjusted net tangible book value per share after this offering by $0.26 and increase the dilution per share to new investors participating in this offering by $0.26, assuming no change in the assumed initial public offering price and after deducting estimated underwriting discounts and commissions.

If the underwriters exercise their option to purchase additional shares of common stock in this offering in full at the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover of this prospectus and assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, the pro forma as adjusted net tangible book value per share after this offering would be $5.15 per share, and the dilution in pro forma as adjusted net tangible book value per share to new investors purchasing common stock in this offering would be $9.85 per share.

The following table summarizes, on a pro forma as adjusted basis, as of March 31, 2018, the number of shares of common stock purchased from us on an as converted to common stock basis, the total consideration paid, or to be paid, and the average price per share paid, or to be paid, by existing stockholders and by new investors in this offering at an assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

 
   
   
   
   
   
 
 
  Shares purchased   Total consideration   Average
price per
share

 
 
  Number
  Percent
  Amount
  Percent
 

Existing stockholders

    25,721,624     82.8%   $ 145,761,936     64.6%   $ 5.67  

New investors

    5,333,333     17.2%   $ 79,999,995     35.4%   $ 15.00  

Total

    31,054,957     100%   $ 225,761,931     100%        

Certain of our existing stockholders, including certain affiliates of our directors, have indicated an interest in purchasing an aggregate of up to $30.0 million of shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, the underwriters may determine to sell more, less or no shares in this offering to any of these stockholders, or any of these stockholders may determine to purchase more, less or no shares in this offering.

The table above assumes no exercise of the underwriters' option to purchase additional shares in this offering. If the underwriters' option to purchase additional shares is exercised in full, the number of shares of our common stock held by existing stockholders would be reduced to 81% of the total number of shares of our common stock outstanding after this offering, and the number of shares of common stock held by

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new investors participating in the offering would be increased to 19% of the total number of shares outstanding after this offering.

A $1.00 increase (decrease) in the assumed initial public offering price of $15.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the total consideration paid by new investors by $5.3 million and, in the case of an increase, would increase the percentage of total consideration paid by new investors by 1.5 percentage points and, in the case of a decrease, would decrease the percentage of total consideration paid by new investors by 1.6 percentage points, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same. An increase (decrease) of one million shares in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase (decrease) the total consideration paid by new investors by $15.0 million and, in the case of an increase, would increase the percentage of total consideration paid by new investors by 4.1 percentage points and, in the case of a decrease, would decrease the percentage of total consideration paid by new investors by 4.7 percentage points, assuming no change in the assumed initial public offering price.

The tables above do not include:

3,275,342 shares of common stock issuable upon the exercise of stock options outstanding as of March 31, 2018, at a weighted-average exercise price of $3.86 per share;

4,405,755 shares of our common stock that will be reserved for future issuance under our 2018 Stock Option and Incentive Plan, or the 2018 Plan, upon the effectiveness of the registration statement of which this prospectus is a part (which amount is comprised of (i) 3,900,709 shares of our common stock newly reserved plus (ii) 505,046 shares of our common stock reserved under our 2015 Plan which will become available for issuance under our 2018 Plan upon its effectiveness); and

314,697 additional shares of common stock reserved for future issuance under our 2018 ESPP, which will become effective upon the effectiveness of the registration statement of which this prospectus is a part.

To the extent that outstanding options are exercised or shares are issued under our 2018 Plan or 2018 ESPP, you will experience further dilution. In addition, we may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities may result in further dilution to our stockholders.

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Selected financial data

You should read the following selected financial data below together with our financial statements and the related notes appearing at the end of this prospectus and the "Management's discussion and analysis of financial condition and results of operations" section of this prospectus. The selected financial data in this section are not intended to replace the financial statements and are qualified in their entirety by the financial statements and related notes appearing at the end of this prospectus. We have derived the statement of operations data for the years ended December 31, 2016 and 2017 and the balance sheet data as of December 31, 2016 and 2017 from our audited financial statements appearing at the end of this prospectus. We have derived the statement of operations data for the three months ended March 31, 2017 and 2018 and the balance sheet data as of March 31, 2018 from our unaudited financial statements appearing at the end of this prospectus. The unaudited financial statements have been prepared on the same basis as our audited financial statements and include, in the opinion of management, all adjustments that management considers necessary for a fair presentation of the financial information set forth in those statements. Our historical results are not necessarily indicative of our future results and our interim results are not necessarily indicative of results to be expected for a full fiscal year or any other interim period.

 
   
   
   
   
 
 
  Years ended December 31,   Three months ended
March 31,
 
(in thousands, except per share data)
  2016
  2017
  2017
  2018
 

Statements of operations data:

                         

Collaboration and grant revenue

  $ 9,792   $ 4,962   $ 1,145   $ 2,464  

Operating expenses:

                         

Research and development

    22,743     31,644     8,662     12,224  

General and administrative

    4,766     5,551     1,232     2,049  

Total operating expenses

    27,509     37,195     9,894     14,273  

Loss from operations

    (17,717 )   (32,233 )   (8,749 )   (11,809 )

Other income

    2,239     165     52     137  

Net loss and comprehensive loss

  $ (15,478 ) $ (32,068 ) $ (8,697 ) $ (11,672 )

Net loss per share attributable to common stockholders, basic and diluted

  $ (3.16 ) $ (6.17 ) $ (1.71 ) $ (2.17 )

Weighted-average number of common shares outstanding, basic and diluted

    4,903     5,196     5,085     5,378  

Pro forma net loss per share, basic and diluted (unaudited)

        $ (1.91 )       $ (0.45 )

Pro forma weighted-average common shares outstanding, basic and diluted (unaudited)

          16,831           25,685  

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  As of December 31,   As of
March 31,
 
(in thousands)
  2016
  2017
  2018
 

Balance sheet data:

                   

Cash and cash equivalents

  $ 16,180   $ 92,136   $ 82,350  

Working capital(1)

    12,726     90,661     79,477  

Total assets

    18,646     97,322     88,810  

Convertible preferred stock

    22,650     132,386     132,386  

Total stockholders' deficit

    (8,551 )   (39,718 )   (50,866 )

(1)    We define working capital as current assets less current liabilities. See our financial statements for further details regarding our current assets and current liabilities.

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Management's discussion and analysis of financial condition and results of operations

You should read the following discussion and analysis of our financial condition and results of operations together with the section entitled "Selected financial data" and our financial statements and related notes appearing in this prospectus. Some of the information contained in this management's discussion and analysis of financial condition and results of operations or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. See "Special note regarding forward-looking statements and market data." As a result of many factors, including those factors set forth in the "Risk factors" section of this prospectus, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical-stage biopharmaceutical company focused on the discovery, development, and commercialization of novel, proprietary, synthetic small molecules for the treatment of brain and nervous system disorders. We focus our efforts on targeting and modulating N-methyl-D-aspartate receptors, or NMDArs, which are vital to normal and effective function of the brain and nervous system. We believe leveraging the therapeutic advantages of the differentiated modulatory mechanism of our compounds will drive a paradigm shift in the treatment of disorders of the brain and nervous system.

We are advancing a pipeline of distinct product candidates derived from our NMDAr modulator discovery platform, or discovery platform. This platform enables us to discover compounds that have the potential to modulate NMDArs optimally. We are currently studying our first product candidate, NYX-2925, in two Phase 2 studies in chronic pain. The first is in subjects with painful diabetic peripheral neuropathy, or DPN, and the second is in subjects with fibromyalgia. We expect to report top-line data from these studies in the first half of 2019. Our second product candidate, NYX-783, has been evaluated in Phase 1 clinical development. We intend to develop NYX-783 for the treatment of post-traumatic stress disorder, or PTSD, and plan to initiate a Phase 2 clinical study in the second half of 2018. For our third product candidate, NYX-458, we have received written clearance to proceed with clinical investigation from the U.S. Food and Drug Administration, or FDA, and plan to initiate a Phase 1 study in the second half of 2018. We intend to develop NYX-458 for the treatment of cognitive impairment associated with Parkinson's disease.

Since our inception in June 2015, we have devoted substantially all of our resources to: identifying and developing our product candidate portfolio; organizing and staffing our company; raising capital; developing manufacturing capabilities; conducting clinical studies; and providing general and administrative support for these operations. To date, we have primarily financed our operations through the issuance and sale of our convertible preferred stock. From our inception through March 31, 2018, we have raised an aggregate of $135 million of gross proceeds from sales of our convertible preferred stock. As of March 31, 2018, we had cash and cash equivalents in the amount of $82.4 million.

Since inception, we have never generated revenue from the sale of our products and have incurred significant net losses. Our revenue has been primarily derived from a research collaboration agreement with Allergan plc, or Allergan, a development services agreement with Allergan, and research and development grants from the U.S. government. There are no repayment or royalty obligations with respect to such grants. Our net losses were $15.5 million and $32.1 million for the years ended December 31, 2016

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and 2017, and $8.7 million and $11.7 million for the three months ended March 31, 2017 and 2018, respectively. As of March 31, 2018, we had an accumulated deficit of $63.9 million. Our net losses may fluctuate significantly from quarter to quarter and year to year. We expect to continue to incur significant expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase significantly in connection with our ongoing activities, as we:

advance the clinical development of our lead product candidates;

continue the research and development of our preclinical product candidates;

seek to identify and develop additional product candidates;

seek marketing approvals for any of our product candidates for which we successfully complete clinical development;

develop and expand our sales, marketing, and distribution capabilities for our product candidates for which we obtain marketing approval;

scale up our manufacturing processes and capabilities to support our ongoing preclinical activities and clinical studies of our product candidates and commercialization of any of our product candidates for which we obtain marketing approval;

maintain, expand, and protect our intellectual property portfolio;

expand our operational, financial, and management systems and increase personnel, including personnel to support our clinical development, manufacturing, and commercialization efforts; and

increase our product liability and clinical trial insurance coverage as we initiate our clinical studies and commercialization efforts.

We believe that our available funds will be sufficient to fund our operations for at least the next 12 months, without giving effect to any anticipated proceeds from this offering. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect. We do not expect to generate revenue from product sales unless and until we successfully complete development and obtain regulatory approval for a product candidate or enter into collaborative agreements with third parties, which we expect will take a number of years and the outcome of which is uncertain. To fund our current and future operating plans, we will need additional capital, which we may obtain through one or more equity offerings, debt financings, or other third-party funding, including potential strategic alliances and licensing or collaboration arrangements. We may, however, be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into such other arrangements as and when needed would have a negative impact on our financial condition and our ability to develop our current product candidates, or any additional product candidates, if developed. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our preclinical and clinical development efforts. We cannot assure you that we will ever be profitable or generate positive cash flow from operating activities.

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Financial operations overview

Collaboration and grant revenue

We have not generated any revenue from product sales. Our revenue to date has been primarily derived from a research collaboration agreement with Allergan; a development services agreement with Allergan, which was put in place to continue certain development activities for a pre-determined period of time following Allergan's acquisition of Naurex, as agreed to by both parties; and research and development grants from the U.S. government which have no repayment or royalty obligations. The development services agreement with Allergan was terminated in October 2016. Therefore, we have not generated any revenues under this agreement since October 2016 and do not expect to generate revenues in the future under this agreement.

Operating expenses

Research and development expenses

Research and development activities account for a significant portion of our operating expenses. We expense research and development costs as incurred. Research and development expense consists of costs incurred in connection with the development of our product candidates, including:

fees paid to consultants, sponsored researchers, and CROs, including in connection with our preclinical and clinical studies, and other related clinical study fees, such as for investigator grants, patient screening, laboratory work, clinical study database management, clinical study material management, and statistical compilation and analysis;

costs related to acquiring clinical study materials;

costs related to compliance with regulatory requirements; and

costs related to salaries, bonuses, and other compensation for employees in research and development functions.

At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the development of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales of our products, if approved. This is due to the numerous risks and uncertainties associated with developing such product candidates, including the uncertainty related to:

future clinical study results; the scope, rate of progress, and expense of our ongoing as well as any additional preclinical studies, clinical studies and other research and development activities;

clinical study enrollment rate or design;

the manufacturing of our product candidates;

our ability to obtain and maintain intellectual property protection for our product candidates;

significant and changing government regulation;

the timing and receipt of any regulatory approvals; and

the risks disclosed in the section entitled "Risk factors" beginning on page 11 of this prospectus.

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A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing, and viability associated with the development of that product candidate.

We expect our research and development expenses to increase over the next several years as we continue to implement our business strategy, which includes advancing our product candidates into and through clinical development, expanding our research and development efforts, seeking regulatory approvals for any product candidates for which we successfully complete clinical studies, accessing and developing additional product candidates, and hiring additional personnel to support our research and development efforts. In addition, product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical studies. As such, we expect our research and development expenses to increase as our product candidates advance into later stages of clinical development.

General and administrative expenses

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation. General and administrative expenses also include rent as well as professional fees for legal, consulting, accounting, and audit services.

In the future, we expect that our general and administrative expenses will increase as we increase our headcount to support our continued research and development and the potential commercialization of our product candidates, if approved. We also anticipate that we will incur increased accounting, audit, legal, tax, regulatory, compliance, and director and officer insurance costs, as well as investor and public relations expenses associated with maintaining compliance with exchange listing and SEC requirements.

Other income

Other income consists of the change in the fair value of the preferred stock tranche liability associated with our obligation to issue additional shares of Series A convertible preferred stock, and interest income earned on our cash and cash equivalents. In May 2016, we entered into a Series A convertible preferred stock purchase agreement. Under the agreement, we agreed to issue to the purchasers, and the purchasers agreed to purchase, additional shares of our Series A convertible preferred stock in multiple closings. We determined that the obligation to issue additional Series A convertible preferred stock at a future date was a freestanding financial instrument that should be accounted for as a liability. Accordingly, we recorded a preferred stock tranche liability related to this instrument at the time of the initial close in May 2016, and we remeasured the liability at fair value at each reporting period with the corresponding gain or loss from the adjustment recorded as other income until the tranche obligation either expired or was fulfilled. In January 2017, the milestone event associated with the issuance of the second and final tranche was met, and the final tranche of the Series A convertible preferred stock was issued on February 2, 2017, at which point the tranche liability was extinguished.

