COCP US Equity☆

Item 1A. Risk Factors. 11

Item 1B. Unresolved Staff Comments. 40

Item 1C. Cybersecurity. 40

Item 2. Properties. 41

Item 3. Legal Proceedings. 41

Item 4. Mine Safety Disclosures. 41

Part II. 42

Item 6. Selected Financial Data. 42

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

Item 8. Financial Statements. 46

Item 9A. Controls and Procedures. 47

Item 9B. Other Information. 47

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 47

Part III. 47

Item 10. Directors, Executive Officers and Corporate Governance. 47

Item 11. Executive Compensation. 47

Item 14. Principal Accounting Fees and Services. 47

Part IV. 48

Item 15. Exhibits, Financial Statement Schedules. 48

SIGNATURES 50

PART

I

Item

1. Business.

Overview

Cocrystal

Pharma, Inc. (the “Company” or “Cocrystal”) is a clinical-stage biotechnology company discovering and developing

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 RNA viruses including influenza virus, coronaviruses (including

SARS-CoV-2 & MERS-CoV), norovirus, respiratory virus infections and hepatitis C virus (“HCV”) infections.

The

Company operates as one business entity.

Cocrystal

Technology

We

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

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

and developing drug candidates targeting required steps in the viral replication process. Additionally, one of our goals is to decrease

the duration of HCV therapy. To discover and design these virus replication inhibitors, we use a proprietary platform comprising computational

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

the inhibitors bound to the viral 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 may 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, pharmacology, virology, and enzymology are required. We developed our proprietary structure-based

drug design under the guidance of Dr. Roger Kornberg, our Chief Scientist and Chairman of both our Scientific Advisory Board (“SAB”)

and Board of Directors (the “Board”), who received the Nobel Prize in Chemistry in 2006. Our drug discovery process focuses

on the highly conserved regions of the viral drug target 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, norovirus and

HCV.

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) Novel mechanism of action for therapeutic and/or prophylactic treatments;

(4) Favorable 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. During the COVID-19 pandemic outbreak newly

emergent mutated coronaviruses have been identified, pointing out the ineffectiveness of vaccines and therapeutics. Another example,

the Omicron variant which arose as the dominant strain of COVID-19 in late 2021 until it diminished in the winter of 2022 displayed increased

resistance to available vaccines and treatments, resulting in the limitation or suspension of emergency use authorizations by the FDA

for certain therapeutic products. In early 2024, a new strain of COVID-19 named JN.1 rapidly grew to the predominant strain of the virus

in circulation, believed to be either more transmissible or better at evading the immune system than other circulating variants.

The

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

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

critical residues is likely to inactivate or slow down the replication processes 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 existing drug resistant variants 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 and hospitalizations, with influenza A viruses being solely responsible for past

influenza pandemics. 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 enzymes involved in

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

is essentially 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: As viruses can reproduce rapidly and in enormous quantities in human cells, antiviral drugs are needed with faster

onset of viral load reduction resulting in shorter treatment time.

Safety

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

ability to interact and/or interfere the physiological functions of human proteins, causing undesirable effects. 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, 2023 the Company focused its research and development efforts primarily in three areas:

Influenza

Program

We

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

a preclinical lead for the treatment of pandemic and seasonal influenza A. Oral CC-42344 was advanced to a Phase 2a influenza human challenge

clinical study in 2023 as described in more detail below. This drug 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, Tamiflu® and baloxavir resistant strains, and has favorable pharmacokinetic and drug resistance

profiles. This drug candidate was specifically designed and developed using Cocrystal’s proprietary structure-based drug discovery

platform technology.

In

March 2022 enrollment was initiated in a randomized, double-blind, placebo-controlled Phase 1 study of orally delivered CC-42344, which

was conducted in Australia. Later that year we reported favorable safety and tolerability results from the Phase 1 study of CC-42344

for the treatment of both pandemic and seasonal influenza A.

In

October 2023 we announced receipt of authorization from the United Kingdom Medicines and Healthcare Products Regulatory Agency (MHRA)

to initiate a Phase 2a human challenge trial with oral CC-42344 as a potential treatment for pandemic and seasonal influenza A. In December

2023 we announced achievement of first-patient-in for this Phase 2a human challenge clinical trial. This ongoing randomized, double-blind,

placebo-controlled study is evaluating the safety, tolerability, viral and clinical measurements of influenza A infection in subjects

dosed with oral CC-42344 treatment. Topline clinical results from the Phase 2a trial are expected in 2024.

