Shareholder Update
July 1, 2024

Dear Shareholders,

The first half of 2024 has been both productive and challenging for us. Many of you have written to ask us to provide context around both those advancements and those challenges. The questions most frequently asked relate to our financial path forward, particularly in light of recent clinical trial data, the cancellation of our development agreement with Alvogen, and our dispute with Streeterville. The key question for NRx, in management’s opinion, is: “How does NRx become a profitable biotechnology company in 2025?” If management is able to deliver that result, the challenges that some have focused upon become insignificant.

In our view, we have three viable paths to significant revenue (in the hundreds of million dollars) beginning in 2024 with a potential for profitability by the end of 2025 that will not require investing in an additional clinical trial: (1) Revenue from operation of HOPE Therapeutics-branded interventional psychiatry clinics, (2) Revenue from sales of NRX-100 (IV ketamine) based on an FDA New Drug Application approval, and (3) Revenue from sales of NRX-101 as an FDA-approved product for the sub-population of people with suicidal bipolar depression and akathisia.  These are opportunities that the Company can pursue with currently-available financial resources. We have two additional paths to revenue in the billions of dollars that will require additional clinical trial investment to realize: (4) a broad indication for NRX-101 as a market leading drug for bipolar depression, (5) a broad indication for NRX-101 as a Qualified Infectious Disease Product to treat Complicated Urinary Tract Infection and Pyelonephritis.  These are large opportunities that will require either commercial partnership or substantial financial resources to pursue.

Given the Company’s current market capitalization, we believe that success in any one of the first three opportunities is consistent with a sizeable increase in our share value, consistent with published projections by public markets securities analysts. Success in more than one of those opportunities is likely consistent with a far greater appreciation in our share value. We are working on formal financial projections that will be included in our Q2 earnings report, expected in mid-August.

Understanding the current paths to profitability:

1. Commercial Development of Ketamine Clinics: In February we first presented the contours of HOPE Therapeutics, a subsidiary that will focus on the delivery of ketamine-focused treatment for depression and suicidality. Unlike the core business of NRx Pharmaceuticals, that is focused on biotechnology Research and Development, HOPE is organized around consolidating existing first-in-class ketamine clinics into a nationwide network. This has been done previously and without much success with clinics that are not necessarily psychiatrist-led. As currently envisioned, the HOPE consolidation is likely to be funded through tax-advantaged bond offerings and, thus, to be non-dilutive to NRx shareholders. Over the past quarter, HOPE leadership has identified the clinics that are most likely to participate in the first $100 million consolidation, has completed the audit required for a public listing of HOPE shares, and has identified appropriate underwriters for a future bond offering. Management anticipates sharing further details in the August 2024 Earnings Release. 
    
2. Approval and marketing of NRX-100/HTX-100 for suicidal depression: As NRx has shared in various filings and releases, we believe that we have sufficient efficacy and safety data from randomized, prospective, controlled trials to support an application for approval of Ketamine in the treatment of suicidal depression. Those trials have demonstrated superiority of Ketamine against both placebo^[1] and active comparator (midazolam).^[2] Ketamine has additionally been demonstrated to be non-inferior to Electroconvulsive Therapy (ECT) in a 420-person clinical trial.^[3] The trial actually demonstrated superiority of Ketamine over ECT at a statistically-significant level, although this was not claimed in the scientific publication because the primary endpoint of the trial was established as non-inferiority. The study reports are summarized in our corporate slide deck.In public meetings, people frequently ask FDA officials why they have not approved Ketamine for the treatment of depression and suicidality. The key answer, to the best of our understanding, is that no New Drug Application to use Ketamine for this purpose has ever been submitted. In order to file a New Drug Application, beyond clinical data, a sponsor must have manufactured three commercial lots of drug and adequate stability data to support a market approval. We are unaware of another US sponsor that has done so.

   The current multidose vial of Ketamine is suboptimal for single patient administration of intravenous ketamine. It contains a preservative (Benzanthonium Chloride) that is designed to preserve sterility in the vial when multiple doses are drawn for multiple patients. This practice is no longer allowed under current hospital regulations. There is no safety data, to the best of our knowledge, to support the safety of the benzanthonium chloride preservative for repeated IV administration. Data were collected 20 years ago that demonstrated the toxic effect of this class of preservatives when applied repeatedly to the surface of the eye, which led to the current generation of preservative-free eye drops. NRX-100 will therefore be launched as a preservative-free presentation.

   The current commercial presentation of Ketamine is also acidic, with a pH of less than 4. If you raise the pH of standard Ketamine HCl, the ketamine does not remain in solution. This is not an impediment to intravenous administration because the ketamine is diluted in an IV bag.  However, this renders Ketamine unsuitable for subcutaneous use because acidic compounds are known to cause skin ulcers, as well as pain. We believe that as Ketamine becomes a mainstream treatment for depression, subcutaneous infusion may be deemed substantially more convenient at many sites of care and more comfortable for patients, many of whom find the process of inserting an IV to be uncomfortable. We have been designating our pH-neutral Ketamine product as HTX-100.

   By the time of FDA approval, therefore, we believe that the form of ketamine we bring to market will have advantages over the preparation currently used in anesthesia and will have multiple years of patent protection.

