Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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.

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 pursuant to Section13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August~~May 9, ~~2022,~~2023, there were ~~8,069,001~~6,063,964 shares of common stock, par value $0.01 per share, outstanding.

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this Quarterly Report regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” “would,” “could,” “should,” “potential,” “seek,” “evaluate,” “pursue,” “continue,” “design,” “impact,” “affect,” “forecast,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal,” or the negative of such terms and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Such statements are based on assumptions and expectations that may not be realized and are inherently subject to risks, uncertainties and other factors, many of which cannot be predicted with accuracy and some of which might not even be anticipated.

These forward-looking statements in this Quarterly Report include, among other things, statements about:

Any forward-looking statements that we make in this Quarterly Report speak only as of the date of such statement, and we undertake no obligation to update such statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.

You should also read carefully the factors described in the “Risk Factors”included in Part II, Item 1A of this Quarterly Report and Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021~~2022 filed with the SEC on ~~March 16, 2022,~~February 23, 2023, or the ~~2021~~2022 Annual Report, to better understand significant risks and uncertainties inherent in our business and underlying any forward-looking statements. As a result of these factors, actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements in this Quarterly Report and you should not place undue reliance on any forward-looking statements.


(amounts in thousands, except share and per share data)	June 30, 2022			December 31, 2021			March 31, 2023			December 31, 2022
	Unaudited
Assets
Current assets:
Cash and cash equivalents	$	5,210		$	15,891		$	3,803		$	5,259
Accounts receivable, net		616			542
Inventory		5,255			5,002
Prepaid expenses and other current assets		1,398			2,059			305			303
Current assets of discontinued operation								—			785
Total current assets		12,479			23,494			4,108			6,347
Property, plant and equipment, net		4,941			5,015
Intangible assets, net		20,390			21,678
Property and equipment, net								1			9
Goodwill		2,127			2,127			2,127			2,127
Other long-term assets		897			963			829			854
Non-current assets of discontinued operation								—			695
Total assets	$	40,834		$	53,277		$	7,065		$	10,032
Liabilities and Shareholders' Equity
Liabilities and Shareholders' (Deficit) Equity
Current liabilities:
Accounts payable	$	3,064		$	1,468		$	3,837		$	3,198
Accrued expenses and other current liabilities		3,812			5,540			2,534			2,364
Current portion of long-term debt, net		3,611			2,222			6,000			5,600
Current portion of contingent consideration		7,694			6,416
Current liabilities of discontinued operation								—			10,298
Total current liabilities		18,181			15,646			12,371			21,460
Long-term debt, net		5,099			6,309			1,433			1,519
Long-term portion of contingent consideration		12,692			17,446
Other long-term liabilities		632			650			574			598
Non-current liabilities of discontinued operation								—			10,697
Total liabilities		36,604			40,051			14,378			34,274
Commitments and contingencies (Note 12)
Shareholders’ equity:
Preferred stock, $0.01 par value. Authorized, 10,000,000 shares; issued and outstanding, 0 shares at June 30, 2022 and 8,289 shares at December 31, 2021		0			0
Common stock, $0.01 par value. Authorized, 190,000,000 shares; issued and outstanding, 8,068,853 shares at June 30, 2022 and 2,807,239 shares at December 31, 2021		81			28
Commitments and contingencies (Note 11)
Shareholders’ (deficit) equity:
Preferred stock, $0.01 par value. Authorized, 10,000,000 shares; issued and outstanding, 0 shares at March 31, 2023 and December 31, 2022								—			—
Common stock, $0.01 par value. Authorized, 190,000,000 shares; issued and outstanding, 2,585,702 shares at March 31, 2023 and 1,623,913 shares at December 31, 2022								26			16
Additional paid-in capital		156,578			145,287			172,161			166,646
Accumulated deficit		(152,429	)		(132,089	)		(179,500	)		(190,904	)
Total shareholders’ equity		4,230			13,226
Total liabilities and shareholders’ equity	$	40,834		$	53,277
Total shareholders’ deficit								(7,313	)		(24,242	)
Total liabilities and shareholders’ deficit							$	7,065		$	10,032


	For the Six Months Ended June 30,						For the Three Months Ended March 31,
(amounts in thousands)	2022			2021			2023			2022
Cash flows from operating activities:
Net loss	$	(20,340	)	$	(32,241	)
Adjustments to reconcile net loss to net cash used in operating activities:
Net income (loss)							$	11,404		$	(12,809	)
(Income) loss on discontinued operation								(18,790	)		4,615
Adjustments to reconcile net income (loss) from continuing operations to net cash used in operating activities from continuing operations:
Stock-based compensation		858			3,207			191			491
Non-cash interest expense		449			458			276			226
Depreciation expense		86			149			3			14
Amortization		1,288			1,288
Non-cash loss on retirement of fixed assets		8			—			5			—
Gain on extinguishment of debt		—			(1,553	)
Loss on extinguishment of debt								2,196			—
Change in warrant valuation		(6	)		(41	)		—			(5	)
Change in contingent consideration valuation		(2,476	)		5,722
Changes in operating assets and liabilities:
Inventory		(253	)		(580	)
Prepaid expenses and other assets		734			1,529			28			(325	)
Accounts receivable		(74	)		(168	)
Accounts payable, accrued expenses and other liabilities		(396	)		(1,826	)		749			2,021
Net cash used in operating activities		(20,122	)		(24,056	)
Cash flows from investing activities:
Purchase of property and equipment		(20	)		(76	)
Purchase of short-term investments		—			(12,147	)
Net cash used in investing activities		(20	)		(12,223	)
Net cash used in operating activities, continuing operations								(3,938	)		(5,772	)
Cash flows from financing activities:
Payment of deferred financing costs								(5	)		—
Proceeds from public offering, net of transaction costs		8,925			0			(15	)		9,074
Proceeds from registered direct offerings, net of transaction costs		1,816			27,109			—			(13	)
Payments on long-term debt		(278	)		—			(1,100	)		—
Proceeds from warrant exercises		—			12,155			4,328			—
Payment of contingent consideration		(1,000	)		(7,869	)
Payments of withholdings on shares withheld for income taxes		(2	)		(46	)		—			(2	)
Net cash provided by financing activities		9,461			31,349
Net decrease in cash and cash equivalents		(10,681	)		(4,930	)
Net cash provided by financing activities, continuing operations								3,208			9,059
Net (decrease) increase in cash and cash equivalents from continuing operations								(730	)		3,287
Discontinued operation:
Cash flows used in operating activities								(726	)		(7,131	)
Cash flows used in investing activities								—			(20	)
Cash flows used in financing activities								—			(500	)
Net decrease in cash and cash equivalents from discontinued operations								(726	)		(7,651	)
Cash and cash equivalents, beginning of period		15,891			30,342			5,259			15,891
Cash and cash equivalents, end of period	$	5,210		$	25,412		$	3,803		$	11,527
Supplemental disclosure of cash flow information:
Offering costs included in accounts payable and accrued expenses	$	213		$	7		$	850		$	281

(1) Background

Business

Baudax Bio, Inc. (“Baudax Bio” or the “Company”) is a pharmaceutical company primarily focused on innovative products for ~~hospital~~acute care and related ~~acute care~~ settings. Baudax Bio believes it can bring valuable therapeutic options to patients, prescribers and payers ~~such as its lead product, ANJESO~~® ~~(meloxicam) injection,~~ to ~~the hospital and~~ acute care and related markets.

~~Baudax Bio~~The Company holds exclusive global rights to two new molecular entities, which are centrally acting Neuromuscular Blocking Agents (NMBs), BX1000, an intermediate duration of action NMB that recently completed a Phase II clinical trial, and BX2000, an ultra-short acting NMB currently undergoing a Phase I clinical trial. A proprietary blockade reversal agent, BX3000, is currently being evaluated in preclinical studies intended to support an IND filing in 2023. BX3000 is an agent that is expected to rapidly reverse BX1000 and BX2000 blockade. All three agents are licensed from Cornell University. The Company believes these agents, when an NMB and BX3000 are administered in succession, allow for a rapid onset of centrally acting neuromuscular blockade, followed by a rapid reversal of the neuromuscular blockade with BX3000. These novel agents have the potential to meaningfully reduce time to onset and reversal of blockade and improve the reliability of onset and offset of neuromuscular blockade. This can potentially reduce time in operating rooms or post operative suites (PACU), resulting in potential clinical and cost advantages, as well as valuable cost savings for hospitals and ambulatory surgical centers and has the potential for an improved clinical profile in terms of safety.

In mid-2020, the Company launched its first commercial product, ANJESO, ~~which~~in the United States. ANJESO was the first and only 24-hour, intravenous, or IV, analgesia agent. ANJESO is ~~indicated~~a cyclooxygenase-2, or COX-2, preferential, non-steroidal anti-inflammatory, or NSAID, for the management of moderate to severe pain, which could be administered alone or in ~~2020.~~combination with other non-NSAID analgesics. The Company discontinued commercial sales of ANJESO ~~is currently approved~~in December of 2022 and further withdrew its New Drug Application (“NDA”) related to ANJESO in late March 2023. See Note 4 for ~~use within~~discussion on the ~~Department of Veterans Affairs, the Department of Defense, Indian Health Service, 340B covered entities, and multiple state Medicaid programs.~~discontinued operation related to our ANJESO commercial business.

The Company has determined that it operates in a single segment involved in innovative products for hospital and ~~other acute care~~related settings.

~~The Separation~~

Pursuant to the Separation Agreement between Societal CDMO, Inc. (“Societal CDMO”), formerly Recro Pharma, Inc., and Baudax Bio, Societal CDMO transferred the assets, liabilities, and operations of its Acute Care business to the Company (the “Separation”) and, on November 21, 2019, the distribution date, each Societal CDMO shareholder received 1 ~~share of the Company’s common stock for every~~ ~~two and one-half shares~~ of Societal CDMO common stock held of record at the close of business on November 15, 2019, the record date for the distribution (the “Distribution”). Following the Distribution and Separation, Baudax Bio operates as a separate, independent company.

Reverse Stock ~~Split~~Splits

On February 16, 2022, the Company effected a reverse split of shares of the Company’s common stock on a 1-for-35 basis (the “Reverse Stock Split”). On December 1, 2022, the Company effected a second reverse split of shares of the Company’s common stock on a 1-for-40 basis (the “December Reverse Stock Split”). All issued and outstanding shares of common stock, warrants, common stock options, and unvested restricted stock units and the related per share amounts contained in the financial statements have been retroactively adjusted to reflect ~~this Reverse Stock Split~~these reverse stock splits for all periods presented. The par value and authorized shares of common stock were not adjusted as a result of the ~~Reverse Stock Split.~~reverse stock splits. Additionally, the authorized, issued and outstanding shares of preferred stock and their related per share amount, other than the conversion price per share, was not adjusted as a result of the ~~Reverse Stock Split.~~reverse stock splits.

(2) Development Activity Risks, Liquidity and Going Concern

The Company has incurred operating losses ~~and negative cash flows~~ since inception and has annegative cash flows, working capital and equity, including accumulated deficit of $~~152,429~~179,500, as of ~~June 30, 2022.~~March 31, 2023.

The Company has raised funds from debt and equity transactions and will be required to raise additional funds to continue to operate as a standalone entity. In order to fund development activities, and clinical and pre-clinical testing, ~~modest commercialization of ANJESO and, if approved, commercialization of the Company’s other product candidates,~~ the Company will require significant additional funding. The Company could delay clinical trial activity or reduce funding of specific programs in order to reduce cash needs. Insufficient funds may cause the Company to delay, reduce the scope of or eliminate one or more of its development, future commercialization, or expansion activities. The Company may raise such funds, if available, through debt financings, bank or other loans, through strategic research and development, licensing (including out-licensing) and/or marketing arrangements or through public or private sales of equity or debt securities from time to time. Financing may not be available on acceptable terms, or at all, and failure to raise capital when needed could materially adversely impact the Company’s growth plans and its financial condition or results of operations and ability to continue as a going concern. Additional debt or equity financing, if available, may be dilutive to holders of the Company’s common stock and may involve significant cash payment obligations and covenants that restrict the Company’s ability to operate its business.

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

The Company follows the provisions of Financial Accounting Standards Board (“FASB”), Accounting Standards Codification (“ASC”), Topic 205-40, “Presentation of Financial Statements — Going Concern”, or ASC 205-40, which requires management to assess the Company’s ability to continue as a going concern for one year after the date the consolidated financial statements are issued. Based on the Company’s available cash and cash equivalents as of ~~June 30, 2022,~~March 31, 2023, management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for one year from the date these financial statements are issued. The Company expects to seek additional funding to sustain its future operations and while the Company has successfully raised capital in the past, the ability to raise capital in future periods is not assured. The Company is not expected to be able to maintain its minimum liquidity covenant over the next twelve months without additional inflows of funds or capital financing. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

(a) Basis of Presentation

The accompanying unaudited consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”), for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X and, therefore, do not include all of the information and notes required by U.S. GAAP for complete annual financial statements. In the opinion of management, the accompanying consolidated financial statements include all normal and recurring adjustments (which consist primarily of accruals, estimates and assumptions that impact the financial statements) considered necessary to present fairly the Company’s results for the interim periods. Operating results for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 are not necessarily indicative of the results that may be expected for the full year ending December 31, ~~2022.~~2023.

The accompanying unaudited interim consolidated financial statements should be read in conjunction with the annual audited financial statements and related notes as of and for the year ended December 31, ~~2021~~2022 included in the Company’s Form 10-K.

(b) Use of Estimates

The preparation of financial statements and the notes to the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from such estimates.

Cash and cash equivalents represents cash in banks and highly liquid short-term investments that have maturities of three months or less when acquired to be cash equivalents. These highly liquid short-term investments are both readily convertible to known amounts of cash and so near to their maturity that they present insignificant risk of changes in value because of the changes in interest rates.

~~(d) Investments~~

Investments generally consist of government money market funds and commercial paper with maturity of greater than three months when acquired and does not meet the definition of a cash or cash equivalents. The Company has historically classified its entire investment portfolio as available-for-sale debt securities and is carried at fair value with unrealized gains and losses included in comprehensive loss in the consolidated statement of operations and realized gains and losses included in other income/expense, if applicable.

~~The Company uses benchmark inputs and industry standard analytical models to derive the fair value of its commercial paper.~~

~~BAUDAX BIO, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(amounts in thousands, except share and per share data)~~

~~(Unaudited)~~

~~(e)~~(d) Property and Equipment

Property and equipment are recorded at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which are as follows: three to seven years for furniture and office equipment; six to ten years for manufacturing equipment; and the shorter of the remaining lease term or useful life for leasehold improvements. Repairs and maintenance costs are expensed as incurred.

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

~~(f)~~(e) Goodwill ~~and Intangible Assets~~

Goodwill represents the excess of purchase price over the fair value of net assets acquired by the Company. Goodwill is not amortized but assessed for impairment on an annual basis or more frequently if impairment indicators exist. The impairment model prescribes a one-step method for determining impairment.

The one-step quantitative test calculates the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit. The Company has 1one reporting unit.

The Company performs its annual goodwill impairment test as of November 30th, or whenever an event or change in circumstances occurs that would require reassessment of the recoverability of goodwill. In performing the evaluation, the Company assesses qualitative factors such as overall financial performance of its reporting unit, anticipated changes in industry and market conditions, including recent tax reform, intellectual property protection, and competitive environments. The Company performed an impairment test as of ~~June 30, 2022~~March 31, 2023 after identifying indicators of impairment. There was 0no impairment to goodwill based on the analysis.

~~The Company’s intangible asset is classified as an asset resulting from R&D activities. The Company determined the useful life of its asset resulting from R&D activities to be approximately~~ ~~10 years~~, which is based on the remaining patent life and is being amortized on a straight-line basis. The Company is required to review the carrying value of assets resulting from R&D activities for recoverability whenever events occur or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. The Company performed an impairment test as of June 30, 2022 after identifying indicators of impairment. There was no impairment to intangible assets based on the analysis as of June 30, 2022.

~~(h)~~(f) Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash ~~equivalents, short-term investments, and accounts receivable.~~equivalents. The Company manages its cash and cash equivalents ~~and short-term investments~~ based on established guidelines relative to diversification and maturities to maintain safety and liquidity. ~~The Company’s accounts receivable balance as of June 30, 2022 and December 31, 2021 is compromised solely from transactions with the Company’s 3PL.~~

~~(i)~~(g) Research and Development

Research and development costs for the Company’s proprietary products/product candidates are charged to expense as incurred. Research and development expenses consist of internal costs and funds paid to third parties for the provision of services for pre-commercialization and manufacturing scale-up activities, drug development, pre-clinical activities, clinical trials, statistical analysis, report writing and regulatory filing fees and compliance costs. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress toward completion of the research or development project. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record net prepaid or accrued expenses relating to these costs.

Upfront and milestone payments made to third parties who perform research and development services on the Company’s behalf are expensed as services are rendered. Costs incurred in obtaining product technology licenses are charged to research and development expense as acquired in-process research and development (“IPR&D”) if the technology licensed has not reached technological feasibility and has no alternative future use.

~~(j)~~(h) Stock-Based Awards

Share-based compensation included in the consolidated financial statements is based upon the Baudax Bio, Inc. 2019 Equity Incentive Plan (the “2019 Plan”). The plan includes grants of stock options, time-based vesting restricted stock units (“RSUs”) and performance-based RSUs. The Company measures employee stock-based awards at grant-date fair value and recognizes employee compensation expense on a straight-line basis over the vesting period of the award. The Company accounts for forfeitures as they occur.

Determining the appropriate fair value of stock options requires the input of subjective assumptions, including the expected life of the option and expected stock price volatility. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value of stock-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and/or management uses different assumptions, stock-based compensation expense could be materially different for future awards.

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

The expected life of stock options was estimated using the “simplified method,” as the Company has limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock options grants. The simplified method is based on the average of the vesting tranches and the contractual life of each grant. For stock price volatility, the Company uses an average of its peer group’s volatility in order to estimate future stock price trends. The risk-free interest rate is based on U.S. Treasury notes with a term approximating the expected life of the option. The Company has never declared or paid cash dividends and has no plans to do so in the foreseeable future, therefore the dividend yield is zero.

~~(k)~~(i) Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis, operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is recorded to the extent it is more likely than not that some portion or all of the deferred tax assets will not be realized. Because of the Company’s history of losses as a standalone entity, a full valuation allowance is recorded against deferred tax assets in all periods presented.

~~BAUDAX BIO, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(amounts in thousands, except share and per share data)~~

~~(Unaudited)~~

Unrecognized income tax benefits represent income tax positions taken on income tax returns that have not been recognized in the consolidated financial statements. The Company recognizes the benefit of an income tax position only if it is more likely than not (greater than 50%) that the tax position will be sustained upon tax examination, based solely on the technical merits of the tax position. Otherwise, no benefit is recognized. The tax benefits recognized are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company does not anticipate significant changes in the amount of unrecognized income tax benefits over the next year.

~~(l)~~ (j) Net ~~Loss~~Income (Loss) Per Common Share

Net loss per common share is computed using the two-class method required due to the participating nature of the Series A Preferred Stock (as defined and discussed in Note ~~13(b)~~12(b)). Except with respect to voting and conversion, the rights of the holders of the Company’s common stock and the Company’s Series A Preferred Stock are identical. Each class of shares has the same rights to dividends. Although the Preferred Stock are participating securities, such securities do not participate in net losses and therefore do not impact the Company’s net loss per share calculation as of ~~June 30, 2022.~~March 31, 2023.

Basic net loss per common share is determined by dividing net loss attributable to common shareholders by the weighted average common shares outstanding during the period. Diluted net loss per common share is determined using the weighted average common shares outstanding during the period plus the weighted average number of shares of common shares that would be issued assuming exercise or conversion of all potentially dilutive instruments. Outstanding warrants, common stock options and unvested restricted stock units are excluded from the calculation of diluted net loss per share when their effect would be anti-dilutive.

For purposes of calculating basic and diluted loss per common share, the denominator includes the weighted average common shares outstanding, the weighted average common stock equivalents for warrants priced at par value, or $0.01, as the underlying common shares will be issued for little cash consideration and the conditions for the issuance of the underlying common shares are met when such warrants are issued, and, with regard to diluted loss per common share, the number of common stock equivalents if the inclusion of such common stock equivalents would be dilutive.

~~The following table sets forth the computation of basic and diluted loss per share:~~

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Basic Loss Per Share

Net loss

$
(7,531
)

$
(15,329
)

$
(20,340
)

$
(32,241
)
Weighted average common shares
   outstanding, basic

7,181,640

2,137,191

5,610,037

1,962,655

Net loss per share of common stock,
   basic

$
(1.05
)

$
(7.17
)

$
(3.63
)

$
(16.43
)

Diluted Loss Per Share

Net loss

$
(7,531
)

$
(15,329
)

$
(20,340
)

$
(32,241
)
Change in warrant valuation

0

(17
)

0

0

Diluted net loss

$
(7,531
)

$
(15,346
)

$
(20,340
)

$
(32,241
)
Weighted average common shares
   outstanding, basic

7,181,640

2,137,191

5,610,037

1,962,655

Dilutive effect of warrants

0

909

0

0

Weighted average common shares
   outstanding, diluted

7,181,640

2,138,100

5,610,037

1,962,655

Net loss per share of
   common stock, diluted

$
(1.05
)

$
(7.18
)

$
(3.63
)

$
(16.43
)

1413

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

The following table sets forth the computation of basic and diluted income (loss) per share:


	Three Months Ended March 31,
	2023			2022
Basic and Diluted Income (Loss) Per Share
Net loss from continuing operations	$	(7,386	)	$	(8,194	)
Net income (loss) from discontinued operation	$	18,790		$	(4,615	)
Net income (loss)	$	11,404		$	(12,809	)

Net loss per share from continuing operations	$	(3.19	)	$	(81.16	)
Net income (loss) per share from discontinued operation	$	8.10		$	(45.71	)
Net income (loss) per share of common stock, basic and diluted	$	4.91		$	(126.87	)

Weighted average common shares outstanding, basic and diluted		2,318,539			100,961

The following potentially dilutive securities have been excluded from the computations of diluted weighted average shares outstanding as they would be anti-dilutive:


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2022		2021		2022		2021		2023		2022
Options and restricted stock units outstanding		613,580		146,399		613,580		146,399		11,807		2,665
Warrants		7,065,509		299,006		7,065,509		299,925		2,672,798		133,016

Amounts in the table above reflect the common stock equivalents of the noted ~~instruments.~~instruments.

