0001558370-23-020000 | 10-K | XBRL Viewer

Finance leases

Total undiscounted lease payments

Less: Imputed interest

Total lease obligations

Stock-Based Compensation

12 Months Ended

Sep. 30, 2023

11. Stock-Based Compensation

2011 Equity Incentive Plan

The Company’s 2011 Equity Compensation Plan (the “2011 Plan”) provided for the Company to sell or issue restricted common stock, RSUs, performance-based awards (“PSUs”), cash-based awards or to grant stock options for the purchase of common stock to officers, employees, consultants and directors of the Company. The 2011 Plan was administered by the board of directors or, at the discretion of the board of directors, by a committee of the board. As of September 30, 2023, PSUs representing 2,470 shares of the Company’s common stock were outstanding under the 2011 Plan. In light of the December 2015 adoption of the 2015 Equity Incentive Plan, (the “2015 Plan”) no future awards under the 2011 Plan will be granted.

2015 Equity Incentive Plan

In December 2015, the Company adopted the 2015 Plan. The 2015 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSU awards, performance stock awards and other forms of equity compensation to Company employees, directors and consultants. The aggregate number of shares of common stock authorized for issuance pursuant to the Company’s 2015 Plan is 42,265,841. As of September 30, 2023, 17,414,910 shares remained available for grant under the 2015 Plan.

Stock options and RSUs granted under the Company's 2015 Plan generally vest over a period of one to four years from the date of grant and, in the case of stock options, have a term of 10 years. The Company recognizes the grant date fair value of each option and share of RSU over its vesting period.

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations for the years ended September 30, 2023 and 2022:


	Year ended September 30,
	2023		2022
Research and development	$	986,598	$	2,691,330
General and administrative		4,560,421		5,019,474
	$	5,547,019	$	7,710,804

Stock options

The following table summarizes all of the Company’s stock option activity for the years ended September 30, 2022 and 2023:


				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2021	16,110,015	$	1.46
Granted	4,039,566		1.60
Exercised	(25,000)		0.71
Balance at September 30, 2022	20,124,581		1.49
Granted	3,831,698		1.15
Balance at September 30, 2023	23,956,279	$	1.44	7.6	$	—
Exercisable at September 30, 2023	13,570,078	$	1.52	7.2	$	—
Vested and expected to vest at September 30, 2023	23,956,279	$	1.44	7.6	$	—

The aggregate intrinsic value represents the total amount by which the fair market value of the common stock subject to options exceeds the exercise price of the related options.

The Company estimated the fair value of each stock option award on the grant date using the Black-Scholes option pricing model, wherein expected volatility is based on a weighted average of the Company’s historical volatility and the volatilities of similar entities within the Company’s industry which are commensurate with the expected term assumption. The expected term calculation is based on the “simplified” method described in Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, and SAB No. 110, Share-Based Payment, since the simplified method provides a reasonable estimate in comparison to actual experience. The risk-free interest rate is based on the U.S. Treasury yield at the date of grant for an instrument with a maturity that is commensurate with the expected term of the stock options. The dividend yield is zero since the Company has never paid cash dividends on its common stock and has no present intention to pay cash dividends. Options granted under the 2015 Plan generally vest over one to four years and have a term of 10 years.

The weighted average grant date fair value of the options awarded to employees and directors for the years ended September 30, 2023 and 2022 was $0.97 and $1.23 per option, respectively. The fair value of the options was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:


	Year ended September 30,
	2023		2022
Risk-free interest rate	3.7	%	1.8	%
Expected term (years)	5.9		6.0
Expected volatility	111.6	%	95.3	%
Expected dividend yield	—		—

As of September 30, 2023, there was $9,176,983 of unrecognized compensation expense that is expected to be recognized over a weighted-average period of 2.3 years.

Performance-based stock options

The Company granted certain officers of the Company option awards where vesting was contingent upon meeting certain company-wide performance goals. The performance stock options were granted “at-the-money” and have a term of 10 years.

The fair value of each option grant under the performance share option plan was estimated on the date of grant using the same option valuation model used for non-statutory options above. Compensation expense for performance-based stock options is only recognized when management determines it is probable that the awards will vest.

The following table summarizes all of the Company’s performance-based stock option activity for the years ended September 30, 2022 and 2023.


				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2021	1,000,000	$	2.42
Granted	1,900,000		1.44
Forfeited or expired	(2,200,000)		1.89
Balance at September 30, 2022	700,000		1.44
Granted	1,200,000		1.04
Forfeited or expired	(1,200,000)		1.04
Balance at September 30, 2023	700,000	$	1.44	8.2	$	—
Exercisable at September 30, 2023	700,000	$	1.44	8.2	$	—
Vested and expected to vest at September 30, 2023	700,000	$	1.44	8.2	$	—

The weighted average grant date fair value of the performance stock options awarded for the years ended September 30, 2023 and 2022 was $0.91 and $1.03 per option, respectively. During the year ended September 30, 2023, no expense was recognized because the performance conditions were not considered probable of achievement. During the year ended September 30, 2022, an aggregate of 700,000 performance-based stock options vested as a result of achieving one of the set performance conditions related to the Company’s BLA submission that resulted in the Company recognizing stock-based compensation expense of $718,950. During the years ended September 30, 2023 and 2022, an aggregate of 1,200,000 and 2,200,000, respectively, of performance-based stock options were forfeited because certain performance conditions were not achieved. As of September 30, 2023, there were no remaining performance conditions. The fair value of the options was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:


	Year ended September 30,
	2023		2022
Risk-free interest rate	3.8	%	1.3	%
Expected term (years)	10.0		5.2
Expected volatility	91.3	%	91.5	%
Expected dividend yield	—		—

Performance-based stock units

The Company has issued PSUs, which generally have a ten-year life from the date of grant. Upon exercise, the PSU holder receives common stock or cash at the Company’s discretion. The following table summarizes the activity related to PSUs during the years ended September 30, 2022 and 2023:


				Weighted
				Average
	Number	Base		Remaining
	of	Price		Contractual	Aggregate
	PSUs	Per PSU		Term (Years)	Intrinsic Value
Balance at October 1, 2021	2,470	$	49.97
Forfeitures	—		—
Balance at September 30, 2022	2,470	$	49.97
Forfeitures	—		—
Balance at September 30, 2023	2,470	$	49.97	1.0	$	—
Exercisable at September 30, 2023	2,470	$	49.97	1.0	$	—
Vested and expected to vest at September 30, 2023	2,470	$	49.97	1.0	$	—

Restricted stock

In January 2020, in connection with the consulting agreements entered into by the Company and four principals of MTTR, LLC (MTTR), the Company issued an aggregate of 7,244,739 shares of its common stock. Refer to Note 13 for further details on the consulting agreements and terminated strategic partnership agreement. The shares may not be sold until the earlier of (i) six months following FDA approval of ONS-5010, (ii) the date the Company publicly announces not to pursue development of ONS-5010, (iii) a change in control or (iv) January 2025. In addition, the Company has the right to repurchase the shares for $0.01 per share if the consultant terminates his agreement other than for good reason or the Company terminates the agreement for cause. The repurchase right lapses, in tiered percentages, based upon the completion of enrollment of the Company’s NORSE TWO clinical trial of ONS-5010 by certain dates. The repurchase right may also lapse as to 50% or 100% of the shares if the Company enters into certain agreements pertaining to ONS-5010 that meet certain value thresholds or the Company’s share price meets certain predefined targets. The repurchase right also lapses as to 100% of the shares upon the earliest to occur of (i) filing of the BLA for ONS-5010, (ii) termination of the agreement by the consultant for good reason or by the Company other than for cause, (iii) in the event of disability, or (iv) upon a change in control.

The grant date fair value of the restricted shares was $0.54 per share and equal to the closing stock price of the Company’s common stock at the time of grant. Compensation expense is recognized over the shorter of the explicit service period or derived service period which was determined to be 4.8 years at the time of grant. The compensation expense was accelerated during the year ended September 30, 2022 as a result of the Company achieving certain performance conditions related to the Company’s BLA submission and the corresponding repurchase rights lapsing. During the year ended September 30, 2022, the Company recognized compensation expense related to the restricted stock of $2,003,946. There was no expense recognized for the year ended September 30, 2023 and as of September 30, 2023, there was no unrecognized compensation expense related to the restricted stock.

Stockholders' Equity - Warrants (Details) - $ / shares	12 Months Ended
Stockholders' Equity - Warrants (Details) - $ / shares	Sep. 30, 2022	Sep. 30, 2023
Common Stock and Stockholders' Equity
Shares of common stock issuable upon exercise of warrants		7,328,549
Exercise price per share	$ 12.00
Warrants expired (in shares)	400,360
Warrants expired (in dollars per share)	$ 12.00
Issuance of common stock in connection with exercise of warrants (in shares)	15,675
December 22, 2024
Common Stock and Stockholders' Equity
Shares of common stock issuable upon exercise of warrants		277,128
Exercise price per share		$ 12.00
February 26, 2024
Common Stock and Stockholders' Equity
Shares of common stock issuable upon exercise of warrants		1,747,047
Exercise price per share		$ 0.9535
February 24, 2025
Common Stock and Stockholders' Equity
Shares of common stock issuable upon exercise of warrants		172,864
Exercise price per share		$ 1.27
April 13, 2025
Common Stock and Stockholders' Equity
Shares of common stock issuable upon exercise of warrants		145,686
Exercise price per share		$ 12.00
May 31, 2025
Common Stock and Stockholders' Equity
Shares of common stock issuable upon exercise of warrants		62,437
Exercise price per share		$ 12.00
June 22, 2025
Common Stock and Stockholders' Equity
Shares of common stock issuable upon exercise of warrants		191,268
Exercise price per share		$ 1.51875
December 28, 2025
Common Stock and Stockholders' Equity
Shares of common stock issuable upon exercise of warrants		515,755
Exercise price per share		$ 1.0500
January 28, 2026
Common Stock and Stockholders' Equity
Shares of common stock issuable upon exercise of warrants		2,116,364
Exercise price per share		$ 1.25
November 23, 2026
Common Stock and Stockholders' Equity
Shares of common stock issuable upon exercise of warrants		2,100,000
Exercise price per share		$ 1.5625

Commitments and Contingencies - Lease cash flow (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Leases
Operating cash flows from finance leases	$ 1,399	$ 3,141
Operating cash flows from operating leases	27,675	46,652
Financing cash flows from finance leases	$ 11,751	$ 26,464

Income Taxes - Reconciliation (Details)		1 Months Ended	12 Months Ended
Income Taxes - Reconciliation (Details)	Jan. 01, 2018	Dec. 31, 2017	Sep. 30, 2023	Sep. 30, 2022
Income Taxes
U.S. federal statutory rate	(21.00%)	(34.00%)	(21.00%)	(21.00%)
State taxes, net of federal benefit			(7.30%)	(7.10%)
Deferred true-up			0.10%
Permanent differences			(0.70%)
Foreign tax credits			1.30%
Research and development credit			1.30%	3.50%
Change in valuation allowance			29.00%	32.10%
Other			(0.10%)	(0.50%)
Effective income tax rate			0.00%	0.00%

Basis of Presentation and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Sep. 30, 2023

Basis of Presentation and Summary of Significant Accounting Policies

Basis of presentation

The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”). The accompanying consolidated financial statements include the accounts of the Company and Outlook Therapeutics Pty Ltd, its wholly-owned subsidiary incorporated in Australia (the “Subsidiary”). All intercompany accounts and transactions have been eliminated in consolidation. The Company has determined the functional currency of the Subsidiary to be the U.S. dollar. The Company translates assets and liabilities of its foreign operations at exchange rates in effect at the balance sheet date. The Company records remeasurement gains and losses on monetary assets and liabilities, such as incentive and tax receivables and accounts payables, which are not in the functional currency of the operation. These remeasurement gains and losses are recorded in the consolidated statements of operations as they occur.

Cash and cash equivalents

Cash and cash equivalents include cash-on-hand and demand deposits with financial institutions and other short-term investments with maturities of less than three months when acquired and convertible to known cash amounts. At September 30, 2023 and 2022, the Company’s cash equivalents consist of a money market account.

Equity method investment

The Company accounts for equity investments where it owns a non-controlling interest, but has the ability to exercise significant influence, under the equity method of accounting. Under the equity method of accounting, the original cost of the investment is adjusted for the Company’s share of equity in the earnings or loss of the equity investee and reduced by dividends and distributions of capital received, unless the fair value option is elected, in which case the investment balance is marked to fair value each reporting period and the impact of changes in fair value of the equity investment are reported in earnings. The Company has not elected the fair value option. The Company assesses its investment for other-than-temporary impairment when events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable and recognize an impairment loss to adjust the investment to its then-current fair value.

