KTTA US Equity☆

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2023

or

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

For the transition period from __________________________

to __________________________

Commission file number 001-40804

PASITHEA THERAPEUTICS CORP.

(Exact name of registrant as specified in its charter)

State or other jurisdiction of (I.R.S. Employer

incorporation or organization Identification No.)

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including

area code: (702)514-4174

Securities registered pursuant to Section 12(b)

of the Act:

Title of each class Trading Symbol(s) Name of each exchange on which registered

Common Stock, par value $0.0001 per share KTTA The Nasdaq Capital Market

Securities registered pursuant to Section 12(g)

of the Act: None

Indicate by check mark if the registrant is a

well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐No☒

Indicate by check mark if the registrant is not

required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐No☒

Indicate by check mark whether the registrant

(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months

(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements

for the past 90 days. Yes☒ No ☐

Indicate by check mark whether the registrant

has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405

of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant

is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.

See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company,”

and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☒

If an emerging growth company, indicate by checkmark

if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards

provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant

has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial

reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or

issued its audit report. ☐

If securities are registered pursuant to Section

12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction

of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error

corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s

executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant

is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐

No ☒

The aggregate market value of the common stock,

par value $0.0001 per share (“Common Stock”), held by non-affiliates of the registrant as of the last business day of the

registrant’s most recently completed second fiscal quarter (June 30, 2023) was $10.5 million.

As of March 23, 2024, there were 1,042,415 shares of the registrant’s

Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

PASITHEA THERAPEUTICS CORP.

2023 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

Page

PART I

ITEM 1. BUSINESS 1

ITEM 1A. RISK FACTORS 26

ITEM 1B. UNRESOLVED STAFF COMMENTS 49

ITEM 1C. CYBERSECURITY 49

ITEM 2. PROPERTIES 49

ITEM 3. LEGAL PROCEEDINGS 49

ITEM 4. MINE SAFETY DISCLOSURES 49

PART II

ITEM 6. [RESERVED] 50

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 56

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 56

ITEM 9A. CONTROLS AND PROCEDURES 56

ITEM 9B. OTHER INFORMATION 57

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS 57

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 58

ITEM 11. EXECUTIVE COMPENSATION 64

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES 77

PART IV

ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES 79

SIGNATURES 81

i

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains

forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities

Exchange Act of 1934, as amended. These statements are generally identified by the use of such words as “may,” “could,”

“should,” “would,” “believe,” “anticipate,” “forecast,” “estimate,”

“expect,” “intend,” “plan,” “continue,” “outlook,” “will,” “potential”

and similar statements of a future or forward-looking nature. These forward-looking statements speak only as of the date of filing this

annual report with the SEC and include, without limitation, statements about the following:

● our lack of operating history;

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

ii

● our dependence on third parties;

Because forward-looking statements

are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control,

you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our

forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking

statements. You should refer to the “Risk Factors” section of this annual report for a discussion of important factors that

may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. We operate in an

evolving environment and new risk factors and uncertainties may emerge from time to time. It is not possible for management to predict

all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this annual

report will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking

statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. You should

review the factors and risks and other information we describe in the reports we will file from time to time with the SEC.

iii

EXPLANATORY NOTE

On December 28, 2023, our

board of directors (“Board”) approved a 1:20 reverse stock split (the “Reverse Stock Split”) of our outstanding

shares of common stock, par value $0.0001 per share (“Common Stock”), which became effective on January 2, 2024. In connection

with the Reverse Stock Split, there was corresponding reduction in the number of authorized shares of Common Stock to 100,000,000.

Unless otherwise noted, the

share and per share information in this Annual Report on Form 10-K reflects the Reverse Stock Split.

iv

PART I

ITEM 1. BUSINESS

Overview

We are a clinical-stage biotechnology

company primarily focused on the discovery, research and development of innovative treatments for Central Nervous System (“CNS”)

disorders and other diseases, including RASopathies. We are leveraging our expertise in the fields of neuroscience, translational medicine,

and drug development to bring life-changing therapies to patients where we believe there are suboptimal treatment options.

During the year ended December

31, 2023, we discontinued our support services to anti-depression clinics in the U.K. and related at-home services in New York, NY. In

addition, we discontinued our clinical operations in Los Angeles, CA and disposed of the related property. Accordingly, as of December

31, 2023, we have discontinued the operations of our “Clinics” segment provided by our subsidiaries, and currently have one

reportable segment, “Therapeutics,” related to the research and development of our therapeutic product candidates.

Our Therapeutic Pipeline

We are advancing a pipeline of three therapeutic

product candidates, with a focus on our lead product candidate, PAS-004, a next-generation macrocyclic (as defined below) mitogen-activated

protein kinase, or MEK inhibitor, that we believe may address the limitations and liabilities associated with existing drugs with a similar

mechanism of action. PAS-004 is a small molecule allosteric inhibitor of MEK 1 and 2 (“MEK 1/2”) for potential use in the

treatment of a range of RASopathies, including neurofibromatosis type 1 (“NF1”) and a number of oncology indications, among

others.

