Quarterly Report (10-q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


	☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended September 30, 2020


	☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from __________________ to __________________

Commission File Number: 001-38045

Neurotrope, Inc.

(Exact name of registrant as specified in its charter)


Nevada	46-3522381
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer
	Identification No.)

1185 Avenue of the Americas, 3^rd Floor	(Zip code)
New York, New York	10036
(Address of principal executive offices)

(973) 242-0005

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	NTRP	The Nasdaq Stock Market
Preferred Stock Purchase Rights		The Nasdaq Stock Market

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.

Large accelerated filer	◻	Accelerated filer	☒
Non-accelerated filer	◻	Smaller reporting company	☒
		Emerging growth company	◻

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 Section 13(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 November 5, 2020, there were 23,790,667 shares of the registrant’s common stock, $0.0001 par value per share, issued and outstanding.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain statements in this report contain or may contain forward-looking statements. These statements, identified by words such as “plan,” “anticipate,” “believe,” “estimate,” “should,” “expect” and similar expressions, include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to, the risk that the conditions to the closing of the merger with Metuchen Pharmaceuticals LLC contemplated by the merger agreement are not satisfied, including the failure to obtain stockholder approval for the transactions in a timely manner or at all, uncertainties as to the timing of the consummation of the mergers and the spin-off of Neurotrope's wholly-owned subsidiary, Neurotrope Bioscience, Inc., and our ability to consummate the transactions, the significant length of time associated with drug development and related insufficient cash flows and resulting illiquidity, our patent portfolio, our inability to expand our business, significant government regulation of pharmaceuticals and the healthcare industry, lack of product diversification, availability of our raw materials, existing or increased competition, stock volatility and illiquidity, and the our failure to implement our business plans or strategies. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Readers should carefully review this report in its entirety, including but not limited to our financial statements and the notes thereto and the risks described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission (the “SEC”). We advise you to carefully review the reports and documents we file from time to time with the SEC, particularly our quarterly reports on Form 10-Q and our current reports on Form 8-K. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to publicly release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

OTHER INFORMATION

When used in this report, the terms, “we,” the “Company,” “our,” and “us” refer to Neurotrope, Inc., a Nevada corporation and its consolidated subsidiary Neurotrope Bioscience, Inc. (“Neurotrope Bioscience”).

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TABLE OF CONTENTS


		Page

Part I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)		4

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019		4

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019		5

Condensed Consolidated Statement of Changes in Shareholders’ Equity for the three and nine months ended September 30, 2020 and 2019		6

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019		8

Notes to Condensed Consolidated Financial Statements		9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22

Item 3. Quantitative and Qualitative Disclosures about Market Risk		31

Item 4. Controls and Procedures		31

Part II – OTHER INFORMATION

Item 1. Legal Proceedings		33

Item 1A. Risk Factors		33

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		34

Item 3. Defaults upon Senior Securities		34

Item 4. Mine Safety Disclosures		34

Item 5. Other Information		34

Item 6. Exhibits		35

Signatures		37

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PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

Neurotrope, Inc and Subsidiary

Condensed Consolidated Balance Sheets

(Unaudited)


	September 30,		December 31,
	2020		2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	26,999,862	$	17,382,038
Grant receivable		861,852		—
Prepaid expenses and other current assets		1,264,721		494,112

TOTAL CURRENT ASSETS		29,126,435		17,876,150

Fixed assets, net of accumulated depreciation		23,446		21,671

TOTAL ASSETS	$	29,149,881	$	17,897,821


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	1,190,285	$	413,081
Accrued expenses		110,159		65,975

TOTAL CURRENT LIABILITIES		1,300,444		479,056

Commitments and contingencies

SHAREHOLDERS’ EQUITY
Convertible preferred stock - 100,000 shares authorized, $0.0001 par value; 500 shares issued and outstanding as of September 30, 2020, 0 shares issued and outstanding as of December 31, 2019 Liquidation preference of $500,000 and $0 as of September 30, 2020 and December 31, 2019, respectively.		1		—
Common stock - 150,000,000 shares authorized, $0.0001 par value; 23,777,539 shares issued and outstanding as of September 30, 2020; 13,068,023 shares issued and outstanding as of December 31, 2019;		2,378		1,307
Additional paid-in capital		126,402,980		106,234,301
Accumulated deficit		(98,555,922)		(88,816,843)

TOTAL SHAREHOLDERS’ EQUITY		27,849,437		17,418,765

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	29,149,881	$	17,897,821

See accompanying notes to condensed consolidated financial statements.

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Neurotrope, Inc. and Subsidiary

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2020		2019		2020		2019
OPERATING EXPENSES:
Research and development	$	410,292	$	845,797	$	1,004,762	$	4,273,531
General and administrative - related party		—		12,500		7,361		37,500
General and administrative		1,778,187		2,131,205		5,731,238		5,165,096
Stock-based compensation - related party		—		47,695		21,001		173,161
Stock-based compensation		387,927		877,525		1,428,022		3,173,519

TOTAL OPERATING EXPENSES		2,576,406		3,914,722		8,192,384		12,822,807

OTHER INCOME (EXPENSE):
Warrant amendment expense		(1,700,000)		—		(1,700,000)		—
Interest income		6,797		90,159		153,305		301,620

Net loss before income taxes		4,269,609		3,824,563		9,739,079		12,521,187

Provision for income taxes		—		—		—		—

Net loss	$	4,269,609	$	3,824,563	$	9,739,079	$	12,521,187

PER SHARE DATA:

Basic and diluted loss per common share	$	(0.18)	$	(0.30)	$	(0.46)	$	(0.97)

Basic and diluted weighted average common shares outstanding		23,775,300		12,940,100		21,370,800		12,967,500

See accompanying notes to condensed consolidated financial statements.

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Neurotrope, Inc. and Subsidiary

Condensed Consolidated Statement of Changes in Shareholders’ Equity

(Unaudited)


	Three Months Ended September 30, 2019
								Additional
	Common Stock			Preferred Stock				Paid-In		Accumulated
	Shares	Amount		Shares		Amount		Capital		Deficit		Total

Balance July 1, 2019	12,982,949	$	1,298	$	—	$	—	$	103,601,474	$	(82,378,717)	$	21,224,055

Issuance of common stock for consulting fees	—		—		—		—		—				—

Issuance of warrants for consulting fees	—		—		—		—		427,306		—		427,306

Exercise of common stock warrants	85,074		9		—		—		371,764				371,773

Stock based compensation	—		—		—		—		925,220		—		925,220

Net loss	—		—		—		—		—		(3,824,563)		(3,824,563)

Balance September 30, 2019	13,068,023	$	1,307	$	—	$	—	$	105,325,764	$	(86,203,280)	$	19,123,791


	Nine Months Ended September 30, 2019
								Additional
	Common Stock				Preferred Stock			Paid-In		Accumulated
	Shares	Amount		Shares		Amount		Capital		Deficit		Total

Balance January 1, 2019	12,922,370	$	1,292	$	—	$	—	$	100,202,110	$	(73,682,093)	$	26,521,309

Issuance of common stock for consulting fees	49,579		5		—		—		352,743		—		352,748

Issuance of warrants for consulting fees	—		—		—		—		1,004,398		—		1,004,398

Exercise of common stock warrants	96,074		10		—		—		419,833				419,843

Stock based compensation	—		—		—		—		3,346,680		—		3,346,680

Net loss	—		—		—		—		—		(12,521,187)		(12,521,187)

Balance September 30, 2019	13,068,023	$	1,307	$	—	$	—	$	105,325,764	$	(86,203,280)	$	19,123,791

See accompanying notes to condensed consolidated financial statements.

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	Three Months Ended September 30, 2020
								Additional
	Common Stock				Preferred Stock			Paid-In		Accumulated
	Shares	Amount		Shares		Amount		Capital		Deficit		Total
Balance July 1, 2020	23,674,089	$	2,368		500	$	1	$	124,081,782	$	(94,286,313)	$	29,797,838

Stock based compensation	—		—		—		—		387,927		—		387,927

Issuance of common stock for consulting fees	103,450		10		—		—		119,990				120,000

Issuance of warrants for consulting fees	—		—		—		—		113,281		—		113,281

Sale of preferred stock and warrants	—		—		—		—		—		—		—

Conversion of preferred stock to common stock	—		—		—		—		—		—		—

Warrant amendment expense	—		—		—		—		1,700,000		—		1,700,000

Net loss	—		—		—		—		—		(4,269,609)		(4,269,609)

Balance September 30, 2020	23,777,539	$	2,378		500	$	1	$	126,402,980	$	(98,555,922)	$	27,849,437


	Nine Months Ended September 30, 2020
								Additional
	Common Stock				Preferred Stock			Paid-In		Accumulated
	Shares	Amount		Shares		Amount		Capital		Deficit		Total
Balance January 1, 2020	13,068,023	$	1,307		—	$	—	$	106,234,301	$	(88,816,843)	$	17,418,765

Stock based compensation	—		—		—		—		1,449,023		—		1,449,023

Issuance of common stock for consulting fees	103,450		10		—		—		119,990				120,000

Issuance of warrants for consulting fees	—		—		—		—		380,740		—		380,740

Sale of preferred stock and warrants	—		—		18,000		2		16,519,986		—		16,519,988

Conversion of preferred stock to common stock	10,606,066		1,061		(17,500)		(1)		(1,060)		—		(0)

Warrant amendment expense									1,700,000				1,700,000

Net loss	—		—		—		—		—		(9,739,079)		(9,739,079)

Balance September 30, 2020	23,777,539	$	2,378		500	$	1	$	126,402,980	$	(98,555,922)	$	27,849,437

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Neurotrope, Inc. and Subsidiary

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended		Nine Months Ended
	September 30, 2020		September 30, 2019
CASH FLOW USED IN OPERATING ACTIVITIES
Net loss	$	(9,739,079)	$	(12,521,187)
Adjustments to reconcile net loss to net cash used by operating activities Stock based compensation		1,449,023		3,346,680
Consulting services paid by issuance of common stock		120,000		352,748
Consulting services paid by issuance of common stock warrants		380,740		1,004,398
Warrant amendment expense		1,700,000		—
Depreciation expense		3,638		3,289
Change in assets and liabilities
(Increase) in grant receivable		(861,852)		—
(Increase) in prepaid expenses		(770,609)		(380,623)
Increase (decrease) in accounts payable		777,204		(2,172,813)
Increase in accrued expenses		44,184		371
Total adjustments		2,842,328		2,154,050

Net Cash Used in Operating Activities		(6,896,751)		(10,367,137)

CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of fixed assets		(5,413)		(5,214)

Net Cash Used in Investing Activities		(5,413)		(5,214)

CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from exercise of common stock warrants		—		419,843
Net proceeds from issuance of preferred stock and warrants		16,519,988		—

Net Cash Provided by Financing Activities		16,519,988		419,843

NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS		9,617,824		(9,952,508)

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD		17,382,038		28,854,218

CASH AND EQUIVALENTS AT END OF PERIOD	$	26,999,862	$	18,901,710

See accompanying notes to condensed consolidated financial statements.

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NEUROTROPE, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Note 1 – Organization, Nature of Business, and Liquidity:

Organization & Business

Neurotrope Bioscience was incorporated in Delaware on October 31, 2012. Neurotrope Bioscience was formed to advance new therapeutic and diagnostic technologies in the field of neurodegenerative disease, primarily Alzheimer’s disease (“AD”). Neurotrope Bioscience is collaborating with Cognitive Research Enterprises, Inc. (formerly known as the Blanchette Rockefeller Neurosciences Institute, or BRNI) (“CRE”), a related party, in this process. The exclusive rights to certain technology were licensed by CRE to Neurotrope Bioscience on February 28, 2013 (see Note 4, “Related Party Transactions and Licensing / Research Agreements”). Neurotrope Bioscience is a wholly-owned subsidiary of Neurotrope, Inc.