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Results of operations

Comparison of the three months ended March 31, 2017 and 2018

The following table summarizes our results of operations for the three months ended March 31, 2017 and 2018 (in thousands):

 
   
   
   
 
 
  Three months
ended March 31,
   
 
 
  Increase
(Decrease)

 
 
  2017
  2018
 

Collaboration and grant revenue

  $ 1,145   $ 2,464   $ 1,319  

Operating expenses:

                   

Research and development

    8,662     12,224     3,562  

General and administrative

    1,232     2,049     817  

Total operating expenses

    9,894     14,273     4,379  

Loss from operations

    (8,749 )   (11,809 )   3,060  

Other income

    52     137     85  

Net loss and comprehensive loss

  $ (8,697 ) $ (11,672 ) $ 2,975  

Collaboration and grant revenue

Revenue was $1.1 million for the three months ended March 31, 2017, compared to $2.5 million for the three months ended March 31, 2018. The net increase of $1.3 million was primarily driven by an increase in research and development costs incurred under our grants from the U.S. government primarily associated with preclinical studies towards NYX-458 during the first quarter of 2018. This trend is not expected to continue since our grants are nearing completion, and accordingly, we do not expect to generate significant incremental grant-related revenues in the future.

Research and development expenses

The following table summarizes our research and development expenses incurred during the three months ended March 31, 2017 and 2018 (in thousands):

 
   
   
   
 
 
  Three months
ended March 31,
   
 
 
  Increase
(Decrease)

 
 
  2017
  2018
 

NYX-2925

  $ 3,151   $ 4,794   $ 1,643  

NYX-783

    1,159     1,430     271  

NYX-458

    74     1,002     928  

Preclinical research and discovery programs

    1,774     1,827     53  

Personnel and related costs

    1,914     2,476     562  

Other expenses

    590     695     105  

Total research and development expenses

  $ 8,662   $ 12,224   $ 3,562  

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Research and development expenses were $8.7 million for the three months ended March 31, 2017, compared to $12.2 million for the three months ended March 31, 2018. The increase of $3.6 million was primarily due to the following:

approximately $1.6 million increase for clinical, regulatory, and drug product costs related to our Phase 2 clinical study of NYX-2925 for the treatment of painful DPN, an exploratory clinical study in subjects with fibromyalgia and our two Phase 1 target pathway clinical studies that commenced in early 2018;

approximately $0.3 million increase for clinical, regulatory, and drug product costs related to our Phase 1 clinical study of NYX-783 for the treatment of PTSD;

approximately $0.9 million increase for external research and development costs, and commencement of IND enabling activities related to NYX-458 for the treatment of Parkinson's disease cognitive impairment in late 2017;

approximately $0.1 million increase for costs associated with our internal preclinical research efforts; and

approximately $0.6 million increase for costs related to employee compensation due to increased headcount.

General and administrative expenses

General and administrative expenses were $1.2 million for the three months ended March 31, 2017, compared to $2.0 million for the three months ended March 31, 2018. The increase of $0.8 million was primarily driven by $0.6 million for increased costs related to employee compensation, including $0.3 million of additional stock-based compensation expense, due to increased headcount.

Other income

We recorded $0.1 million of other income for each of the three month periods ended March 31, 2017 and 2018. This was due to interest income earned on our cash and cash equivalents.

Comparison of the years ended December 31, 2016 and 2017

The following table summarizes our results of operations for the years ended December 31, 2016 and 2017 (in thousands):

 
   
   
   
 
 
  Year ended
December 31,
   
 
 
  Increase
(Decrease)

 
 
  2016
  2017
 

Collaboration and grant revenue

  $ 9,792   $ 4,962   $ (4,830 )

Operating expenses:

                   

Research and development

    22,743     31,644     8,901  

General and administrative

    4,766     5,551     785  

Total operating expenses

    27,509     37,195     9,686  

Loss from operations

    (17,717 )   (32,233 )   14,516  

Other income

    2,239     165     (2,074 )

Net loss and comprehensive loss

  $ (15,478 ) $ (32,068 ) $ 16,590  

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Collaboration and grant revenue

Revenue was $9.8 million for the year ended December 31, 2016, compared to $5.0 million for the year ended December 31, 2017. The net decrease of $4.8 million was primarily the result of the following changes:

approximately $5.7 million decrease due to the conclusion of the development services agreement with Allergan in 2016; and

approximately $1.0 million increase due to additional research and development grants from the U.S. government in 2017 associated with preclinical studies towards NYX-458.

Research and development expenses

The following table summarizes our research and development expenses incurred during the years ended December 31, 2016 and 2017 (in thousands):

 
   
   
   
 
 
  Year ended
December 31,
   
 
 
  Increase
(Decrease)

 
 
  2016
  2017
 

NYX-2925

  $ 4,797   $ 10,257   $ 5,460  

NYX-783

    290     2,424     2,134  

NYX-458

    161     1,746     1,585  

Preclinical research and discovery programs

    5,157     6,960     1,803  

Personnel and related costs

    4,988     7,990     3,002  

Development services

    5,362         (5,362 )

Other expenses

    1,988     2,267     279  

Total research and development expenses

  $ 22,743   $ 31,644   $ 8,901  

Research and development expenses were $22.7 million for the year ended December 31, 2016, compared to $31.6 million for the year ended December 31, 2017. The increase of $8.9 million was primarily due to the following:

approximately $5.5 million increase for clinical, regulatory, and drug product costs related to our Phase 2 clinical study of NYX-2925 for the treatment of painful DPN and an exploratory clinical study in subjects with fibromyalgia;

approximately $2.1 million increase for clinical, regulatory, and drug product costs related to our Phase 1 clinical study of NYX-783 for the treatment of PTSD, which we initiated in 2017;

approximately $1.6 million increase for external research and development costs, and commencement of IND enabling activities related to NYX-458 for the treatment of Parkinson's disease cognitive impairment in late 2017;

approximately $1.8 million increase for costs associated with our internal preclinical research efforts and increase in sponsored research activities with Northwestern and other academic institutions;

approximately $3.0 million increase for costs related to employee compensation due to increased headcount; and

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approximately $5.4 million decrease due to the conclusion of the development services agreement with Allergan in 2016.

General and administrative expenses

General and administrative expenses were $4.8 million for the year ended December 31, 2016, compared to $5.6 million for the year ended December 31, 2017. The increase of $0.8 million was primarily driven by $0.7 million for increased costs related to employee compensation, including $0.4 million of additional stock-based compensation expense, due to increased headcount.

Other income

We recorded $2.2 million of other income for the year ended December 31, 2016, compared to $0.2 million of other income for the year ended December 31, 2017. The decrease of $2.0 million was primarily driven by a $2.1 million gain that was recognized in 2016 due to the remeasurement of the fair value of the preferred stock derivative liability associated with the future issuance of our Series A-2 convertible preferred stock. The liability associated with our obligation to issue an additional tranche of Series A convertible preferred stock at a future date was terminated on February 2, 2017 and, as a result, there is no gain or loss associated with remeasurement of such liability for any subsequent reporting period. Interest income was insignificant for the years ended December 31, 2016 and 2017.

Liquidity and capital resources

From our inception through March 31, 2018 we have funded our operations primarily with proceeds from the issuance and sale of our convertible preferred stock. From our inception through March 31, 2018, we have raised an aggregate of $135 million of gross proceeds from sales of our convertible preferred stock. We have generated limited revenue to date from a research collaboration agreement with Allergan, a development services agreement with Allergan, and research and development grants from the U.S. government. There are no repayment or royalty obligations with respect to such grants. As of March 31, 2018, we had cash and cash equivalents of $82.4 million. We invest our cash equivalents in highly liquid money market accounts.

Cash flows

The following table summarizes our sources and uses of cash for each of the periods presented (in thousands):

 
   
   
   
   
 
 
  Year ended
December 31,
  Three months
ended March 31,
 
 
  2016
  2017
  2017
  2018
 

Net cash provided by (used in):

                         

Operating activities

  $ (19,715 ) $ (32,735 ) $ (7,407 ) $ (9,436 )

Investing activities

    (371 )   (1,577 )   (263 )   (46 )

Financing activities

    24,706     109,968     39,979     (304 )

Net increase (decrease) in cash, cash equivalents and restricted cash

  $ 4,620   $ 75,656   $ 32,309   $ (9,786 )

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Net cash used in operating activities

Net cash used in operating activities was $7.4 million during the three months ended March 31, 2017, compared to $9.4 million during the three months ended March 31, 2018. The increase of $2.0 million in cash used in operating activities was primarily due to increases in net loss of $3.0 million, adjusted quarter-over-quarter for the non-cash impact of increased stock-based compensation expense of $0.3 million. The cash used in operating activities was a result of increased expenses, particularly in research and development.

Net cash used in operating activities was $19.7 million during the year ended December 31, 2016, compared to $32.7 million during the year ended December 31, 2017. The increase of $13.0 million in cash used in operating activities was primarily due to increases in net loss of $16.6 million, adjusted year-over-year for the non-cash impact of the fair value remeasurement of the preferred stock tranche liability of $2.1 million and increased stock-based compensation expense of $0.5 million. The cash used in operating activities was a result of increased expenses, particularly in research and development.

Net cash used in investing activities

Net cash used in investing activities was $0.3 million during the three months ended March 31, 2017, compared to approximately $0.1 million during the three months ended March 31, 2018. The decrease of $0.2 million in cash used in investing activities was due to the timing of purchases of laboratory equipment and leasehold improvements.

Net cash used in investing activities was $0.4 million during the year ended December 31, 2016, compared to $1.6 million during the year ended December 31, 2017. The increase of $1.2 million in cash used in investing activities was due to purchases of laboratory equipment and leasehold improvements.

Net cash provided by (used in) financing activities

Net cash provided by financing activities was $40.0 million during the three months ended March 31, 2017, compared to net cash used in financing activities of $0.3 million during the three months ended March 31, 2018. Net cash provided by financing activities during the three months ended March 31, 2017 was due to the gross proceeds of $40.0 million received from the issuance of Series A-2 convertible preferred stock. Net cash used in financing activities during the three months ended March 31, 2018 was due to proposed initial public offering costs of $0.1 million and additional costs of $0.2 million related to our Series B financing that closed in December 2017.

Net cash provided by financing activities was $24.7 million during the year ended December 31, 2016, compared to $110.0 million during the year ended December 31, 2017. The increase in cash provided by financing activities was due to the gross proceeds of $40.0 million received from the issuance of Series A-2 convertible preferred stock and proceeds of $70.0 million from the issuance of Series B convertible preferred stock during 2017, as compared to $25.0 million from the issuance of Series A-1 convertible preferred stock in 2016.

Funding requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical studies of our product candidates in development. In addition, upon the closing of this offering, we expect to incur additional costs associated with operating as a public company.

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Our expenses will also increase as we:

pursue the clinical development of our most advanced product candidates;

continue the research and development of our other product candidates;

seek to identify and develop additional product candidates;

seek marketing approvals for any of our product candidates that successfully complete clinical development;

develop and expand our sales, marketing, and distribution capabilities for our product candidates for which we obtain marketing approval;

scale up manufacturing processes and capabilities to support our ongoing preclinical activities and clinical studies of our product candidates and commercialization of any of our product candidates for which we obtain marketing approval;

maintain, expand, and protect our intellectual property portfolio;

expand our operational, financial, and management systems and increase personnel, including personnel to support our clinical development, manufacturing, and commercialization efforts; and

increase our product liability and clinical study insurance coverage as we initiate our clinical studies and commercialization efforts.

As of March 31, 2018 we had cash and cash equivalents of $82.4 million. We believe that our available funds will be sufficient to fund our operations for at least the next 12 months, without giving effect to any anticipated proceeds from this offering. We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, or other third-party funding, including potential strategic alliances and licensing or collaboration arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends.

If we raise funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, or product candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce, or terminate our product development or future commercialization efforts or grant rights to third parties to develop and market our product candidates that we would otherwise prefer to develop and market ourselves.

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Contractual obligations and other commitments

The following table summarizes our contractual obligations as of December 31, 2017 (in thousands):

 
   
   
   
   
   
 
 
  Payments due by period
 
Contractual Obligations:
  Less than
1 year

  1 to 3
years

  3 to 5
years

  More than
5 years

  Total

 

Operating leases(1)

  $ 619   $ 1,262   $ 1,077   $   $ 2,958  

Total contractual obligations

  $ 619   $ 1,262   $ 1,077   $   $ 2,958  

(1)    Operating leases include total future minimum rent payments under non-cancelable operating lease agreements.

We also enter into contracts in the normal course of business with CROs for clinical studies, preclinical research studies and testing, manufacturing, and other services and products for operating purposes. These contracts generally are cancelable at any time by us, generally upon 30 days prior written notice. These payments are therefore not included in this table of contractual obligations.

Off-balance sheet arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Quantitative and qualitative disclosures about market risk

Our primary exposure to market risk is interest income sensitivity, which is affected by changes in the general level of U.S. interest rates. Our cash and cash equivalents of $82.4 million as of March 31, 2018 consisted of cash and money market accounts. The primary objectives of our investment activities are to preserve principal, provide liquidity, and maximize income without significantly increasing risk. However, because of the short-term nature of the instruments in our portfolio, a sudden change in market interest rates would not be expected to have a material impact on our financial condition, or results of operation.

Inflation would generally affect us by increasing our cost of labor and clinical study costs. We do not believe that inflation had a material effect on our business, financial condition, or results of operations during the years ended December 31, 2016 and 2017, and during the three months ended March 31, 2017 and 2018.

Critical accounting policies and significant judgments and estimates

We prepare our financial statements in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. In the preparation of these financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures. To the extent that there are material differences between these estimates and actual results, our financial condition or operating results would be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis.

While our significant accounting policies are described in more detail in the notes to our financial statements appearing at the end of this prospectus, we believe the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements.