~~(m)~~(k) Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” or ASU 2020-06. ASU 2020-06 simplifies accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. ASU 2020-06 also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years and early adoption is permitted in annual reporting periods ending after December 15, 2020. The Company adopted this guidance as of January 1, 2022, using the full retrospective method of adoption. The adoption eliminated the presentation of the beneficial conversion feature on the consolidated statement of operations and had no other material impact to the Company.

In May 2021, the FASB issued ASU No. 2021-04, “Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options,” or ASU 2021-04. ASU 2021-04 clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options, such as warrants, that remain equity classified after modification or exchange. ASU 2021-04 is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years and early adoption is permitted. The Company adopted this guidance as of January 1, 2022, using the prospective method of adoption. This adoption did not have a material impact to the Company or its disclosures.

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

In November 2021, the FASB issued ASU No. 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance,” or ASU 2021-10. ASU 2021-10 requires entities to provide disclosures on government assistance transactions for annual reporting periods. The disclosures include information around the nature of the transaction, the related accounting policies used to account for the transaction, the effect of the transaction on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies. ASU 2021-10 is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted. The Company adopted this guidance as of January 1, 2022, using the prospective method of adoption. This adoption did not have a material impact to the Company or its disclosures.

~~BAUDAX BIO, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(amounts in thousands, except share and per share data)~~

~~(Unaudited)~~

~~Accounting Pronouncements Not Yet Adopted~~

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” or ASU 2016-13. ASU 2016-13 requires companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires consideration of a range of reasonable information to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including those interim periods within those fiscal years. The Company ~~is currently assessing the impact of adopting this standard, but based on a preliminary assessment, does not expect the adoption of~~adopted this guidance as of January 1, 2023 and noted no impact to ~~have a material impact on~~the Company or its ~~consolidated financial statements.~~disclosures.

~~(4)~~4) Discontinued Operations

In March 2023, the Company entered into an Asset Transfer Agreement with Alkermes Pharma Ireland Limited (“Alkermes”) (the “Transfer Agreement”). Under the terms of the Transfer Agreement, the Company transferred the rights to certain patents, trademarks, equipment, data and other rights related to ANJESO (the “Assets”) to Alkermes. The Company also withdrew the New Drug Application (“NDA”) related to ANJESO and agreed, if elected by Alkermes at a later date, to transfer such withdrawn NDA to Alkermes at no additional cost.

Additionally, under the Transfer Agreement, the Company granted Alkermes a non-exclusive, perpetual and irrevocable, royalty-free and fully paid-up worldwide license, to the additional intellectual property owned by the Company necessary to or useful to exploit ANJESO. In consideration of the transfer of the Assets, the parties agreed to the termination of (i) the Purchase and Sale Agreement, dated March 7, 2015 by and among Alkermes, the Company and the other parties thereto (as amended, the “PSA”), (ii) the Asset Transfer and License Agreement, dated April 10, 2015 by and among Alkermes, the Company and the other parties thereto (as amended, the “ATLA”); and (iii) the Development, Manufacturing and Supply Agreement, dated as of July 10, 2015 by and between the Company and Alkermes (as amended, the “Manufacturing Agreement”) between the parties related to ANJESO (the PSA, ATLA and Manufacturing Agreement, collectively, the “ANJESO Agreements”). In connection with the termination of the ANJESO Agreements, no further payments of any kind pursuant to the ANJESO Agreements are payable by the Company to Alkermes.

The accounting requirements for reporting the abandonment of ANJESO as a discontinued operation were met when the agreements with Alkermes were executed. Accordingly, the accompanying consolidated financial statements for all periods presented reflect this business as a discontinued operation.

The historical consolidated balance sheet and statements of operations of the Company and the related notes to the consolidated financial statements have been presented as discontinued operations in the consolidated financial statements and prior periods have been recast. Discontinued operations include results of the Company’s commercial business except for certain corporate overhead costs, which are included in continuing operations.

The following table shows amounts included in assets and liabilities of discontinued operations, respectively, on the Company’s Consolidated Balance Sheets at December 31, 2022:

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)


	December 31, 2022

Current assets of discontinued operation:
Accounts receivable, net	$	336
Prepaid expenses and other current assets		449
Total current assets of discontinued operation		785
Non-current assets of discontinued operation:
Property and equipment, net		695
Total non-current assets of discontinued operation		695
Total assets of discontinued operation	$	1,480

Current liabilities of discontinued operation:
Accounts payable	$	730
Accrued expenses and other current liabilities		365
Current portion of contingent consideration		9,203
Total current liabilities of discontinued operation		10,298
Non-current liabilities of discontinued operation:
Long-term portion of contingent consideration		10,697
Total non-current liabilities of discontinued operation		10,697
Total liabilities of discontinued operation	$	20,995

The results of operations from discontinued operations for the three months ended March 31, 2023 and 2022, have been reflected as discontinued operations in the consolidated statements of operations and consist of the following:


	For the Three Months Ended March 31,
	2023			2022
Revenue, net	$	(14	)	$	422

Operating expenses:
Cost of sales		405			648
Research and development		—			599
Selling, general and administrative		—			7,256
Amortization of intangible assets		—			644
Change in contingent consideration valuation		(19,900	)		(3,803	)
Loss on impairment of property and equipment		485			—
Total operating expenses		(19,010	)		5,344
Operating gain (loss) from discontinued operation		18,996			(4,922	)
Other expense:
Other expense, net		(206	)		307
Net income (loss) from discontinued operation	$	18,790		$	(4,615	)

The Company sold ANJESO in the U.S. through a single third-party logistics provider (“3PL”), which took title to and control of the goods, and was considered the customer. The Company recognized revenue from ANJESO product sales at the point the title to the product is transferred to the customer and the customer obtains control of the product. The transaction price that was recognized as revenue for products includes an estimate of variable consideration for reserves, which result from discounts, returns, chargebacks, rebates, and other allowances that were offered within contracts between the Company and end-user customers, wholesalers, group purchasing organizations and other indirect customers. The Company’s payment terms were generally between thirty to ninety days.

Historically, the Company’s intangible asset was classified as an asset resulting from R&D activities. The Company determined the useful life of its asset resulting from R&D activities to be approximately 10 years, which was based on the remaining patent life, and was amortized on a straight-line basis. The Company performed an impairment test as of December 31, 2022 after identifying indicators of impairment, such as a decline in share price, the termination of the dedicated commercial team, sustained impacts of COVID-19 on the market and the discontinuation of commercialization of ANJESO, and based on the quantitative

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

analysis an impairment loss of $19,681 was recorded during the year ended December 31, 2022, eliminating the remaining carrying value of the intangible asset.

Additionally, as part of the Transfer Agreement, the Company wrote off its inventory balance as of March 31, 2023, which was fully reserved for as of December 31, 2022, and the remaining property and equipment balance related to equipment at the Alkermes facility that was transferred as part of the Transfer Agreement of $485. The Company was additionally relieved of its milestone payments previously owed to Alkermes in connection with the transaction and reversed its contingent consideration balance of $19,900 as of March 31, 2023.

(5) Fair Value of Financial Instruments

The Company follows the provisions of FASB ASC Topic 820, “Fair Value Measurements and Disclosures,” for fair value measurement recognition and disclosure purposes for its financial assets and financial liabilities that are remeasured and reported at fair value each reporting period. The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, warrants, and contingent consideration. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of financial assets and financial liabilities and their placement within the fair value hierarchy. Categorization is based on a three-tier valuation hierarchy, which prioritizes the inputs used in measuring fair value, as follows:

•

Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities;

•

Level 2: Inputs that are other than quoted prices in active markets for identical assets and liabilities, inputs that are quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are either directly or indirectly observable; and

•

Level 3: Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company has classified assets and liabilities measured at fair value on a recurring basis as follows:

Fair value measurements at reporting date using

Quoted prices
in active
markets for
identical
assets
(Level 1)

Significant
other
observable
inputs
(Level 2)

Significant
unobservable
inputs
(Level 3)

At June 30, 2022:

Assets:

Cash equivalents (See Note 5)

Money market mutual funds

$
3,613

$
0

$
0

Total cash equivalents

$
3,613

$
0

$
0

Liabilities:

Warrants (See Note 13(c))

$
0

$
0

$
1

Contingent consideration (See Note 12(b))

0

0

20,386

$
0

$
0

$
20,387

At December 31, 2021:

Assets:

Cash equivalents (See Note 5)

Money market mutual funds

$
10,110

$
0

$
0

Total cash equivalents

$
10,110

$
0

$
0

Liabilities:

Warrants (See Note 13(c))

$
0

$
0

$
7

Contingent consideration (See Note 12(b))

0

0

23,862

$
0

$
0

$
23,869


	Fair value measurements at reporting date using
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
At March 31, 2023:
Assets:
Cash equivalents (See Note 6)
Money market mutual funds	$	2,264	$	—	$	—
Total cash equivalents	$	2,264	$	—	$	—

At December 31, 2022:
Assets:
Cash equivalents (See Note 6)
Money market mutual funds	$	2,241	$	—	$	—
Total cash equivalents	$	2,241	$	—	$	—

~~BAUDAX BIO, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(amounts in thousands, except share and per share data)~~

~~(Unaudited)~~

~~The reconciliation of the warrant liability and contingent consideration measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows:~~

Warrants

Contingent
Consideration

Balance at December 31, 2020

$
65

$
65,043

Payment of contingent consideration

0

(7,869
)
Remeasurement

(58
)

(33,312
)
Balance at December 31, 2021

$
7

$
23,862

Payment of contingent consideration

0

(1,000
)
Remeasurement

(6
)

(2,476
)
Total at June 30, 2022

$
1

$
20,386

Current portion as of June 30, 2022

$
0

$
7,694

Long-term portion as of June 30, 2022

1

12,692

~~See Note 13(c) for the significant assumptions and inputs used to determine the fair value of liability classified warrants.~~

Based on the amended terms of the Alkermes agreement (see Note 12(b)), the remaining contingent consideration payments include the second components, which became payable upon regulatory approval, and includes remaining payments of $~~45,000~~ ~~payable in~~ 7 ~~equal annual payments of approximately $6,400~~ of which the first payment was made in February 2021, the first anniversary of such approval. The third component consists of three potential payments, based on the achievement of specified annual revenue targets, which currently do not have a fair value assigned to its achievement. The fourth component consists of a royalty payment between 10~~% and~~ 12~~% (subject to a~~ 30% reduction when no longer covered by patent) for a defined term on future injectable meloxicam net sales. The fair value of the remaining second consideration component is estimated by applying a risk-adjusted discount rate to the scheduled remaining payments. The fair value of the third contingent consideration component is estimated using the Monte Carlo simulation method and applying a risk-adjusted discount rate to the potential payments resulting from probability-weighted revenue projections based upon the expected revenue target attainment dates. The fair value of the fourth contingent consideration component is estimated by applying a risk-adjusted discount rate to the potential payments resulting from probability-weighted revenue projections and the defined royalty percentage. As of June 30, 2022, the fair value calculations used a discount rate of ~~35.00~~%.

The fair value of the contingent consideration liability is measured using inputs and assumptions as of the date of the financial statements. The current portion of the contingent consideration represents the estimated probability-adjusted fair value that is expected to become payable within one year as of June 30, 2022. Events and circumstances impacting the fair value of the liability that occur after the balance sheet date, but before the date that the financial statements are available to be issued, are adjusted in the period during which such events and circumstances occur.

These fair values are based on significant inputs not observable in the market, which are referred to in the guidance as Level 3 inputs. The contingent consideration components are classified as liabilities and are subject to the recognition of subsequent changes in fair value through the results of operations.

The Company follows the disclosure provisions of FASB ASC Topic 825, “Financial Instruments”, for disclosure purposes for financial assets and financial liabilities that are not measured at fair value. As of ~~June 30, 2022,~~March 31, 2023, the financial assets and liabilities recorded on the Consolidated Balance Sheets that are not measured at fair value on a recurring basis include ~~accounts receivable,~~ accounts payable and accrued expenses, which approximate fair value due to the short-term nature of these instruments. The fair value of debt, where a quoted market price is not available, is evaluated based on, among other factors, interest rates currently available to the Company for debt with similar terms, remaining payments and considerations of the Company’s creditworthiness. The Company determined that the recorded book value of debt approximated fair value at ~~June 30, 2022~~March 31, 2023 due to the fact that the debt arrangements reflect market terms from recent transactions.

~~(5)~~(6) Cash Equivalents

The following is a summary of cash equivalents:


	June 30, 2022								March 31, 2023
	Amortized		Gross Unrealized				Estimated		Amortized		Gross Unrealized				Estimated
Description	Cost		Gain		Loss		Fair Value		Cost		Gain		Loss		Fair Value
Money market mutual funds	$	3,613	$	—	$	—	$	3,613	$	2,264	$	—	$	—	$	2,264
Total cash equivalents	$	3,613	$	—	$	—	$	3,613	$	2,264	$	—	$	—	$	2,264


	December 31, 2021								December 31, 2022
	Amortized		Gross Unrealized				Estimated		Amortized		Gross Unrealized				Estimated
Description	Cost		Gain		Loss		Fair Value		Cost		Gain		Loss		Fair Value
Money market mutual funds	$	10,110	$	—	$	—	$	10,110	$	2,241	$	—	$	—	$	2,241
Total cash equivalents	$	10,110	$	—	$	—	$	10,110	$	2,241	$	—	$	—	$	2,241

As of ~~June 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company’s cash equivalents had maturities of one month.

(7) Property, Plant and Equipment

Property, plant and equipment consists of the following:

June 30, 2022

December 31, 2021

Building and improvements

$
166

$
196

Furniture, office and computer equipment

841

952

Manufacturing and laboratory equipment

717

717

Construction in progress

4,642

4,622

6,366

6,487

Less: accumulated depreciation

1,425

1,472

Property, plant and equipment, net

$
4,941

$
5,015


	March 31, 2023		December 31, 2022
Building and improvements	$	129	$	166
Furniture, office and computer equipment		259		306
		388		472
Less: accumulated depreciation		387		463
Property and equipment, net	$	1	$	9

Depreciation expense for the three ~~and six~~ months ended ~~June 30, 2022~~March 31, 2023 was $433 ~~and $~~86~~, respectively.~~. Depreciation expense for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 was $6314 ~~and $149, respectively.~~

(8) Leases

The Company is a party to various operating leases in Malvern, Pennsylvania, and Dublin, Ireland for office space and office equipment. Right-of-use assets are recorded on the Consolidated Balance Sheet in other long-term assets. Operating lease liabilities are recorded on the Consolidated Balance Sheet in accrued expenses and other current liabilities and other long-term liabilities, based on the timing of expected cash payments.

The Company determines if an arrangement is a lease at inception. The arrangement is a lease if it conveys the right to the Company to control the use of identified property, plant, or equipment for a period of time in exchange for consideration. Lease terms vary based on the nature of operations. The current leased facility recorded on the Consolidated Balance Sheet is classified as an operating lease with a remaining lease term of 65 years. Most leases contain specific renewal options where notice to renew must be provided in advance of lease expiration or automatic renewals where no advance notice is required. Periods covered by an option to extend the lease were included in the non-cancellable lease term when exercise of the option was determined to be reasonably certain. Costs determined to be variable and not based on an index or rate were not included in the measurement of operating lease liabilities. As most leases do not provide an implicit rate, the Company’s effective interest rate was used to discount its lease liabilities.

The Company’s leases with an initial term of twelve months or less that do not have a purchase option or extension that is reasonably certain to be exercised are not included in the right of use asset or lease liability on the Consolidated Balance Sheets. Lease expense is recognized on a straight-line basis over the lease term.

~~As of June 30, 2022, undiscounted future lease payments for non-cancellable operating leases are as follows:~~

Lease payments

Remainder of 2022

$
211

2023

270

2024

278

2025

278

2026

287

2027

295

Total lease payments

1,619

Less imputed interest

(754
)
Total operating lease liability

$
865

~~As of June 30, 2022, the weighted average remaining lease term was~~ ~~6 years~~ ~~and the weighted average discount rate was~~ 23%.

~~The components of the Company’s lease cost were as follows:~~

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Operating lease cost

$
71

$
89

$
145

$
177

Short-term lease cost

35

39

73

78

Total lease cost

$
106

$
128

$
218

$
255

~~Cash paid for amounts included in the measurement of lease liabilities, which is included in operating cash flows, was $187~~ ~~and $171~~ ~~for the six months ended June 30, 2022 and 2021, respectively.~~

Cash paid for amounts included in the measurement of lease liabilities, which is included in operating cash flows, was $96 and $131 for the three months ended March 31, 2023 and 2022, respectively.

~~(10)~~(9) Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:


	June 30,		December 31,		March 31,		December 31,
	2022		2021		2023		2022
Payroll and related costs	$	2,685	$	3,516	$	220	$	656
Professional and consulting fees		409		1,071		568		789
Other research and development costs		288		157		1,246		593
Interest payable		109		116		81		94
Other		321		680		419		232
	$	3,812	$	5,540	$	2,534	$	2,364

~~In November 2020, the Company implemented a reduction in force impacting approximately~~ 40 ~~employees and resulted in a charge of $1,753, primarily related to severance, of which $~~25 ~~remains accrued and unpaid as of June 30, 2022.~~

In March 2022, the Company implemented a reduction in force impacting approximately 66 employees and resulted in a charge of $4,148, primarily related to severance, of which $~~1,874~~97 remains accrued and unpaid as of ~~June 30, 2022.~~March 31, 2023.

~~(11)~~(10) Debt

The following table summarizes the components of the carrying value of debt:


	June 30,			December 31,			March 31,			December 31,
	2022			2021			2023			2022
Credit Agreement	$	9,722		$	10,000		$	10,000		$	10,000
Payment of principal								(3,344	)		(2,244	)
Unamortized deferred issuance costs		(1,162	)		(1,583	)		—			(828	)
Accrued amendment fee								568			—
Exit fee accretion		150			114			209			191
Total debt	$	8,710		$	8,531		$	7,433		$	7,119

Current portion	$	3,611		$	2,222		$	6,000		$	5,600
Long-term portion, net		5,099			6,309			1,433			1,519

~~(a)~~ Credit Agreement

On May 29, 2020 (the “Credit Agreement Closing Date”), the Company entered into a $50,000 Credit Agreement (the “Credit Agreement”) by and among the Company, Wilmington Trust, National Association, in its capacity as the agent (“Agent”), and MAM Eagle Lender, LLC, as the lender (together with any other lenders under the Credit Agreement from time to time, collectively, the “Lenders”). The Credit Agreement provides for a term loan in the original principal amount of $10,000 (the “Tranche One Loans”) funded on the Credit Agreement Closing Date. Pursuant to the terms of the Credit Agreement, there are four additional tranches of term loans, in an aggregate original principal amount of $40,000 (the “Tranche Two Loans”, “Tranche Three Loans”, “Tranche Four Loans” and the “Tranche Five Loans”, and collectively with the Tranche One Loans, the “Term Loans” and each a “Term Loan”). As of ~~June 30, 2022,~~March 31, 2023, 0no funds have been drawn from the additional ~~tranches.~~

~~The Tranche Two Loans in an amount~~tranches and are not expected to ~~exceed $5,000~~ ~~may~~ be drawn ~~upon on or before~~ ~~August 29, 2021~~ ~~provided that the Company generates at least $5,000~~ ~~in net revenue~~ in the three consecutive calendar months immediately preceding the date such Tranche Two Loans are funded. The Tranche Two Loans may also be drawn on a subsequent date with the satisfaction of the conditions for the Tranche Three Loans, Tranche Four Loans, or Tranche Five Loans, as applicable, provided that the Tranche Two Loans may not be drawn more than once. The Tranche Three Loans in an amount not to exceed $future.~~5,000~~ ~~may be drawn upon on or before~~ ~~November 29, 2021~~ ~~provided that the Company generates at least $10,000~~ in net revenue in the three consecutive calendar months immediately preceding such date such Tranche Three Loans are funded. The Tranche Three Loans may also be drawn on a subsequent date with the satisfaction of the conditions for the Tranche Four Loans or Tranche Five Loans, as applicable, provided that the Tranche Three Loans may not be drawn more than once. The Tranche Four Loans in an amount not to exceed $~~10,000~~ ~~may be drawn upon, subject to the consent of the Lenders, on or before~~ ~~August 29, 2022~~ ~~provided that the Company generates at least $20,000~~ in net revenue in the three consecutive calendar months immediately preceding the date such Tranche Four Loans are funded. The Tranche Four Loans may also be drawn on a subsequent date with the satisfaction of the conditions for the Tranche Five Loans provided that the Tranche Four Loans may not be drawn more than once. The Tranche Five Loans in an amount not to exceed $~~20,000~~ ~~may be drawn upon, subject to the consent of the Lenders, on or before~~ ~~March 1, 2023~~ ~~provided that the Company generates at least $100,000~~ ~~in net revenue in the twelve consecutive calendar months immediately preceding the date such Tranche Five Loans are funded.~~

The Term Loans will bear interest at a per annum rate equal to 13.5%, with monthly,, interest-only payments until the date that is three years prior to the Maturity Date (as defined below) (the “Amortization Date”). The maturity date of the Credit Agreement is May 29, 2025, but may be extended to May 29, 2026 provided that the EBITDA (as defined in the Credit Agreement) for the consecutive twelve-month period ending on or immediately prior to May 29, 2022 is greater than $10,000 (such date, “Maturity Date”)., which the Company did not achieve. Beginning on the Amortization Date, the Company ~~will be~~was obligated to pay amortization payments (in addition to the interest stated above) on such date and each month thereafter in equal month installments of principal based on an amortization schedule of thirty-six months. Any unpaid principal amount of the Term Loans is due and payable on the Maturity Date.

