Tryp Therapeuatics (TRYPF) Coverage Report

APPENDIX A: IMPORTANT RESEARCH DISCLOSURES ANALYST CERTIFICATION I, Michael Higgins, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report, provided, however, that: The research analyst primarily responsible for the preparation of this research report has or will receive compensation based upon various factors, including the volume of trading at the firm in the subject security, as well as the firm’s total revenues, a portion of which is generated by investment banking activities. Additional information regarding the contents of this publication will be furnished upon request. Please contact Ladenburg Thalmann, Compliance Department, 640 Fifth Avenue, 4th floor, New York, New York 10019 (or call 212-409-2000) for any information regarding current disclosures, and where applicable, relevant price charts, in regard to companies that are the subject of this research report. COMPANY BACKGROUND Tryp Therapeutics is a San Diego-based pharmaceutical company focused on developing psychedelic compounds with known activity and/ or safety profiles for the treatment of diseases with high unmet medical needs. Under its Psilocybin-For-Neuropsychiatric Disorders (PFN) program, Tryp’s most advanced drug development programs are designed to treat neuropsychiatric disorders through the novel dosing of formulations of synthetic psilocybin. The primary indications for its PFN programs include binge eating and hypothalamic obesity, as well as inadequately addressed chronic pain conditions: phantom limb pain (PLP); fibromyalgia; and complex regional pain syndrome. VALUATION METHODOLOGY We initiate coverage of Tryp Therapeutics, Inc. with a Buy rating and $2.00 price target. We reach our price target via our risk-adjusted net present value estimates for Tryp’s operating expenses per share, -$0.70, and TRP-8803 in chronic pain disorders, $1.75 and eating disorders, $0.90 and cash/share of $0.08. Factors that could negatively affect our estimates include negative clinical or regulatory outcomes, greater than expected equity dilution and unexpected competition from other drugs in development. RISKS Risks to our rating and price target include but are not limited to: Financing risks . Tryp has not generated any revenues from collaboration and licensing agreements or product sales to date and continues to incur research and development and other expenses. Their prior losses, combined with expected future losses, have had, and will continue to have an adverse effect on our shareholders’ deficit and working capital, and their future success is subject to significant uncertainty. As they have not begun generating revenue, it is extremely difficult to make accurate predictions and forecasts of their finances and this is compounded by the fact that they intend to operate in the psychedelic industry, which is a relatively new and rapidly transforming industry. For the foreseeable future, Tryp expects to continue to incur losses, which will increase significantly from recent historical levels as they expand their drug development activities, seek regulatory approvals for their drug candidates and begin to commercialize them if they are approved by the FDA, the EMA or comparable foreign authorities. Given their lack of current cash flow, they will need to raise additional capital; however, it may be unavailable to them or, even if capital is obtained, may cause dilution or place significant restrictions on their ability to operate their business. Even if they succeed in developing and commercializing one or more drug candidates, they may never become profitable. Historically, the company’s sole source of funding has been loans from related parties and private placements. There is substantial doubt about the company’s ability to continue as a going concern. The company’s access to financing is always uncertain. There can be no assurance of continued access to significant equity funding. The company’s financial liabilities are comprised of trade and other payables, shareholder loan, which are classified as current on the condensed interim statement of financial position. Clinical development risk. Tryp relies, and will continue to rely, predominantly, on third parties to manufacture their preclinical and clinical drug supplies and their business, financial condition and results of operations could be harmed if those third parties fail to provide them with sufficient quantities of drug product, or fail to do so at acceptable quality levels, prices, or timelines. They have not yet demonstrated our ability to successfully complete any clinical trials, obtain marketing approvals, manufacture a commercial-scale drug or arrange for a third party to do so on their behalf, or enter into agreements with third parties to conduct sales, marketing and distribution activities necessary for successful commercialization. The development process is expensive, can take many years and has an uncertain outcome. Failure can occur at any stage of the process. They may experience numerous unforeseen events during, or because of, the development process that could delay or prevent approval and commercialization of our current or future drug candidates, any of which may be exacerbated by unforeseen impacts related to the ongoing Covid-19 pandemic. The company is significantly dependent on the success of their PFN™ program and drug candidates that are based on this program. A failure of any of these drug candidates in clinical development would adversely affect business and may require the company to discontinue development of other drug candidates that are based on their PFN™ program. Michael Higgins 212.409.2074 Tryp Therapeutics, Inc. (TRYPF) Page 42