MEK 1/2 are two of several

protein kinases involved in a signaling cascade, known as the mitogen-activated protein kinase, or MAPK pathway. The MAPK pathway

is an important pathway in cellular biology which has been a frequent target for drug discovery efforts. The MAPK pathway has been implicated

in a variety of diseases, as it functions to drive cell proliferation, differentiation, survival and a variety of other cellular functions

that, when abnormally upregulated, are critical for the formation and progression of tumors, fibrosis and other diseases. MEK inhibitors

block phosphorylation (activation) of extracellular signal-regulated kinases (“ERK”), which can lead to cell death and inhibition

of tumor growth.

Existing MEK inhibitors approved

by the U.S. Food and Drug Administration (the “FDA”) are marketed for a range of diseases, including certain cancers and NF1-associated

plexiform neurofibromas (“NF1-PN”) in pediatric patients. We believe these MEK inhibitors suffer from certain limitations,

including known toxicities. Unlike current FDA approved MEK inhibitors, PAS-004 is macrocyclic, which we believe may lead to improved

pharmacokinetics (“PK”), tolerability and potency. Macrocycles are large cyclic molecules that can bring increased potency,

metabolic stability, and oral bioavailability. Cyclization also offers rigidity for stronger binding with drug target receptors. PAS-004

was designed to provide a lower Cmax (the maximum (or peak) serum concentration that a drug achieves in a specified compartment or

test area of the body after the drug has been administered) and a longer half-life that may lead to a better therapeutic window. However,

the ultimate safety and efficacy profile of PAS-004 will require clinical testing to be completed.

In December 2023, the FDA cleared our

Investigational New Drug application (the “IND”) for PAS-004 and we received a study may proceed letter for our first-in-human

Phase 1 multicenter, open-label trial of PAS-004 in patients with MAPK pathway-driven advanced tumors with a documented RAS, NF1 or RAF

mutation or patients who have failed BRAF/MEK inhibition. We are currently conducting the Phase 1 clinical trial at four clinical sites

in the U.S. and plan to open three additional sites in Eastern Europe. The objective of the Phase 1 study is to assess the safety, tolerability,

PK, and pharmacodynamics (“PD”) of PAS-004 as well as to evaluate the preliminary anticancer activity (efficacy) of PAS-004

and to define the preliminary recommended Phase 2 dose(s).

1

PAS-004 has received orphan-drug

designation from the FDA for the treatment of NF1. Our clinical development plan for PAS-004 following the ongoing Phase 1 trial is to

advance PAS-004 into a Phase 1b/2 clinical trial in adult NF1-PN patients followed by adolescent and pediatric NF1-PN patients.

Our remaining two programs,

PAS-001 and PAS-003, are in the earlier stages of development and are based on novel targets for the treatment of CNS disorders that

we believe address limitations in the treatment paradigm of the indications we plan to address, which are currently amyotrophic lateral

sclerosis (“ALS”) for our PAS-003 program, and schizophrenia for our PAS-001 program.

Our

PAS-003 program aims to develop a proprietary humanized monoclonal antibody (“mAb”) with a mechanism-of-action targeting a5b1

integrin for the treatment of ALS and potentially address other CNS disorders, such as MS and stroke. We believe targeting a5b1

integrin may have a beneficial impact on disease due to modulation of multiple cell types and mechanisms involved in neuroinflammation,

which occurs in ALS. We acquired PAS-003 in connection with our acquisition of Alpha-5 Integrin, LLC, a privately held biotechnology company,

in June 2022.

On November 9, 2023, we announced

that we selected our PAS-003 lead development candidate, a humanized monoclonal antibody with optimal properties that targets α5β1

integrin for the treatment of both sporadic and familial ALS. PAS-003 is now ready for manufacturing and IND-enabling studies.

Our PAS-001 discovery program

aims to develop a brain penetrant small molecule targeting the complement component 4A (“C4A”) for the treatment of schizophrenia.

Recent findings implicate C4A in synaptic loss (fewer connections between nerve cells), which has been shown to occur in schizophrenia.

In humans, structural variation in the complement 4 gene (C4) are an important genetic risk factor for schizophrenia.

During the year ended December

31, 2023, we determined to cease further development of our PAS-002 program for multiple sclerosis (“MS”) due to several factors

including the significant capital, resources and time required to develop the program, and the current and projected availability of

effective treatment options for MS patients, among others.

2

Our Strategy

Our mission is to develop innovative therapies to address areas of

high unmet medical need, initially in RASopathies and CNS disorders. To achieve our mission, we are executing a near-term strategy with

the following key elements:

3

Overview of Our Lead Program: PAS-004

MAPK Pathway Overview

Signaling pathways describe

a series of biological mechanisms in which a group of molecules work together to control a cell function. A cell receives signals from

its environment when a molecule binds to a specific receptor on or in the cell. This process may be repeated multiple times through the

entire signaling pathway until the last receptor is activated and the cell function is carried out. Abnormal activation of signaling pathways

may lead to diseases.

The MAPK pathway, which

relies upon the Ras/Raf/MEK/ERK signaling cascade, represents a central biological pathway in all human cells that is responsible for

regulating cellular transcription, proliferation and survival. The general structure of the pathway consists of Ras, a small GTPase, and

three downstream protein kinases, Raf, MEK and ERK. ERK 1 and 2 (“ERK 1/2”) are structurally similar protein-serine/threonine

kinases that regulate a variety of cellular processes including adhesion, migration, survival, differentiation, metabolism, proliferation,

transcription, cytoskeletal remodeling and cell cycle progression. MEK 1/2 catalyzes the phosphorylation of ERK 1/2, which is required

for enzyme activation. Phosphorylated ERK 1/2 moves to the nucleus, and in turn activates many transcription factors, regulates gene expression,

and controls various physiological processes, finally inducing cell repair or cell death.