On September 9, 2019, the Company issued a press release announcing that the confirmatory Phase 2 study of Bryostatin-1 in moderate to severe AD patients did not achieve statistical significance on the primary endpoint, which was change from baseline to Week 13 in the Severe Impairment Battery (“SIB”) total score. An average increase in SIB total score of 1.3 points and 2.1 points was observed for the Bryostatin-1 and placebo groups, respectively, at Week 13. There were multiple secondary outcome measures in this trial, including the changes from baseline at Weeks 5, 9 and 15 in the SIB total score. No statistically significant difference was observed in the change from baseline in SIB total score between the Bryostatin-1 and placebo treatment groups. On January 22, 2020, the Company announced the completion of an additional analysis in connection with the confirmatory Phase 2 study, which examined moderately severe to severe AD patients treated with Byrostatin-1 in the absence of memantine. To adjust for the baseline imbalance observed in the study, a post-hoc analysis was conducted using paired data for individual patients, with each patient as his/her own control. For the pre-specified moderate stratum (i.e., MMSE-2 baseline scores 10-15), the baseline value and the week 13 value were used, resulting in pairs of observations for each patient. The changes from baseline for each patient were calculated and a paired t-test was used to compare the mean change from baseline to week 13 for each patient. A total of 65 patients had both baseline and week 13 values, from which there were 32 patients in the Bryostatin-1 treatment group and 33 patients in the placebo group. There was a statistically significant improvement over baseline (4.8 points) in the mean SIB at week 13 for subjects in the Bryostatin-1 treatment group (32 subjects), paired t-test p < 0.0076, 2-tailed. In the placebo group (33 subjects), there was also a statistically significant increase from baseline in the mean SIB at week 13, for paired t-test p < 0.0144, consistent with the placebo effect seen in the overall 203 study. Although there was a signal of Bryostatin-1’s benefit for the moderately severe stratum, the difference between the Bryostatin-1 and placebo treatment groups was not statistically significant (p=0.2727). The Company is currently proceeding with its third Phase 2 clinical trial. The Company is using the data and findings from its clinical trials to determine how to advance the development of Bryostatin-1.

On October 8, 2019, following the Company’s announcement of top-line results from its Phase 2 study of Bryostatin-1 in moderate to severe AD, the Company announced its plans to explore strategic alternatives to maximize shareholder value. The Company’s Board of Directors (the “Board”) formed a strategic alternatives committee to evaluate its alternatives, including, but not necessarily limited to, collaborations or merger and acquisition transactions (see below- “Planned Merger and Spin-Off”.)

WCT Services Agreement

On July 23, 2020, Neurotrope Bioscience entered into a services agreement (the “2020 Services Agreement”) with Worldwide Clinical Trials, Inc. (“WCT”). The 2020 Services Agreement relates to services for the Company’s Phase 2 clinical study assessing the safety, tolerability and long-term efficacy of bryostatin in the treatment of moderately severe AD subjects not receiving memantine treatment (the “2020 Study”).

Pursuant to the terms of the 2020 Services Agreement, WCT will provide services to enroll approximately one hundred (100) 2020 Study subjects. The first 2020 Study site was initiated in September of 2020. The total estimated budget for the services, including pass-through costs, is approximately $9.8 million. As previously disclosed on January 22, 2020, the Company has received a $2.7 million award from the National Institutes of Health (“NIH”), which award is being used to support the 2020 Study, resulting in an estimated net budgeted cost of the 2020 Study to the Company of $7.1 million. The NIH grant provides for funds in the first year, which began in April 2020, of approximately $1.0 million and funding in year two, which begins April 2021, of approximately $1.7 million.

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In connection with their entry into the 2020 Letter of Intent and Services Agreement, the parties agreed that WCT would invoice Neurotrope Bioscience for the following advance payments: (i) services fees of approximately $943,000; (ii) pass-through expenses of approximately $266,000; and (iii) investigator/institute fees of approximately $314,000, which in each case will be due within ten (10) days of Neurotrope Bioscience’s receipt of such invoice. Neurotrope Bioscience may terminate the 2020 Services Agreement without cause upon sixty (60) days prior written notice. As of September 30, 2020, the Company incurred approximately $1 million of expenses associated with the clinical trial.

Of the total cost of the trial, as of November 5, 2020, approximately $1.5 million has been funded against the total trial cost. The Company incurred approximately $800,000 and $1 million of expenses associated with the current Phase 2 clinical trial for the three and nine months ended September 30, 2020, respectively, with approximately $0.5 million of the expense incurred credited to the $1.5 million advance payment. As of September 30, 2020, approximately $1 million of WCT prepayments is included as a prepaid expense and other current assets and $548,000 which is included in accounts payable in the accompanying balance sheet.

Planned Merger and Spin-Off

On May 17, 2020, the Company, Petros Pharmaceuticals, Inc., a Delaware corporation formed for the purposes of effecting transactions contemplated by the Merger Agreements (as defined below) (“Petros”), PM Merger Sub 1, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Petros (“Merger Sub 1”), PN Merger Sub 2, Inc., a Delaware corporation and a wholly-owned subsidiary of Petros (“Merger Sub 2”), and Metuchen Pharmaceuticals LLC, a Delaware limited liability company (“Metuchen”), entered into an Agreement and Plan of Merger (the “Original Merger Agreement”), as amended by the First Amendment to the Original Merger Agreement dated as of July 23, 2020 (the “ First Merger Agreement Amendment”) and the Second Amendment to the Original Merger Agreement dated as of September 30, 2020 (the “Second Merger Agreement Amendment” and, together with the First Merger Agreement Amendment and the Original Merger Agreement, the “Merger Agreement”), which provides for (1) the merger of Merger Sub 1 with and into Metuchen, with Metuchen surviving as a wholly-owned subsidiary of Petros (the “Metuchen Merger”) and (2) the merger of Merger Sub 2 with and into the Company, with the Company surviving as a wholly-owned subsidiary of Petros (the “Neurotrope Merger” and together with the Metuchen Merger, the “Mergers”). The shareholder vote to approve the merger and spin-off transaction is scheduled for November 25, 2020.

As a result of the Metuchen Merger, each outstanding common unit or preferred unit of Metuchen will be exchanged for a number of shares of Petros common stock, par value $0.0001 per share (the “Petros Common Stock”) equal to the quotient resulting from the formula of (i) 24,748,051 divided by (ii) the number of fully-diluted units of Metuchen outstanding immediately prior to the effective time of the Mergers, subject to adjustment. In addition, each securityholder of Metuchen prior to the Mergers will receive a right to receive such securityholder’s pro rata share of an aggregate of 71,160,451 shares of Petros Common Stock potentially issuable upon the achievement of certain milestones set forth in the Merger Agreement. As a result of the Neurotrope Merger, each outstanding share of Neurotrope common stock, par value $0.0001 per share (the “Neurotrope Common Stock”) will be exchanged for one (1) share of Petros Common Stock and each outstanding share of Neurotrope preferred stock, par value $0.0001 per share (the “Neurotrope Preferred Stock”) will be exchanged for one (1) share of Petros preferred stock (the “Petros Preferred Stock”). Following the Mergers, the Petros Preferred Stock will have substantially the same conversion rights (proportionally adjusted to give effect to the Mergers), powers, rights and privileges as the Neurotrope Preferred Stock prior to the Mergers. In addition, each outstanding option to purchase Neurotrope Common Stock or outstanding warrant to purchase common stock that has not previously been exercised prior to the closing of the Mergers (the “Closing”) will be converted into equivalent options and warrants to purchase shares of Petros Common Stock and will be adjusted to give effect to the exchange ratios set forth in the Merger Agreement.

Upon the Closing, it is anticipated that current Neurotrope stockholders will own approximately 49.0% of Petros and current Metuchen securityholders will own approximately 51.0% of Petros. The Board of Directors of Petros is expected to consist of five members, three of whom will be designated by Metuchen and two of whom will be designated by the Company. Upon closing, Metuchen will be the accounting acquirer in the Mergers, but not the legal acquirer. As such, the Mergers are expected to be accounted for as a reverse recapitalization under the guidance of ASC 805 and, upon consummation, the historical financial statements of Metuchen will become the historical financial statements of the combined company.

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In addition, as a condition to the consummation of the Mergers, Neurotrope is required to approve a spin-off transaction (the “Spin-Off”) whereby (i) any cash in excess of $20,000,000, subject to adjustment as provided for in the Merger Agreement, and all of the operating assets and liabilities of the Company not retained by the Company in connection with the Mergers will be contributed to a wholly-owned subsidiary of the Company (“Neurotrope SpinCo”) and (ii) holders of record of Neurotrope Common Stock and certain warrants will receive a pro rata distribution of one share of Neurotrope SpinCo’s common stock for each share of Neurotrope Common Stock held or underlying certain warrants, contingent upon the consummation of the Mergers. The record date for the Spin-Off, the ratio of the Spin-Off shares distributed to the Company shareholders held as of the record date and the extent to which other stakeholders of the Company may be entitled to participate in the Spin-Off have not yet been determined.

Consummation of the Mergers is still subject to certain closing conditions, including, among other things, approval by the common stockholders of the Company and the listing of the Petros common stock on the Nasdaq Stock Market after the Mergers. The Company currently anticipates that the shareholder meeting will be held on November 25, 2020. The Merger Agreement contains certain termination rights for both the Company and Metuchen, and further provides that, upon termination of the Merger Agreement under specified circumstances, either party may be required to pay the other party a termination fee of $1.0 million plus third party expenses incurred by the terminating party.

In connection with entry into the Second Merger Agreement Amendment, certain stockholders of the Company who in the aggregate hold approximately 34% of the outstanding shares of the common stock of the Company, entered into voting agreements (the “Voting Agreements”) with Metuchen whereby such stockholders have agreed to vote any securities of the Company held by them as of the record date for the special meeting of the stockholders of the Company in favor of the adoption of the Merger Agreement and the approval of the transactions contemplated therein, including the Mergers and the issuance of Petros common stock in the Mergers pursuant to the Merger Agreement, subject to the terms of the voting agreements.

Also, in connection with the entry into the Second Merger Agreement Amendment, on September 30, 2020, the Company entered into separate warrant amendment agreements with certain existing holders of warrants to purchase shares of the Company’s common stock. The warrant amendment agreements are intended to facilitate the transactions contemplated by the Merger Agreement. As of September 30, 2020, holders of warrants to purchase 19,556,629 shares of common stock had entered into warrant amendment agreements, including holders of Series E Warrants to purchase 788,956 shares of common stock, Series F Warrants to purchase 3,116,252 shares of common stock, Series G Warrants to purchase 4,542,321 shares of common stock and Series H Warrants to purchase 11,109,100 shares of common stock.

Pursuant to the terms of the warrant amendment agreements, the Company and the holders agreed to certain provisions (See Note 8 – “Common Stock Warrants” below.)

Liquidity

As of September 30, 2020, the Company had approximately $27.0 million in cash and cash equivalents as compared to $17.4 million at December 31, 2019. The increase in cash is attributable to the Company’s issuance of preferred stock and warrants pursuant to a registered direct offering in January 2020 (see Note 6, “Common Stock”) partially offset by cash used for operating activities during the 2020 period. The Company expects that its current cash and cash equivalents will be sufficient to support its projected operating requirements for at least the next 12 months from the Form 10-Q filing date, which would include the continuing development of bryostatin, our novel drug targeting the activation of PKC epsilon.

Such cash and cash projections do not include the impact of the Planned Merger and Spinoff transaction, if approved. Future development activities may require additional equity or debt financing or additional collaboration or licensing agreements. Such equity financing may not be on favorable terms and would likely be dilutive or in the case of debt financing may involve restrictive covenants. Collaboration or licensing arrangements may require the Company to relinquish rights to some of its technologies or product candidates on terms that may not favorable to the Company. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, could materially harm its business, financial condition and results of operations.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, the unaudited condensed consolidated financial statements included herein contain all adjustments necessary to present fairly the Company's financial position and the results of its operations and cash flows for

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the interim periods presented. Such adjustments are of a normal recurring nature. The results of operations for the nine months ended September 30, 2020 may not be indicative of results for the full year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes to those statements for the year ended December 31, 2019 included in our Annual Report on Form 10-K.

Note 2 – Summary of Significant Accounting Policies:

Use of Estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make significant estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents and Concentration of Credit Risk:

The Company considers all highly liquid cash investments with an original maturity of three months or less when purchased to be cash equivalents. At September 30, 2020, the Company’s cash balances that exceed the current insured amounts under the Federal Deposit Insurance Corporation (“FDIC”) were approximately $1.3 million. In addition, approximately $25.7 million included in cash and cash equivalents were invested in a money market fund, which is not insured under the FDIC. Cash and cash equivalents are held in banks or in custodial accounts with banks. Cash equivalents are defined as all liquid investments and money market funds with maturity from date of purchase of 90 days or less that are readily convertible into cash.

