This notice of action by written consent and the accompanying information statement is being furnished by the Board of Directors of Channel Therapeutics Corporation, a Nevada corporation (“Channel”, “we”, “us” or “our”), to the holders of record at the close of business on April 23, 2025 of the outstanding shares of the Channel’s common stock, par value $0.0001 per share (“Channel common stock”), pursuant to Rule 14c-2 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in connection with an Agreement and Plan of Merger (the “Merger Agreement”), dated April 16, 2025, pursuant to which, subject to the terms and conditions thereof, CHRO Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Channel (the “Merger Sub”), will merge with and into LNHC, Inc., a Delaware corporation (“LNHC”), with LNHC surviving as a wholly owned subsidiary of Channel, and the surviving corporation of the merger, which transaction is referred to herein as the “Merger”. A copy of the Merger Agreement is attached as Annex A to the accompanying information statement and incorporated by reference into this notice.

Immediately prior to the effective time of the Merger (the “Effective Time”), each share of LNHC capital stock will be converted into the right to receive a number of shares of Series A Convertible Preferred Stock, par value $0.0001 per share (the “Channel Series A Preferred Stock”), of Channel equal to the exchange ratio described in more detail in the section titled “The Merger-Exchange Ratio” beginning on page 125 of this information statement. The exchange ratio represents the number of shares of Channel common stock issuable upon conversion of the Channel Series A Preferred Stock that will be received for each LNHC share outstanding in the Merger and is based on a stipulated value for Channel of $15 million (excluding the PIPE Financing (as defined below)) and for LNHC of $67 million. Based on Channel’s and LNHC’s capitalization as of May 23, 2025, Ligand Pharmaceuticals, Inc., a Delaware corporation (“Ligand”) is expected to receive an aggregate of approximately 31,253.76 shares of Channel Series A Preferred Stock in the Merger. This amount is an estimate only and the final number of shares Ligand will receive at closing will be determined pursuant to a formula described in more detail in the Merger Agreement.

Certain investors (the “PIPE Investors”) have agreed to subscribe for and purchase an aggregate of approximately 50,100 of shares of Channel Series A Preferred Stock, at a price per share equal to $1,000 (the “Purchase Price”), subject to adjustment as set forth in the securities purchase agreement, by and among Channel, LNHC and certain investors, which includes Nomis Bay Ltd (“Nomis Bay”) and Ligand (the “Purchase Agreement” and together with the Merger Agreement, the “Transaction Agreements”; such transaction, the “PIPE Financing” and together with the Merger, the “Transactions”). The PIPE Financing is expected to close immediately prior to the closing of the Merger. Each share of Channel Series A Preferred Stock is initially convertible into 1,000 shares of Channel common stock. The gross proceeds from the PIPE Financing are expected to be approximately $50.1 million, consisting of approximately $50.0 million in cash and the conversion of approximately $0.1 million of principal and interest payable under an outstanding convertible note issued by Channel, before paying estimated expenses. The funding of the cash Purchase Price by Ligand, Nomis Bay and one other investor will be offset by the repayment of certain bridge loans issued by such investors to LNHC. The closing of the PIPE Financing is conditioned upon all conditions to the closing of the Merger being satisfied or waived, the Merger being set to occur substantially concurrently with the PIPE Financing, entry into the Royalty Agreements (as defined in the Purchase Agreement), as well as certain other conditions. A copy of the Purchase Agreement is attached as Annex B to the accompanying information statement and incorporated by reference into this notice.

Additionally, immediately following the Transactions, the Channel securityholders as of immediately prior to the Merger are expected to hold approximately 7.9% of the shares of combined company capital stock, Ligand, including its participation in the PIPE Financing, is expected to hold approximately 55.7% of the shares of combined company capital stock, and the other PIPE Investors are expected to hold approximately 36.3% of the shares of combined company capital stock, in each case, on a fully diluted basis, subject to certain assumptions.

Shares of Channel common stock are currently listed on The NYSE American LLC (“the NYSE American”) under the symbol “CHRO”. On April 16, 2025, the last trading day before the announcement of the Transactions, the closing sale price of Channel common stock was $1.255 per share. On May 23, 2025, the last trading day before the date of the accompanying information statement, the closing sale price of Channel common stock was $0.97 per share. Channel intends to file a listing application for the combined company with The NYSE American. After completion of the Merger, the combined company will be renamed “Pelthos Therapeutics Inc.” and, assuming approval of the listing application, the common stock of the combined company will trade on The NYSE American under the symbol “PTHS”. However, The NYSE American’s determination of the combined company’s listing status is not known as of the date of this information statement.

The Transaction Agreements and the Transactions were unanimously approved and determined to be advisable, fair to and in the best interests of Channel and Channel stockholders, by the Channel board of directors upon unanimous recommendation of an independent special committee of the Channel board of directors (the “Special Committee” and, such recommendation, the “Special Committee Recommendation”) — a committee comprised solely of independent and disinterested directors with respect to the Transactions that was established by the Channel board of directors to (a) establish, approve, modify, monitor and direct the process and procedures related to the review, evaluation and negotiation of the Transactions; (b) review and make such investigation of the Transactions as the Special Committee deems appropriate; (c) evaluate the terms and conditions of the Transactions; (d) contact and negotiate with Ligand or its representatives regarding any element of the Transactions, including the Transactions’ structure, price, terms and conditions (including the terms and conditions of any definitive agreements with respect to the Transactions); (e) contact and negotiate with third parties and their representatives (including potential investors, lenders and other parties) regarding any element of the Transactions; (f) in the event the Transactions involved stock consideration, investigate the appropriate relative valuations of Channel, Ligand or any other third party, as applicable; (g) to the extent the Special Committee deems it appropriate, report to the full Channel board of directors its recommendations and conclusions with respect to the Transactions, including a recommendation and determination as to whether the Transactions are advisable and in the best interests of Channel and Channel stockholders and should be approved or rejected by the full Channel board of directors; (h) in connection with its recommendation to the full Channel board of directors, communicate (including, but not limited to, communications with the stockholders, management, advisors and representatives of Channel) regarding the Transactions; (i) following the execution of any agreements relating to the Transactions, if any, take any other actions contemplated by such agreements to be taken by the Special Committee, including to take (or determine not to take) actions with respect to any intervening event; (j) to the fullest extent permitted by Nevada law, as amended from time to time, exercise any other power or authority that may be otherwise exercised by the Channel board of directors that the Special Committee may determine to be necessary or advisable to carry out and fulfill its duties and responsibilities; and (k) determine to elect not to pursue the Transactions.

Stockholder approvals of the Merger Agreement, including the Merger, and the Purchase Agreement are also required pursuant to Section 713 of the NYSE American LLC Company Guide (the “NYSE American Guide”), which requires stockholder approval prior to the issuance of securities in connection with a transaction other than a public offering involving (1) the sale, issuance, or potential issuance by the issuer of common stock (or securities convertible into common stock) at a price less than the greater of book or market value which together with sales by officers, directors or principal stockholders of the issuer equals 20% or more of presently outstanding common stock; (2) the sale, issuance, or potential issuance by the issuer of common stock (or securities convertible into common stock) equal to 20% or more of presently outstanding common stock for less than the greater of book or market value of the stock; or (3) the issuance of shares in connection with a transaction when the issuance or potential issuance will result in a change of control of the issuer.

Because Channel expects to issue approximately 31,253.76 shares of Channel Series A Preferred Stock to Ligand in accordance with the terms and subject to the conditions of the Merger Agreement, and approximately 50,100 of shares of Channel Series A Preferred Stock to the PIPE Investors in accordance with the terms and subject to the conditions of the Purchase Agreement, Channel will issue more than 20% of both the voting power and the

number of shares of Channel common stock outstanding before such issuance. Further, the closing price of Channel’s common stock on April 16, 2025, which immediately preceded the signing of the Merger Agreement and the Purchase Agreement, was $1.255 per share, and the average closing price of Channel’s common stock for the five trading days immediately preceding the signing of the Merger Agreement and the Purchase Agreement was $1.311 per share. Because the price at which Channel will issue the shares of Channel Series A Preferred Stock to PIPE Investors in accordance with the terms and subject to the conditions of the Purchase Agreement is $1.00 per share, which is lower than $1.255 per share, the stockholder approval of Channel is required pursuant to Section 713(b) of the NYSE American Guide.

On April 11, 2025, the Channel board of directors adopted a resolution approving an amendment to the articles of incorporation of Channel to change the name of the corporation from “Channel Therapeutics Corporation” to “Pelthos Therapeutics Inc.” upon the consummation of the Transactions (the “Name Change Charter Amendment”). Stockholder approval of the Name Change Charter Amendment is required pursuant to Section 78.390 of the Nevada Revised Statutes (the “NRS”), which requires stockholder approval with respect to a change in the name of Channel, if the proposed amendment to the articles of incorporation consists of more than a change in the name of Channel. A copy of the Name Change Charter Amendment is attached as Annex C to the accompanying information statement and incorporated by reference into this notice.

Also on April 11, 2025, the Channel board of directors adopted a resolution approving the Amended and Restated Channel Therapeutics Corporation 2023 Equity Incentive Plan (the “Amended and Restated 2023 Plan”). Stockholder approval of the Amended and Restated 2023 Plan is also required pursuant to Section 711 of the NYSE American Guide, which requires stockholder approval with respect to the establishment or material amendment of any equity compensation arrangement, with limited exceptions. A copy of the Amended and Restated 2023 Plan is attached as Annex D to the accompanying information statement and incorporated by reference into this notice.

Additionally, on April 11, 2025, the Channel board of directors adopted a resolution approving an amendment to the articles of incorporation of Channel (the “Reverse Stock Split Charter Amendment”) to effect a reverse stock split of all outstanding shares of Channel common stock, by a ratio in the range of one-for five to one-for-twenty-five, to be determined in the Board’s discretion (the “Reverse Stock Split”), only to the extent needed to meet the listing requirements for listing the shares of the combined company on The NYSE American. Stockholder approval of the Reverse Stock Split is required pursuant to Section 78.2055 of the NRS, which requires stockholder approval with respect to a decrease in the number of issued and outstanding shares of a class or series held by Channel stockholders without correspondingly decreasing the number of authorized shares of the same class or series. A copy of the Reverse Stock Split Charter Amendment is attached as Annex K to the accompanying information statement and incorporated by reference into this notice.

In accordance with Section 78.320 of the NRS, following execution of the Merger Agreement, Channel stockholders who collectively held more than a majority of the combined voting power of the of the total issued and outstanding Channel common stock (the “Majority Stockholders”), executed and delivered to Channel a written consent approving and adopting the Transaction Agreements, the Transactions, the Name Change Charter Amendment, the Amended and Restated 2023 Plan and the Reverse Stock Split (the “Stockholder Approval”) in lieu of a special meeting of stockholders, which is attached hereto as Annex E (the “Written Consent”). As a result of the execution and delivery of the Written Consent, the holders of a majority of the aggregate voting power of the outstanding Channel common stock entitled to vote thereon have adopted and approved the Transaction Agreements, the Transactions, the Name Change Charter Amendment, the Amended and Restated 2023 Plan and the Reverse Stock Split. The delivery of the Written Consent constituted the necessary approvals of stockholders for the approval of the Transaction Agreements and the Transactions, subject to the other conditions set forth in the Transaction Agreements (as further described herein), the Name Change Charter Amendment, the Amended and Restated 2023 Plan and the Reverse Stock Split. As a result, no further action by any stockholder of Channel is required under applicable law or the Transaction Agreements (or otherwise) to adopt the Transaction Agreements, approve the Transactions, approve the Name Change Charter Amendment, approve the Amended and Restated 2023 Plan or approve the Reverse Stock Split, and Channel will not be soliciting your vote for or consent to the adoption of the Transaction Agreements, the approval of the Transactions, the approval of the Charter Amendment, the approval of the Amended and Restated 2023 Plan and the Reverse Stock Split and will not call a stockholders’ meeting for purposes of voting on the adoption of the Transaction Agreements, the approval of the Transactions, the approval of the Name Change Charter Amendment, the approval of the Amended and Restated 2023 Plan and the Reverse Stock Split.

PLEASE NOTE THAT THE SPECIFIED STOCKHOLDERS HAVE VOTED TO APPROVE AND ADOPT THE TRANSACTION AGREEMENTS, INCLUDING THE TRANSACTIONS, THE NAME CHANGE CHARTER AMENDMENT, THE AMENDED AND RESTATED 2023 PLAN AND THE REVERSE STOCK SPLIT. THE NUMBER OF VOTES HELD BY THE SPECIFIED STOCKHOLDERS IS SUFFICIENT TO SATISFY THE STOCKHOLDER VOTE REQUIREMENT UNDER THE NRS, INCLUDING FOR THE NAME CHANGE CHARTER AMENDMENT AND THE REVERSE STOCK SPLIT, SECTION 713 OF THE NYSE AMERICAN GUIDE FOR APPROVING THE TRANSACTION AGREEMENTS, INCLUDING THE TRANSACTIONS, AND SECTION 711 OF THE NYSE AMERICAN GUIDE FOR APPROVING THE AMENDED AND RESTATED 2023 PLAN. CONSEQUENTLY, NO ADDITIONAL VOTES WILL BE NEEDED TO APPROVE THE TRANSACTION AGREEMENTS, INCLUDING THE TRANSACTIONS, THE NAME CHANGE CHARTER AMENDMENT OR THE AMENDED AND RESTATED 2023 PLAN.

The information statement accompanying this letter provides you with more specific information concerning the Transaction Agreements, including the Transactions, the Name Change Charter Amendment, the Amended and Restated 2023 Plan and the Reverse Stock Split. We encourage you to carefully read the accompanying information statement and the copies of the Merger Agreement, the Purchase Agreement, the Name Change Charter Amendment, the Amended and Restated 2023 Plan and the Written Consent included, respectively, as Annex A, Annex B, Annex C, Annex D and Annex E to the accompanying information statement.

Neither the Securities and Exchange Commission nor any state securities regulatory agency has approved or disapproved the Transactions, the Name Change Charter Amendment, the Amended and Restated 2023 Plan or the Reverse Stock Split or passed upon the merits or fairness of the Transactions, the Name Change Charter Amendment, the Amended and Restated 2023 Plan or the Reverse Stock Split or passed upon the adequacy or accuracy of the disclosures in this notice or the accompanying information statement. Any representation to the contrary is a criminal offense.

The information statement is dated May 27, 2025 and is being mailed on May 27, 2025 to our stockholders of record as of April 23, 2025.

Certain schedules and exhibits from certain Annexes have been omitted. Channel agrees to furnish supplementally a copy of such schedules and exhibits, or any section thereof, to the SEC upon its request.

The following questions and answers are intended to briefly address commonly asked questions as they pertain to the Transaction Agreements and the Transactions. These questions and answers may not address all questions that may be important to you as a holder of shares of Channel common stock. Please refer to the section entitled “Summary” beginning on page 1 and the more detailed information contained elsewhere in this information statement, the annexes to this information statement and the documents referred to or incorporated by reference in this information statement, each of which you should read carefully. You may obtain additional information, which is incorporated by reference in this information statement, without charge by following the instructions in the section entitled “Where You Can Find More Information” beginning on page 285.

This information statement and the documents incorporated by reference into this information statement contain forward-looking statements related to Channel, LNHC, the Merger and the other proposed transactions contemplated thereby that involve substantial risks and uncertainties. These forward-looking statements are based on current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. These forward-looking statements should not be relied upon as predictions of future events, as neither Channel nor LNHC can assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify forward-looking statements by the use of forward-looking terminology, including “anticipates,” “target,” “believes,” “continue,” “could,” “design,” “estimates,” “expects,” “intends,” “may,” “plans,” “potentially,” “predict,” “pro forma” “seeks,” “should,” “will,” “project,” “contemplate” or the negative of these words and phrases or other variations of these words and phrases or comparable terminology.

Forward-looking statements contained in this information statement include, but are not limited to, statements about:

These forward-looking statements are based largely on the current expectations and projections of about Channel’s, LNHC’s, or the combined company’s business, the industry in which Channel and LNHC operate and financial trends that Channel and LNHC believe may affect the business, financial condition, results of operations and prospects of Channel, LNHC, or the combined company, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this information statement and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” beginning on page 20 of this information statement. Additional factors that could cause actual results to differ materially from those expressed in the forward-looking statements are discussed in reports filed with the SEC by Channel. Please see the section titled “Where You Can Find More Information” beginning on page 285 of this information statement. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in these forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, Channel and LNHC do not plan to publicly update or revise any forward-looking statements contained herein until after the distribution of this information statement, whether as a result of any new information, future events or otherwise.

In addition, statements that “Channel and/or LNHC believe(s)” and similar statements reflect the beliefs and opinions on the relevant subject of Channel and LNHC. These statements are based upon information available to Channel and LNHC as of the date of this information statement, and while Channel and LNHC believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and the statements of Channel and/or LNHC should not be read to indicate that Channel or LNHC have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

You should read this information statement and the documents that are referenced in this information statement and have been filed with the SEC as exhibits to this information statement with the understanding that the actual future results, levels of activity, performance and events and circumstances of Channel, LNHC, or the combined company may be materially different from what Channel or LNHC expect.

In addition, this information statement includes statistical and other industry and market data that was obtained from independent industry publications and research, surveys and studies conducted by independent third parties as well as Channel’s and LNHC’s estimates. The market data used in this information statement involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such data. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information. Channel’s and LNHC’s estimates include assumptions based on their respective industry knowledge, industry publications, third-party research and other surveys. While Channel and LNHC believe that their respective internal assumptions and estimates are reasonable, no independent source has verified such assumptions or estimates.

All trademarks, trade names and service marks appearing in this information statement are the property of their respective owners. Solely for convenience, trademarks and trade names referred to in this information statement may appear without the ® or ™ symbols, but such references are not intended to indicate in any way that Channel and LNHC will not assert, to the fullest extent under applicable law, their rights or the rights of their applicable licensor to these trademarks and trade names.

The combined company will be faced with a market environment that cannot be predicted and that involves significant risks, many of which will be beyond its control. In addition to the other information contained or incorporated by reference in this information statement, you should carefully consider the material risks described below before making a decision to invest in Channel common stock. You should also read and consider the other information in this information statement and additional information about Channel set forth in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which is filed with the SEC as such risks may be updated or supplemented in its subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. Please see the section titled “Where You Can Find More Information” beginning on page 285 of this information statement for further information regarding the documents incorporated by reference into this information statement.

At the Effective Time, outstanding shares of LNHC capital stock will be converted into shares of Channel Series A Preferred Stock equal to the exchange ratio described in more detail in the section titled “The Merger-Exchange Ratio” beginning on page 125 of this information statement. The exchange ratio represents the number of shares of Channel common stock issuable upon conversion of the Channel Series A Preferred Stock that will be received for each LNHC share outstanding in the Merger and is based on a stipulated value for Channel of $15 million (excluding the PIPE Financing) and for LNHC of $67 million. Based on Channel’s and LNHC’s capitalization as of May 23, 2025, Ligand is expected to receive an aggregate of approximately 31,253.76 shares of Channel Series A Preferred Stock in the Merger. This amount is an estimate only and the final number of shares Ligand will receive at closing will be determined pursuant to a formula described in more detail in the Merger Agreement.

Immediately following the Transactions, the Channel securityholders as of immediately prior to the Merger are expected to hold approximately 7.9% of the shares of combined company capital stock, Ligand, including its participation in the PIPE Financing, is expected to hold approximately 55.7% of the shares of combined company capital stock, and the other PIPE Investors are expected to hold approximately 36.3% of the shares of combined company capital stock, in each case, on a fully diluted basis, subject to certain assumptions.

