COCP US Equity☆

Item 1A. Risk Factors. 11

Item 1B. Unresolved Staff Comments. 39

Item 2. Properties. 40

Item 3. Legal Proceedings. 40

Item 4. Mine Safety Disclosures. 41

Part II. 41

Item 6. Selected Financial Data. 41

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 46

Item 8. Financial Statements. 46

Item 9A. Controls and Procedures. 48

Item 9B. Other Information. 48

Part III. 48

Item 10. Directors, Executive Officers and Corporate Governance. 48

Item 11. Executive Compensation. 48

Item 14. Principal Accounting Fees and Services. 48

Part IV. 49

Item 15. Exhibits, Financial Statement Schedules. 49

SIGNATURES 50

PART

I

Item

1. Business.

Overview

Cocrystal

Pharma, Inc. (the “Company” or “Cocrystal”) is a biotechnology company seeking to discover and develop

novel antiviral therapeutics as treatments for serious and/or chronic viral diseases. We employ unique structure-based technologies

and Nobel Prize winning expertise to create first- and best-in-class antiviral drugs. These technologies are designed to efficiently

deliver small molecule therapeutics that are safe, effective, and convenient to administer. We have identified promising discovery,

preclinical and clinical stage antiviral compounds for unmet medical needs caused by influenza virus, coronavirus, hepatitis C

virus (“HCV”), and norovirus infections.

The

Company operates in one segment. Management uses cash flows as the primary measure to manage its business and does not segment

its business for internal reporting or decision-making.

Cocrystal

Technology

We

are developing antiviral therapeutics that inhibit the essential viral replication function of RNA viruses causing acute and chronic

viral diseases. Our goals include treating influenza virus, coronavirus, and norovirus infections by discovering and developing

drug candidates targeting the viral replication process. Additionally, one of our goals is to decrease the duration of HCV therapy

by advancing our drug candidate targeting the HCV RNA-dependent RNA polymerase enzyme through partnerships and/or licensing activities.

In the case of coronavirus, we target a major protease enzyme that produces the active form of the viral replication enzyme. To discover and design these inhibitors, we use a proprietary platform comprising computation, medicinal

chemistry, X-ray crystallography, and our extensive know-how. We determine the structures of cocrystals containing the inhibitors

bound to the enzyme or protein to guide our structure-based drug design. We also use advanced computational methods to screen

and design product candidates using proprietary cocrystal structural information. In designing the candidates, we seek to anticipate

and avert potential viral mutations leading to resistance. By designing and selecting drug candidates that interrupt the viral

replication process and also have specific binding characteristics, we seek to develop drugs that are not only effective against

both the virus and possible mutants of the virus, but which also have reduced off-target interactions that cause undesirable clinical

side effects. The successful application of our approach requires an extensive knowledge of viruses and drug targets. In addition,

knowledge and experience in the fields of structural biology, and enzymology are required. We developed our proprietary structure-based

drug design under the guidance of Dr. Roger Kornberg, our Chief Scientist, Chairman of our Scientific Advisory Board and recipient

of the Nobel Prize in Chemistry in 2006. Our drug discovery process focuses on the highly conserved regions of the viral enzymes

and inhibitor-enzyme interactions at the atomic level. Additionally, we have developed proprietary chemical libraries consisting

of non-nucleoside inhibitors, metal-binding inhibitors, and drug-like fragments. Our drug discovery process is different from

traditional, empirical, medicinal chemistry approaches that often require iterative high-throughput compound screening and lengthy

hit-to-lead processes. We will continue developing preclinical and clinical drug candidates using our proprietary drug discovery

technology.

The

Company’s proprietary technology integrates several powerful and specialized techniques:

(2) Atomic resolution 3-D structure determination of drug binding pockets;

We

have applied these techniques to develop antiviral inhibitors of four important viruses: influenza virus, coronavirus, HCV and

norovirus.

Market-Driven

Product Profiles

In

all of our programs our goal is to develop best-in-class broad-spectrum antiviral drugs with high-barrier-to-drug resistance.

An ideal product for an antiviral therapy would have at least the following characteristics:

(1) High barrier to viral resistance;

(2) Effective against all viral subtypes that cause disease;

(3) Fast onset of action and/or shortened therapeutic time;

(4) Good safety and tolerability profile; and

Even

at the discovery stage of drug development, we select compounds with these factors in mind. Furthermore, we believe our

technology is capable of delivering therapies that satisfy all of these key factors, as detailed below.

High

barrier to drug resistance: Drug resistance is a major obstacle to developing effective antiviral therapies. Viruses can reproduce

rapidly and in enormous quantities in infected human cells. During viral replication, random changes in the viral genome, called

mutations, develop. If such a mutation occurs in a region of the viral genome that is targeted by a given antiviral therapy, that

therapy may no longer be effective against the mutated virus. These mutated or “resistant” viruses can freely infect

and multiply even in individuals who have received drug treatment. In some cases, resistant virus strains may even predominate.

For example, in the 2009 swine influenza pandemic, the predominant strain was resistant to the best available therapies. In

the current COVID-19 pandemic mutated viruses have been identified and sequenced demonstrating that the potential for resistance

to current drugs and reduced effectiveness of vaccines is already present.