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Research and development

As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf, and estimating the level of service performed and the associated costs incurred for the services when we have not yet been invoiced or otherwise notified of the actual costs. The majority of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual milestones are met; however, some require advanced payments. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. Examples of estimated accrued research and development expenses include fees paid to:

CROs in connection with performing research and development services on our behalf;

investigative sites or other providers in connection with clinical studies;

vendors in connection with preclinical development activities; and

vendors related to product manufacturing, development, and distribution of clinical supplies.

We base our expenses related to clinical studies on our estimates of the services received and efforts expended pursuant to contracts with multiple CROs that conduct and manage clinical studies on our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the clinical expense. Payments under some of these contracts depend on factors such as the successful enrollment of patients and the completion of clinical study milestones. In accruing service fees, we estimate the time period over which services will be performed, enrollment of patients, number of sites activated and level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from our estimate, we adjust the accrual or amount of prepaid expenses accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in us reporting expenses that are too high or too low in any particular period. To date, we have not made any material adjustments to our prior estimates of accrued or prepaid research and development expenses.

Stock-based compensation

We measure stock-based awards granted to our employees at fair value on the date of grant and recognize the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. Generally, we issue stock options and restricted stock with only service-based vesting conditions and record the expense for these awards using the straight-line method. We have historically granted stock options with exercise prices equivalent to the fair value of our common stock as of the date of grant.

The fair value of each stock option grant is estimated using the Black-Scholes option pricing model. We are a private company and lack company-specific historical and implied volatility information. Therefore, we estimate our expected volatility based on the historical volatility of a set of publicly traded peer companies and expect to continue to do so until such time as we have adequate historical data regarding the volatility of our traded stock price. The expected term of our options has been determined utilizing the "simplified method" for awards that qualify as "plain-vanilla" options. The risk-free interest rate is determined by

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reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future.

The assumptions we used to determine the fair value of stock options granted to employees are as follows, presented on a weighted-average basis:

 
   
   
   
   
 
 
  Year ended
December 31,
  Three months ended
March 31,
 
 
  2016
  2017
  2017
  2018
 

Expected volatility

    75%     75%     75%     75%  

Expected dividends

    None     None     None     None  

Expected option life

    5.79 - 6.08 Years     6.08 Years     6.08 Years     6.08 Years  

Risk-free rate

    1.36 - 2.03%     2.02 - 2.40%     2.23 - 2.40%     2.74 - 2.81%  

These assumptions represented our best estimates, but the estimates involve inherent uncertainties and the application of our judgment. As a result, if factors change and we use significantly different assumptions or estimates when valuing our stock options, our stock-based compensation expense could be materially different. We recognize compensation expense for only the portion of awards that are expected to vest.

Our stock-based compensation expense associated with stock options and restricted stock was recorded as (in thousands):

 
   
   
   
   
 
 
  Year ended
December 31,
  Three months ended
March 31,
 
 
  2016
  2017
  2017
  2018
 

Research and development

  $ 171   $ 325   $ 67   $ 132  

General and administrative

    220     576     124     392  

Total stock-based compensation expense

  $ 391   $ 901   $ 191   $ 524  

Determination of the fair value of common stock

We are a privately held company with no active public market for our common stock. Therefore, the board of directors has estimated the fair value of our common stock at various dates, with input from management, considering our most recently available third-party valuations of common stock and its assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. Once a public trading market for our common stock has been established in connection with the completion of this offering, it will no longer be necessary for our board of directors to estimate the fair value of our common stock in connection with our accounting for granted stock options and shares of restricted stock.

In the absence of a public trading market for our common stock, the valuations of our common stock were performed using methodologies, approaches, and assumptions consistent with the American Institute of Certified Public Accountants Audit and Accounting Practice Aid Series: Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or the Practice Aid. We performed these contemporaneous valuations, with the assistance of a third-party specialist, as of October 19, 2015, April 30, 2016, January 31, 2017, and December 31, 2017. The contemporaneous valuations prepared as of October 19,

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2015, April 30, 2016, January 31, 2017, and December 31, 2017 resulted in a valuation of our common stock of $1.10, $1.66, $2.48 and $5.24, respectively, as of those dates.

There are significant judgments and estimates inherent in these valuations. These judgments and estimates include assumptions regarding our future operating performance, the stage of development of our product candidates, the timing of a potential initial public offering or other liquidity event, and the determination of the appropriate valuation methodology at each valuation date. If we had made different assumptions, our stock-based compensation expense, net loss attributable to common stockholders, and net loss per share attributable to common stockholders could have been significantly different.

Valuation methodologies

In accordance with the Practice Aid, we considered the various methods for allocating the enterprise value across our classes and series of capital stock to determine the fair value of our common stock at each valuation date.

Our common stock valuations as of October 19, 2015, April 30, 2016, and January 31, 2017 were prepared using an option pricing method. Our common stock valuation as of December 31, 2017 was prepared utilizing a probability-weighted expected return method, or PWERM. Under the PWERM approach, the fair value of our common stock is determined based upon an analysis of future values for our company, and discounted to the present using a risk-adjusted discount rate. The present values of the common stock under each scenario are then weighted based on the probability of each scenario occurring to determine the value of the common stock. This method is generally considered appropriate to use when there are several distinct scenarios to be considered.

JOBS Act

Under Section 107(b) of the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, an "emerging growth company" can delay the adoption of new or revised accounting standards until such time as those standards would apply to private companies. We intend to rely on this exemption. There are other exemptions and reduced reporting requirements provided by the JOBS Act that we are currently evaluating. For example, as an "emerging growth company," we are exempt from Sections 14A(a) and (b) of the Exchange Act which would otherwise require us to (1) submit certain executive compensation matters to shareholder advisory votes, such as "say-on-pay," "say-on-frequency," and "golden parachutes;" and (2) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of our chief executive officer's compensation to our median employee compensation. We also intend to rely on an exemption from the rule requiring us to provide an auditor's attestation report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. We will continue to remain an "emerging growth company" until the earliest of the following: (1) the last day of the fiscal year following the fifth anniversary of the date of the completion of this offering; (2) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.07 billion; (3) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

Recent accounting pronouncements

See Note 2 to our financial statements appearing at the end of this prospectus for a full description of recent accounting pronouncements including the respective expected dates of adoption and estimated effects, if any, on our financial statements.

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Business

Overview

We are a clinical-stage biopharmaceutical company focused on the discovery, development, and commercialization of novel, proprietary, synthetic small molecules for the treatment of brain and nervous system disorders. We focus our efforts on targeting and modulating N-methyl-D-aspartate receptors, or NMDArs, which are vital to normal and effective function of the brain and nervous system. We believe leveraging the therapeutic advantages of the differentiated modulatory mechanism of our compounds will drive a paradigm shift in the treatment of disorders of the brain and nervous system.

We are advancing a pipeline of distinct product candidates derived from our NMDAr modulator discovery platform, or discovery platform. This platform enables us to discover compounds that have the potential to modulate NMDArs optimally. We are currently studying our first product candidate, NYX-2925, in two Phase 2 studies in chronic pain. The first is in subjects with painful diabetic peripheral neuropathy, or DPN, and the second is in subjects with fibromyalgia. We expect to report top-line data from these studies in the first half of 2019. Our second product candidate, NYX-783, has been evaluated in Phase 1 clinical development. We intend to develop NYX-783 for the treatment of post-traumatic stress disorder, or PTSD, and plan to initiate a Phase 2 clinical study in the second half of 2018. For our third product candidate, NYX-458, we have received written clearance to proceed with clinical investigation from the U.S. Food and Drug Administration, or FDA, and plan to initiate a Phase 1 study in the second half of 2018. We intend to develop NYX-458 for the treatment of cognitive impairment associated with Parkinson's disease.

Our discovery platform is based on extensive original research into a novel way of modulating NMDArs. NMDArs are a well-established subclass of receptors for glutamate, the principal excitatory neurotransmitter in the brain. Our molecules bind in a previously uncharacterized binding domain, or "pocket", on NMDArs that is distinct from that of other NMDAr-targeted therapies. The mechanism by which our molecules modulate NMDArs triggers a cascade of activity that ultimately strengthens the synaptic connections between neural cells, resulting in stronger connections over time between these cells. The communication between neural cells is not only essential to routine function of the nervous system, but also allows the cells of the nervous system to learn, or adapt in response to external stimuli, through a process called synaptic plasticity. We believe our therapeutic approach, which modulates NMDArs to enhance synaptic plasticity, affecting learning and memory, holds great promise for alleviating multiple disorders of the brain and nervous system, such as cognitive impairment, PTSD, chronic pain, and depression.

The foundation of our proprietary discovery platform is the ability to modulate NMDArs in a highly specific and selective manner to enhance synaptic plasticity. Rather than fully turning the receptor "on" (agonist) or "off" (antagonist), we believe our approach effectively normalizes NMDAr function, enhancing communication between neural cells and avoiding the issues associated with excessive unidirectional activation or inhibition that have plagued NMDAr-targeted drug development historically.

In clinical studies, compounds generated from our discovery platform penetrate the blood-brain barrier to achieve brain concentration levels consistent with levels observed at doses that had significant effects in various preclinical animal models. These compounds are orally bioavailable, potentially suitable for once-daily dosing, and have favorable tolerability profiles that we believe may allow for wide dose ranges that are both safe and effective.

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The following table summarizes our pipeline and other product candidates generated from our discovery platform:

GRAPHIC

Our first product candidate, NYX-2925, is a novel, oral, small-molecule NMDAr modulator currently in Phase 2 clinical development for the treatment of chronic pain. NYX-2925 works by enhancing synaptic plasticity, a mechanism that is differentiated from any therapy currently used for the treatment of chronic pain. This approach is uniquely suited to treat chronic pain. It is established that, when pain becomes chronic (especially neuropathic pain), it becomes a largely centralized disorder mediated by central learning and memory pathways. The development of NYX-2925 in painful DPN has been granted Fast Track designation by the FDA. We are currently studying NYX-2925 in a Phase 2 study in approximately 300 subjects with painful DPN across numerous U.S.-based sites. We are also conducting an exploratory efficacy and biomarker study of NYX-2925 in subjects suffering from fibromyalgia. We anticipate reporting top-line data from these studies in the first half of 2019. In a Phase 1 study, NYX-2925 demonstrated a predictable, dose-dependent, and linear pharmacokinetic, or PK, profile with no accumulation after multiple daily doses and was well-tolerated with no drug-related serious adverse events. In addition, across numerous and various preclinical models of neuropathic pain, we have observed robust, rapid, and long-lasting analgesic effects following dosing with NYX-2925. Neuropathic pain affects more than 18 million people in the United States, of which DPN accounts for approximately 5.5 million. Approved therapies for neuropathic pain provide suboptimal efficacy and often come with substantial side effects and abuse liability. However, despite these limitations, nearly $19.7 billion in sales were achieved in 2016 for treatments related to pain, of which we estimate over $4 billion came from treatments related to neuropathic pain. If approved, we believe NYX-2925 will provide an attractive and effective therapeutic option for treating painful DPN. We estimate that fibromyalgia affects approximately 5 million people in the United States and also represents a patient population that is underserved by currently available therapies. We believe the therapeutic profile of NYX-2925 may allow us to expand the development of this molecule into multiple other chronic pain conditions.

Our second product candidate, NYX-783, is a novel, oral, small-molecule NMDAr modulator currently in Phase 1 clinical development and we plan to initiate Phase 2 development in the second half of 2018. We intend to develop NYX-783 for the treatment of PTSD, which has been granted Fast Track designation by the FDA. To date, in the Phase 1 study, NYX-783 has demonstrated a predictable, dose-dependent, and linear PK profile and has been well-tolerated with no drug-related serious adverse events. In preclinical

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models of contextual fear conditioning and extinction, NYX-783 appears to both accelerate fear extinction and inhibit spontaneous recurrence of fear, making it an ideal product candidate for the treatment of PTSD. Unlike currently used therapies, we believe NYX-783 has the potential to target the underlying cause of PTSD—learning and memory dysfunction associated with an inability to extinguish fear caused by trauma—as well as the core symptoms and comorbidities associated with the disorder. It is estimated that 8% to 10% of people that experience trauma will develop PTSD in their lifetime and approximately 8.5 million people currently suffer from PTSD in the United States. Many of these people are currently untreated or poorly treated due to the lack of safe and effective options. To date only two pharmacotherapies have been approved to treat PTSD and both are selective serotonin reuptake inhibitor, or SSRI, antidepressants that have limited efficacy in treating the symptoms of PTSD.

Our third product candidate, NYX-458, has been evaluated in IND-enabling preclinical studies and we submitted an IND application to the FDA on May 18, 2018 for the treatment of Parkinson's disease dementia, a subset of Parkinson's disease cognitive impairment. We subsequently received written clearance to proceed with clinical investigation from the FDA on June 8, 2018. Mechanistic rationale and compelling preclinical data in a model of Parkinson's disease suggest NYX-458 may be optimally suited to treat the cognitive deficits caused by the disease. This model is highly relevant and translatable, as it evaluates the compound's effects in non-human primates by employing the neurotoxin MPTP to destroy dopamine-related neural cells similar to the way Parkinson's disease does in humans and measuring cognitive function using the same battery of tests used in human clinical studies. In a study using this model, oral administration of NYX-458 resulted in a reversal of MPTP-induced cognitive impairment and, on some measures, restored cognitive function back to pre-MPTP baseline levels. NYX-458 has also shown robust and long-lasting effects in relevant rodent models, including water maze and novel object recognition models. We plan to initiate a single- and multiple-ascending dose Phase 1 study to evaluate safety, tolerability, and PK in the second half of 2018.

We are also evaluating our product candidates in clinical studies designed to explore NMDAr-dependent biomarkers in healthy human subjects. Using readily and rapidly measurable markers, these studies have the potential to further demonstrate that our small-molecule compounds can engage NMDArs and downstream pathways in the human brain in a dose-dependent and predictable way. Successful biomarker studies could aid in our understanding of clinical efficacy results and optimal dosing regimens, and allow us to optimize future clinical study design.