Any changes in the market price of Channel stock before the completion of the Merger will not affect the number of shares Ligand will be entitled to receive pursuant to the Merger Agreement. Therefore, if before the completion of the Merger, the market price of Channel common stock increases from the market price on the date of the Merger Agreement, then Ligand could receive merger consideration with substantially more value for their shares of LNHC capital stock than the parties had negotiated when they established the exchange ratio. Similarly, if before the completion of the Merger the market price of Channel common stock declines from the market price on the date of the Merger Agreement, then Ligand could receive merger consideration with substantially lower value. The Merger Agreement does not include a price-based termination right.

If the Merger is not completed, the price of Channel common stock may decline and could fluctuate significantly.

If the Merger Agreement is terminated and the Channel board of directors or the LNHC board of directors determines to seek another business combination, there can be no assurance that either Channel or LNHC will be able to find a partner with whom a business combination would yield greater benefits than the benefits to be provided under the Merger Agreement.

The completion of the Merger is not assured. The conditions to the completion of the Merger are set forth in the Merger Agreement and described in the section titled “The Merger Agreement-Conditions to the Completion of the Merger” beginning on page 139 of this information statement. Channel and LNHC cannot assure you that all of the conditions to the consummation of the Merger will be satisfied or waived. If the conditions are not satisfied or waived, the Merger may not occur or the closing may be delayed, and Channel and LNHC each may lose some or all of the intended benefits of the Merger.

LNHC or Channel may waive one or more of the conditions to the Merger without re-soliciting stockholder approval.

Certain conditions to LNHC’s or Channel’s obligations to complete the Merger may be waived, in whole or in part, to the extent permitted by law, either unilaterally or by agreement of LNHC and Channel. In the event of a waiver of a condition, the Channel board of directors will evaluate the materiality of any such waiver to determine whether stockholder approval or amendment of this information statement is necessary.

In the event that the Channel board of directors, in its own reasonable discretion, determines any such waiver is not significant enough to require re-solicitation of its stockholders, it will have the discretion to complete the Merger without seeking further stockholder approval, which decision may have a material adverse effect on the Channel stockholders. For example, if LNHC and Channel agree to waive the requirement that The NYSE American application be accepted for listing prior to the consummation of the Merger, and their respective boards of directors elect to proceed with the closing of the Merger, The NYSE American may notify the combined company of its determination to delist the company’s securities based upon the failure to satisfy the initial inclusion criteria. The combined company may appeal the determination to a hearings panel, which will stay the delisting action pending a panel decision. If the combined company does not appeal the determination, its common stock will be delisted.

Notwithstanding the foregoing, certain closing conditions may not be waived due to applicable law or otherwise. The following closing conditions may not be waived: receipt of the requisite stockholder approvals; the filing of the information statement on Schedule 14C; and the absence of any order or injunction that has the effect of prohibiting the consummation of the Merger. For more information about the conditions to the completion of the Merger, see the section titled “The Merger Agreement-Conditions to the Completion of the Merger.”

In general, neither Channel nor LNHC is obligated to complete the Merger if there is a material adverse effect affecting the other party between April 16, 2025, the date of the Merger Agreement, and the closing of the Merger. However, certain types of changes are excluded from the concept of a “material adverse effect.” Such exclusions include but are not limited to changes in general economic or market conditions, industry wide changes, changes in GAAP, changes in laws, rules or regulations of general applicability or interpretations thereof, natural disasters, epidemics, pandemics or other disease outbreaks, outbreaks of major hostilities or acts of terrorism, changes resulting from the announcement or pendency of the Merger, and failures to meet internal guidance, budgets, plans or forecasts. Therefore, if any of these events were to occur impacting Channel or LNHC, the other party would still be obliged to consummate the closing of the Merger. If any such adverse changes occur and Channel and LNHC consummate the closing of the Merger, the stock price of the combined company may suffer. This in turn may reduce the value of the Merger to the stockholders of Channel, LNHC or both. Additionally, if there is a material adverse effect, the PIPE Investors will not be obligated to consummate the purchase of shares of Channel common stock in connection with the PIPE Financing, which, in turn, may reduce the value of the Merger to the stockholders of Channel, LNHC, or both. For a more complete discussion of what constitutes a material adverse effect on Channel or LNHC, see the section titled “The Merger Agreement-Conditions to Completion of the Merger” beginning on page 139 of this information statement.

On April 16, 2025, Channel entered into the Purchase Agreement with the PIPE Investors, pursuant to which, among other things, the PIPE Investors agreed to subscribe for and purchase an aggregate of approximately 50,100 of shares of Channel Series A Preferred Stock at a price per share equal to the Purchase Price, subject to adjustment as set forth in the Purchase Agreement, which is expected to close immediately prior to the closing of the Merger. The closing of the PIPE financing is conditioned upon all conditions to the closing of the Merger being satisfied or waived, the Merger being set to occur substantially concurrently with the PIPE Financing, entry into the Royalty Agreements, as well as certain other conditions.

Even if the PIPE Financing closes as expected, the combined company will need to raise additional capital in the future. Additional financing may not be available to the combined company when it is needed or may not be available on favorable terms. To the extent that the combined company raises additional capital by issuing equity

securities, such financing will cause additional dilution to all securityholders of the combined company, including Channel’s pre-Merger securityholders and Ligand. It is also possible that the terms of any new equity securities may have preferences over the combined company common stock. Any debt financing the combined company enters into may involve covenants that restrict its operations. These restrictive covenants may include limitations on additional borrowing and specific restrictions on the use of the combined company’s assets, as well as prohibitions on its ability to create liens, pay dividends, redeem its stock or make investments. In addition, if the combined company raises additional funds through licensing arrangements, it may be necessary to grant licenses on terms that are not favorable to the combined company.

Directors and executive officers of Channel and LNHC may have interests in the Merger that are different from, or in addition to, the interests of other Channel stockholders generally. These interests with respect to Channel’s directors and executive officers may include, among others, that certain of Channel’s executives are entitled to, in connection with a qualifying termination of employment, accelerated vesting of options and restricted stock units with respect to Channel common stock and the payment of severance; that certain of Channel’s executives are entitled to the extension of the applicable executive’s post-termination exercise period with respect to their options in the event of the executive’s continued employment through the closing of the Merger; Channel’s chief executive officer, Francis Knuettel II, is expected to continue as an executive officer of the combined company after the Effective Time and that all of Channel’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement. In addition, three current members of the Channel board of directors namely Todd Davis, Ezra Friedberg and Dr. Richard Malamut, are expected to continue as directors of the combined company after the Effective Time, and, following the closing of the Merger, will be eligible to be compensated as non-employee directors of the combined company pursuant to the Channel non-employee director compensation policy that is expected to remain in place following the Effective Time. These interests with respect to LNHC’s directors and executive officers may include, among others, that all but one of LNHC’s executive officers are expected to continue as executive officers of the combined company after the Effective Time; and all of LNHC’s directors and executive officers are entitled to certain indemnification and liability insurance coverage pursuant to the terms of the Merger Agreement. Todd Davis, Chairman of the Channel board of directors, is also a current member of the LNHC board of directors and is expected to continue as a director of the combined company after the Effective Time and, following the closing of the Merger, will be eligible to be compensated as a non-employee director of the combined company pursuant to the Channel non-employee director compensation policy that is expected to remain in place following the Effective Time. The directors and executive officers of Channel own options to purchase the shares of Channel common stock.

The Channel and LNHC boards of directors considered that Todd C. Davis, Chairman of the board of directors of Channel and a director of LNHC, is the Chief Executive Officer of Ligand, a stockholder of LNHC, and (A) Ligand will receive proceeds as a result of the Merger, (B) Ligand agreed to participate in the PIPE Financing, and (C) Mr. Davis will be appointed to the combined company’s board of directors in connection with the Merger.

The Channel and LNHC boards of directors were aware of and considered those interests, among other things, in reaching their decisions to approve and adopt the Merger Agreement and the Merger. These interests, among other factors, may have influenced the directors and executive officers of Channel and LNHC to support or approve the Merger.

For more information regarding the interests of Channel and LNHC directors and executive officers in the Merger, please see the sections titled “The Merger-Interests of Channel Directors and Executive Officers in the Merger” beginning on page 121 and “The Merger-Interests of LNHC Directors and Executive Officers in the Merger” beginning on page 124 of this information statement.

If the combined company is unable to realize the full strategic and financial benefits currently anticipated from the Merger, Channel stockholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the Merger.

The market price of Channel common stock is subject to significant fluctuations. During the 12-month period ended April 23, 2025, the closing sales price of Channel common stock on The NYSE American ranged from a high of $3.80 on January 21, 2025 to a low of $0.45 on November 19, 2024. Market prices for securities of pharmaceutical, biotechnology and other life science companies have historically been particularly volatile. In addition, the market price of Channel common stock will likely be volatile based on whether stockholders and other investors believe that Channel can complete the Merger or otherwise raise additional capital to support Channel’s operations if the Merger is not consummated and another strategic transaction cannot be identified, negotiated and consummated in a timely manner, if at all. The volatility of the market price of Channel common stock is exacerbated by low trading volume. Additional factors that may cause the market price of Channel common stock to fluctuate include:

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of Channel common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies.

After the completion of the Merger, the current stockholders of Channel will own a smaller percentage of the combined company than their ownership of their respective companies prior to the Merger.

Immediately following the Transactions, the Channel’s current securityholders as of immediately prior to the Merger are expected to hold approximately 7.9% of the shares of combined company capital stock, Ligand, including its participation in the PIPE Financing, is expected to hold approximately 55.7% of the shares of combined company capital stock, and the other PIPE Investors are expected to hold approximately 36.3% of the shares of combined company capital stock, in each case, on a fully diluted basis, subject to certain assumptions.

Covenants in the Merger Agreement impede the ability of Channel and LNHC to make acquisitions during the pendency of the Merger, subject to specified exceptions. As a result, if the Merger is not completed, the parties may be at a disadvantage to their competitors during that period. In addition, while the Merger Agreement is in effect, each party is generally prohibited from soliciting, proposing, seeking, initiating or knowingly encouraging, facilitating or supporting any inquiries, indications of interest, proposals or offers that constitute or may reasonably be expected to lead to certain transactions involving a third party, including a merger, sale of assets or other business combination, subject to specified exceptions. Any such transactions could be favorable to such party’s stockholders, but the parties may be unable to pursue them. For more information, see the section titled “The Merger Agreement-Non-Solicitation” beginning on page 134 of this information statement.

The terms of the Merger Agreement prohibit each of Channel and LNHC from soliciting competing proposals or cooperating with persons making unsolicited takeover proposals, except in limited circumstances as described in further detail in the section titled “The Merger Agreement-Non-Solicitation.”

Because the lack of a public market for LNHC capital stock makes it difficult to evaluate the fair market value of LNHC capital stock, Channel may pay more than the fair market value of LNHC capital stock and/or Ligand may receive consideration in the Merger that is less than the fair market value of LNHC capital stock.

The outstanding capital stock of LNHC is privately held and is not traded in any public market. The lack of a public market makes it difficult to determine the fair market value of LNHC capital stock. Because the percentage of Channel equity to be issued to Ligand was determined based on negotiations between the parties, it is possible that the value of the Channel Series A Preferred Stock to be received by Ligand will be less than the fair market value of LNHC capital stock, or Channel may pay more than the aggregate fair market value for LNHC capital stock.

Putative stockholder complaints, including stockholder class action complaints, and other complaints may be filed against Channel, Ligand, LNHC, and/or their respective boards of directors in connection with the transactions contemplated by the Merger Agreement.

The outcome of litigation is uncertain, and Channel, Ligand, LNHC, and/or their respective boards of directors may not be successful in defending against any such claims. Any such lawsuits that have been or may be filed against Channel, Ligand, LNHC, and/or their respective boards of directors could delay or prevent the Merger from becoming effective or from becoming effective within the intended timeframe, divert the attention of Channel’s, Ligand’s and/or LNHC’s management and employees from their respective day-to-day businesses and otherwise adversely affect their respective financial conditions.

The financial projections for LNHC included in the section entitled “The Merger-Certain Unaudited Financial Projections”, which were considered by the Channel board of directors in evaluating the Merger and used by M&N Sarchet in rendering the Fairness Opinion and performing its related financial analyses, reflect numerous variables, estimates and assumptions and are inherently uncertain. If any of these variables, estimates and assumptions prove to be wrong, such as the assumptions relating to the approval of LNHC’s product candidates, the actual results for the combined company’s business may be materially different from the results reflected in the financial projections.

As further described below in the section entitled “The Merger-Certain Unaudited Financial Projections”, in connection with the Channel board of directors’ evaluation of the Merger, preliminary internal financial forecasts for LNHC were prepared by the management of LNHC and provided to the management of Channel, for use by M&N Sarchet in connection with the rendering of the Fairness Opinion and performing its related financial analyses, as described below under “The Merger-Opinion of M&N Sarchet to the Channel Special Committee and Channel Board of Directors”. The financial forecasts and financial projections reflect numerous variables, estimates, and forecasts made by LNHC’s management at the time the initial financial forecasts were prepared by LNHC and approved by LNHC. If any of these variables, estimates and assumptions prove to be wrong, the actual results for the combined company’s business may differ materially from the results reflected in the financial projections.

The estimated probabilities of success included in the financial projections take into account a range of potential outcomes, including outcomes in which product candidates fail to achieve commercial launch due to commercial and regulatory uncertainty (including failure to obtain regulatory authorization to market the applicable product candidate), as well as economic and portfolio management decisions and competition, and these assumptions, including those with respect to regulatory approval and probability of success more broadly, are inherently uncertain and could prove inaccurate. If one or more of the LNHC product candidates do not receive marketing authorization when anticipated, for the indications anticipated, or at all, or the other assumptions reflected in the estimates as to probability of success prove untrue, the actual results of the combined company’s business will differ materially from the results reflected in the financial projections. For example, while the financial projections reflect the probability of success assessments described below in the section entitled “The Merger-Certain Unaudited Financial Projections” for each of LNHC’s product candidates, if one or both of these product candidates are not approved then actual results will differ materially, including the potential for one or both of these product candidates to generate no revenue at all.

In addition, the financial projections cover a significant period of time. This extended period was used in light of the anticipated timing for regulatory approval and the initiation of commercial sales of the LNHC product candidates. However, the risks and uncertainties regarding the financial projections, including the potential for adverse developments such as delays in obtaining or failure to obtain regulatory approvals or additional competition or changes in the competitive or regulatory landscape, increase with each successive year and the likelihood that the actual results will differ materially from the projected results increases with each successive year. The financial projections also do not reflect general business, economic, market and financial conditions and any changes in any of these conditions over the period of the projections could result in the actual results differing materially from the results reflected in the financial projections.

In connection with and immediately prior to the closing of the Merger, Channel intends to complete the PIPE Financing with the PIPE Investors involving the sale of approximately 50,100 of shares of Channel Series A Preferred Stock, at a price per share equal to the Purchase Price, subject to adjustment as set forth in the Purchase Agreement, for gross proceeds of approximately $50.1 million, consisting of approximately $50.0 million in cash and the conversion of approximately $0.1 million of principal and interest payable under an outstanding convertible note issued by Channel, before paying estimated expenses. Channel has entered into the Purchase Agreement with the PIPE Investors pursuant to which the Channel Series A Preferred Shares will be issued immediately prior to the closing of the Merger. The Purchase Agreement may be terminated under certain circumstances, and, if such termination were to occur, the combined company would not receive the proceeds of the PIPE Financing. The Purchase Agreement may be terminated as follows:

Accordingly, there can be no guarantee that the PIPE Financing will occur.

The PIPE Financing is a condition to each party’s obligations to effect the Merger under the Merger Agreement. In the event that the PIPE Financing does not occur, the Merger Agreement may be terminated without the Merger being consummated. For more information, please see the section titled “Agreements Related to the Merger” beginning on page 145 of this information statement.

If the Merger is not completed, Channel will reconsider its strategic alternatives, including dissolving and liquidating its assets, pursuing another strategic transaction, or operating its business. If the Merger is not completed, Channel will face various risks related to its financial condition and need for capital; its ability to execute on alternative strategies; its third party agreements, licenses, and collaborations; its intellectual property; regulatory and compliance matters; and its status as a public company, all as further discussed in the Risk Factors, including this subsection titled “-Risks Related to Channel.”

The report of the independent registered public accounting firm covering our consolidated financial statements for the years ended December 31, 2024 and 2023 stated that certain factors, including that Channel has suffered recurring losses from operations and have an accumulated deficit at December 31, 2024, raised substantial doubt as to its ability to continue as a going concern. Because Channel is not yet producing sufficient revenue or cash flow to sustain its operating costs, Channel is dependent upon raising capital to continue its business. If Channel is unable to raise capital, it may be unable to continue as a going concern.

The operations of Channel, contributed to Channel by Chromocell Corporation (“Chromocell Holdings”), to date have been limited to financing and staffing Channel, developing and licensing compounds, conducting preclinical and clinical studies of CC8464 for EM and iSFN, CT2000 for eye pain, CT3000 for post-surgical pain and

other pain indications. Channel has not yet demonstrated the ability to successfully complete a large-scale, pivotal clinical trial, obtain marketing approval, manufacture a commercial scale product, arrange for a third party to do so on its behalf, or conduct sales and marketing activities necessary for successful product commercialization. Consequently, predictions about Channel’s future success or viability may not be as accurate as they could be if Channel had a history of successfully developing and commercializing pharmaceutical products.

Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in the early stages of development, especially early-stage clinical pharmaceutical companies such as Channel. Potential investors should carefully consider the risks and uncertainties that a company with a limited operating history will face. In particular, potential investors should consider that Channel cannot assure you that Channel will be able to, among other things:

If Channel cannot successfully execute any one of the foregoing, its business may fail, and your investment will be adversely affected.

There are numerous risks and uncertainties associated with pharmaceutical product and biological development, and Channel is unable to accurately predict the timing or amount of increased expenses or when, or if, it will be able to achieve profitability.

Channel has had net losses since inception, and Channel had an accumulated deficit of approximately $21.5 million and $13.5 million as of December 31, 2024 and December 31, 2023, respectively, which includes a net loss of approximately $8.0 million for year ended December 31, 2024, and approximately $7.4 million the year ended December 31, 2023, respectively. Overall, these conditions have raised substantial doubt regarding its ability to continue as a going concern beyond one year of the filing of Channel’s consolidated financial statements. Channel’s ability to continue as a going concern is dependent upon the ability to complete clinical studies and implement its business plan, raise capital, generate sufficient revenues and to control operating expenses.

Channel has primarily financed our operations through a combination of a series of cash advances, equity raises, bridge and promissory note issuances, licensing arrangements, government grants and Channel’s initial public offering (from which it raised net proceeds of approximately $5.7 million, after deducting underwriting discounts, commissions and other offering expenses) (the “IPO”). Channel’s ability to achieve significant profitability depends on its ability to successfully complete the development of, and obtain the regulatory approvals necessary to commercialize, CC8464, CT2000, CT3000 and/or additional compounds. Channel expects that it will take several years, if ever, before it has a commercialized compound. The net losses Channel incurs may fluctuate significantly from quarter to quarter.