The

Company’s focus on viral replication proteins can overcome the obstacle of viral resistance. We identify and target critical

components of viral replication proteins that are essential for function, and therefore, sensitive to change. A mutation in these

critical components is likely to inactivate the replication protein and, in turn, render the virus incapable of replicating. Because

such mutations cannot propagate, the virus cannot effectively develop resistance to the enzyme inhibitors we employ. We test the

effectiveness of our compounds against potential viral mutations and select compounds with the highest barrier to resistance.

Broadly

effective against major strains responsible for a viral disease: For any given viral disease, there are different strains

of viruses that cause the disease. For example, there are three types of influenza viruses, A, B, and C. Influenza A and B viruses

are significant human respiratory pathogens that cause seasonal flu. Influenza A viruses can also cause an influenza pandemic.

Influenza C is a subtype of the influenza virus that tends to cause only mild illness and is not responsible for seasonal or pandemic

infections. Our goal is to design and develop drug candidates that will be effective on the broadest possible range of viruses

causing the disease.

Many

antiviral drugs available today are effective only against certain strains of a given virus and less effective or not effective

at all against other strains. To address this problem, we are developing drug candidates that specifically target viral proteins

involved in viral replication. Despite the various strains of virus that may exist, these enzymes required for viral replication

are essentially similar (highly conserved) among all strains of a given virus. By targeting these highly conserved regions of

the replication enzymes, our antiviral compounds are designed and tested to be effective against major virus strains. Replication

enzymes are generally conserved not only among subtypes of a given virus but also among many different viruses, creating an opportunity

for the development of broad-spectrum antiviral drugs.

Fast

onset of action: Antiviral drugs are needed with faster onset of viral load reduction resulting in shorter treatment time.

Safety

and tolerability: All drugs have side effects, also referred to as adverse effects. These usually result from a drug’s

ability to bind to human molecules (usually proteins). When this interaction is intentional (i.e., part of the drug’s mechanism

of action), the adverse effects are classified as on-target effects. When this interaction is unintentional (i.e., resulting from

the drug’s interaction with an unintended human molecule), the effects are called off-target effects. Our inhibitors target

viral replication enzymes, which are generally unique to viruses. Because the targets are viral, not human, minimal adverse effects

may be the result. During the discovery phase, we evaluate candidate compounds for potential cross-reactivity with human replication

enzymes and attempt to eliminate those compounds that are cross-reactive with human homologous proteins.

Ease

of administration: We select compounds for development that can be administered orally, preferably once daily in pill-form,

or by inhalation or injection.

Research

and Development Update

During

the year ended December 31, 2020 the Company focused its research and development efforts primarily in three areas:

Influenza

infections

We

have several preclinical candidates under development for the treatment of influenza infection. CC-42344, a novel PB2 inhibitor,

has been selected as a preclinical lead. This candidate binds to a highly conserved PB2 site of influenza polymerase complex (PB1:

PB2: PA) and exhibits a novel mechanism of action. CC-42344 showed excellent antiviral activity against influenza A strains, including

avian pandemic strains and Tamiflu resistant strains, and has favorable pharmacokinetic and drug resistance profiles. We are currently

conducting additional preclinical IND enabling studies and plan to initiate a Phase 1 study in the third quarter of 2021.

In

addition, novel inhibitors effective against both influenza strains A and B have been identified and are in the preclinical stage.

Several of these have potencies approaching single digit nanomolar. On January 2, 2019, the Company entered into an Exclusive

License and Research Collaboration Agreement (the “Collaboration Agreement”) with Merck Sharp & Dohme Corp. (“Merck”)

to discover and develop certain proprietary influenza A/B antiviral agents. See “Item 1 – Business – Collaborations

– Merck Collaboration” for more information.

In

January 2021, we announced that we completed all research obligations under the Merck exclusive worldwide license and collaboration

agreement, and that Merck is now solely responsible for further development of the influenza A/B antiviral compounds that were

discovered using Cocrystal’s unique structure-based technologies and Nobel Prize-winning expertise. Merck is continuing

development of the compounds under the terms of our Collaboration Agreement.

Coronavirus

infections

In

December 2020 we announced the selection of CDI-45205 as the lead compound for further development against coronaviruses including

SARS-CoV-2, that causes COVID-19.

CDI-45205

was one of the broad-spectrum protease inhibitors that were obtained from Kansas State University Research Foundation (“KSURF”)

under an exclusive license agreement announced in April 2020. That agreement provides Cocrystal with an exclusive, royalty-bearing

license to develop and commercialize therapeutic, diagnostic and prophylactic products against coronaviruses, caliciviruses and

picornaviruses based on antivirals discovered by KSURF. See “Collaborations – Kansas State University Research Foundation.”

The Company believes these protease inhibitors have the ability to convert the inactive SARS-CoV-2 polymerase replication enzymes

into an active form. We are working toward pre-IND status with CDI-45205.

We

are also developing COVID-19 replication inhibitors using our drug discovery platform and expect to develop such additional

COVID-19 inhibitors with novel mechanism of action in 2021.

Norovirus

Infections

We

continue to identify and develop non-nucleoside polymerase and protease inhibitors using the Company’s proprietary structure-based

drug design technology platform. In addition, we now have exclusive rights to norovirus protease inhibitors for use in humans

obtained in the license from Kansas State University Research Foundation (see under Collaborations below). We expect to complete

proof-of-concept animal study in the first half of 2021.

