NANOVIRICIDES, INC.

The Company has several drugs in various stages of early development. COVID-19 has become our lead drug program due to the necessity of responding to the pandemic. The Company began development of a drug to treat COVID-19 patients just as the cases of the novel disease were being reported from China. The Company’s drug candidates for COVID-19 successfully entered core safety pharmacology studies required prior to any human clinical trials around October/November, 2020. The studies were completed in January and February 2021, and the Company has received draft reports from the external Contract Research Organization (CRO). The final quality audited reports on these studies are expected soon and will be required for an Investigational New Drug (IND) Application. The Company is currently working on a pre-IND application to the US Food and Drug Administration (FDA) to seek guidance for an IND. The Company is also involved with tasks needed for setting up and executing human clinical trials for our COVID-19 drug candidates assuming that the IND is approved by the US FDA. As of March 31, 2021, there are 10 COVID-19 drugs that have received Emergency Use Authorization (EUA) and one drug that has received full approval (remdesivir) from the US FDA (https://www.fda.gov/drugs/coronavirus-covid-19-drugs/coronavirus-treatment-acceleration-program-ctap#dashboard). In addition, there are at least three vaccines licensed in the USA and several more are in use internationally. Apart from remdesivir and antibodies, there are very few drugs with direct antiviral effect that have EUA or are in clinical trials. Internationally, virus variants have continued to emerge with resistance to drugs and vaccines. Scientists believe it is only a matter of time before escape variants against existing vaccines and therapeutics become commonplace. Thus the need for therapeutics that the virus would not escape by mutations, such as the broad-spectrum, pan-coronavirus nanoviricides drug candidates, remains unmet.

In addition to NV-CoV-2, we are also developing another anti-coronavirus drug candidate, NV-CoV-2-R. This drug candidate is comprised of holding remdesivir inside our polymeric drug candidate NV-CoV-2 by a process known as encapsulation. Thus NV-CoV-2-R is potentially capable of (1) direct attack on extracellular virus, to break the “re-infection cycle” by virtue of NV-CoV-2, and (2) attack on intracellular reproduction of the virus to break the “replication cycle” as has been validated for remdesivir. If both of these cycles are broken, in theory, it is expected to result in a cure of the virus infection, or at least a substantially strong control of the virus infection. Remdesivir is a challenging drug, because it is rapidly converted by blood and cellular enzymes into a significantly less potent form. It is also almost insoluble in aqueous media. These issues have been cited as possible reasons for different data from clinical trials. In randomized controlled clinical trials, Gilead reported that remdesivir was effective in reducing the hospital stay of COVID-19 patients significantly. However, in analysis of field usage of remdesivir and other clinical trials, WHO reported that remdesivir was not as effective as was thought based on the clinical trials that led to first its emergency use approval (EUA) followed by complete approval (Approval) by the US Food and Drug Administration (FDA). Encapsulation of remdesivir in NV-CoV-2 is expected to solve these problems. Encapsulation inside NV-CoV-2 is expected to protect remdesivir from the rapid bodily metabolism, thereby raising the effective drug concentration in the body, and it is also expected to make effective drug available over a longer period of time than the Gilead formulation of remdesivir.

We began development of a nanoviricide drug to treat SARS-CoV-2, the virus that causes COVID-19 spectrum of diseases and which became a historic worldwide pandemic, around January 2020, when the news of cases in China broke out. Since then, we have been working diligently on designing, testing, and advancing drug candidates against SARS-CoV-2 (see below). We have recently completed safety pharmacology studies required for filing an IND application with the US FDA of our COVID-19 drug candidate. We have received an audited report on the GLP safety/pharmacology studies from the external CRO, and expect to receive the remaining report(s) soon. We have previously received unaudited draft reports of these studies. We are awaiting written reports of non-GLP safety/toxicology studies and non-GLP animal efficacy antiviral efficacy studies. We are preparing a pre-IND application for submission to the US FDA for our pan-coronavirus drug candidates to obtain further guidance and plan on submitting an IND application thereafter. We are in the process of identifying and engaging clinical study sites for the Phase 1 and Phase 2 human clinical trials of these broad-spectrum coronavirus infection treatments, in the USA as well as abroad.

The Company studied the effectiveness of NV-CoV-2, NV-CoV-2-R and remdesivir against two unrelated human coronaviruses: h-CoV-229E (229E), and h-CoV-NL63 (NL63). Of these NL63 uses the same ACE2 human cell receptor to gain entry into cells as do all variants of SARS-CoV-2 and SARS-CoV-1. Additionally, human pathology of NL63 infection closely mimics that of SARS-CoV-2, albeit with limited disease severity. NL-63 is being used as a model for anti-SARS-CoV-2 drug development in various labs including ours (reviewed in: A. Chakraborty and A. Diwan (2020). “NL63: A Better Surrogate Virus for studying SARS- CoV-2”. Integer Mol Med, 2020, vol.7, pp 1-9, doi: 10.15761/IMM.1000408.). In contrast, 229E uses the cell surface receptor APN for entry rather than ACE2, and causes common colds. Thus, NL63 and 229E are unrelated human coronaviruses.

Net Loss – For the three months ended March 31, 2021, the Company had a net loss of $(2,108,030) or $(0.19) per share compared to a net loss of $(8,083,304) or $(1.24) per share for the three months ended March 31, 2020. For the nine months ended March 31, 2021, the Company had a net loss of $(6,749,317) or $(0.63) per share compared to a net loss of $(11,571,963) or $(2.45) per share for the nine months ended March 31, 2020. The decrease in the net loss for the three months ended March 31, 2021 is attributable mainly to a decrease in the loss from the change in fair value of derivative liabilities of $(6,119,772), offset by a decrease in the gain on warrant settlement of $614,494 and by a decrease in operating expenses for the three months ended March 31, 2021. The decrease in the net loss for the nine months ended March 31, 2021 is attributable mainly to a decrease in the loss from the change in fair value of derivative liabilities of $(5,845,313), offset by a decrease in the gain on warrant settlement of $614,494, and by a decrease in operating expenses for the nine months ended March 31, 2021.