If Channel is required by the FDA, the EMA, or other international regulatory authorities to which it may be subject, to perform studies in addition to those currently expected, or if there are any delays in completing its clinical trials or the development of CC8464, CT2000, CT3000 and/or other future compounds, its expenses could increase and revenue could be further delayed. Channel anticipates that its expenses will increase substantially if, and as, Channel:

To become and remain profitable, Channel must develop and eventually commercialize one or more compounds with significant market potential. This will require Channel to be successful in a range of challenging activities, including completing the clinical trials, developing and validating commercial scale manufacturing processes, obtaining marketing approval for its compounds, manufacturing, and marketing. Licensing and selling any future compounds for which Channel may obtain marketing approval and satisfying any post-marketing requirements. If Channel was required to discontinue development of CC8464, CT2000 or CT3000, if CC8464, CT2000 or CT3000 does not receive regulatory approval, if it does not obtain its targeted indication(s) for CC8464, CT2000 or CT3000, or if CC8464, CT2000 pr CT3000 fails to achieve sufficient market acceptance for any indication, Channel could be delayed by many years in its ability to achieve profitability. Channel’s failure to become and remain profitable would decrease the value of its company and could impair its ability to raise capital, maintain our research and development efforts, expand its business or continue its operations. A decline in the value of Channel also could cause you to lose all or part of your investment.

The design and effectiveness of Channel’s disclosure controls and procedures and its internal control over financial reporting may not prevent all errors, misstatements or misrepresentations. There can be no guarantee that its disclosure controls and procedures and internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Deficiencies, including any material weaknesses, in its disclosure controls and procedures or internal control over financial reporting could result in misstatements of its results of operations or its consolidated financial statements or could otherwise materially and adversely affect its business, reputation, results of operations, financial condition or liquidity.

Prior to the IPO, Channel was a private company and had limited accounting and financial reporting personnel and other resources with which to address its internal controls and related procedures. In connection with the audit, as applicable, of its consolidated financial statements for the years ended December 31, 2024 and 2023, Channel identified material weaknesses in its internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of its annual or interim consolidated financial statements will not be prevented or detected on a timely basis. The material weaknesses in Channel arose from inadequate segregation of duties, ineffective information technology controls and lack of certain financial reporting and transaction processing controls. If Channel is unable to remedy its material weaknesses, or if it generally fails to establish and maintain effective internal controls appropriate for a public company, it may be unable to produce timely and accurate consolidated financial statements, and it may conclude that its internal control over financial reporting is not effective, which could adversely impact its investors’ confidence and its stock price.

To complete the process of obtaining regulatory approval for CC8464, CT2000 and CT3000 and to build the sales, marketing, licensing and distribution infrastructure that Channel believes will be necessary to commercialize CC8464, CT2000 and CT3000, if approved, it will require substantial additional funding. In addition, if Channel obtains marketing approval for CC8464, CT2000 and CT3000, it expects to incur significant expenses related to product sales, medical affairs, marketing, manufacturing and distribution.

Channel’s future capital requirements will depend on many factors, including:

Identifying potential compounds and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and Channel may never generate the necessary data or results required

to obtain marketing approval and achieve product sales. Channel’s lead compounds, if approved, may not achieve commercial success. Its future compound’s revenues, if any, will be derived from or based on sales of compounds that may not be commercially available for many years, if at all. Accordingly, it is unlikely that Channel will generate product or licensing revenue during the next twelve months and will need to continue to rely on additional financing to achieve its business objectives. Any additional fundraising efforts may divert its management from their day-to-day activities, which may adversely affect its ability to develop and commercialize future compounds. Moreover, the terms of any financing may adversely affect the holdings or the rights of its stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of Channel common stock to decline. The sale of additional equity or convertible securities would dilute all Channel stockholders. The incurrence of indebtedness would result in increased fixed payment obligations and a portion of its operating cash flows, if any, being dedicated to the payment of principal and interest on such indebtedness, and Channel may be required to agree to certain restrictive covenants, such as limitations on its ability to incur additional debt, limitations on its ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact its ability to conduct its business. Furthermore, existing securityholders may not agree with its financing plans or the terms of such financings. Adequate additional financing may not be available to Channel on acceptable terms, or at all. The terms of additional financing may be impacted by, among other things, general market conditions, and the market’s perception of future compounds. If adequate funds are not available, Channel may be required to curtail its operations or other business activities or obtain funds through arrangements with strategic partners or others that may require it to relinquish rights to certain technologies or potential markets.

Channel may be subject to litigation for a variety of claims arising from its normal business activities. These may include claims, suits, and proceedings involving labor and employment, wage and hour, commercial and other matters. The outcome of any litigation, regardless of its merits, is inherently uncertain. Any claims and lawsuits, and the disposition of such claims and lawsuits, could be time-consuming and expensive to resolve, divert management attention and resources, and lead to attempts on the part of other parties to pursue similar claims. Any adverse determination related to litigation could adversely affect its results of operations, harm its reputation or otherwise negatively impact its business. In addition, depending on the nature and timing of any such dispute, a resolution of a legal matter could materially affect its future operating results, its cash flows or both.

Channel is early in its development of CC8464. The development and commercialization of CC8464 (or any other compound that it may advance towards clinical development in the future) is subject to many uncertainties, including the following:

If Channel fails in one or more of these factors, it could experience significant delays or an inability to successfully commercialize CC8464, which would materially harm our business. If Channel does not receive regulatory approvals for CC8464, its business, financial condition, results of operations and prospects could be materially and adversely affected. Advancing a different compound than CC8464 towards clinical development would take substantial time and resources and be subject to the same risks as described here for CC8464.

Channel is early in its development of CT2000. The development and commercialization of CT2000 (or any other compound that it may advance towards clinical development in the future) is subject to many uncertainties, including the following:

If Channel fails in one or more of these factors, it could experience significant delays or an inability to successfully commercialize CT2000, which would materially harm our business. If Channel does not receive regulatory approvals for CT2000, its business, financial condition, results of operations and prospects could be materially and adversely affected. Advancing a different compound than CT2000 towards clinical development would take substantial time and resources and be subject to the same risks as described here for CT2000.

Channel is early in its development of CT3000. The development and commercialization of CT3000 (or any other compound that it may advance towards clinical development in the future) is subject to many uncertainties, including the following:

If Channel fails in one or more of these factors, it could experience significant delays or an inability to successfully commercialize CT3000, which would materially harm its business. If Channel does not receive regulatory approvals for CT3000, its business, financial condition, results of operations and prospects could be materially and adversely affected. Advancing a different compound than CT3000 towards clinical development would take substantial time and resources and be subject to the same risks as described here for CT3000.

There is no guarantee that results of Channel’s potential future clinical trials will be positive or that it will be able to complete this or any potential future clinical trials on the anticipated timelines or at all. Furthermore, research and discoveries by Channel or others may identify serious adverse events, undesirable side effects or other unexpected properties of its current and future compounds, including CC8464, that could delay, prevent or cause the withdrawal of regulatory approval, limit the commercial potential, or result in significant negative consequences following marketing approval.

The regulatory authorities may not complete their review processes in a timely manner, or Channel may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval. In addition, Channel may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory authority policy during the period of product development, clinical trials and the review process.

Regulatory authorities also may approve a future compound for more limited indications than requested or they may impose significant limitations in the form of narrow indications, warnings or post-approval safety monitoring program. These regulatory authorities may require precautions or contra-indications with respect to conditions of use or they may grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of CC8464. Any of the foregoing scenarios could materially harm the commercial prospects for CC8464 and materially and adversely affect our business, financial condition, results of operations and prospects.

Before obtaining marketing approval from regulatory authorities for the sale of Channel’s drug candidates, CC8464, CT2000 and CT3000 included, it must conduct extensive clinical trials to demonstrate the safety and efficacy of the drug candidate for its intended indications. Clinical trials are expensive, time consuming and uncertain as to outcome. Channel cannot guarantee that any clinical trials will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical trials can occur at any stage of testing. Events that may prevent successful or timely completion of clinical development include:

In addition, if Channel has to make manufacturing or formulation changes to CC8464, CT2000 and CT3000, it would need to conduct additional studies to bridge its modified compound to earlier versions. Clinical trial delays could also shorten any periods during which it may have the exclusive right to commercialize CC8464, CT2000, and CT3000, or allow its competitors to bring products to market before it does, which could limit its potential revenue or impair its ability to successfully commercialize CC8464, CT2000 and CT3000 and may harm its business, financial condition, results of operations and prospects. Any delays, setbacks or failures in its clinical trials could materially and adversely affect its business, financial condition, results of operations and prospects.

Additionally, if the results of Channel’s clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our drug candidates, it may:

As CC8464 is Channel’s only compound in clinical development, any setback may have a significant negative effect on its business.

Channel, the FDA or an Institutional Review Board may suspend Channel’s clinical trials at any time if it appears that Channel or its collaborators are failing to conduct a trial in accordance with regulatory requirements, including the FDA’s current GCP, regulations, that Channel is exposing participants to unacceptable health risks, or if the FDA finds deficiencies in Channel’s IND applications or the conduct of these trials. Therefore, Channel cannot predict with any certainty the schedule for commencement and completion of future clinical trials. If Channel experiences delays in the commencement or completion of its clinical trials, or if Channel terminates a clinical trial prior to completion, the commercial prospects of its drug candidates could be negatively impacted, and its ability to generate revenues from its drug candidates may be delayed. As CC8464 is Channel’s only compound in clinical development, any setback may have a significant negative effect on its business.

Channel cannot commercialize a compound until the appropriate regulatory authorities have reviewed and approved the compound. Even if CC8464, CT2000 and CT3000 meet their respective safety and efficacy endpoints in clinical trials, the regulatory authorities may not complete their review processes in a timely manner, or Channel may not be able to obtain regulatory approval. Additional delays may result if an FDA Advisory Committee or other regulatory authority recommends non-approval or restrictions on approval. In addition, Channel may experience delays or rejections based upon additional government regulation from future legislation or administrative action, or changes in regulatory authority policy during the period of product development, clinical trials and the review process.

Regulatory authorities also may approve a compound for more limited indications than requested or they may impose significant limitations in the form of narrow indications, warnings or a post-approval safety monitoring program. These regulatory authorities may require precautions or contra-indications with respect to conditions of use or they may grant approval subject to the performance of costly post-marketing clinical trials. In addition, regulatory authorities may not approve the labeling claims that are necessary or desirable for the successful commercialization of CC8464, CT2000 and CT3000. Any of the foregoing scenarios could materially harm the commercial prospects for CC8464, CT2000 and CT3000 and materially and adversely affect Channel’s business, financial condition, results of operations and prospects as CC8464 is its only compound in clinical development and CT2000 and CT3000 have not yet entered pre-clinical trials.

Channel’s Phase 1 clinical trials have shown that CC8464 can lead to rashes. In addition to this side effect and possibly others caused by CC8464, the administration process or related procedures also can cause adverse side effects. If any such adverse events occur, Channel’s clinical trials could be suspended or terminated. If in the future Channel is unable to demonstrate that such adverse events were caused by the administration process or related procedures, the FDA, the European Commission, the EMA or other regulatory authorities could order Channel to cease further development of, or deny approval of, CC8464 for any or all targeted indications. Even if Channel can demonstrate that any serious adverse events are not product-related, such occurrences could affect patient recruitment or the ability of enrolled patients to complete the trial. Moreover, if Channel elects, or is required, to delay, suspend or terminate any clinical trial of CC8464, the commercial prospects of such compound may be harmed and its ability to generate revenues from this compound may be delayed or eliminated. Any of these occurrences may harm Channel’s ability to develop other product candidates, and may harm its business, financial condition and prospects significantly. As CC8464 is Channel’s only compound in clinical development, any setback may have a significant negative effect on its business.

Additionally, if CC8464 receives marketing approval, the FDA could require Channel to adopt a post-approval safety monitoring program to ensure that the benefits outweigh its risks, which may include, among other things, a medication guide outlining the risks of the product for distribution to patients and a communication plan to health care practitioners. Furthermore, if Channel or others later identify undesirable side effects caused by CC8464, several potentially significant negative consequences could result, including:

Any of these events could prevent Channel from achieving or maintaining market acceptance of CC8464 and could significantly harm its business, financial condition, results of operations and prospects.

Additionally, other regulatory regimes in other geographies, such as the European Union, India and Japan, where Channel is initially targeting its products, may impose similar conditions or post-monitoring requirements as a result of such findings.

Channel has yet to begin evaluating CT2000 and CT3000 in humans to determine if it has any side effects, but could face similar or other issues, including but not limited to the disclosures set forth above for CC8464 with respect to FDA approval, ongoing monitoring programs and label requirements.

The clinical trial requirements of the FDA, EMA and other regulatory authorities and the criteria these regulators use to determine the safety and efficacy of a compound vary substantially according to the type, complexity, novelty and intended use and market of such compounds. The regulatory approval process for novel compounds such as Channel can be more expensive and take longer than for other, better known or more extensively studied compounds.

Regulatory requirements governing pain medication products have been changing as side effects and the addictive nature of opioids became more apparent. The regulatory framework for pain medications has been tightened and these changes may affect Channel’s programs and its commercial potential despite Channel’s expectations that CC8464 will not show addictive features. While Channel is subject to the FDA and EMA regulatory regimes, these are not the only regulatory regimes to which Channel may be subject in the event Channel is able to execute on our objectives.

These regulatory review committees and advisory groups and the new guidelines they promulgate may lengthen the regulatory review process, require Channel to perform additional studies, increase its development costs, lead to changes in regulatory positions and interpretations, delay or prevent approval and commercialization of CC8464, CT2000 and CT3000 or future compounds or lead to significant post-approval limitations or restrictions. As Channel advances CC8464, CT2000 and CT3000, it will be required to consult with these regulatory and advisory groups and comply with applicable guidelines. If Channel fails to do so, it may be required to delay or discontinue development of CC8464, CT2000 and CT3000. These additional processes may result in a review and approval process that is longer than Channel otherwise would have expected. Delay or failure to obtain, or unexpected costs in obtaining, the regulatory approval necessary to bring a potential product to market could decrease Channel’s ability to generate sufficient product revenue, and our business, financial condition, results of operations and prospects would be materially and adversely affected.

Even if Channel obtains any regulatory approval for CC8464, CT2000 and CT3000, its lead compounds, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping and submission of safety and other post-market information. Any regulatory approvals that Channel receives for CC8464, CT2000 and CT3000 may also be subject to a post-approval safety

monitoring program, limitations on the approved indicated uses for which the product may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials, and surveillance to monitor the quality, safety and efficacy of the product. For example, the holder of an approved NDA is obligated to monitor and report adverse events and any failure of a product to meet the specifications in the NDA. The holder of an approved NDA also must submit new or supplemental applications and obtain FDA approval for certain changes to the approved product, product labeling or manufacturing process. Advertising and promotional materials must comply with FDA rules and are subject to FDA review, in addition to other potentially applicable federal and state laws.

In addition, product manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practices (“cGMPs”) requirements and adherence to commitments made in the NDA or foreign marketing application. If Channel, or a regulatory authority, discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured or disagrees with the promotion, marketing or labeling of that product, a regulatory authority may impose restrictions relative to that product, the manufacturing facility or Channel, including requiring recall or withdrawal of the product from the market or suspension of manufacturing.

If Channel fails to comply with applicable regulatory requirements following approval of CC8464, CT2000, CT3000 or any future compound, a regulatory authority may:

Any government investigation of alleged violations of law could require Channel to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit Channel’s ability to commercialize CC8464, CT2000 and CT3000 and adversely affect its business, financial condition, results of operations and prospects.

The FDA’s policies, and those of equivalent foreign regulatory agencies, may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of CC8464, CT2000 and CT3000. Channel cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If Channel is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if it is not able to maintain regulatory compliance, Channel may lose any marketing approval that it may have obtained and it may not achieve or sustain profitability, which would materially and adversely affect its business, financial condition, results of operations and prospects.

Approval of a compound in the United States by the FDA does not ensure approval of such compound by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA. Sales of CC8464, CT2000 and CT3000 or other future compounds outside of the United States will be subject to foreign regulatory requirements governing clinical trials and marketing approval. Even if the FDA grants marketing approval for a compound, comparable regulatory authorities of foreign countries also must approve the manufacturing and marketing of the compound in those countries. Approval procedures vary among jurisdictions and can involve requirements and

administrative review periods different from, and more onerous than, those in the United States, including additional preclinical studies or clinical trials. In many countries outside the United States, a compound must be approved for reimbursement before it can be approved for sale in that country. In some cases, the price that Channel intends to charge for its compounds, if approved, is also subject to approval. Channel intends to submit a marketing authorization application to the EMA for approval of CC8464, CT2000 and CT3000 in the European Union, but obtaining such approval from the European Commission following the opinion of the EMA is a lengthy and expensive process. Even if a compound is approved, the FDA or the European Commission, as the case may be, may limit the indications for which the product may be marketed, require extensive warnings on the product labeling or require expensive and time-consuming additional clinical trials or reporting as conditions of approval. Regulatory authorities in countries outside of the United States and the European Union also have requirements for approval of compounds with which Channel must comply prior to marketing in those countries. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for Channel and could delay or prevent the introduction of our compounds in certain countries.

Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. Also, regulatory approval for any of Channel’s compounds may be withdrawn. If Channel fails to comply with the regulatory requirements, its target market will be reduced and its ability to realize the full market potential of CC8464, CT2000, CT3000 or Channel’s future compounds will be harmed and its business, financial condition, results of operations and prospects will be adversely affected.

In connection with the application for one of Channel’s two lead compounds, CC8464, for the treatment of EM and iSFN, Channel also plans to seek orphan drug designation from the FDA. As of the date of this information statement, Channel has not submitted an application for orphan drug designation for CC8464. Under the Orphan Drug Act of 1983, the FDA may designate a compound as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as having a patient population of fewer than 200,000 individuals in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States.

Generally, if a compound with an orphan drug designation receives the first marketing approval for the indication for which it has such designation, the product is entitled to a period of marketing exclusivity, which precludes the FDA from approving another marketing application for a product that constitutes the same drug treating the same indication for that marketing exclusivity period, except in limited circumstances. If another sponsor receives such approval before Channel does (regardless of its orphan drug designation), Channel will be precluded from receiving marketing approval for its product for the applicable exclusivity period. The applicable period is seven years in the United States.

Even though Channel may obtain orphan drug exclusivity for CC8464, that exclusivity may not effectively protect the compound from competition because different drugs can be approved for the same condition. In the United States, even after an orphan drug is approved, the FDA may subsequently approve another drug for the same condition if the FDA concludes that the latter drug is not the same drug or is clinically superior in that it is shown to be safer, more effective or makes a major contribution to patient care. In the European Union, marketing authorization may be granted to a similar medicinal product for the same orphan indication if:

If Channel is not able to secure an orphan drug designation, or if the exclusivity associated with such designation does not effectively protect Channel from competition, its business, financial condition, results of operations and prospects will be adversely affected.

As with any future application for “orphan drug” designation for CC8464 from the FDA, there is no assurance that any of Channel’s other compounds that it may develop in the future will receive a similar designation from the FDA or that Channel will receive Breakthrough Therapy or Fast Track designations for its compounds. Further, even if Channel does receive favorable designations from the FDA, the receipt of any of these designations may not result in a faster development process, review or approval compared to products considered for approval under conventional FDA procedures and does not assure ultimate approval by the FDA.

Channel has limited financial and managerial resources. As a result, it may forego or delay pursuit of opportunities with other of its compounds or for other indications that later prove to have greater commercial potential. Channel’s resource allocation decisions may cause it to fail to timely capitalize on viable commercial products or profitable market opportunities. Channel’s spending on current and future research and development programs and its lead compounds for specific indications may not yield any commercially viable products. If Channel does not accurately evaluate the commercial potential or target market for a particular compound, it may relinquish valuable rights to that compound through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for Channel to retain sole development and commercialization rights to such compound.