Therapeutic

Targets

Influenza:

A worldwide public health problem, including the potential for pandemic disease.

Influenza

is a severe respiratory illness, caused primarily by influenza A or B virus. The Centers for Disease Control and Prevention (the

“CDC”) estimates that influenza was linked to approximately 79,000 deaths and 960,000 hospitalizations in the United

States during the 2017-2018 flu season. According to the report published by BCC Research in May 2018, the global influenza market

was valued at approximately $5.6 billion in 2017 and is expected to reach nearly $6.5 billion by 2022, increasing at a compound

annual growth rate (CAGR) of 3.0% from 2017 through 2022.

Currently,

approved antiviral treatments for influenza are effective, but burdened with significant viral resistance. Strains of influenza

virus that are resistant to the approved treatments osteltamivir phosphate (Tamiflu(R)) and zanamavir (Relenza(R)) have appeared,

and in some cases predominate. For example, the predominant strain of the 2009 swine influenza pandemic was resistant to Tamiflu.

These drugs target viral neuraminidase enzymes, which are not highly conserved between viral strains. In fact, different influenza

virus strains such as H1N1 and H5N1 are named according to their respective differences in hemagglutinin (H) and neuraminidase

(N).

The

Company has several preclinical candidates under development for the treatment of influenza infection. CC-42344, a novel PB2 inhibitor,

has been selected as a preclinical lead. This candidate binds to a highly conserved PB2 site of the influenza polymerase (PB1:

PB2: PA), and exhibits a novel mechanism of action. CC-42344 showed excellent antiviral activity against influenza A strains,

including avian pandemic strains, and Tamiflu-resistant, Xofluza-resistant strains, and has a favorable pharmacokinetic profile.

In addition to Tamiflu, an approved antiviral product candidate that is a competitor for the Company’s influenza programs,

S-033188, being developed by Shionogi/Roche. S-033188 was approved as Xofluza in Japan on February 23, 2018, and in the US as

baloxavir marboxil (trade name Xofluza®) on October 24, 2018. See “Item 1 – Business – Research

and Development Update – Influenza” for more information. Xofluza-resistant strains emerged in both the US and Japan

within several months of Xofluza being on the market.

Coronavirus:

COVID-19 continues to be a global pandemic fueled by an emergence of new strains.

COVID-19

continues to be a global pandemic with 117,332,262 confirmed cases globally, including 2,605,356 deaths, as of March 10, 2021,

according to the data reported by the World Health Organization. The COVID-19 pandemic and the measures taken by the federal,

state and foreign governments to stop the spread of the virus have caused a significant disruption to the U.S. and global economy.

Coronaviruses

(CoV) are a large family of viruses that historically have been associated with illness ranging from mild symptoms similar to

the common cold to more severe respiratory disease. Infection with the novel SARS-CoV-2 has been associated with a wide range

of responses, from no symptoms to more severe disease that has included pneumonia, severe acute respiratory syndrome, kidney failure,

and death. The incubation period for SARS-CoV-2 is believed to be within 14 days after exposure, with most illness occurring within

about 5 days after exposure. The ability of someone with no symptoms to transmit infection to another person has heightened the

public health challenge of COVID-19.

On

October 22, 2020, FDA approved the antiviral drug Veklury (remdesivir) for the treatment of COVID-19 requiring hospitalization.

Remdesivir is a nucleotide prodrug that inhibits viral replication and was previously evaluated in clinical trials for Ebola treatment

in 2014. We are aggressively pursuing the development of novel antiviral compounds for the treatment of coronavirus infections

using our established proprietary drug discovery platform. By targeting the viral replication enzymes and protease, we believe

it is possible to develop an effective treatment for all coronavirus diseases including COVID-19, Severe Acute Respiratory Syndrome

(SARS), and Middle East Respiratory Syndrome (MERS) - coronaviruses.

Hepatitis

C: A large competitive market with opportunity for shorter treatment regimens.

HCV

is a highly competitive and changing market. Currently, the standard treatment varies with the genotype of the HCV infection.

Prior to late 2013, treatment included peginterferon alpha and ribavirin, along with a protease inhibitor (either telaprevir,

boceprevir, or simeprevir). In late 2013, sofosbuvir, a drug belonging to a new class of drugs called “nucleoside analogs”

or “Nucs,” was approved to treat HCV. In patients infected with HCV genotype 1 (the most common HCV genotype in the

US), sofosbuvir was administered in combination with peginterferon alpha and ribavirin. In patients with HCV genotypes 2 and 3,

however, sofosbuvir could be effectively administered in combination with ribavirin, without the need for peginterferon alpha.

Since 2014, several new combinations of direct-acting antiviral agents (“DAAs”) have been approved for the treatment

of HCV infection. These include Harvoni (sofosbuvir/ledipasvir) 12 weeks of treatment, Viekira Pak (ombitasvir/paritaprevir/ritonavir,

dasabuvir) 12 weeks of treatment, Epclusa (sofosbuvir/velpatasvir) 12 weeks of treatment, Zepatier (elbasvir/grazoprevir) 12 weeks

of treatment and Mavyret (glecaprevir/pibrentasvir) 8 weeks of treatment. We believe the next improvements in HCV treatment will

be ultra-short treatments of four to six weeks, the goal of our program.