   It is premature for us to offer potential sales projections for NRX-100/HTX-100. However, we do know that J&J is currently reporting sales rates in excess of $800 million annually for SPRAVATO®. Formal market share data are not currently published. However, non-formal data presented at recent medical meetings suggest that the majority of patients treated with Ketamine for depression are treated with intravenous IV Ketamine. As I said in the HC Wainwright fireside chat last week, were NRx to sell even $100 million of proprietary ketamine in 2025, that achievement would markedly alter NRx’s profile as a biotechnology company. Of course, we aim to far exceed that threshold and will offer formal projections in August.

3. Approval and marketing of NRX-101 for patients with suicidal bipolar depression and akathisia: Many, including ourselves, expected NRX-101 to be a superior antidepressant to lurasidone alone. That was observed when NRX-101 was administered after IV Ketamine. However, the reduction in suicidality and akathisia observed in the STABIL-B^[4] trial was equally compelling because no oral antidepressant has ever demonstrated a reduction in either side effect. As you know, antidepressants are well known to have the potential to increase the risk of suicidal ideation and akathisia. The 003 trial just reported (please see the scientific poster on our website)^[5] provides confirmatory evidence that NRX-101 was comparable in its antidepressant effect (the primary efficacy endpoint), but superior in time to remission from suicidality (the primary safety endpoint) and superior in reduction of akathisia (the secondary safety endpoint).The trial we conducted was the first outpatient clinical trial ever conducted in patients with active suicidal ideation and the first clinical trial in which such patients were treated first with an oral antidepressant. Originally, we anticipated that NRX-101 would follow ketamine in patients with suicidality. However, in January 2023 – as we reported to shareholders – FDA advised us that such a pattern of treatment would first require approval of Ketamine (NRX-100/HTX-100), which we now aim to achieve.

   Ultimately, we believe NRX-101 has the potential to become a standard of care for patients with suicidal bipolar depression.  These patients are known to have up to a 15% rate of developing akathisia on standard of care medications. As cited in our scientific poster and elsewhere, akathisia is viewed as the worst side effect of the antidepressant class of drugs, is closely associated with suicide, and akathisia-related suicides have led to widespread class action lawsuits against manufacturers of antidepressant drugs. Seeking that broad indication, which applies to approximately 3.5 million patients with bipolar depression and implies sales in the billions of dollars per year will require additional clinical trials involving more than 500 patients on the efficacy side and a safety database of 1500 patients.

   We are of the belief – a belief supported by a review with regulatory counsel and former FDA officials – that we have sufficient evidence of improved safety versus the standard of care drug to submit a New Drug Application for Accelerated Approval, with reduction of suicidal ideation and akathisia identified as clinically-meaningful surrogate endpoints (see the FDA guidance). In this approach, NRx would be required to provide confirmatory efficacy data within five years of initial market approval.

   Our conversations with key opinion leaders, psychiatrists who treat patients with bipolar depression, and patients themselves, identify an enormously high degree of enthusiasm for an antidepressant drug that reduces suicidality and akathisia, regardless of whether it has a larger antidepressant effect than current best-in-class drugs. The key argument for Accelerated Approval is that patients with suicidality and akathisia who are taking a 5-HT2A antagonist drug such as lurasidone, quetiapine, olanzapine, lumateperone, etc. have no therapeutic alternative other than ECT.

   The market for this Accelerated Approval labeled indication for NRX-101 is smaller than the multi-billion dollar broad market described above. However, that market potential is well in the hundreds of millions of dollars per year and FDA market approval to distribute NRX-101 in that “limited” market would drastically alter the outlook of NRx Pharmaceuticals as a small biotechnology company.  As is the case for Ketamine, we have three commercial lots of drug manufactured and expect to have adequate stability by October to support an NDA submission.

   In summary, we believe that 3 years after our 2021 restart of psychiatry-focused R&D, following a COVID-induced pause, we are at a point of implementing three market-facing initiatives, any one of which has the potential to reward investors for the risk that they undertook by investing in NRx in the R&D stage. Although published reports from biotechnology analysts have predicted share prices well in excess of our current price, those reports are based solely on expected sales of NRX-101 and do not yet include the opportunity associated with the first two commercial paths outlined above.

We look forward to your ongoing questions and to being in touch with you on an ongoing basis.

Best Regards,
Jonathan Javitt, MD MPH
Chairman and Chief Scientist

[1] Abbar, et. al. Ketamine for Acute Treatment of Severe Suicidal Ideation, BMJ 2022; 376

[2] Grunebaum, et. al., Ketamine for Rapid Reduction of Suicidal Thoughts. Am J Psychiatry. 2018 Apr 1: 175(4): 327-335

[3] Anand, et. al, Ketamine is non-inferior to ECT for non-psychotic treatment resistant depression. NEJM 2023 388(25):2315-2325

[4] Nierenberg A, Lavin P, Javitt DC, et. al. NRX-101 vs lurasidone for the maintenance of initial stabilization after ketamine in patients with severe bipolar depression with acute suicidal ideation and behavior; a randomized prospective phase 2 trial. Int J Bipolar Dis 2023;11:28-38

[5] Nierenberg, et. al., A Randomized, Double-Blind Controlled Comparison of NRX-101 (D-cycloserine/lurasidone) to Lurasidone for Adults with Bipolar Depression and Subacute Suicidal Ideation or Behavior. Am Soc Clin Psych Annual Meeting 2024.