While all of our product candidates and the other molecules from our discovery platform modulate NMDArs, they are each distinct chemical entities with different pharmacologic properties. Each of our molecules binds uniquely within the binding domain, resulting in a variety of activity, potency, and NMDAr-subtype selectivity profiles. We evaluate the therapeutic implications of these variations by interrogating our molecules across different preclinical models of brain and nervous system disorders. The data we collect from these preclinical studies indicate which molecules are better suited for different indications and inform our development decisions accordingly.

We have secured intellectual property protection for our clinical-stage compounds and are pursuing intellectual property protection for our earlier-stage compounds. In addition, we have characterized the binding domain of our compounds on NMDArs and created a broad portfolio of chemical scaffolds and specific compounds that demonstrate NMDAr interaction and properties appropriate for drugs that target the central nervous system, or CNS. We believe the breadth and depth of our medicinal chemistry efforts are comprehensive with respect to this particular mechanism of NMDAr modulation. We have secured, or have applications to secure, the associated intellectual property protection for these compounds. We believe our intellectual property strategy and medicinal chemistry approach position us to make meaningful

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clinical advances in safety and efficacy through the enhancement of synaptic plasticity utilizing our differentiated mechanism.

Our company and history

We have assembled a world-class management team with highly relevant scientific, clinical, regulatory, and commercial expertise. Many members of our management team worked together for several years at Naurex Inc., or Naurex, prior to the spin out of Aptinyx in 2015 in conjunction with the acquisition of Naurex by Allergan for up to $1.7 billion in total deal value, $560 million of which it agreed to pay up front. Our Chief Scientific Officer, Joseph Moskal, Ph.D., pioneered our NMDAr modulation approach, beginning with his work at the National Institutes of Health, or NIH, in the 1990s and continuing across his academic career at various institutions, including Northwestern University, where he is currently a Distinguished Research Professor. Dr. Moskal discovered a peptide compound, rapastinel, which Naurex ultimately evaluated in two Phase 2 studies in subjects with major depressive disorder. The data from those studies offered clinical validation of our unique mechanism of modulating NMDArs, informing Allergan's acquisition of Naurex and its advancement of rapastinel into Phase 3 development. Rapastinel has been granted breakthrough therapy designation by the FDA. Naurex scientists had also developed a separate new platform for discovering small-molecule compounds that bind to and modulate NMDArs in a fashion similar to that of rapastinel. This discovery platform was spun out into Aptinyx and formed the foundation of our company.

As part of the Naurex-Allergan transaction and spin out of Aptinyx, we entered into a research collaboration with Allergan around the discovery, screening, and profiling of novel NMDAr modulators from our discovery platform. In addition to fueling our own pipeline, this collaboration has enabled Allergan to advance another product candidate from our discovery platform, AGN-241751. On May 16, 2018, Allergan exercised its option under our collaboration to acquire the exclusive rights to develop and commercialize this compound within its specified set of indications. In connection with the exercise of its option, Allergan triggered payment of a $1.0 million option fee as stipulated in the collaboration agreement. Allergan has disclosed its plan to advance AGN-241751 for the treatment of major depressive disorder. Under the terms of the collaboration, Allergan has options to acquire up to three molecules (including AGN-241751) from our discovery platform and to develop those molecules within a field of specified indications set out in the collaboration agreement. Each time Allergan exercises an option, it will be obligated to make a $1.0 million option fee payment and will have no further obligations to pay downstream royalties or milestones. For a discussion of this collaboration, see "Business—Research collaboration agreement with Allergan."

We are backed by a group of leading institutional life science investors, including Adage Capital, Adams Street Partners, Bain Capital Life Sciences, Frazier Healthcare Partners, HBM Healthcare Investments, Longitude Capital, Nan Fung Life Sciences, New Leaf Venture Partners, Osage University Partners, Partner Fund Management, and Rock Springs Capital, among others.

Our strategy

Our goal is to become a leading biopharmaceutical company to discover, develop, and commercialize innovative therapies for disorders of the brain and nervous system with significant unmet medical needs. Key elements of our strategy are to:

Advance the development of NYX-2925 as a novel treatment for chronic pain conditions.  We are currently studying NYX-2925 in two Phase 2 studies in subjects with chronic pain. The first is in subjects with painful DPN and the second is in subjects with fibromyalgia. We believe positive results from these studies will establish NYX-2925, if approved, as a high-potential therapy for chronic pain with

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    mechanistic innovations that address significant unmet medical needs around efficacy, safety, dosing regimens, and the alleviation of comorbid symptoms. We expect efficacy data from these studies to be available in the first half of 2019 and to form the basis for future studies for regulatory approvals in not only painful DPN and fibromyalgia, but also additional chronic and centrally-mediated pain indications.

Advance the development of NYX-783 as a novel treatment for PTSD.  We are currently evaluating NYX-783 as a potential treatment for people with PTSD. This compound has been evaluated in Phase 1 clinical development. We expect to initiate a Phase 2 study during the second half of 2018 and to report Phase 2 data during the second half of 2019. We believe NYX-783, if approved, could represent a transformational treatment for PTSD that addresses the underlying learning and memory dysfunction associated with an inability to extinguish fear caused by trauma, while also addressing the core symptoms and major comorbidities of the disorder.

Advance the development of NYX-458 as a novel treatment for Parkinson's disease cognitive impairment.  We are currently conducting preclinical studies for NYX-458, and submitted an IND application to the FDA in May 2018. Based on compelling data in a relatable, translatable model, we believe NYX-458, if approved, may offer substantial improvements over existing treatments for Parkinson's disease cognitive impairment by working through the synaptic plasticity mechanisms that drive cognition, including attention, learning, and memory.

Continue to expand our pipeline by leveraging our NMDAr modulator discovery platform, building on and extending our leadership in NMDAr biology.  We intend to use our discovery platform to develop a broad pipeline and product portfolio across an array of disorders of the brain and nervous system. Our pipeline is fueled by our library of over 800 unique, synthesized, small-molecule NMDAr modulators derived through our extensive original research and the discovery of a novel binding domain that we believe could allow for safe and effective enhancement of synaptic plasticity. All of these compounds have been designed to meet favorable CNS safety and PK criteria. We also plan to identify and use NMDAr-dependent biomarkers to expedite and inform the development of our future product candidates.

Optimize the development and commercial potential of our product candidates.  We own the worldwide commercial rights to NYX-2925, NYX-783, and NYX-458 in our selected indications. Our primary strategy is to independently pursue the development and commercialization of our product candidates. We have assembled an experienced management team that is capable of executing along the entire value chain of drug development and commercialization. As we continue to build and develop our product portfolio, we may opportunistically pursue strategic partnerships that maximize the value of our pipeline.

Synaptic plasticity and NMDAr function in the brain and nervous system

Neural cells communicate through chemical messengers called neurotransmitters. Examples of common neurotransmitters include glutamate, glycine, GABA, acetyl choline, serotonin, dopamine, and norepinephrine. These neurotransmitters move from one neural cell to the receptors of another neural cell across small gaps between them called synapses. Movement of these neurotransmitters between neural cells is the main way in which they communicate with each other. The communication can be positive (excitation) or negative (inhibition). If excitation of a neural cell is sufficient, it will activate, or depolarize, transmitting a signal along its length.

The communication between neural cells not only enables routine function of the nervous system, but also allows the cells of the nervous system to learn, or adapt in response to external stimuli, through a process called synaptic plasticity. The hallmarks of synaptic plasticity include changes in the structure and function of neural cells, such as growth of neural cell endings and strengthening of synaptic connections. These

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lasting changes in cell structure and function are believed to translate into changes in learning, memory, cognition, mood, pain perception, and behavior.

NMDArs are important to synaptic plasticity as they are a subclass of receptors for glutamate, the principal excitatory neurotransmitter in the brain. NMDArs sit on neural cells and form channels or pores in the cell membrane that open when the receptors are activated and close when they are not. The open channel allows positively charged particles, such as calcium ions, to enter the cell and begin a cascade of activity. NMDArs require several events to occur simultaneously for the receptor to be activated. NMDArs cannot open when the neural cells they are on are in a resting state. The first event required for the receptor to be activated is therefore that the neural cell must be activated or depolarized. At the same time, the receptor must bind glutamate released by the activation of an adjacent neural cell. When these events happen simultaneously, NMDArs can be activated and open. The figure below illustrates this cascade of activity leading to activation of NMDArs.

GRAPHIC

NMDAr activation triggers a cascade of activity that ultimately strengthens the synaptic connections between neural cells that are simultaneously activated. For example, a particular group of neural cells might be activated in response to an external stimulus, such as seeing a previously unseen ("novel") object. The neural cells that are simultaneously activated by this stimulus will, through this NMDAr-dependent mechanism, become more strongly connected, and the connections will strengthen more if the object is encountered multiple times. This essentially hardwires the response to this stimulus into the brain, creating a memory of the (now "familiar") object.

The process of forming stronger connections over time between neural cells is known as long-term potentiation, or LTP. The opposing process, whereby connections weaken between cells that show less activity is known as long-term depression, or LTD. LTP and LTD are believed to be the primary physical manifestations of learning and memory throughout the brain covering a range of phenomena, including emotion and pain. These processes are key components of synaptic plasticity and act to strengthen and weaken neural connections in response to changing patterns of activity.

Learning, communication, and cognition

Synaptic plasticity is critically involved in learning and memory processes. Abnormalities in synaptic plasticity underlie a number of disorders. Disorders of cognitive ability such as dementia and mild cognitive impairment, or MCI, seen in Alzheimer's disease, Parkinson's disease, Huntington's disease, autism spectrum disorders, cerebral ischemia, stroke, traumatic brain injury, or TBI, anti-NMDAr encephalitis and

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numerous other diseases, clearly indicate an intuitive connection to the process of learning, thinking, and forming memories driven by synaptic plasticity. In many cognitive disorders, people undergo progressive loss of structure or function of neural cells. Here, the disease pathology may trigger an inability to properly attend to stimuli, learn, or remember how to perform tasks driven by a similar lack of synaptic plasticity.

There are a number of additional disorders where a similar lack of effective learning or memory plays a critical role. For example, in PTSD, chronic pain, and depression, there is evidence that specific regions of the brain exhibit a lack of plasticity and the ability to appropriately learn. Therapeutic approaches that modulate NMDArs to enhance synaptic plasticity hold great promise for alleviating these disorders, among others.

For instance, in people with PTSD, the brain acts as though a repeated stressful stimulus is present when it is not, and the acute stress, fear, and other symptoms that characterize PTSD are the result of the abnormally intrusive memory of past trauma. In many cases of chronic pain, the brain is acting as though a painful stimulus is present even when it is not, or the perception of pain is disproportional to the extent of the stimulus. This is especially true of neuropathic pain, which arises from the nervous system itself. Similarly, in some people with depression, the brain may act as though a repeated mood depressing stimulus is present even when it is not.

Many of the available treatments for these disorders are weakly efficacious. Treatments often result in little or no benefit for large groups of patients and often are accompanied by significant side effects. For example, drugs acting as calcium channel blockers often have side effects including nausea, edema, and dizziness while only providing modest efficacy. SSRIs and selective serotonin—norepinephrine reuptake inhibitors, or SNRIs, are antidepressants which may have side effects such as nausea, constipation, and weight gain while the efficacy is highly variable and often takes weeks to be achieved, if it ever is. Many current therapies for disorders like neuropathic pain, PTSD, and cognitive impairment have unclear or partially understood mechanisms of action or may involve multiple potential mechanisms, leading to similar issues with inconsistent responses and side effects. The underlying lack of synaptic plasticity in these disorders has not been effectively targeted by existing therapies.

Limitations of historical approaches to targeting NMDArs

Given the well-established evidence of a connection between certain brain and nervous system disorders, aberrant neural cell communication, and NMDArs, scientists have been trying for decades to target this family of receptors to create therapies that effectively treat these disorders. Many of the drugs developed to target NMDArs utilize the binding sites of glutamate or glycine or target the NMDAr channel itself, turning the receptor "off" (antagonists) by closing the receptor or "on" (agonists) by opening the receptor.

Antagonists tend to have significant side effects at therapeutic doses, such as psychosis-like symptoms, and dissociative symptoms such as detachment, abnormal perceptions, and memory loss, which strongly limit their potential for chronic use. The NMDAr antagonist ketamine is even used clinically as an anesthetic due to the extent of its sedative and amnesic effects. Similarly, the NMDAr antagonist phencyclidine (PCP) was originally approved for anesthetic purposes but was subsequently discontinued due to significant side effects such as delusions, severe anxiety, and agitation.

Agonists can cause toxicity and cell death due to prolonged NMDAr activation, a process that is believed to play a role in some neurodegenerative disorders such as Alzheimer's disease.

Prior approaches to targeting NMDArs have been unidirectional, and compounds developed using these approaches have narrow therapeutic windows, resulting in limited utility. A unidirectional approach to targeting NMDArs resembles a light switch that can only be turned on or off, when what is required is a dimmer switch to dial light levels up or down in smaller increments. The drugs that have been developed using this on/off approach are also limited by their significant side effects.

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Our approach to modulating NMDArs and enhancing synaptic plasticity

Our approach to targeting NMDArs is unique, binding to a previously uncharacterized site to facilitate the activation of NMDArs leading to the cascade of activity described earlier that ultimately leads to enhanced synaptic plasticity, or neural cell communication. Our compounds enable a subtle modulation of communication between neural cells without fully turning the receptor on or off. The binding of our compounds to the NMDAr results in a concentration-dependent change in receptor conformation that can facilitate appropriate activation. The figure below illustrates the cascade of activity leading to enhanced LTP and synaptic plasticity, the mechanism by which we believe our product candidates work.

GRAPHIC

The modulatory activity of our compounds can be observed in a calcium flux assay in which NYX-2925, in a concentration dependent manner, can either enhance calcium flux by approximately 20% or inhibit calcium flux by approximately 20%. This differs substantially from antagonists like ketamine which only exhibit unidirectional effects and reduce calcium flux by up to 100%. This comparison is shown in the figure below.