We

anticipate a significant global HCV market opportunity that will persist through at least 2036, given the large prevalence of

HCV infection worldwide. The 2017 World Health Organization Global Hepatitis Report estimates that 71 million people worldwide

have chronic HCV infections.

We

are targeting the viral NS5B polymerase with an NNI, which could be developed as part of an all-oral, pan-genotypic combination

regimen. Our focus is on developing what is now called ultrashort treatment regimens from 4 to 6 weeks in length. Such a combination

treatment CC-31244 with different classes of approved DAAs has the potential to change the paradigm of treatment for HCV with

a shorter duration of treatment. Combination strategies with approved drugs could allow us to expand CC-31244 into the HCV antiviral

therapeutic area globally and could lead to a high and fast cure rate, to improved compliance, and to reduced treatment duration.

To our knowledge no competing company has yet developed a short HCV treatment of less than 8 weeks with a high (>95%) sustained

virologic response (SVR) at week 12.

CC-31244,

an HCV NNI, is a potential best in class pan-genotypic inhibitor of NS5B polymerase for the treatment of HCV. The Company completed

a Phase 1a/b study in Canada in September 2016, with favorable safety results in a randomized, double-blinded, Phase 1a/b study

in healthy volunteers and HCV-infected subjects. The Company has completed a Phase 2a study in HCV genotype 1 subjects in the

United States. Cocrystal presented the interim results from the Phase1a/b study at the APASL in February 2017. HCV-infected subjects

treated with CC-31244 had a rapid and marked decline in HCV RNA levels, and slow viral rebound after treatment. Results of this

study suggest that CC-31244 could be an important component in a shortened duration all-oral HCV combination therapy. Patient

enrollment has been completed in the Phase 2b and the final study report filed with the FDA. See “Item 1 – Business

– Research and Development Update – Hepatitis C” for more information.

The

Company has been seeking a partner for further clinical development of CC-31244 since completing Phase 2a trials.

Norovirus:

A worldwide public health problem responsible for close to 90% of epidemic, non-bacterial outbreaks of gastroenteritis around

the world.

Norovirus

is a very common and highly contagious virus that causes symptoms of acute gastroenteritis including nausea, vomiting, stomach

pain and diarrhea. Other symptoms include fatigue, fever and dehydration. Noroviruses are a major cause of gastrointestinal illness

in closed and crowded environments, having become notorious for their common occurrence in hospitals, nursing homes, child care

facilities, and cruise ships. In the United States alone, noroviruses are the most common cause of acute gastroenteritis, and

are estimated to cause 20 million illnesses each year and contribute to 70,000 hospitalizations and 800 deaths. Noroviruses are

responsible for up to 1.1 million hospitalizations and 218,000 deaths annually in children in the developing world. In immunosuppressed

patients, chronic norovirus infection can lead to a debilitating illness with extended periods of nausea, vomiting and diarrhea.

There is currently no effective treatment or effective vaccine for norovirus, and the ability to curtail outbreaks is limited.

A few companies, including Chimerix, are developing antiviral treatments for this disease and three candidate vaccines are currently

in early stages of clinical testing by GlaxoSmithKline, Ligocyte and Takeda Pharmaceuticals.

By

targeting viral replication enzymes and a viral protease, we believe it is possible to develop an effective treatment for all

genogroups of norovirus. Also, because of the significant unmet medical need and the possibility of chronic norovirus infection

in immunocompromised individuals, new antiviral therapeutic approaches may warrant an accelerated path to market. The Company

is developing inhibitors of the RNA-dependent RNA polymerase and protease of norovirus. Similar to the HCV polymerases, these

enzymes are essential to viral replication and is highly conserved between all noroviral genogroups. Therefore, an inhibitor of

these enzymes might be an effective treatment or short-term prophylactic agent, when administered during a cruise or nursing home

stay, for example. We have developed X-ray quality norovirus polymerase and protease crystals and have identified promising inhibitors.

We are implementing the platform and approaches that have proven successful in our other antiviral programs.

Intellectual

Property

Our

success depends, in part, upon our ability to protect our core technology. To establish and protect our proprietary rights, we

rely on a combination of patents, patent applications, trademarks, copyrights, trade secrets and know-how, license agreements,

confidentiality procedures, non-disclosure agreements with third parties, employee disclosure and invention assignment agreements,

and other contractual rights.

Our

patent portfolio consists of issued patents and pending applications in the areas primarily related to the treatment of disease

associated with HCV, Influenza A, Influenza B, and Norovirus/Coronavirus.

In

our HCV program, our patent portfolio consists of four patent families, with granted patents in the U.S. and Europe, as well as

China, Canada, Eurasia, Japan, and Singapore. Applications are pending in numerous other jurisdictions.

In

our Influenza A program, our patent portfolio consists of four patent families, including two pending international (PCT) applications

and two families of pending applications in the U.S. and various foreign countries.

In

our Influenza A/B program, our patent portfolio consists of a number of patent families pending, variously, as international (PCT)

applications and in Taiwan. Aspects of this program are developed in collaboration with Merck.

In

our Norovirus and Coronavirus programs, our patent portfolio consists of three pending families of U.S. provisional applications,

and a portfolio of patent families licensed through KSURF.