~~BAUDAX BIO, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(amounts in thousands, except share and per share data)~~

~~(Unaudited)~~

Subject to certain exceptions, the Company is required to make mandatory prepayments of the Term Loans, with the proceeds of asset sales, extraordinary receipts, debt issuances and specified other events. The Company may make voluntary prepayments in whole or in part, subject to a prepayment premium equal to (i) with respect to any prepayment paid on or prior to the third anniversary of the Tranche One Loan (or, in the case of each of the Tranche Two Loans, Tranche Three Loans, Tranche Four Loans or Tranche Five Loans, the third anniversary of the date each such loan is funded), the remaining scheduled payments of interest that would have accrued on the Term Loans being prepaid, repaid or accelerated, but that remained unpaid, in no event to be less than 5.0% of the principal amount of the Term Loan being prepaid, and (ii) with respect to any prepayment paid after the third but prior to the fourth anniversary of the Tranche One Loan (or, in the case of each of the Tranche Two Loans, Tranche Three Loans, Tranche Four Loans or Tranche Five Loans, the fourth anniversary of the date each such loan is funded), 3.0% of the principal amount of the Term Loan being prepaid. In addition, an exit fee will be due and payable upon prepayment or repayment of the Term Loans (including, without limitation, on the Maturity Date) equal to the lesser of 2.5% of the sum of the aggregate principal amount of the Term Loans advanced or approved to be advanced by the Lenders and $700; provided that such exit fee will be equal to $700 if fee is paid in conjunction with a change of control that occurs in connection with the payoff or within 6 months thereof. As of ~~June 30, 2022,~~March 31, 2023, the Company will have to pay a 2.5% exit fee, which is $250 at the current outstanding loan balance and is being accreted to the carrying amount of the debt using the effective interest method over the term of the loan.

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

The Credit Agreement contains certain usual and customary affirmative and negative covenants, as well as financial covenants including a minimum liquidity requirement of $5,000 at all times (the “Minimum Liquidity Covenant”) and minimum EBITDA levels that the Company may need to satisfy on a quarterly basis beginning in September 2021, subject to borrowing levels. As of ~~June 30, 2022,~~March 31, 2023, the Company was in compliance with the Minimum Liquidity Covenant as the minimum EBITDA criteria is not applicable until additional tranches are drawn. As of ~~June 30, 2022,~~March 31, 2023, borrowings under the Credit Agreement are classified based on their schedule maturities.

In connection with the Credit Agreement, the Company issued a warrant to MAM Eagle Lender, LLC to purchase 376 shares of the Company’s common stock, at an exercise price equal to $6,426.00 per share. See Note 12(c) for additional information. The warrant is exercisable through May 29, 2027.

The Company recorded debt issuance costs for the Credit Agreement of $1,496 plus the fair value of warrants of $1,423, which were being amortized using the effective interest method over the term of Credit Agreement prior to Amendment No. 5 as noted below. Debt issuance cost amortization is included in interest expense within the Consolidated Statements of Operations. The Company recorded debt issuance cost amortization related to the Credit Agreement prior to Amendment No. 5 of $263 and $211 for the three months ended March 31, 2023 and 2022, respectively.

On August 1, 2022, the Company entered into Amendment No. 1 and Waiver to Credit Agreement, or the Amendment, with MAM Eagle Lender. Pursuant to the terms of the Amendment, the lenders waived any default under the credit agreement (including the imposition of a default interest rate with respect to the default) resulting from our failure to comply with the Minimum Liquidity Covenant. In addition, the Amendment, among other items, (i) provides that 30% of any cash proceeds received by the Company from certain potential strategic licensing transactions shall be used to prepay amounts outstanding under the credit agreement; and (ii) decreases the amount of cash the Company is required to maintain pursuant to the Minimum Liquidity Covenant to $3,000 for a period beginning on August 1, 2022, and ending on August 31, 2022, at which point the amount required pursuant to the Minimum Liquidity Covenant shall increase to $5,000.

On October 24, 2022, the Company entered into Amendment No. 2 and Waiver to Credit Agreement, or the Amendment, with MAM Eagle Lender. Pursuant to the terms of the Amendment, the Credit Agreement is amended such that the Company must repay the principal thereunder (i) on the first business day of each month until the Interest Payment Date on December 1, 2022, in equal monthly installments of principal based on an amortization schedule of 36 months, (ii) an additional payment of principal in the amount of $300 prior to December 31, 2022 and (iii) commencing on the Interest Payment Date on January 2, 2023 and on each Interest Payment Date thereafter until the obligations have been repaid in full, the principal amount of $500. In addition, the Amendment decreases the minimum cash covenant the Company is required to maintain under the Credit Agreement to (i) $3,000 for the period beginning on October 1, 2022, and ending on November 30, 2022, (ii) $4,500 for the period beginning on December 1, 2022, and ending on February 28, 2023, and (iii) $4,000 from and after March 1, 2023. Further, the Company has agreed that prior to December 31, 2022, it shall not, without the prior written consent of the Lenders, make or permit any payment under its agreements with Alkermes. In consideration for the Amendment, the Company agreed to pay the Agent an amendment fee of $5 and the Lender an amendment fee of $200.

On December 1, 2022, the Company entered into Amendment No. 3 to Credit Agreement with MAM Eagle Lender. Pursuant to the terms of the amendment, the amendment decreases the minimum cash covenant the Company is required to maintain under the credit agreement to (a) from October 1, 2022 to December 6, 2022 to not be less than $3,000 at any time, (b) from December 7, 2022 to February 28, 2023 to not be less than $4,500, and (c) from and after March 1, 2023 to not be less than $4,000.

In January 2023, the Company entered into Amendment No. 4 to Credit Agreement with MAM Eagle Lender. Pursuant to the terms of the amendment, the credit agreement was amended such that the Company must make (i) a payment of principal in the amount of $500 on January 3, 2023, (ii) a payment of principal in the amount of $300 on February 1, 2023 and March 1, 2023, and (iii) on the interest payment date on April 3, 2023 and on each interest payment date thereafter until the obligations are repaid in full, a payment in the principal amount of $500. In addition, the amendment decreases the minimum cash covenant the Company is required to maintain under the credit agreement, or the Minimum Liquidity Covenant, to (i) $3,000 for the period beginning on October 1, 2022, and ending on December 6, 2022, (ii) $4,500 for the period beginning on December 7, 2022, and ending on January 10, 2023, (iii) $2,225 for the period beginning on January 11, 2023, and ending on February 28, 2023, and (iv) $3,000 from and after March 1, 2023. Further, the Company agreed that prior to April 30, 2023, it will not, without the prior written consent of MAM Eagle Lender, make or permit any payment under its agreements with Alkermes.

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

On March 29, 2023, the Company entered into Amendment No. 5 and Consent to Credit Agreement whereby MAM Eagle Lender consented to the transactions contemplated by the Transfer Agreement (as defined above) and agreed to release and discharge any liens granted or held by the lenders in respect of the assets discussed in the Transfer Agreement. The parties also agreed to, among other things, amend the minimum liquidity covenants under the Credit Agreement to require that the Company maintains $2,500 of liquidity at all times. In connection with Amendment No. 5, the Company issued warrants to MAM Eagle Lender to purchase an aggregate of 785,026 shares of the Company’s common stock, par value $0.01 per share at an exercise price equal to $1.8951 per share.

As a result of Amendment No. 5, the Company performed a cash flow analysis to determine if the terms of the amended agreement were substantially different from those of the previous debt agreement. Due to the amendment fee and the fair value of the warrants issued, the Company concluded the terms are substantially changed in accordance with ASC 470-50, Debt – Modifications and Extinguishments. ASC 470-50 requires accounting for the amendment as a debt extinguishment and not a debt modification. The Company recorded a loss on debt extinguishment of $2,196 as of March 31, 2023, which represents the difference between the net carrying value of the existing debt and the reacquisition cost of the amended terms of the agreement and is attributable to unamortized debt issuance costs, the fair value of the Amendment No. 5 warrants and the Amendment No.5 fee.

Based on the terms of the amended agreement, as of March 31, 2023, the effective interest rate was 14.51%, which takes into consideration the accretion of the exit fee.

As a result of the liquidity conditions discussed in Note 2, the Company is not expected to be able to comply with the Minimum Liquidity Covenant, as amended, over the next twelve months without additional capital financing. If the Company is unable to maintain its Minimum Liquidity Covenant, it is reasonably possible that the Lenders could demand repayment of the borrowings under the Credit Agreement during the next twelve months.

~~In connection with the Credit Agreement, the Company issued a warrant to MAM Eagle Lender, LLC to purchase~~ ~~15,060~~ ~~shares of the Company’s common stock, at an exercise price equal to $160.65~~ ~~per share. See Note 13(c) for additional information. The warrant is exercisable through~~ ~~May 29, 2027~~.

~~The Company recorded debt issuance costs for the Credit Agreement of $1,496~~ ~~plus the fair value of warrants of $1,423, which are being amortized using the effective interest method over the term of Credit Agreement. Debt issuance cost amortization is included in interest expense within the ConsolidatedStatements of Operations. As of June 30, 2022, the effective interest rate was~~ ~~22.67~~%, which takes into consideration the non-cash amortization of the debt issuance costs and accretion of the exit fee. The Company recorded debt issuance cost amortization related to the Credit Agreement of $~~209~~ ~~and $421~~ ~~for the three and six months ended June 30, 2022, respectively, and $211~~ ~~and $422~~ ~~for the three and six months ended June 30, 2021, respectively.~~

~~(12)~~(11) Commitments and Contingencies

(a) Licenses and Supply Agreements

The Company is party to an exclusive license with Orion Corporation, a company incorporated under the laws of Finland (“Orion”) for the development and commercialization of Dexmedetomidine for use in the treatment of pain in humans in any dosage form for transdermal, transmucosal (including sublingual and intranasal), topical, enteral or pulmonary (inhalational) delivery, but specifically excluding delivery vehicles for administration by injection or infusion, worldwide, except for Europe, Turkey and the CIS (currently includes Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan), referred to herein as the Territory. The Company is required to pay Orion lump sum payments of up to €~~20,500~~ ($~~21,420~~ ~~as of June 30, 2022) on the achievement of certain developmental and commercial milestones, as well as a royalty on net sales during the term, which varies from~~ 10~~% to~~ 20~~% depending on annual sales levels. Through June 30, 2022,~~ 0 ~~such milestones have been achieved.~~

The Company is also party to an exclusive license agreement with Orion for the development and commercialization of Fadolmidine for use as a human therapeutic, in any dosage form in the Territory. The Company is required to pay Orion lump sum payments of up to €~~12,200~~ ($~~12,749~~ ~~as of June 30, 2022) on achievement of certain developmental and commercial milestones, as well as a royalty on net sales during the term, which varies from~~ 10~~% to~~ 15~~% depending on annual sales levels. Through June 30, 2022,~~ 0 ~~such milestones have been achieved.~~

In June 2017, the Company acquired the exclusive global rights to two novel neuromuscular blocking agents (“NMBs”) and a proprietary reversal agent from Cornell University (“Cornell”). The NMBs and reversal agent are referred to herein as the NMB Related Compounds. The NMB Related Compounds include one novel intermediate-acting NMB that has initiated Phase I clinical trials and two other agents, a novel short-acting NMB, and a rapid-acting reversal agent specific to these NMBs. The Company is obligated to make: (i) an annual license maintenance fee payment to Cornell in the remaining range of ~~$70~~$70 to ~~$125~~$125 until the first commercial sale of the NMB Related Compounds; and (ii) milestone payments to Cornell upon the achievement of certain milestones, up to a maximum, for each NMB Related Compound, of $5,000 for U.S. regulatory approval and commercialization milestones and $3,000 for European regulatory approval and commercialization milestones. The Company is obligated to pay Cornell royalties on net sales of the NMB Related Compound at a rate ranging from low to mid-single digits, depending on the applicable NMB Related Compounds and whether there is a valid patent claim in the applicable country, subject to an annual minimum royalty amount. Further, the Company reimburses Cornell for its ongoing patent costs related to prosecution and maintenance of the patents related to the Cornell patents for the NMB Related Compounds. Through ~~June 30, 2022,~~ March 31, 2023, no such milestones have been achieved.

The Company is party to a Development, Manufacturing and Supply Agreement (“Supply Agreement”), with Alkermes plc (“Alkermes”) (through a subsidiary of Alkermes), pursuant to which Alkermes will (i) provide clinical and commercial bulk supplies of ANJESO formulation and (ii) provide development services with respect to the Chemistry, Manufacturing and Controls section of a New Drug Application (“NDA”) for ANJESO. Pursuant to the Supply Agreement, Alkermes will supply the Company with such quantities of bulk ANJESO formulation as shall be reasonably required for the completion of clinical trials of ANJESO. During the term of the Supply Agreement, the Company will purchase its clinical and commercial supplies of bulk ANJESO formulation exclusively from Alkermes, subject to certain exceptions, for a period of time.

The Company is party to a Master Manufacturing Services Agreement and Product Agreement with Patheon UK Limited, a company incorporated under the laws of England (“Patheon”), collectively the Patheon Agreements, pursuant to which Patheon provides sterile fill-finish of injectable meloxicam drug product at its Monza, Italy manufacturing site. The Company has agreed to purchase a certain percentage of its annual requirements of finished injectable meloxicam from Patheon during the term of the Patheon Agreements.

(b) Contingent Consideration for the Alkermes Transaction

On April 10, 2015, Societal CDMO, Inc. (“Societal CDMO”), formerly Recro Pharma, Inc., completed the acquisition of a manufacturing facility in Gainesville, Georgia and the licensing and commercialization rights to injectable meloxicam (the “Alkermes Transaction”). Pursuant to the purchase and sale agreement and subsequent amendment with Alkermes, as amended, governing the Alkermes Transaction, the Company agreed to pay to Alkermes up to an additional $140,000 in milestone payments including $60,000 upon regulatory approval payable over a seven-year period, as well as net sales milestones related to injectable meloxicam and royalties on future product sales of injectable meloxicam.

23On March 29, 2023, the Company entered into the Transfer Agreement. Under the terms of the Transfer Agreement, the Company transferred the rights to certain patents, trademarks, equipment, data and other rights related to ANJESO (the “Assets”) to Alkermes. The Company also withdrew the New Drug Application (“NDA”) related to ANJESO and agreed, if elected by Alkermes at a later date, to transfer such withdrawn NDA to Alkermes at no additional cost.

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

~~Based on~~Additionally, under the ~~amended terms~~Transfer Agreement, the Company granted Alkermes a non-exclusive, perpetual and irrevocable, royalty-free and fully paid-up worldwide license, to the additional intellectual property owned by the Company necessary to or useful to exploit ANJESO. In consideration of the transfer of the Assets, the parties agreed to the termination of (i) the Purchase and Sale Agreement, dated March 7, 2015, (ii) the Asset Transfer and License Agreement, dated April 10, 2015; and (iii) the Development, Manufacturing and Supply Agreement, dated as of July 10, 2015. In connection with the termination of the ANJESO Agreements, no further payments of any kind pursuant to the ANJESO Agreements will be payable by the Company to Alkermes ~~agreement,~~and as a result, the Company removed the balance of its contingent consideration as of March 31, 2023.

Historically, the contingent consideration ~~consists~~consisted of four separate components. The first component was (i) a $5,000 payment made in the first quarter of 2019 and (ii) a $5,000 payment made in the second quarter of 2019. The second components became payable upon regulatory approval in February 2020 and ~~include~~included (i) a $5,000 payment, which was paid in three installments during 2020 and 2021, and (ii) $45,000 payable in 7seven equal annual payments of approximately $6,400 beginning on the first anniversary of such approval, of which the first payment was made in the first quarter of 2021. The Company paid $~~1,000~~1,200 of the second payment ~~which was due~~ in ~~the first quarter of 2022, and will make monthly payments of $200~~ ~~thereafter until the second payment is fully paid, as agreed between the Company and Alkermes.~~2022. The third component ~~consists~~consisted of three potential payments, based on the achievement of specified annual revenue ~~targets, which currently do not have a fair value assigned to its achievement.~~targets. The fourth component consists of a royalty payment between 10% and 12% (subject to a 30% reduction when no longer covered by patent) for a defined term on future injectable meloxicam net sales, which iswas paid quarterly.

~~As of June 30, 2022, the Company has paid $22,429~~ ~~in milestone payments to Alkermes.~~

The Company is involved, from time to time, in various claims and legal proceedings arising in the ordinary course of its business. The Company accrues for any legal costs as they are incurred. Except as disclosed below, the Company is not currently a party to any such claims or proceedings that, if decided adversely to it, would either individually or in the aggregate have a material adverse effect on its business, financial condition or results of operations. In connection with the Separation, the Company accepted assignment by Societal CDMO of all of Societal CDMO’s obligations in connection with a securities class action lawsuit (the “Securities Litigation”) and agreed to indemnify Societal CDMO for all liabilities related to the Securities Litigation.

On May 31, 2018, the Securities Litigation was filed against Societal CDMO and certain of Societal CDMO’s officers and directors in the U.S. District Court for the Eastern District of Pennsylvania (Case No. 2:18-cv-02279-MMB) that purported to state a claim for alleged violations of Section 10(b) and 20(a) of the Exchange Act and Rule 10(b)(5) promulgated thereunder, based on statements made by Societal CDMO concerning the NDA for ANJESO. The complaint seeks unspecified damages, interest, attorneys’ fees, and other costs. On December 10, 2018, the lead plaintiff filed an amended complaint that asserted the same claims and sought the same relief but included new allegations and named additional officers as defendants. On February 8, 2019, Societal CDMO filed a motion to dismiss the amended complaint in its entirety, which the lead plaintiff opposed on April 9, 2019. On May 9, 2019, Societal CDMO filed its response and briefing was completed on the motion to dismiss. In response to questions from the Judge, the parties submitted supplemental briefs with regard to the motion to dismiss the amended complaint during the fall of 2019. On February 18, 2020, the motion to dismiss was granted without prejudice. On April 25, 2020, the plaintiff filed a second amended complaint. Societal CDMO filed a motion to dismiss the second amended complaint on June 18, 2020. The plaintiff filed an opposition to the motion to dismiss on August 17, 2020. On September 16, 2020, Societal CDMO filed a reply in support of the motion to dismiss. On March 1, 2021, Societal CDMO’s second motion to dismiss was denied. On June 21, 2021, the defendants filed an answer and affirmative defenses to the second amended complaint. Since then, the parties have been engaged in discovery, which concluded by March 15, 2022. On September 30, 2021, the plaintiff filed a motion for class certification and appointment of class representative. Societal CDMO filed an opposition to the plaintiff’s motion on November 30, 2021. On January 6, 2022, the plaintiff filed a reply in support of the motion for class certification.

On March 24, 2022, the plaintiff informed the Court that the parties had reached an agreement-in-principle to settle the Securities Litigation and requested that the court stay all deadlines. On May 10, 2022, plaintiff filed an unopposed motion for preliminary approval of the class action settlement. The Court entered an order preliminarily approving the settlement and providing for notice on May 12, 2022. A hearing for final approval of the settlement is set for October 26, 2022.

~~(d)~~ Purchase Commitments

As of ~~June 30, 2022,~~March 31, 2023, the Company had outstanding non-cancelable and cancelable purchase commitments in the aggregate amount of $~~4,621~~64 primarily related to ~~manufacturing and development activities and other~~ goods and ~~services. The timing of certain purchase commitments cannot be estimated as it is dependent on the outcome of other strategic evaluations and agreements.~~services from development activities.

~~BAUDAX BIO, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(amounts in thousands, except share and per share data)~~

~~(Unaudited)~~

~~(e)~~(d) Certain Compensation and Employment Agreements

The Company ~~has~~ entered into an employment agreement with one of its named executive ~~officers.~~officers in February 2020. As of ~~June 30, 2022,~~March 31, 2023, this employment agreement provided for, among other things, annual base salary in an aggregate amount of not less than $927, from that date through ~~December 2023.~~September 2024.

~~(13)~~(12) Capital Structure

(a) Common Stock

On November 21, 2019, the Company separated from Societal CDMO as a result of a special dividend distribution of all the outstanding shares of its common stock to Societal CDMO shareholders. On the distribution date, each Societal CDMO shareholder received 1one share of Baudax Bio’s common stock for every two and one-half shares of Societal CDMO common stock held of record at the close of business on November 15, 2019. Upon the ~~Distribution,~~distribution, ~~268,473~~6,712 shares of common stock were ~~issued, of which~~ ~~1,311~~ ~~were distributed after December 31, 2019.~~issued.