GRAPHIC

Our proprietary compounds are intended to normalize NMDAr function through subtle modulation, allowing for synaptic plasticity to be enhanced without fully turning the receptor on or off, potentially avoiding significant side effects. We believe we are positioned to be the first biopharmaceutical company to exploit this mechanism to develop small-molecule therapeutics with substantially wider therapeutic windows than

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other NMDAr-targeted compounds and to treat numerous disorders of the brain and nervous system. We are initially focusing on the following disorders which have the potential to be addressed via this mechanism:

Chronic Pain:  Chronic pain, especially neuropathic pain arising from damage to, or malfunction of, the nervous system itself, and associated emotional disturbances are believed to be partly driven by inappropriate neural cell communication in specific regions of the brain. It is established that when pain becomes chronic (especially neuropathic pain), it becomes a largely centralized disorder mediated by central learning and memory pathways. We believe centrally-mediated pain disorders can be addressed through the enhancement of synaptic plasticity. This is evidenced by the ability of NYX-2925 to alleviate pain and emotional disturbances in animal models of neuropathic pain.

PTSD:  One of the key characteristics of PTSD is the re-experiencing of fear related to a traumatic event. This can take different forms including experiencing distress in response to reminders of the event or a heightening of startle responses to otherwise harmless triggers. The persistence of, and inability to extinguish, this fear response is also believed to be partly driven by inappropriate neural cell communication in specific regions of the brain. NYX-783 enhances synaptic plasticity and neural cell communication and has shown the ability to significantly accelerate fear extinction in animal models.

Cognitive Impairment:  Cognitive impairment can occur in multiple cognitive domains, many of which are dependent on effective learning and memory. Since learning and memory are synaptic plasticity dependent, there is a clear potential for NMDAr modulation to enhance cognition. NYX-458 has demonstrated an ability to substantially reverse cognitive deficits seen in a non-human primate model of Parkinson's disease. On some measures, such as those relating to attention, working memory, and cognitive flexibility, function was restored to baseline levels.

While aspects of the underlying pathology in these different conditions are similar, the precise pathways and nature of abnormal neural cell communication is different in each case. As a result, we functionally screen our drug candidates to determine which molecules are best suited for further development in which indications.

Our NMDAr modulator discovery platform

We have synthesized an extensive proprietary chemistry library of over 800 unique, small-molecule NMDAr modulators that demonstrate receptor interaction and particular properties appropriate for drugs that target the brain and nervous system. These distinct molecules are at various stages of the drug discovery and development process, from initial synthesis to clinical studies. We designed all of these compounds to bind within a unique binding domain on NMDArs. NMDArs are composed of multiple subunits and can be expressed in different configurations within the brain and nervous system leading to multiple potential subtypes of NMDArs that show different properties and play different roles in brain and nervous system function. Our compound library demonstrates a range of profiles in receptor subtype binding and subsequent activity.

The differentiated binding profiles across compounds result in variations in activity and potency depending on the disease model being assessed. This allows us to screen compounds as potential therapies for specific disorders of the brain and nervous system based on their specific effects in different animal and cell-based models. The data we collect from these preclinical studies indicate which molecules are better suited for different indications and inform our development decisions accordingly.

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The chemistry underlying our discovery platform stems from decades of original research beginning at the NIH and more recently at Northwestern University. This research began with the study of the underlying foundation of learning and memory, and eventually led to the discovery of a peptide that modulated a novel binding domain on NMDArs. Administration of the peptide, rapastinel, in animal models was shown to enhance synaptic plasticity in a dose-dependent fashion. As a peptide, rapastinel could not be dosed orally due to lack of oral bioavailability. Dosed intravenously, rapastinel showed a favorable tolerability profile, with no drug-related serious adverse events in over 500 subjects, and met the primary endpoint and achieved statistical significance on some of the secondary endpoints in two Phase 2 studies of major depression disorder and was acquired by Allergan in 2015 through the acquisition of Naurex.

Aptinyx was formed around the continuation of this research, with the discovery and synthesis of small-molecules that were able to bind in the same distinct domain on NMDArs and modulate activity in a similar manner as rapastinel, but with a diversity of chemistry and activity not readily achievable with peptides. Many of these small molecules, including NYX-2925 and the other molecules in our pipeline, have shown robust and long-lasting activity in several animal models and high bioavailability and brain penetration after oral administration in animal models and clinical studies. Although our new generation of small-molecule NMDAr modulators is building on the same validated foundational research that led to rapastinel, our medicinal chemistry approach has generated a wide range of differentiated pharmacological profiles, and all with the convenience of oral dosing.

Product candidates from our discovery platform

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We have three clinical-stage product candidates derived from our discovery platform, NYX-2925, NYX-783, and NYX-458, which we are developing for the treatment of chronic pain, PTSD, and Parkinson's disease cognitive impairment, respectively. Allergan is also developing a product candidate from our discovery platform, AGN-241751, for the treatment of major depressive disorder. In May 2018, Allergan exercised its option under our collaboration to acquire the exclusive intellectual property rights specific to AGN-241751. In addition to our clinical-stage product candidates, we believe our preclinical-stage small molecules have the potential to treat numerous other brain and nervous system disorders that may be addressed through NMDAr modulation or synaptic plasticity enhancement.

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NYX-2925

Our first product candidate, NYX-2925, is in Phase 2 clinical development for the treatment of painful DPN, as well as a Phase 2 exploratory study in fibromyalgia. We expect to report top-line data from these studies in the first half of 2019. In a Phase 1 study, NYX-2925 demonstrated a favorable tolerability and PK profile. NYX-2925 has also presented robust, dose-dependent, long-lasting activity across various preclinical pain models. Assuming positive results from the ongoing Phase 2 studies, we plan to develop NYX-2925 for multiple other chronic pain conditions.

Mechanistic rationale

There is increasing evidence implicating inappropriate neural cell communication and NMDAr-dependent synaptic plasticity in states of chronic pain. Human imaging studies have shown that as pain becomes chronic, the activated brain regions transition from regions associated with sensory processing to regions associated with learning and memory processing. This is seen across chronic and neuropathic pain conditions including painful DPN and fibromyalgia, as well as other centrally-mediated pain disorders such as lower back pain and osteoarthritis. This suggests that, over time, chronic pain becomes a largely centralized disorder mediated by learning and memory pathways. Therefore, we believe therapies that improve neural cell communication, such as NYX-2925, have great potential to be effective across a wide range of chronic pain conditions.

Chronic and neuropathic pain are also associated with comorbidities including impaired cognitive and emotional states. Because NMDArs are critical for neural cell communication, as well as in emotional and cognitive learning, we believe that targeting NMDArs can be effective in addressing chronic pain and its comorbidities.

Disease overview

According to the NIH, chronic pain is a persistent pain in which pain signals are transmitted within the nervous system for weeks, months, or years. Chronic pain can be triggered by an initial incident or an ongoing cause of pain. Some people may also suffer chronic pain in the absence of past injury or tissue damage. The figure below outlines chronic pain versus acute pain, and also provides examples of each of the various types of pain.

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We are currently studying NYX-2925 in two Phase 2 studies across two chronic pain conditions. The first study is in painful DPN. According to the American Chronic Pain Association, painful DPN is one of the most common complications among people with diabetes. It often causes pain or loss of feeling in the toes, feet, legs, hands, and arms. People with painful DPN report the experience of burning, electric or stabbing pain, and may also suffer from increased sensitivity to pain, or hyperalgesia, or even a pain response to an otherwise non-painful stimulus, or allodynia.

In the second study, we are exploring the effects of NYX-2925 in fibromyalgia, primarily focused on changes to markers in the brain associated with pain processing. Fibromyalgia is a condition of chronic widespread pain associated with fatigue, sleep disturbances, cognitive impairment, and depression. Individuals suffering from fibromyalgia often display symptoms without an apparent associated cause such as tissue inflammation or other damage. The systemic nature of fibromyalgia symptoms suggests that it is a centralized pain disorder with a dysfunction in pain processing within the brain.

Prevalence and market opportunity

We estimate that up to 100 million adults in the United States suffer from chronic pain. In a recent study, IMS Health Institute estimated the market for pain treatments in the United States in 2016 was approximately $19.7 billion, of which we estimate that neuropathic pain treatments represented approximately $4 billion. While we believe our compounds have the potential to address many chronic pain conditions, we estimate that the initial pain conditions we are targeting have the following prevalence in the United States:

Painful DPN—approximately 5.5 million patients

Fibromyalgia—more than 5 million patients

The figure below shows our estimates of the U.S. prevalence of a few of the most common and relevant chronic pain conditions.

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Current treatment options and unmet needs

There is substantial overlap in the treatment of chronic pain conditions, especially among our lead indications, painful DPN and fibromyalgia, where two drugs, duloxetine and pregabalin, developed by Eli Lilly and Pfizer, respectively, are widely used and have achieved substantial sales. Cymbalta (duloxetine), originally developed as an antidepressant, has been approved for multiple chronic pain conditions and before facing generic competition achieved peak sales of $5.1 billion in 2013. Lyrica (pregabalin) was originally developed for postherpetic neuralgia and painful DPN, then later expanded into fibromyalgia and pain due to spinal cord injury. Lyrica achieved revenue of $5.2 billion in 2017 with the majority of revenue from painful DPN and fibromyalgia.

In addition to duloxetine and pregabalin, the opioid tapentadol is the only other drug that is FDA-approved for painful DPN. The figure below outlines a number of therapies for painful DPN published in the American Diabetes Association's current guidelines.

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Despite these treatment options, substantial unmet medical need remains in the treatment of chronic pain broadly, and specifically in painful DPN. It has been shown that, with existing therapies, no more than 40 to 60% of patients obtain even partial relief of their pain. Many of these therapies have unclear or

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partially understood mechanisms of action, or may involve multiple potential mechanisms and targets, leading to the issues with inconsistent responses and side effects.

Efficacy.  Therapies used today lack a mechanism targeted specifically for chronic pain. Most therapies were originally developed as either anticonvulsants or antidepressants. Only one-third of neuropathic pain and fibromyalgia patients achieve a 50% pain reduction with pharmacotherapy, and nearly all continue to experience residual pain. Most therapies require treatment of four to eleven patients in order for just one to achieve a satisfactory (>50%) pain reduction.

Tolerability.  All of the existing drugs used to treat painful DPN and fibromyalgia show side effects, including somnolence, dizziness, edema, tremors, nausea, constipation, and weight gain.

Dosing.  Many of the currently used therapies must be taken two to three times daily in order to maintain a pain response, if one is achieved at all. In a chronic condition, dosing multiple times daily can lead to lack of compliance, or failure to take medication as prescribed, which in turn leads to overall suboptimal treatment.

Abuse potential.  Abuse of pain medications is commonly associated with opioids, but other chronic pain therapies have been recognized as drugs with abuse potential. Specifically, pregabalin and gabapentin have been recognized as therapies carrying substantial risks. Duloxetine comes with the potential for withdrawal symptoms if discontinued abruptly.

Even with these issues, drugs to treat chronic pain conditions have garnered significant revenue and are or have been (Lyrica and Cymbalta, respectively) among the top-selling pharmaceutical products globally. We believe this indicates broad and substantial unmet need in this space.

NYX-2925 has a mechanism of action that is distinct from all other existing and emerging therapies. We believe that NYX-2925, if approved, may represent a substantial improvement to existing therapies in the following ways:

provide rapid and durable (long-lasting) pain symptom resolution;

induce fewer side effects than current therapies;

enhance patient compliance with a simple dosing regimen; and

provide a chronic pain therapy that has low potential for abuse liability.

In the future, we expect to develop NYX-2925 for broader chronic pain indications, such as neuropathic lower back pain and osteoarthritis, where there is significant need for chronic pain therapies without serious dependency issues. The Centers for Disease Control and Prevention estimates that, on average, 115 Americans die every day from an opioid overdose and that the economic burden to the United States, including the costs of healthcare, lost productivity, addiction treatment, and criminal justice involvement, is $78.5 billion a year. We believe that NYX-2925 has the potential to meet the desperate need for safe and effective non-opioid chronic pain therapies.

Ongoing Phase 2 clinical studies

Given the preclinical data supporting the potential ability of NYX-2925 to meet the significant unmet needs existing in the management of chronic pain, especially neuropathic pain, we have initiated two Phase 2 clinical studies in chronic pain, one in subjects with painful DPN and one in subjects with fibromyalgia. We believe NYX-2925 has the potential to achieve robust pain reduction with limited side effects.

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Painful diabetic peripheral neuropathy

We are currently enrolling a Phase 2 clinical study to evaluate efficacy and safety for NYX-2925 for the treatment of painful DPN, our lead clinical indication. The study is a double-blind, randomized, and placebo controlled clinical study of NYX-2925 in 300 subjects across multiple U.S.-based sites. We are studying multiple doses of NYX-2925 ranging up to 200 mg. Subjects will be dosed daily for four weeks, with an additional one week follow-up period.

Pain will be assessed using a patient reported scale (with a pain score ranging from zero to ten) and recorded daily on a provided hand-held device. The study will assess daily pain scores at baseline (for seven days prior to treatment) and throughout the study duration. Additional end-points will measure a range of other physical and psychological parameters.

We currently expect to conclude enrollment and report top-line results in the first half of 2019.

To mitigate high placebo response rates seen in similar chronic pain studies, we have included an analysis of baseline (pre-treatment) pain scores as part of the screening process for the study. Our protocol removes subjects, prior to randomization, whose daily pain scores exhibit significant day-to-day variation, which variation is associated with higher rates of placebo response. This is intended to reduce the variance of baseline pain scores and help to ensure a robust comparison with pain score during and after treatment.

The figure below illustrates the design of our Phase 2 study in subjects with painful DPN.

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Fibromyalgia

We are currently enrolling an exploratory Phase 2 clinical study in subjects with fibromyalgia. The study is a single-blind, placebo-controlled clinical study. We intend to enroll approximately 24 subjects across two U.S.-based academic sites evaluating daily doses of 20 mg and 200 mg.

The goal of the study is to determine whether daily dosing of NYX-2925 in subjects with fibromyalgia changes certain biomarkers of central pain processing using various neuro-imaging techniques, including

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functional magnetic resonance imaging, or fMRI. This study will give us data to indicate at which dose these changes are most prominent, potentially aiding in the design of a focused late-stage program in this indication, or other chronic pain indications. We are also evaluating additional end-points, including daily pain scores, measuring a range of other physical and psychological parameters. Each subject will serve as his or her own control, receiving both placebo and NYX-2925 over the six weeks of the study.