Collaborations

Merck

Collaboration

On

January 2, 2019, we entered into an Exclusive License and Research Collaboration Agreement (the “Collaboration Agreement”)

with Merck to discover and develop certain proprietary influenza A/B antiviral agents.

Under

the terms of the Collaboration Agreement, Merck is funding research and development for the program at Cocrystal and Merck, including

clinical development at Merck, and Merck is responsible for worldwide commercialization of any products derived from the collaboration.

The Company received an upfront payment of $4,000,000 in January 2019 and is eligible to receive milestone payments related to

designated development, regulatory and sales milestones with the potential to earn up to $156,000,000, as well as royalties on

product sales. The Collaboration Agreement operates under a Research Operating Plan (ROP) which includes goals for both organizations.

In January 2021, the Company announced it had completed all research obligations under the Merck exclusive worldwide license and

collaboration agreement, and that Merck is now solely responsible for further development of the influenza A/B antiviral compounds

that were discovered in the collaboration using Cocrystal’s unique structure-based technologies and Nobel Prize-winning

expertise.

Kansas

State University Research Foundation

Cocrystal

entered into a License Agreement with KSURF on February 18, 2020 to further develop certain proprietary broad-spectrum antiviral

compounds for the treatment of Norovirus and Coronavirus infections.

Pursuant

to the terms of the License Agreement, KSURF granted the Company an exclusive royalty bearing license to practice under certain

patent rights, under patent applications covering antivirals against coronaviruses, caliciviruses, and picornaviruses, and related

know-how, including to make and sell therapeutic, diagnostic and prophylactic products.

The

Company agreed to pay KSURF a one-time non-refundable license initiation fee of $80,000 under the License Agreement, and annual

license maintenance fees. The Company also agreed to make certain future milestone payments of up to approximately $3.1 million,

dependent upon the progress of clinical trials, regulatory approvals, and initiation of commercial sales in the United States

and certain countries outside the United States.

On

April 19, 2020, the Company entered into a second License Agreement with KSURF in addition to the License Agreement entered into

in February 2020.

Pursuant

to the terms of the second License Agreement, KSURF granted the Company an exclusive royalty bearing license to practice under

certain patent rights under patent applications covering antivirals against coronaviruses, caliciviruses, and picornaviruses,

and related know-how, including to make and sell therapeutic, diagnostic and prophylactic products.

The

Company agreed to pay KSURF a one-time non-refundable license initiation fee and annual license maintenance fees. The Company

also agreed to make certain future milestone payments of up to approximately $4.2 million, dependent upon the progress of clinical

trials, regulatory approvals, and initiation of commercial sales in the United States and certain countries outside the United

States.

Drug

Discovery Collaboration with HitGen and InterX

Cocrystal

has a drug discovery collaboration with HitGen, a biotech company with an innovative DNA Encoded Library technology, and InterX

Inc., a computer software company with a biomolecular simulation for drug discovery. The collaboration was initiated in September

2017 and has a term through August 2023.

Through

this collaboration, Cocrystal, HitGen and InterX scientists are applying HitGen’s DNA-encoded library (DEL) technology platform,

Cocrystal’s structure-based drug discovery platform technology, and InterX’s computational science to develop novel

antiviral lead candidates. The DEL technology combines the power of molecular biology, combinatorial chemistry, high throughput

sequencing and advanced informatics to identify potential drug candidates. Cocrystal applies its technology to determine the cocrystal

structures of the potential drug candidates identified from the DEL library. This structural information is then combined with

InterX’s advanced computer algorithms to predict inhibitor-target interactions. A Joint Steering Committee comprised of

representatives from all three companies is overseeing the collaboration.

Competition

The

biotechnology and pharmaceutical industries are subject to intense and rapidly changing competition as companies seek to develop

new technologies and proprietary products. We know of several companies that have marketed or are developing products for the

treatment of influenza, coronavirus and HCV, including Roche, Gilead Sciences, Inc. (“Gilead”), Merck, Janssen Pharmaceuticals,

Inc., Bristol-Myers Squibb, Toyama Chemical Co., Shionogi/Roche and Abbvie, Inc. Their products are widely considered effective.

Further, in the wake of the global COVID-19 pandemic a number of third parties, including large biotechnology and pharmaceutical

companies such as Pfizer Inc., Moderna, Inc., Janssen Pharmaceuticals, Inc., and academic institutions have been conducting research

aimed at development of an effective treatment for, or a vaccine against, COVID-19. Many of the companies developing products

for the viral diseases that are the focus of our programs have substantially greater financial resources, including government

funding, expertise and capabilities than we do and have existing products in significantly more advanced stages of development.

Government

Regulation

Government

authorities extensively regulate the research, development, testing, manufacturing and commercialization of drug products. Any

product candidates we develop must be approved by the U.S. Food and Drug Administration (“FDA”) before they may be

legally marketed in the U.S., and by the appropriate foreign regulatory agencies before they may be legally marketed in other

countries. The clinical testing of product candidates to establish their safety and efficacy in humans is subject to substantial

statutory and regulatory requirements with which we must comply.

Human

Capital

As

of December 31, 2020, we employed 13 full-time employees. Of these full-time employees, eight are engaged in research and development

activities. In addition, we have contracts with Clinical Research Organizations (“CROs”), Contract Manufacturing Organizations

(“CMOs”) and consultants to provide chemistry, toxicology, preclinical, clinical, and regulatory work on our programs.