Although a substantial amount of Channel’s effort initially focuses on developing CC8464, CT2000 and CT3000 towards approval in the U.S. and other countries, an additional component of its strategy is to discover, develop and potentially commercialize a portfolio of compounds to treat orphan diseases and potentially, non-orphan diseases. Identifying new compounds requires substantial technical, financial and human resources, whether any other compounds are ultimately identified. Channel may not be able to identify new molecules with the potential for clinical development and ultimate approval. Even if Channel identifies new compounds that initially show promise, it may fail to successfully develop and commercialize such new compounds for many reasons, including the following:

If Channel is unsuccessful in identifying and developing additional new compounds, its potential for growth may be impaired.

Many of Channel’s potential competitors, alone or with their strategic partners, have substantially greater financial, technical and other resources, such as larger research and development, clinical, marketing and manufacturing organizations. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of competitors. Channel’s commercial opportunity could be reduced or eliminated if competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any compound that it may develop. Competitors also may obtain FDA or other regulatory approval for their products more rapidly or earlier than Channel may obtain approval for Channel’s, which could result in Channel’s competitors establishing a strong market position before it is able to enter the market. Additionally, technologies developed by Channel’s competitors may render CC8464, CT2000 and CT3000 uneconomical or obsolete, and it may not be successful in marketing CC8464, CT2000 and CT3000 against competitors.

In addition, as a result of the expiration or successful challenge of our patent rights, Channel could face more litigation with respect to the validity and/or scope of patents relating to its competitors’ products. The availability of products of Channel’s competitors could limit the demand, and the price Channel is able to charge, for any compound that Channel may develop and commercialize.

On December 23, 2023, Channel entered into an exclusive licensing agreement (the “Benuvia License Agreement”) with Benuvia Operations LLC (“Benuvia”) for the Diclofenac Spray Formulation, the Rizatriptan Intranasal Formulation and the Ondansetron Spray Formulation (collectively, the “Spray Formulations”), diversifying its pipeline of non-opioid pain treatment therapies, while adding therapeutic options for related conditions. The Diclofenac Spray Formulation is patented and has started clinical development in human volunteers. Preliminary pharmacokinetics suggest that this formulation may have a faster onset of action than oral Diclofenac tablets. Diclofenac is an NSAID that is also marketed under additional brand names including Voltaren and Cataflam in its pill form. Rizatriptan, whose brand name is Maxalt, is used for the acute treatment of migraines as a pill. Ondansetron is an anti-emetic that is available in oral and intravenous form. Under the terms of the Benuvia License Agreement, Benuvia will be responsible for the manufacturing and supply of the Spray Formulations, but Channel will have exclusive, worldwide rights to develop, commercialize and distribute the Spray Formulations. If Channel breaches the Benuvia License Agreement, Benuvia may be able to terminate it, and as a result of this termination, Channel’s business could be negatively impacted.

Channel is a party to the Benuvia License Agreement. To this end, Channel is dependent on its license with Benuvia. Channel’s success will depend in part on the ability of Benuvia to obtain, maintain and enforce its licensed intellectual property. Benuvia may not successfully prosecute any applications for or maintain intellectual property to which Channel has licenses, may determine not to pursue litigation against other companies that are infringing such intellectual property, or may pursue such litigation less aggressively than Channel would. Without protection for the intellectual property Channel licenses, other companies might be able to offer similar products for sale, which could adversely affect Channel’s competitive business position and harm its business prospects. If Channel loses any of its right to use third-party intellectual property, it could adversely affect Channel’s ability to commercialize its technologies, products or services, as well as harm its competitive business position and its business prospects.

Rizatriptan is an off-patent branded generic pharmaceutical and is currently not protected by intellectual property rights. As a result, other pharmaceutical companies may sell products similar to the Rizatriptan Spray

Formulation at a lower cost, and this might result in a commensurate loss in expected sales or require Channel to lower its prices to compete. If other pharmaceutical companies sell products that are similar to the Rizatriptan Spray Formulation, Channel may face additional competition and its business and profitability may be adversely affected, and its ability diversifying its pipeline of non-opioid pain treatment therapies, while adding therapeutic options for related conditions under the Benuvia License Agreement may be reduced.

Before Channel can begin to commercially manufacture CC8464, CT2000, CT3000 or any of its other compounds, whether in a third-party facility or in its own facility, if established, Channel must pass a pre-approval inspection of its manufacturing facility by the FDA. A manufacturing authorization must also be obtained from the appropriate regulatory authorities. The timeframe required for Channel to obtain such approvals is uncertain. To obtain approval, Channel will need to ensure that all its processes, methods and equipment are compliant with cGMP, and perform extensive audits of vendors, contract laboratories and suppliers. If any of its vendors, contract laboratories or suppliers is found to be out of compliance with cGMP, Channel may experience delays or disruptions in manufacturing while it works with these third parties to remedy the violation or while Channel works to identify suitable replacement vendors. The cGMP requirements govern quality control of the manufacturing process and documentation policies and procedures. In complying with cGMP, Channel will be obligated to expend time, money and effort in production, record keeping and quality control to assure that the product meets applicable specifications and other requirements. If Channel fails to comply with these requirements, it would be subject to possible regulatory action and may not be permitted to sell any compound that it may develop.

In addition, the manufacturing process used to produce Channel’s existing compounds is complex, novel and has not been validated for commercial use. To produce enough quantities of its existing compounds for future clinical trials and initial U.S. commercial demand, Channel will need to increase the scale of its manufacturing process. Channel employs multiple steps to control its manufacturing process to assure that the process works and that CC8464, CT2000 and CT3000 are made strictly and consistently in compliance with the process. Problems with, or deviations from, the manufacturing process, even if minor, could result in product defects or manufacturing failures that result in lot failures, product recalls, product liability claims or insufficient inventory. Channel may encounter problems achieving adequate quantities and quality of clinical-grade materials that meet FDA, EMA or other applicable standards or specifications with consistent and acceptable production yields and costs.

Given the nature of sterile product manufacturing, there is a risk of contamination. Any contamination could materially adversely affect Channel’s ability to produce CC8464, CT2000 and CT3000 on schedule and could, therefore, harm its results of operations and cause reputational damage.

Some of the raw materials required in Channel’s manufacturing process may be derived from biologic sources. Such raw materials are difficult to procure and may be subject to contamination or recall. A material shortage, contamination, recall or restriction on the use of biologically derived substances in the manufacture of CC8464, CT2000 and CT3000 could adversely impact or disrupt the commercial manufacturing or the production of clinical material, which could materially and adversely affect Channel’s development timelines and our business, financial condition, results of operations and prospects.

Channel currently does not have a market development organization. To successfully commercialize CC8464, CT2000 and CT3000, if approved, it will need to expand its capabilities to promote market access and build awareness. To successfully commercialize any other products that may result from its development programs, Channel will need to further expand its market development organization, either on its own or with a third party. The

development of its own market development team will be expensive and time-consuming and could delay any product launch. Moreover, Channel cannot be certain that it will be able to successfully develop this capability. Channel may enter into collaboration agreements regarding any of its compounds with third parties to utilize their established marketing and distribution capabilities, but Channel may be unable to enter into such agreements on favorable terms, if at all. If any future collaborators do not commit sufficient resources to commercialize Channel’s products, or Channel is unable to develop the necessary capabilities on its own, it will be unable to generate sufficient product revenue to sustain its business. Channel competes with many companies that currently have extensive, experienced and well-funded medical affairs, marketing and sales operations to recruit, hire, train and retain marketing and sales personnel. Channel also faces competition in its search for third parties to assist it with the sales and marketing efforts of its compounds. Without an internal team or the support of a third party to perform marketing and sales functions, Channel may be unable to compete successfully against these more established companies.

Channel’s efforts to educate the medical community and third-party payors on the benefits of its compounds may require significant resources and may never be successful. Such efforts may require more resources than are typically required due to the complexity and uniqueness of our potential products. If any of our compounds are approved but fails to achieve market acceptance among physicians, patients or third-party payors, Channel will not be able to generate significant revenues from such product, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Channel is currently focusing its research and product development efforts on CC8464 for the management of EM and iSFN, CT2000 for acute and chronic eye pain, CT3000 for post-surgical pain and, potentially, other fields of neuropathic pain. Its understanding of both the number of people who have EM or iSFN, as well as the subset of people with either disease who have the potential to benefit from treatment with CC8464, are based on estimates in published literature. Similarly, its understanding of the number of people who could benefit from treatment with CT2000 and CT3000, are based on estimates in published literature. These estimates may prove to be incorrect, and new studies may reduce the estimated incidence or prevalence of this disease. The number of patients in the United States, the European Union and elsewhere may turn out to be lower than expected or these patients may not be otherwise amenable to treatment with CC8464, CT2000 and CT3000 or may become increasingly difficult to identify and access, all of which would adversely affect its business, financial condition, results of operations and prospects.

Further, there are several factors that could contribute to making the actual number of patients who receive CC8464, CT2000 and CT3000 less than the potentially addressable market. These include the increased use of currently available medication for mild cases as physicians gain a better understanding diagnosis and treatment of EM and iSFN, the discovery of novel medications for EM and iSFN and the lack of widespread availability of, and limited reimbursement for, new therapies in many underdeveloped markets.

Channel expects that coverage and reimbursement of pharmaceutical costs may be increasingly restricted both in the U.S. and internationally. The escalating cost of health care has led to increased pressure on the health care industry to reduce costs. Drug pricing by pharmaceutical companies recently has come under increased scrutiny and continues to be subject to intense political and public debate in the U.S. and abroad. Government and private third-party payors have proposed health care reforms and cost reductions. A number of federal and state proposals to control the cost of health care, including the cost of drug treatments, have been made in the U.S. Specifically, there have been several recent U.S. Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for drugs. In some international markets, the government controls the pricing, which can affect the profitability of drugs. Current government regulations and possible future legislation regarding health care may affect coverage and reimbursement for medical treatment by third-party payors, which may render Channel’s compounds, if approved, not commercially viable or may adversely affect its anticipated future revenues and gross margins.

Channel cannot predict the extent to which its business may be affected by these or other potential future legislative or regulatory developments. However, future price controls or other changes in pricing regulation or

negative publicity related to the pricing of pharmaceutical drugs generally could restrict the amount that Channel is able to charge for its future products, which would adversely affect its anticipated revenue and results of operations.

Channel expects that coverage and reimbursement by government and private payors will be essential for most patients to be able to afford these treatments. Accordingly, sales of Channel’s compounds will depend substantially, both domestically and abroad, on the extent to which the costs of its compounds will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or will be reimbursed by government authorities, private health coverage insurers and other third-party payors. Coverage and reimbursement by a third- party payor may depend upon several factors, including the third-party payor’s determination that use of a product is:

Obtaining coverage and reimbursement for a product from third-party payors is a time-consuming and costly process that could require Channel to provide to the payor supporting scientific, clinical and cost-effectiveness data. Channel may not be able to provide data sufficient to gain acceptance with respect to coverage and reimbursement. If coverage and reimbursement are not available, or are available only at limited levels, it may not be able to successfully commercialize its compounds. Even if coverage is provided, the approved reimbursement amount may not be adequate to realize a sufficient return on its investment.

There is significant uncertainty related to third-party coverage and reimbursement of newly approved products. In the United States, third-party payors, including government payors such as the Medicare and Medicaid programs, play an important role in determining the extent to which new drugs and biologics will be covered and reimbursed. The Medicare and Medicaid programs increasingly are used as models for how private payors and government payors develop their coverage and reimbursement policies.

Outside the United States, international operations generally are subject to extensive government price controls and other market regulations and increasing emphasis on cost-containment initiatives in the European Union, Canada and other countries may put pricing pressure on Channel. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. It also can take a significant amount of time after approval of a product to secure pricing and reimbursement for such product in many counties outside the United States. In general, the prices of medicines under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for medical products but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that Channel is able to charge for its compounds. Accordingly, in markets outside the United States, the reimbursement for its products will be reduced compared with the United States and may be insufficient to generate commercially reasonable product revenues.

Moreover, increasing efforts by government and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for Channel’s compounds. Payors increasingly are considering new metrics as the basis for reimbursement rates, such as average sales price, average manufacturer price, and Actual Acquisition Cost. The existing data for reimbursement based on some of these metrics is relatively limited, although certain states have begun to survey acquisition cost data for the purpose of setting Medicaid reimbursement rates, and the Centers for Medicare & Medicaid Services (“CMS”) has begun making pharmacy National Average Drug Acquisition Cost and National Average Retail Price data publicly available on at least a monthly basis. Therefore, it may be difficult to project the impact of these evolving reimbursement metrics on the willingness of payors to cover candidate products that Channel or its partners are able to commercialize. Channel expects to experience pricing pressures in connection with the sale of any of its product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations

and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become intense. As a result, increasingly high barriers are being erected to the entry of new products such as Channel’s.

Beyond the development and commercialization of CC8464, CT2000 and CT3000, the future success of Channel’s business depends upon its ability to identify, develop and commercialize compounds based on the platform technology. CC8464, along with CT2000 and CT3000, which were derived from CC8464, was discovered in its labs using its technologies. Research programs to identify new compounds will require to invest substantial technical, financial and human resources. Channel may fail to identify other potential compounds for clinical development for several reasons. For example, its research may be unsuccessful in identifying potential compounds or its potential compounds may be shown to have harmful side effects, may be commercially impracticable to manufacture or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval.

Additionally, because Channel has limited resources, it may forego or delay pursuit of opportunities with certain programs or compounds or for indications that later prove to have greater commercial potential. Its spending on current and future research and development programs may not yield any commercially viable products. If Channel does not accurately evaluate the commercial potential for a particular compound, it may relinquish valuable rights to that compound through strategic collaboration, licensing or other arrangements in cases in which it would have been more advantageous for it to retain sole development and commercialization rights to such compound. Alternatively, Channel may allocate internal resources to a compound in a therapeutic area in which it would have been more advantageous to enter into a partnering arrangement.

If any of these events occur, Channel may be forced to abandon its development efforts with respect to a particular compound or fail to develop a potentially successful compound, which could have a material adverse effect on its business, financial condition, results of operations and prospects.

If Channel is successful in executing its business strategy, it will need to expand its managerial, operational, financial and other systems and resources to manage its operations, continue its research and development activities and, in the longer term, build a commercial infrastructure to support commercialization of any of its compounds that are approved for sale. Future growth would impose significant added responsibilities on members of management. It is likely that Channel’s management, finance, development personnel, systems and facilities currently in place may not be adequate to support this future growth. Channel’s need to effectively manage its operations, growth and its compounds requires that it continues to develop more robust business processes and improve its systems and procedures in each of these areas and to attract and retain enough numbers of talented employees. Channel may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve its research, development and growth goals.

Channel’s success is dependent upon certain key management and technical personnel, the loss of whose services may adversely impact the achievement of its objectives. Its Chief Executive Officer, Chief Financial Officer, Chief Medical Officer, Treasurer and Corporate Secretary have played key roles in the founding, management, technology development and/or promotion of Channel. Channel currently does not hold key man insurance on its executives. Even if Channel does seek to obtain such insurance, it cannot assure you that such insurance will be available on acceptable terms or at all. The loss of the services of either its Chief Executive Officer, Chief Financial Officer, Chief Medical Officer, Treasurer or Corporate Secretary could have a material adverse effect on its business, financial condition, and results of operations.

Channel employs additional staff that are critical to implementing its clinical development and business strategy, and further development of its products will require that it recruits additional employees or consultants, particularly

qualified scientific and technical personnel. Any inability to retrain and attract key employees or advisors may impede the progress of Channel’s research, development and commercialization objectives which could have a material adverse effect on its business, financial condition, results of operations and prospects. In addition, failure to succeed in preclinical or clinical trials or applications for marketing approval may make it more challenging to recruit and retain qualified personnel.

Channel is exposed to the risk of fraud or other misconduct by its employees, principal investigators and advisors. Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in the European Union and other jurisdictions, provide accurate information to the FDA, the EMA and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. Sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Such misconduct also could involve the improper use of information obtained during clinical trials or interactions with the FDA or other regulatory authorities, which could result in criminal and civil penalties or sanctions and cause serious harm to Channel’s reputation. It is not always possible to identify and deter employee misconduct, and the precautions it takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against Channel and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on its business, financial condition, results of operations and prospects, including the imposition of significant fines, criminal penalties, or other sanctions.

In addition, principal investigators for Channel’s clinical trials may serve as scientific advisors or consultants to Channel from time to time and receive compensation in connection with such services. Under certain circumstances, Channel may be required to report some of these relationships to the FDA. The FDA may conclude that a financial relationship between Channel and a principal investigator has created a conflict of interest or otherwise affected interpretation of the trial. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of Channel’s marketing applications by the FDA and may ultimately lead to the denial of marketing approval of its current and future drug candidates.

If Channel obtains FDA approvals for CC8464, CT2000 and CT3000 and begin commercializing them in the United States, its operations will be directly, or indirectly through its prescribers, customers and purchasers, subject to various federal and state fraud and abuse laws and regulations, including, without limitation, the federal Anti-Kickback Statute, federal civil and criminal false claims laws and the Physician Payments Sunshine Act and regulations. These laws will impact, among other things, Channel’s proposed sales, marketing and educational programs. In addition, Channel may be subject to patient privacy laws by both the federal government and the states in which it conducts its business as well as other jurisdictions. The laws that will affect its operations include, but are not limited to:

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of Channel’s business activities could be subject to challenge under one or more of such laws. If Channel’s operations are found to be in violation of any of the laws described above or any other government regulations that apply to it, Channel may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment and the curtailment or restructuring of its operations, any of which could adversely affect its ability to operate its business and its results of operations.

Efforts to ensure that its business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that its business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If Channel’s operations are found to be in violation of any of these laws or any other governmental regulations that may apply to it, it may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of its operations.

The risk of Channel being found in violation of these laws is increased by the fact that many of them have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action against Channel for violation of these laws, even if Channel successfully defends against it, could cause Channel to incur significant legal expenses and divert its management’s attention from the operation

of its business. The shifting compliance environment and the need to build and maintain a robust and expandable systems to comply with multiple jurisdictions with different compliance and/or reporting requirements increases the possibility that a healthcare company may run afoul of one or more of the requirements.

Channel is subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the generation, handling, use, storage, treatment, manufacture, transportation and disposal of, and exposure to, hazardous materials and wastes, as well as laws and regulations relating to occupational health and safety. Channel’s operations involve the use of hazardous and flammable materials, including chemicals and biologic materials. Its operations also produce hazardous waste products. Channel generally contracts with third parties for the disposal of these materials and wastes. Channel cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from its use of hazardous materials, it could be held liable for any resulting damages, and any liability could exceed its resources. Channel also could incur significant costs associated with civil or criminal fines and penalties. Channel does not carry specific biological or hazardous waste insurance coverage, and its property, casualty and general liability insurance policies specifically exclude coverage for damages and fines arising from biological or hazardous waste exposure or contamination. Accordingly, in the event of contamination or injury, Channel could be held liable for damages or be penalized with fines in an amount exceeding its resources, and its clinical trials or regulatory approvals could be suspended.

Although Channel maintains workers’ compensation insurance for certain costs and expenses, it may incur due to injuries to its employees resulting from the use of hazardous materials or other work-related injuries, this insurance may not provide adequate coverage against potential liabilities. Channel does not maintain insurance for toxic tort claims that may be asserted against it in connection with its storage or disposal of biologic, hazardous or radioactive materials.

Channel also may incur substantial costs to comply with current or future environmental, health and safety laws and regulations, which have tended to become more stringent over time. These current or future laws and regulations may impair its research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions or liabilities, which could materially adversely affect its business, financial condition, results of operations and prospects.