In

addition to the oral CC-42344, we developed inhaled CC-42344 for the prophylactic treatment of pandemic and seasonal influenza A infections.

Our preclinical data of the inhaled CC-42344 showed excellent antiviral activity in influenza H1N1-infected human upper airway epithelium

with favorable safety profile. We completed inhalation formulation development and are evaluating plans to initiate a Phase 1 study in

2024.

We

also continue developing novel broad-spectrum influenza antivirals targeting replication enzymes of influenza A and B strains.

Coronavirus

and Norovirus Programs

In

October 2022 we announced the selection of a novel, broad-spectrum antiviral drug candidate CDI-988 for clinical development as an oral

treatment for SARS-CoV-2, the virus that causes COVID-19. CDI-988 targets a highly conserved region in the active site of SARS-CoV-2

main (3CL) protease required for viral replication and and was discovered to exhibit pan-coronavirus activity against MERS-CoV, SARS-CoV,

and common coronaviruses. This drug candidate was specifically designed and developed as a pan-viral protease inhibitor using Cocrystal’s

proprietary structure-based drug discovery platform technology.

Subsequent

preclinical studies demonstrated that pan-coronavirus lead CDI-988 also showed broad-spectrum antiviral activity against the multiple

pandemic norovirus proteases. High resolution crystal structures confirmed that CDI-988 binds to the highly conserved region of the norovirus

protease active site. In August 2023 we announced the selection of pan-viral CDI-988 as a potential oral therapy for coronaviruses and

norovirus.

In

May 2023 we announced approval from the Australian Human Research Ethics Committee (HREC) to conduct a randomized, double-blind, placebo-controlled

Phase 1 study of CDI-988. The study is designed to access the safety, tolerability and pharmacokinetics of CDI-988.

In

September 2023 we announced dosing of the first subjects in our Phase 1 clinical study with our oral, first-in-class pan-norovirus and

pan-coronavirus 3CL protease inhibitor CDI-988. Topline clinical results from the Phase 1 trial are expected in 2024.

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. Influenza A viruses are the only influenza viruses known

to cause influenza pandemics. Each year there are approximately 1 billion cases of seasonal influenza worldwide, with 3-5 million severe

illnesses and up to 650,000 deaths, according to the World Health Organization (“WHO”). On average about 8% of the U.S. population

contracts influenza each season, according to the Centers for Disease Control and Prevention (“CDC”). In addition to the

health risk, influenza is responsible for approximately $10.4 billion in direct medical costs in the U.S. annually, according to the

National Institutes of Health (“NIH”).

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 oseltamivir phosphate (Tamiflu®) and zanamavir (Relenza®), baloxavir marboxil (Xofluza®)

have appeared, and in some cases are predominated. For example, the predominant strain of the 2009 swine influenza pandemic was resistant

to oseltamivir. Oseltamivir inhibits influenza neuraminidase enzymes, which are not highly conserved between viral strains. According

to the WHO, approximately 15% of the H1N1 isolated circulating worldwide were oseltamivir resistant. Also, treatment-emergent resistance

to recently approved baloxavir has been observed during clinical trials and the potential transmission of resistant influenza variants

could significantly diminish baloxavir effectiveness.

The

Company developed CC-42344, a novel PB2 inhibitor, as a lead candidate for the treatment of influenza A. We completed a Phase 1 study

with oral CC-42344 and in December 2022 reported on favorable safety and tolerability results from the CC-42344 Phase 1 study. Upon approval

of United Kingdom MHRA, we initiated a randomized, double-blind, placebo-controlled influenza Phase 2a human challenge study in the first

half of 2023 and announced dosing of the first subjects in this study with oral CC-42344 in December 2023. Topline clinical results from

the Phase 2a trial are expected in 2024.

Coronavirus:

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

As

a global pandemic with 774,631,044 COVID-19 confirmed cases globally, including 7,031,216 deaths, as of February 27, 2024, according

to the data reported by the WHO. 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 RNA 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. SARS-CoV-2, like other RNA viruses, is prone to mutate over time, resulting in the emergence of multiple variants. Adaptive

mutations in the viral genome can alter the virus’s pathogenic potential. Even a single amino acid exchange can drastically affect

a virus’s ability to evade the immune system and complicate the vaccine and antibody therapeutics development against the virus.