We currently expect to conclude enrollment and report top-line results in the first half of 2019. The figure below illustrates the design of our Phase 2 exploratory study in subjects with fibromyalgia.

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Dose selection

To select the appropriate dose levels to study in Phase 2, we leveraged our findings from Phase 1 regarding the cerebrospinal fluid, or CSF, penetration and concentration of NYX-2925. We correlated CSF levels in humans to the CSF levels seen with efficacious doses in preclinical animal studies. We believe that the predictability and linearity of the plasma PK and CSF concentrations enable accurate prediction of CNS exposure to NYX-2925 in humans. We have selected doses for our ongoing Phase 2 studies that correlate to the low and high ends of the exposure observed for the doses that demonstrated the most activity in preclinical studies.

Future development

We intend to advance NYX-2925 towards regulatory approval for the treatment of painful DPN. The specific studies that will be required to achieve this will depend on the results of the ongoing Phase 2 study in painful DPN and be informed by the results of our other clinical studies. In addition, we intend to pursue

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broader chronic pain indications for NYX-2925, including fibromyalgia, neuropathic lower-back pain, and osteoarthritis.

As well as pursing FDA approval in the United States in these indications, we also plan to opportunistically explore registrations outside of the United States in the most attractive markets, including but not limited to the European Union, Japan, Canada, Australia, and large emerging markets such as China.

Target pathway clinical studies

We are currently studying NYX-2925 in two target pathway clinical studies designed to explore NMDAr-dependent pharmacodynamic biomarkers in healthy human subjects. These studies will expand on findings from our research labs and have the potential to show, using readily and rapidly measurable markers, that NYX-2925 can engage NMDArs and downstream pathways in the human CNS in a dose-dependent and predictable way. Successful biomarker studies can also allow us to study different dose levels and dose intervals in an efficient manner. This will help inform the design, and assist in the interpretation, of data from further clinical studies of NYX-2925.

The first target pathway clinical study is a Phase 1, double-blind, placebo-controlled pilot study to assess the effect of multiple doses of NYX-2925 on sleep architecture, especially on slow-wave sleep, or SWS, as measured during a sleep monitoring study in healthy subjects whose sleep patterns are disrupted. SWS plays an important role in memory consolidation and can be enhanced in an NMDAr-dependent manner. We believe that sleep architecture and SWS measurements have potential as pharmacodynamic biomarkers of NMDAr pathway activation. While we are open to the pursuit of sleep disorders as a potential future therapeutic application for our compounds, this study is not intended to inform safety and efficacy for sleep indications.

The second target pathway clinical study is a Phase 1, double-blind, placebo-controlled exploratory study to assess the effect of multiple doses of NYX-2925 on brain function in awake healthy subjects. Brain function will be measured by electroencephalogram, or EEG, and event-related potentials, a measure of certain brain activity. The goal of the study is to determine whether NYX-2925 affects the early processing of auditory stimuli, auditory LTP, and resting EEG. Early auditory processing relates to attention and vigilance, and LTP is a key process in memory formation and consolidation. Both of these have been shown to be NMDAr pathway dependent phenomena and we believe they have potential as pharmacodynamic biomarkers of NMDAr pathway activation.

Both of these studies are ongoing and we expect initial data to be available during the second half of 2018.

Phase 1 clinical data

In 2017, we completed a Phase 1 study in 84 healthy volunteer subjects which evaluated the safety, tolerability, and PK of NYX-2925. This was the first in-human clinical study of NYX-2925. The study was a sponsor-open, placebo-controlled study that was completed in two phases. In the first phase, subjects were dosed with single ascending doses, or SAD, ranging from 50-1200 mg. The second phase was a multiple ascending dose, or MAD, phase in which subjects received repeat daily doses of NYX-2925, over seven days, in dose levels ranging from 150-900 mg. In both phases of the study, we evaluated the following safety and tolerability measures: adverse events, vital signs, clinical lab values, electrocardiographic parameters, or ECG, and heart rate interval, or QTc, measures, dissociative side effects, and suicide risk. We also measured the PK in plasma, including an exploratory food effect cohort and an elderly cohort. Along with

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the PK samples collected, we also collected samples of CSF in cohorts at two dose levels from each phase of the study.

Treatment emergent adverse event results

Overall, 19 of 84 subjects (22.6%) reported a total of 47 treatment emergent adverse events, or TEAEs. Of these, 16 of 66 subjects (24.2%) reported 42 TEAEs after receiving NYX-2925 and three of 18 subjects (16.7%) reported five TEAEs after receiving placebo. The highest percentages of subjects reported the highest numbers of TEAEs in the CSF 50 mg cohort (SAD) and the CSF 300 mg cohort (MAD). Only four of 84 subjects (4.8%) had a TEAE considered possibly or probably related to study drug by the investigator. Of the 47 reported TEAEs, 34 (72.3%) were considered procedure related and 13 (27.7%) were considered non-procedure related. No subject in the SAD or MAD groups experienced a Grade 3 (severe) or Grade 4 (life threatening) TEAE, a death or serious TEAE, or a TEAE leading to discontinuation of study drug. Importantly, there were no adverse findings as it relates to dissociative side effects or suicide risk. As shown in the table below, only three TEAEs were determined to be related to NYX-2925, and all other TEAEs were due to the CSF procedure.

The table below lists the treatment-related TEAEs that were observed in the Phase 1 study.

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Pharmacokinetic conclusions

NYX-2925 plasma concentrations were quantifiable in all subjects that received NYX-2925, in all dose groups and cohorts through the 24-hour post-dose sample on day one, and in the majority of subjects through 48 hours post dose on day seven. Based on the PK measures evaluated, including average peak plasma concentrations, or Cmax, we observed increased NYX-2925 plasma concentration in a dose-proportional manner. The concentration levels and half-life were also generally comparable across dose groups and cohorts. Repeat daily administration for seven days resulted in minimal accumulation of NYX-2925. Despite delayed absorption resulting in an approximately 10% lower Cmax, the overall extent of exposure was not impacted by a high-fat high-calorie meal, suggesting that NYX-2925 may be taken with or without food. The majority of the administered dose was excreted unchanged in the urine.

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The figure below shows the mean plasma concentration of NYX-2925 at various doses in the single ascending dose phase of the Phase 1 study.


Single Ascending Dose Pharmacokinetics

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The figure below shows the mean plasma concentration of NYX-2925 at various doses in the multiple ascending dose phase of the Phase 1 study on day one and day seven.


Multiple Ascending Dose Pharmacokinetics

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In both phases, drug concentration in plasma was predictable, dose-proportional, and linear, with no significant accumulation with repeat daily dosing.

Thorough ECG analysis

The primary finding in this analysis was that NYX-2925 did not increase QTc at any single dose up to 1200 mg or after multiple doses up to 900 mg for seven days. The maximum geometric mean Cmax (20.1 mg/mL) was well above the expected exposure in clinical care. In addition, there were no clinically significant changes in QTc or ECG measures, indicating low risk of cardiac side effects caused by NYX-2925.

CNS exposure

The CNS exposure was confirmed from the CSF concentration-time profile in both CSF dose groups. The CSF concentrations increased proportionally as the dose increased. The maximum concentrations in the CSF were approximately 6% to 9% of the plasma Cmax, resulting in concentrations that extrapolate to concentrations that resulted in therapeutic benefit in animal models.

Preclinical data

NYX-2925 has shown reproducible alleviation of pain in numerous models of neuropathic and persistent pain. The table below shows the neuropathic pain model along with the specific readout with which analgesic activity has been seen with NYX-2925. These studies were completed between 2015 and 2017. Across these models, the activity of NYX-2925 has been consistent and reproducible and the study results outlined below are representative of the results observed with NYX-2925 across various neuropathic pain models.

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Preclinical behavioral pharmacology in pain

In preclinical studies in rodent models of neuropathic pain, NYX-2925 administration resulted in significant analgesic effect after single or repeat administration. In the rodent chronic constriction injury, or CCI, model, ligation of the sciatic nerve results in robust pain that emerges two to three weeks after the initial ligation surgery. This pain can be measured as an increased pain response, paw withdrawal, to a stimulus that is not considered painful to a healthy naïve animal.

In the study shown below, we administered a single dose of NYX-2925, gabapentin (an approved neuropathic pain medication), or vehicle to different sets of rats that had undergone CCI. We used gabapentin as a positive control because it demonstrates a robust acute analgesic effect in this model over

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a wide dose range in rodents. Paw withdrawal responses, following application of a filament to the affected hind paw, were measured at different timepoints after a single administration of test compound. NYX-2925 resulted in a significant increase in paw-withdrawal threshold at all timepoints tested for doses between 1-30 mg/kg and for one hour and 24 hours for 100 mg/kg. Gabapentin resulted in a time dependent increase in paw withdrawal threshold at one hour but not 24 hours or one week post-administration.

The figure below shows the results for the various doses and timepoints for NYX-2925, gabapentin, and vehicle in the CCI model.


Rat CCI Model of Neuropathic Pain

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The analgesic effect of NYX-2925 was long-lasting, persisting for at least seven days following a single administration, unlike gabapentin, which showed robust but short-lived analgesic activity. This long-lasting analgesic activity extended beyond the PK availability of compound in the brain and we believe is due to the enhancement of synaptic plasticity, which results in long-term changes in how the brain cells communicate.

Analgesic effect has also been shown after repeat dosing in the CCI model. Animals were dosed daily with NYX-2925 or vehicle for 12 consecutive days. NYX-2925 showed persistent analgesic activity on all testing days. NYX-2925 has also demonstrated analgesic effect in the streptozotocin model of painful DPN. Streptozotocin was administered to rats to induce a diabetes-like state. Once stable neuropathic pain was established, a single dose of NYX-2925 (1 or 10 mg/kg), gabapentin (150 mg/kg), or vehicle was

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administered. NYX-2925 (10 mg/kg) resulted in a significant increase in paw-withdrawal threshold at all timepoints tested. We did not observe analgesic effects with a 1 mg/kg dose of NYX-2925 at any timepoint. Gabapentin resulted in a time dependent increase in paw withdrawal threshold at one hour but not 24 hours or one week post-administration.

The figure below shows the results for the various doses and timepoints for NYX-2925, gabapentin, and vehicle in this model.


Streptozotocin Model of Diabetic Neuropathy

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In addition to alleviating pain, data from preclinical studies suggest that NYX-2925 can improve the emotional component of neuropathic pain. Rats emit vocalizations that can be used to understand the emotional state of the animal, with different vocalization ranges representing positive or negative affective states. In neuropathic pain models, rats show an increase in negative vocalizations and a decrease in positive vocalizations. In addition, when animals are put through a learning paradigm that involves tickling the animals (rough and tumble play), rats that have undergone the CCI surgery emit fewer positive vocalizations between the tickling sessions than animals that had undergone a sham surgery. Treatment with NYX-2925 one hour prior to the first tickling session increases positive vocalizations over repeat sessions. Furthermore, a measurement of negative vocalizations across the sessions shows that animals treated with NYX-2925 emit fewer than those treated with vehicle. These data support the premise that NYX-2925 not only reduces the pain that the animals are experiencing, but also improves cognition and mood.

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As shown in the figure below, CCI animals treated with oral doses of NYX-2925 emit more positive (50 kHz) vocalizations and fewer negative (20 kHz) vocalizations than the vehicle treated CCI animals.

                Hedonic Vocalizations During
                Rough-and-Tumble Play Intertrials
  Aversive Vocalizations Across              
Rough-and-Tumble Play Intertrials                


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Preclinical safety pharmacology and toxicology

Many pain therapeutics come with adverse side effects that can cause harm or at least limit their therapeutic benefit. We are committed to only advancing product candidates that have the potential to demonstrate meaningfully better safety profiles than those seen across the currently available therapies. NYX-2925 shows no evidence of sedation or ataxia, side effects often seen in products like gabapentin, even at doses far higher than the pharmacologically-active dose. The comparative impact of oral doses of NYX-2925 and gabapentin on the amount of time observed before a rat falls off, or fall latency, a rotating rod, or rotarod, which is a measure of sedation and ataxia, is illustrated in the figure below.

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Rat Rotarod Study

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Results from a rat drug discrimination study suggest low likelihood of abuse potential of NYX-2925. We evaluated NYX-2925 in a self-administration study in which rats are trained to press a lever to self-administer ketamine, a drug known to cause psychosis-like effects and have high abuse potential. The figure on the left shows the percentage of rats that pressed the lever to receive ketamine at various doses, and the figure on the right shows the frequency with which the rats pressed the lever to receive ketamine at various doses, each versus vehicle and NYX-2925. The figures demonstrate that NYX-2925 did not substitute for, or show the same level of "liking," as ketamine in this model.

Ketamine Discrimination   Lever-Pressing Rate


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In addition, across safety pharmacology studies assessing effects on the CNS and cardiovascular system in dogs, and respiratory function in rats, NYX-2925 did not show any notable safety findings. Importantly, NYX-2925 had no significant activity in a panel of 80 receptor-binding assays that include opiate, serotonin,

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tachykinin receptors, ion channels, and transporters, indicating NYX-2925 has low potential for off-target pharmacology.

Both single-dose and daily-repeat dose toxicology studies have been performed in rats and dogs. The maximum tolerated dose, following a single oral exposure, is at least 1000 mg/kg in both rats and dogs. After six weeks of daily oral administration, the no-observed-adverse-effect levels, or NOAELs, were the highest doses tested: 180 mg/kg in dogs (42 days) and 480 mg/kg in rats (55 days).

NYX-783

Our second product candidate, NYX-783, has been granted Fast Track designation for the treatment of PTSD and is in Phase 1 clinical development to assess safety, tolerability, and PK. To date, in the Phase 1 study, NYX-783 has demonstrated a predictable, dose-dependent, and linear PK profile with no accumulation after multiple daily doses and has been well-tolerated with no drug-related serious adverse events. We plan to initiate a Phase 2 clinical study in the second half of 2018. Preclinical data suggest that NYX-783 may accelerate fear extinction and inhibit spontaneous fear, potentially addressing key underlying causes of PTSD. We believe NYX-783, if approved, may represent significant improvement over current treatments for PTSD.