Corporate

History

The

Company was formerly incorporated in Nevada under the name Biozone Pharmaceuticals, Inc. (“Biozone”). On January 2,

2014, Biozone sold substantially all of its assets to MusclePharm Corporation, and, on the same day, merged with Cocrystal Discovery,

Inc. (“Discovery”) in a transaction accounted for as a reverse merger. Following the merger, the Company assumed Discovery’s

business plan and operations. On March 18, 2014, the Company reincorporated in Delaware under the name Cocrystal Pharma, Inc.

On

November 25, 2014, a subsidiary of the Company and affiliated entities completed a series of merger transactions. As a result,

a subsidiary of the Company merged with RFS Pharma, LLC, a Georgia limited liability company (RFS Pharma”).

Available

Information

Our

corporate website is www.cocrystalpharma.com. We make available on our website under “Investors – SEC Filings”

access to our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Schedule

14A and amendments to those materials filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of

1934, as amended (the “Exchange Act”), free of charge.

ITEM

1A. RISK FACTORS

You

should carefully consider the risks described below, as well as other information contained in this report, including the consolidated

financial statements and the notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results

of Operations.” The occurrence of any of the events discussed below could significantly and adversely affect our business,

prospects, results of operations, financial condition, and cash flows.

Summary

Risk Factors

Our

business is subject to numerous risks and uncertainties that you should consider before investing in our common stock. The following

is a summary of the principal risk factors we face:

● We have no history of commercializing products.

● We will need additional funding to pursue our business objectives.

Risk

Factors

RISKS

RELATED TO OUR BUSINESS

Our

business has been and may continue to be affected by the COVID-19 pandemic, and the full extent of such impact remains uncertain.

The

United States and global impact from the COVID-19 virus has had and/or will have a material adverse effect on us in a number of

ways including:

● Similarly, the third parties on whom we rely can be similarly impacted;

We

have never generated revenue from product sales and all of our product candidates are currently in the pre-clinical and early

clinical stage, we may continue to incur significant losses for the foreseeable future and never generate revenue from product

sales.

We

are a pre-clinical and early stage clinical, biopharmaceutical discovery and development company. We currently expect to initiate

a Phase 1 clinical trial for our Influenza A product candidate in the third quarter of 2021, although with the FDA’s focus

on the COVID-19 pandemic it is possible it could be delayed. Because of the need to complete clinical trials, establish safety

and efficacy and obtain regulatory approval, which is an expensive and time-consuming process, we do not anticipate generating

revenue from product sales for at least five years and will continue to sustain considerable losses. We may develop a partnership

that could generate income sooner, but there is no guarantee that will be achievable.

We

had an accumulated deficit of $245,000,000 from inception through December 31, 2020 and expect to continue losing money in the

future. We may never achieve income from operations or have positive cash flow from operations.

As

an early-stage drug development company, our focus is on developing product candidates, obtaining regulatory approvals and commercializing

pharmaceutical products. As a result, we have lost $245,000,000 from inception through December 31, 2020, expect losses to continue,

and have never generated revenue from product sales. It is likely that we will need to raise additional capital in the future.

There can be no assurance that we will ever generate income from operations or have positive cash flow from operations.

Because

we have yet to generate any revenue from product sales on which to evaluate our potential for future success and to determine

if we will be able to execute our business plan, it is difficult to evaluate our prospects and the likelihood of success or failure

of our business.

Our

ability to generate revenue from product sales and achieve profitability depends on our ability, alone or with partners, to successfully

complete the development of, obtain the regulatory approvals for and commercialize pharmaceutical product candidates. We have

no pharmaceutical product candidates that have generated any commercial revenue, do not expect to generate revenues from the commercial

sale of pharmaceutical products for foreseeable future, and might never generate revenues from the sale of pharmaceutical products.

Our ability to generate revenue and achieve profitability will depend on, among other things, the following:

● identifying and validating new therapeutic strategies;

● attracting, hiring and retaining qualified personnel.

Because

of the numerous risks and uncertainties associated with pharmaceutical product development, we cannot predict the timing or amount

of increased expenses and when we will be able to achieve or maintain profitability, if ever. Our expenses could increase beyond

expectations if we are required by regulatory agencies to perform additional unanticipated studies and trials.

Even

if one or more pharmaceutical product candidates we independently develop is approved for commercial sale, we anticipate incurring

significant costs associated with commercializing any approved pharmaceutical product candidate. Moreover, even if we can generate

revenues from the sale of any approved pharmaceutical products, we may not become profitable and may need to obtain additional

funding to continue operations.

Because

early-stage drug development requires major capital investment, as we continue to incur operating losses, we will need to raise

additional capital or form strategic partnerships to support our research and development activities in the future.