Fixed Assets:

Fixed assets are stated at cost less accumulated depreciation. Depreciation is computed on a straight line basis over the estimated useful life of the asset, which is deemed to be between three and ten years.

Research and Development Costs:

All research and development costs, including costs to maintain or expand the Company’s patent portfolio licensed from CRE are expensed when incurred. FASB ASC Topic 730 requires companies involved in research and development activities to capitalize non-refundable advance payments for such services pursuant to contractual arrangements because the right to receive those services represents an economic benefit. Such capitalized advances will be expensed when the services occur and the economic benefit is realized. There were no capitalized research and development services at September 30, 2020 and December 31, 2019.

Loss Per Share:

Basic loss per common share amounts are computed by dividing net loss by the weighted average number of common shares outstanding. In periods where there is net income, the Company applies the two-class method to calculate basic and diluted net income (loss) per share of common stock, as the Company’s preferred stock is a participating security. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. In periods where there is a net loss, the two-class method of computing earnings per share does not apply as the Company’s preferred stock does not contractually participate in its losses.

Diluted loss per share amounts are based on the weighted average number of common shares outstanding, plus the incremental shares that would have been outstanding upon the assumed exercise of all potentially dilutive stock options and warrants subject to anti-dilution limitations. All such potentially dilutive instruments were anti-dilutive as of September 30, 2020 and 2019, which were approximately 24.6 million shares and 12.7 million shares, respectively.

Income Taxes:

The Company accounts for income taxes using the asset and liability approach which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts reportable for income tax purposes. Deferred tax assets are reduced by a valuation

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allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.

The Company had federal and state net operating loss carryforwards for income tax purposes of approximately $70.4 million for the period from October 31, 2012 (inception) through September 30, 2020. The net operating loss carryforwards resulted in a deferred tax asset of approximately $14.8 million at September 30, 2020. Income tax effects of share-based payments are recognized in the financial statements for those awards that will normally result in tax deductions under existing tax law. The deferred tax asset is offset by a full valuation allowance.

The Company applies the provisions of FASB ASC 740-10, Accounting for Uncertain Tax Positions, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The standard also provides guidance on de-recognition, classification, interest and penalties, and accounting in interim periods, disclosure and transitions.

The Company has concluded that there are no significant uncertain tax positions requiring recognition in the accompanying financial statements. The tax period that is subject to examination by major tax jurisdictions is generally three years from the date of filing.

Under Section 382 of the Internal Revenue Code of 1986, as amended, changes in the Company’s ownership may limit the amount of its net operating loss carryforwards that could be utilized annually to offset future taxable income, if any. This limitation would generally apply in the event of a cumulative change in ownership of the Company of more than 50% within a three-year period. The Company has not performed a study to assess whether an ownership change for purposes of Section 382 has occurred, or whether there have been multiple ownership changes since the Company’s inception, due to the significant costs and complexities associated with such study.

Risks and Uncertainties:

The Company operates in an industry that is subject to rapid technological change, intense competition, and significant government regulation. The Company’s operations are subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risk. Such factors include, but are not necessarily limited to, the results of clinical testing and trial activities, the ability to obtain regulatory approval, the limited supply of raw materials, the ability to obtain favorable licensing, manufacturing or other agreements, including risk associated with our CRE licensing agreement, for its product candidates and the ability to raise capital to achieve strategic objectives.

CRE has entered into a material transfer agreement with the National Cancer Institute of the National Institutes of Health (“NCI”), pursuant to which the NCI has agreed to supply bryostatin required for the Company’s pre-clinical research and clinical trials. This agreement does not provide for a sufficient amount of bryostatin to support the completion of all of the clinical trials that the Company is required to conduct in order to seek U.S. Food and Drug Administration (“FDA”) approval of bryostatin for the treatment of AD. Therefore, CRE or the Company will have to enter into one or more subsequent agreements with the NCI for the supply of additional amounts of bryostatin. If CRE or the Company are unable to secure such additional agreements, or if the NCI otherwise discontinues for any reason supplying the Company with bryostatin, then the Company would have to either secure another source of bryostatin or discontinue its efforts to develop and commercialize bryostatin for the treatment of AD. In the interest of mitigating this risk, on June 9, 2020, the Company entered into a supply agreement (the "Supply Agreement") with BryoLogyx Inc. ("BryoLogyx"), pursuant to which BryoLogyx agreed to serve as the Company's exclusive supplier of synthetic Bryostatin-1. Pursuant to the terms of the Supply Agreement, the Company has agreed to place an initial order of one gram of current good manufacturing practice ("cGMP") synthetic Bryostatin-1 as an active pharmaceutical ingredient to be used in a drug product ("API"), to be shipped by BryoLogyx within 60 days after the date upon which BryoLogyx obtains cGMP certification for production of API, which certification shall be obtained no later than March 31, 2021.

Stock Compensation:

The Company accounts for stock-based awards to employees and consultants in accordance with applicable accounting principles, which requires compensation expense related to share-based transactions, including employee stock options and consultant warrants, to be measured and recognized in the financial statements based on a determination of the fair value of the stock options or warrants. The grant date fair value is determined using the Black-Scholes-Merton (“Black-Scholes”) pricing model. Employee stock option and consulting expenses are recognized over the employee’s or consultant’s requisite service period (generally the vesting period

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of the equity grant). The Company’s option pricing model requires the input of highly subjective assumptions, including the volatility and expected term. Any changes in these highly subjective assumptions can significantly impact stock-based compensation expense.

Expense reimbursement for grant award

The Company is reducing research and development expenses by funding from a National Institutes of Health (“NIH”) grant during the period that the expenses are incurred. For the three and nine months ending September 30, 2020, the Company recorded a reduction to expenses incurred and a corresponding grant receivable for its current Phase 2 clinical trial of $861,852. Of this amount, approximately $705,000 was received in October 2020 with the remaining amount to be received pursuant to the terms of the NIH grant.

Of the total $2.7 million available from the NIH grant, approximately $1 million is available for reimbursement for trial-related expenses incurred during the period April 2020 to March 2021 ($300,000 remaining to receive as of November 5, 2020) with the remaining $1.7 million available for reimbursement during the period April 2021 to March 2022. The Company believes it will receive the maximum reimbursements under the grant.

Recent Accounting Pronouncements

Accounting Pronouncements Adopted During the Period:

In August 2018 the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This standard modifies certain disclosure requirements on fair value measurements. This standard became effective for the Company on January 1, 2020. The adoption of this standard did not have a material impact on the Company’s financial statements.

Note 3 – Collaborative Agreements:

Stanford License Agreements

On May 12, 2014, Neurotrope Bioscience entered into a license agreement (the “Stanford Agreement”) with The Board of Trustees of The Leland Stanford Junior University (“Stanford”), pursuant to which Stanford has granted to Neurotrope Bioscience a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights and related technology for the use of bryostatin structural derivatives, known as “bryologs,” for use in the treatment of central nervous system disorders, lysosomal storage diseases, stroke, cardio protection and traumatic brain injury, for the life of the licensed patents. Neurotrope Bioscience is required by the Stanford Agreement to use commercially reasonable efforts to develop, manufacture and sell products (“Licensed Products”) in the Licensed Field of Use (as defined in the Stanford Agreement) during the term of the licensing agreement which expires upon the termination of the last valid claim of any licensed patent under this agreement. In addition, the Company must meet specific diligence milestones, and upon meeting such milestones, make specific milestone payments to Stanford. Neurotrope Bioscience must also pay Stanford royalties of 3% of net sales, if any, of Licensed Products (as defined in the Stanford Agreement) and milestone payments of up to $3.7 million dependent upon stage of product development. As of September 30, 2020, no royalties nor milestone payments have been required.

On January 19, 2017, Neurotrope Bioscience entered into an additional, second license agreement with Stanford, pursuant to which Stanford has granted to Neurotrope Bioscience a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under certain patent rights and related technology for the use of “Bryostatin Compounds and Methods of Preparing the Same,” or synthesized bryostatin, for use in the treatment of neurological diseases, cognitive dysfunction and psychiatric disorders, for the life of the licensed patents. The Company paid Stanford $70,000 upon executing the license and is obligated to pay an additional $10,000 annually as a license maintenance fee. In addition, based upon certain milestones which include product development and commercialization, Neurotrope Bioscience will be obligated to pay up to an additional $2.1 million and between 1.5% and 4.5% royalty payments on certain revenues generated by Neurotrope Bioscience relating to the licensed technology. The Company has made all required annual maintenance payments. As of September 30, 2020, no royalties nor milestone payments have been required.

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Mt. Sinai License Agreement

On July 14, 2014, Neurotrope Bioscience entered into an Exclusive License Agreement (the “Mount Sinai Agreement”) with the Icahn School of Medicine at Mount Sinai (“Mount Sinai”). Pursuant to the Mount Sinai Agreement, Mount Sinai granted Neurotrope Bioscience (a) a revenue-bearing, world-wide right and exclusive license, with the right to grant sublicenses (on certain conditions), under Mount Sinai’s interest in certain joint patents held by the Company and Mount Sinai (the “Joint Patents”) as well as in certain results and data (the “Data Package”) and (b) a non-exclusive license, with the right to grant sublicenses on certain conditions, to certain technical information, both relating to the diagnostic, prophylactic or therapeutic use for treating diseases or disorders in humans relying on activation of Protein Kinase C Epsilon (“PKCε”), which includes Niemann-Pick Disease (the “Mount Sinai Field of Use”). The Mount Sinai Agreement allows Neurotrope Bioscience to research, discover, develop, make, have made, use, have used, import, lease, sell, have sold and offer certain products, processes or methods that are covered by valid claims of Mount Sinai’s interest in the Joint Patents or an Orphan Drug Designation Application covering the Data Package (“Mount Sinai Licensed Products”) in the Mount Sinai Field of Use (as such terms are defined in the Mount Sinai Agreement).

The Company will pay Mt. Sinai milestone payments of $2 million upon approval of a new drug approval (“NDA”) in the United States and an additional $1.5 million for an NDA approval in the European Union or Japan. In addition, the Company would be obligated to pay Mt. Sinai royalties on net sales of licensed product of 2.0% for up to $250 million of net sales and 3.0% of net sales over $250 million. Since inception, the Company has paid Mt. Sinai approximately $160,000 consisting of licensing fees of $85,000 plus development costs and patent fees of approximately $75,000. As of September 30, 2020, no royalties nor milestone payments have been required.

Agreements with BryoLogyx

On June 9, 2020, the Company entered into a supply agreement (the “Supply Agreement”) with BryoLogyx Inc. (“BryoLogyx”), pursuant to which BryoLogyx agreed to serve as the Company’s exclusive supplier of synthetic Bryostatin-1. Pursuant to the terms of the Supply Agreement, the Company has agreed to place an initial order of one gram of current good manufacturing practice (“cGMP”) synthetic Bryostatin-1 as an active pharmaceutical ingredient to be used in a drug product (“API”), to be shipped by BryoLogyx within 60 days after the date upon which BryoLogyx obtains cGMP certification for production of API, which certification shall be obtained no later than March 31, 2021. The Company may place additional orders for API beyond the initial order by making a written request to BryoLogyx no later than six months prior to the requested delivery date.

In connection with the Supply Agreement, on June 9, 2020, the Company entered into a transfer agreement (the “Transfer Agreement”) with BryoLogyx. Pursuant to the terms of the Transfer Agreement, the Company agreed to assign and transfer to BryoLogyx all of the Company’s right, title and interest in and to that certain Cooperative Research and Development Agreement, dated as of January 29, 2019 (the “CRADA”), by and between the Company and the U.S. Department of Health and Human Services, as represented by the NCI, under which Bryostatin-1’s ability to modulate CD22 in patients with relapsed/refractory CD22+ disease has been evaluated to date. The transfer is subject to the receipt of NCI’s consent. Pursuant to guidance provided by NCI, Neurotrope’s CRADA has been cancelled and BryoLogyx has initiated a request for a new CRADA in its name. BryoLogyx will be filing its own investigational new drug application (“IND”) for CD22 with the FDA. As consideration for the transfer of rights to the CRADA, BryoLogyx has agreed to pay to the Company 2% of the gross revenue received in connection with the sale of bryostatin products, up to an aggregate payment amount of $1 million. No such revenues have been earned as of September 30, 2020.