Based on the recent epidemiological update by the WHO, five SARS-CoV-2 VOCs (variants of concern) have been identified since the beginning

of the pandemic. Also, as demonstrated in Delta and Omicron variants as well as the more recent JN.1 strain, some variations allow the

virus to spread more easily and make it resistant to the treatments and vaccines.

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.

On May 25, 2023, the FDA approved Paxlovid (nirmatrelvir tablets and ritonavir tablets, co-packaged for oral use) for use to treat COVID-19

for the treatment of mild-to-moderate COVID-19 in adults who are at high risk for progression to severe COVID-19, including hospitalization

or death. For certain hospitalized adults with COVID-19, the FDA has also approved Olumiant (baricitinib) and Actemra (tocilizumab).

In addition, the FDA issued emergency authorization use on several antibody and antiviral therapeutics, including and Lagevrio (molpiravir).

We

continue 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.

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. among people of all ages. Norovirus

infection can be much more severe and prolonged in specific risk groups including infants, children, the elderly, and people with

immunodeficiency. Symptoms include nausea, vomiting, stomach pain and diarrhea as well as fatigue, fever and dehydration. Outbreaks

occur most commonly in semi-closed communities, having become notorious for their occurrence in hospitals, nursing homes, childcare

facilities, cruise ships, schools, disaster relief sites and military settings. In the United States alone, noroviruses are

responsible for an estimated 21 million cases annually, including 109,000 hospitalizations, 465,000 emergency department visits and

nearly 900 deaths, according to the CDC. The NIH estimates the annual burden to the United States at $10.6 billion. 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. We have a candidate norovirus therapeutic in clinical testing. A few companies have been developing vaccines and six

candidate vaccines are in stages of clinical testing by Vaxart Pharmaceutical, Moderna, Hillevax, Takeda Pharmaceuticals, Anhui

Zhifei Longcom Biopharmaceutical (China) and National Vaccine and Serum Institute (China).

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 are 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.

In

September 2023 we announced dosing of the first subjects in our Phase 1 clinical study with our oral, first-in-class pan-norovirus and

pan-coronavirus 3CL protease inhibitor CDI-988. Topline clinical results from the Phase 1 trial are expected in 2024.

Hepatitis

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

HCV

is a highly competitive and changing market. Since 2014, several 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) twelve weeks of treatment, Epclusa (sofosbuvir/velpatasvir) twelve weeks of treatment,

Zepatier (elbasvir/grazoprevir) twelve weeks of treatment and Mavyret (glecaprevir/pibrentasvir) eight weeks of treatment. We believe

the next improvements in HCV treatment will be ultra-short combination oral treatments of four to six weeks, which is 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.

In July 2023, WHO published that globally, an estimated 58 million people have chronic HCV infection, with about 1.5 million new infections

occurring per year, and an estimated 3.2 million adolescents and children with chronic HCV infection.

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 four to six 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 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. The Company has completed the Phase 2a final study

report as 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.

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 Influenza A, Influenza A/B, and norovirus/coronaviruses and HCV.

In

our Influenza A program, our patent portfolio consists of several 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 were developed in collaboration with Merck, which is legally protecting the intellectual property

of the collaboration compounds.

In

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

In

our HCV program, our patent portfolio consists of several 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.

Collaborations

Merck

Collaboration

On

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

with Merck Sharp & Dohme LLC (“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, protecting intellectual property and Merck is responsible for worldwide commercialization of any products

derived from the collaboration.

On

December 15, 2023, we received written notice from Merck of Merck’s election to terminate the Collaboration Agreement, dated January

2, 2019, by and between the Company and Merck, with respect to the collaboration with Merck on the development of influenza A/B antiviral

compounds. The termination of the Agreement is effective on March 14, 2024. The termination resulted from the inability to develop the

compounds to meet a specific aspect of Merck’s program.

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.

On

February 28, 2024, the Company provided notice to KSURF of the Company’s election to terminate the License Agreements. The terminations,

which were made due to the Company’s determination that further development efforts under the License Agreements would be futile,

are effective on March 29, 2024. The Company continues to clinically progress its fully owned compound CDI-988 for coronaviruses and

norovirus.