We

are still in the early stages of development of our product candidates and have no products approved for commercial sale or presently

in clinical trials. Although our Hepatitis C product advanced through Phase 2a, we are seeking a partner to fund and oversee that

product candidate’s further development. As stated earlier, we expect to initiate a Phase 1 clinical trial for our Influenza

A product in the third quarter. Developing pharmaceutical products, including conducting preclinical studies and clinical trials,

is capital-intensive. As a rule, research and development expenses increase substantially as we advance our product candidates

toward clinical programs. We currently have one hepatitis C product candidate that has completed a Phase 2a clinical trial and

have secured funding of the research and development of influenza A/B product candidates under our Collaboration Agreement with

Merck. See “Item 1 – Business – Collaborations – Merck Collaboration.” However, in order to conduct

trials for our other product candidates, including our potential COVID-19 therapy, we will need to raise additional capital to

support our operations or form partnerships, in addition to our existing collaborative alliances, which may give substantial rights

to a partner. Such funding or partnerships may not be available to us on acceptable terms, or at all. Moreover, any future financing

may be very dilutive to our existing stockholders.

As

we move lead compounds through toxicology and other preclinical studies, also referred to as nonclinical studies, we have and

we will be required to file an Investigational New Drug application (“IND”) or its equivalent in foreign countries,

and as we conduct clinical development of product candidates, we may have adverse results that may cause us to consume additional

capital. Our partners may not elect to pursue the development and commercialization of our product candidates subject to our respective

agreements with them. These events may increase our development costs more than we expect. We may need to raise additional capital

or otherwise obtain funding through strategic alliances if we initiate clinical trials for new product candidates other than programs

currently partnered. We will require additional capital to obtain regulatory approval for, and to commercialize, product candidates.

In

securing additional financing, such additional fundraising efforts may divert our management’s attention from our day-to-day

activities, which may adversely affect our ability to develop and commercialize product candidates. We cannot guarantee that future

financing will be available in sufficient amounts or on terms acceptable to us, if at all. If we cannot raise additional capital

when required or on acceptable terms, we may be required to:

If

we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we will be prevented from pursuing

development and commercialization efforts, which will have a material adverse effect on our business, operating results and prospects

or may render the Company unable to continue operations.

Because

we are unable to rely on certain exemptions from registration under the federal securities laws, as the result of a “disqualifying

event” involving a director of the Company, it could adversely affect our ability to obtain future private financing.

On

January 10, 2019, Dr. Phillip Frost, one of our directors, was permanently enjoined from violating a certain anti-fraud provision

of the Securities Act of 1933 (the “Securities Act”), future violations of Section 13(d) of the Exchange Act and Rule

13d-1(a) thereunder and participating in penny stock offerings with certain exceptions. So long as Dr. Frost is a director or

until five years have passed since the injunction, the Company will be unable to rely on certain exemptions from registration

including the exemptions under Rule 506 and Regulation A promulgated under the Securities Act absent a waiver issued by the Securities

and Exchange Commission (the “SEC”). We have not applied for a waiver, and even if we do, the SEC may choose not to

grant us a waiver. While there is a statutory exemption for private placements under Section 4(a)(2) of the Securities Act, the

absence of the Rule 506 safe harbor under Regulation D could adversely affect our ability to raise necessary capital in private

placements. It has not and will not affect our ability to raise capital in registered public offerings.

RISKS

RELATED TO THE DISCOVERY, DEVELOPMENT AND COMMERCIALIZATION OF PRODUCT CANDIDATES

Our

COVID-19 program is in the preclinical stage and we face significant competition from major companies who have developed vaccines

or COVID-19 treatments. If we fail to gain market share because our competitors develop and successfully commercialize effective

COVID-19 vaccines or therapies or if we fail to obtain or maintain FDA authorization or to otherwise account for uncertainties

surrounding the virus, our business and future prospects could be materially and adversely affected.

Our

COVID-19 program is in the preclinical stage. We initiated preclinical studies during the second quarter of 2020 and selected

the lead preclinical molecule in the fourth quarter of 2020. We may be unable to produce an effective therapy in a timely manner

or at all. Additionally, we are committing substantial financial and other resources to our COVID-19 program, which may negatively

impact our other programs. Further, in the wake of the global COVID-19 pandemic a number of third parties, including large biotechnology

and pharmaceutical companies and academic institutions have developed vaccines, at least three of which have FDA approval and

have FDA approval for the treatment of hospitalized patients for, or a vaccine against, COVID-19. Some of these large pharmaceutical

companies, including Pfizer, Moderna and Janssen Biotech, Inc., have obtained emergency use authorization from the FDA for vaccines

which have demonstrated high efficacy rates and are currently being distributed to the general population, with an initial priority

to the elderly and other more vulnerable individuals. While our COVID-19 program is focused on treatment rather than prevention,

widespread vaccination limits our prospects with respect to any therapeutic product candidate we develop.

Further,

some of our competitors that are also developing treatments for the virus have substantially more resources, including government

funding, than we do and have existing products in significantly more advanced stages of development. For example, the FDA approved

remdesivir, an investigational antiviral agent developed by Gilead Sciences, Inc. (“Gilead”), for the treatment of

patients with COVID-19 requiring hospitalization. In addition, the FDA has issued an emergency use authorization for the investigational

monoclonal antibody therapy for the treatment of mild-to-moderate COVID-19 in adult and pediatric patients. At least one other

competitor is conducting a combination Phase II/III clinical trial for a treatment using cannabidiol to treat COVID-19 for patients

with heart issues. Even if we do obtain FDA authorization for a therapeutic product, the FDA may subsequently rescind or limit

such authorization as more information about the product, including its efficacy and side effects, becomes available. Further,

this virus is highly mutative and a number of strains have already arisen, and any treatment we are able to develop and commercialize

will therefore remain subject to the risk that a mutation will occur that produces a strain or strains of the virus to which such

treatment has a diminished effect or is ineffective. If we are unable to timely advance our COVID-19 program, or if we fail to

gain or maintain a market share as a result of our competitors developing and successfully commercializing vaccines and effective

COVID-19 therapies more quickly than we do, our business and future prospects could be materially and adversely affected.