Note 4 – Related Party Transactions and Licensing / Research Agreements:

Cognitive Research Enterprises, Inc. (“CRE”)

James Gottlieb, who resigned as a director of the Company on February 21, 2020, serves as a director of CRE, and Shana Phares, who resigned as a director of the Company on February 25, 2020, served as President and Chief Executive Officer of CRE. CRE is a stockholder of a corporation, Neuroscience Research Ventures, Inc. (“NRV, Inc.”), which owned approximately 1.2% of the Company’s outstanding common stock as of September 30, 2020.

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Effective October 31, 2012, Neurotrope Bioscience executed a Technology License and Services Agreement (the “TLSA”) with CRE, a related party, and NRV II, LLC (“NRV II”), another affiliate of CRE, which was amended by Amendment No. 1 to the TLSA as of August 21, 2013. As of February 4, 2015, the parties entered into an Amended and Restated Technology License and Services Agreement (the “CRE License Agreement”). The CRE License Agreement provides research services and has granted Neurotrope Bioscience the exclusive and nontransferable world-wide, royalty-bearing right, with a right to sublicense (in accordance with the terms and conditions described below), under CRE’s and NRV II’s respective right, title and interest in and to certain patents and technology owned by CRE or licensed to NRV II by CRE as of or subsequent to October 31, 2012, to develop, use, manufacture, market, offer for sale, sell, distribute, import and export certain products or services for therapeutic applications for AD and other cognitive dysfunctions in humans or animals (the “Field of Use”). Additionally, the TLSA specifies that all patents that issue from a certain patent application shall constitute licensed patents and all trade secrets, know-how and other confidential information claimed by such patents constitute licensed technology under the CRE License. The CRE License Agreement terminates on the later of the date (a) the last of the licensed patent expires, is abandoned, or is declared unenforceable or invalid or (b) the last of the intellectual property enters the public domain.

After the initial Series A Stock financing, the CRE License Agreement required Neurotrope Bioscience to enter into scope of work agreements with CRE as the preferred service provider for any research and development services or other related scientific assistance and support services. There were no such statements of work agreements required to be entered into during the nine months ended September 30, 2020 or fiscal year 2019.

In addition, the CRE License Agreement requires the Company to pay CRE a “Fixed Research Fee” of $1 million per year for five years, commencing on the date that the Company completes a Series B Preferred Stock financing resulting in proceeds of at least $25,000,000 (the “Series B Financing “) which shall also include the proceeds from the exercise of any Series A warrants, Series B warrants, and Series E warrants. This Fixed Research Fee has not been triggered. The CRE License Agreement also requires the payment of royalties ranging between 2% and 5% of the Company’s revenues generated from the licensed patents and other intellectual property, dependent upon the percentage ownership that NRV, Inc. holds in the Company.

In addition, on November 10, 2018, Neurotrope Bioscience and CRE entered into a second amendment (the “Second Amendment”) to the TLSA pursuant to which CRE granted certain patent prosecution and maintenance rights to Neurotrope Bioscience. Under the Second Amendment, Neurotrope Bioscience will have the sole and exclusive right and the obligation, to apply for, file, prosecute and maintain patents and applications for the intellectual property licensed to Neurotrope Bioscience, and pay all fees, costs and expenses related to the licensed intellectual property. Neurotrope Bioscience paid CRE $10,000 in consideration of this Second Amendment.

Note 5 – Commitments:

Clinical Trial Services Agreements

On May 4, 2018, Neurotrope Bioscience executed a Services Agreement (the “2018 Services Agreement”) with WCT. The 2018 Services Agreement related to services for Neurotrope Bioscience’s Phase 2 confirmatory clinical study assessing the safety, tolerability and efficacy of bryostatin in the treatment of moderately severe to severe AD (the “2018 Study”). Pursuant to the terms of the 2018 Services Agreement, WCT provided services to target enrollment of approximately one hundred (100) 2018 Study subjects. The total estimated budget for the services, including pass-through costs, drug supply and other statistical analyses, was approximately $7.8 million. The Company has incurred all of the expenses associated with the 2018 Services Agreement as of September 30, 2020.

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Pursuant to the terms of the 2020 Services Agreement, WCT is providing services to enroll approximately one hundred (100) 2020 Study subjects, which enrollment is currently underway. The first 2020 Study site was initiated during the third quarter of 2020. The total estimated budget for the services, including pass-through costs, is approximately $9.8 million. As previously disclosed, the Company was awarded a $2.7 million grant from the NIH, which award will be used to support the 2020 Study, resulting in an estimated net budgeted cost of the 2020 Study to the Company of $7.1 million. In connection with their entry into the 2020 Services Agreement and letter of intent, WCT invoiced Neurotrope Bioscience for the following advance payments: (i) services fees of approximately $943,000; (ii) pass-through expenses of approximately $266,000; and (iii) investigator/institute fees of approximately $314,000, which were paid as of September 30, 2020. Remaining amounts due to WCT will be paid as services and related expenses are incurred. Neurotrope Bioscience may terminate the 2020 Services Agreement without cause upon sixty (60) days prior written notice.

Pursuant to the terms of a letter of intent between Neurotrope Bioscience and WCT, dated May 28, 2020, which anticipated the entry into the 2020 Services Agreement, Neurotrope Bioscience paid to WCT a cash fee of approximately $0.6 million as an advance in order to fund the initial commitment and certain upfront costs of third party vendors. As of September 30, 2020, approximately $1.1 million of expenses have been incurred in connection with the 2020 Services Agreement, of which approximately $492,000 was applied against the advance paid to WCT per the terms of the letter of intent and Services Agreement. As of September 30, 2020, the Company recorded a payable to WCT of approximately $548,000 which is included in accounts payable on the accompanying balance sheet.

Consulting Agreements

On August 4, 2016, the Company entered into a consulting agreement with SM Capital Management, LLC (“SMCM”), a limited liability company owned and controlled by the Company’s Chairman of the Board, Mr. Joshua N. Silverman (the “Consulting Agreement”). Mr. Silverman was appointed to the Board on August 4, 2016. Pursuant to the Consulting Agreement, SMCM shall provide consulting services which shall include, but not be limited to, providing business development, financial communications and management transition services, for a one-year period, subject to annual review thereafter. SMCM’s annual consulting fee is $120,000, payable by the Company in monthly installments of $10,000. In addition, SMCM shall be reimbursed for (i) all pre-approved travel in connection with the consulting services to the Company, (ii) upon submission to the Company of appropriate vouchers and receipts, for all other out-of-pocket expenses reasonably incurred by SMCM in furtherance of the Company’s business.

Effective as of June 1, 2019, the Company entered into a consulting agreement with Katalyst Securities LLC (“Katalyst”), pursuant to which Katalyst agreed to provide investment banking consulting services to the Company (the “Katalyst Agreement”). The term of the agreement continues until the second anniversary from the effective date and may be canceled by either Katalyst or the Company with 30 days’ advance notice. As consideration for its services under the Katalyst Agreement, the Company agreed to pay to Katalyst $25,000 per month, plus five-year warrants to purchase 90,000 shares of the Company’s common stock on the effective date of the Katalyst Agreement and on each of the three month anniversaries following the effective date. The warrants have an exercise price equal to the closing price of the Company’s stock price on the date of issuance. Katalyst’s cash and stock-based compensation is included as general and administrative expenses in the Company’s statement of operations.

Effective as of June 5, 2019, the Company entered into a consulting agreement with GP Nurmenkari, Inc. (“GPN”) (the “GPN Agreement”), pursuant to which GPN agreed to provide investment banking consulting services to the Company. The term of the agreement continues until the second anniversary from the effective date and may be canceled by either GPN or the Company with 30 days’ advance notice. As consideration for its services under the GPN Agreement, the Company agreed to pay to GPN $8,000 per month, plus five-year warrants to purchase 24,000 shares of the Company’s common stock on the effective date and on each of the three month anniversaries following the effective date. The warrants have an exercise price equal to the closing price of the Company’s stock price on the date of issuance. On February 1, 2020, the Company amended the GPN Agreement, increasing the cash compensation to $17,500 per month and increasing the number of warrants issued each three-month period from 24,000 to 50,000. GPN’s cash and stock-based compensation is included as general and administrative expenses in the Company’s statement of operations.

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Note 6 – Common and Preferred Stock:

Adoption of a Shareholder Rights Plan

Overview

On September 9, 2019, the Company announced that its Board had adopted a shareholder rights plan (the “Rights Plan”). The Rights Plan is intended to protect the interests of the Company’s stockholders and enable them realize the full potential value of their investment by reducing the likelihood that any person or group gains control of the Company through open market accumulation or other tactics without appropriately compensating all stockholders. Pursuant to the Rights Plan, the Company issued, by means of a dividend, one preferred share purchase right for each outstanding share of the Company’s common stock to shareholders of record on the close of business on September 19, 2019. Initially, these Rights (as defined below) will trade with, and be represented by, the shares of the Company’s common stock. The Rights will generally become exercisable only if any person (or any persons acting as a group) acquires 15% or more of the Company’s outstanding common stock (the “Acquiring Person”) in a transaction not approved by the Board, subject to certain exceptions, as explained below.

If the Rights become exercisable, all holders of Rights, other than the Acquiring Person, will be entitled to acquire shares of the Company’s common stock at a 50% discount or the Company may exchange each Right held by such holders for one share of its common stock. In such situation, Rights held by the Acquiring Person would become void and will not be exercisable. If any person at the time of the first public announcement of the Rights Plan owned more than the triggering percentage then that stockholder’s existing ownership percentage will be grandfathered, although, with certain exceptions, the Rights will become exercisable if at any time after the announcement of the Rights Plan such stockholder increases its ownership of the Company’s common stock.

Unless earlier redeemed, terminated or exchanged pursuant to the terms of the Rights Plan, the Rights will expire at the close of business on September 8, 2021. The Board may terminate the Rights Plan before that date if the Board determines that there is no longer a threat to shareholder value.

Key Features

On September 9, 2019, the Board declared a dividend of one preferred share purchase right (a “Right”), payable on September 19, 2019, for each share of common stock, par value $0.0001 per share, of the Company outstanding on September 19, 2019, to the stockholders of record on that date. In connection with the distribution of the Rights, the Company entered into a Rights Agreement (the “Rights Agreement”), dated as of September 9, 2019, between the Company and Philadelphia Stock Transfer, Inc., as rights agent. Each Right entitles the registered holder to purchase from the Company one one-thousandth of a share of Series C Preferred Stock, par value $0.0001 per share (the “Preferred Shares”), of the Company at a price of $20 per one one-thousandth of a Preferred Share represented by a Right, subject to adjustment. Each one one-thousandth of a Preferred Share entitles the holder thereof to receive (i) the same dividends and liquidation rights as if the holder held one share of common stock and will be treated the same as one share of common stock in the event of a merger, consolidation or other share exchange and (ii) one vote on all matters submitted to a vote of the Company’s stockholders, in each case subject to adjustment as described in the Certificate of Designations, Preferences and Rights of Series C Preferred Stock of Neurotrope Inc. Until a right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. As of September 30, 2020, there is no Series C Preferred Stock outstanding.

January 2020 Offering

On January 22, 2020, the Company entered into a securities purchase agreement with certain institutional investors and certain pre-existing high net worth individual investors. Pursuant to the terms of the purchase agreement, the Company issued to the purchasers in a registered offering an aggregate of 18,000 shares of Series D Convertible Preferred Stock, par value $0.0001 per share (the “Series D Preferred Stock”) (which are convertible into a total of 10,909,100 shares of common stock) and Series H warrants to purchase up to an aggregate of 10,909,100 shares of common stock for an aggregate gross purchase price of approximately $18 million. The warrants are exercisable at a price of $1.65 per share immediately upon issuance. They feature a five-year term and a right by the Company, in certain circumstances, to call for the cancellation of up to 50% of the shares of common stock underlying such warrants for consideration equal to $0.0001 per share of underlying common stock in the event the value weighted average price of the Company’s common stock exceeds $5.00 for each of 10 consecutive trading days in a 30-day calendar period. The Series D Preferred Stock and the Series H warrants are immediately separable and were issued separately. The net proceeds to the Company from the offering were approximately $16.4 million, after deducting financial advisory fees and offering expenses paid by the Company.