Channel’s results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including conditions that are outside of its control, such as the impact of health and safety concerns, as well as the recent inflation in the United States, foreign and domestic government sanctions imposed on Russia as a result of its invasion of Ukraine, war or other military conflict, terrorist activities, and other disruptions to global supply chains. Each of these events has caused or may continue to result in extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn, whether due to inflationary pressures or otherwise, could result in a variety of risks to Channel’s business, including weakened demand for its compounds and its ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could strain its suppliers, possibly resulting in supply disruption, or cause delays in payments for its services by third-party payors or its collaborators. Any of the foregoing could harm Channel’s business and it cannot anticipate all the ways in which the current economic climate and financial market conditions could adversely impact its business.

Events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. Similarly, on March 12, 2023, Signature Bank and

Silvergate Capital Corp. were each swept into receivership. Although a statement by the Department of the Treasury, the Federal Reserve and the FDIC indicated that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts, borrowers under credit agreements, letters of credit and certain other financial instruments with SVB, Signature Bank or any other financial institution that is placed into receivership by the FDIC may be unable to access undrawn amounts thereunder.

Although Channel regularly assesses its banking relationships and the location of the assets held in Channel’s account as it believes necessary or appropriate, its access to funding sources and other credit arrangements could be significantly impaired by factors that affect the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry.

Channel’s internal computer systems and those of its current and any future collaborators and other contractors or consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.

While Channel has not experienced any such material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in its operations, it could result in a material disruption of its development programs and its business operations, whether due to a loss of its trade secrets or other proprietary information or other similar disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in Channel’s regulatory approval efforts and significantly increase its costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, its data or applications, or inappropriate disclosure of confidential or proprietary information, Channel could incur liability, its competitive position could be harmed, and the further development and commercialization of its compounds could be delayed.

Channel receives, processes, stores and transmits, often electronically, confidential data of others. Unauthorized access to Channel’s computer systems or stored data could result in the theft or improper disclosure of confidential information, the deletion or modification of records, or could cause interruptions in its operations. These cyber-security risks increase when it transmits information from one location to another, including transmissions over the Internet or other electronic networks. Despite implemented security measures, Channel’s facilities, systems, and procedures, and those of its third-party service providers, may be vulnerable to security breaches, acts of vandalism, software viruses, misplaced or lost data, programming and/or human errors, or other similar events which may disrupt Channel’s delivery of services or expose the confidential information of its customers and others. Any security breach involving the misappropriation, loss or other unauthorized disclosure or use of confidential information of others, whether by Channel or a third party, could: (i) subject Channel to civil and criminal penalties; (ii) have a negative impact on Channel’s reputation; or (iii) expose Channel to liability to our customers, third parties or government authorities.

Channel’s business exposes it to significant potential product liability risks that are inherent in the development, manufacturing, marketing and sale of human device and drug products. Product liability claims could delay or prevent completion of its development programs, clinical or otherwise. If Channel succeeds in marketing and selling products, such claims could result in a recall of any products or a limitation or other change in the indications for which they may be used. If Channel cannot successfully defend itself against claims that its compounds or drugs caused injuries, Channel will incur substantial liabilities. Depending on their merit or eventual outcome, liability claims may result in:

In addition, Channel currently does not have product liability insurance, but plan to obtain such insurance at appropriate levels prior to initiating studies in humans or clinical trials and prior to marketing and selling any drug or device products. Any insurance it obtains may not provide sufficient coverage against potential liabilities. These liabilities could prevent or interfere with its product development and commercialization efforts. Furthermore, if Channel was unable or otherwise failed to obtain and maintain sufficient insurance at a reasonable cost to protect it against any such liabilities, that inability could have a material adverse effect on its business.

Channel’s success depends, in large part, on its ability to obtain and maintain patent protection in the United States and other countries with respect to CC8464, CT2000 and CT3000, additional new compounds in its product pipeline, and its institutional knowledge. The patent prosecution process is expensive, time- consuming and complex. In particular, Channel may not be able to file, prosecute, maintain, and/or enforce all necessary or desirable patent applications and issued patents at a reasonable cost or in a timely manner.

Channel has secured U.S. Patent No. 9,458,118 (the “CC8464 Patent”), covering the chemical composition and use of its clinical-stage NaV1.7 blocker. Apart from the CC8464 Patent, Channel has filed multiple patent applications in foreign jurisdictions, including Canada, France, India and Japan. It is possible that some of Channel’s pending patent applications in foreign jurisdictions will not result in issued patents in a timely fashion or at all, and even if Channel is granted the patents it is currently pursuing in foreign jurisdictions, the patents may not be issued in a form that will provide Channel with the full scope of protection that it desires, they may not prevent competitors or other third parties from competing with Channel, and/or they may not otherwise provide Channel with a competitive advantage. Channel’s competitors, or other third parties, may be able to circumvent its patents by developing similar or alternative technologies or products in a non-infringing manner. For example, there is no assurance that the CC8464 Patent, or any other patent that it may be granted, will prevent third parties from developing competing technologies. Moreover, Channel’s patent estate, including the CC8464 Patent, does not preclude third parties from obtaining intellectual property rights that could interfere with its freedom to use its platform for other indications. Even assuming patents issue from its pending and future patent applications, changes in either the patent laws or interpretation of the patent laws in the United States and foreign jurisdictions may diminish the value of its patents or narrow their scope of protection.

Channel has pending patent applications for both of CT2000 and CT3000 and there is no guarantee that any of these applications become patents in the United States or any other jurisdiction.

Filing and prosecuting patent applications on CC8464, CT2000, CT3000 and future new compounds, current and future innovations related to Channel’s technology, and its institutional knowledge in all countries throughout the world would be prohibitively expensive, and intellectual property protections available in some countries outside the United States, and the enforceability thereof, may differ in scope from those in the United States. Thus, in some cases, Channel will not seek to obtain patent protection for certain technologies in some jurisdictions outside the United

States. In addition, the laws of some foreign countries do not protect intellectual property to the same extent as federal and state laws in the United States. Consequently, Channel may not be able to prevent third parties from utilizing its inventions in all countries outside the United States, even in jurisdictions where Channel does pursue patent protection. Competitors may use its technologies in jurisdictions where it has not pursued and obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where Channel has patent protection, but enforcement is not as strong as that in the United States. These products may compete with Channel’s compounds, and its patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting intellectual property and enforcing intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protections, particularly those relating to biotechnology products and those of foreign entities. Such challenges in enforcing rights in these countries could make it difficult for Channel to stop the infringement of its patents, if pursued and obtained, or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce its current and future patent rights in foreign jurisdictions could result in substantial costs and may divert its efforts and attention from other aspects of its business; could put its asserted patents at risk of being invalidated or interpreted narrowly; could put any future patent applications, including continuation and divisional applications, at risk of not issuing; and could provoke third parties to assert their own patent claims against Channel or to attack the validity of its other patents. Channel may not prevail in any lawsuits that it initiates, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, Channel’s efforts to enforce any intellectual property rights around the world stemming from intellectual property that it develops may be inadequate to obtain a significant commercial advantage in these foreign jurisdictions.

Channel’s commercial success depends upon its ability (and the ability of any potential future collaborators) to develop, manufacture, market and sell CC8464, CT2000, CT3000 and future new compounds, and to freely use its proprietary technologies (e.g., without infringing the intellectual property rights of others). Many companies and institutions have filed, and continue to file, patent applications related to various aspects of pain management and opioid sparing technology. Because patent applications can take many years to issue, may be confidential for 18 months or more after filing, and can be revised before and after issuance, there may be issued patents and patent applications now pending which may later result in issued patents that third-party asserts are infringed by the manufacture, use, sale, or importation of Channel’s products. The biotechnology and pharmaceutical industries are characterized by extensive and complex litigation regarding patents and other intellectual property rights. Channel’s competitors or other third parties may assert infringement claims against it, alleging that its therapeutics, manufacturing methods, formulations or administration methods are covered by their patents. Moreover, Channel may face patent infringement claims from non-practicing entities that have no relevant product revenue, and against whom its patent portfolio may therefore have no deterrent effect.

Channel may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to CC8464, CT2000, CT3000 or any future compounds, or related technologies, including, for example, interference proceedings, post grant review challenges, and inter partes review before the U.S. Patent and Trademark Office (the “USPTO”). For example, a third party may bring an inter partes review challenging Channel’s patents and any future patent that may be granted to it. Such proceedings often are used as a tactic by defendants in a patent litigation suit to threaten a patentee’s patents, both asserted in the litigation and unasserted. Thus, a competitor, either in response to litigation initiated by Channel or in the ordinary course, may threaten the validity, enforceability, and breadth of Channel’s patents which could have a negative impact on our business and render our patents or other intellectual property rights ineffective or insufficient to prevent competition.

Patent and other types of intellectual property litigation and administrative proceedings can involve complex factual and legal questions, and their outcomes are uncertain. A finding of infringement could prevent Channel from manufacturing and commercializing its technologies, including CC8464, CT2000 and CT3000, or force it to cease some or all its business operations. If Channel is found or believe there is a risk that it may be found, to infringe a third party’s valid and enforceable intellectual property rights, it could be required (or may choose) to obtain a license from such a third party to continue developing, manufacturing and marketing its technologies. However, Channel may not be able to obtain any required license on commercially reasonable terms, if at all. Even if Channel was able to obtain a license, it could be non-exclusive, thereby giving our competitors and other third parties access to the same technologies licensed to it, and further, it could require Channel to make substantial licensing and royalty payments. Channel could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing technologies, including CC8464, CT2000 and CT3000. Channel also could be found liable for monetary damages, including treble damages and attorneys’ fees if Channel is found to have willfully infringed a patent or other intellectual property right. Claims that Channel has misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on its business, financial condition, results of operations and prospects.

Litigation or other legal or administrative proceedings relating to intellectual property claims, with or without merit, is unpredictable and generally expensive and time consuming. Competitors may infringe Channel’s current or future patents, should such patents issue, or Channel may be required to defend against claims of infringement or other unauthorized use of third-party intellectual property or third-party attacks against its intellectual property rights. Even if resolved in its favor, litigation or other legal proceedings relating to intellectual property may cause it to incur significant expenses and could distract its scientific and management personnel from their normal responsibilities. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation and administrative proceedings, there is a risk that some of Channel’s confidential information could be compromised by disclosure during this type of litigation despite its attempts to prevent such disclosure. In addition, there could be public announcements of the results of hearings, motions, or other interim proceedings or developments and, if securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of Channel common stock. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development activities or any future sales, marketing, or distribution activities.

Channel may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of its competitors may be able to sustain the costs of such litigation or proceedings more effectively than it can because of their greater financial resources. Accordingly, despite Channel’s efforts, it may not be able to prevent third parties from infringing, misappropriating, or successfully challenging its intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on its ability to compete in the marketplace.

Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. As patent reform legislation can inject serious uncertainty into the patent prosecution and litigation processes, it is not clear what impact future patent reform legislation will have on the operation of Channel’s business. However, such future legislation, and its implementation, could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents, all of which could have a material adverse effect on Channel’s business, financial condition, results of operations and prospects.

Moreover, the patent positions of companies engaged in the development and commercialization of pharmaceuticals are particularly uncertain. Channel cannot assure you that its efforts to seek patent protection for CC8464, CT2000, CT3000 and future new compounds will not be negatively impacted by the future court decisions or changes in guidance or procedures issued by the USPTO. These decisions, and any guidance issued by the USPTO (or changes thereto), could have a material adverse effect on its existing patent portfolio and its ability to protect and enforce its intellectual property rights in the future.

The degree of future protection afforded by Channel’s intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect its business or permit Channel to maintain its competitive advantage. For example:

Should any of these events occur, they could significantly harm Channel’s business, financial condition, results of operations and prospects.

In addition to patent protection, Channel also relies on the protection of trade secrets, know-how and confidential and proprietary information. The disclosure of its trade secrets would impair its competitive position and could harm its business. However, trade secrets are difficult to protect. To maintain the confidentiality of trade secrets and proprietary information, Channel relies in part on confidentiality agreements with its employees, consultants, outside scientific collaborators, sponsored researchers, and/or other advisors, and inventions agreements with employees, consultants, and advisors, to protect its trade secrets and other proprietary information. These agreements require that all confidential information developed by the individual or made known to the individual by Channel during the course of the individual’s relationship with it be kept confidential and not disclosed to third parties. Channel’s agreements with employees and consultants also provide that inventions conceived by the individual in the course of rendering services to Channel will be its exclusive property. Despite these efforts, Channel cannot provide any assurances that these agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover Channel’s trade secrets and proprietary information.

In the event of unauthorized use or disclosure of trade secrets or proprietary information, these agreements, even if obtained, may not provide sufficient protection for Channel’s trade secrets or other confidential information. Further, to the extent that its employees, consultants or contractors use technology or know-how owned by others in

their work for Channel, disputes may arise as to the rights in related inventions. This can be of particular concern with respect to university collaborators with Channel, who typically have pre-existing obligations to their universities to assign intellectual property rights, which university rights generally are superior to assignment rights that it might receive from such individuals.

Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. Moreover, third parties may still obtain this information or may come upon this or similar information independently, and Channel would have no right to prevent them from using that technology or information to compete with it. Trade secrets will over time be disseminated within the industry through independent development, the publication of journal articles, and the movement of personnel skilled in the art from company to company or academic to industry scientific positions. Though Channel’s agreements with third parties typically restrict the ability of its advisors, employees, collaborators, licensors, suppliers, third-party contractors, and/or consultants to publish data potentially relating to its trade secrets, its agreements may contain certain limited publication rights. If any of Channel’s trade secrets were to be lawfully obtained or independently developed by a competitor, it would have no right to prevent such competitor from using that technology or information to compete with Channel which could harm our competitive position. Because from time to time Channel expects to rely on third parties in the development, manufacture, and distribution of its products and provision of its services, it must, at times, share trade secrets with them. Despite employing the contractual and other security precautions described above, the need to share trade secrets increases the risk that such trade secrets become known by its competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. If any of these events occurs or if Channel otherwise loses protection for its trade secrets, the value of this information may be greatly reduced and its competitive position would be harmed. If Channel does not apply for patent protection prior to such publication or if Channel cannot otherwise maintain the confidentiality of its proprietary technology and other confidential information, then its ability to obtain patent protection or to protect its trade secret information may be jeopardized.

Recently, the market prices and trading volume of shares of Channel common stock of other small publicly traded companies with a limited number of shares available to purchasers, have experienced rapid and substantial price volatility unrelated to the financial performance of those companies. Similarly, shares of Channel common stock may experience similar rapid and substantial price volatility unrelated to its financial performance, which could cause purchasers of Channel common stock to incur substantial losses, which may be unpredictable and not bear any relationship to its business and financial performance. Extreme fluctuations in the market price of Channel common stock may occur in response to strong and atypical retail investor interest, including on social media and online forums, the direct access by retail investors to broadly available trading platforms, the amount and status of short interest in Channel common stock and its other securities, access to margin debt, trading in options and other derivatives on shares of Channel common stock and any related hedging and other trading factors.

If there is extreme market volatility and trading patterns in Channel common stock, it may create several risks for investors, including the following:

Further, Channel may incur rapid and substantial increases or decreases in Channel common stock price in the foreseeable future that may not coincide in timing with the disclosure of news or developments by or affecting

Channel. Accordingly, the market price of Channel common stock may fluctuate dramatically, and may decline rapidly, regardless of any developments in its business. Overall, there are various factors, many of which are beyond its control, that could negatively affect the market price of Channel common stock or result in fluctuations in the price or trading volume of Channel common stock, including:

Should Channel fail to satisfy the continued listing requirements for remaining listed on NYSE American, such as the corporate governance requirements or the minimum closing bid price requirement, NYSE American may take steps to delist Channel common stock. Such a delisting would likely have a negative effect on the price of Channel common stock and would impair your ability to sell or purchase Channel common stock when you wish to do so. In the event of a delisting, Channel would take actions to restore its compliance with NYSE American’s listing requirements, but Channel can provide no assurance that any such action taken by it would allow Channel common stock to become listed again, stabilize the market price or improve the liquidity of Channel common stock, prevent Channel common stock from dropping below NYSE American’s minimum bid price requirement or prevent future non-compliance with such listing requirements.

If Channel cannot maintain the listing of Channel common stock for trading on NYSE American, it could face significant material adverse consequences, including:

Channel’s Articles of Incorporation authorizes the issuance of up to 20,000,000 shares of “blank check” preferred stock with designations, rights and preferences as may be determined from time to time by the Channel board of directors. The Channel board of directors is empowered, without stockholder approval, to issue a series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute the interest of, or impair the voting power of, its common stockholders. The issuance of a series of preferred stock could be used as a method of discouraging, delaying, or preventing a change in control of Channel. For example, it would be possible for Channel board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to change control of Channel.

Channel’s Series C Convertible Redeemable Preferred Stock, par value of $0.0001 per share (“Channel Series C Preferred Stock”) currently ranks (i) senior to the Channel common stock and any class or series of capital stock of Channel created specifically ranking by its terms junior to the Channel Series C Preferred Stock; and (ii) junior to any class or series of capital stock of Channel created after the creation of the Channel Series C Preferred Stock specifically ranking by its terms senior to any Channel Series C Preferred Stock, in each case, with respect to payment of dividends and distributions of assets upon liquidation, dissolution or winding up of the Corporation, whether voluntarily or involuntarily. For further information regarding Channel’s shares of Channel Series C Preferred Stock, please refer to the Certificate of Designations of Channel Series C Convertible Redeemable Preferred Stock, filed with the Secretary of State of the State of Nevada on November 8, 2024 filed as an exhibit to, and the disclosure contained in, our Post-Effective Amendment No. 1 on Form S-1 filed with the SEC on November 22, 2024.

Channel’s Articles of Incorporation require that, to the fullest extent permitted by law, and unless it otherwise consent in writing to the selection of an alternative forum, the Second Judicial District Court, in and for the State of Nevada, located in Washoe County, Nevada, (or if the Second Judicial District Court does not have jurisdiction, any other state district court located in the State of Nevada, and if no state district court in the State of Nevada has jurisdiction, any federal court located in the State of Nevada), will be the exclusive forum for each of the following:

The exclusive forum provision provides federal courts located in the State of Nevada as the forum for suits brought to enforce any duty or liability for which Section 27 of the Exchange Act establishes exclusive jurisdiction with the federal courts, or any other claim for which the federal courts have exclusive jurisdiction. In addition, Section 22 of the Securities Act provides that federal and state courts have concurrent jurisdiction over lawsuits brought under the Securities Act or the rules and regulations thereunder. To the extent the exclusive forum provision restricts the courts in which claims arising under the Securities Act may be brought, there is uncertainty as to whether a court would enforce such a provision. Channel notes that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Although Channel believes this provision will benefit Channel by providing increased consistency in the application of Nevada law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against its directors and officers.

Sales of substantial amounts of shares of Channel common stock in the public market following the IPO, or the perception that these sales could occur, could cause the market price of its securities to decline. These sales, or the possibility that these sales may occur, also might make it more difficult for it to sell equity securities in the future at a time and at a price that it deems appropriate.

All of the shares of Channel common stock in the IPO are immediately tradable without restriction under the Securities Act, except for any securities held by “affiliates,” as that term is defined in Rule 144 under the Securities Act, or Rule 144.