Use of estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Due to the uncertainty of factors surrounding the estimates or judgments used in the preparation of the consolidated financial statements, actual results may materially vary from these estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.

Fair value of financial instruments

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

●

Level 1 — Quoted prices in active markets for identical assets or liabilities.

●

Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

●

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

At September 30, 2023 and 2022, the Company’s financial instruments included cash, accounts payable, accrued expenses, convertible notes and warrant liabilities. The carrying amount of accounts payable, and accrued expenses approximates fair value due to the short-term maturities of these instruments.

Fair Value Option

The Company elected the fair value option to account for the December 2022 Note. Refer to Note 7 for further details on the December 2022 Note. The fair value of the December 2022 Note is estimated using a binomial lattice model, which evaluates the payouts under hold, convert or call decisions. Significant estimates in the binomial lattice model include the Company’s stock price, volatility, risk-free rate of return, and credit-adjusted discount rate.

Leases

Leases

At lease commencement, the Company records a lease liability based on the present value of lease payments over the expected lease term including any options to extend the lease that the Company is reasonably certain to exercise. The Company calculates the present value of lease payments using an incremental borrowing rate as the Company’s leases do not provide an implicit interest rate. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. At the lease commencement date, the Company records a corresponding right-of-use lease asset based on the lease liability, adjusted for any lease incentives received and any initial direct costs paid to the lessor prior to the lease commencement date. The Company may enter into leases with an initial term of 12 months or less (“Short-Term Leases”). For Short-Term Leases, the Company records the rent expense on a straight-line basis and does not record the leases on the consolidated balance sheet. The Company had no Short-Term Leases as of September 30, 2023.

After lease commencement, the Company measures its leases as follows: (i) the lease liability based on the present value of the remaining lease payments using the discount rate determined at lease commencement and (ii) the right-of-use lease asset based on the re-measured lease liability, adjusted for any unamortized lease incentives received, any unamortized initial direct costs and the cumulative difference between rent expense and amounts paid under the lease agreement. Any

lease incentives received, and any initial direct costs incurred are amortized on a straight-line basis over the expected lease term. Rent expense is recorded on a straight-line basis over the expected lease term.

Stock-based compensation

The Company measures equity classified stock-based awards based on the estimated fair value on the date of grant and recognizes compensation expense of those awards on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. The Company accounts for forfeitures of stock option awards as they occur.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model, which is described more fully in Note 12. The fair value of each restricted stock award is measured as the fair value per share of the Company’s common stock on the date of grant.

Research and development

Research and development costs are expensed as incurred and consist primarily of funds paid to third parties for the provision of services for product candidate development, clinical and preclinical development and related supply and manufacturing costs, and regulatory compliance costs. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record net prepaid or accrued expense relating to these costs.

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

Income taxes

The Company accounts for income taxes using the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded to the extent it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Net loss per share

Basic net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. For purposes of calculating diluted net loss per common share, the denominator includes both the weighted average common shares outstanding and the number of common stock equivalents if the inclusion of such common stock equivalents would be dilutive. Dilutive common stock equivalents potentially include warrants, performance-based stock options and units, and stock options and non-vested restricted stock unit (“RSU”) awards using the treasury stock method. For all periods presented, there is no difference in the number of shares used to compute basic and diluted shares due to the Company’s losses.

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding as of September 30, 2023 and 2022, as they would be antidilutive:


	As of September 30,
	2023		2022
Performance-based stock units	2,470		2,470
Performance-based stock options	700,000		700,000
Stock options	23,956,279		20,124,581
Common stock warrants	7,328,549		6,812,794
Convertible debt	17,099,246	⁽ⁱ⁾	—

(i)

The potentially dilutive securities related to convertible debt are calculated based on a fixed conversion price of $2.00 per share, which is subject to change as described in Note 8.

Recently issued accounting pronouncements

There have been no accounting pronouncements issued but not yet adopted by the Company which are expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

Consolidated Balance Sheets (Parentheticals) - $ / shares	Sep. 30, 2023	Sep. 30, 2022
Preferred stock, par value per share (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	7,300,000	7,300,000
Preferred stock, shares issued	0	0
Preferred stock shares outstanding	0	0
Common stock, par value per share (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	425,000,000	425,000,000
Common stock, shares issued	260,257,517	227,310,572
Common stock, shares outstanding	260,257,517	227,310,572
Series A convertible preferred stock
Convertible stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized	1,000,000	1,000,000
Convertible preferred stock, shares issued	0	0
Convertible preferred stock outstanding	0	0
Series A-1 convertible preferred stock
Convertible stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized	200,000	200,000
Convertible preferred stock, shares issued	0	0
Convertible preferred stock outstanding	0	0
Series B convertible preferred stock
Preferred stock, par value per share (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,500,000	1,500,000
Preferred stock, shares issued	0	0
Preferred stock shares outstanding	0	0

Consolidated Statements of Operations - USD ($)	12 Months Ended
Consolidated Statements of Operations - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Operating expenses:
Research and development	$ 26,452,942	$ 42,330,856
General and administrative	26,673,440	20,739,897
Loss from operations	(53,126,382)	(63,070,753)
Loss on equity method investment	10,998	48,730
Interest expense, net	1,559,748	1,487,456
Loss on extinguishment of debt	577,659	1,025,402
Change in fair value of promissory notes	3,756,000	882,903
Change in fair value of warrant liability	(50,919)	(465,780)
Loss before income taxes	(58,979,868)	(66,049,464)
Income tax expense	2,800	2,800
Net loss	$ (58,982,668)	$ (66,052,264)
Per share information:
Net loss per share of common stock, basic (in dollars per share)	$ (0.24)	$ (0.31)
Net loss per share of common stock, diluted (in dollars per share)	$ (0.24)	$ (0.31)
Weighted average shares outstanding, basic (in shares)	250,176,633	212,079,472
Weighted average shares outstanding, diluted (in shares)	250,176,633	212,079,472

Commitments and Contingencies

12 Months Ended

Sep. 30, 2023

Commitments and Contingencies

Commitments and Contingencies

8. Commitments and Contingencies

Selexis Commercial License Agreements

In April 2013, the Company entered into commercial license agreements with Selexis for each of the ONS-3010, ONS-1045 and ONS-1050 biosimilar product candidates (which agreements were subsequently amended on May 21, 2014). Under the terms of each commercial license agreement, the Company acquired a non-exclusive worldwide license under the Selexis Technology to use the applicable Selexis expression technology along with the resulting Selexis materials/cell lines, each developed under the research license, to manufacture and commercialize licensed and final products, with a limited right to sublicense.

The Company paid an upfront licensing fee to Selexis for each commercial license and also agreed to pay a fixed milestone payment for each licensed product. In addition, the Company is required to pay a low single-digit royalty on a final product-by-final product and country-by-country basis, based on worldwide net sales of such final products by the Company or any of the Company’s affiliates or sublicensees during the royalty term. The royalty term for each final product in each country is the period commencing from the first commercial sale of the applicable final product in the applicable country and ending on the expiration of the specified patent coverage. At any time during the term, the Company has the right to terminate its royalty payment obligation by providing written notice to Selexis and paying Selexis a royalty termination fee.

Each of the Company’s commercial agreements with Selexis will expire upon the expiration of all applicable Selexis patent rights. Either party may terminate the related agreement in the event of an uncured material breach by the other party or in the event the other party becomes subject to specified bankruptcy, winding up or similar circumstances. Either

party may also terminate the related agreement under designated circumstances if the Selexis Technology infringes third-party intellectual property rights. In addition, the Company has the right to terminate each of the commercial agreements at any time at its convenience; however, with respect to the agreements relating to ONS-3010 and ONS-1045, this right is subject to the licensee’s consent pursuant to a corresponding letter the Company executed in conjunction with the standby agreement entered into between Selexis and Laboratories Liomont, S.A. de C.V. (“Liomont”) in November 2014.

The standby agreement permits Liomont to assume the license under the applicable commercial agreement for Mexico upon specified triggering events involving the Company’s bankruptcy, insolvency or similar circumstances.

Technology License

The Company entered into a technology license agreement with Selexis that will require milestone payments of $328,192 (based on an exchange rate on September 30, 2023 for converting Swiss Francs to U.S. dollars) to the licensor by the Company upon achievement of certain clinical milestones and pay a single digit royalty on net sales by the Company utilizing such technology. The Company also has the contractual right to buy out the royalty payments at a future date.

Litigation

On July 20, 2020, Liomont, filed a complaint against the Company in the U.S. District Court of the Southern District of New York alleging certain breach of contract claims under the June 25, 2014 strategic development, license and supply agreement relating to the biosimilar development program for ONS-3010 and ONS-1045 claiming $3,000,000 in damages. On March 30, 2021, the Company entered into a confidential settlement agreement with Liomont, and the complaint was dismissed on April 11, 2021. The Company agreed to make an initial settlement payment of $625,000 that was paid in April 2021; and an additional payment of $750,000, which was paid in April 2022. There are no remaining future financial obligations.

On November 3, 2023, a securities class action lawsuit was filed against the Company and certain of its officers in the United States District Court for the District of New Jersey. The class action complaint alleges violations of the Securities Exchange Act of 1934, as amended, or the Exchange Act, in connection with allegedly false and misleading statements made by the Company related to the Company’s BLA during the period from December 29, 2022 through August 29, 2023. The complaint alleges, among other things, that the Company violated Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5 by failing to disclose that there was an alleged lack of evidence supporting ONS-5010 as a treatment for wet AMD and that we and/or our manufacturing partner had deficient CMC controls for ONS-5010, which remained unresolved at the time the Company’s BLA was re-submitted to the FDA and, as a result, the FDA was unlikely to approve the Company’s BLA, and that the Company’s stock price dropped when such information was disclosed. The plaintiffs in the class action complaint seek damages and interest, and an award of reasonable costs, including attorneys’ fees.

The pending lawsuit and any other related lawsuits are subject to inherent uncertainties, and the actual defense and disposition costs will depend upon many unknown factors. The outcome of the pending lawsuit and any other related lawsuits is necessarily uncertain. The Company could be forced to expend significant resources in the defense of the pending lawsuit and any additional lawsuits, and the Company may not prevail. In addition, the Company may incur substantial legal fees and costs in connection with such lawsuits. The Company currently is not able to estimate the possible cost to us from these matters, as the pending lawsuit is currently at an early stage, and the Company cannot be certain how long it may take to resolve the pending lawsuit or the possible amount of any damages that the Company may be required to pay. Such amounts could be material to the Company’s financial statements if it does not prevail in the defense of the pending lawsuit and any other related lawsuits, or even if it does prevail. The Company has not established any reserve for any potential liability relating to the pending lawsuit and any other related lawsuits. It is possible that the Company could, in the future, incur judgments or enter into settlements of claims for monetary damages.

Leases

Corporate office

In March 2021, the Company entered into a three-year term corporate office lease in Iselin, New Jersey which commenced on April 23, 2021.

Equipment leases

The Company has equipment leases with terms between 12 and 36 months and has recorded those leases as finance leases. The equipment leases bear interest between 4.0% and 13.0% per annum.

Certain lease agreements contain provisions for future rent increases. Payments due under the lease contracts include minimum payments that the Company is obligated to make under the non-cancelable initial terms of the leases as the renewal terms are at the Company’s option. Lease expense is recorded as research and development or general and administrative based on the use of the leased asset.

The components of lease cost for the years ended September 30, 2023 and 2022 were as follows:


	Year ended September 30,
	2023		2022
Lease cost:
Amortization of right-of-use assets	$	—	$	—
Interest on lease liabilities		1,399		3,141
Total finance lease cost		1,399		3,141
Operating lease cost		44,867		44,867
Total lease cost	$	46,266	$	48,008

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee were as follows:


	September 30,
	2023		2022
Operating leases:
Right-of-use asset	$	26,172	$	70,360
Operating lease liabilities		—		26,995
Finance leases:
Right-of-use asset	$	—	$	—
Financing lease liabilities		4,267		16,018
Weighted-average remaining lease term (years):
Operating leases		0.6		1.6
Finance leases		0.3		1.3
Weighted-average discount rate:
Operating leases		7.5%		7.5%
Finance leases		13.0%		13.0%

Other information related to leases for the years ended September 30, 2023 and 2022 are as follows:


	Year ended September 30,
	2023		2022
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from finance leases	$	1,399	$	3,141
Operating cash flows from operating leases		27,675		46,652
Financing cash flows from finance leases		11,751		26,464

Future minimum payments under noncancelable leases at September 30, 2023 are as follows for the years ending September 30:

Employee Benefit Plan

The Company maintains a defined contribution 401(k) plan (the “Plan”) in which employees may contribute up to 100% of their salary and bonus, subject to statutory maximum contribution amounts. The Company matches 100% of the first 3% of employee contributions. The Company assumes all administrative costs of the Plan. For the years ended September 30, 2023 and 2022, the expense relating to the matching contribution was $136,914 and $83,266, respectively.