In addition, at the level

of Ras, the pathway is negatively regulated by several proteins, including neurofibromin, the protein encoded by the NF1 gene.

Given its direct regulation of ERK, which directly controls downstream signaling through the MAPK pathway, MEK occupies a pivotal

position in this signaling cascade and represents a rational small-molecule therapeutic target for multiple diseases, including RASopathies

(such as NF1-PN), CNS indications (such as ALS), cardiomyopathies (such as LMNA cardiomyopathy) and oncology indications, where overactivation

of the MAPK pathway contributes to disease onset and/or progression.

Background of MEK Inhibitors

MAPK represents one of the

most highly targeted signaling pathways in drug development. Several allosteric inhibitors of MEK 1/2 are currently in clinical development.

Three of them are approved by the FDA for various oncological indications, and only one approved for the treatment of children aged two

and older with NF1-PN. These MEK inhibitors are selective towards MEK 1/2, as they bind to non-ATP-competitive allosteric sites. We believe

a limitation of current FDA approved MEK inhibitors are their high rates of serious drug-related adverse events, reported to occur in

many treated patients, which may result in drug intolerability. These MEK inhibitors often require multiple doses per day which provides

high maximum concentrations which may result in a higher rate of adverse events.

Our rationale in developing

PAS-004 is to address these shortcomings to potentially provide patients with better outcomes and improved safety.

RASopathies Overview

RASopathies are a clinically

defined group of genetic syndromes caused by germline mutations in genes that encode components or regulators of the MAPK pathway. These

disorders include neurofibromatosis type 1, Noonan syndrome, capillary malformation–arteriovenous malformation syndrome, Costello

syndrome, cardio-facio-cutaneous syndrome, and Legius syndrome. Because of the common underlying MAPK pathway dysregulation amongst all

of these syndromes, RASopathies exhibit numerous overlapping phenotypic features, including CNS abnormalities. The MAPK pathway plays

an essential role in regulating various cell cycle functions, which are critical to normal human development. Therefore, we believe there

is a strong scientific rationale for targeting the MAPK pathway with small-molecule therapeutics to treat various RASopathies.

4

Neurofibramatosis type 1 (NF1) Overview

The initial indication we

plan to seek marketing approval for PAS-004 is the treatment of NF1-PN. NF1 is a RASopathy and part of a group of conditions known as

neurocutaneous disorders, conditions that affect the skin and the CNS. NF1 is one of the most common genetic disorders, affecting both

children and adults. NF1 affects approximately one in 3,000 newborns throughout the world, with approximately 100,000 patients living

in U.S. with NF1.

NF1 arises from mutations in the NF1 gene which encodes the tumor suppressor

neurofibromin. Loss of NF1 function leads to loss of neurofibromin activity, leading to Ras being locked in its active confirmation, which

stimulates MEK, and then ERK activity.

NF1 is characterized by multiple

café au lait (light brown) skin spots and neurofibromas (small benign growths) on or under the skin, and/or freckling in the armpits

or groin. Individuals with NF1 may have other manifestations of the disorder, including cardiac malformations, cardiovascular disease,

vasculopathy, hypertension, vitamin D deficiency, brain malformations, and seizures. About 50% of people with NF1 also have learning disabilities.

Softening and curving of bones, and curvature of the spine (scoliosis) may occur in some patients with NF1. Occasionally, tumors

may develop in the brain, on cranial nerves, or on the spinal cord. NF1 is usually diagnosed during childhood.

Throughout their lifetime,

about 30% to 50% of NF1 patients progress to develop plexiform neurofibromas (“PN”), which are tumors that grow in an infiltrative

pattern along the peripheral nerve sheath and can cause severe disfigurement, pain and functional impairment. In rare cases NF1-PN may

be fatal. NF1-PN are most often diagnosed within the first twenty years of life. These tumors are characterized by aggressive growth,

which is typically more rapid during childhood. While NF1-PN are initially benign, these tumors can undergo malignant transformation,

leading to malignant peripheral nerve sheath tumors (“MPNST”). NF1 patients have an 8% to 15% lifetime risk of developing

MPNST, a diagnosis that carries a 12-month survival rate of under 50%. In addition to MPNST, NF1 patients are at an increased risk of

developing other malignancies, including breast cancer and gliomas.

Until recently, the only treatment

option for NF1-PN was the surgical removal of the tumors. However, because NF1-PN arise from nerve cells and grow in an infiltrative pattern,

it is challenging to successfully resect tumors and surgery can lead to severe comorbidities, such as permanent nerve damage. Patients

that are ineligible for surgery or those who have had a recurrence post-surgery are often treated with a variety of off-label therapies.

Among these off-label therapies are various systemic treatments, such as chemotherapy and immunotherapy, which have not been shown to

consistently confer a clinical benefit. Given that NF1-PN is driven by dysregulation in the MAPK pathway, MEK inhibitors have emerged

as the only FDA approved therapy for the treatment of NF1-PN.