The Company is authorized to issue 190,000,000 shares of common stock, with a par value of $0.01 per share.

On February 13, 2020, the Company entered into a Sales Agreement (the “ATM Facility”) with JMP Securities LLC, as sales agent (the “Agent”), pursuant to which the Company may, from time to time, issue and sell shares of its common stock, par value $~~0.01~~ ~~per share, in an aggregate offering price of up to $25,000~~ ~~through the Agent. On May 27, 2021, the Company voluntarily terminated the ATM Facility with the Agent. During the term of the ATM Facility, the Company sold an aggregate of~~ ~~12,628~~ ~~shares of common stock under the ATM Facility for net proceeds of $3,612. The Agent was paid a sales commission of~~ 3~~% for such sales under the ATM Facility. The ATM Facility was terminable at will by the Company with no penalty.~~

~~On March 26, 2020, the Company closed an underwritten public offering of~~ ~~219,780~~ ~~shares of its common stock, Series A Warrants to purchase~~ ~~219,780~~ ~~shares of common stock (the “March Series A Warrants”) and Series B Warrants to purchase~~ ~~219,780~~ ~~shares of common stock (the “March Series B Warrants”), at an exercise price of $160.65~~ ~~per share for the March Series A Warrants and at an exercise price of $113.75~~ ~~per share for the March Series B Warrants, for net proceeds to the Company of~~$~~23,085, after deducting underwriting discounts and commissions and offering expenses.~~

~~On November 24, 2020, the Company closed a registered direct offering of~~ ~~81,429~~ ~~shares of its common stock, warrants to purchase~~ ~~289,330~~ ~~shares of common stock (the “November Series A Warrants”) at an exercise price of $42.00~~ ~~per share, pre-funded warrants to purchase~~ ~~207,902~~ ~~shares of common stock (the “November Series B Warrants”) at an exercise price of $0.35~~ ~~per share, for net proceeds to the Company of $10,763. As compensation to H.C. Wainwright & Co., LLC (the “Placement Agent”) as placement agent, the Company agreed to pay to the Placement Agent a cash fee of~~ ~~6.0% of the aggregate gross proceeds, plus a management fee equal to~~ ~~1.0% of the gross proceeds and reimbursement of certain expenses and legal fees. The Company also issued warrants to purchase~~ ~~17,357~~ ~~shares of common stock (the “November Placement Agent Warrants”) at an exercise price of $51.84375~~ ~~per share.~~

~~On December 18, 2020, the Company closed a registered direct offering of~~ ~~121,428~~ ~~shares of its common stock, warrants to purchase~~ ~~294,298~~ ~~shares of common stock (the “December Series A Warrants”) at an exercise price of $41.30~~ ~~per share, pre-funded warrants to purchase~~ ~~172,869~~ ~~shares of common stock (the “December Series B Warrants”) at an exercise price of $0.35~~ ~~per share, for net proceeds to the Company of $10,933. As compensation to the Placement Agent, the Company agreed to pay to the Placement Agent a cash fee of~~ ~~6.0% of the aggregate gross proceeds, plus a management fee equal to~~ ~~1.0% of the gross proceeds and reimbursement of certain expenses and legal fees. The Company also issued warrants to purchase~~ ~~17,654~~ ~~shares of common stock (the “December Placement Agent Warrants”) at an exercise price of $50.96875~~ ~~per share.~~

~~On February 8, 2021, the Company closed a registered direct offering of~~ ~~314,286~~ ~~shares of common stock (the “February Offering”) at an offering price of $56.00~~ ~~per share for net proceeds to the Company of $16,187. As compensation to the Placement Agent, the Company agreed to pay the Placement Agent a cash fee of~~ ~~6.0% of the gross proceeds raised in the February Offering, plus a management fee equal to~~ ~~1.0% of the gross proceeds raised in the February Offering and reimbursement of certain expenses and legal fees. The Company also issued to designees of the Placement Agent warrants to purchase~~ ~~18,854~~ ~~shares of common stock (the “February Placement Agent Warrants”) at an exercise price of $70.00~~ ~~per share.~~

~~BAUDAX BIO, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(amounts in thousands, except share and per share data)~~

~~(Unaudited)~~

~~On May 31, 2021, the Company closed a registered direct offering of~~ ~~400,815~~ ~~shares of common stock (the “May Offering”) at an offering price of $29.75~~ ~~per share and warrants to purchase~~ ~~400,812~~ ~~shares of common stock (the “May Warrants”) at an exercise price of $31.50~~ ~~per share, for net proceeds to the Company of $10,861. As compensation to the Placement Agent, the Company agreed to pay the Placement Agent a cash fee of~~ ~~6.0% of the gross proceeds raised in the May Offering, plus a management fee equal to~~ ~~1.0% of the gross proceeds raised in the May Offering and reimbursement of certain expenses and legal fees. The Company also issued to designees of the Placement Agent warrants to purchase~~ ~~24,046~~ ~~shares of common stock (the “May Placement Agent Warrants”) at an exercise price of $37.1875~~ ~~per share. The May Warrants and May Placement Agent Warrants were exercisable on the six-month anniversary of the closing date of the May Offering.~~

~~On December 28, 2021, the Company closed a registered direct offering (the “December 2021 Offering”) of~~ ~~42,289.3~~ ~~shares of the Company’s Series A Preferred Stock, par value $0.01~~ ~~per share (the “Preferred Stock”), at a stated value of $100.00~~ ~~per share and warrants to purchase~~ ~~362,479~~ ~~shares of common stock of the Company (the “December 2021 Warrants”) for net proceeds of $3,658. The shares of Preferred Stock are convertible, on the date after the issuance thereof, into an aggregate of~~ ~~483,306~~ ~~shares of common stock at a conversion price of $8.75~~ ~~per share, of which~~ ~~34,000~~ ~~shares of Preferred Stock were converted to common stock on December 29, 2021 and the remaining were converted in the first quarter of 2022.~~ The Preferred Stock have no voting rights, other than the right to vote as a class on certain matters, and each share of Preferred Stock will have the right to cast 3,571 votes per share of Preferred Stock on an amendment to the Company’s Amended and Restated Articles of Incorporation, as amended, to effect a reverse stock split of the Company’s outstanding shares of common stock by a ratio to be determined by the Board of Directors of the Company, voting together with the common stock as a single class; and in accordance with Nasdaq Stock Market LLC Listing Rules, the votes cast by holders of the Preferred Stock must be counted by the Company in the same proportion as the aggregate shares of Common Stock voted on the proposal. The holders of Preferred Stock are entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on shares of common stock. The Company recognized a beneficial conversion charge of $~~2,422~~ during the year ended December 31, 2021, which represents the in-the-money value of the conversion rate as of the date of issuance. As compensation to the Placement Agent, the Company agreed to pay the Placement Agent a cash fee of ~~7.0% of the gross proceeds raised in the December 2021 Offering, plus a management fee equal to~~ ~~1.0% of the gross proceeds raised in the December 2021 Offering and reimbursement of certain expenses and legal fees. The Company also issued to designees of the Placement Agent warrants to purchase~~ ~~28,996~~ ~~shares of common stock (the “December 2021 Placement Agent Warrants”). The December 2021 Warrants and the December 2021 Placement Agent Warrants have an exercise price of $11.20~~ ~~per share and were exercisable upon the six-month anniversary of their issuance.~~

On March 1, 2022, the Company closed an underwritten public offering of ~~1,831,631~~45,791 shares of its common stock, pre-funded warrants to purchase ~~1,677,141~~41,929 shares of common stock at an exercise price of $~~0.01~~0.40 per share and warrants to purchase ~~3,508,772~~87,719 shares of common stock at an exercise price of $~~3.25~~130.00 per share, as well as up to ~~526,315~~13,158 additional shares of common stock and/or additional warrants to purchase up to ~~526,315~~13,158 shares of common stock, which may be purchased pursuant to a 30-day option to purchase additional securities granted to H.C. Wainwright & Co., LLC (the “Underwriter”) by the Company. The public offering price for each share of common stock and accompanying warrant to purchase one share of common stock was $~~2.85~~114.00, and the public offering price for each pre-funded warrant and accompanying warrant was $~~2.84~~113.60. As compensation to the Underwriter, the Company agreed to pay to the Underwriter a cash fee of 7.0% of the gross proceeds, plus a cash management fee equal to 1.0% of the gross proceeds and reimbursement of certain expenses and legal fees. The Company also issued to designees of the Underwriter warrants to purchase ~~210,526~~5,263 shares of common stock at an exercise price of $~~3.5625~~142.50 per share. On February 28, 2022, the Underwriter partially exercised its option to purchase an additional ~~113,896~~2,847 warrants. Net proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses, was $8,791.

On May 17, 2022, the Company entered into a securities purchase agreement with institutional investors named therein, pursuant to which the Company agreed to issue and sell, in a registered direct offering (the “May 2022 Offering”),~~1,646,091~~

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

41,152 shares of the Company’s common stock, par value $0.01 per share, and, in a concurrent private placement, warrants exercisable for up to an aggregate of ~~1,646,091~~41,152 shares of Common Stock at a combined offering price of $~~1.215~~48.60 per share and associated warrant. The warrants have an exercise price of $~~1.09~~43.60 per share. Each warrant is exercisable for one share of common stock and was exercisable immediately upon issuance. The warrants will have a term of five years from the issuance date. As compensation to H.C. Wainwright & Co., LLC as placement agent in connection with the offering, the Company agreed to pay to the placement agent a cash fee of 7.0% of the aggregate gross proceeds raised in the offering, plus a management fee equal to 1.0% of the gross proceeds raised in the offering and certain expenses. The Company also issued to designees of the placement agent warrants to purchase up to 6.0% of the aggregate number of shares of common stock sold in the transactions, or warrants to purchase up to ~~98,765~~2,469 shares of common stock. The placement agent warrants have substantially the same terms as the warrants, except that the placement agent warrants have an exercise price equal to 125% of the offering price per share (or $60.75 per share). The placement agent warrants will expire on May 17, 2027. Net proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses, was $1,720.

On September 1, 2022, the Company closed a best efforts public offering of: (i) 188,872 shares of its common stock, par value $0.01 per share and accompanying Series A-1 warrants (“Series A-1 warrants”) to purchase 188,872 shares of Common stock and Series A-2 warrants (“Series A-2 warrants”, and together with the Series A-1 warrants, “Series A warrants”) to purchase 188,872 shares of Common Stock, at a combined public offering price of $21.00 per share and Series A warrants and (ii) Series B pre-funded warrants (“Series B pre-funded warrants”) to purchase 106,607 shares of Common Stock and accompanying Series A-1 warrants to purchase 106,607 shares of Common Stock and Series A-2 warrants to purchase 106,607 shares of Common stock at a combined public offering price of $20.60 per Series B pre-funded warrant and Series A warrants, which is equal to the public offering price per share of Common Stock and accompanying Series A warrants less the $0.01 per share exercise price of each such Series B pre-funded warrant. The Series A warrants have an exercise price of $21.00 per share of Common Stock. The Series A-1 warrants are exercisable upon issuance and will expire five years from the date of issuance. The Series A-2 warrants are exercisable upon issuance and will expire thirteen months from the date of issuance. The exercise price of the Series A warrants is subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in the Series A warrants. Subject to certain ownership limitations, the Series B pre-funded warrants are immediately exercisable and were exercised at a nominal consideration of $0.40 per share of Common Stock upon the closing of the transaction. As compensation to H.C. Wainwright & Co., LLC, as the exclusive placement agent in connection with the Offering, the Company paid a cash fee of 7.0% of the aggregate gross proceeds raised in the offering, plus a management fee equal to 1.0% of the gross proceeds raised in the offering, and reimbursement of certain expenses and legal fees. The Company also issued to designees of the placement agent warrants to purchase up to 17,728 shares of common stock. The placement agent warrants have substantially the same terms as the Series A warrants, except that the placement agent warrants have an exercise price equal to $26.25 per share and expire on August 29, 2027. Net proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses, was $5,044.

26On December 6, 2022 the Company closed a best efforts public offering of: (i) 54,787 shares of its common stock, par value $0.01 per share and accompanying Series A-3 warrants to purchase 54,787 shares of common stock and Series A-4 warrants to purchase 54,787 shares of common stock, at a combined public offering price of $4.795 per share and accompanying series A warrants and (ii) series C pre-funded warrants to purchase 988,000 shares of common stock and accompanying series A-3 warrants to purchase 988,000 shares of common stock and series A-4 warrants to purchase 988,000 shares of common stock at a combined public offering price of $4.785 per series C pre-funded warrant and accompanying series A warrants, which was equal to the public offering price per share of common stock and accompanying series A warrants less the $0.01 per share exercise price of each such series C pre-funded warrant. The series A warrants have an exercise price of $4.50 per share of common stock. The series A-3 warrants are exercisable upon issuance and will expire on December 6, 2027. The series A-4 warrants are exercisable upon issuance and will expire on January 8, 2024. The exercise price of the series A warrants is subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in the Series A Warrants. The Series C prefunded warrants have been exercised in full as of December 31, 2022. As compensation to H.C. Wainwright & Co., LLC as the exclusive placement agent in connection with the offering, the Company paid the placement agent a cash fee of 7.0% of the aggregate gross proceeds raised in the offering, plus a management fee equal to 1.0% of the gross proceeds raised in the offering, and reimbursement of certain expenses and legal fees. The Company also issued to designees of the placement agent warrants to purchase up to 62,567 shares of common stock. The Placement Agent Warrants have substantially the same terms as the series A warrants, except that the placement agent warrants have an exercise price equal to $5.99375 per share and expire on December 2, 2027. Net proceeds to the Company, after deducting underwriting discounts and commissions and offering expenses, was $3,916.

On May 1, 2023 the Company closed a best efforts public offering of: (i) 1,326,175 shares of its common stock, par value $0.01 per share and accompanying Series A-5 warrants to purchase 1,326,175 shares of Common stock and Series A-6

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

warrants to purchase 1,326,175 shares of common stock, at a combined public offering price of $1.15 per share and accompanying Series A warrants and (ii) Series D pre-funded warrants to purchase 2,152,087 shares of common stock and accompanying Series A-5 warrants to purchase 2,152,087 shares of common stock and Series A-6 warrants to purchase 2,152,087 shares of common stock at a combined public offering price of $1.14 per Series D pre-funded warrant and accompanying Series A warrants, which is equal to the public offering price per share ~~(or~~of Common Stock and accompanying Series A warrants less the $~~1.5188~~0.01 per ~~share).~~share exercise price of each such Series D pre-funded warrant. The ~~placement agent~~Series A warrants have an exercise price of $1.15 per share of common stock. The Series A-5 warrants are exercisable upon issuance and will expire on May ~~17, 2027. Net proceeds~~1, 2028. The Series A-6 warrants are exercisable upon issuance and will expire on November 1, 2024. Subject to certain ownership limitations described in the Series D pre-funded warrants, the Series D pre-funded warrants were immediately exercisable and were fully exercised at a nominal consideration of $0.01 per share of common stock upon closing. As compensation to H.C. Wainwright & Co., LLC, as the exclusive placement agent in connection with the offering, the Company ~~after deducting underwriting discounts~~paid the placement agent a cash fee of 7.0% of the aggregate gross proceeds raised in the offering, plus a management fee equal to 1.0% of the gross proceeds raised in the offering, and ~~commissions~~reimbursement of certain expenses and ~~offering expenses, was~~legal fees. The Company also issued to designees of the placement agent warrants to purchase up to 208,696 shares of common stock. These warrants have substantially the same terms as the Series A warrants, except that the placement agent warrants have an exercise price equal to $~~1,720~~1.4375 per share and expire on April 26, 2028.

(b) Preferred Stock

The Company is authorized to issue 10,000,000 shares of preferred stock, with a par value of $0.01 per share. As

On September 19, 2022, the board of ~~June 30,~~directors of the Company declared a dividend of one one-thousandth (1/1,000th) of a share of Series B Preferred Stock, par value $0.01 per share (“Series B Preferred Stock”), for each outstanding share of the Company’s common stock, par value $0.01 per share to shareholders of record on September 29, 2022 (the “Record Date”). The shares of Series B Preferred Stock were distributed to such recipients on October 3, 2022. Each share of Series B Preferred Stock entitles the holder thereof to 1,000,000 votes per share. The outstanding shares of Series B Preferred Stock vote together with the outstanding shares of Common Stock of the Company as a single class exclusively with respect to (1) any proposal to adopt an amendment to the Company’s Amended and Restated Articles of Incorporation, as amended, to reclassify the outstanding shares of common stock into a smaller number of shares of common stock at a ratio specified in or determined in accordance with the terms of such amendment (the “Reverse Stock Split”) and (2) any proposal to adjourn any meeting of shareholders called for the purpose of voting on the Reverse Stock Split. The Series B Preferred Stock will not be entitled to vote on any other matter, except to the extent required under the Pennsylvania Business Corporation Law.

In September 2022, 020,003.745 shares of ~~preferred~~Series B Preferred Stock were declared as a stock dividend and issued on October 3, 2022. On November 3, 2022, all of our outstanding shares of Series B Preferred Stock were ~~issued or outstanding.~~redeemed for nominal consideration pursuant to the terms of the Series B Preferred Stock.

~~See Note 13(a) for additional information regarding the December 2021 Offering.~~As of March 31, 2023, there were no shares of Preferred Stock issued and outstanding.

On May 29, 2020, in connection with the Credit Agreement, the Company issued a warrant to MAM Eagle Lender, LLC to purchase ~~15,060~~376 shares of common stock, at an exercise price equal to $~~160.65~~6,426.00 per share (see Note ~~11(b))~~10).

On October 19, 2020, the Company entered into Warrant Exchange Agreements (each, an “Exchange Agreement”) with certain holders (each, a “Holder”) of the Company’s outstanding March Series A Warrants and March Series B Warrants. Pursuant to the Exchange Agreements, the Holders, at their election, agreed to a cashless exchange of either all of their March Series A Warrants or March Series B Warrants, in each case for ~~0.0057~~0.2 shares of the Company’s common stock per warrant (rounded up to the nearest whole share) (the “Exchange”). The Company issued ~~33,908~~848 shares of its common stock to the participating Holders as a result of the Exchange.

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

As a result of the Exchange, pursuant to certain price adjustment provisions in the warrants, the exercise price of each of the March Series A Warrants or March Series B Warrants (including warrants held by holders not participating in the Exchange) that were not exchanged were adjusted to ~~par value, or~~ $~~0.35~~1.8951, for each share of common stock underlying such warrant. Pursuant to the Exchange Agreements, any outstanding warrant held by a Holder participating in the Exchange (i) was amended to remove certain anti-dilution and variable pricing protections and (ii) in the case of March Series A Warrants not exchanged by a participating Holder, was amended to adjust the expiration date of such March Series A Warrants to April 26, 2021 (which is the expiration date of the March Series B Warrants). The March Series A and Series B warrants were liability classified prior to the Exchange because they contained anti-dilution provisions that did not meet the standard definition of anti-dilution provisions. The Company recorded a mark-to-market adjustment to record the March Series A and Series B warrant at their fair values immediately prior to the Exchange and then reclassified the remaining balance of $21,858 to equity as a result of the issuance of shares and the removal of the anti-dilution and variable pricing protections in the Exchange.

On January 21, 2021, the Company entered into an agreement with an institutional investor, pursuant to which the Company agreed to issue and sell, in an offering (the “January Offering”), warrants exercisable for an aggregate of ~~294,298~~7,358 shares of common stock of the Company (the “January Warrants”) at an offering price of $~~4.375~~175.00 per warrant in exchange for the exercise of the institutional investor’s existing December Series A warrants that were issued to them on December 21, 2020, at an exercise price of $~~41.30~~1,652.00 per warrant. The January Warrants have an exercise price of $~~56.00~~2,240.00 per share.

As compensation to the Placement Agent, in connection with the January Offering, the Company agreed to pay to the Placement Agent a cash fee of 6.0% of the aggregate gross proceeds raised in the January Offering (including the proceeds relating to the exercise of the December Series A Warrants), plus a management fee equal to 1.0% of the gross proceeds raised in the January Offering (including the proceeds relating to the exercise of the December Series A Warrants) and reimbursement of certain expenses and legal fees. The Company also issued to designees of the Placement Agent warrants to purchase ~~17,654~~441 shares of common stock (the “January Placement Agent Warrants”) at an exercise price of $~~70.00~~2,800.00 per share.

~~During~~On August 24, 2022, the ~~year ended December 31, 2020,~~Company entered into warrant amendment agreements (the “Warrant Amendment Agreements”) with certain holders of the Company’s (i) Series A Warrants to purchase 7,234 shares of common stock with an exercise price of $1,680.00 per share, (ii) Warrants to purchase 7,358 shares of common stock with an exercise price of $2,240.00 per share, (iii) Warrants to purchase 10,021 shares of common stock with an exercise price of $1,260.00 per share, (iv) Warrants to purchase 9,062 shares of common stock with an exercise price of $448.00 per share, and (v) Warrants to purchase 88,615 shares of common stock with an exercise price of $130.00 per share (the “Existing Warrants”). Under the Warrant Amendment Agreements, the Company agreed to amend the Existing Warrants by lowering the exercise price of the Existing Warrants to $23.92 per share. The warrant modification resulted in an increase in the fair value of warrants of $1,151. Subsequent to the warrant amendment, the Company issued ~~252,476~~2,875 shares of common stock upon exercise of a portion of the ~~March Series A and Series B Warrants~~amended warrants for net proceeds of $~~2,538~~69.