Consolidated Balance Sheets - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Current assets:
Cash and cash equivalents	$ 23,391,982	$ 17,396,812
Prepaid expenses and other current assets	7,587,216	10,123,634
Total current assets	30,979,198	27,520,446
Operating lease right-of-use assets, net	26,172	70,360
Equity method investment	793,932	804,930
Other assets	501,299	132,015
Total assets	32,300,601	28,527,751
Current liabilities:
Current portion of long-term debt	35,551,000	10,915,015
Current portion of finance lease liabilities	4,267	11,751
Current portion of operating lease liabilities		26,995
Accounts payable	6,574,523	3,491,485
Accrued expenses	2,745,740	3,427,900
Income taxes payable	1,856,629	1,856,629
Total current liabilities	46,732,159	19,729,775
Finance lease liabilities		4,267
Warrant liability	6,219	57,138
Total liabilities	46,738,378	19,791,180
Commitments and contingencies (Note 8)
Convertible preferred stock:
Total convertible preferred stock
Stockholders' (deficit) equity:
Preferred stock, value
Common stock, par value $0.01 per share; 425,000,000 shares authorized; 260,257,517 and 227,310,572 shares issued and outstanding at September 30, 2023 and September 30, 2022, respectively	2,602,574	2,273,105
Additional paid-in capital	450,877,835	415,398,984
Accumulated deficit	(467,918,186)	(408,935,518)
Total stockholders' (deficit) equity	(14,437,777)	8,736,571
Total liabilities, convertible preferred stock and stockholders' (deficit) equity	32,300,601	28,527,751
Series A convertible preferred stock
Convertible preferred stock:
Total convertible preferred stock
Series A-1 convertible preferred stock
Convertible preferred stock:
Total convertible preferred stock
Series B convertible preferred stock
Stockholders' (deficit) equity:
Preferred stock, value

Income Taxes (Tables)

12 Months Ended

Sep. 30, 2023

Income Taxes

Schedule of Income tax expense

Schedule of tax expense reconciliation


	Year ended September 30,
	2023		2022
U.S. federal statutory rate	(21.0)	%	(21.0)	%
State taxes, net of federal benefit	(7.3)		(7.1)
Deferred true-up	0.1		—
Permanent differences	(0.7)		—
Foreign tax credits	1.3		—
Research and development credit	(1.3)		(3.5)
Change in valuation allowance	29.0		32.1
Other	(0.1)		(0.5)
Effective income tax rate	0.0	%	(0.0)	%

Schedule of deferred taxes


	September 30,
	2023		2022
Deferred tax assets:
Net operating loss carryforwards	$	92,961,718	$	83,971,779
Capitalized research and development costs		6,531,508		—
Stock-based compensation		5,066,375		4,331,889
Lease liability		—		7,588
Research and development credit carryforward		11,953,956		11,166,153
Foreign tax credits		1,562,639		2,357,309
Accruals and others		1,656,239		815,310
Gross deferred tax assets		119,732,435		102,650,028
Less: valuation allowance		(119,725,078)		(102,630,250)
		7,357		19,778
Deferred tax liabilities:
Property and equipment		—		—
Right-of-use assets		(7,357)		(19,778)
Net deferred tax assets	$	—	$	—

Schedule of reconciliation of unrecognized tax benefits


	Year ended September 30,
	2023		2022
Balance at beginning of year	$	1,856,629	$	1,856,629
Changes based on tax positions related to the current year		—		—
Balance at end of year	$	1,856,629	$	1,856,629

Related-Party Transactions (Details) - USD ($)			12 Months Ended
Related-Party Transactions (Details) - USD ($)	Dec. 21, 2021	Jan. 27, 2020	Sep. 30, 2023	Sep. 30, 2022
Related party
Research and development			$ 26,452,942	$ 42,330,856
Accounts payable			$ 6,574,523	$ 3,491,485
Stock options
Related party
Number of options granted			3,831,698	4,039,566
Performance-based stock options
Related party
Number of options granted			1,200,000	1,900,000
Number of stock options vested				700,000
Related Party \| Stock options
Related party
Vesting (as a percent)	25.00%
Vesting period	3 years
Related Party \| Performance-based stock options
Related party
Number of stock options vested			200,000
Related Party \| MTTR
Related party
Shares issued during period		7,244,739
Contract termination settlement fee		$ 110,000
Research and development			$ 185,552	$ 526,435
Accounts payable			$ 0	$ 18,333
Related Party \| Terry Dagnon
Related party
Base salary	$ 450,000
Percentage of cash bonus	50.00%
Related Party \| Terry Dagnon \| Stock options
Related party
Number of options granted	800,000
Related Party \| Terry Dagnon \| Performance-based stock options
Related party
Number of options granted	200,000
Related Party \| Jeff Evanson
Related party
Base salary	$ 450,000
Percentage of cash bonus	50.00%
Related Party \| Jeff Evanson \| Stock options
Related party
Number of options granted	800,000
Related Party \| Jeff Evanson \| Performance-based stock options
Related party
Number of options granted	200,000

Liquidity

12 Months Ended

Sep. 30, 2023

Liquidity

Liquidity

2. Liquidity

The Company has incurred recurring losses and negative cash flows from operations since its inception and has an accumulated deficit of $467,918,186 as of September 30, 2023. As of September 30, 2023, the Company had $36,763,381 of principal, accrued interest and exit fees due under an unsecured convertible promissory note issued in December 2022 (the “December 2022 Note”), maturing on April 1, 2024, as amended. As a result, there is substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.

Management does not believe that the Company’s existing cash and cash equivalents as of September 30, 2023 are sufficient to fund the Company’s operations through one year from the Form 10-K filing date as a result of the costs associated with initiating the planned NORSE EIGHT clinical trial and the April 1, 2024 maturity date of the December 2022 Note. Management is currently assessing the costs to conduct NORSE EIGHT and will need to secure additional funding to complete the study. Additional financing will be needed by the Company to fund its operations in the future and to commercially launch ONS-5010 and develop any other product candidates. Management is currently evaluating different strategies to obtain the required funding for future operations. These strategies may also include, but are not limited to, proceeds from potential licensing and/or marketing arrangements or collaborations with pharmaceutical or other companies, the issuance of equity securities, the issuance of additional debt, and revenues from potential future product sales, if any. In addition, the Company is in discussions to further extend the maturity date of the December 2022 Note beyond April 1, 2024. The terms of the further extension could include additional interest or other fees, or a change in the conversion price that could increase the number of shares that need to be issued to satisfy a conversion of the December 2022 Note. However, there can be no assurance that these future funding efforts will be successful or that we will be successful in further extending the maturity date of the December 2022 Note.

The Company’s future operations are highly dependent on a combination of factors, including (i) the timely and successful completion of additional financing discussed above; (ii) the Company’s ability to successfully begin marketing of its

product candidates or complete revenue-generating partnerships with other companies; (iii) the success of its research and development; (iv) the development of competitive therapies by other biotechnology and pharmaceutical companies; and, ultimately, (v) regulatory approval and market acceptance of the Company’s proposed future products.

Liquidity (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Liquidity
Accumulated deficit	$ 467,918,186	$ 408,935,518
Debt, interest, fees	$ 36,763,381

- Definition

Amount of accumulated undistributed earnings (deficit).

+ References + Details

Basis of Presentation and Summary of Significant Accounting Policies - Dilutive (Details) - $ / shares	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Performance-based stock units
Antidilutive securities
Antidilutive securities excluded from computation of earnings per share	2,470	2,470
Performance-based stock options
Antidilutive securities
Antidilutive securities excluded from computation of earnings per share	700,000	700,000
Stock options
Antidilutive securities
Antidilutive securities excluded from computation of earnings per share	23,956,279	20,124,581
Common stock warrants
Antidilutive securities
Antidilutive securities excluded from computation of earnings per share	7,328,549	6,812,794
Convertible debt
Antidilutive securities
Antidilutive securities excluded from computation of earnings per share	17,099,246
Conversion rate per share	$ 2.00

Fair Value Measurements

12 Months Ended

Sep. 30, 2023

Fair Value Measurements

Fair Value Measurements

4. Fair Value Measurements

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis:


	September 30, 2023
	(Level 1)		(Level 2)		(Level 3)
Liabilities
Unsecured convertible promissory note	$	—	$	—	$	35,551,000
Warrant liability		—		—		6,219
Total	$	—	$	—	$	35,557,219


	September 30, 2022
	(Level 1)		(Level 2)		(Level 3)
Liabilities
Unsecured convertible promissory note	$	—	$	—	$	—
Warrant liability		—		—		57,138
Total	$	—	$	—	$	57,138

The table presented below is a summary of changes in the fair value of the Company’s Level 3 valuation for the warrant liability and the December 2022 Note for the years ended September 30, 2023 and 2022:


	Unsecured Convertible
	Promissory Note		Warrants
Balance at October 1, 2021	$	—	$	522,918
Change in fair value		—		(465,780)
Balance at September 30, 2022		—		57,138
Fair value at issuance date		31,820,000		—
Conversion of accrued interest to common stock shares		(25,000)		—
Change in fair value		3,756,000		(50,919)
Balance at September 30, 2023	$	35,551,000	$	6,219

As further described in Note 7, the Company elected the fair value option to account for the December 2022 Note. The fair value of the December 2022 Note is estimated using a binomial lattice model, which evaluates the payouts under hold, convert or call decisions. Significant estimates in the binomial lattice model include the Company’s stock price, volatility, risk-free rate of return, and credit-adjusted discount rate.

The fair value of the December 2022 Note as of September 30, 2023 was estimated using a binomial lattice model with the following assumptions:


	September 30, 2023
Term (years)		0.3
Stock price	$	0.22
Volatility		71.0	%
Risk-free rate		5.5	%
Dividend yield		—	%
Credit-adjusted discount rate		22.8	%

The warrants issued in connection with convertible senior secured notes originally issued pursuant to a certain Note and Warrant Purchase Agreement dated December 22, 2017, are classified as liabilities on the accompanying consolidated balance sheets as the warrants include cash settlement features at the option of the holders under certain circumstances. The warrant liability is revalued each reporting period with the change in fair value recorded in the accompanying consolidated statements of operations until the warrants are exercised or expire. The fair value of the warrant liability is estimated using the Black-Scholes option pricing model using the following weighted-average assumptions:


	September 30,

	2023			2022
Risk-free interest rate		5.30	%		4.23	%
Remaining contractual term of warrants (years)		1.4			2.4
Expected volatility		158.3	%		92.5	%
Annual dividend yield		—	%		—	%
Fair value of common stock (per share)	$	0.22		$	1.22

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Income Taxes - Deferred (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Deferred tax assets:
Net operating loss carryforwards	$ 92,961,718	$ 83,971,779
Capitalized research and development costs	6,531,508
Stock-based compensation	5,066,375	4,331,889
Lease liability		7,588
Research and development credit carryforward	11,953,956	11,166,153
Foreign tax credits	1,562,639	2,357,309
Accruals and others	1,656,239	815,310
Gross deferred tax assets	119,732,435	102,650,028
Less: valuation allowance	(119,725,078)	(102,630,250)
Deferred tax assets net of valuation allowance	7,357	19,778
Deferred tax liabilities:
Right-of-use assets	$ (7,357)	$ (19,778)

Fair Value Measurements - Assumptions (Details)	Sep. 30, 2023 $ / shares Y	Sep. 30, 2022 $ / shares Y
Expected Term
Fair value inputs
Debt inputs \| Y	0.3
Warrant inputs \| Y	1.4	2.4
Stock price (per share)
Fair value inputs
Debt inputs \| $ / shares	0.22
Warrant inputs \| $ / shares	0.22	1.22
Expected volatility
Fair value inputs
Debt inputs	0.710
Warrant inputs	1.583	0.925
Risk-free interest rate
Fair value inputs
Debt inputs	0.055
Warrant inputs	0.0530	0.0423
Annual dividend yield
Fair value inputs
Debt inputs	0
Warrant inputs	0	0
Discount rate
Fair value inputs
Debt inputs	0.228

Accrued Expenses (Tables)

12 Months Ended

Sep. 30, 2023

Accrued Expenses

Schedule of accrued expenses


	September 30,
	2023		2022
Compensation	$	919,970	$	1,976,252
Research and development		1,234,192		744,154
Professional fees		165,192		564,423
Other accrued expenses		426,386		143,071
	$	2,745,740	$	3,427,900

Commitments and Contingencies - Lease minimum payments (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Finance leases
2024	$ 4,383
Total undiscounted lease payments	4,383
Less: Imputed interest	116
Total lease obligations	$ 4,267	$ 16,018

Commitments and Contingencies - Lease cost (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2021
Leases
Operating lease term			3 years
Lease cost
Interest on lease liabilities	$ 1,399	$ 3,141
Total finance lease cost	1,399	3,141
Operating lease cost	44,867	44,867
Total lease cost	$ 46,266	$ 48,008
Minimum
Leases
Finance lease term	12 months
Finance lease interest (as a percent)	4.00%
Maximum
Leases
Finance lease term	36 months
Finance lease interest (as a percent)	13.00%

Debt

12 Months Ended

Sep. 30, 2023

Debt

Debt

7. Debt

Debt consists of:


	September 30,
	2023		2022
Unsecured convertible promissory note (measured at fair value)	$	35,551,000	$	—
Unsecured promissory note		—		11,114,518
Total debt		35,551,000		11,114,518
Less: unamortized loan costs		—		(199,503)
Total debt, net of unamortized loan costs		35,551,000		10,915,015
Less: current portion		(35,551,000)		(10,915,015)
Long-term debt	$	—	$	—

December 2022 Note

On December 22, 2022, the Company entered into a Securities Purchase Agreement and issued the December 2022 Note with a face amount of $31,820,000 to Streeterville Capital, LLC (the “Lender”), the holder of the Company’s unsecured promissory note issued in November 2021 (the “November 2021 Note”). The December 2022 Note has an original issue discount of $1,820,000. The Company received net proceeds of $18,052,461 upon the closing on December 28, 2022 after deducting the Lender’s transaction costs in connection with the issuance and a full payment of the remaining outstanding principal and accrued interest on the November 2021 Note. The November 2021 Note was cancelled upon repayment. See below for additional disclosures relating to November 2021 Note.