Limitations of Current Standard of Care

Koselugo (selumetinib), a MEK inhibitor, was approved by the FDA in

2020 for NF1 pediatric patients two years of age and older who have symptomatic, inoperable plexiform neurofibromas. Koselugo is the only

FDA approved drug for the treatment of NF1. Koselugo is also being evaluated in an ongoing Phase 3 clinical trial for the treatment of

adult patients with NF1-PN. In addition to Koselugo, we are aware of several other MEK inhibitors in clinical trials for this indication,

as well as the off-label use of other drugs, such as bevacizumab, for the treatment of NF1.

We believe that Koselugo and

other earlier generation MEK inhibitors approved for indications other than NFI suffer from limitations, such as a challenging dosing

schedule, which requires dosing twice a day on an empty stomach, at least one hour before or two hours after a meal. We believe that this

creates a significant market opportunity for a next-generation MEK inhibitor that addresses these shortcomings, has a pharmacokinetic

and tolerability profile suitable for long-term dosing and that can arrest or reverse tumor growth.

5

Preclinical Profile and Mechanism of Action

of PAS-004

PAS-004 is a next-generation

MEK inhibitor that was rationally designed to have a macrocyclic structure by taking into consideration the metabolic liabilities of earlier

generation MEK inhibitors. The structure of PAS-004 is distinct from other earlier generation MEK inhibitors as

it maintains critical protein/ligand contacts but does not possess a primary alcohol or hydroxamate functionality, a known metabolic

liability in earlier generation MEK inhibitors. It is generally observed that macrocyclic scaffolds improve drug-like properties including

target binding, selectivity, and oral bioavailability.

PAS-004 has displayed promising

PK properties in IND-enabling toxicology studies of both rats and dogs. In these toxicology studies, PAS-004 has demonstrated a half-life

of 11.5 hours in rats and 52 hours in dogs. We believe PAS-004’s PK profile and extended half-life compared to other MEK inhibitors

allows durable suppression of ERK phosphorylation, critical for clinical responses.

Preclinical Studies Overview

In vitro Preclinical Studies of PAS-004

In a screen of 99 protein

kinases, a single high dose of PAS-004 (10 μM) was used to assess kinase inhibition specificity. This assay demonstrated that PAS-004

is a strong inhibitor of only the MEK 1 (~95%) and MEK 2 (>99%) kinases.

In an unpublished preclinical

study, the effects of PAS-004 were compared to selumetinib in tests for the ability to inhibit the growth of three NF1 mutant neurofibroma-derived

Schwann cell lines, the tumorigenic cell of origin for NF1-PN, and two human wild-type Schwann cell lines. Cells were treated for 48 hours

and all PAS-004 treated cell lines showed dose-dependent growth inhibition, with 60-80% growth inhibition in the three neurofibroma-derived

NF1 mutant cell lines and less than 20% inhibition of the wild-type cell lines tested. Growth inhibition with PAS-004 was greater than

the maximal growth inhibition seen with equivalent doses of selumetinib. In addition, the inhibition did not plateau at the highest doses

used in the study, compared to a plateau effect with selumetinib.

Additionally, PAS-004 was

compared to selumetinib in an in vitro potency assay. Western blots from this unpublished preclinical study showed that cells treated

with PAS-004 demonstrated greater reduction in ERK 1/2 phosphorylation as compared to cells treated with selumetinib.

We believe these in vitro

preclinical results support PAS-004’s favorable pharmacokinetic profile, potency and dose-dependent inhibitory activity against

cellular proliferation in NF1 deficient Schwann cells and appears similar to selumetinib, an FDA approved MEK inhibitor.

In vivo Preclinical Studies

In an unpublished preclinical

study, the effects of PAS-004 were assessed in the in vivo Colo-205 xenograft tumor model, a common mouse model used for preclinical

therapies. Results showed that PAS-004 dosed at 5 mg/kg once daily reduced tumor volume. The magnitude of tumor volume reduction was similar

to selumetinib dosed at 25mg/kg, twice daily, as published in Molecular Cancer Therapeutics in 2007.

In an unpublished preclinical

pilot study, PAS-004 was tested for tolerability and preliminary biological efficacy in a genetically engineered mouse model of NF1-PN.

These mice were engineered to develop plexiform neurofibromas that closely phenocopy the human tumors by four months of age with

100% penetrance. In this pilot study, selumetinib was administered in a parallel group, which served as a positive control. Both PAS-004

and selumetinib were administered as single-agents to six mice per group. PAS-004 was administered at 10 mg/kg once daily and selumetinib

was administered at the established maximum tolerated dose of 10 mg/kg, twice daily. Treatment began when the mice reached four months

of age and was continued for 12 weeks or until death. Mice were monitored for signs of toxicity, as well as survival. Results demonstrated

that both PAS-004 and selumetinib showed similar toxicity profiles and both PAS-004 (p=0.0123) and selumetinib (p=0.0048) significantly

reduced the tumor size compared to vehicle-treated mice based on statistical analysis using uncorrected Fisher’s least significant

difference.

6

We believe the results from

this preclinical pilot study illustrate that PAS-004 may be effective in reducing tumor burden of NF1-associated plexiform neurofibromas.

When administered at 10 mg/kg once daily, PAS-004 and selumetinib, which was dosed at 10mg/kg twice daily, demonstrated similar results.