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In connection with the offering, on January 22, 2020, the Company filed with the Secretary of State of the State of Nevada a Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock (the “Series D Certificate of Designation”) establishing and designating the rights, powers and preferences of the Series D Preferred Stock. The Company designated 18,000 shares of Series D Preferred Stock. Pursuant to the Series D Certificate of Designation, the holders of the Series D Preferred Stock are entitled, among other things, to the right to participate in any dividends and distributions paid to common stockholders on an as-converted basis. The Series D Preferred Stock has no voting rights except as required by law. The Series D Preferred Stock is convertible at any time and from time to time without the payment of additional consideration into shares of the Company’s common stock at a conversion price of $1.65 per share, subject to certain adjustments and has a stated value of $1,000 per share of Series D Preferred Stock. In the event of any liquidation or dissolution of the Company, the Series D Preferred Stock will rank junior to the Company’s Series C Preferred Stock under the Rights Agreement, if applicable, and any other class of preferred stock of senior rank to the Series D Preferred Stock, senior to any other class of preferred stock and to the Company’s common stock in the distribution of assets, to the extent legally available for distribution.

During the nine months ended September 30, 2020, 17,500 shares of Series D Preferred Stock were converted into an aggregate of 10,606,066 shares of common stock. The remaining 500 shares of Series D Preferred Stock are convertible into an aggregate of 303,031 shares of common stock.

“Universal Shelf” Registration Statement

On April 17, 2020, the Company filed a “universal shelf” registration statement on Form S-3 with the Securities and Exchange Commission (the “SEC”), which provides for the issuance by the Company of up to $100,000,000 in common stock, preferred stock, debt securities, warrants and rights, either individually or in units. The registration statement was declared effective by the SEC on April 24, 2020.

Note 7 – Stock Options:

Option Grants

The following is a summary of stock option activity under the stock option plans for the nine months ended September 30, 2020:


				Weighted-
				Average
		Weighted-		Remaining	Aggregate
	Number	Average		Contractual	Intrinsic
	of	Exercise		Term	Value
	Shares	Price		(Years)	($ in thousands)
Options outstanding at January 1, 2020	2,366,519	$	12.86	7.5		—
Options granted	60,000	$	0.82			60.2
Less options forfeited	(27,282)	$	5.30
Less options expired/cancelled	(127,664)	$	10.76
Less options exercised	—	$	—
Options outstanding at September 30, 2020	2,271,573	$	12.75	6.8	$	60.2
Options exercisable at September 30, 2020	1,947,344	$	14.22	6.9	$	17.1

Pursuant to the Company’s non-employee director compensation plan, in March 2020, the Company granted stock options to purchase an aggregate of 60,000 shares of the Company’s common stock to six members of the Board. The stock options have an exercise price of $0.82 per share and an expiration date that is ten years from the date of issuance. All of these options vest upon the first anniversary of the issuance date.

As of September 30, 2020, there was approximately $944,000 of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted average period of one year.

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The Company used the Black-Scholes valuation model to calculate the fair value of stock options. The fair value of stock options issued for the nine months ended September 30, 2020 was estimated at the grant date using the following weighted average assumptions: Dividend yield 0%; Expected term 10 years; an aggregate volatility based upon a blend of the Company’s and guideline company historical volatility of 99.46%; and Risk-free interest rate 0.92%. The weighted average grant date fair value of options granted for the nine months ended September 30, 2020 is $0.73 per option, or a total for all grants of approximately $44,000.

Stock Compensation

Total stock-based compensation for the nine months ended September 30, 2020 was $1,449,024, of which $551,865 was classified as research and development expense and $897,159 was classified as general and administrative expense, versus total stock-based compensation for the nine months ended September 30, 2019 of $3,346,680, of which $908,601 was classified as research and development expense and $2,438,079 was classified as general and administrative expense. For the three months ended September 30, 2020, total stock-based compensation was $387,928, of which $153,025 was classified as research and development expense and $234,903 was classified as general and administrative expense, versus total stock-based compensation for the three months ended September 30, 2019 totaling $925,220, of which $213,195 was classified as research and development expense and $712,025 was classified as general and administrative expense.

Note 8 – Common Stock Warrants:

The following is a summary of common stock warrant activity for the nine months ended September 30, 2020:


		Number of
		shares
Warrants outstanding January 1, 2020		10,482,158
Warrants issued		11,538,100
Warrants exercised		—
Warrants outstanding September 30, 2020		22,011,258

Pursuant to its January 2020 offering, the Company issued a total of 11,109,100 five-year Series H warrants to purchase shares of common stock at $1.65 per share (See Note 6, “Common Stock” above for details of the January 2020 offering.) Of the total warrants issued, 10,909,100 were issued to investors and 200,000 to the Company’s financial advisor.

As of September 30, 2020, the Company’s warrants by exercise price were as follows: 147,606 warrants exercisable at $0.32 per share, 114,000 warrants exercisable at $0.86 per share, 140,000 warrants exercisable at $1.10 per share, 140,000 warrants exercisable at $1.13 per share, 140,000 warrants exercisable at $1.46 per share, 11,109,100 Series H Warrants exercisable at $1.50 per share, 4,542,321 Series G Warrants exercisable at $3.50 per share, 374,282 warrants exercisable at $4.37 per share, 114,000 warrants exercisable at $5.31 per share, 100,240 warrants exercisable at $6.25 per share, 382,887 warrants exercisable at $6.40 per share, 24,000 warrants exercisable at $7.12 per share, 90,000 warrants exercisable at $7.13 per share, 3,116,252 Series F Warrants exercisable at $10.25 per share, 656,656 warrants exercisable at $12.80 per share, 788,956 Series E Warrants exercisable at $25.00 per share and 30,958 warrants exercisable at $32.00 per share.

During September, 2020, the Company entered into separate warrant amendment agreements with certain existing holders of warrants to purchase shares of its common stock. The warrant amendment agreements are intended to facilitate the transactions contemplated by the Merger Agreement. As of September 30, 2020, holders of warrants to purchase 19,556,629 shares of common stock had entered into warrant amendment agreements, including holders of Series E Warrants to purchase 788,956 shares of common stock, Series F Warrants to purchase 3,116,252 shares of common stock, Series G Warrants to purchase 4,542,321 shares of common stock and Series H Warrants to purchase 11,109,100 shares of common stock.

Pursuant to the terms of the warrant amendment agreements, the Company and the holders agreed to the following provisions:

(i)

to reduce the exercise price of the Series E Warrants from $32.00 to $25.00, to reduce the exercise price of the Series F Warrants from $12.80 per share to $10.25 per share, to reduce the exercise price of the Series G Warrants from $4.37 to $3.50 and to reduce the exercise price of the Series H Warrants from $1.65 to $1.50;

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(ii)

to extend the termination date or expiration date, as applicable, of each of the original Series E Warrants, Series F Warrants, Series G Warrants and Series H Warrants (collectively, the “Original Warrants”) from their original respective termination or expiration dates to either (a) the five year anniversary of the closing of the Mergers contemplated by the Merger Agreement or (b) if the Merger Agreement is terminated or the Mergers contemplated thereby have not been consummated, the one year anniversary of the original termination or expiration date of such Original Warrants;

(iii)

to revise the terms of the Original Warrants to provide that in the event of a spin-off (the “Spin-Off”) of Neurotrope Bioscience, Inc. or any other entity or entities containing the existing business of the Company (collectively, the “Spin-Off Company”), the holder shall only receive, in lieu of any other consideration, warrants (the “Spin-Off Warrants”), to purchase a number of shares of the Spin-Off Company based on the same ratio as the ratio used to determine the number of shares of common stock of the Spin-Off Company that common stockholders of the Company will receive in the Spin-Off; and

(iv)

to delete the call provision contained in the original Series H Warrants.

The initial exercise price of the Spin-Off Warrants will be determined as follows for each of the Original Warrants:

(i)

for the Series E Warrants, by dividing $250 million by the number of shares of common stock of the Spin-Off Company outstanding immediately after the Spin-Off, excluding any shares issued in connection with a financing of the Spin-off Company after the date of entry into the warrant amendment agreement;

(ii)

for the Series F Warrants, by dividing $100 million by the number of shares of common stock of the Spin-Off Company outstanding immediately after the Spin-Off, excluding any shares issued in connection with a financing of the Spin-off Company after the date of entry into the warrant amendment agreement;

(iii)

for the Series G Warrants, by dividing $50 million by the number of shares of common stock of the Spin-Off Company outstanding immediately after the Spin-Off, excluding any shares issued in connection with a financing of the Spin-off Company after the date hereof; and

(iv)

for the Series H Warrants, by dividing $20 million by the number of shares of common stock of the Spin-Off Company outstanding immediately after the Spin-Off, excluding any shares issued in connection with a financing of the Spin-off Company after the date after the date of entry into the warrant amendment agreement.

The number of shares of common stock underlying the Spin-Off Warrants will be determined by using the same ratio used to determine how many shares of the Spin-Off Company that the common stockholders of the Company will receive in the Spin-Off. The Company currently contemplates that the Spin-Off will result in each common stockholder of the Company receiving one share of the Spin-Off Company for every five shares of the Company’s common stock owned by such stockholder (the “Spin-Off Ratio”). Although the Spin-Off Ratio may change depending on a number of factors, the number of shares of common stock of the Spin-Off Company underlying the Spin-Off Warrants will be based on the final Spin-Off Ratio. If the Spin-Off Ratio changes, so will the ratio applicable to the Spin-Off Warrants.

As a result of these warrant amendments, the Company has recorded an other expense of approximately $1,700,000 as the fair value of the four classes of warrants were higher as amended than per their original terms. The Company used the Black-Scholes valuation model to calculate the fair value of the amended warrants using applicable terms before and after amendment. The fair value of warrants was estimated at the date of amendment using the following weighted average assumptions: dividend yield 0%; expected term from one to five years; an aggregate volatility based upon a blend of the Company’s and guideline company historical volatility which resulted in aggregated volatilities ranging between 53.4% and 140.4% based upon the particular term of the underlying amended warrant; and risk-free interest rate ranging from 0.127% to 0.27%.

Note 9 – Subsequent Events:

Warrant Exercises

During October 2020, four warrant holders exercised warrants to purchase an aggregate of 13,128 shares of common stock at $0.32 per share.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing elsewhere in this report. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included elsewhere in this report and our annual report on Form 10-K for the year ended December 31, 2019.

The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the periods described, and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on the unaudited financial statements contained in this report, which we have prepared in accordance with United States generally accepted accounting principles. You should read the discussion and analysis together with such financial statements and the related notes thereto.

Overview

We are a biopharmaceutical company with product candidates in pre-clinical and clinical development. Neurotrope Bioscience began operations in October 2012. We are principally focused on developing a product platform based upon a drug candidate called bryostatin for the treatment of Alzheimer’s disease (“AD”), which is in the clinical testing stage. We are also evaluating bryostatin for other neurodegenerative or cognitive diseases and dysfunctions, such as Fragile X syndrome, Multiple Sclerosis, and Niemann-Pick Type C disease, which have undergone pre-clinical testing. Neurotrope has been a party to a technology license and services agreement with the original Blanchette Rockefeller Neurosciences Institute (“BRNI”) (which has been known as Cognitive Research Enterprises, Inc. (“CRE”) since October 2016), and its affiliate NRV II, LLC, which we collectively refer to herein as “CRE,” pursuant to which we now have an exclusive non-transferable license to certain patents and technologies required to develop our proposed products. Neurotrope Bioscience was formed for the primary purpose of commercializing the technologies initially developed by BRNI for therapeutic applications for AD or other cognitive dysfunctions. These technologies have been under development by BRNI since 1999 and, until March 2013, had been financed through funding from a variety of non-investor sources (which include not-for-profit foundations, the NIH, which is part of the U.S. Department of Health and Human Services, and individual philanthropists). From March 2013 forward, development of the licensed technology has been funded principally through the Company in collaboration with CRE.