The December 2022 Note bears interest at 9.5% per annum and matures on January 1, 2024. The December 2022 Note contains customary covenants, including a restriction on the Company’s ability to pledge certain of the Company’s assets, subject to certain exceptions, without the Lender’s consent. Beginning on April 1, 2023, the Lender has the right to convert the December 2022 Note at the Conversion Price (as defined below). The principal amount and conversion price of the December 2022 Note are subject to adjustment upon certain triggering events. In addition, the Company has the right to convert all or any portion of the outstanding balance under the December 2022 Note into shares of common stock at the Conversion Price if certain conditions have been met at the time of conversion, including if at any time after the six-month anniversary of the closing date, the daily volume-weighted average price of the common stock on Nasdaq equals or exceeds $2.50 per share (subject to adjustments for stock splits and stock combinations) for a period of 30 consecutive trading days. Payments may be made by the Company (i) in cash, (ii) in shares of common stock, with the number of shares being equal to the portion of the applicable payment amount divided by the Conversion Price (as defined below), or (iii) a combination of cash and shares of common stock. Any payments made by the Company in cash, including prepayments or repayment at maturity, will be subject to an additional fee of 7.5%. Upon the occurrence of certain events described in the December 2022 Note, including, among others, the Company’s failure to pay amounts due and payable under the December 2022 Note, events of insolvency or bankruptcy, failure to observe covenants contained in the Securities Purchase Agreement and the December 2022 Note, breaches of representations and warranties in the Securities Purchase

Agreement, and the occurrence of certain transactions without the Lender’s consent (each such event, a “Trigger Event”), the Lender shall have the right, subject to certain exceptions, to increase the balance of the December 2022 Note by 10% for a Major Trigger Event (as defined in the December 2022 Note) and 5% for a Minor Trigger Event (as defined in the December 2022 Note). If a Trigger Event is not cured within ten (10) trading days of written notice thereof from the Lender, it will result in an event of default (such event, an “Event of Default”). Following an Event of Default, the Lender may accelerate the December 2022 Note such that all amounts thereunder become immediately due and payable, and interest shall accrue at a rate of 22% annually until paid. Under the December 2022 Note, “Conversion Price” means, prior to a Major Trigger Event, $2.00 per share (subject to adjustment for stock splits and stock combinations), and following a Major Trigger Event, the lesser of (i) $2.00 per share (subject to adjustment for stock splits and stock combinations), and (ii) 90% multiplied by the lowest closing bid price of the Company’s common stock in the three trading days prior to the date on which the conversion notice is delivered. If the Conversion Price is below $0.1756 per share, the Company will be required to satisfy a conversion notice from the Lender in cash. Subject to certain exceptions, while the December 2022 Note is outstanding, the Lender will have a consent right on any future variable rate transactions or any debt and a 10% participation right in any future debt or equity financings. In December 2023, the December 2022 Note was amended to change the mauturity date of the December 2022 Note to April 1, 2024 to allow time to further negotiate a longer extension of maturity of the December 2022 Note. The Company paid a one-time cash fee of $475,000 to the Lender. No other terms of the December 2022 Note were amended.

The Company elected to account for the December 2022 Note at fair value (Note 4) and was not required to bifurcate the conversion option as a derivative and as a result the original issue discount of $1,820,000 and debt issuance costs were written off upon election to fair value and accounted for as interest. During the year ended September 30, 2023, the Company recognized $2,074,964 of interest expense related to original issue discount of $1,820,000 and other third party debt issuance costs of $254,964.

November 2021 Note

On November 16, 2021, the Company received $10,000,000 in net proceeds from the issuance of an unsecured promissory note (the “November 2021 Note”) with a face amount of $10,220,000. Debt issuance costs totaling $820,000 were recorded as debt discount and are deducted from the principal in the accompanying consolidated balance sheets. The debt discount was amortized as a component of interest expense over the term of the underlying debt using the effective interest method. The note bore interest at a rate of 9.5% per annum compounding daily and was set to mature on January 1, 2023. The Company could prepay all or a portion of the note at any time by paying 105% of the outstanding balance elected for pre-payment.

As discussed above, the November 2021 Note was cancelled using proceeds from the December 2022 Note issued to the same lender. The total repayment was $11,947,539, which represented 105% of the outstanding balance and included $1,158,609 of interest expense. The transaction has been accounted for as an extinguishment of the November 2021 Note. As a result, the Company recorded a loss on debt extinguishment of $577,659, which included $8,729 of unamortized debt discount, and prepayment fees of $568,930.

During the years ended September 30, 2023 and 2022, the Company recognized $454,866 and $1,655,340, respectively, of interest expense related to the unsecured promissory notes, of which $190,775 and $646,299, respectively, are related to the amortization of debt discount.

November 2020 Note

On November 5, 2020, the Company received $10,000,000 in net proceeds from the issuance of an unsecured promissory note (the “November 2020 Note”) with a face amount of $10,220,000, which was amended in November 2021 and became convertible. Debt issuance costs totaling $228,032 were recorded as debt discount and were deducted from the principal. The debt discount was amortized as a component of interest expense over the 14-month term of the underlying debt using the effective interest method. The November 2020 Note bore interest at a rate of 7.5% per annum and was due to mature

January 1, 2022. On November 16, 2021, the Company entered into a note amendment, which, among other things, (i) extended the maturity date to January 1, 2023, (ii) increased the interest rate from 7.5% per annum to 10% per annum beginning on January 1, 2022, and (iii) provided for the lender’s right to redeem some or all of the outstanding balance of the note for shares of the Company’s common stock beginning July 1, 2022, subject to certain limitations. The amendment was accounted for as an extinguishment of the November 2020 Note. As a result, the Company recorded a loss on debt extinguishment of $1,025,402, which is the difference between the fair value of the amended promissory note and the net carrying value of the November 2020 Note, which included $26,488 of unamortized debt discount and lender fees of $552,633. The amended promissory note included redemption options whereby beginning on July 1, 2022, the holder had the option to redeem up to $2,000,000 of outstanding principal and accrued and unpaid interest per calendar month for shares of the Company’s common stock at a redemption price equal to 75% of the lowest closing bid price in the three trading days immediately preceding the date the holder delivers written notice. The Company elected to account for the amended promissory note at fair value (Note 4) and was not required to bifurcate the redemption options as derivatives.

The Company prepaid the note in full on June 30, 2022 by paying 105% of the outstanding balance. The total payment was $12,934,484, which included interest of $1,546,038.

Paycheck Protection Program term loan

On May 4, 2020, the Company received $904,200 in proceeds from a loan granted pursuant to the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relies, and Economic Securites (“CARES”) Act. The PPP term loan was evidenced by a promissory note containing the terms and conditions for repayment of the PPP term loan. The PPP term loan provided for an initial six-month deferral of payments and any amount owed on the loan had a two-year maturity (May 2022), with an interest rate of 1% per annum. Commencing October 15, 2021, the Company began to pay the lender equal monthly payments of principal and interest as required to fully amortize any principal amount outstanding on the PPP term loan as of October 15, 2021 by May 2, 2022. The loan was fully repaid on May 2, 2022. Interest expense on the PPP loan for the year ended September 30, 2022 was $2,718.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (h)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(c))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1

Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
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-Name Accounting Standards Codification
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-URI https://asc.fasb.org//470/tableOfContent

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-Section 50
-Paragraph 1B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1B
-Subparagraph (g)
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-SubTopic 20
-Name Accounting Standards Codification
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-Paragraph 1B
-Subparagraph (i)
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1C
-Subparagraph (a)
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Subparagraph (c)
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

Commitments and Contingencies - Employee Benefit (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Commitments and Contingencies
Maximum employee annual contributions (as a percent)	100.00%
Maximum employer annual contributions (as a percent)	100.00%
Maximum employer match (as a percent)	3.00%
Expense related to matching contribution	$ 136,914	$ 83,266

Income Taxes - Carryforwards (Details) - USD ($)		1 Months Ended	12 Months Ended
Income Taxes - Carryforwards (Details) - USD ($)	Jan. 01, 2018	Dec. 31, 2017	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2021
Carryforwards
Increase (decrease) in valuation allowance			$ 17,100,000	$ 21,200,000
Unrecognized tax benefits			$ 1,856,629	$ 1,856,629	$ 1,856,629
U.S. federal statutory rate	(21.00%)	(34.00%)	(21.00%)	(21.00%)
Federal
Carryforwards
NOL carryforwards			$ 371,700,000
Tax credit carryforward			11,200,000
State
Carryforwards
NOL carryforwards			207,500,000
Tax credit carryforward			800,000
Foreign
Carryforwards
Tax credit carryforward			1,600,000
Unrecognized tax benefits			$ 1,900,000

Stock-Based Compensation - Expense (Details) - USD ($)	12 Months Ended
Stock-Based Compensation - Expense (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation
Stock-based compensation expense	$ 5,547,019	$ 7,710,804
Research and development
Share-based Compensation
Stock-based compensation expense	986,598	2,691,330
General and administrative
Share-based Compensation
Stock-based compensation expense	$ 4,560,421	$ 5,019,474

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
-SubTopic 10
-Name Accounting Standards Codification
-Section 35
-Paragraph 1D
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480483/718-10-35-1D

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 718
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
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Reference 14: http://www.xbrl.org/2003/role/disclosureRef
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Reference 17: http://www.xbrl.org/2003/role/disclosureRef
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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
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Reference 19: http://www.xbrl.org/2003/role/disclosureRef
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Reference 20: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Basis of Presentation and Summary of Significant Accounting Policies

12 Months Ended

Sep. 30, 2023

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Summary of Significant Accounting Policies

3. Basis of Presentation and Summary of Significant Accounting Policies

Basis of presentation

Cash and cash equivalents

Equity method investment

Use of estimates

Fair value of financial instruments

●

Level 1 — Quoted prices in active markets for identical assets or liabilities.

●

Fair Value Option

Leases

Stock-based compensation

Research and development

Income taxes

Net loss per share

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding as of September 30, 2023 and 2022, as they would be antidilutive:


	As of September 30,
	2023		2022
Performance-based stock units	2,470		2,470
Performance-based stock options	700,000		700,000
Stock options	23,956,279		20,124,581
Common stock warrants	7,328,549		6,812,794
Convertible debt	17,099,246	⁽ⁱ⁾	—

(i)

The potentially dilutive securities related to convertible debt are calculated based on a fixed conversion price of $2.00 per share, which is subject to change as described in Note 8.