We believe that the longer half-life of PAS-004, as compared to selumetinib, could potentially enhance treatment with superior efficacy

by allowing better sustained MEK/ERK signaling inhibition, in addition allowing for greater intervals between dosing such as single daily

dose as compared to the required twice daily dosing for selumetinib.

Mutations in the LMNA gene,

which encodes nuclear lamins A and C, cause diseases affecting various organs, including the heart. Studies have found that the ERK 1/2

kinase branches of the MAPK signaling pathway were abnormally hyperactivated prior to the onset of significant cardiac impairment.

PAS-004 was studied in the

LMNA-cardiomyopathy LmnaH222P/H222P mouse model, a validated model of cardiomyopathy caused by LMNA mutations in humans. In

this study, male mice were orally administered placebo, or PAS-004 at 3 mg/kg/day or PAS-004 at 6 mg/kg/day starting at 14 weeks of age

when symptoms of cardiomyopathy were present. Results of this preclinical study were published in Bioorganic & Medicinal Chemistry

in 2017 and are summarized as follows:

7

In unpublished preclinical

in vivo studies, PAS-004 was tested for anti-tumor efficacy in NRAS mutation cancer xenograft models. In the first study, PAS-004

exhibited dose-dependent anti-tumor efficacy in the lung cancer NCI-H1299 cell-line-derived xenograft model. PAS-004 at dose levels of

10 mg/kg and 5 mg/kg, once daily, significantly inhibited tumor growth as compared to vehicle control. The anti-tumor efficacy of PAS-004,

when taken at equivalent doses was shown to be superior to that of binimetinib and selumetinib. In the second study, PAS-004 exhibited

dose-dependent anti-tumor efficacy in the liver cancer xHepG2 cell-line-derived xenograft model. PAS-004 at dose levels of 10 mg/kg and

5 mg/kg, once daily, produced significant antitumor activities as compared to vehicle control. The anti-tumor efficacy of PAS-004, when

taken at equivalent doses was shown to be similar to that of binimetinib and superior to that of selumetinib.

PAS-004 has demonstrated dose-dependent response in vivo across

several preclinical cancer, LMNA cardiomyopathy and NF1-PN models.

Toxicology Studies

28-day toxicological studies

were performed in both rats and dogs under good laboratory practices (“GLP”) on PAS-004 by Wuxi AppTec (Suzhou) Co., Ltd.

and demonstrated a sufficient safety and toxicology profile of PAS-004 to support our IND with the FDA. We are currently conducting long-term

toxicological studies in rats and dogs to support chronic dosing of PAS-004.

Completion of GMP-Compliant

Manufacturing

In June 29, 2023, we announced

the successful completion of manufacturing the GMP-compliant Phase 1 clinical supplies of the active pharmaceutical ingredient (“API”)

of our lead product candidate PAS-004. Utilizing this drug substance, we have manufactured the drug product in capsule form that we are

utilizing in our ongoing Phase I clinical trial.

Clinical Development Overview

In December 2023 we received

a study may proceed letter from the FDA for our IND and in February 2024 we opened the first clinical site of our first-in-human clinical

trial of PAS-004 in patients with MAPK pathway driven advanced solid tumors with a documented RAS, NF1 and RAF mutation or patients who

have failed BRAF/MEK inhibition. The Phase 1 clinical trial is a multicenter open-label study designed to evaluate the safety, tolerability,

PK, PD, and preliminary efficacy of PAS-004 in cancer patients with MAPK pathway driven advanced solid tumors. Approximately 30 to 36

patients will be enrolled across four clinical sites in the U.S. and three clinical sites in Eastern Europe. Patients will be enrolled

into dosing cohorts under a modified 3+3 dose escalation study design framework and will sequentially receive one of seven planned dose

levels of PAS-004 (2 mg, 4 mg, 6 mg, 9 mg, 12 mg, 15 mg, and 18 mg) to be taken orally. We currently expect to provide initial interim

data as early as the second half of 2024 and to complete the Phase 1 trial in 2025.

The Company’s clinical

development plan for PAS-004 following the ongoing Phase 1 study is to bridge to a Phase 1b/2 clinical trial in adult and then pediatric

patients with NF1-PN and ultimately seek FDA marketing approval of PAS-004 for adult and pediatric NF1-PN patients.

Overview of Our Discovery Programs

PAS-003 Program

Amyotrophic Lateral Sclerosis Overview

ALS, or Lou Gehrig’s

disease, is a fatal, progressive motor neuron disease that targets nerve cells in the spinal cord and brain. ALS most commonly affects

people between the ages of 40 and 70, with an average age of 55 at the time of diagnosis. It affects as many as 30,000 patients in the

United States, with 5,000 new cases diagnosed each year.

While approximately 10% of

cases are hereditary, which is known as familial ALS, the large majority of cases (90-95%) are not, which is known as sporadic ALS. While

the pathogenesis of ALS is not fully understood, studies have shown that the disease is multifactorial, with several interlinked mechanisms,

such as neuroinflammation and neurodegeneration.

ALS often begins with muscle

twitching and/or weakness in a limb, however, as the disease progresses, ALS affects control of the muscles needed to move, speak, eat

and breathe. As a result, ALS patients develop extensive muscle wasting and atrophy leading to paralysis and ultimately death. The

life expectancy is low, with patients living on average three to five years after symptom onset, and the patient ́s quality of life

is typically poor.