The remaining shares of Channel common stock outstanding, other than the 2,969,823 shares (the “Selling Stockholder Shares”) of Channel common stock that it has registered on behalf of certain selling stockholders (the “Selling Stockholders”) identified in a separate prospectus (the “Resale Prospectus”) and which may be resold by such Selling Stockholders from time to time, are restricted securities within the meaning of Rule 144 under the Securities Act but will be eligible for resale subject to applicable volume, means of sale, holding period and other limitations of Rule 144 under the Securities Act or pursuant to an exception from registration under Rule 701 under the Securities Act, subject to the lock-up agreements executed in conjunction with the IPO.

In addition, Channel has registered the Selling Stockholder Shares pursuant to the Resale Prospectus and, as a result, all of the Selling Stockholder Shares are freely tradable under the Securities Act, subject to the terms of the lock up agreements.

Channel intends to file one or more registration statements on Form S-8 under the Securities Act to register the shares of Channel common stock to be issued under the to the Channel Therapeutics Corporation 2023 Equity Incentive Plan (the “Prior Plan”) and, as a result, all shares of Channel common stock acquired under our plans will also be freely tradable under the Securities Act, subject to the terms of any lock-up agreements, unless purchased by our affiliates. In addition, 1,944,444 shares of Channel common stock has been reserved for future issuances under the Prior Plan.

In connection with the Bridge Financings (defined below), Channel was required to file a registration statement within 180 calendar days after the consummation of the IPO, providing for the resale of Channel common stock, which includes 549 Bonus Shares (as defined below), received by holders of the senior secured convertible notes upon conversion of such notes. As of May 23, 2025, Channel has not filed a registration statement in connection with the Bridge Financings, and the investors that participated in the Bridge Financings have not objected to the fact that Channel has not filed such registration statement nor have they requested the payment of partial liquidated damages pursuant to the terms of the Bridge Documents.

In connection with that certain Common Stock Purchase Agreement, dated as of July 26, 2024 (the “CEF Purchase Agreement”), Channel filed a registration statement, providing for the resale of the shares of Channel common stock issuable pursuant to the CEF Purchase Agreement. In the future, it may issue additional shares of Channel common stock or other equity or debt securities convertible into Channel common stock in connection with draw-downs under the CEF Purchase Agreement, a financing, acquisition, litigation settlement or employee arrangement or otherwise. Any of these issuances could result in substantial dilution to our existing stockholders and could cause the trading price of its securities to decline.

The Channel Series C Preferred Stock has a liquidation preference that gets paid prior to any payment on Channel common stock. As a result, if Channel was to liquidate, dissolve or wind-up, each holder of Channel Series C Preferred Stock would have the right to receive payment out of our assets available for distribution, before any amount is paid to the holders of Channel common stock, in an amount in cash equal to the aggregate liquidation value of all of the shares of preferred stock held by such holder. Holders of the Channel Series C Preferred Stock will not be entitled to dividends. The payment of the liquidation preferences on the Channel Series C Preferred Stock could result in holders of Channel common stock not receiving any proceeds if Channel was to liquidate, dissolve or wind up, either voluntarily or involuntarily.

The existence of the liquidation preferences may reduce the value of Channel common stock, make it harder for Channel to sell shares of Channel common stock in offerings in the future, or prevent or delay a change of control.

The trading market for Channel common stock relies, in part, on the research and reports that industry or financial analysts publish about Channel or its business. If securities analysts do not commence coverage of Channel, the trading price of Channel common stock could decrease. Additionally, if one or more of the analysts covering Channel’s business downgrade their evaluations of Channel common stock, the price of Channel common stock could decline. If one or more of these analysts cease to cover Channel common stock, Channel could lose visibility in the market for Channel common stock, which in turn could cause the price of Channel common stock to decline.

The market price of our securities is likely to be highly volatile due to many factors, including:

The stock markets have experienced extreme volatility in recent years that has been unrelated to operating performance. These broad market fluctuations may adversely affect the trading price of Channel common stock. In the past, following periods of volatility in the market price of a company’s securities, class action litigation has often been instituted against the affected company. Any litigation of this type brought against Channel could result in substantial costs and a diversion of its management’s attention and resources, which would harm its business, results of operations, financial condition and cash flows.

Channel’s stock price may fluctuate for many reasons, including as a result of public announcements regarding Channel’s strategic updates or the development efforts of current or future collaborators or competitors, the addition or departure of its key personnel, variations in its quarterly operating results and changes in market valuations of biopharmaceutical and biotechnology companies.

This risk is especially relevant to Channel because biopharmaceutical and biotechnology companies have experienced significant stock price volatility in recent years. When the market price of a stock has been volatile, as Channel’s stock price may be, holders of that stock have occasionally brought securities class action litigation against it that issued the stock. If any of the Channel stockholders were to bring a lawsuit of this type against Channel, even if the lawsuit was without merit, it could result in substantial costs incurred defending the lawsuit and diversion of the time, attention and resources of the Channel board of directors and management, which could significantly harm its profitability and reputation.

Channel management will have broad discretion in the application of its cash and could spend the proceeds in ways that do not improve its results of operations or enhance the value of Channel common stock. The failure by Channel’s management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, cause the price of Channel common stock to decline and delay the development of CC8464, CT2000 and any other new compounds that it may develop. Pending their use, Channel may invest its cash in a manner that does not produce income or that loses value.

Channel may seek additional capital through a combination of draw-downs under the CEF Purchase Agreement, public and private equity offerings, debt financings, collaborations and licensing arrangements. To the extent that Channel raises additional capital through the sale of equity or debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder. The incurrence of indebtedness would result in increased fixed payment obligations and could involve restrictive covenants, such as limitations on its ability to incur additional debt, limitations on its ability to acquire or license intellectual property rights and other operating restrictions that could adversely impact its ability to conduct its business. If Channel raises additional funds through strategic partnerships and alliances and licensing arrangements with third parties, it may have to relinquish valuable rights to its technologies, CC8464, CT2000 and CT3000 or grant licenses on terms unfavorable to it.

Channel is an “emerging growth company,” as defined in the JOBS Act, and it may take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” In particular, while it is an “emerging growth company”: (i) it will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act; (ii) it will be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial statements; (iii) it will be subject to reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements; and (iv) it will not be required to hold nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments not previously approved. Investors may find Channel common stock less attractive if it relies on the exemptions and relief granted by the JOBS Act. If some investors find Channel common stock less attractive as a result, there may be a less active trading market for Channel common stock and its stock price may decline or become more volatile.

Channel has taken advantage of reduced reporting burdens in this information statement. Channel cannot predict whether investors will find Channel common stock less attractive if it relies on certain or all of these exemptions. If some investors find Channel common stock less attractive as a result, there may be a less active trading market for Channel common stock and its stock price may be more volatile.

In addition, the JOBS Act provides that an emerging growth company may take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Channel has irrevocably elected not to avail itself of this exemption from new or revised accounting standards and, therefore, it will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

As a public company, Channel is subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act and other applicable securities rules and regulations. The Exchange Act requires, among other things, that Channel files annual and current reports with the SEC with respect to its business and operating results. Compliance with these rules and regulations increases its legal and financial compliance costs, makes some activities more difficult, time-consuming, or costly, and increases demand on its systems and resources.

As a result of disclosure of information in this information statement and in filings required of a public company, Channel’s business and financial condition is more visible, which it believes may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, its business and operating results could be harmed, and even if the claims do not result in litigation or are resolved in its favor, these claims, and the time and resources necessary to resolve them, could divert resources of its management and harm its business and operating results.

Channel has never declared or paid cash dividends on its capital stock. Channel currently intends to retain all of its future earnings, if any, to finance the growth and development of its business. In addition, the terms of any future debt agreements may preclude it from paying dividends. As a result, capital appreciation, if any, of Channel common stock will be your sole source of gain for the foreseeable future.

Certain provisions of Channel’s Articles of Incorporation bylaws may have an anti-takeover effect and may delay, defer or prevent a merger, acquisition, tender offer, takeover attempt or other change of control transaction that a stockholder might consider to be in its interests, including attempts that might result in a premium over the market price for the shares held by Channel stockholders.

These provisions provide, among other things:

These anti-takeover provisions, including those noted above, could make it more difficult for a third party to acquire Channel, even if the third party’s offer may be considered beneficial by many of Channel stockholders. As a result, Channel stockholders may be limited in their ability to obtain a premium for their shares.

On July 26, 2024, Channel entered into the CEF Purchase Agreement with Tikkun Capital LLC (“Tikkun”), pursuant to which Tikkun committed to purchase up to $30.0 million in shares of Channel common stock, subject to certain limitations and conditions set forth in the CEF Purchase Agreement.

The shares of Channel common stock that may be issued under the CEF Purchase Agreement (the “Purchase Shares”) may be sold by Channel to Tikkun at Channel’s discretion from time to time until July 26, 2026, commencing after the satisfaction of certain conditions set forth in the CEF Purchase Agreement, including a registration statement covering the resale of shares of Channel common stock that may be issued under the CEF Purchase Agreement is declared effective by the SEC, a final prospectus in connection therewith is filed, and the other conditions set forth in the CEF Purchase Agreement are satisfied. Channel generally has the right to control the timing and amount of any sales of Purchase Shares to Tikkun under the CEF Purchase Agreement. Sales of Purchase Shares to Tikkun under the CEF Purchase Agreement will depend upon market conditions and other factors to be determined by Channel. Channel may ultimately decide to sell to Tikkun all or a portion of the Purchase Shares that may be available pursuant to the CEF Purchase Agreement.

Because the purchase price per share to be paid by Tikkun for the Purchase Shares that Channel may elect to sell to Tikkun under the CEF Purchase Agreement will fluctuate based on the market prices of Channel common stock during the applicable volume weighted average price purchase valuation period for each purchase, it is not possible for Channel to predict the total number of Purchase Shares that Channel will sell to Tikkun under the CEF Purchase Agreement, the purchase price per share that Tikkun will pay for shares purchased from Channel under the CEF Purchase Agreement, or the aggregate gross proceeds that it will receive from those purchases by Tikkun under the CEF Purchase Agreement.

Although the CEF Purchase Agreement provides that Channel may sell up to an aggregate of $30.0 million of Purchase Shares to Tikkun, only 2,000,000 Purchase Shares are being registered for resale by Tikkun under the registration statement on Form S-1 filed with the SEC on July 29, 2024, which Channel may elect to sell to Tikkun, in Channel’s sole discretion, from time to time from and after the Commencement Date under the CEF Purchase Agreement.

If after the Commencement Date, Channel elects to sell to Tikkun all of the 2,000,000 Purchase Shares being registered for resale under the prospectus in the registration statement on Form S-1 filed with the SEC on July 29, 2024, that are available for sale by Channel to Tikkun in purchases under the CEF Purchase Agreement, depending on the market prices of Channel common stock during the applicable volume weighted average price purchase valuation period for each purchase made pursuant to the CEF Purchase Agreement, the actual gross proceeds from the sale of all such shares may be substantially less than the $30.0 million (the “Total Commitment”) available to Channel under the CEF Purchase Agreement, which could materially adversely affect its liquidity.

If it becomes necessary for Channel to issue and sell to Tikkun under the CEF Purchase Agreement more than 2,000,000 Purchase Shares being registered for resale under the registration statement on Form S-1 filed with the SEC on July 29, 2024 in order to receive aggregate gross proceeds equal to the Total Commitment of an aggregate of $30.0 million under the CEF Purchase Agreement, Channel must file with the SEC one or more additional registration statements to register under the Securities Act the resale by Tikkun of any such additional Purchase Shares Channel wishes to sell from time to time under the CEF Purchase Agreement, which the SEC must declare effective. Tikkun will not be required to purchase any Purchase Shares if such sale would result in Tikkun and its affiliates’ beneficial ownership exceeding than 4.99% of the outstanding shares of the Channel common stock (the “Beneficial Ownership Limit”).

Any issuance and sale by Channel under the CEF Purchase Agreement of a substantial amount of Purchase Shares could cause additional substantial dilution to our stockholders. The number of Purchase Shares ultimately offered for resale by Tikkun is dependent upon the number of Purchase Shares Channel ultimately sells to Tikkun under the CEF Purchase Agreement.

Channel’s inability to access a portion or the full amount available under the CEF Purchase Agreement, in the absence of any other financing sources, could have a material adverse effect on its business.

Tikkun may resell up to 2,000,000 Purchase Shares, from time to time during the term of the CEF Purchase Agreement. If all of the 2,000,000 Purchase Shares were issued and outstanding as of the date hereof (without taking into account the Exchange Cap limitation), such shares would represent approximately 23.3% of the total number of outstanding shares of Channel common stock and approximately 37.7% of the total number of outstanding shares of Channel common stock held by non-affiliates of Channel, in each case as of May 23, 2025.

Sales of a substantial number of shares of Channel common stock in the public market by Tikkun and/or by Channel’s other existing stockholders, or the perception that those sales might occur, could depress the market price of shares of Channel common stock and could impair its ability to raise capital through the sale of additional equity securities.

Pursuant to the CEF Purchase Agreement, Channel will have discretion, subject to market demand, to vary the timing, prices, and numbers of Purchase Shares sold to Tikkun. If and when Channel does elect to sell Purchase Shares to Tikkun under the CEF Purchase Agreement, after Tikkun has acquired such shares, Tikkun may resell all or a portion of such shares at any time or from time to time in its discretion and at different prices. As a result, investors who purchase shares of Channel common stock from Tikkun at different times will likely pay different prices for those shares and so may experience different levels of dilution and in some cases substantial dilution and different outcomes in their investment results. Investors may experience a decline in the value of the shares they purchase from Tikkun as a result of future sales made by Channel to Tikkun at prices lower than the prices such investors paid for their shares.

The extent to which Channel relies on Tikkun as a source of funding will depend on a number of factors, including the prevailing market price of Channel common stock and the extent to which Channel is able to secure working capital from other sources. If obtaining sufficient funding from Tikkun were to prove unavailable or prohibitively dilutive, Channel may need to secure another source of funding in order to satisfy its working capital needs. Even if it was to sell to Tikkun all of the shares of Channel common stock available for sale to Tikkun under the CEF Purchase Agreement, Channel will still need additional capital to fully implement its business plan. Should the financing it requires to sustain its working capital needs be unavailable or prohibitively expensive when Channel requires it, the consequences would be a material adverse effect on its business, operating results, financial condition and prospects.

On July 24, 2024, Channel entered into a securities purchase agreement with an accredited investor (the “July Holder”), pursuant to which Channel issued to the July Holder a senior unsecured convertible note (the “July Note”) in the aggregate principal amount of $750,000, which is convertible into shares of Channel common stock. If Channel was to default on the July Note and such default is not waived, the July Note shall bear interest at a rate of 12% per annum, and the Holder may require Channel to redeem all or any portion of the July Note. The July Note also imposes certain restrictions on Channel and Channel’s subsidiaries. These restrictions limit Channel and its subsidiaries’ ability, among other things, to incur or guarantee certain additional indebtedness, engage in transactions with affiliates, sell certain assets, and create liens, and they place restrictions on the ability of Channel to make dividends and its subsidiaries to pay dividends. If Channel fails to maintain compliance with the restrictions and covenants under the Securities Purchase Agreement and the July Note, Channel would be subject to events of default which in turn would materially and adversely affect its business, financial condition, and results of operations and its liquidity. As of May 23, 2025, the Holder has requested, and Channel has redeemed, an aggregate of $600,000 in principal of the July Note, for a total of 398,409 shares of Channel common stock.

The CEF Purchase Agreement includes restrictions on Channel’s ability to sell shares of Channel common stock to Tikkun, including, subject to specified limitations, if a sale would cause Tikkun and its affiliates to beneficially own more than the Beneficial Ownership Limit. Accordingly, Channel cannot guarantee that it will be able to sell all $30.0 million of shares of Channel common stock under the CEF Purchase Agreement. If Channel cannot sell the full amount of the shares that Tikkun has committed to purchase because of these limitations, it may be required to utilize more costly and time-consuming means of accessing the capital markets, which could materially adversely affect its liquidity and cash position.

In order to raise additional capital, Channel may in the future offer additional shares of Channel common stock or other securities convertible into or exchangeable for Channel common stock. Investors purchasing shares or other securities

in the future could have rights superior to existing shareholders. The price per share at which Channel sells additional shares of Channel common stock, or securities convertible or exchangeable into Channel common stock, in future transactions may be higher or lower than the price per share paid by investors in previous offerings by Channel.

Because Channel has not designated the amount of net proceeds from its sale to Tikkun of Purchase Shares to be used for any particular purpose, its management will have broad discretion as to the application of such net proceeds. Its management may use the net proceeds for corporate purposes that may not improve its financial condition or advance its business objectives.

LNHC was formed by Ligand to hold the assets Ligand acquired from Novan, Inc. (“Novan”) in September 2023 (“Novan Acquisition”). LNHC is currently focused on the commercialization of ZELSUVMI for the treatment of molluscum contagiosum. Since the Novan Acquisition, LNHC has incurred significant net losses, and its operations have been financed by its parent, Ligand.

LNHC has devoted substantially all of its financial resources and efforts to the development and commercialization of ZELSUVMI, its product for the topical treatment of molluscum contagiosum. ZELSUVMI was approved by the FDA for the treatment of molluscum contagiosum in adults and pediatric patients one year of age and older in January 2024.

LNHC expects to continue to incur significant expenses and operating losses until revenue from ZELSUVMI is sufficient to fund its operations. LNHC’s net losses may fluctuate significantly from quarter to quarter and year to year. LNHC’s expenses may increase substantially, as it:

To become and remain profitable, LNHC must succeed in commercializing ZELSUVMI and/or developing and potentially commercializing future product candidates that generate significant revenue. This will require it to be successful in a range of challenging activities, including commercialization of ZELSUVMI, completing preclinical testing and clinical trials of any of LNHC’s potential future product candidates, obtaining regulatory approval, and manufacturing, marketing and selling any future product candidates for which it may obtain regulatory approval, as well as discovering and developing additional product candidates. LNHC may never succeed in these activities and, even if it does, may never generate revenue that is significant enough to achieve profitability.

LNHC’s revenue will be dependent, in part, upon the size of the markets in the territories for which LNHC has gained or may gain regulatory approval, the accepted price for the product, the ability to obtain coverage and

reimbursement and whether LNHC owns the commercial rights for that territory. If the number of LNHC’s addressable patients is not as significant as LNHC estimates, if any indication approved by regulatory authorities is narrower than LNHC expects, or any targeted treatment population is narrowed by competition, physician choice or treatment guidelines, LNHC may not generate significant revenue from sales of such products.

Because of the numerous risks and uncertainties associated with commercialization and product development, LNHC may not achieve profitability in the time frame it currently expects, or at all. If LNHC is required by regulatory authorities to perform studies in addition to those expected, or if there are any delays in the initiation and completion of any clinical trials that LNHC may decide to conduct or the development of any of LNHC’s future product candidates, LNHC’s expenses could increase.

Even if LNHC achieves profitability, LNHC may not be able to sustain or increase profitability on a quarterly or annual basis. LNHC’s failure to become and remain profitable would depress the value of LNHC and could impair its ability to raise capital, diversify LNHC’s offerings or continue LNHC’s operations.

LNHC’s operations to date have been largely focused on developing and commercializing ZELSUVMI, which was approved by the FDA for the treatment of molluscum contagiosum in adult and pediatric patients one year of age and older in January 2024. LNHC holds a license to commercialize ZELSUVMI, which has not commercially launched. LNHC has not demonstrated an ability to successfully complete clinical trials, obtain regulatory approval for a product, manufacture a product on a commercial scale, or arrange for a third party to do so on its behalf, or conduct sales and marketing activities necessary for successful commercial launch and commercialization over time. Consequently, any predictions you make about LNHC’s future success or viability may not be as accurate as they could be if LNHC had a longer operating history or a history of successfully commercializing products.