We

will depend on Merck for the successful research, development and commercialization of our influenza A/B product candidates.

We

are party to the Collaboration Agreement, dated January 4, 2019, with Merck to research, develop, and commercialize certain proprietary

influenza A/B antiviral agents. On January 19, 2021, the Company announced that it had completed all research obligations under

the Collaboration Agreement with Merck, and Merck is now solely responsible for further development of the influenza A/B antiviral

compounds, and will also be solely responsible for the commercialization of any products derived therefrom. See “Item 1

– Business – Collaborations – Merck Collaboration” for more information on the Collaboration Agreement.

As such, the success of this collaborative alliance will depend on the efforts and activities of Merck, particularly moving forward.

If

our research collaboration with Merck is terminated or is otherwise unsuccessful, including failure to reach milestones, we would

not receive milestone payments or royalties, which could materially and adversely affect our ability to successfully develop and

commercialize influenza A/B product candidates and our future financial condition.

Pursuant

to the terms of the Collaboration Agreement, Merck agreed to, among other things, (i) fund the research and development collaboration,

including clinical development and commercialization; (ii) make certain milestone payments up to a total of $156 million, including

payments associated with the successful product development and attainment of certain U.S. and EU regulatory approvals for the

developed products and sales volume; and (iii) pay royalties on net sales of the products.

Merck

can terminate the Collaboration Agreement at any time prior to the first commercial sale of the first product developed under

the Collaboration Agreement, in its sole discretion, without cause. Furthermore, research collaborations, including the Collaboration

Agreement, may turn out to be unsuccessful and are subject to certain risks, including the following risks:

● change the focus by Merck of its development and commercialization efforts;

If

our collaboration with Merck is unsuccessful for these or other reasons, or is otherwise terminated for any reason, we would not

receive the milestone payments or royalties under the Collaboration Agreement.

Further,

pursuant to the Collaboration Agreement Merck will only be obligated to make many of the milestone payments if our influenza A/B

product receives required regulatory approvals, is commercialized and net sales exceed the thresholds set forth in the Collaboration

Agreement. Achieving the milestones may be difficult and time-consuming. If some or all of these goals are not achieved, we may

not receive some or all of the milestone payments under the Collaboration Agreement.

Any

of the foregoing could have a material adverse effect on our ability to successfully develop and commercialize influenza A/B product

candidates and our future financial condition.

If

we form strategic alliances which are unsuccessful or are terminated, we may be unable to develop or commercialize certain product

candidates and we may be unable to generate revenues from our development programs.

In

addition to the Collaboration Agreement with Merck, we are likely to use third-party alliance partners for financial, scientific,

manufacturing, marketing and sales resources for the clinical development and commercialization of certain of our product candidates.

These strategic alliances will likely constrain our control over development and commercialization of our product candidates,

especially once a candidate has reached the stage of clinical development. Our ability to recognize revenues from successful strategic

alliances may be impaired by several factors including:

Termination

of a strategic alliance may require us to seek out and establish alternative strategic alliances with third-party partners. This

may not be possible, including due to restrictions under the terms of our existing collaborations, or we may not be able to do

so on terms acceptable to us. See also the risk factor entitled “We will depend on Merck for the successful research, development

and commercialization of our influenza A/B product candidates.” If we fail to establish alternative strategic alliances

with third-party partners on terms acceptable to us, or at all, we may be required to limit the size or scope of one or more of

our programs or decrease our expenditures and seek additional funding by other means. Such events would likely have a material

adverse effect on our results of operations and financial condition.

We

expect to rely on third parties to conduct some or all aspects of our compound formulation, research and preclinical testing,

if those third parties do not perform satisfactorily our business and future prospects would be materially and adversely affected.

We

do not expect to independently conduct all aspects of our drug discovery activities, compound formulation research or preclinical

testing of product candidates. We rely and expect to continue to rely on third parties to conduct some aspects of our preclinical

testing and on third-party Clinical Research Organizations (“CROs”) to conduct clinical trials.

If

these third parties terminate their engagements, we will need to enter into alternative arrangements which would delay our product

development activities. Our reliance on these third parties for research and development activities will reduce our control over

these activities but will not relieve us of our responsibilities. If in the future, we elect to develop and commercialize any

product candidates on our own, we will remain responsible for ensuring that each of our IND-enabling preclinical studies and clinical

trials are conducted under the respective study plans and trial protocols. If these third parties do not successfully carry out

their contractual duties, meet expected deadlines or conduct our studies under regulatory requirements or our stated study plans

and protocols, we will not be able to complete, or may experience delays in completing, the necessary clinical trials and preclinical

studies to enable us or our partners to select viable product candidates for IND submissions and will not be able to, or may be

delayed in our efforts to, successfully develop and commercialize such product candidates.

Because