Mechanistic rationale

Existing data support the involvement of NMDArs in the central mechanisms of PTSD. PTSD may be caused through abnormal function of and communication between critical regions of the brain involved in emotional learning and memory. This abnormal function and communication, which is triggered by a traumatic event and persists even when the underlying trauma has long passed, is thought to underlie many of the key characteristics of PTSD such as distress related to reminders of the trauma, avoidance of such reminders, hypervigilance or startle response to everyday triggers, and many others. NMDArs facilitate synaptic plasticity and are therefore critical for normal learning processes including emotional learning such as fear conditioning and fear extinction. As an NMDAr modulator, NYX-783 targets synaptic plasticity processes and may enable more effective fear extinction in PTSD while also addressing the numerous comorbidities associated with PTSD, including mood, cognition, and sleep disturbances.

Disease overview

PTSD is a severe, often chronic, and disabling disorder that develops in individuals after exposure to a traumatic event involving actual or threatened injury to such individuals or others. While PTSD is often associated with combat veterans, whom it affects at a disproportionately higher rate, there are a number of other common traumas that can lead to the development of PTSD, including natural disasters, criminal assault, and rape. Following exposure to one of these traumas, PTSD can be characterized by a cluster of four core symptoms: (1) re-experiencing; recurrent intrusive memories, traumatic nightmares, and flashbacks; (2) avoidance; avoiding trauma related-thoughts, feelings, objects, people, and places associated with the trauma; (3) hyper-arousal; irritability, hypervigilance, reckless behavior, sleep disturbance, and difficulty concentrating, and (4) negative changes in cognition and mood; distorted beliefs about oneself or the world, persistent shame or guilt, emotional numbing, feelings of alienation, and inability to recall key details of the trauma.

In addition to the core symptoms, people with PTSD often suffer from significant comorbidities, including depression, insomnia, chronic pain, obesity, concentration difficulties, dementia, difficulties in interpersonal

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relationships, and substance abuse. The figure below illustrates the core symptoms and comorbidities associated with PTSD.

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Prevalence and market opportunity

PTSD is one of the most common psychiatric disorders. A majority of people will experience some type of trauma in their lifetime, of those that do, it is estimated that 8% to 10% will develop PTSD in their lifetime, and as many as one-third of such individuals will fail to recover. In terms of prevalence, studies estimate that during a one-year period, 3.5% of the U.S. adult population suffers from PTSD. This equates to approximately 8.5 million people.

The market size for PTSD treatments is difficult to estimate as there are currently only two approved pharmacotherapies to treat PTSD, both of which are antidepressants and available generically. However, considering the substantial size of the patient population and lack of available efficacious therapies, we believe PTSD represents a significant market opportunity. An effective treatment for PTSD has the potential to achieve significant revenues. If a therapy were to treat 5% of the people in the United States with PTSD, assuming pricing in line with current branded antidepressants, it would represent annual revenues of approximately $2 billion.

Current treatment options and unmet needs

PTSD is currently addressed through various forms of treatment, typically including psychotherapy and/or pharmacotherapies. It is always recommended that people with PTSD are treated using psychotherapy as a primary intervention; however, psychotherapy can often be time consuming, inconvenient, and come with varying degrees of effectiveness. Further, people with PTSD often lack access to, or fail to complete psychotherapy, resulting in relative reliance on pharmacotherapies. Only two pharmacotherapies,

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paroxetine and sertraline, have been approved by the FDA to treat PTSD, and no drug has been approved for PTSD since 2001. Other drugs are used off-label and have not demonstrated effectiveness in well-controlled clinical studies. In addition to approved and off-label pharmacotherapies, people with PTSD often self-medicate with alcohol and recreational drugs, perpetuating societal impacts of the disorder.

The following diagram illustrates the current treatment guidelines, related specifically to pharmacotherapies, for treating people with PTSD.

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The lack of approved therapies over nearly the past two decades and the limited efficacy of those therapies highlight the critical unmet medical need in the treatment of PTSD. Pharmacotherapies, paroxetine and sertraline, rarely produce a response rate greater than 60% and less than 30% of patients treated with them achieve clinical remission. Along with limited efficacy, pharmacotherapies often come with substantial warnings and side effects: suicidality, slowing of movement, nausea, diarrhea, and sexual dysfunction, among others. We believe the current treatment options for PTSD are inadequate for two main reasons: (1) they are merely symptomatic treatments that target a particular subset of PTSD symptoms, leaving the underlying condition and many other symptoms that patients experience untreated, and (2) the weak efficacy and undesirable side effects of the therapies used contribute to low compliance rates.

We believe NYX-783, which has a mechanism of action distinct from that of existing and emerging therapies, has the potential to dramatically improve the treatment of PTSD in the following ways if approved:

address the underlying learning and memory dysfunction associated with PTSD by enhancing synaptic plasticity, rather than simply palliate the symptoms as other therapies do;

provide rapid and long-lasting improvement to PTSD symptoms;

address common comorbidities associated with PTSD effectively; and

produce fewer side effects than current therapies due to lack of off-target activity.

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Ongoing Phase 1 clinical study

We are currently conducting a Phase 1 clinical study of NYX-783 in order to evaluate safety and tolerability, and to understand the plasma and CSF pharmacokinetics. This is a randomized, double-blind, sponsor-open, placebo-controlled, single and multiple ascending doses, parallel safety, tolerability and pharmacokinetics, study of NYX-783 dosed orally in healthy volunteers. The single ascending dose phase includes four escalating dose groups and one additional elderly cohort after all single and multiple ascending dose groups have completed. The multiple ascending dose phase includes three dose groups. We measured the PK in plasma, including an exploratory food effect cohort. Along with the PK samples collected, we also collected samples of CSF in cohorts at two dose levels from each phase of the study.

Treatment emergent adverse event results

At each dose level tested to date, NYX-783 has been well-tolerated. 15 of 62 subjects (24.2%) in the study reported a total of 31 TEAEs. Of these, 13 of 48 subjects (27.1%) reported 29 TEAEs after receiving NYX-783 and 2 of 14 subjects (14%) reported 2 TEAEs after receiving placebo. The highest percentage of subjects reported the highest number of TEAEs in the CSF 50mg cohort (SAD) and the reported adverse events were largely related to procedures for collecting CSF. Only 1 of 62 subjects (1.6%) had a TEAE considered possibly or probably related to study drug by the investigator. The 1 TEAE deemed to be possibly or probably related to study drug was "headache; possibly related to study drug." No subjects experienced TEAEs leading to discontinuation of the study.

Pharmacokinetic conclusions

NYX-783 plasma concentrations have been quantifiable and internally consistent within each dose group. The NYX-783 plasma pharmacokinetics have been dose-proportional and the time to maximum concentration and half-life have been generally comparable across dose groups and cohorts. Repeat daily administration for seven days has resulted in minimal accumulation of NYX-783. Much of the administered dose has been excreted unchanged in the urine.

The figure below shows the mean plasma concentration of NYX-783 at various doses in the single ascending dose phase of the Phase 1 study.


Single Ascending Dose Pharmacokinetics

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The figure below shows the mean plasma concentration of NYX-783 at various doses at day 1 and day 7 in the multiple ascending dose phase of the Phase 1 study.


Multiple Ascending Dose Pharmacokinetics

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CNS exposure

The CNS exposure was confirmed from the CSF concentration-time profile in a CSF dose group. We intend to use the CSF concentration data from the ongoing Phase 1 study to evaluate brain exposure in humans and select doses to evaluate in future studies. We will leverage these data to correlate human CSF levels with CSF levels from doses in preclinical animal models to determine the human doses we believe are most likely to show efficacy based on CNS exposure.

Future development

We intend to study NYX-783 in Phase 2 human clinical studies for the treatment of PTSD and plan to initiate these studies in the second half of 2018. We may seek to confirm the translatability of our preclinical fear extinction mechanism and dose response in human subjects prior to proceeding directly in to studies in people suffering from PTSD.

We expect to study NYX-783 both as an adjunct to psychotherapy and as a monotherapy for PTSD. Certain forms of psychotherapy have proven effective in treating PTSD, but are often complicated and labor-intensive. We believe NYX-783 may have potential to augment psychotherapy in a simple and easy to administer form. We also believe it may have potential as a monotherapy, used without psychotherapy.

Target pathway clinical studies

Following the conclusion and validation of our ongoing studies of sleep architecture and EEG brain function in NYX-2925, we plan to conduct similar pharmacodynamic biomarker studies with NYX-783. The goals of these studies, similar to those of the NYX-2925 studies, will be to confirm engagement of NMDArs and downstream pathways, as well as to inform the effect of different dose levels and dose intervals on this

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engagement. This will help inform the design of, and assist in the interpretation of data from, further clinical studies of NYX-783.

Preclinical data

Preclinical behavioral pharmacology in fear extinction

Rodents, like humans, can learn to associate fear with a specific stimulus tied to a traumatic event through fear conditioning. Rodents can also learn to extinguish that fear through repeated exposures to the stimuli in the absence of any traumatic event through fear extinction, or extinction learning. In the fear conditioning model, rats are initially placed in a specific context and administered a foot-shock, which leads to the development of a contextual fear, which can be measured by observing freezing behavior. Rats are then placed back in the same context on days 1 through 6 without a foot-shock to extinguish their fear. Once the fear is extinguished, animals are left undisturbed in their home cage on days 7 through 13. On day 14 animals are placed back in the original context to assess the level of spontaneous fear recovery. The figure below illustrates this fear conditioning and extinction model:


Fear Conditioning and Extinction Model

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When administered to rats after fear conditioning and before the first fear extinction session, a single administration of NYX-783 can accelerate the fear extinction process. In addition, both rodents and humans can spontaneously recover their fear to a specific stimulus, even after fear extinction. The NYX-783 treated rats did not show spontaneous recovery of fear, while rats administered either vehicle or the control compound D-cycloserine, or DCS, presented spontaneous recovery of fear one week after that fear had been completely extinguished. This suggests that NYX-783 not only enhances fear extinction learning, but also blocks spontaneous recovery of fear. The fear conditioning paradigm and associated data from a study completed in 2016 are shown below. The figures below show that both NYX-783 and DCS facilitate a more rapid extinction of fear when compared to vehicle-treated animals. NYX-783 also significantly inhibited

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spontaneous recovery of the fear response on day 14 compared to both vehicle-treated animals and DCS-treated animals.

Contextual Fear Conditioning and Extinction Model

                % Freezing, Days 1-6, 14

 

% Freezing, Day 14        


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We have also observed effects following dosing with NYX-783 in animal models of depression, a highly comorbid indication with PTSD. In the Porsolt forced swim model, animals were habituated to a cylinder filled with water, referred to as Porsolt chambers, 24 hours prior to the test day. On the test day, animals were given oral administration of NYX-783 at various dose levels or vehicle one hour before the first test in the same Porsolt chambers. Animals were re-assessed one week and two weeks after such administration. NYX-783 administered animals showed significantly less floating, a depression-like symptom, over a wide dose range. The activity is long-lasting with a single administration resulting in a significant effect that lasts up to two weeks post-dosing. The figure below shows NYX-783 administration significantly decreased floating at all dose levels tested and on all test days when compared to vehicle treated animals.


Porsolt Forced Swim Model

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Overall, the preclinical data with NYX-783 show that the compound enhances extinction learning and therefore has the potential to treat the underlying cause of PTSD. NYX-783's ability to inhibit the spontaneous recovery of fear 14 days after the initial shock suggests that NYX-783 has a robust and long-lasting effect on fear extinction. In addition, NYX-783's effect on reducing depression-like symptoms suggests that this product candidate may alleviate one of the main comorbidities associated with PTSD.

Preclinical pharmacokinetics

PK studies have been performed in rats and dogs at doses ranging from 2 to 600 mg/kg and 0.2 to 200 mg/kg, respectively. After a single oral dose, NYX-783 is rapidly absorbed into the bloodstream, with the time at which Cmax is observed ranging between 0.5 to one hour, and is rapidly eliminated from plasma in a linear fashion. NYX-783 is highly bioavailable following oral administration, with a fraction of dose of approximately 94% and 86% in rats and dogs, respectively. Also in the study in dogs, Cmax and area under the curve, or AUC, are directly dose-proportional at doses between 1 and 200 mg/kg, with a half-life of generally one to two hours. Cmax and AUC are also directly dose-proportional in the rat at all doses studied, ranging from 10 to 600 mg/kg. Based on Cmax and AUC in rats at pharmacologically-active doses, the exposure to the brain is approximately 5% to 10% relative to plasma levels of NYX-783.

Preclinical safety pharmacology and toxicology

Safety pharmacology studies indicate that NYX-783 was inactive in modulating hERG activity, had no effect on the hemodynamic parameters or ECG in male isolated guinea pig hearts (Langendorff method) at any concentrations in the range of 10mM to £ 500 mM. In the 28-day toxicology study in dogs, the QTc interval was significantly increased at the dose of 200 mg/kg, a dose that was evaluated only in male dogs. NYX-783 did not affect any cardiac indices in conscious dogs at any oral dose £100 mg/kg, or affect respiratory indices in rats up to and including the highest oral dose evaluated, 1000 mg/kg. In addition, NYX-783 did not affect behavior or motor coordination in a functional observation battery in rats at oral doses up to and including 600 mg/kg. In another CNS safety study, there were no observations or adverse findings in the Rotarod test in rats (1 to 600 mg/kg). NYX-783 had no significant activity in a panel of 80 receptor-binding assays that included opiate, serotonin, tachykinin receptors, ion channels, and transporters.

The acute toxicity of NYX-783 was evaluated in rats and dogs following a single oral administration. In both species, there were no significant changes in body weights, clinical pathology, or histopathology at any dose. In general, NYX-783 was well-tolerated after single oral doses up to and including 600 mg/kg in rats and 1000 mg/kg in dogs, which represents >100 times the proposed clinical starting dose. Daily repeat-dose toxicology studies have been performed in rats and dogs. After four weeks of daily oral doses of NYX-783, there were no adverse findings in rats up to and including the highest dose tested, 600 mg/kg/day, and 20 mg/kg/day in dogs. No neurotoxicity was observed in either species when treated for four weeks with NYX-783. All of these observations occur at doses well in excess of planned clinical doses and can be easily monitored in clinical studies.