~~During~~On December 2, 2022, the ~~year ended~~Company entered into a warrant amendment agreement (the “December Warrant Amendment Agreement”) with a certain holder of the Company’s (i) warrants to purchase 7,234 shares of common stock with an exercise price of $23.92 per share, (ii) warrants to purchase 7,358 shares of common stock with an exercise price of $23.92 per share, (iii) warrants to purchase 6,013 shares of common stock with an exercise price of $23.92 per share, (iv) Warrants to purchase 5,143 shares of common stock with an exercise price of $23.92 per share, (v) warrants to purchase 48,246 shares of common stock with an exercise price of $23.92 per share, (vi) Series A-1 warrants to purchase 14,404 shares of common stock with an exercise price of $43.60 per share, (vii) Series A-2 warrants to purchase 142,858 shares of common stock with an exercise price of $21.00 per share and (viii) warrants to purchase 142,858 shares of common stock with an exercise price of $21.00 per share (collectively, the “December Existing Warrants”). Under the December ~~31, 2020,~~Warrant Amendment Agreement, the Company (i) agreed to amend the December Existing Warrants by lowering the exercise price of the December Existing Warrants to $4.50 per share and (ii) amend the expiration date of the December Existing Warrants to December 6, 2027, in each case effective on December 6, 2022. The warrant modification resulted in an increase in the fair value of warrants of $746.

In January 2023, the Company issued ~~207,902~~961,787 shares of common stock upon the exercise of ~~the November Series B Warrants~~warrants for proceeds of $734,328 ~~and~~.

In March 2023, in connection with Amendment No. 5, the Company issued warrants to MAM Eagle Lender to purchase an aggregate of ~~172,869~~785,026 shares of the Company’s common stock, ~~upon~~par value $0.01 per share at an exercise ~~of the December Series B Warrants for proceeds of~~price equal to $601.8951. per share.

~~During the year ended December 31, 2021, the Company issued~~ ~~3,189~~ ~~shares of common stock upon exercise of the March Series B Warrants for net proceeds of $~~1 ~~and~~ ~~294,298~~ ~~shares of common stock upon exercise of the December Series A Warrants for proceeds of $12,155~~.

2726

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

As of ~~June 30, 2022,~~March 31, 2023, the Company had the following warrants outstanding to purchase shares of the Company’s common stock:

Number of Shares

Exercise Price per Share

Expiration Date
March Series A Warrants
(non-participating holders)

919

$
0.35

March 26, 2025
MAM Eagle Lender Warrant

15,060

$
160.65

May 29, 2027
November Series A Warrants

289,330

$
42.00

November 24, 2025
November Placement Warrants

17,357

$
51.84375

November 24, 2025
December Placement Warrants

17,654

$
50.96875

December 18, 2025
January Warrants

294,298

$
56.00

January 21, 2026
January Placement Warrants

17,654

$
70.00

January 21, 2026
February Placement Warrants

18,854

$
70.00

February 8, 2026
May Warrants

400,812

$
31.50

June 1, 2027
May Placement Warrants

24,046

$
37.1875

May 31, 2026
December 2021 Warrants

362,479

$
11.20

June 27, 2027
December 2021 Placement Agent
Warrants

28,996

$
11.20

December 27, 2026
March 2022 Warrants

3,622,668

$
3.25

March 1, 2027
March 2022 Underwriter Warrants

210,526

$
3.56

February 24, 2027
May 2022 Warrants

1,646,091

$
1.09

May 19, 2027
May 2022 Placement Agent Warrants

98,765

$
1.52

May 17, 2027


	Number of Shares		Exercise Price per Share		Expiration Date
March Series A Warrants (non-participating holders)		15	$	1.8951	March 26, 2025
MAM Eagle Lender Warrant		376	$	6,426.00	May 29, 2027
November Series A Warrants		7,234	$	4.50	December 6, 2027
November Placement Warrants		433	$	2,073.75	November 24, 2025
December Placement Warrants		441	$	2,038.75	December 18, 2025
January Warrants		7,358	$	4.50	December 6, 2027
January Placement Warrants		441	$	2,800.00	January 21, 2026
February Placement Warrants		471	$	2,800.00	February 8, 2026
May Warrants		4,008	$	23.924	June 1, 2027
May Warrants, repriced		6,013	$	4.50	December 6, 2027
May Placement Warrants		601	$	1,487.50	May 31, 2026
December 2021 Warrants		3,918	$	23.924	June 27, 2027
December 2021 Warrants, repriced		5,143	$	4.50	December 6, 2027
December 2021 Placement Agent Warrants		724	$	448.00	December 27, 2026
March 2022 Warrants		1,952	$	130.00	March 1, 2027
March 2022 Warrants, repriced		37,492	$	23.924	March 1, 2027
March 2022A Warrants, repriced		48,246	$	4.50	December 6, 2027
March 2022 Underwriter Warrants		5,263	$	142.50	February 24, 2027
May 2022 Warrants		26,748	$	43.60	May 19, 2027
May 2022 Warrants, repriced		14,404	$	4.50	December 6, 2027
May 2022 Placement Agent Warrants		2,469	$	60.752	May 17, 2027
August 2022 Series A-1 Warrants		152,612	$	21.00	September 1, 2027
August 2022 Series A-1 Warrants, repriced		142,858	$	4.50	December 6, 2027
August 2022 Series A-2 Warrants		152,612	$	21.00	October 2, 2023
August 2022 Series A-2 Warrants, repriced		142,858	$	4.50	December 6, 2027
August 2022 Placement Agent Warrants		17,728	$	26.25	August 29, 2027
December 2022 Series A-3 Warrants		1,042,787	$	4.50	December 6, 2027
December 2022 Placement Agent Warrants		62,567	$	5.99375	December 2, 2027
MAM Eagle Lender Amendment No. 5 Warrant		785,026	$	1.89510	March 29, 2033

With the exception of the March Series A Warrants to purchase ~~919~~15 shares of common stock related to the public offering and held by non-participating investors in the Exchange that are liability classified as they contain antidilution provisions that do not meet the standard definition of antidilution provisions, the remaining warrants outstanding are equity classified. As of March 31, 2023 the liability warrants had a nominal fair value.

~~The following table summarizes the fair value and the assumptions used for the Black-Scholes option-pricing model for the liability classified warrants.~~

June 30, 2022

Series A Warrants

Fair value

$
1

Expected dividend yield

—

%
Expected volatility

79.89

%
Risk-free interest rates

2.99

%
Remaining contractual term

2.7 years

~~(14)~~(13) Stock-Based Compensation

The Company has adopted the 2019 Plan that allows for the grant of stock options, stock appreciation rights and stock awards for an initial total of ~~85,714~~2,142 shares of common stock. On December 1st of each year, pursuant to the “Evergreen” provision of the 2019 Plan, the number of shares available under the plan shall be increased by an amount equal to 5% of the outstanding common stock on December 1st of that year or such lower amount as determined by the Board of Directors. ~~In December 2021, the number of shares available for issuance under the 2019 Plan was increased by~~ ~~120,605~~. The total number of shares authorized for issuance under the 2019 Plan as of ~~June 30, 2022~~March 31, 2023 is ~~263,167~~31,581. shares. As of ~~June 30, 2022,~~March 31, 2023, ~~112,019~~28,718 shares are available for future grants under the 2019 Plan.

Stock Options:

Stock options are exercisable generally for a period of 10 years from the date of grant and generally vest over four years. There were no options granted during the ~~six~~three months ended ~~June 30,~~March 31, 2023 or 2022. ~~The weighted average grant-date fair value of options awarded to employees during the six months ended June 30, 2021 was $27.45~~.

~~BAUDAX BIO, INC.~~

~~Notes to the Consolidated Financial Statements~~

~~(amounts in thousands, except share and per share data)~~

~~(Unaudited)~~

~~Under the 2019 Plan, the fair value of the Baudax Bio options was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions:~~


	~~June 30,~~
	~~2021~~
~~Expected option life~~	~~5.5~~ ~~years~~
~~Expected volatility~~	~~75.37~~%
~~Risk-free interest rate~~	~~0.78~~%
~~Expected dividend yield~~		0

The following table summarizes Baudax Bio stock option activity during the ~~six~~three months ended ~~June 30, 2022:~~March 31, 2023:


	Number of shares			Weighted average exercise price		Weighted average remaining contractual life	Number of shares			Weighted average exercise price		Weighted average remaining contractual life
Balance, December 31, 2021		125,418		$	76.05	8.6 years
Balance, December 31, 2022								1,939		$	3,525.88	6.5 years
Expired/forfeited/cancelled		(35,756	)	$	49.85			(351	)	$	3,644.51
Balance, June 30, 2022		89,662		$	86.50	7.6 years
Balance, March 31, 2023								1,588		$	3,499.66	7.7 years
Vested		61,610		$	85.63	7.1 years		1,193		$	3,568.46	7.8 years
Vested and expected to vest		89,662		$	86.50	7.6 years		1,588		$	3,499.66	7.7 years

Included in the table above are ~~6,106~~28 stock options outstanding as of ~~June 30, 2022~~March 31, 2023 that were granted outside of the plan. The grants were made pursuant to the Nasdaq inducement grant exception in accordance with Nasdaq Listing Rule 5635(c)(4).

Restricted Stock Units (RSUs):

The following table summarizes Baudax Bio RSUs activity during the ~~six~~three months ended ~~June 30, 2022:~~March 31, 2023:


	Number of shares			Weighted average grant date fair value		Number of shares			Weighted average grant date fair value
Balance, December 31, 2021		41,069		$	63.79
Balance, December 31, 2022							10,611		$	116.81
Granted		501,209			0.76		—			—
Vested and settled		(11,337	)		44.77		(6	)		2,391.91
Expired/forfeited/cancelled		(7,023	)		57.22		(386	)		1,318.71
Balance, June 30, 2022		523,918		$	3.99
Balance, March 31, 2023							10,219		$	70.08
Expected to vest		508,792					10,219

In June 2022, the Company granted ~~501,209~~12,519 time-based RSUs, which may be settled in cash, stock, or a combination of cash and stock, solely at the election of the Company. These awards are classified as Other long-term liabilities on the Consolidated Balance Sheet due to insufficient shares available for grant in the 2019 Plan.

Included in the table above are ~~683~~3 time-based RSUs outstanding as of ~~June 30, 2022~~March 31, 2023 that were granted outside of the plan. The grants were made pursuant to the Nasdaq inducement grant exception in accordance with Nasdaq Listing Rule 5635(c)(4).

Stock-Based Compensation Expense:

Stock-based compensation expense from continuing operations for the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ was $~~858~~191 and $~~3,207~~491, respectively, which ~~for the current year~~ also includes expense for the liability classified awards.

BAUDAX BIO, INC.

Notes to the Consolidated Financial Statements

(amounts in thousands, except share and per share data)

(Unaudited)

As of ~~June 30, 2022,~~March 31, 2023, there was $~~2,374~~705 of unrecognized compensation expense related to unvested options and time-based RSUs that are expected to vest and will be expensed over a weighted average period of ~~2.0~~0.9 years. ~~As of June 30, 2022, there was $450~~ ~~of unrecognized compensation expense related to unvested performance-based RSUs.~~

The aggregate intrinsic value represents the total amount by which the fair value of the common stock subject to options exceeds the exercise price of the related options. As of ~~June 30, 2022,~~March 31, 2023, there was 0no aggregate intrinsic value of the vested and unvested options.

~~(16)~~(14) Retirement Plan

The Company has a voluntary 401(k) Savings Plan (the “401(k) Plan”) in which all employees are eligible to participate. The Company’s policy is to match 100% of the employee contributions up to a maximum of 5% of employee compensation. Total Company contributions to the 401(k) plan for the three months ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~ were $5131 and $~~151, respectively. Total Company contributions to the 401(k) plan for the six months ended June 30, 2022 and 2021 were $341~~ ~~and $421~~117, respectively.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the interim unaudited financial statements contained in Part I, Item 1 of this Quarterly Report, and the audited financial statements and notes thereto for the year ended December 31, ~~2021~~2022 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the SEC on ~~March 16, 2022.~~February 23, 2023. As used in this Quarterly Report, unless the context suggests otherwise, “we,” “us,” “our,” the “Company” or “Baudax Bio” refer to Baudax Bio, Inc. and its consolidated subsidiaries.

We are a pharmaceutical company primarily focused on innovative products for ~~hospital~~acute care and related ~~acute care~~ settings. We believe that we can bring valuable therapeutic options for patients, prescribers and payers to the ~~hospital~~acute care and related ~~acute care~~ markets.

We hold exclusive global rights to two new molecular entities, which are centrally acting Neuromuscular Blocking Agents, or NMBs, BX1000, an intermediate duration of action NMB that recently completed a Phase II clinical trial, and BX2000, an ultra-short acting NMB currently undergoing a Phase I clinical trial. A proprietary blockade reversal agent, BX3000, is currently being evaluated in preclinical studies intended to support an IND filing in 2023. BX3000 is an agent that is expected to rapidly reverse BX1000 and BX2000 blockade. All three agents are licensed from Cornell University. We believe these agents, when an NMB and BX3000 are administered in succession, allow for a rapid onset of centrally acting neuromuscular blockade, followed by a rapid reversal of the neuromuscular blockade with BX3000. These novel agents have the potential to meaningfully reduce time to onset and reversal of blockade and improve the reliability of onset and offset of neuromuscular blockade. The combination of the blocking agent, and the reversal agent can potentially reduce time in operating rooms resulting in potential clinical and cost advantages, as well as valuable cost savings for hospitals and ambulatory surgical centers and has the potential for an improved clinical profile in terms of safety compared to other NMBs and reversal agents.

The Top-line results for the Phase II clinical trial for BX1000 showed that BX1000 met the primary endpoint of readiness for intubation (evaluated as “Good” or “Excellent” - Viby-Mogensen 1996) at 60 seconds for all three dose levels of BX1000 compared to the active-control, rocuronium. Study treatments were generally well tolerated, with no occurrence of severe or serious adverse events. The frequency and severity of adverse events was similar across all four dose groups, and no notable events were aggregated in any one dose group.

In mid-2020, we launched our first commercial product, ANJESO, in the United States. ANJESO iswas the first and only 24-hour, intravenous, or IV, analgesia agent. ANJESO is a cyclooxygenase-2, or COX-2, preferential, non-steroidal anti-inflammatory, or NSAID, for the management of moderate to severe pain, which ~~can~~could be administered alone or in combination with other non-NSAID analgesics. We have successfully completed three Phase III clinical trials, including two pivotal efficacy trials, a large double-blind Phase III safety trial and two Phase IIIb programs evaluating ANJESO clinical safety and efficacy along with its health economic impacts in specific surgical settings.

~~We utilize our internal field team and collaborate with contracted third parties, to market ANJESO to health care professionals at key targeted institutions for the commercialization~~discontinued commercial sales of ANJESO in December 2022 and further withdrew the ~~United States. The Centers for Medicare and Medicaid Services, or CMS, established a unique J-code for ANJESO~~NDA in the fourth quarter of 2020. ANJESO has transitional pass-through status under traditional Medicare plans for a period of 3 years, thereby providing separate reimbursement for ANJESO when used for surgical procedures in the outpatient setting. We have also entered into agreements with leading group purchasing organizations in the U.S., including Vizient Inc., Premier Inc. and HealthTrust, as well as one of the top three integrated delivery networks that serves over twelve million patients nationwide, for availability of ANJESO to their member institutions and with a leading operator of surgical facilities and ancillary services nationally, with over 150 locations nationwide. In addition, ANJESO is currently approved for use within the Department of Veterans Affairs, the Department of Defense, Indian Health Service, 340B covered entities, and multiple state Medicaid programs. We are continuing to evaluate strategic partnerships for the commercialization of ANJESO both in the United States and outside the United States.

We have seen continued growth of ANJESO in the second quarter of 2022 through deepening usage at existing accounts, particularly in the hospital setting where we saw a growth of 12% in vials sold to hospitals compared to the first quarter of 2022. Further, this growth came through the addition of several new key accounts as well as a resurgence by some accounts that ordered early on in the commercialization of ANJESO. The second quarter of 2022 was our second best quarter since launch, a decrease of 9% from the first quarter of 2022, which was our strongest quarter to date. The number of vials sold to end-users increased approximately 67% in the second quarter of 2022 compared to the second quarter of prior year.March 2023.

Our costs ~~consist~~have consisted primarily of expenses incurred in conducting our manufacturing and commercialization of ANJESO, which was discontinued in December 2022, as well as public company and personnel costs, clinical trials and preclinical studies, regulatory activities, and ~~regulatory activities.~~manufacturing costs for our NMB blocking and reversal agents. We expect to incur operating losses for at least the next ~~few~~several years. We expect substantially all of our operating losses to result from costs incurred in connection with our ~~commercialization activities, including manufacturing costs, and~~ development programs, including our clinical, ~~non-clinical~~nonclinical and formulation development, preclinical and manufacturing related activities. Our expenses over the next several years are expected to primarily relate to ~~commercialization activities and continuing to develop~~developing our ~~other current and future~~ product candidates. In addition, we may incur costs associated with the acquisition or in-license of products and successful commercialization of the acquired or in-licensed products.

~~Our pipeline also includes other early-stage product candidates, including two novel NMBs and a related proprietary chemical reversal agent and Dex-IN, a proprietary intranasal formulation~~

Proportion of subjects with excellent or ~~Dex, an alpha-2 adrenergic agonist that we are evaluating for possible partnering.~~good intubating conditions at 60 seconds after NMB administration:

Our efforts to commercialize ANJESO were impacted in 2020, 2021, and continue to impact us in 2022 on a variable basis depending on the timing, location and extent of the outbreaks. There may continue to be impact fromWhile the COVID-19 pandemic ~~particularly in light of the surge of new COVID-19 cases relating to new variants, and any new and potentially more virulent variants that~~has stabilized within many global regions, it may emerge. Intermittent impacts in the reduction of elective surgeries have occurred and this has had an impact in the recent quarter, especially in January and February. Overall, many centers have yet returned to pre-COVID levels of surgeries even where the impact of COVID-19 and its variants have not been as great. In addition, COVID-19 has impacted revenue for many hospitals, caused a reduction in hospital staffing, lead to a diversion in resources from other normal activities to patients suffering from COVID-19, and caused a limitation in hospital access for nonpatients, including our sales professionals, which we believe has impacted and willcyclically continue to ~~impact~~adversely affect our ~~marketing~~business, financial condition and ~~commercialization efforts. Further, hospitals~~results of operations. Although the Department of Health and ~~ambulatory surgical centers may experience staffing shortages~~Human Services announced that the federal public health emergency for COVID-19 ended on May 11, 2023, we expect the trends that emerged as a result of ~~employee non-compliance with government or employer mandated vaccination requirements, which could reduce~~ the ~~number of elective surgeries that can be performed at hospitals with staffing shortages. We believe a reduction in elective surgeries during the COVID-19~~ pandemic ~~has impacted and~~ may continue to ~~impact demand for ANJESO.~~

We anticipate that many hospitals and health care providers will continue to suffer negative financial consequences due to an increase in unexpected costs, including for personal protective equipment and ventilators, and this impact may result in ongoing decreased revenue. If fewer elective procedures are being performed, we believe this may negatively impact ANJESO growth rates. In addition, in some areas the absence of hospital formulary meetings where new drugs can be adopted has had ongoing variable impact on our efforts to commercialize ANJESO. Many hospital formularies have resumed meetings after a 6-month, or longer, absence. Despite the existence of a backlog of products scheduled to be reviewed, we believe we will make progress with having ANJESO added to additional hospital formularies over the near term. Duedisruptions to the ~~rapidly evolving environment, continued uncertainties from~~global economy, as well as businesses and capital markets around the ~~impact of~~world. While the COVID-19 ~~global pandemic,~~vaccines have proven effective in reducing the severity and mortality of COVID-19 including the ~~recent regional outbreaks~~variants that ~~are impacting~~have evolved to date, the ~~recovery, we cannot estimate the full~~emergence of new variants, which could prove resistant to existing vaccines, could again result in major disruptions to businesses and markets worldwide. The extent to which the outbreak may affect our ~~commercialization~~preclinical studies, clinical trials, business, financial condition, and results of operations will depend on future developments, which are uncertain and cannot be predicted at this time.

In March 2023, we entered into an Asset Transfer Agreement with Alkermes Pharma Ireland Limited, or Alkermes, or the Transfer Agreement. Under the terms of the Transfer Agreement, we transferred the rights to certain patents, trademarks, equipment, data and other rights related to ANJESO, or the Assets to Alkermes. We also withdrew the New Drug Application, or NDA, related to ANJESO and ~~financial results may be adversely impacted.~~agreed, if elected by Alkermes at a later date, to transfer such withdrawn NDA to Alkermes at no additional cost.

Due to our ~~current~~ cash position, in March of 2022, we implemented a reduction in workforce by approximately 66 employees (representing approximately 80% of our total workforce), including 43 members of our sales force. The reorganization was substantially completed by the end of the second quarter and approximately $4.1 million of charges were incurred for severance and other related costs. The reduction in force was designed to substantially reduce our operational expenses and conserve cash resources. Further, in September 2022, we terminated the remaining dedicated commercial team of 7 employees and incurred a third quarter charge of $0.2 million for severance and other related costs.

Upon executing the Transfer Agreement, we met the criteria for discontinued operations related to our commercial business. Accordingly, the accompanying consolidated financial statements for all periods presented reflect this business as a discontinued operation. Discontinued operations include results of our commercial business except for certain corporate overhead costs, which are included in continuing operations. See Note 4 to the Consolidated Financial Statements included in this Quarterly Report for additional information.