LNHC may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving its business objectives.

LNHC’s business currently depends heavily on its ability to successfully commercialize ZELSUVMI in the United States for the treatment of molluscum contagiosum. LNHC may never be able to successfully commercialize ZELSUVMI or its expectations with respect to profit. There is no guarantee that the infrastructure, systems, processes, policies, personnel, relationships and materials LNHC built in preparation for the launch and commercialization of ZELSUVMI in the United States will be sufficient for it to achieve success at the levels LNHC expects. Additionally, healthcare providers may not accept a new treatment for the treatment of molluscum contagiosum. LNHC may also encounter challenges related to reimbursement of ZELSUVMI, even if it has positive early indications from payors, including potential limitations in the scope, breadth, availability, or amount of reimbursement covering ZELSUVMI. Similarly, healthcare settings or patients may determine that the financial burdens of treatment are not acceptable. LNHC’s results may also be negatively impacted if it encounters deficiencies or inefficiencies in its infrastructure or processes. Any of these issues could impair LNHC’s ability to successfully commercialize ZELSUVMI or to generate substantial profit or to meet its expectations with respect to the amount or timing of profit. Any issues or hurdles related to its commercialization efforts may materially adversely affect its business, results of operations, financial condition and prospects. There is no guarantee that LNHC will be successful in its commercialization efforts with respect to ZELSUVMI, or that LNHC will generate significant profit from ZELSUVMI or any product candidate or become profitable.

ZELSUVMI and any of LNHC’s product candidates that receive regulatory approval may fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. If ZELSUVMI

for the treatment of molluscum contagiosum or LNHC’s potential product candidates, if approved, do not achieve an adequate level of acceptance, LNHC may not generate sufficient revenue, and it may not become profitable. The degree of market acceptance of ZELSUVMI and LNHC’s product candidates, if approved for commercial sale, will depend on a number of factors, including:

The failure of healthcare professionals or patients to perceive the benefits of using ZELSUVMI for the treatment of molluscum contagiosum instead of other alternative therapies, such as curettage, cantharidin application or cryotherapy, would adversely affect the commercial success of ZELSUVMI for the treatment of molluscum contagiosum.

LNHC has not yet commercially launched ZELSUVMI for the treatment of molluscum contagiosum. To achieve commercial success for it and any other product candidate for which LNHC may obtain regulatory approval, LNHC will need to establish an effective sales and marketing organization. LNHC has been building a focused sales and marketing organization to launch ZELSUVMI in the United States, but it may not be large enough to support the commercial launch and market acceptance of ZELSUVMI that LNHC expects, and will need to expand if LNHC receives approval of other product candidates. There are inherent risks to establishing and maintaining a standalone commercial organization, which is also time-consuming and requires significant financial resources.

Factors that create risk and may inhibit LNHC’s efforts to commercialize LNHC’s products on its own include:

If LNHC is unable to establish and maintain LNHC’s own sales, marketing and distribution capabilities and is forced to enter into arrangements with, and rely on, third parties to perform these services, LNHC’s revenue and LNHC’s profitability, if any, is likely to be lower than if it had developed such capabilities itself. In addition, LNHC may not be successful in entering into arrangements with third parties to sell, market and distribute LNHC’s products or may be unable to do so on terms that are favorable to it. LNHC likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market LNHC’s products effectively. If LNHC does not establish and maintain sales, marketing and distribution capabilities successfully, either on LNHC’s own or in collaboration with third parties, LNHC will not be successful in commercializing its products.

The development and commercialization of new products is highly competitive. LNHC faces competition with respect to ZELSUVMI and will face competition with respect to any product candidates that LNHC may seek to develop or commercialize in the future, from many different sources, including major pharmaceutical and specialty pharmaceutical companies, compounding facilities, academic institutions and governmental agencies and public and private research institutions.

ZELSUVMI may compete with other procedure-based treatment regimens currently available for molluscum contagiosum such as curettage, cantharidin application or cryotherapy In addition, other drugs have been and may continue to be used off label as treatment for molluscum contagiosum.

In addition, LNHC’s commercial opportunity could be reduced or eliminated if its competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than ZELSUVMI or any other product that LNHC may develop.

Many of the companies against which LNHC is competing, or against which LNHC may compete in the future, have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than LNHC does. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of LNHC’s competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These competitors also compete with LNHC in recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or that may be necessary for, LNHC’s programs.

The commercial success of LNHC’s products, including ZELSUVMI and any other products for which it may obtain regulatory approval, will depend in part on the medical community, patients and third-party payers accepting LNHC’s products and product candidates as effective and safe. If these products do not achieve an adequate level of acceptance, LNHC may not generate significant product revenue and may not become profitable. The degree of market acceptance of LNHC’s products will depend on a number of factors, including:

Even if a product candidate displays a favorable efficacy and safety profile in preclinical studies and clinical trials, market acceptance of the product will not be known until after it is launched. Any failure to achieve market acceptance of LNHC’s products will harm its business, results and financial condition.

Furthermore, government agencies, as well as private organizations involved in healthcare, from time to time publish guidelines or recommendations to healthcare providers and patients. Such guidelines or recommendations can

be very influential and may adversely affect product usage directly (for example, by recommending a decreased dosage of a product in conjunction with a concomitant therapy) or indirectly (for example, by recommending a competitive product over a product of LNHC’s). Consequently, LNHC does not know if physicians or patients will adopt or use its products for their approved indications.

Market acceptance and sales of ZELSUVMI and any product candidates that LNHC may develop will depend in large part on third-party payor coverage and reimbursement policies and may be affected by future healthcare reform measures in the U.S. as well as the EEA countries and other key international markets. The continuing efforts of governmental and other third-party payors to contain, reduce or shift the costs of healthcare through various means, including an increased emphasis on managed care and attempts to limit or regulate the price of medical products and services, particularly for new and innovative products and therapies, may result in downward pressure on pricing, reimbursement and utilization, which may adversely affect LNHC’s product sales and results of operations. Moreover, because private health insurers and other third-party payors in the U.S. often follow the coverage and reimbursement policies of government payors, including the Medicare and Medicaid programs, cost-containment measures under these programs play a particularly significant role in the reimbursement landscape. The government programs relevant to LNHC’s products include, without limitation, the following:

In addition, in the U.S., third-party payors often develop cost containment measures using policies that specifically target specialty products and high-cost drugs. For example, formulary placements may be less favorable for brand and higher-costing drugs, resulting in, among other things, greater out-of-pocket costs to patients. ZELSUVMI may be subject to such measures and may be impacted by similar future policies addressing such cost-containment measures.

Further, payors also are increasingly considering new metrics as the basis for reimbursement rates, such as average sales price, or ASP, average manufacturer price, or AMP, or actual acquisition cost, or AAC. Although the intent of the changes to reimbursement methodologies generally is to limit payment increases, it is difficult to project the impact of these and other alternative reimbursement methodologies on the willingness of payors to reimburse ZELSUVMI and any product candidates that LNHC may develop. LNHC cannot provide any assurances that ZELSUVMI and any future products, if approved, will be covered and reimbursed in the U.S. until it enters into payor negotiations. If coverage and reimbursement are not available or available only to limited levels, LNHC may not be able to generate sufficient revenue to meet its operating costs or to achieve its revenue, cash flow breakeven or profitability goals in the timeframe that it expects, or at all.

Molluscum contagiosum is a skin disease that is currently undertreated. Even with approval of ZELSUVMI for the treatment of molluscum contagiosum in adult and pediatric patients one year and older, individuals may continue to decline treatment for molluscum contagiosum as, if left untreated, the diseases will eventually be resolved by the body’s immune system.

In addition, LNHC’s estimates of the potential market opportunity for ZELSUVMI for the treatment of molluscum contagiosum include several key assumptions based on LNHC’s industry knowledge, industry publications, third-party research reports, IDC-10 claims data, and surveys of dermatologists commissioned by LNHC. These assumptions include the current treatment rates and/or prevalence of molluscum contagiosum and other skin diseases as well as the estimated coverage levels for ZELSUVMI. However, there can be no assurance that any of these assumptions are, or will remain, accurate. Furthermore, even if LNHC’s estimates relating to claims data

and/or the prevalence of molluscum contagiosum and other skin diseases as well as the estimated coverage levels for ZELSUVMI for the treatment of molluscum contagiosum or any future product candidate LNHC may develop, as applicable, are accurate, the degree of market acceptance by the medical community and those infected by such skin diseases following regulatory approval could impact LNHC’s assumptions and reduce the market size for ZELSUVMI for the treatment of molluscum contagiosum and any other product that may be approved. Furthermore, the market research study LNHC commissioned surveying payor organizations has no bearing on the payors, and any assumptions or interpretations based on the results of this study, may ultimately be inaccurate. If the actual markets for ZELSUVMI for the treatment of molluscum contagiosum or any future product candidates are smaller than LNHC expect, LNHC’s revenues, if any, may be limited and it may be more difficult for it to achieve or maintain profitability.

The FDA strictly regulates marketing, labeling, advertising and promotion of prescription drugs. These regulations include standards and restrictions for direct-to-consumer advertising, industry-sponsored scientific and educational activities, promotional activities involving the internet and off-label promotion. Any regulatory approval that the FDA grants, including the approval of ZELSUVMI, is limited to those specific diseases and indications for which a product is deemed to be safe and effective by FDA. While physicians in the United States may choose, and are generally permitted, to prescribe drugs for uses that are not described in the product’s labeling and for uses that differ from those tested in clinical trials and approved by the regulatory authorities, LNHC’s ability to promote ZELSUVMI or any future products will be narrowly limited to those indications that are specifically approved by the FDA. ZELSUVMI has been approved by the FDA for the treatment of molluscum contagiosum in adults and pediatric patients one year of age and older, and LNHC is not permitted to promote ZELSUVMI for other uses.

If LNHC is found to have promoted such off-label uses, LNHC may become subject to significant liability. The U.S. federal government has levied large civil and criminal fines against companies for alleged improper promotion of off-label use and has enjoined several companies from engaging in off-label promotion. The FDA has also required that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. If LNHC cannot successfully manage the promotion of ZELSUVMI or any future product candidates, if approved, LNHC could become subject to significant liability, which would materially adversely affect its business and financial condition.

LNHC faces an inherent risk of product liability exposure related to the commercial sales of ZELSUVMI, as well as the testing of LNHC’s potential future product candidates in human clinical trials. If LNHC cannot successfully defend itself against claims that ZELSUVMI or such product candidates caused injuries, LNHC will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:

LNHC’s parent, Ligand, currently holds product liability insurance that covers its clinical trials up to a $15.0 million annual limit. LNHC may need to secure additional product liability insurance coverage following commencement of LNHC’s commercialization activities for ZELSUVMI for the treatment of molluscum

contagiosum and may need to further increase its insurance coverage if it initiates clinical trials or expands commercialization activities for its product candidates that obtain regulatory approval. Insurance coverage is increasingly expensive. LNHC may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.

LNHC’s ability to make, move, and sell its products is critical to its success. Damage or disruption to LNHC’s supply chain, including third-party manufacturing, assembly or transportation and distribution capabilities, due to weather, including any potential effects of climate change, natural disaster, fire or explosion, terrorism, pandemics (such as the COVID-19 pandemic), strikes, tariffs, government action, inflation, war or other reasons beyond LNHC’s control or the control of its suppliers and business partners, could impair LNHC’s ability to manufacture or sell its products. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, particularly where LNHC’s product is sourced from a single supplier or location, could adversely affect LNHC’s business or financial results. Any interruption or failure by LNHC’s suppliers, distributors and other partners to meet their obligations on schedule or in accordance with LNHC’s expectations, misappropriation of LNHC’s proprietary information, including trade secrets and know-how, or any termination by these third parties of their arrangements with LNHC, which, in each case, could be the result of one or many factors outside of LNHC’s control, could delay or prevent the manufacture or commercialization of LNHC’s products, disrupt LNHC’s operations or cause reputational harm to LNHC. In addition, except for the terms and conditions specified in LNHC’s contractual arrangements with its contract manufacturers, LNHC has no control over the ability of its contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of LNHC’s API or drug products or if it withdraws any such approval in the future, LNHC may need to find alternative manufacturing facilities, which would significantly impact LNHC’s ability to develop, obtain regulatory approval for, market and sell its products and potential product candidates.

LNHC is required to identify the supplier(s) of all the raw materials for its products, including ZELSUVMI, in its applications with the FDA. To the extent practicable, LNHC’s attempts to identify more than one supplier in each drug application. However, some products and raw materials are available only from a single source and, in some of its drug applications, only one supplier of products and raw materials has been identified, even in instances where multiple sources exist. To the extent any difficulties experienced by LNHC’s suppliers cannot be resolved within a reasonable time and at reasonable cost, or if raw materials for a particular product become unavailable from an approved supplier and LNHC is required to qualify a new supplier with the FDA, its profit margins and market share for the affected product could decrease and LNHC’s development and sales and marketing efforts could be delayed or negatively impacted.

LNHC internally manufactures the berdazimer sodium API that is utilized in LNHC’s ZELSUVMI commercial product. Any delays or disruptions in LNHC’s manufacturing processes and analytical methods for API testing and commercial manufacturing under cGMP guidelines and regulations, or LNHC’s inability to execute such activities, could impact the commercialization timelines of LNHC’s ZELSUVMI product and/or any future product candidate, as well as increase costs. Further, if LNHC does not appropriately coordinate with, project manage, or provide adequate internal expertise, resources and documentation with LNHC’s third-party drug product manufacturer, LNHC may not be successful, or may be delayed, in the commercialization of ZELSUVMI. LNHC has a limited number of personnel who have experience in drug substance manufacturing and possess the expertise necessary to manufacture berdazimer sodium.

Orion Corporation (“Orion”), with whom LNHC has formed a strategic alliance to manufacture the commercial drug product for ZELSUVMI, including final fill/finish and packaging, must be successful in its execution of LNHC’s commercial production strategy. For instance, LNHC may not be successful in realizing the intended operating goals from this arrangements based on a number of factors, including, among other things, (i) delays or failures, including delays in LNHC ability to transition applicable technology and processes to our vendors or partners, (ii) reduced quality, (iii) delayed receipt of goods or services, (iv) increased and unexpected costs on the part of the third-party vendors or strategic partners, and (v) certain incremental and discrete costs to effect this strategy. If LNHC is unsuccessful in partnering with third-party manufacturers, it could experience delays in the development and commercialization timelines of its product candidates, as well as increased costs.

LNHC will also have no direct control over the ability of third-party manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or any comparable foreign regulatory authority does not approve these facilities for the manufacture of LNHC’s products, or if such authorities withdraw any such approval in the future, LNHC may be required to find alternative manufacturing facilities, which would significantly impact its ability to obtain approval of and commercialize any product candidates, if approved. LNHC’s failure, or the failure of any of its third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on LNHC, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, seizures or recalls, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect LNHC’s financial position.

LNHC’s or a third party’s failure to execute on LNHC’s manufacturing requirements on commercially reasonable terms and in compliance with cGMP or other regulatory requirements could adversely affect its business in a number of ways, including:

In addition, LNHC may be unable to establish additional long-term supply agreements with third-party manufacturers or to do so on acceptable terms, which increases the risk of failing to timely obtain sufficient quantities of its products or any future product candidates or such quantities at an acceptable cost, which would have a material adverse impact on LNHC’s financial position. There are risks associated with scaling up manufacturing to commercial volumes including, among others, cost overruns, technical or other problems with process scale-up, process reproducibility, stability issues, lot consistency and timely availability of raw materials. There is no assurance that LNHC’s manufacturers will be successful in establishing a larger-scale commercial manufacturing process for ZELSUVMI that achieves LNHC’s objectives for manufacturing capacity and cost of goods, in a timely manner, or at all.

Third parties engaged directly by LNHC or by its API and drug product contract manufacturing organizations (“CMOs”), test all of the raw materials and finished API and drug products. It is a regulatory requirement that raw materials are tested and there are a limited number of suppliers for testing these raw materials. There may be a need to assess alternate suppliers to prevent a possible disruption of the supply of these raw materials for the manufacture of API or drug product. Additionally, the analytical equipment used by these third parties must be maintained and operational. Except for the terms established within LNHC’s or its CMOs’ contracts with the third parties responsible for testing raw materials and finished API and drug products, LNHC has limited ability to control the process or timing of their testing work. Additionally, if the results do not meet specifications, then obtaining additional raw materials may jeopardize LNHC’s or its CMOs’ ability to manufacture API and/or drug product, the start or overall conduct of preclinical studies and clinical trials, the timing of regulatory submissions, or the commercialization of LNHC’s products and any future product candidates, if approved. LNHC and its CMOs currently engage third parties to perform analytical tests to ensure the API and drug product meets quality specifications. The analytical equipment

used by LNHC or its CMOs to perform these tests must be maintained, qualified, calibrated and operational. If there are testing execution delays, equipment problems or if the results of the analytical testing do not meet LNHC’s quality specifications, then manufacturing additional API or drug product may increase costs and may jeopardize LNHC’s or its CMOs’ ability to manufacture API and/or drug product, which may cause delays in the start or overall conduct of preclinical studies and clinical trials, the submission of regulatory filings, or the commercialization of LNHC’s products and any future product candidates.

LNHC’s manufacturing activities and the manufacturing activities of LNHC’s third-party suppliers and manufacturers, involve the controlled storage, use and disposal of hazardous materials. Further, LNHC’s manufactured drug substances and drug products may be considered hazardous materials under applicable laws and regulations. LNHC’s manufacturing activities, whether conducted by it or its third-party suppliers and manufacturers, like all manufacturing processes that utilize hazardous materials, including those under high pressures, must be properly controlled to avoid unintended reactions or other accidents that could cause injury or damage to personnel, equipment or property. LNHC and its manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, transportation, handling and disposal of these hazardous materials, and its failure to manage the use, manufacture, storage, transportation, handling or disposal of hazardous materials could subject it to significant costs or future liabilities. In some cases, these hazardous materials and various wastes resulting from their use are transported and stored at LNHC’s suppliers’ or manufacturers’ facilities pending use and disposal. LNHC and its suppliers and manufacturers cannot completely eliminate the risk of contamination, which could cause an interruption of LNHC’s commercialization efforts, research and development efforts and business operations, injury to LNHC’s service providers and others and environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste products. Although LNHC believes that the manufacturing controls and safety procedures utilized by LNHC and its third-party suppliers and manufacturers for handling, transporting and disposing of these materials generally comply with the standards prescribed by these laws and regulations, LNHC cannot guarantee that this is the case or eliminate the risk (i) that the laws and regulations will not restrict LNHC’s or its third-party suppliers’ or manufacturers’ ability to use, manufacture, store, transport, handle or dispose of such materials or (ii) of accidental contamination or injury from these hazardous materials and processes. If these risks were to materialize, LNHC could experience an interruption of its business operations and LNHC may be held liable for any resulting damages and such liability could exceed LNHC’s financial resources.

LNHC has been impacted, and may continue to be impacted, by inflation and/or trade tariffs which have the potential to adversely affect LNHC’s liquidity, business, financial condition and results of operations by increasing LNHC’s overall cost structure. The existence of inflation and the recent uncertainty in the levying of certain trade tariffs by the U.S. government, has resulted in, and may continue to result in, higher interest rates and capital costs, supply shortages, increased costs of labor, components, manufacturing and shipping, as well as weakening exchange rates and other similar effects. As a result of inflation and tariffs, LNHC has experienced and may continue to experience cost increases. Although LNHC may take measures to mitigate the effects of inflation and tariffs, if these measures are not effective and if the inflationary and tariff pressure is sustained or increased, LNHC’s business, financial condition, results of operations and liquidity could be negatively affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact LNHC’s results of operations and when the cost of inflation and/or tariffs are incurred.