Recently issued accounting pronouncements

Preferred Stock (Details) - $ / shares	12 Months Ended
Preferred Stock (Details) - $ / shares	Sep. 30, 2023	Sep. 30, 2022
Common Stock and Stockholders' Equity
Preferred stock, shares authorized	7,300,000	7,300,000
Preferred stock, shares issued	0	0
Preferred stock shares outstanding	0	0
Preferred stock, par value per share (in dollars per share)	$ 0.01	$ 0.01
Maximum
Common Stock and Stockholders' Equity
Preferred stock, shares authorized	10,000,000
Series A convertible preferred stock
Common Stock and Stockholders' Equity
Convertible preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock dividend rate (as a percent)	10.00%
Series A-1 convertible preferred stock
Common Stock and Stockholders' Equity
Convertible preferred stock, shares authorized	200,000	200,000
Preferred stock dividend rate (as a percent)	10.00%
Series B convertible preferred stock
Common Stock and Stockholders' Equity
Preferred stock, shares authorized	1,500,000	1,500,000
Preferred stock, shares issued	0	0
Preferred stock shares outstanding	0	0
Preferred stock, par value per share (in dollars per share)	$ 0.01	$ 0.01
Number of common stock shares the preferred stock could be converted to	2,112,676
Series B convertible preferred stock \| Beneficial Holder
Common Stock and Stockholders' Equity
Maximum ownership in order to convert to common stock (as a percentage)	9.99%
Series B convertible preferred stock \| Beneficial Holder During First Six-Months
Common Stock and Stockholders' Equity
Maximum ownership in order to convert to common stock (as a percentage)	7.50%

Collaboration Arrangements (Details) - Syntone - USD ($)		1 Months Ended
	May 22, 2020	Jun. 30, 2020
Collaborative arrangements
Ownership percentage	20.00%
Investment in joint venture		$ 900,000
Expected future investment	$ 2,100,000
Syntone PRC
Collaborative arrangements
Ownership percentage	80.00%

Commitments and Contingencies - Lease balance sheet (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Leases
Operating leases, Right-of-use asset	$ 26,172	$ 70,360
Operating lease liabilities		26,995
Financing lease liabilities	$ 4,267	$ 16,018
Operating leases, Weighted-average remaining lease term	7 months 6 days	1 year 7 months 6 days
Finance leases, Weighted-average remaining lease term	3 months 18 days	1 year 3 months 18 days
Operating leases, Weighted-average discount rate (as a percent)	7.50%	7.50%
Finance leases, Weighted-average discount rate (as a percent)	13.00%	13.00%

Related-Party Transactions

12 Months Ended

Sep. 30, 2023

Related-Party Transactions

Related-Party Transactions

13. Related-Party Transactions

MTTR - Strategic Partnership Agreement (ONS-5010)

In February 2018, the Company entered into a strategic partnership agreement with MTTR to advise on regulatory, clinical and commercial strategy and assist in obtaining approval of ONS-5010, the Company's bevacizumab therapeutic product candidate for ophthalmic indications.

In November 2018, the board of directors of the Company appointed Mr. Terry Dagnon as Chief Operating Officer, and Mr. Jeff Evanson as Chief Commercial Officer. Both Mr. Dagnon and Mr. Evanson initially provided services to the Company pursuant to the February 2018 strategic partnership agreement with MTTR, as amended. Mr. Dagnon and Mr. Evanson were both principals in MTTR. The Company did not pay Mr. Dagnon or Mr. Evanson any direct compensation as consultants or as employees during the period from October 1, 2019 through March 19, 2020. Both Mr. Dagnon and Mr. Evanson were compensated directly by MTTR for services provided to the Company as the Company's Chief Operating Officer and Chief Commercial Officer, respectively, pursuant to the strategic partnership agreement until such agreement, as amended, was terminated effective March 19, 2020. The Company began compensating Mr. Dagnon and Mr. Evanson directly as consultants effective March 19, 2020 pursuant to their respective consulting agreements with the Company, which became effective March 19, 2020 following stockholder approval of the share issuances contemplated therein. Mr. Dagnon and Mr. Evanson have also agreed to provide consulting services to an affiliate of BioLexis Pte. Ltd. pursuant to a separate arrangement.

On January 27, 2020, the Company entered into a termination agreement and mutual release with MTTR to terminate the strategic partnership agreement. Pursuant to the agreement, the Company agreed (x) to issue to the four principals of MTTR (who include two of its named executive officers, Messrs. Dagnon and Evanson), an aggregate of 7,244,739 shares of its common stock, subject to stockholder approval, (y) to enter into consulting agreements with each of the four principals setting forth the terms of his respective compensation arrangement, and (z) to pay MTTR a one-time settlement fee of $110,000, upon effectiveness of the agreement.

Concurrently, the Company also entered into consulting agreements directly with each of the four principals of MTTR setting forth the terms of his respective compensation arrangement, as well as providing for certain transfer restrictions and repurchase rights applicable to the shares of common stock to be issued pursuant hereto. The termination agreement, and the consulting agreements, became effective upon stockholder approval of the share issuance on March 19, 2020. Refer to Note 11 for the accounting of the restricted stock issued and compensation expense recognized.

MTTR and its four principals under the strategic partnership agreement and the subsequent individual consulting agreements earned an aggregate $185,552 and $526,435 during the years ended September 30, 2023 and 2022, respectively, which includes monthly consulting fees and expense reimbursement, but excludes stock-based compensation related to restricted stock (Note 11). As of September 30, 2022, the amounts payable to former MTTR principals as consultants of $18,333, were included in accounts payable in the accompanying consolidated balance sheets. No amounts were due and payable to the former MTTR principals as of September 30, 2023.

On December 21, 2021, the Company entered into employment agreements with each of Mr. Dagnon and Mr. Evanson, which superseded and replaced their prior consulting agreements. Pursuant to their new employment agreements, each of Mr. Dagnon and Mr. Evanson will receive a base salary of $450,000 and a discretionary annual cash bonus with a target

amount equal to 50% of his respective base salary. In connection with their entry into the employment agreements, each of Mr. Dagnon and Mr. Evanson received a grant of 800,000 options to purchase common stock, one quarter of which will vest on the first anniversary of the grant and the remainder of which will vest in monthly installments over the succeeding three years, subject to their continued service through each vesting date. In addition, each of Mr. Dagnon and Mr. Evanson received a performance grant of 200,000 options to purchase common stock, which will vest upon the Company’s achievement of certain milestones. An aggregate of 200,000 performance-based stock options vested as a result of achieving the performance condition related to the Company’s BLA submission. Refer to Note 11 for further details on performance-based stock options.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-2

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Collaboration Arrangements

12 Months Ended

Sep. 30, 2023

Collaboration Arrangements

Collaboration Arrangements

12. Collaboration Arrangements

Syntone Strategic Partnership and PRC Joint Venture

In connection with a stock purchase agreement entered in May 2020 between the Company and Syntone, the Company and Syntone entered into a joint venture agreement pursuant to which they agreed to form a PRC joint venture that will be 80% owned by Syntone and 20% owned by the Company. Upon formation of the PRC joint venture in April 2021, the

Company entered into a royalty-free license with the PRC joint venture for the development, commercialization and manufacture of ONS-5010 in the greater China market, which includes Hong Kong, Taiwan and Macau.

The Company made the initial investment of $900,000 in June 2020. The Company is committed to making up to $2,100,000 in additional capital contributions to the PRC joint venture, based upon the development plan contemplated in the license agreement or on such other terms.

Stock-Based Compensation (Tables)

12 Months Ended

Sep. 30, 2023

Share-based Compensation

Schedule of stock-based compensation expense


	Year ended September 30,
	2023		2022
Research and development	$	986,598	$	2,691,330
General and administrative		4,560,421		5,019,474
	$	5,547,019	$	7,710,804

Schedule of performance-based stock units activity


				Weighted
				Average
	Number	Base		Remaining
	of	Price		Contractual	Aggregate
	PSUs	Per PSU		Term (Years)	Intrinsic Value
Balance at October 1, 2021	2,470	$	49.97
Forfeitures	—		—
Balance at September 30, 2022	2,470	$	49.97
Forfeitures	—		—
Balance at September 30, 2023	2,470	$	49.97	1.0	$	—
Exercisable at September 30, 2023	2,470	$	49.97	1.0	$	—
Vested and expected to vest at September 30, 2023	2,470	$	49.97	1.0	$	—

Stock options

Share-based Compensation

Schedule of stock option activity


				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2021	16,110,015	$	1.46
Granted	4,039,566		1.60
Exercised	(25,000)		0.71
Balance at September 30, 2022	20,124,581		1.49
Granted	3,831,698		1.15
Balance at September 30, 2023	23,956,279	$	1.44	7.6	$	—
Exercisable at September 30, 2023	13,570,078	$	1.52	7.2	$	—
Vested and expected to vest at September 30, 2023	23,956,279	$	1.44	7.6	$	—

Schedule of option assumptions


	Year ended September 30,
	2023		2022
Risk-free interest rate	3.7	%	1.8	%
Expected term (years)	5.9		6.0
Expected volatility	111.6	%	95.3	%
Expected dividend yield	—		—

Performance-based stock options

Share-based Compensation

Schedule of stock option activity


				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2021	1,000,000	$	2.42
Granted	1,900,000		1.44
Forfeited or expired	(2,200,000)		1.89
Balance at September 30, 2022	700,000		1.44
Granted	1,200,000		1.04
Forfeited or expired	(1,200,000)		1.04
Balance at September 30, 2023	700,000	$	1.44	8.2	$	—
Exercisable at September 30, 2023	700,000	$	1.44	8.2	$	—
Vested and expected to vest at September 30, 2023	700,000	$	1.44	8.2	$	—

Schedule of option assumptions


	Year ended September 30,
	2023		2022
Risk-free interest rate	3.8	%	1.3	%
Expected term (years)	10.0		5.2
Expected volatility	91.3	%	91.5	%
Expected dividend yield	—		—

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Fair Value Measurements - Changes in fair value (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
December 2022 Note
Liabilities fair value changes
Fair value at issuance date	$ 31,820,000
Conversion of accrued interest to common stock shares	(25,000)
Change in fair value	$ 3,756,000
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Change In Fair Value Of Redemption Feature
Balance, ending	$ 35,551,000
Warrant liability
Liabilities fair value changes
Balance, beginning	57,138	$ 522,918
Change in fair value	$ (50,919)	$ (465,780)
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration]	Fair Value Adjustment of Warrants	Fair Value Adjustment of Warrants
Balance, ending	$ 6,219	$ 57,138

Equity Method Investment - Syntone (Details) - Syntone - USD ($)		1 Months Ended
	May 22, 2020	Jun. 30, 2020
Investments
Ownership percentage	20.00%
Investment in joint venture		$ 900,000
Expected future investment	$ 2,100,000
Syntone PRC
Investments
Ownership percentage	80.00%

Debt - Summary (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Nov. 16, 2021
Debt
Total debt	$ 35,551,000	$ 11,114,518
Less: unamortized loan costs		(199,503)
Total debt, net of unamortized loan costs	35,551,000	10,915,015
Less: current portion	(35,551,000)	(10,915,015)
December 2022 Note
Debt
Total debt	$ 35,551,000
November 2021 Note
Debt
Total debt		$ 11,114,518
Less: unamortized loan costs			$ (820,000)

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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+ Details

Income Taxes (Details) - USD ($)	12 Months Ended
Income Taxes (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Income Taxes
State tax	$ 2,800	$ 2,800

Basis of Presentation and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Sep. 30, 2023

Basis of Presentation and Summary of Significant Accounting Policies

Schedule of dilutive securities excluded from the computation weighted-average shares


	As of September 30,
	2023		2022
Performance-based stock units	2,470		2,470
Performance-based stock options	700,000		700,000
Stock options	23,956,279		20,124,581
Common stock warrants	7,328,549		6,812,794
Convertible debt	17,099,246	⁽ⁱ⁾	—

(i)

The potentially dilutive securities related to convertible debt are calculated based on a fixed conversion price of $2.00 per share, which is subject to change as described in Note 8.

Consolidated Statements of Stockholders' Equity (Deficit) - USD ($)	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Balance at Sep. 30, 2021	$ 1,764,616	$ 345,726,087	$ (342,883,254)	$ 4,607,449
Balance, beginning (in shares) at Sep. 30, 2021	176,461,628
Increase (Decrease) in Stockholders' Equity
Issuance of common stock in connection with exercise of stock options	$ 250	17,500		17,750
Issuance of common stock in connection with exercise of stock options (in shares)	25,000
Issuance of common stock in connection with exercise of warrants	$ 157	187,943		$ 188,100
Issuance of common stock in connection with exercise of warrants (in shares)	15,675			15,675
Sale of common stock, net of issuance costs	$ 508,082	61,756,650		$ 62,264,732
Sale of common stock, net of issuance costs (in shares)	50,808,269
Stock-based compensation expense		7,710,804		7,710,804
Net loss			(66,052,264)	(66,052,264)
Balance at Sep. 30, 2022	$ 2,273,105	415,398,984	(408,935,518)	8,736,571
Balance, ending (in shares) at Sep. 30, 2022	227,310,572
Increase (Decrease) in Stockholders' Equity
Issuance of common stock upon conversion of convertible promissory accrued interest	$ 125	24,875		25,000
Issuance of common stock upon conversion of convertible promissory accrued interest (in shares)	12,500
Sale of common stock, net of issuance costs	$ 329,344	29,906,957		30,236,301
Sale of common stock, net of issuance costs (in shares)	32,934,445
Stock-based compensation expense		5,547,019		5,547,019
Net loss			(58,982,668)	(58,982,668)
Balance at Sep. 30, 2023	$ 2,602,574	$ 450,877,835	$ (467,918,186)	$ (14,437,777)
Balance, ending (in shares) at Sep. 30, 2023	260,257,517

Fair Value Measurements (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Liabilities
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Warrants and Rights Outstanding	Warrants and Rights Outstanding
Fair value measurements recurring basis \| Level 3
Liabilities
Unsecured convertible promissory note	$ 35,551,000
Warrant liability	6,219	$ 57,138
Total	$ 35,557,219	$ 57,138

- Definition

Fair value, after the effects of master netting arrangements, of a financial liability or contract with one or more underlyings, notional amount or payment provision or both, and the contract can be net settled by means outside the contract or delivery of an asset. Includes liabilities not subject to a master netting arrangement and not elected to be offset.