We ~~sell~~sold ANJESO in the U.S. through a single third-party logistics provider, or 3PL, which takes title to and control of the goods and is considered our customer. We ~~recognize~~recognized revenue from ANJESO product sales at the point the title to the product is transferred to the customer and the customer ~~obtains~~obtained control of the product. The transaction price that iswas recognized as revenue for products ~~includes~~included an estimate of variable consideration for reserves, which result from discounts, returns, chargebacks, rebates and other allowances that ~~are~~were offered within contracts between us and our end-user customers, wholesalers, group purchasing organizations and other indirect customers.

~~Our estimates~~ In December 2022, we discontinued the commercialization of ~~variable consideration~~ANJESO and ~~determination~~expect that the majority of ~~whether to include estimated amounts in~~expenses associated with the transaction price are based largely on an assessment of its anticipated performance and all information (historical, current and forecasted) that is reasonably available. These reserves reflect our best estimatediscontinuation were incurred by the end of the ~~amount~~first quarter of consideration to which we are entitled based on the terms of the contracts. The amount of variable consideration that is included in the transaction price may be constrained and is included in the net sales price only to the extent that is considered probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.2023.

~~Cost~~Historically, cost of sales ~~includes~~included product costs, manufacturing costs, transportation and freight, royalty expense, qualification costs for a secondary manufacturing suite ~~for increased available capacity~~ and indirect overhead costs associated with the manufacturing and distribution of ANJESO including supply chain and quality personnel costs. Cost of sales ~~may~~ also ~~include~~included period costs related to certain manufacturing services and inventory adjustment charges. We ~~expensed a significant portion~~discontinued commercialization of ANJESO in December 2022. We believe there is very modest inventory held at the ~~cost of producing ANJESO~~wholesaler level and have notified wholesalers through our 3PL that we ~~are using in the commercialization~~will accept product returns until June 30, 2023, which has been reserved for as ~~research and development expense prior to the regulatory approval~~ of ~~ANJESO. We expect that over time, product costs in cost of sales will increase as sales increase and inventory associated with the units manufactured prior to FDA approval are sold.~~March 31, 2023.

Research and development expenses ~~currently consist~~have consisted primarily of costs incurred in connection with the NMB portfolio and in previous years, the FDA required pediatric development of ANJESO ~~and the NMB portfolio~~ activities. These expenses consist primarily of:

The majority of our external research and development costs have related to clinical trials, manufacturing of drug supply for pre-commercial products, analysis and testing of product candidates and patent costs. We expense costs related to clinical inventory and pre-commercial inventory until we receive approval from the FDA to market a product, at which time we commence capitalization of costs relating to that product to inventory. Costs related to facilities, depreciation and support are not charged to specific programs. Subsequent to regulatory approval of ANJESO and prior to the withdrawal of the NDA, we allocated or recategorized certain personnel and overhead expenses related to medical affairs, supply chain, quality and regulatory support functions that had previously been recorded within research and development, to cost of sales or selling, general and administrative expenses in support of the commercialization of ANJESO. Pre-commercial activities directly utilizing personnel and overhead expenses from the medical affairs, supply chain, quality and regulatory support function continue to be recorded within research and development.

The development of our other product candidates is highly uncertain and subject to a number of risks, including, but not limited to:

Development timelines, probability of success and development costs vary widely. As a result of the uncertainties discussed above, we will assess our product candidate’s commercial potential and our available capital resources. As a result of these uncertainties surrounding the timing and outcome of any approval, we are currently unable to estimate precisely when, if ever, any of our product candidates will generate revenues and cash flows.

We expect our research and development costs to relate to ~~ANJESO, including required pediatric post-marketing studies, as well as~~the development and commercialization scale-up of our ~~other~~NMB product ~~candidates.~~candidate portfolio. We may elect to seek collaborative relationships in order to provide us with a diversified revenue stream and to help facilitate the development and commercialization of our product candidate pipeline.

Selling, general and administrative expenses ~~consist~~have consisted of sales and marketing expenses related to ANJESO and general and administrative expenses.

Sales and marketing expenses primarily ~~consist~~consisted of compensation and benefits for our sales force and personnel that ~~support~~supported our sales and marketing efforts as well as third party consulting costs for the promotion and sale of ANJESO. In addition, sales and marketing expenses ~~include~~included expenses related to communicating the clinical and economic benefits of ANJESO and educational programs for our indirect customers.

General and administrative expenses consist principally of salaries and related costs for personnel in executive, finance and information technology functions, ~~as well as~~and additionally in the prior year, the commercial portion of the medical affairs and regulatory functions. General and administrative expenses also include public company costs, directors and officer’s insurance, professional fees for legal, including patent-related expenses, consulting, auditing, and tax services.

Our selling, general and administrative expenses decreased in the quarter ended ~~June 30, 2022~~March 31, 2023 as a result of a reduction in personnel and ~~marketing~~public company costs, and we expect ~~our~~no future selling ~~general~~and commercial costs at this time. General and administrative expenses tofrom continuing operations will remain relatively constant in the near term.

In connection with the Separation, we entered into an Assignment and a Partial Assignment, Assumption and Bifurcation Agreement, or the Alkermes Agreements, relating to the Purchase and Sale Agreement for the acquisition of certain assets, including the worldwide rights to injectable meloxicam and Societal CDMO’s development, formulation and manufacturing business from Alkermes, or the Alkermes Transaction, as amended in December 2018 and August 2020. Pursuant to the Alkermes Agreements, we ~~are~~were required to pay up to $140.0 million in milestone payments, including $10.0 million that was paid during 2019, $3.6 million paid in 2020, another $1.4 million paid in 2021, and $45.0 million over seven years beginning one year after approval, of which the first payment was made in the first quarter of 2021 and a partial payment was made on the second payment of ~~$1.0~~$1.2 million, ~~which was due in the first quarter of 2022, with monthly payments of $0.2 million paid thereafter until fully paid,~~ as well as net sales milestones and a royalty percentage of future product net sales related to injectable meloxicam between 10% and 12% (subject to a 30% reduction when no longer covered by patent), which iswas paid quarterly. The estimated fair value of the initial $54.6 million payment obligation was recorded as part of the purchase price for the Alkermes Transaction. We ~~have continued to reevaluate~~reevaluated the fair value each subsequent ~~period~~period.

As noted above, in March 2023, we entered into the Transfer Agreement. Under the terms of the Transfer Agreement, we transferred the rights to certain patents, trademarks, equipment, data and other rights related to ANJESO, or the Assets, to Alkermes. We also

withdrew the NDA related to ANJESO and agreed, if elected by Alkermes at a later date, to transfer such withdrawn NDA to Alkermes at no additional cost.

Additionally, under the Transfer Agreement, we granted Alkermes a non-exclusive, perpetual and irrevocable, royalty-free and fully paid-up worldwide license, to the additional intellectual property owned by the Company necessary to or useful to exploit ANJESO. In consideration of the transfer of the Assets, the parties agreed to the termination of (i) the Purchase and Sale Agreement, dated March 7, 2015 by and among Alkermes, the Company and the other parties thereto, or as amended, the PSA, (ii) the Asset Transfer and License Agreement, dated April 10, 2015 by and among Alkermes, the Company and the other parties thereto, or as amended, the ATLA; and (iii) the Development, Manufacturing and Supply Agreement, dated as of ~~June 30, 2022 recorded a $20.4 million payment obligation, representing~~July 10, 2015 by and between the ~~estimated probability adjusted fair value~~Company and Alkermes, or as amended, the Manufacturing Agreement, between the parties related to ANJESO (the PSA, ATLA and Manufacturing Agreement are collectively referred to herein as the ANJESO Agreements). In connection with the termination of the ~~liability. Each reporting period,~~ANJESO Agreements, no further payments of any kind pursuant to the ANJESO Agreements will be payable by us to Alkermes and a result, we ~~revalue this estimated obligation with changes in fair value recognized~~reversed the balance of contingent consideration recorded on our balance sheet as ~~a non-cash operating expense or gain. As~~ of ~~June 30, 2022, we have paid $22.4 million in milestone payments to Alkermes.~~March 31, 2023 of $19,900 within Income from discontinued operation on our Consolidated Statements of Operations.

Interest expense for the periods presented primarily includes interest expense incurred on our Credit Agreement with MAM Eagle Lender, the amortization of related financing costs, and ~~interest expense~~in the current year the resulting loss on ~~a promissory note with PNC Bank under the Paycheck Protection Program (“PPP”)~~extinguishment of debt from Amendment No. 5 of the Coronavirus Aid, Relief and Economic Security Act of 2020 (the “CARES Act”) administered by the Small Business Administration (the “SBA”), which was fully forgiven during the year ended December 31, 2021.MAM lender agreement.

We maintained a valuation allowance against our deferred tax assets as of ~~June 30, 2022~~March 31, 2023 and ~~2021.~~December 31, 2022.

Comparison of the Three Months Ended ~~June 30,~~March 31, 2023 and 2022 ~~and 2021~~

~~Revenue, net.~~ For the three months ended June 30, 2022 and 2021, net product revenue was $0.3 million and $0.2 million, respectively, related to sales of ANJESO in the U.S. While utilizing the title model of distribution, product revenue is recognized as shipments are made to our 3PL provider. The increase of $0.1 million was attributable to securing additional formulary approvals and generating trial and adoption of ANJESO, as well as increased end-user demand leading to increased purchasing by direct customers.

~~Cost of Sales.~~ Our cost of sales was $0.4 million and $0.6 million for the three months ended June 30, 2022 and 2021, respectively, and consists of product costs, royalty expense and certain fixed costs associated with the manufacturing of ANJESO, including supply chain and quality costs. We expensed costs associated with the manufacturing of our products as research and development prior to regulatory approval. Certain product costs of ANJESO units recognized as revenue during the three months ended June 30, 2022 and 2021 were expensed prior to FDA approval of ANJESO in February 2020, and therefore are not included in cost of sales during the related periods. We expect that over time, product costs in cost of sales will increase as sales increase and inventory associated with the units manufactured prior to FDA approval are sold. The decrease of $0.2 million was primarily a result of the reduction in manufacturing costs, including production and storage costs, in the current year compared to the prior year of $0.2 million.

Research and Development. Our research and development expenses were ~~$0.9 million for each of the three months ended June 30, 2022 and 2021, respectively. There was no significant change in the comparable periods.~~

~~Selling, General and Administrative.~~ ~~Our selling, general and administrative expenses were $4.0~~$2.9 million and ~~$10.6~~$0.7 million for the three months ended ~~June 30,~~March 31, 2023 and 2022, and 2021, respectively. The decrease of $6.6 million was primarily a result of a reduction in personnel costs of $3.9 million, a decrease in marketing costs of $1.3 million, a decrease in public company costs of $1.0 million, and a decrease in both consulting and travel expenses of $0.2 million.

~~Amortization of Intangible Assets.~~ Amortization expense was $0.6 million for each of the three months ended June 30, 2022 and 2021, which was related to the amortization of our intangible asset resulting from research and development activities over its estimated useful life.

~~Change in Contingent Consideration Valuation.~~ The change in contingent consideration valuation was an increase in value of $1.3 million for the three months ended June 30, 2022 and an increase in value of $3.9 million for the three months ended June 30, 2021. The non-cash charge for contingent consideration in each period related to the revaluation of the probability-adjusted fair value of the Alkermes Transaction payment obligation. The increase in contingent consideration value for the three months ended June 30, 2022 was primarily due tothe time value of money as we progress closer to payment of the contingent consideration liability. The increase in contingent consideration valuation for the three months ended June 30, 2021 was primarily due to the time value of money and change in interest rates.

~~Other Expense, net.~~ Other expense was $0.6 million for the three months ended June 30, 2022 and other income was $1.0 million for the three months ended June 30, 2021, The change in other income (expense) of $1.6 million was primarily due to the gain on extinguishment of the PPP Loan of $1.6 million in the previous year upon the approval of our application for forgiveness.

~~Revenue, net.~~ For the six months ended June 30, 2022 and 2021, net product revenue was $0.7 million and $0.4 million, respectively, related to sales of ANJESO in the U.S. While utilizing the title model of distribution, product revenue is recognized as shipments are made to our 3PL provider. The increase of $0.3 million was attributable to securing additional formulary approvals and generating trial and adoption of ANJESO, as well as increased end-user demand leading to increased purchasing by direct customers.

~~Cost of Sales.~~ Our cost of sales was $1.0 million and $1.4 million for the six months ended June 30, 2022 and 2021, respectively, and consists of product costs, royalty expense and certain fixed costs associated with the manufacturing of ANJESO, including supply chain and quality costs. We expensed costs associated with the manufacturing of our products as research and development prior to regulatory approval. Certain product costs of ANJESO units recognized as revenue during the six months ended June 30, 2022 and 2021 were expensed prior to FDA approval of ANJESO in February 2020, and therefore are not included in cost of sales during the related periods. We expect that over time, product costs in cost of sales will increase as sales increase and inventory associated with the units manufactured prior to FDA approval are sold. The decrease of $0.4 million was primarily a result of the reduction in scrap expense recorded in the current year compared to the prior year of $0.2 million and a decrease in manufacturing costs, including reductions in production and storage costs, of $0.2 million.

~~Research and Development.~~ ~~Our research and development expenses were $2.2 million and $2.0 million for the six months ended June 30, 2022 and 2021,~~ respectively. The increase of ~~$0.2~~$2.2 million was primarily due to an increase in clinical and preclinical trials costs associated with our ~~ANJESO pediatric~~NMB program of ~~$0.2~~$1.7 million and an increase in general expenses, including consulting and other outside service expenses, of $0.5 million.

Selling, General and Administrative. Our selling, general and administrative expenses were ~~$18.2~~$1.8 million and ~~$22.7~~$6.9 million for the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively. The decrease of ~~$4.5~~$5.1 million was primarily a result of a reduction in personnel costs of ~~$1.6~~$3.5 million, a decrease in public company costs of ~~$1.4~~$0.7 million, ~~a decrease in marketing costs of $1.1 million, and~~ a decrease in consulting expenses of ~~$0.4 million.~~$0.5 million, a decrease of $0.2 million in patent legal expenses and a decrease of $0.3 million in other costs.

~~Amortization of Intangible Assets.~~ Amortization expense was $1.3 million for each of the six months ended June 30, 2022 and 2021, which was related to the amortization of our intangible asset resulting from research and development activities over its estimated useful life.

~~Change in Contingent Consideration Valuation.~~ The change in contingent consideration valuation was a decrease in value of $2.5 million for the six months ended June 30, 2022 and an increase in value of $5.7 million for the six months ended June 30, 2021. The non-cash charge for contingent consideration in each period related to the revaluation of the probability-adjusted fair value of the Alkermes Transaction payment obligation. The decrease in contingent consideration value for the six months ended June 30, 2022 was primarily due toupdated forecasts for ANJESO due to the significant reduction of our commercial team, partially offset by the increase for the time value of money. The increase in contingent consideration valuation for the six months ended June 30, 2021 was primarily due to the time value of money and change in interest rates, partially offset by adjusted timing of estimated milestone and royalty payments due to updated forecasts reflecting an estimate of the launch trajectory of ANJESO.

Other Expense, net. Other expense was ~~$0.8~~$2.7 million and $0.6 million for the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and other income was $0.4 million for the six months ended June 30, 2021.~~respectively. The ~~change~~increase in other ~~income (expense)~~expense of ~~$1.2~~$2.1 million was primarily due to the ~~gain~~loss on extinguishment of debt as a result of the ~~PPP Loan~~fifth amendment to the MAM credit agreement of ~~$1.6 million in the previous year upon the approval of our application for forgiveness, partially offset by other income in the current year for the settlement of a patent infringement claim of $0.3~~$2.1 million.

As of ~~June 30, 2022,~~March 31, 2023, we had ~~$5.2~~$3.8 million in cash and cash equivalents.

On May 1, 2023 we closed a best efforts public offering of: (i) 1,326,175 shares of our common stock, par value $0.01 per share and accompanying Series A-5 warrants to purchase 1,326,175 shares of Common stock and Series A-6 warrants to purchase 1,326,175 shares of common stock, at a combined public offering price of $1.15 per share and accompanying Series A warrants and (ii) Series D pre-funded warrants to purchase 2,152,087 shares of common stock and accompanying Series A-5 warrants to purchase 2,152,087 shares of common stock and Series A-6 warrants to purchase 2,152,087 shares of common stock at a combined public offering price of $1.14 per Series D pre-funded warrant and accompanying Series A warrants, which is equal to the public offering price per share of Common Stock and accompanying Series A warrants less the $0.01 per share exercise price of each such Series D pre-funded warrant. The Series A warrants have an exercise price of $1.15 per share of common stock. The Series A-5 warrants are exercisable upon issuance and expire on May 1, 2028. The Series A-6 warrants are exercisable upon issuance and expire on November 1, 2024. Subject to certain ownership limitations described in the Series D pre-funded warrants, the Series D pre-funded warrants were immediately exercisable and were fully exercised at a nominal consideration of $0.01 per share of common stock shortly after closing. As compensation to H.C. Wainwright & Co., LLC, as the exclusive placement agent in connection with the offering, we paid the placement agent a cash fee of 7.0% of the aggregate gross proceeds raised in the offering, plus a management fee equal to 1.0% of the gross proceeds raised in the offering, and reimbursement of certain expenses and legal fees. We also issued to designees of the placement agent warrants to purchase up to 208,696 shares of common stock. These warrants have substantially the same terms as the Series A warrants, except that the placement agent warrants have an exercise price equal to $1.4375 per share and expire on April 26, 2028.

On December 6, 2022 we closed a best efforts public offering of: (i) 54,787 shares of our common stock, par value $0.01 per share and accompanying Series A-3 warrants to purchase 54,787 shares of common stock and Series A-4 warrants to purchase 54,787 shares of common stock, at a combined public offering price of $4.795 per share and accompanying series A warrants and (ii) series C pre-funded warrants to purchase 988,000 shares of common stock and accompanying series A-3 warrants to purchase 988,000 shares of common stock and series A-4 warrants to purchase 988,000 shares of common stock at a combined public offering price of $4.785 per series C pre-funded warrant and accompanying series A warrants, which was equal to the public offering price per share of common stock and accompanying series A warrants less the $0.01 per share exercise price of each such series C pre-funded warrant. The series A warrants have an exercise price of $4.50 per share of common stock. The series A-3 warrants are exercisable upon issuance and expire on December 6, 2027. The series A-4 warrants are exercisable upon issuance and expire on January 8, 2024. The exercise price of the series A warrants is subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in the Series A Warrants. The Series C prefunded warrants have been exercised in full as of December 31, 2022. As compensation to H.C. Wainwright & Co., LLC as the exclusive placement agent in connection with the offering, we paid the placement agent a cash fee of 7.0% of the aggregate gross proceeds raised in the offering, plus a management fee equal to 1.0% of the gross proceeds raised in the offering, and reimbursement of certain expenses and legal fees. We also issued to designees of the placement agent warrants to purchase up to 62,567 shares of common stock. The Placement Agent Warrants have substantially the same terms as the series A warrants, except that the placement agent warrants have an exercise price equal to $5.99375 per share and expire on December 2, 2027. Net proceeds after deducting underwriting discounts and commissions and offering expenses, was $4.0 million.

On September 1, 2022, we closed a best efforts public offering of: (i) 188,872 shares of its common stock, par value $0.01 per share and accompanying Series A-1 warrants to purchase 188,872 shares of Common stock and Series A-2 warrants, and together with the Series A-1 warrants to purchase 188,872 shares of Common Stock, at a combined public offering price of $21.00 per share and Series A warrants and (ii) Series B pre-funded warrants to purchase 106,607 shares of Common Stock and accompanying Series A-1 warrants to purchase 106,607 shares of Common Stock and Series A-2 warrants to purchase 106,607 shares of Common stock at a combined public offering price of $20.60 per Series B pre-funded warrant and Series A warrants, which is equal to the public offering price per share of Common Stock and accompanying Series A warrants less the $0.01 per share exercise price of each such Series B pre-funded warrant. The Series A warrants have an exercise price of $21.00 per share of Common Stock. The Series A-1 warrants are exercisable upon issuance and will expire five years from the date of issuance. The Series A-2 warrants are exercisable upon issuance and will expire thirteen months from the date of issuance. The exercise price of the Series A warrants is subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in the Series A warrants. Subject to certain ownership limitations, the Series B pre-funded warrants were immediately exercisable and were exercised at a nominal consideration of $0.01 per share of Common Stock upon the closing of the transaction. As compensation to H.C. Wainwright & Co., LLC, as the exclusive placement agent in connection with the Offering, we paid a cash fee of 7.0% of the aggregate gross proceeds raised in the offering, plus a management fee equal to 1.0% of the gross proceeds raised in the offering, and reimbursement of certain expenses and legal fees. We also issued to designees of the placement agent warrants to purchase up to 17,728 shares of common stock. The placement agent warrants have substantially the same terms as the Series A warrants, except that the placement agent warrants have an exercise price equal to $26.25 per share and expire on August 29, 2027. Net proceeds, after deducting underwriting discounts and commissions and offering expenses, was $5.0 million.