Planned Merger and Spin-Off

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Upon the Closing, it is anticipated that current Neurotrope stockholders will own approximately 49.0% of Petros and current Metuchen securityholders will own approximately 51.0% of Petros. The Board of Directors of Petros is expected to consist of five members, three of whom will be designated by Metuchen and two of whom will be designated by the Company. Upon closing, Metuchen will be the accounting acquirer in the Mergers, but not the legal acquirer. As such, the Mergers are deemed a reverse recapitalization under the guidance of ASC 805 and, upon consummation, the historical financial statements of Metuchen will become the historical financial statements of the combined company.

In addition, as a condition to the consummation of the Mergers, Neurotrope is required to approve a spin-off transaction (the “Spin-Off”) whereby (i) any cash in excess of $20,000,000, subject to adjustment as provided for in the Merger Agreement, and all of the operating assets and liabilities of the Company not retained by the Company in connection with the Mergers will be contributed to a wholly-owned subsidiary of the Company (“Neurotrope SpinCo”) and (ii) holders of record of Neurotrope Common Stock and certain warrants will receive a pro rata distribution of one share of Neurotrope SpinCo’s common stock for each share of Neurotrope Common Stock held or underlying certain warrants, contingent upon the consummation of the Mergers. The record date for the Spin-Off, and the extent to which other stakeholders of the Company may be entitled to participate in the Spin-Off have not yet been determined.

Consummation of the Mergers is subject to certain closing conditions, including, among other things, approval by the common stockholders of the Company and Metuchen and the listing of the Petros common stock on the Nasdaq Stock Market after the Mergers. The Company currently anticipates that the shareholder meeting will be held on November 25, 2020. The Merger Agreement contains certain termination rights for both the Company and Metuchen, and further provides that, upon termination of the Merger Agreement under specified circumstances, either party may be required to pay the other party a termination fee of $1.0 million plus third party expenses incurred by the terminating party.

For more information on the Merger Agreement, see Note 1, “Organization, Nature of Business, and Liquidity”.

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Results of Most Recent Confirmatory Phase 2 Clinical Trial

On May 4, 2018, we announced a confirmatory, 100-patient, double-blinded clinical trial for the safe, effective 20 μg dose protocol for advanced AD patients not taking memantine as background therapy to evaluate improvements in SIB scores with an increased number of patients. We engaged WCT, in conjunction with consultants and investigators at leading academic institutions, to collaborate on the design and conduct of the trial, which began in April 2018. During July 2018, the first patient was enrolled in this study. Pursuant to a Services Agreement (the “2018 Services Agreement”) with WCT dated as of May 4, 2018, WCT provided services relating to the trial. The total estimated budget for the services, including pass-through costs, drug supply and other statistical analyses, was approximately $7.8 million. The trial was substantially completed as of December 31, 2019. We incurred approximately $7.7 million in total expenses of which WCT has represented a total of approximately $7.3 million and approximately $400,000 of expenses were incurred to other trial-related vendors and consultants, resulting in a total savings for this trial of approximately $500,000.

On September 9, 2019, we issued a press release announcing that the confirmatory Phase 2 study of Bryostatin-1 in moderate to severe AD did not achieve statistical significance on the primary endpoint, which was changed from baseline to Week 13 in the SIB total score.

An average increase in SIB total score of 1.3 points and 2.1 points was observed for the Bryostatin-1 and placebo groups, respectively, at Week 13. There were multiple secondary outcome measures in this trial, including the changes from baseline at Weeks 5, 9 and 15 in the SIB total score. No statistically significant difference was observed in the change from baseline in SIB total score between the Bryostatin -1 and placebo treatment groups.

The confirmatory Phase 2 multicenter trial was designed to assess the safety and efficacy of Bryostatin-1 as a treatment for cognitive deficits in patients with moderate to severe AD — defined as a Mini Mental State Exam 2 (“MMSE-2”) score of 4-15 – who are not currently taking memantine. Patients were randomized 1:1 to be treated with either Bryostatin-1 20μg or placebo, receiving 7 doses over 12 weeks. Patients on memantine, an NMDA receptor antagonist, were excluded unless they had been discontinued from memantine treatment for a 30-day washout period prior to study enrollment. The primary efficacy endpoint was the change in the SIB score between the baseline and week 13. Secondary endpoints included repeated SIB changes from baseline SIB at weeks 5, 9, 13 and 15.

On January 22, 2020, we announced the completion of an additional analysis in connection with the confirmatory Phase 2 study, which examined moderately severe to severe AD patients treated with Byrostatin-1 in the absence of memantine. To adjust for the baseline imbalance observed in the study, a post-hoc analysis was conducted using paired data for individual patients, with each patient as his/her own control. For the pre-specified moderate stratum (i.e., MMSE-2 baseline scores 10-15), the baseline value and the week 13 value were used, resulting in pairs of observations for each patient. The changes from baseline for each patient were calculated and a paired t-test was used to compare the mean change from baseline to week 13 for each patient. A total of 65 patients had both baseline and week 13 values, from which there were 32 patients in the Bryostatin-1 treatment group and 33 patients in the placebo group. There was a statistically significant improvement over baseline (4.8 points) in the mean SIB at week 13 for subjects in the Bryostatin-1 treatment group (32 subjects), paired t-test p < 0.0076, 2-tailed. In the placebo group (33 subjects), there was also a statistically significant increase from baseline in the mean SIB at week 13, for paired t-test p < 0.0144, consistent with the placebo effect seen in the overall 203 study. Although there was a signal of Bryostatin-1’s benefit for the moderately severe stratum, the difference between the Bryostatin-1 and placebo treatment groups was not statistically significant (p=0.2727). As a further test of the robustness of this Moderate Stratum benefit signal, a pre-specified trend analysis (measuring increase of SIB improvement as a function of successive drug doses) was performed on the repeated SIB measures over time (Weeks 0, 5, 9, and 13). These trend analyses showed a significant positive slope of improvement for the treatment groups in the 203 study that was significantly greater than for the placebo group (p<.01).

In connection with the additional analysis, we also announced the approval of a $2.7 million award from the NIH to support an additional Phase 2 clinical study focused on the moderate stratum for which we saw improvement in the 203 study. The grant provides for funds in the first year of approximately $1.0 million and funding in year two of approximately $1.7 million subject to satisfactory progress of the project. We are planning to meet with the Food and Drug Administration (“FDA”) to present the totality of the clinical data for Bryostatin-1. We are continuing to determine how to proceed with respect to our current development programs for Bryostatin-1.

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On July 23, 2020, Neurotrope Bioscience entered into an additional services agreement (the “2020 Services Agreement”) with WCT. The 2020 Services Agreement relates to services for our Phase 2 clinical study assessing the safety, tolerability and long-term efficacy of bryostatin in the treatment of moderately severe AD subjects not receiving memantine treatment. The total estimated budget for the services, including pass-through costs, is approximately $9.8 million. As previously disclosed on January 22, 2020, we have received a $2.7 million award from the NIH, which award will be used to support the 2020 Study, resulting in an estimated net budgeted cost of the 2020 Study to the Company of $7.1 million. In connection with the entry into the Letter of Intent and 2020 Services Agreement, we agreed that WCT would invoice Neurotrope Bioscience for the following advance payments: (i) services fees of approximately $943,000; (ii) pass-through expenses of approximately $266,000; and (iii) investigator/institute fees of approximately $314,000, which in each case will be due within ten (10) days of Neurotrope Bioscience’s receipt of such invoice.

As of September 30, 2020, we incurred approximately $1.1 million of expenses associated with services provided by WCT. Of those amounts, approximately $492,000 was paid utilizing prepayments on deposit with WCT, leaving a balance in prepaid expenses of approximately $1 million. In addition, we reflected an offset to these expenses of approximately $862,000 of amounts receivable from the NIH. As of November 5, 2020, the NIH, pursuant to the $2.7 million award (noted above), has reimbursed us approximately $705,000 for expenses incurred during the third quarter of 2020. See Note 1, "Organization, Nature of Business, and Liquidity" and Note 5, "Clinical Trial Services Agreements".

Other Development Projects

To the extent resources permit, we may pursue development of selected technology platforms with indications related to the treatment of various disorders, including neurodegenerative disorders such as AD, based on our currently licensed technology and/or technologies available from third party licensors or collaborators.

For example, we have entered into a Cooperative Research and Development Agreement (“CRADA”) with the National Cancer Institute (“NCI”) on January 29, 2019 for the research and clinical development of Bryostatin-1. Under the CRADA, we will collaborate with the NCI’s Center for Cancer Research, Pediatric Oncology Branch (“POB”) to develop a Phase 1 clinical trial testing the safety and toxicity of Bryostatin-1 in children and young adults with CD22 + leukemia and B-cell lymphoma. In the growing era of highly effective immunotherapies targeting cell-surface antigens (e.g., CAR-T cell therapy), and the recognition that antigen modulation plays a critical role in evasion of response to immunotherapy, the ability for Bryostatin-1 to upregulate CD22 may serve a synergistic role in enhancing the response to a host of CD22 targeted therapies. Under the CRADA, Bryostatin-1 is expected to be tested in the clinic to evaluate its ability to modulate CD22 in patients with relapsed/refractory CD22+ disease, while evaluating safety, toxicity and overall response. In connection with the Transfer Agreement, we agreed to assign and transfer to BryoLogyx all of our right, title and interest in and to the CRADA, subject to the receipt of NCI’s consent.

Nemours Agreement

On September 5, 2018, we announced a collaboration with The Nemours / Alfred I. duPont Hospital for Children (“Nemours”), a premier U.S. children’s hospital, to initiate a clinical trial in children with Fragile X syndrome (“Fragile X”). In addition to the primary objective of safety and tolerability, measurements will be made of working memory, language and other functional aspects such as anxiety, repetitive behavior, executive functioning, and social behavior.

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Results of Operations

Comparison of the nine months ended September 30, 2020 and September 30, 2019

The following table summarizes our results of operations for the nine months ended September 30, 2020 and 2019:


	Nine months ended
	September 30,				Dollar
	2020		2019		Change		% Change
Revenue	$	—	$	—	$	—	0	%
Operating Expenses:
Research and development expenses – Other	$	1,004,762	$	4,273,531	$	(3,268,769)	(76.5)	%
General and administrative expenses – Related party	$	7,361	$	37,500	$	(30,139)	(80.4)	%
General and administrative expenses – Other	$	5,731,238	$	5,165,096	$	566,142	11.0	%
Stock based compensation expenses – Related Party	$	21,001	$	173,161	$	(152,160)	(87.9)	%
Stock based compensation expenses – Other	$	1,428,022	$	3,173,519	$	(1,745,497)	(55.0)	%
Other income (expense), net	$	(1,546,695)	$	301,620	$	(1,848,315)	(612.8)	%
Net loss	$	9,739,079	$	12,521,187	$	(2,782,108)	(22.2)	%

Revenues

We did not generate any revenues for the nine months ended September 30, 2020 and 2019.

Operating Expenses

Overview

Total operating expenses for the nine months ended September 30, 2020 were $8,192,384 as compared to $12,822,807 for the nine months ended September 30, 2019, a decrease of approximately 36%. The decrease in total operating expenses is due primarily to a decrease in research and development expenses and stock-based, non-cash, compensation expenses offset by an increase in our general and administrative expenses.

Research and Development Expenses

For the nine months ended September 30, 2020, we incurred $1,004,762 in research and development expenses with non-related parties as compared to $4,273,531 for the nine months ended September 30, 2019. These expenses were incurred pursuant to developing the potential AD therapeutic product, specifically expenses relating to the recently concluded confirmatory Phase 2 clinical trial plus the recently initiated Phase 2 clinical trial for AD. Of these expenses, for the nine months ended September 30, 2020, $616,851 was incurred, which includes an expense offset of $861,852 reimbursable pursuant to our NIH grant ($705,000 was received subsequent to the end of the third quarter 2020), principally relating to our confirmatory clinical trial and related storage of drug product, $319,128 for clinical consulting services, $22,138 of amortization of prepaid licensing fees relating to the Stanford and Mount Sinai license agreements and $26,645 for development of alternative drug supply with Stanford University as compared to, for the nine months ended September 30, 2019, $3,647,450 was incurred principally relating to our confirmatory clinical trial and related storage of drug product, $584,745 for clinical consulting services, $20,729 of amortization of prepaid licensing fees relating to the Stanford and Mount Sinai license agreements and $20,607 for development of alternative drug supply with Stanford University.