+ References

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Reference 18: http://www.xbrl.org/2003/role/disclosureRef
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Reference 19: http://www.xbrl.org/2003/role/disclosureRef
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Reference 20: http://www.xbrl.org/2003/role/disclosureRef
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Reference 21: http://www.xbrl.org/2003/role/disclosureRef
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Reference 24: http://www.xbrl.org/2003/role/disclosureRef
-Topic 825
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+ Details

Document And Entity Information - USD ($) $ in Millions	12 Months Ended
Document And Entity Information - USD ($) $ in Millions	Sep. 30, 2023	Dec. 18, 2023	Mar. 31, 2023
Document And Entity Information
Document Type	10-K
Document Annual Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-37759
Entity Registrant Name	OUTLOOK THERAPEUTICS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	38-3982704
Entity Address, Address Line One	485 Route 1 South
Entity Address, Address Line Two	Building F, Suite 320
Entity Address, City or Town	Iselin
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	08852
City Area Code	609
Local Phone Number	619-3990
Title of 12(b) Security	Common Stock
Trading Symbol	OTLK
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Document Financial Statement Error Correction [Flag]	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		260,257,517
Entity Public Float			$ 179.5
Entity Central Index Key	0001649989
Current Fiscal Year End Date	--09-30
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	FY
Amendment Flag	false
Auditor Firm ID	185
Auditor Name	KPMG LLP
Auditor Location	Philadelphia, Pennsylvania

Accrued Expenses (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022
Accrued Expenses
Compensation	$ 919,970	$ 1,976,252
Research and development	1,234,192	744,154
Professional fees	165,192	564,423
Other accrued expenses	426,386	143,071
Accrued expenses, total	$ 2,745,740	$ 3,427,900

Stock-Based Compensation - Non-options (Details) - Performance-based stock units - $ / shares	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation
Term of award	10 years
Number of PSUs
Balance, Beginning	2,470	2,470
Forfeitures	0	0
Balance, Ending	2,470	2,470
Vested and exercisable	2,470
Vested and expected to vest	2,470
Weighted Average Base Price Per Unit
Balance, Beginning	$ 49.97	$ 49.97
Forfeitures	0	0
Balance, Ending	49.97	$ 49.97
Vested and exercisable	$ 49.97
Vested and expected to vest	49.97%
Weighted average remaining contractual term, Outstanding	1 year
Weighted average remaining contractual term, Vested and exercisable	1 year
Weighted average remaining contractual term, Vested and expected to vest	1 year

Stockholders' Equity - Common Stock (Details) - USD ($)			1 Months Ended		12 Months Ended
Stockholders' Equity - Common Stock (Details) - USD ($)	May 16, 2023	Mar. 26, 2021	Dec. 31, 2022	Nov. 30, 2021	Sep. 30, 2023	Sep. 30, 2022	Mar. 29, 2023	Mar. 28, 2023
Common Stock and Stockholders' Equity
Common stock, shares authorized					425,000,000	425,000,000	425,000,000	325,000,000
Proceeds from issuance of stock					$ 30,024,213	$ 62,307,307
Shares of common stock issuable upon exercise of warrants					7,328,549
Exercise price per share						$ 12.00
Common stock voting rights					one
Dividends					$ 0
Underwritten Public Offering
Common Stock and Stockholders' Equity
Shares issued price (in dollars per share)				$ 1.25
Proceeds from issuance of stock				$ 53,968,057
Shares of common stock issuable upon exercise of warrants				2,100,000
Exercise price per share				$ 1.5625
Warrants exercise term				5 years
Sale of common stock, net of issuance costs (in shares)				46,000,000
Underwritten Public Offering \| GMS Ventures & Investments
Common Stock and Stockholders' Equity
Sale of common stock, net of issuance costs (in shares)				16,000,000
Direct registered offering
Common Stock and Stockholders' Equity
Shares issued price (in dollars per share)			$ 0.8784
Proceeds from issuance of stock			$ 23,208,679
Sale of common stock, net of issuance costs (in shares)			28,460,831
Direct registered offering \| GMS Ventures & Investments
Common Stock and Stockholders' Equity
Sale of common stock, net of issuance costs (in shares)			14,230,418
Direct registered offering \| M.S. Howells & Co
Common Stock and Stockholders' Equity
Shares of common stock issuable upon exercise of warrants			515,755
Exercise price per share			$ 1.05
Warrants exercise term			3 years
Wainwright ATM offering
Common Stock and Stockholders' Equity
Proceeds from issuance of stock					1,089,105	$ 8,339,247
Aggregate offering price		$ 40,000,000
Amount reclassified on additional paid in capital		$ 197,654
Payment of fees to sales agent					38,799	$ 279,821
Deferred costs					$ 119,422
Percentage of commission on sale of common stock		3.00%
Sale of common stock, net of issuance costs (in shares)					895,391	4,808,269
BTIG ATM
Common Stock and Stockholders' Equity
Proceeds from issuance of stock					$ 6,080,088
Aggregate offering price	$ 100,000,000
Amount reclassified on additional paid in capital	$ 353,688
Payment of fees to sales agent					188,044
Deferred costs					$ 331,512
Percentage of commission on sale of common stock					3.00%
Sale of common stock, net of issuance costs (in shares)					3,578,223

Organization and Operations

12 Months Ended

Sep. 30, 2023

Organization and Operations

Organization and Operations

1. Organization and Operations

Description of the Business

Outlook Therapeutics, Inc. (“Outlook” or the “Company”) was incorporated in New Jersey on January 5, 2010, started operations in July 2011, reincorporated in Delaware by merging with and into a Delaware corporation in October 2015 and changed its name to “Outlook Therapeutics, Inc.” in November 2018. The Company is a biopharmaceutical company focused on developing and commercializing ONS-5010, an ophthalmic formulation of bevacizumab for use in retinal indications. The Company is based in Iselin, New Jersey.

In fiscal year 2022, the Company submitted a Biologics License Application (“BLA”), and received confirmation from the U.S. Food and Drug Administration (“FDA”) that the BLA had been accepted for filing with a goal date of August 29, 2023 for a review decision by the FDA. On August 29, 2023, the Company received a Complete Response Letter (CRL) in which the FDA concluded it could not approve the BLA during this review cycle due to several chemical, manufacturing and control, or CMC, issues, open observations from pre-approval manufacturing inspections, and a lack of substantial evidence. At subsequent Type A meetings with the FDA, the Company learned that the FDA requires the successful completion of an additional adequate and well-controlled clinical trial evaluating ONS-5010, as well as additional requested CMC data indicated in the CRL to approve ONS-5010 for use in wet age related macular degeneration (“wet AMD”). Additionally, the Company submitted a Marketing Authorization Application (MAA) with the European Medicines Agency (EMA), which has been validated for review with an estimated decision date expected in early 2024.

Stock-Based Compensation - Information (Details)	12 Months Ended
Stock-Based Compensation - Information (Details)	Sep. 30, 2023 shares
Performance-based stock units
Share-based Compensation
Term of award	10 years
2011 Equity Incentive Plan \| Performance-based stock units
Share-based Compensation
Awards outstanding	2,470
2015 Equity Incentive Plan
Share-based Compensation
Aggregate number of common stock authorized for issuance	42,265,841
Number of shares available for grant	17,414,910
Term of award	10 years
2015 Equity Incentive Plan \| Minimum
Share-based Compensation
Vesting period	1 year
2015 Equity Incentive Plan \| Maximum
Share-based Compensation
Vesting period	4 years

Fair Value Measurements (Tables)

12 Months Ended

Sep. 30, 2023

Fair value

Schedule of assets and liabilities measured at fair value on a recurring basis


	September 30, 2023
	(Level 1)		(Level 2)		(Level 3)
Liabilities
Unsecured convertible promissory note	$	—	$	—	$	35,551,000
Warrant liability		—		—		6,219
Total	$	—	$	—	$	35,557,219


	September 30, 2022
	(Level 1)		(Level 2)		(Level 3)
Liabilities
Unsecured convertible promissory note	$	—	$	—	$	—
Warrant liability		—		—		57,138
Total	$	—	$	—	$	57,138

Schedule of changes in the fair value of Level 3 liabilities


	Unsecured Convertible
	Promissory Note		Warrants
Balance at October 1, 2021	$	—	$	522,918
Change in fair value		—		(465,780)
Balance at September 30, 2022		—		57,138
Fair value at issuance date		31,820,000		—
Conversion of accrued interest to common stock shares		(25,000)		—
Change in fair value		3,756,000		(50,919)
Balance at September 30, 2023	$	35,551,000	$	6,219

December 2022 Note

Fair value

Schedule of fair value inputs


	September 30, 2023
Term (years)		0.3
Stock price	$	0.22
Volatility		71.0	%
Risk-free rate		5.5	%
Dividend yield		—	%
Credit-adjusted discount rate		22.8	%

Warrant liability

Fair value

Schedule of fair value inputs


	September 30,

	2023			2022
Risk-free interest rate		5.30	%		4.23	%
Remaining contractual term of warrants (years)		1.4			2.4
Expected volatility		158.3	%		92.5	%
Annual dividend yield		—	%		—	%
Fair value of common stock (per share)	$	0.22		$	1.22

Consolidated Statements of Cash Flows - USD ($)	12 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Sep. 30, 2023	Sep. 30, 2022
OPERATING ACTIVITIES
Net loss	$ (58,982,668)	$ (66,052,264)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	44,188	204,694
Loss on extinguishment of debt	577,659	1,025,402
Non-cash interest expense	2,529,830	1,655,340
Stock-based compensation	5,547,019	7,710,804
Change in fair value of promissory notes	3,756,000	882,903
Change in fair value of warrant liability	(50,919)	(465,780)
Loss on equity method investment	10,998	48,730
Interest paid on debt	(1,158,609)
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	2,616,925	(3,092,811)
Other assets	(208,203)
Operating lease liabilities	(26,995)	(42,854)
Accounts payable	3,083,038	1,295,136
Accrued expenses	(711,661)	156,141
Net cash used in operating activities	(42,973,398)	(56,674,559)
FINANCING ACTIVITIES
Proceeds from the sale of common stock, net of issuance costs	30,024,213	62,307,307
Proceeds from debt	30,000,000	10,000,000
Proceeds from exercise of common stock warrants		188,100
Proceeds from exercise of stock options		17,750
Payments of finance lease obligations	(11,751)	(26,464)
Repayment of debt	(10,220,000)	(12,292,646)
Payment of financing costs	(823,894)	(600,000)
Net cash provided by financing activities	48,968,568	59,594,047
Net increase in cash and cash equivalents	5,995,170	2,919,488
Cash and cash equivalents at beginning of year	17,396,812	14,477,324
Cash and cash equivalents at end of year	23,391,982	17,396,812
Supplemental disclosure of cash flow information:
Cash paid for interest	1,160,008	1,556,691
Cloud computing implementation costs in accrued expenses	29,500
Supplemental schedule of non-cash financing activities:
Convertible promissory note accrued interest converted into common stock	25,000
Deferred offering costs amortization	$ 141,600	$ 42,575

Commitments and Contingencies (Details) - USD ($)		1 Months Ended
Commitments and Contingencies (Details) - USD ($)	Jul. 20, 2020	Apr. 30, 2022	Apr. 30, 2021	Sep. 30, 2023
Commitments
Loss contingency damages due to third party	$ 3,000,000
Settlement payment		$ 750,000	$ 625,000
Settlement payable				$ 0
Selexis
Commitments
Remaining future financial obligations				$ 328,192