There are currently four FDA approved medications to treat ALS and

its symptoms. However, they have been shown to only have modest clinical efficacy. Therefore, despite these therapies, the medical need

for new treatments for ALS patients is very high.

8

Scientific Background and Rationale for Targeting

a5b1 integrin for the treatment of ALS

Integrins are the principal

receptors used by animal cells to bind to the extracellular matrix as well as other cells. Integrins activate intracellular signaling

pathways and can cooperate with other conventional signaling receptors. Integrins are involved in a wide range of biological processes

including cell growth, migration, survival, and proliferation as well as cytokine activation and release. As a result, integrins play

a significant role in many physiological processes, including embryogenesis, organogenesis, and tissue development, but also in pathogenic

ones, including inflammation, infection, and allergic and neoplastic diseases.

Integrins

are composed by two non-covalently linked alpha and beta subunits. a5b1

integrin, also known as the fibronectin receptor, is a heterodimer consisting of the a5

and b1 subunits. Integrins can

be broadly grouped based on ligand specificity. In this classification, integrin a5b1

falls under RGD-recognizing integrins and is known to bind fibronectin, osteopontin, fibrillin, thrombospondin, among others. a5b1

integrin has been shown to play a role in cancer, angiogenesis and in a variety of neurological disorders. a5b1

integrin is a validated drug target supported by the clinical development of anti-a5b1

mAbs by several pharmaceutical companies, including PDL Biopharma, Inc. jointly with Biogen Inc., and Pfizer, Inc., for the treatment

of cancer indications.

In a 2018 Nature Neuroscience publication,

scientists at the Steinman Laboratory at Stanford University, headed by our Chairman, Prof. Lawrence Steinman, used mass cytometry to

identify an upregulation of a5b1

integrin (CD49e) on brain myeloid cells in the mutant SOD1-G93A mouse model of ALS and demonstrated that a5b1

integrin is upregulated on microglia in the CNS as the disease progresses. Additional preclinical studies have shown that a5b1

integrin is also elevated on macrophages in the periphery and suggest a role for mast cells which also express high level of a5b1

integrin.

In August 2023, we announced

the publication of a study in the peer-reviewed journal Proceedings of the National Academy of Sciences (PNAS) that presented new

findings related to PAS-003 from an interdisciplinary collaboration of scientific teams from the Company, the Mayo Clinic, and Oregon

Health & Science University, combining results from human post-mortem tissues from ALS patients and tissue samples from the SOD1-G93A

mouse model of ALS (“SOD1-G93A”), the most phenotypically relevant preclinical model for ALS.

We

have shown an upregulation ofa5b1

integrin in the human brain motor regions but not in sensory regions in ALS and that a5b1

expression increases with disease progression in both mouse models of ALS and human ALS patients. Furthermore, we shown that treatment

with a monoclonal antibody targeting a5b1

leads to increase survival and improved motor function in SOD1-G93A mouse model of ALS.

We

believe these findings suggest that a5b1

integrin in implicated in the pathophysiology of ALS and that targeting a5b1

integrin may provide a treatment for ALS. We have repeated preclinical studies in over 250 animals, using the SOD1-G93A and TDP-43rNLS8

ALS models, and have consistently demonstrated that anti-a5b1

mAb treatment improved motor function on behavioral testing and increased survival in SOD-G93A transgenic mice, as compared to an isotype

control.

We believe these preclinical

results demonstrate that targeting a5b1 integrin has

the potential to be a new therapy that could improve outcomes for all ALS patients. In November 2023, we announced that we selected

our PAS-003 lead development candidate, a humanized mAb with optimal properties that targets α5β1 integrin for the treatment

of both sporadic and familial ALS. PAS-003 is now ready for manufacturing and IND enabling studies.

9

PAS-001

Schizophrenia Overview

Schizophrenia is a chronic

and disabling psychiatric illness characterized by positive psychotic symptoms, such as delusions and hallucinations, negative symptoms,

such as social withdrawal and amotivation, and impairment in cognitive domains, including attention, working memory, verbal learning and

executive function. According to the World Health Organization (“WHO”) schizophrenia affects up to 24 million people in the

world. Schizophrenia has a low lifetime prevalence of about 1%, however the burden of the disease is substantial. Schizophrenia is a leading

cause of adult disease burden and has been ranked 12th in the top global causes of disability for the last decade, leading to substantial

healthcare and societal costs, with annual associated costs in the U.S. estimated to be more than $150 billion.

Current pharmacological treatments

for schizophrenia all act on dopamine D2 receptors. Although they are effective in reducing positive symptoms, they have little effect

on both cognitive and negative symptoms. Furthermore, up to 30% of patients show only partial benefit with antipsychotics and have treatment

resistant schizophrenia. This highlights the need for new therapeutic strategies.

Despite extensive research

the molecular etiology remains unknown. The current dopamine hypothesis postulates that excessive striatal dopamine transmission and reduced

frontal dopamine stimulation underlie the pathophysiology of positive and negative symptoms, respectively. However, converging lines of

genetic, epidemiological and clinical evidence indicate that inflammatory pathways are also altered in schizophrenia. More recently, a

leading hypothesis proposes that synaptic terminal loss is central to the pathophysiology of schizophrenia, leading to impaired cortical

function, and symptoms, including cognitive impairments.