NYX-458

Our third product candidate, NYX-458, has been evaluated in IND-enabling preclinical studies and we submitted an IND application to the FDA on May 18, 2018 for the treatment of Parkinson's disease dementia, a subset of Parkinson's disease cognitive impairment. We subsequently received written clearance to proceed with clinical investigation from the FDA on June 8, 2018. Mechanistic rationale and compelling preclinical data in a model of Parkinson's disease suggest NYX-458 may be optimally suited to treat the cognitive deficits caused by the disease. This model is highly relevant and translatable, as it

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evaluates the compound's effects in non-human primates by employing the neurotoxin MPTP to destroy dopamine-related neural cells similar to the way Parkinson's disease does in humans and measuring cognitive function using the same battery of tests used in human clinical studies. In the model, oral administration of NYX-458 resulted in a reversal of MPTP-induced cognitive impairment and, on some measures, restored cognitive function back to pre-MPTP baseline levels. NYX-458 has also shown robust and long-lasting effects in relevant rodent models, including water maze and novel object recognition models. We plan to initiate a single- and multiple-ascending dose Phase 1 study to evaluate safety, tolerability, and PK in the second half of 2018.

Mechanistic rationale

Parkinson's disease is caused by a progressive loss of neural cells that produce the neurotransmitter dopamine in critical brain regions. The most recognized symptoms associated with this loss of dopamine neurons are the motor symptoms including slowing of movements, rigidity, and tremor. Beyond their movement disorders, people with Parkinson's disease often suffer from a myriad of other symptoms, including cognitive dysfunction and psychiatric symptoms. All of these cognitive symptoms are caused by the loss of dopamine neurons and associated downstream changes, including NMDAr dysregulation and dysfunction. We believe this results in impaired synaptic plasticity.

NYX-458 modulates NMDArs and has the potential to correct NMDAr function in the brains of people with Parkinson's disease. NYX-458 facilitates LTP in hippocampal slices and demonstrates cognitive enhancement in several rodent models of learning and memory impairment. In learning and memory models, NYX-458 appears to enhance memory encoding and attention, cognitive domains specifically altered in Parkinson's disease. This compound shows specificity for a specific NMDAr subtype, NMDAR2B, known to be the predominant subtype expressed in the striatum, a brain region severely affected by the loss of dopamine in the brain of people with Parkinson's disease. For these reasons, we believe that NYX-458 may be ideally suited for the treatment of Parkinson's disease cognitive impairment.

Disease overview

Parkinson's disease has traditionally been characterized by motor signs of resting tremor, slowness of movement (bradykinesia), rigidity, and gait impairment. In recent years, non-motor signs and symptoms, including cognitive impairment, are increasingly recognized as central to Parkinson's disease. Some studies estimate that up to 80% of people with Parkinson's disease will suffer from cognitive impairment. As cognitive impairment can be complex in nature, the table below highlights the six established neurocognitive domains and provides a brief overview of each:

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While working memory deficits tend to be the most prominent domain implicated in Alzheimer's disease, cognitive impairment in Parkinson's disease tends to more heavily involve impairments in executive function, complex attention, and perceptual-motor function.

Although Parkinson's disease cognitive impairment probably follows a continuous spectrum, it tends to be classified in two distinct groups: Parkinson's disease mild cognitive impairment, or PD-MCI, and Parkinson's

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disease dementia, or PDD. In general, PD-MCI represents a degree of cognitive impairment that is abnormal for age, but does not interfere with functional independence. PDD has a substantial daily living impact on patients and caregivers and is associated with increased nursing home placement, morbidity, and mortality. We believe that NYX-458 has the potential to treat cognitive dysfunction along the spectrum from PD-MCI to PDD.

Prevalence and market opportunity

Parkinson's disease is believed to be the second most common neurodegenerative disorder, behind Alzheimer's disease. According to the Parkinson's Foundation, Parkinson's disease affects approximately one million people in the United States and nearly ten million worldwide. It is estimated that there are nearly 60,000 new cases of Parkinson's disease diagnosed annually in the United States and as the population continues to age, studies anticipate the prevalence of Parkinson's disease will continue to grow. The emergence and progression of cognition-related symptoms in Parkinson's disease can vary due to the diverse underlying pathology of the disease; however, MCI tends to be an early non-motor symptom, and affects 15% to 25% of newly diagnosed patients. It is estimated that approximately 30% of people living with Parkinson's disease have PDD, and studies estimate that as people with Parkinson's disease approach ten years post-diagnosis, 75% will have PDD. Based on these percentages, we estimate that there are more than 500,000 people in the United States with either PD-MCI or PDD.

Current treatment options and unmet needs

Progression of cognitive symptoms can significantly diminish functional independence and is associated with increased nursing home placement, morbidity, and mortality. The current treatments for PD-MCI and PDD are limited and only one therapy has obtained FDA approval: rivastigmine, a cholinesterase inhibitor that was approved for mild to moderate dementia associated with Parkinson's disease in 2006. Rivastigmine, along with other cholinesterase inhibitors, and memantine that are all approved for Alzheimer's disease are the therapies used most often to treat cognitive impairment in Parkinson's disease. These therapies only provide modest benefit, have challenging dosing regimens (including the need for individual titration), and often come with substantial side-effects, including nausea, vomiting, anorexia, and dizziness, among others.

Deterioration of cognitive function is commonly cited as a critical unmet medical need for people with Parkinson's disease and we believe NYX-458 represents a novel therapeutic approach that has the potential to address this in the following ways:

provide a therapeutic option that works directly on the synaptic plasticity mechanisms that drive cognition, including attention, learning and memory;

demonstrate effect in a greater proportion of patients (better responder rate);

produce fewer side effects than the therapies used today; and

address dosing challenges through a convenient, oral, dosing regimen.

Future development

We intend to develop NYX-458 for the treatment of Parkinson's disease cognitive impairment, with our initial studies potentially targeting both PD-MCI and PDD.

We submitted an IND for the treatment of PDD in May 2018, and expect to initiate a Phase 1 study in the second half of 2018. In parallel, we are planning our Phase 2 safety and efficacy programs for NYX-458 within Parkinson's disease and other causes of cognitive impairment. We believe the mechanism of NYX-458 may be effective across cognitive impairment due to varying etiologies, based on the results seen

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in the initial studies of Parkinson's disease cognitive impairment, we may seek to expand clinical development to other diseases associated with cognitive impairment.

Preclinical data

Parkinson's disease does not occur naturally outside of humans. The pathophysiology of Parkinson's disease must therefore be imitated in animal models, commonly through the use of agents that destroy dopamine neural cells, such as MPTP. The non-human primate chronic low-dose MPTP, or CLD-MPTP, model is considered to be the most translatable model for testing therapeutics against cognitive impairment in Parkinson's disease. In this model, animals are trained in several cognitive performance tasks until stable performance is achieved. Animals are then given chronic low-dose MPTP until stable deficits are seen in those same cognitive performance tasks. Similar to humans with Parkinson's disease cognitive impairment, CLD-MPTP treated non-human primates demonstrate dopaminergic cell loss as well as other neuropathological deficits common in the human condition. Non-human primates also suffer from similar types of cognitive impairment seen in people with PD-MCI and PDD, including deficits in attention, working memory, and executive function. These deficits can be measured using a monkey version of Cambridge Cognition's CANTAB assessment, which is an automated computerized assessment tool used in humans to assess the extent of deficit.

NYX-458 was orally administered to CLD-MPTP treated non-human primates that showed significant MPTP-induced deficits in several cognitive domains. After administration of NYX-458, improvement of function was seen in the cognitive assessment. These assessments included the continuous performance task model of sustained attention, the variable delayed response model of attention and spatial working memory, and the discrimination reversal model of cognitive flexibility.

In this model, animals must remember the location of a cue that is presented on a computer screen. The time between when they are presented with the initial cue and when they have to recall the location of the cue varies between 2 and 50 seconds. Short delays test the animal's attentional ability while long delays test spatial working memory. CLD-MPTP resulted in a severe impairment in both the short delays and the long delays as shown by the steep drop from the pre-MPTP baseline and the post-MPTP baseline. This impairment was stable for at least four months and was not affected by administration of vehicle. After oral administration of NYX-458, animals saw a robust improvement across all delay lengths, meaning that the compound was able to reverse deficits in both attention and working memory. This reversal of impairment was seen for at least three weeks after a single dose.

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The figure below shows NYX-458 (0.03 mg/kg) oral administration resulting in significant long-lasting improvement (nearly full reversal) from vehicle levels in both short and long delay times in a variable delayed response model that was completed in 2018.


Chronic Low Dose MPTP Non-human Primate Model of Parkinson's Disease
Variable Delayed Response Assay

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Animals dosed with NYX-458 (0.03 to 1 mg/kg) also showed significant improvement in the continuous performance task where the number of correct responses increased and omission errors decreased. This decrease in omission errors is also suggestive of an impact of the compound on attentional processes. NYX-458 administration also reversed deficits seen in the simple discrimination reversal assay, demonstrating that the compound was also able to improve cognitive flexibility. To assess the reproducibility of the positive results with NYX-458, animals were re-lesioned with MPTP. Once the cognitive deficit was re-established, animals were dosed with NYX-458 and the compound again improved attention, working memory, and cognitive flexibility across the assays.

Across animal models tested to date, administration of NYX-458 has resulted in consistent improvement of learning and memory in multiple cognitive domains. In the CLD-MPTP model of Parkinson's cognitive impairment, NYX-458 reversed deficits seen in attention, working memory, and cognitive flexibility in animals that had clear impairment in these memory domains. The effect of NYX-458 was robust, long-lasting, and reproducible when the deficit was re-established. We believe these data support advancing into clinical studies in people with Parkinson's disease cognitive impairment.

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In addition to the non-human primate model, we have studied NYX-458 in numerous rodent models of learning and memory. The table below summarizes the results observed across various models.

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The novel object recognition, or NOR, assay can be used to assess recognition memory in rodent. When NYX-458 was orally administered to rodents in the NOR assay, a clear dose-dependent enhancement of memory was seen. The level of enhancement was similar to that seen with the positive control compound, SB-399885, a 5-HT6 receptor antagonist previously shown to be effective in this model.

The timing of drug administration in the NOR assay can be used to assess whether a compound's effect on memory is through facilitation of encoding, consolidation, or retrieval. An effect seen with compound administration prior to the first testing session, or T1, likely suggests an enhancement of memory encoding, an effect seen with compound administration immediately after T1 suggests an enhancement of memory consolidation, and an effect seen with compound administration prior to the second testing session, or T2, suggests an enhancement of memory retrieval. The data on NYX-458 suggest that this product candidate likely specifically enhances memory encoding.

The NOR assay consists of the two testing sessions shown in the figure below, with a 24-hour delay between T1 and T2. During T1, animals are placed in a box and allowed to explore two identical objects. During T2, animals are placed back in that box and one of the objects is replaced with a novel object. The amount of time spent exploring the novel versus the familiar objects is recorded. As rodents have an innate interest in exploring new stimuli over familiar stimuli, an increase in time spent exploring the novel object versus the familiar object can be interpreted as recognition memory for the familiar object.


Novel Object Recognition (NOR) Assay

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In the figure below on the left, NYX-458 administered orally at 1 mg/kg significantly improved novel object recognition memory compared with vehicle treated animals while 0.01 and 10 mg/kg showed a trend toward a positive effect. In the right panel, NYX-458 significantly enhanced recognition memory compared with vehicle treated animals when administered one hour prior to T1 with no effect when administered immediately post-T1 or one hour prior to T2. These data suggest that the effect of NYX-458 on the enhancement of recognition memory is specific to facilitation of memory encoding and attention.


Novel Object Recognition Assay

                                                                                                  NYX-458 Exhibits a Clear
                                                                                                  Dose Response
  NYX-458 Enhances                                                         
Memory Encoding                                                           

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We have also assessed the effect of NYX-458 on LTP, which is a key driver of synaptic plasticity processes in the brain. When the compound is bath applied to Schaffer collateral-CA1 synapses in hippocampal slices from rats, a clear stimulus- and dose-dependent enhancement is seen, as illustrated by the figure below. The figure below shows that a 100 nM application of NYX-458 results in a significant enhancement of LTP.


NYX-458 LTP Enhancement

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The enhancement of LTP seen with NYX-458 led us to assess the compound in models of learning and memory, since one would expect that an enhancement of LTP and synaptic plasticity to result in facilitation of learning and memory processes.

Preclinical pharmacokinetics

We have evaluated PK parameters in rats, dogs, and non-human primates for up to 28 days. The PK profile of NYX-458 is linear and dose-proportional.

Preclinical safety pharmacology and toxicology

We have been conducting a standard battery of safety-pharmacology studies to assess the effects on the CNS, cardiovascular system, and respiratory function. To date, there have been no notable safety findings in these studies.

We have evaluated NYX-458 in rats and dogs for up to 28 days to understand the toxicology of this product candidate. To date, there have been no noteworthy findings in studies with doses up to and including 1000 mg/kg.

AGN-241751

Through our research collaboration, Allergan has advanced one compound from our discovery platform into Phase 1 clinical development and has disclosed its plan to develop it as a treatment for major depressive disorder. In May 2018, Allergan exercised its option under our collaboration to acquire the exclusive intellectual property rights specific to such compound, triggering payment of a $1.0 million option fee in connection with such exercise. We will receive no further economic consideration from this product candidate. For more information, see "—Research collaboration agreement with Allergan" below.

Competition

Overview

Our industry is highly competitive and subject to rapid and significant technological change. The large and growing markets for pain, PTSD, Parkinson's disease, and other disorders of the brain and nervous system make them attractive therapeutic areas for biopharmaceutical businesses. While we believe that our employees and consultants, scientific knowledge, technology, and development experience provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical, and biotechnology companies, a