Stock-Based Compensation - Stock option activity (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Weighted Average Remaining Contractual Term (Years)
Stock-based compensation expense	$ 5,547,019	$ 7,710,804
Stock options
Number of Shares
Balance, Beginning (in shares)	20,124,581	16,110,015
Granted (in shares)	3,831,698	4,039,566
Exercised (in shares)		(25,000)
Balance, Ending (in shares)	23,956,279	20,124,581
Exercisable (in shares)	13,570,078
Vested and expected to vest (in shares)	23,956,279
Weighted Average Exercise Price
Balance, Beginning (in dollars per share)	$ 1.49	$ 1.46
Granted (in dollars per share)	1.15	1.60
Exercised (in dollars per share)		0.71
Balance, Ending (in dollars per share)	1.44	1.49
Vested and exercisable (in dollars per share)	1.52
Vested and expected to vest (in dollars per share)	$ 1.44
Weighted Average Remaining Contractual Term (Years)
Balance-Remaining contractual term	7 years 7 months 6 days
Vested and exercisable -Remaining contractual term	7 years 2 months 12 days
Vested and expected to vest-Remaining contractual term	7 years 7 months 6 days
Term of award	10 years
Grant date fair value of options (in dollars per share)	$ 0.97	$ 1.23
Stock options \| Minimum
Weighted Average Remaining Contractual Term (Years)
Vesting period	1 year
Stock options \| Maximum
Weighted Average Remaining Contractual Term (Years)
Vesting period	4 years
Performance-based stock options
Number of Shares
Balance, Beginning (in shares)	700,000	1,000,000
Granted (in shares)	1,200,000	1,900,000
Forfeited or expired (in shares)	(1,200,000)	(2,200,000)
Balance, Ending (in shares)	700,000	700,000
Vested and exercisable (in shares)	700,000
Vested and expected to vest (in shares)	700,000
Weighted Average Exercise Price
Balance, Beginning (in dollars per share)	$ 1.44	$ 2.42
Granted (in dollars per share)	1.04	1.44
Forfeited or expired (in dollars per share)	1.04	1.89
Balance, Ending (in dollars per share)	1.44	1.44
Vested and exercisable (in dollars per share)	1.44
Vested and expected to vest (in dollars per share)	$ 1.44
Weighted Average Remaining Contractual Term (Years)
Balance-Remaining contractual term	8 years 2 months 12 days
Vested and exercisable -Remaining contractual term	8 years 2 months 12 days
Vested and expected to vest-Remaining contractual term	8 years 2 months 12 days
Term of award	10 years
Grant date fair value of options (in dollars per share)	$ 0.91	$ 1.03
Stock-based compensation expense	$ 0	$ 718,950
Number of stock options vested		700,000

Preferred Stock

12 Months Ended

Sep. 30, 2023

Preferred Stock.

Preferred Stock

10. Preferred Stock

The Company’s board of directors has the authority, without further action by its stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series and to fix the number, rights, preferences, privileges and restrictions thereof. The Company’s board of directors has previously designated 1,000,000 shares as “Series A Convertible Preferred Stock,” 200,000 shares as “Series A-1 Convertible Preferred Stock” and 1,500,000 shares as “Series B Convertible Preferred Stock.” At September 30, 2023 and 2022, there were no shares of preferred stock issued and outstanding.

Series A Convertible Preferred Stock

The Series A Convertible preferred stock (“Series A Convertible”) accrued dividends at a rate of 10% per annum, compounded quarterly, payable quarterly at the Company’s option in cash or in kind in additional shares of Series A Convertible. The Series A Convertible was also entitled to dividends on an as-if-converted basis in the same form as any dividends actually paid on shares of common stock or other securities. The initial conversion rate was subject to appropriate adjustment in the event of a stock split, stock dividend, combination, reclassification or other recapitalization affecting the common stock.

Series A-1 Convertible Preferred Stock

The Series A-1 Convertible preferred stock, (“Series A-1 Convertible”) accrued dividends at a rate of 10% per annum, compounded quarterly, payable quarterly at the Company’s option in cash or in kind in additional shares of Series A-1. The Series A-1 was also entitled to dividends on an as-if-converted basis in the same form as any dividends actually paid

on shares of Common Stock or other securities. The holders of the Series A-1 had the right to vote on matters submitted to a vote of the Company’s stockholders on an as-converted basis, voting with the Company’s other stockholders as a single class. In addition, without the prior written consent of a majority of the outstanding shares of Series A-1, the Company would not take certain actions, including amending its certificate of incorporation or bylaws, or issuing securities ranking pari passu or senior to the Series A-1.

Series B Convertible Preferred Stock

The Series B Convertible preferred stock (“Series B Convertible”) were non-voting, did not accrue dividends nor did the shares of Series B Convertible had any specific rights or preferences, and had a par value of $0.01 per share and were convertible into 2,112,676 shares of common stock. The Series B Convertible were not convertible into common stock if the holder thereof would beneficially own more than 9.99% of the common stock, or, if during the first six-month period following the closing of the exchange, 7.50%, but automatically converted into common stock in part from time to time if the holder beneficially owned below a certain beneficial ownership threshold of the common stock.

Stock-Based Compensation - Option Assumptions (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Stock options
Share-based Compensation
Risk-free interest rate	3.70%	1.80%
Expected term (years)	5 years 10 months 24 days	6 years
Expected volatility	111.60%	95.30%
Expected dividend yield	0.00%
Unrecognized compensation expense	$ 9,176,983
Unrecognized compensation exercise period	2 years 3 months 18 days
Performance-based stock options
Share-based Compensation
Risk-free interest rate	3.80%	1.30%
Expected term (years)	10 years	5 years 2 months 12 days
Expected volatility	91.30%	91.50%

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

Stockholders' Equity (Tables)

12 Months Ended

Sep. 30, 2023

Stockholders' Equity

Schedule of warrants outstanding


		Shares of
		common stock
		issuable upon
		exercise of	Exercise Price
Expiration Date		warrants	Per Share
December 22, 2024	(i)	277,128	$	12.00
February 26, 2024		1,747,047	$	0.9535
February 24, 2025		172,864	$	1.27
April 13, 2025	(i)	145,686	$	12.00
May 31, 2025	(i)	62,437	$	12.00
June 22, 2025		191,268	$	1.51875
December 28, 2025		515,755	$	1.0500
January 28, 2026		2,116,364	$	1.25
November 23, 2026		2,100,000	$	1.5625
		7,328,549

(i)

The warrants were issued in connection with the convertible senior secured notes originally issued pursuant to the certain Note and Warrant Purchase Agreement dated December 22, 2017 and are classified as liabilities on the accompanying consolidated balance sheets, as the warrants include cash settlement features at the option of the holders under certain circumstances. Refer to Note 4 for fair value measurements disclosures.

Debt - Information (Details)						1 Months Ended	12 Months Ended
Debt - Information (Details)	Dec. 22, 2022 USD ($) D $ / shares	Jun. 30, 2022 USD ($)	Nov. 16, 2021 USD ($)	Nov. 05, 2020 USD ($)	May 04, 2020 USD ($)	Dec. 31, 2023 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)
Debt
Proceeds from loan							$ 30,000,000	$ 10,000,000
Unamortized discount								199,503
Payment of lender fees							823,894	600,000
Carrying value of notes exchanged							25,000
Interest paid							1,158,609
Gain (loss) on extinguishment of debt							(577,659)	(1,025,402)
December 2022 Note
Debt
Original principal amount	$ 31,820,000
Debt issuance costs	1,820,000					$ 475,000	1,820,000
Proceeds from loan	$ 18,052,461
Interest rate (as a percent)	9.50%
Trading day threshold \| D	30
Percentage of additional fee on payments in cash	7.50%
Percentage of increase in debt balance by lender for a Major Trigger Event	10.00%
Percentage of increase in debt balance by lender for a Minor Trigger Event	5.00%
Threshold trading days of written notice from Lender for cure of Trigger Event	10 days
Interest rate for the immediately due and payable amounts	22.00%
Conversion rate per share \| $ / shares	$ 2.50
Conversion price required to satisfy conversion notice from the lender in cash \| $ / shares	$ 0.1756
Percentage of participation right to Lender in future debt or equity financing	10.00%
Interest expense							2,074,964
Third party debt issuance costs							254,964
December 2022 Note \| Major Trigger Event
Debt
Trading day threshold \| D	3
Conversion rate per share \| $ / shares	$ 2.00
Threshold percentage of stock price trigger	90.00%
November 2021 Note
Debt
Original principal amount			$ 10,220,000
Proceeds from loan			$ 10,000,000
Interest rate (as a percent)			9.50%
Interest expense							454,866	1,655,340
Unamortized discount			$ 820,000
Redemption price (as a percent)	105.00%		105.00%
Repayments of unsecured debt	$ 11,947,539
Interest paid	1,158,609
Gain (loss) on extinguishment of debt	(577,659)
Amortization of debt issuance costs	8,729						190,775	$ 646,299
Prepayment fee	$ 568,930
November 2020 Note
Debt
Original principal amount				$ 10,220,000
Proceeds from loan				$ 10,000,000
Interest rate (as a percent)			10.00%	7.50%
Trading day threshold			3
Interest expense		$ 1,546,038
Unamortized discount			$ 26,488	$ 228,032
Redemption price (as a percent)		105.00%	75.00%
Debt Instrument, term				14 months
Payment of lender fees			$ 552,633
Repayments of unsecured debt		$ 12,934,484
Gain (loss) on extinguishment of debt			(1,025,402)
November 2020 Note \| Maximum
Debt
Carrying value of notes exchanged			$ 2,000,000
Paycheck Protection Program
Debt
Proceeds from loan					$ 904,200
Interest rate (as a percent)					1.00%
Interest expense							$ 2,718
Debt Instrument, term					2 years

Debt (Tables)

12 Months Ended

Sep. 30, 2023

Debt

Schedule of debt


	September 30,
	2023		2022
Unsecured convertible promissory note (measured at fair value)	$	35,551,000	$	—
Unsecured promissory note		—		11,114,518
Total debt		35,551,000		11,114,518
Less: unamortized loan costs		—		(199,503)
Total debt, net of unamortized loan costs		35,551,000		10,915,015
Less: current portion		(35,551,000)		(10,915,015)
Long-term debt	$	—	$	—

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 69B
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481568/470-20-55-69B

Reference 2: http://www.xbrl.org/2003/role/exampleRef
-Topic 470
-SubTopic 20
-Name Accounting Standards Codification
-Section 55
-Paragraph 69E
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481568/470-20-55-69E

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 235
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 3
-Subparagraph (SX 210.12-04(a))
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480678/235-10-S99-3

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+ Details

Income Taxes - Unrecognized tax benefits (Details) - USD ($)	12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance at beginning of year	$ 1,856,629	$ 1,856,629
Changes based on tax positions related to the current year	0	0
Balance at end of year	$ 1,856,629	$ 1,856,629

Income Taxes

12 Months Ended

Sep. 30, 2023

Income Taxes

Income Taxes

14. Income Taxes

Income tax benefit for the years ended September 30, 2023 and 2022 consists of the following:

The Company did not sell any New Jersey State net operating losses (“NOLs”) or unused research and development tax credits during the years ended September 30, 2023 and 2022.

A reconciliation of income tax expense (benefit) at the statutory federal income tax rate and income taxes as reflected in the financial statements is as follows:


	Year ended September 30,
	2023		2022
U.S. federal statutory rate	(21.0)	%	(21.0)	%
State taxes, net of federal benefit	(7.3)		(7.1)
Deferred true-up	0.1		—
Permanent differences	(0.7)		—
Foreign tax credits	1.3		—
Research and development credit	(1.3)		(3.5)
Change in valuation allowance	29.0		32.1
Other	(0.1)		(0.5)
Effective income tax rate	0.0	%	(0.0)	%

The tax effects of the temporary differences that gave rise to deferred taxes were as follows:


	September 30,
	2023		2022
Deferred tax assets:
Net operating loss carryforwards	$	92,961,718	$	83,971,779
Capitalized research and development costs		6,531,508		—
Stock-based compensation		5,066,375		4,331,889
Lease liability		—		7,588
Research and development credit carryforward		11,953,956		11,166,153
Foreign tax credits		1,562,639		2,357,309
Accruals and others		1,656,239		815,310
Gross deferred tax assets		119,732,435		102,650,028
Less: valuation allowance		(119,725,078)		(102,630,250)
		7,357		19,778
Deferred tax liabilities:
Property and equipment		—		—
Right-of-use assets		(7,357)		(19,778)
Net deferred tax assets	$	—	$	—

As of September 30, 2023, the Company had approximately $371.7 million and $207.5 million of U.S. federal and New Jersey NOLs that will begin to expire in 2030 and 2039, respectively. As of September 30, 2023, the Company had federal and state research and development tax credit carryforwards of $11.2 million and $0.8 million, respectively, available to reduce future tax liabilities which will begin to expire in 2032 and 2033, respectively. As of September 30, 2023, the Company has federal foreign tax credit (“FTC”) carryforwards of $1.6 million available to reduce future tax liabilities which will begin to expire starting in 2023, of which $1.9 million of the FTC carryforward is included in the balance of unrecognized tax benefits. Realization of the deferred tax asset is contingent on future taxable income and based upon the level of historical losses, management has concluded that the deferred tax asset does not meet the more-likely-than-not threshold for realizability. Accordingly, a full valuation allowance continues to be recorded against the Company’s deferred tax assets as of September 30, 2023 and 2022. The valuation allowance increased by $17.1 million and $21.2 million during the year ended September 30, 2023 and 2022, respectively.