Business-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 face worldwide competition from larger biotechnology and pharmaceutical companies, universities

and other academic or research institutions and government agencies that are developing and commercializing pharmaceutical products similar

to our product candidates that target the viruses we are seeking to treat. We know of several companies that have marketed or are developing

products for the treatment of influenza, coronavirus, norovirus 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 began conducting

research aimed at development of an effective treatment for, or a vaccine against, COVID-19. As a result of these efforts, a number of

vaccines and treatments for COVID-19 have been commercialized under FDA approval, or under the FDA’s emergency use authorization,

although certain of these approvals or authorizations are limited to specified circumstances. At least four treatments and five vaccines

for COVID-19 have received FDA approval. 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. Additionally, viral mutations can lead to new strains or variants of a

virus that may be more resistant to products we develop when compared to those of competitors. See “Risk Factors” for more

information on the risks we face with respect to our competition.

To

date, we have not fully developed, received regulatory approval for or commercialized any of our product candidates. Our ability to compete

will depend, to a great extent, on the speed in which we and our collaborators can develop safe and effective product candidates, complete

clinical testing and regulatory approval processes, and coordinate with third parties to produce and distribute the resulting products

in sufficient commercial quantities to create and maintain a market for such products at favorable costs and prices. If we do complete

development of and obtain regulatory approval to market any product candidate, we anticipate that the competition we would face with

respect to such product would be based on a combination of a number of factors including efficacy, safety, reliability, availability,

price, patent position, and other factors.

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.

In

addition to the U.S. requirements such as those enforced by the FDA with respect to safety and efficacy of research, testing, development

and production, we also must comply with applicable laws and regulations of any foreign jurisdictions in which we operate. For example,

as a result of our Phase 1 trial in Australia for CC-42344, our lead Influenza A product candidate, we are subject to the Australian

government’s laws and regulations pertaining to the research and development, including clinical testing on human subjects, of

therapeutic product candidates. Further, our Phase 2a study for in the United Kingdom in 2023 for CC-42344 subjects us to similar laws

and regulations in the United Kingdom. Our presence in foreign countries has also subjected us to more general laws applicable to operations

abroad, such as the U.S. Foreign Corrupt Practices Act (the “FCPA”) and comparable legislation and regulation in foreign

jurisdictions. In general, the FCPA prohibits U.S. corporations and their representatives from offering, promising, authorizing or making

payments to any foreign government official, government staff member, political party or political candidate to obtain or retain business

abroad. The scope of the FCPA includes interactions with certain healthcare professionals in many countries. Other countries have enacted

similar anti-corruption laws and/or regulations. Further, because of our reliance on one or more CROs and CMOs with respect to our research

and development activities both in the U.S. and in foreign jurisdictions, we may have limited control over compliance with such requirements

in certain instances.

Human

Capital

As

of March 28, 2024, we employed 12 full-time employees. Of these full-time employees, nine are engaged in research and development activities.

In addition, we have contracts with CROs, CMOs and consultants to provide chemistry, toxicology, preclinical, clinical, and regulatory

work on our programs, including in both preclinical and clinical studies for our product candidates.

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 flow.

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.

Risk

Factors

RISKS

RELATED TO OUR BUSINESS

We

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

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

We

are a preclinical and early stage clinical, biopharmaceutical discovery and development company. We completed a Phase 2a clinical trial

for our Influenza A lead oral candidate CC-42344 in 2023. We also completed a COVID-19 clinical trial in 2023 for our lead oral candidate

CDI-988. We expect to report findings from these studies in 2024. 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 four 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 $315,914,000 from inception through December 31, 2023 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 accumulated losses of $315,914,000 from inception through December 31, 2023, 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 preclinical and clinical development of our product candidates and have no products approved for commercial

sale or presently in clinical trials. However, our ability to conduct clinical trials in a cost-effective manner and within the desired

timeframes remains subject to uncertainties, supply chain shortages, and potential difficulties in obtaining adequate participant enrollments.

Further, 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. If we are

able to advance our products through clinical trials, we may need to raise additional capital to support our operations and/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 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.