On May 17, 2022, we closed a registered direct offering of ~~1,646,091~~41,152 shares of our common stock, par value $0.01 per share, and in a concurrent private placements, warrants exercisable for up to an aggregate of ~~1,646,091~~41,152 shares of common stock at a combined offering price of ~~$1.215~~$48.60 per share and associated warrant. The warrants have an exercise price of ~~$1.09~~$43.60 per share. Each warrant is exercisable for one share of common stock and was exercisable immediately upon issuance. The warrants have a term of five years from the issuance date. As compensation to H.C. Wainwright & Co., LLC as placement agent in connection with the offering, we agreed to pay to the placement agent a cash fee of 7.0% of the aggregate gross proceeds raised in the offering, plus a management fee equal to 1.0% of the gross proceeds raised in the offering and certain expenses. We also issued to designees of the placement agent warrants to purchase up

to 6.0% of the aggregate number of shares of common stock sold in the transactions, or warrants to purchase up to ~~98,765~~2,469 shares of common stock. The placement agent warrants have substantially the same terms as the warrants, except that the placement agent warrants have an exercise price equal to 125% of the offering price per share (or ~~$1.5188~~$60.75 per share). The placement agent warrants will expire on May 17, 2027. Net proceeds, after deducting underwriting discounts and commissions and offering expenses, was $1.7 million.

On March 1, 2022, we closed an underwritten public offering of ~~1,831,631~~45,791 shares of common stock, pre-funded warrants to purchase ~~1,677,141~~41,929 shares of common stock at an exercise price of $0.01 per share and warrants to purchase ~~3,508,772~~87,719 shares of common stock at an exercise price of ~~$3.25~~$130.00 per share, as well as up to ~~526,315~~13,158 additional shares of common stock and/or additional warrants to purchase up to ~~526,315~~13,158 shares of common stock which may be purchased pursuant to a 30-day option to purchase additional securities granted to H.C. Wainwright & Co., LLC (the “Underwriter”) by us. The public offering price for each share of common stock and accompanying warrant to purchase one share of common stock was ~~$2.85,~~$114.00, and the public offering price for each pre-funded warrant and accompanying warrant was ~~$2.84.~~$113.60. As compensation to the Underwriter, we agreed to pay to the Underwriter a cash fee of 7.0% of the gross proceeds, plus a cash management fee equal to 1.0% of the gross proceeds and reimbursement of certain expenses and legal fees. We also issued to designees of the Underwriter warrants to purchase ~~210,526~~5,263 shares of common stock at an exercise price of ~~$3.5625~~$142.50 per share. On February 28, 2022, the Underwriter partially exercised its option to purchase an additional ~~113,896~~2,847 warrants. Net proceeds, after deducting underwriting discounts and commissions and offering expenses, was $8.8 million.

On December 28, 2021, we closed a registered direct offering of 42,289.3 shares of Series A Preferred Stock, par value $0.01 per share, or the Preferred Stock, and warrants to purchase 362,479 shares of common stock, or the December 2021 Warrants, for net proceeds of $3.7 million. The shares of Preferred Stock will have a stated value of $100.00 per share and are convertible, on the date after the issuance thereof, into an aggregate of 483,306 shares of common stock at a conversion price of $8.75 per share. As compensation to H.C. Wainwright & Co., LLC, or the Placement Agent, we agreed to pay the Placement Agent a cash fee of 7.0% of the gross proceeds raised in the December 2021 Offering, plus a management fee equal to 1.0% of the gross proceeds raised in the December 2021 Offering and reimbursement of certain expenses and legal fees. We also issued to designees of the Placement Agent warrants to purchase 28,996 shares of common stock, or the December 2021 Placement Agent Warrants. The December 2021 Warrants and the December 2021 Placement Agent Warrants have an exercise price of $11.20 per share and will be exercisable upon the six-month anniversary of their issuance.

On May 31, 2021, we closed a registered direct offering of 400,815 shares of common stock, or the May Offering, at an offering price of $29.75 per share and warrants to purchase 400,812 shares of common stock, or the May Warrants, at an exercise price of $0.90 per share, for net proceeds of $10.9 million. As compensation to the Placement Agent, we agreed to pay the Placement Agent a cash fee of 6.0% of the gross proceeds raised in the May Offering, plus a management fee equal to 1.0% of the gross proceeds raised in the May Offering and reimbursement of certain expenses and legal fees. We also issued to designees of the Placement Agent warrants to purchase 24,076 shares of common stock (the “May Placement Agent Warrants”) at an exercise price of $37.1875 per share. The May Warrants and May Placement Agent Warrants were exercisable on the six-month anniversary of the closing date of the May Offering.

On February 8, 2021, we entered into an agreement to issue and sell 314,286 shares of common stock, or the February Offering, at an offering price of $56.00 per share, for net proceeds of $16.2 million. As compensation to the Placement Agent, we agreed to pay the Placement Agent a cash fee of 6.0% of the gross proceeds raised in the February Offering, plus a management fee equal to 1.0% of the gross proceeds raised in the February Offering and reimbursement of certain expenses and legal fees. We also issued to designees of the Placement Agent warrants to purchase up to 18,854 shares of common stock, or the February Placement Agent Warrants. The February Placement Agent Warrants have an exercise price of $70.00 per share.

On January 21, 2021, we entered into an agreement to issue and sell warrants exercisable for an aggregate of 294,298 shares of common stock, or the January Warrants, at an offering price of $4.375 per warrant in exchange for the exercise of the institutional investor’s existing December Series A warrants that were issued to them on December 21, 2020, at an exercise price of $41.30 per warrant. The January Warrants have an exercise price of $56.00 per share. The January Warrants are immediately exercisable and will expire five years from the issuance date. As compensation to the Placement Agent, we agreed to pay a cash fee of 6.0% of the aggregate gross proceeds raised in the January Offering (including the proceeds relating to the exercise of the December Series A Warrants), plus a management fee equal to 1.0% of the gross proceeds raised in the January Offering (including the proceeds relating to the exercise of the December Series A Warrants) and reimbursement of certain expenses and legal fees. We also issued to designees of the Placement Agent warrants to purchase up to 17654 shares of common stock, or the January Placement Agent Warrants. The January Placement Agent Warrants have substantially the same terms as the January Warrants, except that the January Placement Agent Warrants have an exercise price equal to $70.00 per share.

On May 29, 2020, we entered in a $50.0 million Credit Agreement with MAM Eagle Lender, pursuant to which we have drawn $10.0 million as of the date of this Quarterly Report and may draw upon four additional tranches of term loans. The Tranche Two Loans in an amount not to exceed $5.0 million may be drawn upon on or before August 29, 2021 provided that we generate at least $5.0 million in net revenue in the three consecutive calendar months immediately preceding the date such Tranche Two Loans are funded. The Tranche Two Loans may also be drawn on a subsequent date with the satisfaction of the conditions for the Tranche Three Loans, Tranche Four Loans, or Tranche Five Loans, as applicable, provided that the Tranche Two Loans may not be drawn more than once. The Tranche Three Loans in an amount not to exceed $5.0 million may be drawn upon on or before November 29, 2021 provided that we generate at least $10.0 million in net revenue in the three consecutive calendar months immediately preceding such date such Tranche Three Loans are funded. The Tranche Three Loans may also be drawn on a subsequent date with the satisfaction of the conditions for the Tranche Four Loans or Tranche Five Loans, as applicable, provided that the Tranche Three Loans may not be drawn more than once. The Tranche Four Loans in an amount not to exceed $10.0 million may be drawn upon, subject to the consent of the Lenders, on or before August 29, 2022 provided that we generate at least $20.0 million in net revenue in the three consecutive calendar months immediately preceding the date such Tranche Four Loans are funded. The Tranche Four Loans may also be drawn on a subsequent date with the satisfaction of the conditions for the Tranche Five Loans provided that the Tranche Four Loans may not be drawn more than once. The Tranche Five Loans in an amount not to exceed $20.0 million may be drawn upon, subject to the consent of the Lenders, on or before March 1, 2023 provided that we generate at least $100.0 million in net revenue in the twelve consecutive calendar months immediately preceding the date such Tranche Five Loans are funded.

On August 1, 2022, we entered into Amendment No. 1 and Waiver to Credit Agreement, or the Amendment, with MAM Eagle Lender. Pursuant to the terms of the Amendment, the lenders waived any default under the credit agreement (including the imposition of a default interest rate with respect to the default) resulting from our failure to comply with the minimum cash covenant, or the Minimum Liquidity Covenant, which requires us to maintain at least $5.0 million in a liquidity account. In addition, the Amendment, among other items, (i) provides that 30% of any cash proceeds received by us from certain potential strategic licensing transactions shall be used to prepay amounts outstanding under the credit agreement; and (ii) decreases the amount of cash we are required to maintain pursuant to the Minimum Liquidity Covenant to $3.0 million for a period beginning on August 1, 2022, and ending on August 31, 2022, at which point the amount required pursuant to the Minimum Liquidity Covenant shall increase to $5.0 million.

On ~~May 8, 2020,~~October 24, 2022, we entered into ~~a promissory note for $1.5~~Amendment No. 2 and Waiver to Credit Agreement with MAM Eagle Lender. Pursuant to the terms of the amendment, the Credit Agreement is amended such that we must repay the principal thereunder (i) on the first business day of each month until the Interest Payment Date on December 1, 2022, in equal monthly installments of principal based on an amortization schedule of 36 months, (ii) an additional payment of principal in the amount of $0.3 million prior to December 31, 2022 and (iii) commencing on the Interest Payment Date on January 2, 2023 and on each Interest Payment Date thereafter until the obligations have been repaid in full, the principal amount of $0.5 million. In addition, the amendment decreases the minimum cash covenant we are required to maintain under the ~~PPP~~Credit Agreement to (i) $3.0 million for the period beginning on October 1, 2022, and ending on November 30, 2022, (ii) $4.5 million for the period beginning on December 1, 2022, and ending on February 28, 2023, and (iii) $4.0 million from and after March 1, 2023. Further, we have agreed that prior to December 31, 2022, we shall not, without the prior written consent of the ~~CARES Act administered~~Lenders, make or permit any payment under its agreements with Alkermes. In consideration for the amendment, we paid the Agent an amendment fee of $0.01 million and the Lender an amendment fee of $0.2 million.

On December 1, 2022, we entered into Amendment No. 3 to Credit Agreement with MAM Eagle Lender. Pursuant to the terms of the amendment, the amendment decreases the minimum cash covenant we are required to maintain under the credit agreement to (a) from October 1, 2022 to December 6, 2022 to not be less than $3.0 million at any time, (b) from December 7, 2022 to February 28, 2023 to not be less than $4.5 million, and (c) from and after March 1, 2023 to not be less than $4.0 million.

In January 2023, we entered into Amendment No. 4 to Credit Agreement with MAM Eagle Lender. Pursuant to the terms of the amendment, the credit agreement was amended such that we must make (i) a payment of principal in the amount of $0.5 million on

January 3, 2023, (ii) a payment of principal in the amount of $0.3 million on February 1, 2023 and March 1, 2023, and (iii) on the interest payment date on April 3, 2023 and on each interest payment date thereafter until the obligations are repaid in full, a payment in the principal amount of $0.5 million. In addition, the amendment decreases the minimum cash covenant we are required to maintain under the credit agreement, or the Minimum Liquidity Covenant, to (i) $3.0 million for the period beginning on October 1, 2022, and ending on December 6, 2022, (ii) $4.5 million for the period beginning on December 7, 2022, and ending on January 10, 2023, (iii) $2.225 million for the period beginning on January 11, 2023, and ending on February 28, 2023, and (iv) $3.0 million from and after March 1, 2023. Further, we have agreed that prior to April 30, 2023, we will not, without the prior written consent of MAM Eagle Lender, make or permit any payment under our agreements with Alkermes.

On March 29, 2023, we entered into Amendment No. 5 and Consent to Credit Agreement whereby MAM Eagle Lender consented to the transactions contemplated by the ~~SBA. We have used~~Transfer Agreement (as defined above) and agreed to release and discharge any liens granted or held by the ~~loan proceeds for covered payroll costs~~lenders in ~~accordance with the relevant terms and conditions~~respect of the ~~CARES Act. This Loan may be partially or fully forgiven if~~assets discussed in the Transfer Agreement. The parties also agreed to, among other things, amend the minimum liquidity covenants under the Credit Agreement to require that we ~~comply with the provisions~~maintain $2.5 million of ~~the CARES Act including the use of Loan proceeds for payroll costs, rent, utilities, and other expenses, and~~liquidity at least 60% of the loan proceeds must be for payroll costs as defined by the CARES Act. During the year ended December 31, 2021, we received a Notice of PPP Forgiveness Payment from the SBA regarding the approval of our application for forgiveness of the PPP Loan of $1.5 million and accrued interest. As a result, we recognized a gain on extinguishment of the PPP Loan of $1.5 million during the year ended December 31, 2021.all times.

We anticipate that our principal uses of cash in the future will be primarily to fund our operations, pipeline development activities, ~~ongoing modest ANJESO commercialization,~~ working capital needs, ~~capital expenditures~~ and other general corporate purposes.

We expect to seek additional funding to sustain our future operations and while we have successfully raised capital in the past, the ability to raise capital in future periods is not assured. Based on our available cash as of ~~June 30, 2022,~~March 31, 2023, we will need to raise additional capital in the next twelve months to continue as a going concern.

Cash used in operations was ~~$20.1~~$3.9 million and ~~$24.1~~$5.8 million for the ~~six~~three months ended ~~June 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, which represents our operating ~~losses~~income (losses) less our non-cash items including: stock-based compensation, non-cash interest expense, depreciation, ~~amortization,~~loss on extinguishment of debt, and changes in warrant valuations, ~~and changes in fair value of contingent consideration,~~ as well as changes in operating assets and liabilities.

There was ~~no significant cash used in investing activities for the six months ended June 30, 2022. Cash used in investing activities for the six months ended June 30, 2021 was $12.2~~$3.2 million ~~which was primarily due to purchases~~ of ~~short-term investments in the current year.~~

~~There was $9.5 million of~~net cash provided by financing activities in the ~~six~~three months ended ~~June 30, 2022~~March 31, 2023 consisting of ~~net~~ proceeds of ~~$8.9~~$4.3 million from ~~a public offering of common stock and warrants and $1.8 million of net proceeds from a registered direct offering of common stock and concurrent private placement of warrants,~~warrant exercises, partially offset by ~~a payment of contingent consideration of $1.0~~$1.1 million ~~and payments on~~in long-term debt ~~of $0.2 million.~~principal payments. There was ~~$31.3~~$9.1 million of net cash provided by financing activities for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 consisting primarily of net proceeds of ~~$27.1~~$9.1 million from ~~registered direct~~public offerings of common stock and ~~warrants and net proceeds of $12.2 million from warrant exercises, partially offset by a payment of contingent consideration of $7.8 million.~~warrants.

Our future use of operating cash and capital requirements will depend on many forward-looking factors, including the following:

We ~~might~~may use existing cash and cash equivalents on hand, debt, equity financing, sale of assets or out-licensing revenue or a combination thereof to fund our operations or product acquisitions. If we increase our debt levels, we might be restricted in our ability to raise additional capital and might be subject to financial and restrictive covenants. Our shareholders may experience dilution as a result of the issuance of additional equity or debt securities. This dilution may be significant depending upon the amount of equity or debt securities that we issue and the prices at which we issue any securities.

The table below reflects our contractual commitments as of ~~June 30, 2022:~~March 31, 2023:


	Payments Due by Period (in 000s)										Payments Due by Period (in 000s)
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years		Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Debt Obligations (1):
Debt	$	9,722	$	3,611	$	6,111	$	—	$	—	$	6,656	$	6,000	$	656	$	—	$	—
Interest on Debt		2,140		1,182		958		—		—		795		536		259		—		—

Purchase Obligations (2):	$	4,621	$	819	$	126	$	18	$	—	$	64	$	64	$	—	$	—	$	—
Operating Leases (3)		1,619		345		552		573		149		1,400		332		558		510		—
Other Long-Term Liabilities:
Other License Commitments and Milestone payments (4), (5)		50,565		80		190		125		—
Alkermes Payments (6)		117,571		9,029		22,114		6,429		—
Employment Agreements (7)		927		618		309		—		—
Other License Commitments and Milestone payments (4)												16,395		80		190		125		—
Employment Agreements (5)												927		618		309		—		—

Total Contractual Obligations	$	187,165	$	15,684	$	30,360	$	7,145	$	149	$	26,237	$	7,630	$	1,972	$	635	$	—

Our critical accounting policies and estimates are disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our ~~2021~~2022 Annual Report. In the ~~six~~three months ended ~~June 30, 2022,~~March 31, 2023, there were no significant changes to the application of critical accounting policies previously disclosed in our ~~2021~~2022 Annual Report.

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) as of ~~June 30, 2022.~~March 31, 2023. We maintain disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow for timely decisions regarding required disclosure.

A control system, no matter how well conceived and operated, can provide only reasonable, and not absolute, assurance that the objectives of the control system will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. However, our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Based on the evaluation of our disclosure controls and procedures as of ~~June 30, 2022,~~March 31, 2023, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

There has been no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

~~We are involved, from~~From time to time, we may become involved in ~~various claims and~~ legal proceedings arising in the ordinary course of ~~its~~our business. ~~Except as disclosed below, we~~Our management believes that there are ~~not~~ currently ~~a party to any such~~no claims or ~~proceedings that, if decided adversely to it,~~actions pending against us, the ultimate disposition of which would ~~either individually or in the aggregate~~ have a material adverse effect on ~~its business,~~our results of operations, financial condition or ~~results of operations.~~

On May 31, 2018, a securities class action lawsuit, or the Securities Litigation, was filed against Societal CDMO and certain of Societal CDMO’s officers and directors in the U.S. District Court for the Eastern District of Pennsylvania (Case No. 2:18-cv-02279-MMB) that purported to state a claim for alleged violations of Section 10(b) and 20(a) of the Exchange Act and Rule 10(b)(5) promulgated thereunder, based on statements made by Societal CDMO concerning the NDA for injectable meloxicam. The complaint seeks unspecified damages, interest, attorneys’ fees and other costs. On December 10, 2018, lead plaintiff filed an amended complaint that asserted the same claims and sought the same relief but included new allegations and named additional officers as defendants. On February 8, 2019, Societal CDMO filed a motion to dismiss the amended complaint in its entirety, which the lead plaintiff opposed on April 9, 2019. On May 9, 2019, the Company filed its response and briefing was completed on the motion to dismiss. In response to questions from the Judge, the parties submitted supplemental briefs with regard to the motion to dismiss the amended complaint during the fall of 2019. On February 18, 2020, the motion to dismiss was granted without prejudice. On April 25, 2020, the plaintiff filed a second amended complaint. Societal CDMO filed a motion to dismiss the second amended complaint on June 18, 2020. The plaintiff filed an opposition to Societal CDMO’s motion to dismiss on August 17, 2020. On September 16, 2020, Societal CDMO filed a reply in support of the motion to dismiss. On March 1, 2021, Societal CDMO’s second motion to dismiss was denied. On June 21, 2021, the defendants filed an answer and affirmative defenses to the second amended complaint. Since then, the parties have been engaged in discovery, which must conclude by March 15, 2022. On September 30, 2021, the plaintiff filed a motion for class certification and appointment of class representative. Societal CDMO filed an opposition to the plaintiff’s motion on November 30, 2021. On January 6, 2022, the plaintiff filed a reply in support of the motion for class certification. In connection with the Separation, we accepted assignment by Societal CDMO of all of Societal CDMO’s obligations in connection with the Securities Litigation and agreed to indemnify Societal CDMO for all liabilities related to the Securities Litigation.cash flows.

On March 24, 2022, plaintiff informed the Court that the parties had reached an agreement-in-principle to settle the Securities Litigation and requested that the court stay all deadlines. On May 10, 2022, plaintiff filed an unopposed motion for preliminary approval of the class action settlement. The Court entered an order preliminarily approving the settlement and providing for notice on May 12, 2022. A hearing for final approval of the settlement is set for October 26, 2022.

Except as set forth below, there have been no material changes in the risk factors disclosed in our ~~2021~~2022 Annual Report.

Our losses, negative cash flows from operations and accumulated deficit raise substantial doubt about our ability to continue as a going concern absent obtaining adequate new debt or equity financings.

Management has concluded that substantial doubt exists about our ability to continue as a going concern for the next twelve months from the date of this Quarterly Report on Form 10-Q. As of June 30, 2022, we had an accumulated deficit of $152.4 million, cash and cash equivalents of $5.2 million and current liabilities of $18.2 million. Based on available resources, we believe that our cash and cash equivalents on hand are sufficient to fund our currently anticipated operating and capital requirements through the third quarter of 2022.

We did not become a revenue-generating company until the second quarter of 2020, following the commercial launch of ANJESO. We expect to continue to incur losses for the foreseeable future as we continue our efforts to monetize ANJESO and develop our other current and future product candidates. We have also incurred significant indebtedness. As of June 30, 2022, we had an outstanding balance of $9.7 million under our credit facility with MAM Eagle Lender. These factors, individually and collectively, raise substantial doubt about our ability to continue as a going concern, and therefore, could materially limit our ability to raise additional funds through an issuance of debt or equity securities or otherwise.

Our forecast of the period of time through which our financial resources will be adequate to support our operating requirements is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed elsewhere in this “Risk Factors” section and Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K filed with the SEC on March 16, 2022, as revised or supplemented by our subsequent quarterly reports on Form 10-Q or our current reports on Form 8-K, each as filed with the SEC. We have based this estimate on a number of assumptions that may prove to be wrong, and changing circumstances beyond our control may cause us to consume capital more rapidly than we currently anticipate. Our inability to obtain additional funding when we need it could seriously harm our business.