When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely-than-not be realized. The determination as to whether the tax benefit will more-likely-than-not be realized is based upon the technical merits of the tax position as well as consideration of the available facts and circumstances. The Company recognizes interest and penalties accrued on any unrecognized tax benefits within the provision for income taxes in its consolidated statements of operations.

The 2017 Tax Cuts and Jobs Act (the "Act"), which was signed into law on December 22, 2017, has resulted in significant changes to the U.S. corporate income tax system. These changes include a federal statutory rate reduction from 34% to 21%, the elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation. For the fiscal years ending September 30, 2023, and 2022, the federal tax rate is 21.0%. The Act also transitions international taxation from a worldwide system to a modified territorial system and includes base erosion prevention measures on non-U.S. earnings, which has the effect of subjecting certain earnings of the Company's foreign subsidiaries to U.S. taxation as global intangible low-taxed income.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:


	Year ended September 30,
	2023		2022
Balance at beginning of year	$	1,856,629	$	1,856,629
Changes based on tax positions related to the current year		—		—
Balance at end of year	$	1,856,629	$	1,856,629

The Company does not anticipate material change in the unrecognized tax benefits in the next 12 months. These unrecognized tax benefits, if recognized, would affect the annual effective tax rate. The Company’s income tax returns for the years from 2011 through 2022 remain open for examination by the Internal Revenue Service as well as various states and municipalities.

Due to the change in ownership provisions of the Code, the availability of the Company’s NOL carryforwards may be subject to annual limitations against taxable income in future periods, which could substantially limit the eventual utilization of such carryforwards. The Company has not analyzed the historical or potential impact of its equity financings on beneficial ownership and therefore no determination has been made whether the net operating loss carry forward is subject to any Code Section 382 limitation. To the extent there is a limitation, there would be a reduction in the deferred tax assets with an offsetting reduction in the valuation allowance.

On August 16, 2022, President Biden signed the Inflation Reduction Act (the “IRA”). The IRA contains a number of tax related provisions including a 15% minimum corporate income tax on certain large corporations as well as an excise tax on stock repurchases, both provisions are effective for tax years beginning after December 31, 2022. The Company is in the process of evaluating the IRA, but does not expect it to have a material impact on the Company's consolidated financial statements.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 946
-SubTopic 20
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147480990/946-20-50-13

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147482685/740-10-50-14

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147479360/740-10-S99-1

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 740
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-Name Accounting Standards Codification
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-SubTopic 30
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482603/740-30-50-2

+ Details

Commitments and Contingencies (Tables)

12 Months Ended

Sep. 30, 2023

Commitments and Contingencies

Schedule of lease information

The components of lease cost for the years ended September 30, 2023 and 2022 were as follows:


	Year ended September 30,
	2023		2022
Lease cost:
Amortization of right-of-use assets	$	—	$	—
Interest on lease liabilities		1,399		3,141
Total finance lease cost		1,399		3,141
Operating lease cost		44,867		44,867
Total lease cost	$	46,266	$	48,008

Amounts reported in the consolidated balance sheets for leases where the Company is the lessee were as follows:


	September 30,
	2023		2022
Operating leases:
Right-of-use asset	$	26,172	$	70,360
Operating lease liabilities		—		26,995
Finance leases:
Right-of-use asset	$	—	$	—
Financing lease liabilities		4,267		16,018
Weighted-average remaining lease term (years):
Operating leases		0.6		1.6
Finance leases		0.3		1.3
Weighted-average discount rate:
Operating leases		7.5%		7.5%
Finance leases		13.0%		13.0%

Other information related to leases for the years ended September 30, 2023 and 2022 are as follows:


	Year ended September 30,
	2023		2022
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from finance leases	$	1,399	$	3,141
Operating cash flows from operating leases		27,675		46,652
Financing cash flows from finance leases		11,751		26,464

Schedule of finance lease future minimum payments

Equity Method Investment

12 Months Ended

Sep. 30, 2023

Equity Method Investment

Equity Method Investment

5. Equity Method Investment

In connection with the execution of a stock purchase agreement with Syntone Ventures LLC (“Syntone Ventures”), the U.S. based affiliate of Syntone Technologies Group Co. Ltd. (“Syntone PRC”) on May 22, 2020, the Company and Syntone PRC entered into a joint venture agreement pursuant to which they agreed to form a People’s Republic of China (“PRC”) joint venture, Beijing Syntone Biopharma Ltd (“Syntone JV”), that is 80% owned by Syntone PRC and 20% owned by the Company. As the Company can exert significant influence over, but does not control, Syntone JV’s operations through voting rights or representation on Syntone JV’s board of directors, the Company accounts for this investment using the equity method of accounting. Upon formation of Syntone JV in April 2021, the Company entered into a royalty-free license with Syntone JV for the development, commercialization and manufacture of ONS-5010 in the greater China market, which includes Hong Kong, Taiwan and Macau.

The Company made the initial investment of $900,000 in June 2020 and is committed to making capital contributions to Syntone JV of approximately $2,100,000, based upon the development plan contemplated in the license agreement. The maximum exposure to a loss as a result of the Company’s involvement in Syntone JV is limited to the initial investment and the future capital contributions totaling approximately $2,100,000.

Stock-Based Compensation - Restricted stock (Details) - USD ($)		1 Months Ended	12 Months Ended
	Jan. 27, 2020	Jan. 31, 2020	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation
Stock-based compensation expense			$ 5,547,019	$ 7,710,804
Related Party \| MTTR
Share-based Compensation
Shares issued during period	7,244,739
Restricted Stock \| MTTR
Share-based Compensation
Stock-based compensation expense			2,003,946
Restricted Stock \| Related Party \| MTTR
Share-based Compensation
Shares issued during period		7,244,739
Share repurchase price		$ 0.01
Repurchase right lapses on shares (as a percent)		100.00%
Grant date fair value of share		$ 0.54
Explicit service period		4 years 9 months 18 days
Stock-based compensation expense			0
Unrecognized compensation expense			$ 0
Restricted Stock \| Related Party \| MTTR \| Minimum
Share-based Compensation
Repurchase right lapses on shares (as a percent)		50.00%
Restricted Stock \| Related Party \| MTTR \| Maximum
Share-based Compensation
Repurchase right lapses on shares (as a percent)		100.00%

Stockholders' Equity

12 Months Ended

Sep. 30, 2023

Stockholders' Equity

Stockholders' Equity

9. Stockholders’ Equity

Common stock

On March 29, 2023, following receipt of stockholder approval at the Company’s 2023 annual meeting of stockholders, the number of authorized shares of common stock under the Company’s Certificate of Incorporation was increased from 325,000,000 shares to 425,000,000 shares.

In December 2022, in a registered direct equity offering to certain institutional and accredited investors, including GMS Ventures and Investments (“GMS Ventures”), the Company’s largest stockholder, the Company issued 28,460,831 shares of common stock at a purchase price per share of $0.8784 for $23,208,679 in net proceeds after payment of placement agent fees and other offering costs. GMS Ventures purchased an aggregate of 14,230,418 shares of common stock in the registered direct equity offering. In connection with the registered direct equity offering, the Company issued to M.S. Howells & Co., the placement agent, warrants to purchase up to an aggregate of 515,755 shares of common stock at an exercise price of $1.05 per share, which warrants have a three-year term.

In November 2021, the Company issued 46,000,000 shares of common stock in an underwritten public offering at a purchase price per share of $1.25 for $53,968,057 in net proceeds after payment of underwriter discounts and commissions and other underwriter offering costs. GMS Ventures, the Company’s largest stockholder and strategic partner, purchased an aggregate of 16,000,000 shares of common stock in the public offering at the public offering price per share. In connection with the underwritten public offering, the Company issued the underwriter warrants to purchase up to an aggregate of 2,100,000 shares of common stock at an exercise price of $1.5625 per share, which warrants have a five-year term.

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Subject to preferences that may apply to any outstanding preferred stock, holders of common stock are entitled to receive ratably any dividends that the Company’s board of directors may declare out of funds legally available for that purpose on a non-cumulative basis. No dividends had been declared through September 30, 2023.

H.C. Wainwright & Co. At-the-Market Offering Agreement

On March 26, 2021, the Company entered into an At-the-Market Offering Agreement with H.C. Wainwright & Co., as sales agent (“Wainwright”), (the “Wainwright ATM Agreement” or the “Wainwright ATM Offering”), under which the Company may issue and sell shares of its common stock from time to time through Wainwright as sales agent. The Company filed a prospectus supplement, dated March 26, 2021, with the Securities and Exchange Commission pursuant to which the Company may offer and sell shares of common stock having an aggregate offering price of up to up to $40,000,000 from time to time through Wainwright. The Company incurred financing costs of $197,654 which were capitalized and were being reclassified to additional paid in capital on a pro rata basis when the Company sold common stock under the Wainwright ATM Offering. As of September 30, 2022, $119,422 of such deferred costs are included in other assets on the consolidated balance sheets.

Under the Wainwright ATM Offering, the Company paid Wainwright a commission equal to 3.0% of the aggregate gross proceeds of any sales of common stock under the Wainwright ATM Agreement. The Company terminated the Wainwright ATM Agreement effective May 15, 2023. As a result, the Company wrote off unamortized deferred costs under the Wainwright ATM Agreement. During the year ended September 30, 2023, the Company sold 895,391 shares of common stock under the Wainwright ATM Offering and generated $1,089,105 in net proceeds after paying fees to Wainwright of $38,799.

During the year ended September 30, 2022, the Company sold 4,808,269 shares of common stock under the Wainwright ATM Offering and generated $8,339,247 in net proceeds after paying fees to Wainwright of $279,821.

BTIG, LLC At-the-Market Offering Agreement

On May 16, 2023, the Company entered into the BTIG ATM Offering, under which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $100,000,000 from time to time through BTIG. The Company incurred financing costs of $353,688, which were capitalized and are being reclassified to additional paid in capital on a pro rata basis when the Company sells common stock under the BTIG ATM Offering. As of September 30, 2023, $331,512 of such deferred costs are included in other assets on the consolidated balance sheets.

Under the BTIG ATM Agreement, the Company pays BTIG a commission equal to 3.0% of the aggregate gross proceeds of any sales of common stock under the BTIG ATM Agreement. The offering of common stock pursuant to the BTIG ATM Agreement will terminate upon the earlier of (i) the sale of all common stock subject to the BTIG ATM Agreement or (ii) termination of the BTIG ATM Agreement in accordance with its terms.

During the year ended September 30, 2023, the Company sold 3,578,223 shares of common stock under the BTIG ATM Offering and generated $6,080,088 in net proceeds after paying fees to BTIG and other issuance costs of $188,044.

Common stock warrants

As of September 30, 2023, the Company had the following warrants outstanding to acquire shares of its common stock:


		Shares of
		common stock
		issuable upon
		exercise of	Exercise Price
Expiration Date		warrants	Per Share
December 22, 2024	(i)	277,128	$	12.00
February 26, 2024		1,747,047	$	0.9535
February 24, 2025		172,864	$	1.27
April 13, 2025	(i)	145,686	$	12.00
May 31, 2025	(i)	62,437	$	12.00
June 22, 2025		191,268	$	1.51875
December 28, 2025		515,755	$	1.0500
January 28, 2026		2,116,364	$	1.25
November 23, 2026		2,100,000	$	1.5625
		7,328,549

(i)

During the year ended September 30, 2022, warrants to purchase an aggregate of 400,360 shares of common stock with a weighted average exercise price of $12.00 expired; and warrants to purchase an aggregate of 15,675 shares of common stock with a weighted average exercise price of $12.00 were exercised for cash.

- Definition

The entire disclosure for equity.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 13
-Subparagraph (b)
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-Topic 505
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 18
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481112/505-10-50-18

+ Details

Accrued Expenses

12 Months Ended

Sep. 30, 2023

Accrued Expenses

Accrued Expenses

6. Accrued Expenses

Accrued expenses consists of:


	September 30,
	2023		2022
Compensation	$	919,970	$	1,976,252
Research and development		1,234,192		744,154
Professional fees		165,192		564,423
Other accrued expenses		426,386		143,071
	$	2,745,740	$	3,427,900