RISKS

RELATED TO THE DISCOVERY, DEVELOPMENT AND COMMERCIALIZATION OF PRODUCT CANDIDATES

Our

COVID-19 programs are in the early clinical 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.

While

we completed a Phase 1 clinical study of our COVID-19 lead oral candidate CDI-988 in 2023, 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 and treatments which have FDA approval or

emergency use authorization, as more particularly described above under “Business.” While the approval or authorization of

certain of these competitive offerings are limited to specified circumstances or patients, given the uncertainties in our ability to

fully develop a viable COVID-19 therapeutic product, the substantial amount of time and resources that would be necessary to complete

development and obtain regulatory approval, and the growing number of competitive offerings, we may ultimately be unable to produce a

product that is commercially viable or is able to generate material revenue.

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

variants 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.

For example, newer variants of the virus can be more resistant to treatments that were effective against prior variants of the virus.

If we do develop a treatment that is effective against a current variant, a later variant may arise that reduces or eliminates the product’s

efficacy before we are able to commercialize it. Further, if this occurs, one or more competitors’ products may be more effective

against new variants than ours, resulting in a diminished market for our products. 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.

Because

Merck recently terminated our Collaboration Agreement and we recently terminated our License Agreements with KSURF, we no longer have

potential revenue prospects or the other perceived benefits of those relationships, which may adversely affect our development and commercialization

efforts particularly with respect to our influenza A/B, coronavirus and norovirus programs.

In

late 2023 Merck notified us that it was terminating our Collaboration Agreement, effective March

14, 2024. Pursuant to the terms of the Collaboration Agreement, Merck had 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. Because of the termination,

we will not be receiving any further payments from Merck, and will no longer have the ability to realize the other potential benefits

of this former partnership. We may also be unable to locate a new development and commercialization partner on favorable terms or at

all, or otherwise achieve our objectives with respect to our influenza A/B program. The loss of our alliance with Merck and its name

recognition in the industry and in general could also have adverse consequences outside of this program in terms of our ability to attract

strategic alliances to further our development and commercialization efforts generally.

Further,

in early 2024 we terminated our License Agreements with KSURF, under which we previously licensed proprietary broad-spectrum antiviral

compounds for the potential treatment of norovirus and coronavirus infections. As a result of the terminations, which were based on our

determination that proceeding with research and development efforts under the licenses would be futile, our prospects in our coronavirus

and norovirus programs are diminished because any perceived or anticipated benefits of the licenses and collaboration will not be realized.

Following the terminations the pool of prospective compounds from which we can potentially identify, develop and commercialize viable

therapeutic product candidates under these programs is reduced. Any of the foregoing could materially adversely affect our research and

development efforts, business and prospects.

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.

We

will likely need 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, if we are able to enter into

them, 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 such as the recent terminations of the Merck Collaboration Agreement and KSURF License Agreements 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

“Because Merck recently terminated our Collaboration Agreement and we recently terminated our License Agreements with KSURF, we

no longer have potential revenue prospects or the other perceived benefits of those relationships, which will adversely affect our development

and commercialization efforts particularly with respect to our influenza A/B, coronavirus and norovirus programs.” 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 CROs to conduct clinical trials. This reliance can materially delay our research and developments efforts, and increase

the costs of undertaking them. For example, beginning in 2021, certain of our CROs began experiencing staffing shortages and other issues

due to the outbreak of Omicron cases, resulting in delays and increased costs in researching our product candidates. We have also experienced

material delays and cost increases in general throughout the pandemic caused by pandemic-related difficulties faced by our CROs and CMOs.

Further, any disputes that may arise from our arrangements with CROs or CMOs may result in additional unexpected expenses and force our

management to allocate their limited time to seeking a resolution to the problem, which could materially adversely affect our operations.

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

we intend to rely on third-party manufacturers to produce our preclinical and clinical supplies, and commercial supplies of any approved

product candidates, we will be subject to a variety of risks.

Our

reliance on third-party manufacturers to develop products and our anticipated reliance on third-party manufacturers to produce products

we may develop in the future entail risks to which we would not be subject if we supplied the materials needed to develop and manufacture

our product candidates ourselves, including:

● supply chain shortages which were prevalent during the COVID-19 pandemic;

● a delay or inability to procure or expand sufficient manufacturing capacity;