We expect our research and development expenses to substantially increase, in the short term, as our current Phase 2 clinical trial for AD was recently initiated. Other development might increase, as our resources permit, in order to advance our potential products. We are continuing to determine how to proceed with respect to our other current development programs for Bryostatin-1.

General and Administrative Expenses

We incurred related party general and administrative expenses totaling $7,361 for the nine months ended September 30, 2020 as compared to $37,500 for the nine months ended September 30, 2019. The decrease is attributable to the resignation of two members of our board of directors in February 2020, who are affiliates of CRE.

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We incurred $5,731,238 and $5,165,096 of general and administrative expenses for the nine months ended September 30, 2020 and 2019, respectively, an increase of approximately 10%. Of the amounts for the nine months ended September 30, 2020, as compared to the comparable 2019 period: $1,381,863 was incurred primarily for wages, bonuses, vacation pay, severance, taxes and insurance, versus $1,625,174 for the 2019 comparable period; $1,799,735 was incurred for ongoing legal expenses versus $573,018 for the 2019 comparable period based upon work associated with our strategic alternatives and planning for our January 2020 capital raise; $1,235,761 was incurred for outside operations consulting services, versus $1,188,685 for the 2019 comparable period as we incurred additional cash and non-cash expenses for investment banking consulting services; $53,448 was incurred for travel expenses, versus $160,078 for the 2019 comparable period, which decrease is primarily attributable to limited travel due to the COVID-19 contagion; $368,984 was incurred for investor relations services versus $972,577 for the 2019 comparable period, which additional expenses during the nine months ended September 30, 2019 were primarily attributable to non-cash compensation paid to advisors and an increase in our market exposure; $236,163 was incurred for professional fees associated with auditing, financial, accounting and tax advisory services, versus $109,555 for the 2019 comparable period, which additional expenses during the current period were incurred for fees associated with our announced strategic transactions; $457,887 was incurred for insurance, versus $361,494 for the 2019 comparable period, which increase is primarily attributable to an increase in coverage; and $197,397 was incurred for utilities, supplies, license fees, filing costs, rent, advertising and other versus $174,515 for the 2019 comparable period, which increase is primarily attributable to fees relating to document preparation and filings for our announced strategic transactions.

Stock Based Compensation Expenses

We incurred related party non-cash expenses totaling $21,001 and $173,161 for the nine months ended September 30, 2020 and 2019, respectively. The decrease is primarily attributable to the resignation of two Board members who were affiliates of CRE and fully expensing certain options in 2019.

We incurred $1,428,022 and $3,173,519 of non-related party non-cash expenses for the nine months ended September 30, 2020 and 2019, respectively. The decrease for the comparable period is primarily attributable to newly issued stock options during the first quarter of 2019, which included awards with accelerated vesting terms.

Other Income

We recorded $1,700,000 of other, non-cash expense for the nine months ended September 30, 2020 as compared to $0 for the nine months ended September 30, 2019. The current expense is due to a charge for the revaluation of investor warrants associated with our strategic transactions previously announced and currently in process (See “Planned Merger and Spin-Off” above.)

We earned $153,305 of interest income for the nine months ended September 30, 2020 as compared to $301,620 for the nine months ended September 30, 2019 on funds deposited in interest bearing money market accounts. The decrease is primarily attributable to the decrease in money market interest income rates.

Net loss and loss per share

We incurred losses of $9,739,079 and $12,521,187 for the nine months ended September 30, 2020 and 2019, respectively. The decreased loss was primarily attributable to the decrease in net research and development expenses associated with completing our most recent Phase 2 confirmatory clinical trial and a decrease in non-cash stock-based compensation expenses offset by the increase in our general and administrative expenses and one-time charges associated with the amendment of investor warrants. Earnings (losses) per common share were ($0.46) and ($0.97) for the nine months ended September 30, 2020 and 2019, respectively. The decrease in loss per share is primarily attributable to the decrease in our net loss and an increase in weighted average common shares outstanding.

The computation of diluted loss per share for the nine months ended September 30, 2020 excludes 500 shares of convertible preferred stock convertible into 303,031 shares of common stock, 22,011,258 warrants and options to purchase 2,271,573 shares of our common stock as they are anti-dilutive due to our net loss. For the nine months ended September 30, 2019, the computation excludes 10,368,158 warrants and options to purchase 2,295,246 shares of our common stock, as they are anti-dilutive due to our net loss.

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Comparison of the three months ended September 30, 2020 and September 30, 2019

The following table summarizes our results of operations for the three months ended September 30, 2020 and 2019:


	Three months ended
	September 30,				Dollar
	2020		2019		Change		% Change
Revenue	$	—	$	—	$	—	0	%
Operating Expenses:
Research and development expenses – Other	$	410,292	$	845,797	$	(435,505)	(51.5)	%
General and administrative expenses – Related party	$	—	$	12,500	$	(12,500)	(100.0)	%
General and administrative expenses – Other	$	1,778,187	$	2,131,205	$	(353,018)	(16.6)	%
Stock based compensation expenses – Related Party	$	—	$	47,177	$	(47,177)	(100.0)	%
Stock based compensation expenses – Other	$	387,927	$	877,525	$	(489,598)	(55.8)	%
Other income (expense), net	$	(1,693,203)	$	90,159	$	(1,783,362)	(1,978.0)	%
Net loss	$	4,269,609	$	3,824,562	$	445,046	11.6	%

Revenues

We did not generate any revenues for the three months ended September 30, 2020 and 2019.

Operating Expenses

Overview

Total operating expenses for the three months ended September 30, 2020 were $2,576,406 as compared to $3,914,722 for the three months ended September 30, 2019, a decrease of approximately 34%. The decrease in total operating expenses is due primarily to a decrease in research and development expenses, stock-based, non-cash, compensation expenses and general and administrative expenses.

Research and Development Expenses

For the three months ended September 30, 2020, we incurred $410,292 in research and development expenses with non-related parties as compared to $845,797 for the three months ended September 30, 2019. These expenses were incurred pursuant to developing the potential AD therapeutic product, specifically expenses relating to the recently initiated follow-on Phase 2 clinical trial for AD. Of these expenses, for the three months ended September 30, 2020, $259,729, which includes an expense offset of $861,852 reimbursable pursuant to our NIH grant ($705,000 was received subsequent to the end of the third quarter 2020), was incurred principally relating to our confirmatory clinical trial and related storage of drug product, $130,887 for clinical consulting services, $7,179 of amortization of prepaid licensing fees relating to the Stanford and Mount Sinai license agreements and $12,497 for development of alternative drug supply with Stanford University as compared to, for the three months ended September 30, 2019, $664,677 was incurred principally relating to our confirmatory clinical trial and related storage of drug product, $165,033 for clinical consulting services, $7,480 of amortization of prepaid licensing fees relating to the Stanford and Mount Sinai license agreements and $8,607 for development of alternative drug supply with Stanford University.

General and Administrative Expenses

We incurred related party general and administrative expenses totaling $0 for the three months ended September 30, 2020 versus $12,500 for the three months ended September 30, 2019. The decrease is attributable to the resignation of two members of our board of directors in February 2020, who are affiliates of CRE.

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We incurred $1,778,187 and $2,131,205 of general and administrative expenses for the three months ended September 30, 2020 and 2019, respectively, a decrease of approximately 16%. Of the amounts for the three months ended September 30, 2020, as compared to the comparable 2019 period: $343,774 was incurred primarily for wages, bonuses, vacation pay, severance, taxes and insurance, versus $447,695 for the 2019 comparable period. The decrease for the three months ending September 30, 2020 is principally based upon the resignation of our General Counsel and Regulatory Vice President in the September 30, 2019 period; $529,855 was incurred for ongoing legal expenses versus $288,161 for the 2019 comparable period based upon work associated with our strategic transactions; $437,180 was incurred for outside operations consulting services, versus $764,747 for the 2019 comparable period, the decrease is attributable to additional cash and non-cash expenses for investment banking consulting services during the prior comparable period; $7,792 was incurred for travel expenses, versus $48,769 for the 2019 comparable period, which decrease is primarily attributable to limited travel due to the COVID-19 contagion; $146,593 was incurred for investor relations services versus $350,654 for the 2019 comparable period, which additional expenses during the three months ended September 30, 2019 were primarily attributable to non-cash compensation paid to advisors and an increase in our market exposure; $80,028 was incurred for professional fees associated with auditing, financial, accounting and tax advisory services, versus $24,768 for the 2019 comparable period which increase is primarily attributable to fees relating to document preparation for our announced strategic transactions; $149,490 was incurred for insurance, versus $146,243 for the 2019 comparable period; and $83,475 was incurred for utilities, supplies, license fees, filing costs, rent, advertising and other versus $60,168 for the 2019 comparable period.

Stock Based Compensation Expenses

We incurred related party non-cash expenses totaling $0 and $47,695 for the three months ended September 30, 2020 and 2019, respectively. The decrease is primarily attributable to the resignation of two Board members who were affiliates of CRE and fully expensing certain options in 2019.

We incurred $387,927 and $877,525 of non-related party non-cash expenses for the three months ended September 30, 2020 and 2019, respectively. The decrease for the comparable period is primarily attributable to newly issued stock options during the first quarter of 2019, which included awards with accelerated vesting terms.

Other Income

We recorded $1,700,000 of other non-cash expense for the nine months ended September 30, 2020 as compared to $0 for the nine months ended September 30, 2019. The current expense is due to a charge for the revaluation of investor warrants associated with our strategic transactions previously announced and currently in process (see "Planned Merger and Spin-Off" above.)

We earned $6,797 of interest income for the three months ended September 30, 2020 as compared to $90,159 for the three months ended September 30, 2019 on funds deposited in interest-bearing money market accounts. The decrease is primarily attributable to the decrease in money market interest income rates.

Net loss and loss per share

We incurred losses of $4,269,609 and $3,824,563 for the three months ended September 30, 2020 and 2019, respectively. The increased loss was primarily attributable to the recording of non-cash warrant amendment expenses offset by the decrease in research and development expenses associated with the ramp up of our current Phase 2 confirmatory clinical trial, a decrease in our general and administrative expenses and a decrease in non-cash stock-based compensation expenses. Earnings (losses) per common share were ($0.18) and ($0.30) for the three months ended September 30, 2020 and 2019, respectively. The decrease in loss per share is primarily attributable to an increase in weighted average common shares outstanding partially offset by the increase in our net loss.

The computation of diluted loss per share for the three months ended September 30, 2020 excludes 500 shares of convertible preferred stock convertible into 303,031 shares of common stock, 22,011,258 warrants and options to purchase 2,271,573 shares of our common stock as they are anti-dilutive due to our net loss. For the three months ended September 30, 2019, the computation excludes 10,368,158 warrants and options to purchase 2,295,246 shares of our common stock, as they are anti-dilutive due to our net loss.

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Financial Condition, Liquidity and Capital Resources

Cash and Working Capital

Since inception, we have incurred negative cash flows from operations. As of September 30, 2020, we had an accumulated deficit of $98,555,922 and had working capital of $27,825,991 as compared to working capital of $17,397,094 as of December 31, 2019. The $10,428,897 increase in working capital was primarily attributable to an increase in cash of approximately $16.5 million, net of transaction expenses, from our registered direct offering of common stock and warrants (described below) offset by our net loss, excluding non-cash compensation and consulting expenses and depreciation, of $6,085,678 plus capital expenditures of $5,413.

On January 22, 2020, we entered into a securities purchase agreement with certain institutional investors and certain pre-existing high net worth individual investors, pursuant to which we sold in a registered offering an aggregate of 18,000 shares of Series D Preferred Stock (which are convertible into a total of 10,909,100 shares of common stock) and Series H warrants to purchase up to an aggregate of 10,909,100 shares of common stock, for an aggregate purchase price of approximately $18 million (See Note 6 to the Financials, “Common Stock,” for transaction details.)