~~We have incurred significant indebtedness, which could adversely affect our business, including as a result of any default thereof.~~

As of June 30, 2022, we had an outstanding balance of $9.7 million under our credit agreement with MAM Eagle Lender. Our indebtedness could have important consequences to our shareholders. For example, it:

~~Any of the above-listed factors could materially adversely affect our business, financial condition, results of operations and cash flows.~~

Our credit agreement with MAM Eagle Lender also contains certain financial and other covenants, and includes limitations on, among other things, additional indebtedness, paying dividends in certain circumstances, and making certain acquisitions and investments. The credit agreement provides for certain mandatory prepayment events, including with respect to the net proceeds of asset sales, extraordinary receipts, casualty payments and other specified events, based on the terms of the credit agreement with MAM Eagle Lender.

Any failure to comply with the terms, covenants and conditions of the credit agreement, as amended, including the Minimum Liquidity Covenant, may result in an event of default under such agreement, which could have a material adverse effect on our business, financial condition and results of operation, and could result in the filing of a voluntary or involuntary bankruptcy petition.

IfIf we are unable to regain compliance with the listing standards of Nasdaq, our common stock may become delisted, which could have a material adverse effect on the liquidity of our common stock and our ability to raise funding.

The listing standards of the Nasdaq Capital Market provide that a company, in order to qualify for continued listing, must maintain ~~a minimum closing bid price~~stockholders’ equity of $1.00 and satisfy standards relative to minimum shareholders’ equity, minimum market value of publicly held shares and various additional requirements. On July 6, 2022, we received a deficiency letter from the Listing Qualifications Department of Nasdaq,at least $2,500,000, or the Staff, notifying us that, for the last 30 consecutive business days, the bid price for our common stock had closed below the minimum $1.00 per share requirement for continued listing on the Nasdaq Capital MarketStockholders’ Equity Requirement pursuant to Nasdaq Listing Rule ~~5550(a)(2)~~5550(b)(1), or ~~“Rule 5550(a)(2)~~Rule 5550(b)(1). ~~In accordance with~~On November 15, 2022, we received notice from the Nasdaq ~~Listing Rule 5810(c)(3)(A),~~Stock Market, LLC, or Nasdaq, or the Notice, advising us that we ~~were given 180 calendar days, or until January 2, 2023, to regain compliance with Rule 5550(a)(2). As of the date of this Quarterly Report on Form 10-Q, we were~~are not in compliance with ~~Rule 5550(a)(2).~~

~~There can be no assurance~~the Stockholders’ Equity Requirement. Pursuant to the Notice, Nasdaq gave us until December 30, 2022, to submit to Nasdaq a plan to regain compliance, or the Plan. On January 17, 2023, Nasdaq informed us that the Plan was accepted and we have until May 15, 2023 to comply with the Plan. It is likely we will not be able to ~~achieve and maintain compliance~~comply with ~~Rule 555(a)(2) or~~ the ~~other Nasdaq listing requirements.~~Plan in a timely manner. If we do not ~~achieve and maintain~~regain compliance with the Nasdaq ~~continuing~~continued listing requirements, our common stock will be delisted from the Nasdaq Capital Market and it could be more difficult to buy or sell our securities and to obtain accurate quotations, and the price of our common stock could suffer a material decline. In addition, a delisting would impair our ability to raise capital through the public markets, could deter broker-dealers from making a market in or otherwise seeking or generating interest in our securities and might deter certain institutions and persons from investing in our securities at all.

Management has concluded that substantial doubt exists about our ability to continue as a going concern for the next twelve months from the date hereof. As of March 31, 2023, we had an accumulated deficit of $179.5 million, cash and cash equivalents of $3.8 million and current liabilities of $12.4 million. Based on available resources, we believe that our cash and cash equivalents on hand will be sufficient to fund our currently anticipated operating and capital requirements into the third quarter of 2023.

We expect to continue to incur losses for the foreseeable future as we continue our efforts to develop our current and future product candidates. We have also incurred significant indebtedness. As of March 31, 2023, we had an outstanding principal balance of $6.7 million under our credit facility with MAM Eagle Lender. These factors, individually and collectively, raise substantial doubt about our ability to continue as a going concern, and therefore, could materially limit our ability to raise additional funds through an issuance of debt or equity securities or otherwise.

There can be no assurance that we will be able to raise sufficient additional capital on acceptable terms or at all. Additionally, if we are unable to regain compliance with the listing standards of Nasdaq, our common stock may become delisted, which could have a material adverse effect on the liquidity of our common stock and our ability to raise funding. If such additional financing is not available on satisfactory terms, or is not available in sufficient amounts, we may be required to delay, limit or eliminate the development of business opportunities and our ability to achieve our business objectives, our competitiveness, and our business, financial condition and results of operations will be materially adversely affected. In addition, the impact of the COVID-19 pandemic and other macroeconomic factors, including but not limited to, inflationary pressures, banking instability issues, and geopolitical tensions, on the global financial markets may reduce our ability to access capital, which could negatively affect our liquidity and ability to continue as a going concern. In addition, the perception that we may not be able to continue as a going concern may cause others to choose not to deal with us due to concerns about our ability to meet our contractual obligations.

In connection with the effectiveness of new SEC rules regarding universal proxy cards and a periodic review of our Amended and Restated Bylaws, our Board approved and adopted the Second Amended and Restated Bylaws, or the Amended Bylaws, effective May 10, 2023. The amendments address matters relating to Rule 14a-19 under the Exchange Act, or the Universal Proxy Rules, providing, among other things, that:

The above description of the Amended Bylaws does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended and Restated Bylaws, which is filed as Exhibit 3.1 hereto and incorporated herein by reference.

On May 10, 2023, we entered into an employment agreement with Jillian Dilmore, pursuant to which she will continue to serve as the Company’s Corporate Controller, or the Employment Agreement. Pursuant to the Employment Agreement, Ms. Dilmore is entitled to a base salary of $280,000 per year, which is subject to periodic review and adjustment, and has the opportunity to earn an annual bonus with a target amount equal to 25% of her annual base salary, or the Target Bonus. Ms. Dilmore shall also be eligible to participate in all health insurance, savings and retirement, and other benefit plans, that are generally applicable to our other employees, subject to the terms and conditions of such plans.

The term of the Employment Agreement is one year and will automatically renew, subject to earlier termination, for successive one year periods, unless either we or Ms. Dilmore give notice of non-renewal at least thirty days prior to the expiration of the applicable one-year period. Under the Employment Agreement, Ms. Dilmore is bound by a non-solicitation of employees, license partners, suppliers and customers of the Company and a non-compete during her employment and the one-year period thereafter.

Pursuant to the Employment Agreement, if we terminate Ms. Dilmore’s employment without cause (as defined in the Employment Agreement), or Ms. Dilmore resigns with good reason (as described in the Employment Agreement) within 12 months of a change of control (as defined below), Ms. Dilmore will be entitled to receive: (i) any accrued but unused vacation and paid time off and any earned but unpaid bonus in respect of the prior year, or the Accrued Benefits; (ii) a pro-rata annual bonus in respect of the fiscal year in which the effective date of termination occur (determined based on actual performance and the number of days Ms. Dilmore is employed by the Company in such fiscal year), with such annual bonus (if any) paid at the same time it would have otherwise been paid absent her termination of employment; (iii) continuation of base salary and health insurance benefits (including for eligible dependents), at active employee rates for a period of 6 months; and (iv) outplacement services for a period of 6 months following the date of termination, which shall not exceed $25,000. If Ms. Dilmore’s employment is terminated as a result of her death, her estate will be entitled to receive: (a) the Accrued Benefits; (ii) continuation of base salary and health insurance benefits (including for eligible dependents) at active employee rates for a period of 6 months following the date of termination; and (iii) a pro-rata target bonus in respect of the fiscal year in which the effective date of termination occurs, paid within 30 days of termination.

The severance benefits described above are subject to Ms. Dilmore’s execution of a release of claims in favor of the Company and our affiliates. If the severance and other benefits provided in Ms. Dilmore’s employment agreement or otherwise payable to her

would be subject to excise tax under Section 280(G) of the Internal Revenue Code of 1986, as amended, then her severance benefits will be either delivered in full or delivered as to such lesser extent that would result in no portion of the severance benefits being subject to such excise tax, whichever results in the receipt by Ms. Dilmore, on an after-tax basis, of the greatest portion of such total severance and other benefits.

The summary of the Employment Agreement is qualified in its entirety by the actual terms of the Employment Agreement, which is filed as Exhibit 10.4 to this Quarterly Report on Form 10-Q.

* Certain identified information in the exhibit has been omitted because it is both (i) not material and (ii) would likely cause

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.


Pennsylvania	47-4639500
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

490 Lapp Road, Malvern, Pennsylvania	19355
(Address of principal executive offices)	(Zip Code)


Title of Each Class	Trading Symbol	Name of Exchange on Which Registered
Common Stock, par value $0.01	BXRX	Nasdaq Capital Market


			Page

Forward-Looking Statements			3

PART I. FINANCIAL INFORMATION			5

	Item 1.	Consolidated Financial Statements (Unaudited)	5

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3130

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4139

	Item 4.	Controls and Procedures	4140

PART II. OTHER INFORMATION			4241

	Item 1.	Legal Proceedings	4241

	Item 1A.	Risk Factors	4241

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4341

	Item 3.	Defaults Upon Senior Securities	4342

	Item 4.	Mine Safety Disclosures	4442

	Item 5.	Other Information	42

	Item 6.	Exhibits	44

	~~Item 6.~~	~~Exhibits~~	44

SIGNATURES			4546


	June 30, 2022			December 31, 2021
Raw materials	$	26		$	53
Sub-assemblies		4,011			4,656
Finished goods		1,655			645
		5,692			5,354
Provision for inventory obsolescence		(437	)		(352	)
Inventory	$	5,255		$	5,002


	June 30, 2022			December 31, 2021
Asset resulting from R&D activities	$	26,400		$	26,400
Accumulated Amortization		(6,010	)		(4,722	)
Intangible assets, net	$	20,390		$	21,678


☒		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


☐		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☒


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
(amounts in thousands, except share and per share data)	2022			2021			2022			2021
Revenue, net	$	300		$	201		$	722		$	399

Operating expenses:
Cost of sales		361			586			1,009			1,407
Research and development		912			857			2,205			1,965
Selling, general and administrative		4,029			10,608			18,219			22,696
Amortization of intangible assets		644			644			1,288			1,288
Change in warrant valuation		(1	)		(59	)		(6	)		(41	)
Change in contingent consideration valuation		1,327			3,881			(2,476	)		5,722
Total operating expenses		7,272			16,517			20,239			33,037
Operating loss		(6,972	)		(16,316	)		(19,517	)		(32,638	)
Other expense:
Other (expense) income, net		(559	)		987			(823	)		397
Net loss	$	(7,531	)	$	(15,329	)	$	(20,340	)	$	(32,241	)

Per share information:
Net loss per share of common stock, basic	$	(1.05	)	$	(7.17	)	$	(3.63	)	$	(16.43	)
Net loss per share of common stock, diluted	$	(1.05	)	$	(7.18	)	$	(3.63	)	$	(16.43	)

Weighted average common shares outstanding, basic		7,181,640			2,137,191			5,610,037			1,962,655
Weighted average common shares outstanding, diluted		7,181,640			2,138,100			5,610,037			1,962,655


For the Six Months Ended June 30, 2022
	Preferred Stock					Common Stock				Additional
(amounts in thousands, except share data)	Shares			Amount		Shares		Amount		paid-in capital			Accumulated Deficit			Total
Balance, December 31, 2021		8,289		$	—		2,807,239	$	28	$	145,287		$	(132,089	)	$	13,226
Stock-based compensation expense		—			—		—		—		521			—			521
Issuance of common stock and warrants for public offering, net		—			—		3,508,772		35		8,784			—			8,819
Issuance of common stock and warrants for registered direct offerings, net		—			—		—		—		(13	)		—			(13	)
Issuance of shares pursuant to vesting of restricted stock units, net of shares withheld for income taxes		—			—		2,234		—		(1	)		—			(1	)
Conversion of preferred stock		(8,289	)		—		94,734		1		(1	)		—			—
Net loss		—			—		—		—		—			(12,809	)		(12,809	)
Balance, March 31, 2022		0		$	—		6,412,979	$	64	$	154,577		$	(144,898	)	$	9,743
Stock-based compensation expense		—			—		—		—		325			—			325
Issuance of common stock and warrants for public offering, net		—			—		—		—		(28	)		—			(28	)
Issuance of common stock and warrants for registered direct offerings and private placements, net		—			—		1,646,091		16		1,704			—			1,720
Issuance of shares pursuant to vesting of restricted stock units, net of shares withheld for income taxes		—			—		9,783		1		—			—			1
Net loss		—			—		—		—		—			(7,531	)		(7,531	)
Balance, June 30, 2022		0		$	—		8,068,853	$	81	$	156,578		$	(152,429	)	$	4,230


For the Three Months Ended March 31, 2023
	Preferred Stock				Common Stock				Additional
(amounts in thousands, except share data)	Shares		Amount		Shares		Amount		paid-in capital			Accumulated Deficit			Total
Balance, December 31, 2022		—	$	—		1,623,913	$	16	$	166,646		$	(190,904	)	$	(24,242	)
Stock-based compensation expense		—		—		—		—		194			—			194
Issuance of common stock and warrants for public offering, net		—		—		—		—		(55	)		—			(55	)
Issuance of shares pursuant to vesting of restricted stock units, net of shares withheld for income taxes		—		—		2		—		—			—			—
Exercise of warrants		—		—		961,787		10		4,318			—			4,328
Issuance of warrants for MAM debt amendment		—		—		—		—		1,058			—			1,058
Net income		—		—		—		—		—			11,404			11,404
Balance, March 31, 2023		—	$	—		2,585,702	$	26	$	172,161		$	(179,500	)	$	(7,313	)


For the Six Months Ended June 30, 2021
	Preferred Stock				Common Stock				Additional
(amounts in thousands, except share data)	Shares		Amount		Shares		Amount		paid-in capital			Accumulated Deficit			Total
Balance, December 31, 2020		0	$	—		1,391,099	$	14	$	97,507		$	(112,320	)	$	(14,799	)
Recro Pharma allocation - stock-based compensation		—		—		—		—		1,201			—			1,201
Stock-based compensation expense		—		—		—		—		975			—			975
Issuance of common stock and warrants for registered direct offerings, net		—		—		314,286		3		16,424			—			16,427
Issuance of shares pursuant to vesting of restricted stock units, net of shares withheld for income taxes		—		—		1,205		—		(41	)		—			(41	)
Exercise of warrants		—		—		297,484		3		12,152			—			12,155
Net loss		—		—		—		—		—			(16,912	)		(16,912	)
Balance, March 31, 2021		0	$	—		2,004,074	$	20	$	128,218		$	(129,232	)	$	(994	)
Stock-based compensation expense		—		—		—		—		854			—			854
Issuance of common stock and warrants for registered direct offerings, net		—		—		400,815		4		10,897			—			10,901
Issuance of shares pursuant to vesting of restricted stock units, net of shares withheld for income taxes		—		—		2,917		0		(5	)		—			(5	)
Net loss		—		—		—		—		—			(15,329	)		(15,329	)
Balance, June 30, 2021		0	$	—		2,407,806	$	24	$	139,964		$	(144,561	)	$	(4,573	)


	Warrants			Contingent Consideration
Balance at December 31, 2020	$	65		$	65,043
Payment of contingent consideration		0			(7,869	)
Remeasurement		(58	)		(33,312	)
Balance at December 31, 2021	$	7		$	23,862
Payment of contingent consideration		0			(1,000	)
Remeasurement		(6	)		(2,476	)
Total at June 30, 2022	$	1		$	20,386

Current portion as of June 30, 2022	$	0		$	7,694
Long-term portion as of June 30, 2022		1			12,692


	Lease payments
Remainder of 2022	$	211
2023		270
2024		278
2025		278
2026		287
2027		295
Total lease payments		1,619
Less imputed interest		(754	)
Total operating lease liability	$	865


	Lease payments
Remainder of 2023	$	263
2024		278
2025		278
2026		287
2027		294
Total lease payments		1,400
Less imputed interest		(604	)
Total operating lease liability	$	796


	June 30, 2022
	Series A Warrants
Fair value	$	1
Expected dividend yield		—	%
Expected volatility	79.89		%
Risk-free interest rates	2.99		%
Remaining contractual term	2.7 years


Criteria	Acceptable		Unacceptable
	Excellent	Good	Poor
Vocal cord position	Abducted	Intermediate	Closed/Adducted
Vocal cord movement	None	Moving	Closing
Ease of laryngoscopy*	Easy	Fair	Difficult
Airway reaction	None	Diaphragm	Sustained >10s
Limb movement	None	Slight	Vigorous
Viby-Mogensen 1996	*Ease of Laryngoscopy
Scoring Intubation conditions	-Easy: Jaw relaxed, no resistance to blade in the course of laryngoscopy
Excellent: All qualities are excellent	-Fair: Jaw not fully relaxed, slight resistance to blade
Good: All qualities are either excellent or good	-Difficult: Poor jaw relaxation, active resistance of the patient to laryngoscopy
Poor: The presence of a single quality listed under “poor”


	Rocuronium	BX1000
	0.6 mg/kg	0.15 mg/kg	0.25 mg/kg	0.35 mg/kg	Total
	(N=20)	(N=20)	(N=20)	(N=20)	(N=80)
Subjects dosed n (%)	20 (100.0)	20 (100.0)	20 (100.0)	20 (100.0)	80 (100.0)
Subjects in Efficacy Evaluation n (%)	19 (95.0)*	20 (100.0)	20 (100.0)	20 (100.0)	79 (97.5)
Mean Age (yrs)	37	38.2	40.5	39.5	38.8
n (%) Female	18 (90.0)	13 (65.0)	13 (65.0)	15 (75.0)	59 (73.8)
Race, n (%)
White	19 (95.0)	19 (95.0)	20 (100.0)	19 (95.0)	19 (95.0)
Black or African American	1 (5.0)	-	-	1 (5.0)	2 (2.5)
Multiple	-	1 (5.0)	-	-	1 (1.3)
Mean Baseline BMI (kg/m2)	26.1	28.2	26.2	25.9	26.6

*1 Subject experienced a delay in intubating condition assessments due to issues with the endotracheal tube


	n (%) of Subjects
	Rocuronium	BX1000
	0.6 mg/kg	0.15 mg/kg	0.25 mg/kg	0.35 mg/kg	Total
	(N=19)	(N=20)	(N=20)	(N=20)	(N=79)
Excellent or Good	19 (100.0)	20 (100.0)	20 (100.0)	20 (100.0)	79 (100.0)
Poor	--	--	--	--	--
Not Done	1*	--	--	--	--

*1 Subject experienced a delay in intubating condition assessments at 60, 90, and 120 seconds after NMB administration due to issues with the endotracheal tube, and therefore not included in the efficacy analyses


Exhibit No.	Description	Method of Filing

3.1	Second Amended and Restated Bylaws of Baudax Bio, Inc.	Filed herewith.

4.1	Form of ~~Warrant, issued May 17, 2022.~~Series A-5 Warrant.	Incorporated herein by reference to Exhibit 4.1 to the Company’s ~~Current Report~~Registration Statement on Form ~~8-K~~S-1/A filed on ~~May 18, 2022~~April 26, 2023 (File No. ~~001-39101)~~333-2771161).

4.2	Form of ~~Placement Agent Warrant, issued May 17, 2022.~~Series A-6 Warrant.	Incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1/A filed on April 26, 2023 (File No. 333-2771161).

4.3	Form of Series D Pre-Funded Warrant.	Incorporated herein by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1/A filed on April 26, 2023 (File No. 333-2771161).

4.4	Form of Placement Agent Warrant.	Incorporated herein by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1/A filed on April 26, 2023 (File No. 333-2771161).

10.1*	Amendment No. 5 and Waiver to Credit Agreement, dated March 29, 2023, by and Baudax Bio, Inc., Baudax Bio N.A. LLC, Baudax Bio Limited, Wilmington Trust, National Association, and the Lenders party thereto.	Incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on ~~May 18, 2022~~March 31, 2023 (File No. 001-39101).

10.2	Registration Rights Agreement, dated March 29, 2023, by and between Baudax Bio, Inc. and MAM Eagle Lender, LLC.	Incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 31, 2023 (File No. 001-39101).

10.3	Form of Securities Purchase Agreement.	Incorporated herein by reference to Exhibit 10.35 to the Company’s Registration Statement on Form S-1/A filed on April 26, 2023 (File No. 333-271161).

10.4●	Employment Agreement, by and between Baudax Bio, Inc. and Jillian Dilmore, dated May 10, 2023.	Filed herewith.

31.1	Rule 13a-14(a)/15d-14(a) certification of Principal Executive Officer.	Filed herewith.

31.2	Rule 13a-14(a)/15d-14(a) certification of Principal Financial and Accounting Officer.	Filed herewith.

32.1	Section 1350 certification, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	Filed herewith.

101.SCH	Inline XBRL Taxonomy Extension Schema Document.	Filed herewith.

101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.	Filed herewith.

101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.	Filed herewith.


101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.	Filed herewith.

101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.	Filed herewith.

104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).	Filed herewith.


	BAUDAX BIO, INC.

Date: ~~August~~May 11, ~~2022~~2023	By:	/s/ Gerri A. Henwood
		Gerri A. Henwood
		President and Chief Executive Officer
		(Principal Executive Officer)



Date: ~~August~~May 11, ~~2022~~2023	By:	/s/ Jillian Dilmore
		Jillian Dilmore
		Corporate Controller
		(Principal Financial and Accounting Officer)