Scientific Background and Rationale for Targeting

C4A for the treatment of Schizophrenia

The complement system is a

group of proteins found in both the blood and the CNS. In the brain, the complement system plays in almost every aspect of normal brain

development, including neurogenesis, neuronal migration and synaptic refinement, and is now also recognized as a signaling cascade that

facilitate microglial removal of synapses. Microglia are phagocytes residing in the CNS. Unlike other phagocytes, which primarily function

in immunity, microglia are heavily involved in shaping and supporting brain tissue and are key modulators of neuronal development.

There are nine major complement proteins, labeled C1 through C9. Complement protein C4 is the only complement protein that has two different

isotypes encoded by two different genes: C4A and C4B.

According to the synaptic

pruning hypothesis, schizophrenia is thought to arise from a faulty pruning process and excessive synaptic elimination.

The largest genome-wide association

study (GWAS) in schizophrenia in 2014 identified 128 independent associations spanning 108 conservatively defined loci that meet genome-wide

significance. The most strongly associated GWAS locus is located in the extended Major Histocompatibility Complex (MHC) region on chromosome

6. This locus contains multiple copies of two closely related genes that codes for variants of C4: C4A and C4B. Their analyses revealed

that C4A copy numbers, as well as other structural variance leading to increased C4A mRNA expression, to a large degree explained schizophrenia

risk originating from this locus. This variant remains the strongest polygenic risk factor for schizophrenia identified to date, making

C4A the first gene linked to a specific mechanism underlying the disease. Importantly, schizophrenia risk was not influenced by copy numbers

of the closely related C4B gene.

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Animal models of increased

C4A expression show reduced levels of synaptic proteins and increased phagocytosis of synaptic terminals by microglia. Moreover, preclinical

models showed C4A overexpression leads to reduced neurotransmission in prefrontal cortical neurons, reduced social interaction and impaired

memory, which mimic similar abnormalities seen in schizophrenia patients. Finally, excessive microglial synapse elimination has been observed

in schizophrenia patient-derived neural cultures. Post-mortem brain analyses showed that C4A is expressed at significantly higher levels

in people with schizophrenia than controls. C4A levels in cerebro-spinal fluid (“CSF”) have shown to be elevated in patients

with schizophrenia relative to matched controls and correlates with CSF measurements of synapse density. C4A levels have also been found

to be elevated in plasma in schizophrenia, and higher levels predict poorer outcomes in first episode patients.

Several other studies in

scientific journals have also reported increased complement gene expression, protein concentration, and overall activity in the serum

or plasma of schizophrenia cases compared to controls. Further, a 2020 study published in Brain, Behavior and Immunity, found

that C4A was overexpressed in the dorsolateral prefrontal cortex, parietal cortex, superior temporal gyrus and associative striatum of

patients with schizophrenia and that C4A expression was not altered in the peripheral tissues of schizophrenia patients. Further, the

study found lifelong C4Aoverexpression in the brain of schizophrenia patients. Taken together, this evidence has led to the hypothesis

that C4A may play an important role in the pathophysiology of schizophrenia.

We are currently developing

a brain-penetrant small molecule able to down regulate C4A, for the systemic treatment of schizophrenia. To our knowledge, no other company

is exploring this potentially important target. The initial development work and screening is currently being conducted by Evotec, utilizing

Evotec’s integrated research and development expertise and state-of-the-art structure-based drug design techniques. Our goal is

to continue screening and proceeding with early development of PAS-001 while seeking partnerships and/or collaborators to support further

development of the program including preclinical studies.

Tender Offer

On July 20, 2023, we announced

that our Board authorized the repurchase of up to approximately 285,000 shares of our outstanding Common Stock at a cash purchase price

of $14.00 per share, through a $4.0 million tender offer (the “Tender Offer”). We launched the Tender Offer on August

9, 2023 and it was completed on September 8, 2023.

On

September 14, 2023, we disclosed that a total of 266,171 shares of Common Stock (the “Tender Offer Shares”) were validly

tendered and not properly withdrawn at a purchase price of $14.00 per share for an aggregate purchase price of $3,726,416, including fees

and expenses of $150,000 relating to the Tender Offer. As a result of the Tender Offer, we had 1,040,749 shares of Common Stock outstanding

immediately following the closing of the Tender Offer. The Tender Offer Shares were retired and cancelled following the closing of the

Tender Offer.

Acquisitions

Alpha-5 Integrin Therapeutics, LLC

On June 21, 2022, we entered

into a Membership Interest Purchase Agreement (the “Alpha-5 Agreement”) with PD Joint Holdings, LLC Series 2016-A and Prof.

Lawrence Steinman (the “Alpha-5 Sellers”), pursuant to which we purchased from the Alpha-5 Sellers all of the issued and outstanding

equity of Alpha-5 Integrin, LLC, a Delaware limited liability (“Alpha-5”). The Alpha-5 Sellers were the sole title and beneficial

owners of 100% of the equity interests of Alpha-5. In consideration of the equity of Alpha-5, the Alpha-5 Sellers received (i) an aggregate

of 163,044 shares (the “Alpha-5 Shares”) of our Common Stock, (ii) warrants to purchase 50,000 shares of our Common Stock

at an exercise price of $37.60 per share (the “Alpha-5 Warrants”), and (iii) contingent earn-out payments of an aggregate

of 2% to 4% of net sales generated from the sale of a drug currently in development by Alpha-5.