As of September 30, 2020, the Company had approximately $27.0 million in cash and cash equivalents as compared to $17.4 million at December 31, 2019. The increase in cash is attributable to the aformentioned issuance of preferred stock and warrants pursuant to a registered direct offering in January 2020, partially offset by cash used for operating activities during the 2020 period. The Company expects that its current cash and cash equivalents will be sufficient to support its projected operating requirements for at least the next 12 months from the Form 10-Q filing date, which would include the continuing development of bryostatin, our novel drug targeting the activation of PKC epsilon. Such cash and cash projections do not include the impact of the Planned Merger and Spinoff transaction, if approved.

In addition, should the Planned Mergers and Spinoff be approved and consummated, any cash in excess of $20,000,000, subject to adjustment as provided for in the Merger Agreement, and all of the operating assets and liabilities of the Company will be contributed to a wholly-owned subsidiary of the Company (“Neurotrope SpinCo”). Neurotrope SpinCo operations are expected to be very similar to current operations of Neurotrope Bioscience. The cash expected to be spun out upon approval and closing is anticipated to be sufficient to finance SpinCo operations for at least the next twelve months from this filing date. Future development activities may require additional equity or debt financing or additional collaboration or licensing agreements. Such equity financing may not be on favorable terms and would likely be dilutive or in the case of debt financing may involve restrictive covenants. Collaboration or licensing arrangements may require the Company to relinquish rights to some of its technologies or product candidates on terms that may not favorable to the Company. The Company’s ability to access capital when needed is not assured and, if not achieved on a timely basis, could materially harm its business, financial condition and results of operations.

Sources and Uses of Liquidity

Since inception, we have satisfied our operating cash requirements from the private placement of equity securities sold principally to outside investors. We expect to continue to incur expenses, resulting in losses and negative cash flows from operations, over at least the next several years as we may continue to develop AD and other therapeutic products. We anticipate that this development may include new clinical trials and additional research and development expenditures. We are continuing to determine how to proceed with respect to our current development programs for Bryostatin-1.


	Nine Months Ended September 30,
	2020		2019
Cash used in operating activities	$	6,896,751	$	10,367,137
Cash used in investing activities		5,413		5,214
Cash provided by financing activities		16,519,988		419,843

Net Cash Used in Operating Activities

Cash used in operating activities was $6,896,751 for the nine months ended September 30, 2020, compared to $10,367,137 for the nine months ended September 30, 2019. The $3,470,386 decrease primarily resulted from the decreased net loss of approximately $2.8 million, by the decrease in payables of approximately $3.0 million and the one-time non-cash warrant amendment expense of $1.7 million, offset by a decrease in non-cash stock-based compensation expenses of approximately $2.7 million and by a decrease in prepaid expenses of approximately $1.3 million, for the nine months ended September 30, 2020.

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Net Cash Used in Investing Activities

Net cash used in investing activities was $5,413 for the nine months ended September 30, 2020 compared to $5,214 for the nine months ended September 30, 2019. The cash used in investing activities for both periods was for capital expenditures.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $16,519,988 for the nine months ended September 30, 2020 compared to $419,843 for the nine months ended September 30, 2019. Net cash provided for the nine months ended September 30, 2020 was the result of funds raised through the sale of common stock and warrants to investors from our registered direct public offering as described below versus cash provided for the nine months ended September 30, 2019 resulted from funds raised through exercise of warrants by investors in our historical private placements.

On January 22, 2020, we raised, through a registered direct offering, approximately $16.5 million in net proceeds. Pursuant to the terms of a purchase agreement, we issued to the purchasers an aggregate of 18,000 shares of Series D Preferred Stock (which are convertible into a total of 10,909,100 shares of common stock) and Series H warrants to purchase up to an aggregate of 10,909,100 shares of common stock for an aggregate purchase price of approximately $18 million.

As of November 5, 2020, we had approximately $26.9 million in cash, cash equivalents and marketable investment securities. We expect that our existing capital resources will be sufficient to support our projected operating requirements over at least the next 12 months from the Form 10-Q filing date, including the potential continued development of bryostatin, our novel drug targeting the activation of PKC epsilon. The future course of our operations and research and development activities will be contingent upon the further analysis of results from our recently completed trial, in addition to our current plans regarding the strategic alternative disclosed above in “Overview - Planned Merger and Spin-Off”.

We expect to require additional capital in order to initiate, pursue and complete all potential AD clinical trials, including the development of bryostatin for other potential product applications, or in connection with any strategic alternatives that we may pursue. Additional funding may not be available to us on acceptable terms, or at all. If we are unable to access additional funds when needed, we may not be able to initiate, pursue and complete all planned clinical trials or continue the development of our product candidates or we could be required to delay, scale back or eliminate some or all of our development programs and operations. Any additional equity financing, if available, may not be available on favorable terms, would most likely be significantly dilutive to our current stockholders and debt financing, if available, and may involve restrictive covenants. If we are able to access funds through collaborative or licensing arrangements, we may be required to relinquish rights to some of our technologies or product candidates that we would otherwise seek to develop or commercialize on our own, on terms that are not favorable to us. Our ability to access capital when needed is not assured and, if not achieved on a timely basis, will materially harm our business, financial condition and results of operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable to a smaller reporting company.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

An evaluation was performed under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer, our principal executive officer and principal financial officer, respectively, of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based on their evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective due to: inadequate segregation of duties consistent with control objectives in the areas over certain payroll and banking systems and user access controls; ineffective processes over period end financial disclosure and reporting including documentation of GAAP disclosure and reporting reviews supporting the financial reporting process and changes to chart of accounts; and ineffective information technology (IT) general computing controls including lack of risk and design assessments supporting IT security policies and procedures, user access, and IT controls within third party contracts. These weaknesses may affect management’s ability to determine if errors or inappropriate actions have taken place. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible changes in our disclosure controls and procedures.

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We previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, that our management, including our Chairman of the Board, principal executive officer and principal financial officer, assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in the 2013 Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by the Annual Report on Form 10-K for the fiscal year ended December 31, 2019, such internal controls and procedures were not effective to detect the inappropriate application of US generally accepted accounting principles.

Notwithstanding the material weaknesses described above, our management, including the Chief Executive Officer and Chief Financial Officer, has concluded that financial statements, and other financial information included in this quarterly report, fairly present in all material respects our financial condition, results of operations, and cash flows as of and for the periods presented in this quarterly report.

Changes in Internal Controls over Financial Reporting

There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Except as set forth below, there have been no material changes to our risk factors contained in our Annual Report on Form 10-K for the period ended December 31, 2019. For a further discussion of our Risk Factors, refer to the “Risk Factors” discussion contained in our Annual Report on Form 10-K.

Our financial condition, clinical development efforts, and results of operations could be adversely affected by the ongoing coronavirus outbreak.

Any outbreak of contagious diseases, such as COVID-19, or other adverse public health developments, could have a material and adverse effect on our business operations. Such adverse effects could include disruptions or restrictions on the ability of our, our collaborators’, or our suppliers’ personnel to travel, and could result in temporary closures of our facilities or the facilities of our collaborators or suppliers.

As COVID-19 continues to affect individuals and businesses around the globe, we will likely experience disruptions that could severely impact our business and clinical trials, including:

●

delays or difficulties in enrolling patients in our clinical trials, or drop-outs from our clinical trials, including those resulting from an inability to travel to our clinical trial sites as a result of quarantines or other restrictions resulting from COVID-19;

●

delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

●

diversion or prioritization of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

●

interruption of key clinical trial activities, such as clinical trial site monitoring, due to quarantines or other limitations on travel imposed or recommended by federal or state governments, employers and others;

●

limitations on employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families or requirements imposed on employees to avoid contact with large groups of people;

●

delays in receiving approval from local regulatory authorities to initiate our planned clinical trials;

●

delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials;

●

interruption in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in our clinical trials;

●

changes in local regulations as part of a response to the COVID-19 outbreak which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether; and

●

delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees.

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In addition, the continued spread of COVID-19 globally could adversely affect our manufacturing and supply chain. Parts of our direct and indirect supply chain may accordingly be subject to disruption or product contamination. Additionally, our results of operations could be adversely affected to the extent that COVID-19 or any other epidemic harms our business or the economy in general either domestically or in any other region in which we do business. The extent to which COVID-19 affects our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others, which could have an adverse effect on our business and financial condition.

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

Other than as set forth below, there have been no other unregistered sales of equity securities during the three months ended September 30, 2020:

On July 1, 2020, we issued 103,450 shares of restricted common stock to SRAX, Inc. as compensation for investor relations consulting services.

On September 1, 2020, we issued warrants to purchase 90,000 and 50,000 shares of common stock to Katalyst Securities LLC and GP Nurmenkari Inc., respectively, as compensation for financial advisory services.

We issued these shares pursuant to an exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

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Item 6. Exhibits.


Exhibit Number

2.1		First Amendment to Agreement and Plan of Merger, dated as of July 23, 2020, by and between Petros Pharmaceuticals, Inc., PM Merger Sub 1, LLC, PN Merger Sub 2, Inc., Neurotrope, Inc. and Metuchen Pharmaceuticals LLC (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 24, 2020).

2.2		Second Amendment to Agreement and Plan of Merger, dated as of September 30, 2020, by and between Petros Pharmaceuticals, Inc., PM Merger Sub 1, LLC, PN Merger Sub 2, Inc., Neurotrope, Inc. and Metuchen Pharmaceuticals, LLC. (incorporated by reference to Exhibit 2.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

4.1		Form of the Amended and Restated Series E Warrant (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

4.2		Form of the Amended and Restated Series F Warrant (incorporated by reference to Exhibit 4.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

4.3		Form of the Amended and Restated Series G Warrant (incorporated by reference to Exhibit 4.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

4.4		Form of the Amended and Restated Series H Warrant (incorporated by reference to Exhibit 4.4 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

4.5		Form of Series A Common Stock Warrant (Series E Spin-Off Warrant) (incorporated by reference to Exhibit 4.5 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

4.6		Form of Series B Common Stock Warrant (Series F Spin-Off Warrant) (incorporated by reference to Exhibit 4.6 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

4.7		Form of Series C Common Stock Warrant (Series G Spin-Off Warrant) (incorporated by reference to Exhibit 4.7 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

4.8		Form of Series D Common Stock Warrant (Series H Spin-Of Warrant) (incorporated by reference to Exhibit 4.8 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

10.1		Employee Lease Agreement, dated as of July 23, 2020, by and between Neurotrope, Inc., Neurotrope Bioscience, Inc. and Metuchen Pharmaceuticals, LLC. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 24, 2020).

10.2**		Services Agreement, by and between Worldwide Clinical Trials, Inc. and Neurotrope Bioscience, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 29, 2020).

10.3		Form of Voting Agreement by and between Metuchen Pharmaceuticals, LLC and certain stockholders of Neurotrope, Inc. (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

10.4		Warrant Amendment Agreement, dated as of September 29, 2020, by and between Neurotrope, Inc. and the holders of Series E warrants (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

10.5		Warrant Amendment Agreement, dated as of September 29, 2020, by and between Neurotrope, Inc. and the holders of Series F warrants (incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

10.6		Warrant Amendment Agreement, dated as of September 29, 2020, by and between Neurotrope, Inc. and the holders of Series G warrants (incorporated by reference to Exhibit 10.4 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

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10.7		Warrant Amendment Agreement, dated as of September 29, 2020, by and between Neurotrope, Inc. and the holders of Series H warrants (incorporated by reference to Exhibit 10.5 of the Registrant’s Current Report on Form 8-K filed with the SEC on September 30, 2020).

31.1*		Certification of the President and Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101*		The following financial information from this Quarterly Report on Form 10-Q for the period ended September 30, 2020, formatted in Inline XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Operations; (ii) the Condensed Consolidated Balance Sheets; (iii) the Condensed Consolidated Statements of Cash Flows; and (iv) the Notes to Consolidated Financial Statements, tagged as blocks of text.

104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

* Filed herewith.

** Confidential treatment has been requested for certain portions of this exhibit. The unredacted document will be provided supplementally to the Securities and Exchange Commission upon request.

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SIGNATURES

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


	Neurotrope, Inc.

Date: November 9, 2020	By:	/s/ Charles S. Ryan, JD, Ph.D.
		Charles S. Ryan, JD, Ph.D.
		Chief Executive Officer (principal executive officer)

Date: November 9, 2020	By:	/s/ Robert Weinstein
		Robert Weinstein
		Chief Financial Officer, Executive Vice President,
		Secretary and Treasurer (principal financial officer)

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