Prof. Lawrence Steinman,

one of the Alpha-5 Sellers, is our Executive Chairman and Co-Founder, and as such is considered a related party. The terms of the

Alpha-5 Agreement were approved by (i) the disinterested members of the audit committee (“Audit Committee”) of our board

of directors (the “Board”) and (ii) the disinterested members the Board, under the

Company’s related party transaction policy.

In connection with the Alpha-5

Agreement, each of the employees of Alpha-5 entered into employment agreements with the Company.

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AlloMek Therapeutics, LLC

On October 11, 2022, we entered into a Membership Interest Purchase

Agreement, dated October 11, 2022 (the “AlloMek Agreement”), by and among the Company, AlloMek Therapeutics, LLC, a Delaware

limited liability company (the “AlloMek”), the persons listed on Schedule 1.1 thereto (each individually a “AlloMek

Seller” and collectively, “Sellers”), and Uday Khire, not individually but in his capacity as the representative of

Sellers (the “AlloMek Representative”), pursuant to which we purchased all of the issued and outstanding equity of AlloMek.

The AlloMek Sellers were the sole title and beneficial owners of 100% of the equity interests of AlloMek. In consideration of the sale

of the equity of AlloMek, the AlloMek Sellers received (i) an aggregate of 135,000 shares of our Common Stock, (ii) warrants to purchase

an aggregate of 50,000 shares of our Common Stock (the “AlloMek Warrants”) at an exercise price of $37.60 per share, which

may be exercised on a cashless basis, for a period of five years commencing on the date of issuance, (iii) a cash payment in the amount

of $1.05 million, (iv) the right to certain milestone payments in an amount up to $5.0 million, and (v) the right to contingent earn-out

payments ranging from 3% to 5% of net sales of the Drug currently in development (as defined in the AlloMek Agreement) depending on the

amount of such net sales in the applicable measurement period.

Competition

The biotechnology and pharmaceutical

industries are characterized by rapidly evolving technologies, intense competition, and an emphasis on proprietary product candidates.

While we believe that our technology, development experience and scientific knowledge provide us with competitive advantages, we face

potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical, and biotechnology companies,

academic institutions, governmental agencies and public and private research institutions. Any product candidates that we successfully

develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

Many of our competitors may

have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting

clinical trials, obtaining regulatory approvals, and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical

and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. These competitors

also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and

patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller

or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and

established companies. Moreover, potential competitors have or may have patents or other rights

that conflict with patents covering our technologies.

The key competitive factors

affecting the success of all our product candidates, if approved, are likely to be their efficacy, safety, side effects, convenience,

price, the level of generic competition, and the availability of reimbursement from government and other third-party payors.

Our commercial opportunity

could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less

severe side effects, are more convenient, or are less expensive than any product candidates that we may develop. Our competitors also

may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in

our competitors establishing a strong market position before we are able to enter the market. In addition, our ability to compete may

be affected in many cases by insurers or other third-party payors seeking to encourage the use of generic products.

PAS-004

Companies with FDA approved MEK inhibitors include: GSK plc, which

received FDA approval for Mekinist (trametinib), that was subsequently sold to Novartis AG; Pfizer Inc., which received FDA approval for

Mektovi (binimetinib); Genentech, Inc., a member of the Roche Company, which received FDA approval for Cotellic (cobimetinib); and AstraZeneca

PLC and Merck & Co., Inc., which received FDA approval for Koselugo (selumetinib).

Koselugo (selumetinib)

marketed by AstraZeneca PLC is currently the only FDA approved therapy for the treatment of pediatric NF1-PN patients, while Mekinist,

Mektovi, and Cotellic are approved for certain oncology indications.

We are aware that other companies

are, or may be, developing products for NF1-PN, including, but not limited to, Springworks Therapeutics, Inc., Array BioPharma Inc. (a

subsidiary of Pfizer), Chia Tai Tianqing Pharmaceutical Group Co., LTD, Infixion Bioscience, Inc., NFlection Therapeutics, Inc., Novartis

International AG, and Shanghai Fosun Pharmaceutical (Group) Co., Ltd. We are also aware of several therapies, some of which are generic,

that are used off-label for the treatment of NF1-PN. These therapies include radiotherapy and various systemic treatments, such as chemotherapy

and immunotherapy.

In March 2024, Springworks

Therapeutics, Inc. announced that it initiated a rolling submission of a New Drug Application (“NDA”) to the FDA for mirdametinib,

an investigational MEK inhibitor, in pediatric and adult patients with NF1-PN.

There are other MEK inhibitors

in various stages of clinical trials for multiple indications, including various cancers and NF1-PN. Additionally, there are other FDA

approved small molecule therapeutics that target the MAPK signaling pathway.

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Intellectual Property

Our ability to obtain, maintain

and enforce intellectual property protection for our products candidates, formulations, processes, methods and any other proprietary technologies,

preserve our trade secrets, and operate without infringing on the proprietary rights of other parties, both in the United States and in

other countries is fundamental to the long-term success of our business. Our policy is to actively seek to obtain, where appropriate,

the broadest intellectual property protection possible for our current product candidates and any future product candidates, proprietary

information and proprietary technology through a combination contractual arrangements and patents, both in the United States and abroad.

However, patent protection may not afford us with complete protection against competitors who seek to circumvent our patents.