LNHC currently licenses only one product that is approved for commercial sale. LNHC has invested substantially all of its efforts and financial resources in the development and commercialization of ZELSUVMI. LNHC’s ability to generate substantial revenue from ZELSUVMI or any product candidates it may progress in the

future will depend heavily on the successful development, regulatory approval and commercialization of these assets. The success of ZELSUVMI and any product candidates that LNHC develops or otherwise may acquire which receives regulatory approval will depend on several factors, including:

Whether regulatory approval will be granted is unpredictable and depends upon numerous factors, including the substantial discretion of the regulatory authorities. The success of any of LNHC’s potential product candidates in clinical trials is not guaranteed, and even if clinical trials are successful, such results do not guarantee regulatory approval. The FDA or other comparable foreign regulatory authorities may require that LNHC conduct additional studies or clinical trials, provide additional data, take additional manufacturing steps, or require other conditions before they will reconsider or approve any New Drug Application (“NDA”), supplemental NDA (“sNDA”) or any comparable marketing application. If the FDA or other comparable foreign regulatory authorities require additional studies, clinical trials or data beyond those LNHC may contemplate, LNHC would incur increased costs and delays in the regulatory approval process, which may require expending more resources than LNHC has available.

It is possible that LNHC’s potential product candidates will never obtain regulatory approval, even if LNHC expends substantial time and resources seeking such approval. If LNHC does not achieve one or more of these factors in a timely manner or at all, it could experience significant delays or an inability to successfully commercialize any potential future product candidates, which would harm its business.

The risk of failure for product candidates is high. If LNHC were to acquire or otherwise develop future product candidates, it would be impossible to predict when or if any of LNHC’s future product candidates would prove effective or safe in humans or would receive regulatory approval. Before obtaining regulatory approval from regulatory authorities for the sale of any potential future product candidate, LNHC may be required to complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of its product

candidates in humans. Before LNHC could initiate such clinical trials for any product candidates, it would be required to submit the results of preclinical studies to the FDA or comparable foreign regulatory authorities along with other information, including information about product candidate chemistry, manufacturing and controls and its proposed clinical trial protocol, as part of an Investigational New Drug Application (“IND”) or similar regulatory submission. The FDA or comparable foreign regulatory authorities may require LNHC to conduct additional preclinical studies for any product candidate before it allows LNHC to initiate clinical trials under any IND or similar regulatory submission, which may lead to delays and increase the costs of any such preclinical development programs.

If initiated, clinical testing is expensive, difficult to design and implement, can take many years to complete and is inherently uncertain as to outcome. A failure of one or more clinical trials could occur at any stage of testing or at any time during the trial process. The outcome of preclinical testing and early clinical trials may not be predictive of the results of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain regulatory approval of their products.

LNHC cannot assure you that any clinical trial that it may conduct in the future will demonstrate consistent or adequate efficacy and safety to obtain regulatory approval to market any product candidate.

LNHC also does not know whether future clinical trials, if any, will begin on time, need to be redesigned, enroll an adequate number of patients on time or be completed on schedule, if at all. It may experience numerous unforeseen events during or as a result of clinical trials that could delay or prevent its ability to receive regulatory approval or commercialize LNHC’s future product candidates, including:

Clinical trials must be conducted in accordance with the FDA and other applicable regulatory authorities’ legal requirements, regulations and guidelines, and remain subject to oversight by these governmental agencies and ethics committees or IRBs at the medical institutions where such clinical trials are conducted. LNHC could also encounter delays if a clinical trial was suspended or terminated by it, by the institutional review boards of the institutions in which such trials were being conducted, by the safety review committee for such trial or by the FDA or other regulatory authorities. Such authorities may impose such a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or LNHC’s clinical protocols, inspection of the clinical trial operations or trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate a benefit from using a product, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial.

If LNHC experiences delays in the completion of, or termination of, any clinical trial of any potential future product candidates, the commercial prospects of such product candidates will be harmed, and its ability to generate product revenues from any of such product candidates will be delayed. In addition, any delays in completing its clinical trials will increase LNHC’s costs, slow down its product candidate development process and jeopardize its ability to commence product sales and generate revenues. Any of these occurrences may harm LNHC’s business, financial condition and prospects significantly.

In addition, many of the factors that cause, or lead to, the termination suspension of, or a delay in the commencement or completion of, clinical trials may also ultimately lead to the denial of regulatory approval of a potential product candidate. Any resulting delays to LNHC’s clinical trials could shorten any period during which it may have the exclusive right to commercialize its future product candidates. In such cases, its competitors may be able to bring products to market before LNHC, and the commercial viability of its future product candidates could be significantly reduced. Any of these occurrences may harm LNHC’s business, financial condition and prospects.

Results of any clinical trials LNHC may conduct could reveal a high and unacceptable severity and prevalence of side effects or unexpected characteristics. Undesirable side effects caused by LNHC product candidates, whether used alone or in combination with other therapies, could cause LNHC or regulatory authorities to interrupt, delay or halt clinical trials or lead to the delay or denial of regulatory approval by the FDA or comparable foreign regulatory authorities, or, if for any approved products, result in a more restrictive label and other post-approval requirements. Any treatment-related side effects could also affect patient recruitment or the ability of enrolled patients to complete the trial or could result in potential product liability claims. Any of these occurrences may harm LNHC’s business, financial condition and prospects significantly.

If any of LNHC’s future product candidates are associated with undesirable side effects or have unexpected characteristics in preclinical studies or clinical trials when used alone or in combination with other approved products or investigational drugs, LNHC may need to interrupt, delay or abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective.

If such significant adverse events or other side effects are observed in any clinical trials LNHC may choose to conduct, such events could lead LNHC, the FDA, other comparable regulatory authorities or an institutional review board to suspend clinical trials, including due to a belief that subjects in such trials are being exposed to unacceptable health risks or adverse side effects. Even if such side effects do not preclude the product candidate from obtaining or maintaining regulatory approval, undesirable side effects may inhibit market acceptance due to tolerability concerns as compared to other available therapies. Any of these developments could materially harm LNHC’s business, financial condition and prospects.

Additionally, with respect to ZELSUVMI and any future product candidates for which it may obtain approval, if LNHC or others later identify undesirable side effects caused by such product, a number of potentially significant negative consequences could result. For example, the FDA could require LNHC to adopt a Risk Evaluation and Mitigation Strategy (“REMS”), to ensure that the benefits of treatment with such product outweigh the risks for each potential patient, which may include, among other things, a communication plan to health care practitioners, patient education, extensive patient monitoring or distribution systems and processes that are highly controlled, restrictive and more costly than what is typical for the industry. LNHC may also be required to engage in similar safety-related actions, such as patient education, certification of health care professionals or specific monitoring. Other potentially significant negative consequences associated with adverse events include:

Any of these events could diminish the usage or otherwise limit the commercial success of ZELSUVMI or any of its future product candidates and prevent LNHC from achieving or maintaining market acceptance ZELSUVMI or for any other approved products.

If LNHC initiates clinical trials, it may find it difficult to adequately enroll patients. If LNHC encounters such difficulties enrolling patients in its clinical trials, its clinical development activities could be delayed or otherwise adversely affected.

Patient enrollment is a significant factor in the timing of clinical trials, and the timing of LNHC’s clinical trials may depend, in part, on the speed at which it can recruit patients to participate in such trials, as well as completion of required follow-up periods. LNHC may not be able to initiate or continue clinical trials for any future product candidate if is unable to locate and enroll a sufficient number of eligible patients to participate in these trials through such trial’s conclusion as required by the FDA or other comparable regulatory authorities. The eligibility criteria of LNHC’s clinical trials, once established, may further limit the pool of available trial participants.

Patient enrollment in clinical trials may be affected by other factors, including:

Additionally, other pharmaceutical companies may compete for enrollment of targeted patient population, which may make it more difficult to fully enroll any clinical trials. LNHC would also rely on CROs and clinical trial sites to ensure proper and timely conduct of any clinical trials and preclinical studies. LNHC may have limited influence over such parties’ actual performance. LNHC’s inability to enroll a sufficient number of patients in its clinical trials would result in significant delays or may require it to abandon one or more clinical trials altogether. Enrollment delays in LNHC clinical trials may also result in increased development costs for its product candidates and jeopardize its ability to obtain regulatory approval for such product candidates, any of which could harm LNHC’s business, financial condition, results of operations and prospects.

From time to time, LNHC may publicly disclose interim, topline, or preliminary data from its potential clinical trials and preclinical studies, which disclosures are based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. LNHC may also make assumptions, estimations, calculations and conclusions as part of its analyses of data, and LNHC may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the interim, topline, or preliminary results that LNHC reports may differ from future results of the same studies or trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline and preliminary data also remain subject to audit and verification procedures that may result in the final data being materially different from the topline or preliminary data LNHC previously published. As a result, topline and preliminary data should be viewed with caution until the final data are available.

Interim data from clinical trials are further subject to the risk that one or more of the outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between interim, topline, or preliminary data and final data could significantly harm LNHC’s prospects. Further, disclosure of such data by LNHC or by its competitors could result in volatility in the price of its common stock.

Further, others, including regulatory agencies, may not accept or agree with LNHC’s assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and LNHC in general. In addition, the information LNHC chooses to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what LNHC determines is material or otherwise appropriate information to include in its disclosure, and any information LNHC determines not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular product candidate or LNHC’s business.

Because LNHC has limited financial and management resources. As such, LNHC is currently primarily focused on the commercialization of ZELSUVMI for the treatment of molluscum contagiosum, and LNHC may forgo pursuit of opportunities, including the development of other potential product candidates. LNHC’s resource allocation decisions may cause it to fail to capitalize on viable commercial products or profitable market opportunities. LNHC’s spending on current and future development programs and product candidates for specific indications, if any, may not yield any commercially viable products. If LNHC does not accurately evaluate the commercial potential or target market for a particular product candidate, LNHC may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for it to retain sole development and commercialization rights to such product candidate.

The time required to obtain approval or other marketing authorizations by the FDA and comparable foreign authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. With the exception of ZELSUVMI, LNHC has not obtained regulatory approval for any product candidates, and it is possible that no other product candidates that LNHC may seek to develop in the future will ever obtain regulatory approval. Neither LNHC nor any future collaborator is permitted to market any future drug product candidates in the United States until LNHC receives regulatory approval of an NDA or sNDA as applicable, from the FDA.

Prior to obtaining approval to commercialize any other potential drug product candidate in the United States or abroad, LNHC must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA or foreign regulatory agencies, that such product candidates are safe and effective for their intended uses. Results from nonclinical studies and clinical trials can be interpreted in different ways. Even if LNHC believes the nonclinical or clinical data for its product candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. The FDA may also require that LNHC conduct additional nonclinical studies or clinical trials for LNHC’s product candidates either prior to or after approval, or it may object to elements of LNHC’s clinical development program.

Of the large number of products in development, only a small percentage successfully complete the FDA or foreign regulatory approval processes and are commercialized. The lengthy approval or marketing authorization process as well as the unpredictability of future clinical trial results may result in LNHC’s failing to obtain regulatory approval or marketing authorization to market LNHC’s product candidates, which would significantly harm LNHC’s business, financial condition, results of operations and prospects.

The FDA or comparable foreign regulatory authorities can delay, limit or deny approval of a product candidate for many reasons, including:

Even if LNHC eventually completes clinical testing and receives approval of an NDA, sNDA or foreign marketing application for any product candidates, the FDA or the applicable foreign regulatory agency may grant approval or other marketing authorization contingent on the performance of costly additional clinical trials, including post-market clinical trials. Any delay in obtaining, or inability to obtain, applicable regulatory approval or other marketing authorization would delay or prevent commercialization of that product candidate and would materially adversely impact LNHC’s business and prospects.

In addition, the FDA and other regulatory authorities may change their policies, issue additional regulations or revise existing regulations, or take other actions, which may prevent or delay approval of LNHC’s products under development on a timely basis. Such policy or regulatory changes could impose additional requirements upon LNHC that could delay its ability to obtain approvals, increase the costs of compliance or restrict its ability to maintain any marketing authorizations that it may have obtained.

Furthermore, even if LNHC obtains regulatory approval for any product candidates, LNHC will still need to establish a commercially viable pricing structure and obtain approval for adequate reimbursement from third-party and government payors. If LNHC is unable to successfully commercialize any future product candidates, LNHC may not be able to generate sufficient revenue to continue its business.

For ZELSUVMI and any regulatory approvals that LNHC may receive for its future product candidates, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping for its products and any future product candidates will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketing information and reports, registration, as well as ongoing compliance with cGMPs and GCPs for any clinical trials. In addition, manufacturers of drug products and their facilities are subject to continual review and periodic, unannounced inspections by the FDA and other regulatory authorities for compliance with cGMPs and other applicable regulations and standards. In addition, any regulatory approvals LNHC may receive, including the approval obtained for ZELSUVMI, will require the submission of periodic reports to regulatory authorities and ongoing surveillance to monitor the safety and efficacy of the product. Such approvals may also contain significant limitations related to use restrictions for specified age groups, warnings, precautions or contraindications, and may include burdensome post-approval study or risk management requirements. For example, the FDA may require a REMS as a condition of approval of LNHC’s future product candidates, which could include requirements for a medication guide, physician training and communication plans or additional elements to ensure safe use, such as restricted distribution methods, patient registries and other risk minimization tools.

If LNHC or a regulatory agency discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facilities where the product is manufactured, a regulatory agency may impose restrictions on that product, the manufacturing facility or LNHC, including requiring recall or withdrawal of the product from the market or suspension of manufacturing. In addition, failure to comply with FDA and other comparable foreign regulatory requirements may subject LNHC to administrative or judicially imposed sanctions, including:

The occurrence of any event or penalty described above may inhibit LNHC’s ability to commercialize its product candidates and generate revenue and could require LNHC to expend significant time and resources in response and could generate negative publicity.

The FDA’s and other regulatory authorities’ policies may change and additional government regulations may be promulgated that could prevent, limit or delay marketing authorization of any future product candidates LNHC may develop. LNHC also cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the United States or abroad. If LNHC is slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if LNHC is not able to maintain regulatory compliance, it may be subject to enforcement action and it may not achieve or sustain profitability.

The ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA’s or foreign regulatory authorities’ ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA’s or foreign regulatory authorities’ ability to perform routine functions. Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new drugs or modifications to approved drugs to be reviewed and/or approved by necessary government agencies, which would adversely affect LNHC’s business. For example, in recent years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA employees and stop critical activities. In addition, the current U.S. Presidential administration has issued certain policies and Executive Orders directed towards reducing the employee headcount and costs associated with U.S. administrative agencies, including the FDA, and it remains unclear the degree to which these efforts may limit or otherwise adversely affect the FDA’s ability to conduct routine activities.

Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections at domestic and foreign manufacturing facilities at various points. If a prolonged government shutdown occurs, or if renewed global health concerns, funding shortages or staffing limitations hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other such regulatory authorities to timely review and process LNHC’s regulatory submissions, which could have a material adverse effect on LNHC’s business.

LNHC currently does not have the ability to independently conduct preclinical studies that comply with the regulatory requirements known as good laboratory practice (“GLP”), requirements. It also does not currently have the ability to independently conduct any clinical trials. The FDA and regulatory authorities in other jurisdictions require LNHC to comply with regulations and standards, commonly referred to as GCPs for conducting, monitoring, recording and reporting the results of clinical trials, in order to ensure that the data and results are scientifically credible and accurate and that the trial subjects are adequately informed of the potential risks of participating in clinical trials. LNHC will be required to rely on medical institutions, clinical investigators, contract laboratories and other third parties, such as CROs, to conduct GLP-compliant preclinical studies and GCP-compliant clinical trials on

any future product candidates properly and on time. While LNHC will have agreements governing their activities, LNHC will control only certain aspects of their activities and will have limited influence over their actual performance. The third parties with whom LNHC may contract for execution of its GLP preclinical studies and its GCP clinical trials play a significant role in the conduct of these studies and trials and the subsequent collection and analysis of data. These third parties will not be LNHC’s employees and, except for restrictions imposed by its contracts with such third parties, it will have limited ability to control the amount or timing of resources that they devote to LNHC’s programs. Although LNHC plans to rely on these third parties to conduct GLP-compliant preclinical studies and GCP-compliant clinical trials, LNHC will remain responsible for ensuring that each of these studies and clinical trials is conducted in accordance with its investigational plan and protocol and applicable laws and regulations, and its reliance on the third parties will not relieve it of its regulatory responsibilities. In addition, if any of LNHC’s third parties terminate their involvement with LNHC for any reason, LNHC may not be able to enter into similar arrangements with alternative third parties within a short period of time or do so on commercially reasonable terms.

Many of the third parties with whom LNHC may contract may also have relationships with other commercial entities, including LNHC’s competitors, for whom they may also be conducting clinical trials or other drug development activities that could harm LNHC’s competitive position. If the third parties conducting LNHC’s preclinical studies or clinical trials do not perform their contractual duties or obligations, experience work stoppages, do not meet expected deadlines, terminate their agreements with LNHC or need to be replaced, or if the quality or accuracy of the clinical data they obtain is compromised due to their failure to adhere to LNHC’s clinical trial protocols, GLPs or GCPs, or for any other reason, LNHC may need to enter into new arrangements with alternative third parties. This could be difficult, costly or impossible, and LNHC’s preclinical studies or clinical trials may need to be extended, delayed, terminated or repeated. As a result, LNHC may not be able to obtain regulatory approval in a timely fashion, or at all, for the applicable future product candidate, its financial results and the commercial prospects for its product candidates would be harmed, its costs could increase, and its ability to generate revenues could be delayed.

In addition, principal investigators for LNHC’s clinical trials may serve as scientific advisors or consultants to LNHC from time to time and may receive cash or equity compensation in connection with such services. If these relationships and any related compensation result in perceived or actual conflicts of interest, or the FDA concludes that the financial relationship may have affected the interpretation of the trial, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection by the FDA of any NDA LNHC submits. Any such delay or rejection could prevent it from commercializing its future product candidates.

LNHC is exposed to the risk that its employees, independent contractors, principal investigators, CMOs, CROs, consultants, commercial partners and vendors may engage in fraudulent conduct or other illegal activity. Misconduct by these parties could include intentional, reckless or negligent conduct or disclosure of unauthorized activities to LNHC that violates: (i) FDA laws and regulations, including those laws that require the reporting of true, complete and accurate information to the FDA, (ii) manufacturing standards, (iii) federal, state and foreign data privacy, security, fraud and abuse and other healthcare laws, or (iv) laws that require the true, complete and accurate reporting of financial information or data. Activities subject to these laws also involve the improper use or misrepresentation of information obtained in the course of clinical trials, creating fraudulent data in LNHC’s preclinical studies or clinical trials or illegal misappropriation of drug product, which could result in regulatory sanctions and cause serious harm to LNHC’s reputation. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions LNHC takes to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting it from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations. Additionally, LNHC is subject to the risk that a person or government could allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against LNHC, and it is not successful in defending itself or asserting its rights, those actions could have a significant impact on its business and financial results, including, without limitation, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, reputational harm, diminished profits and future earnings, and curtailment of its operations.

The manufacture, use or sale of LNHC’s potential products may infringe the patent rights of others. If others obtain patents with conflicting claims, LNHC may be required to obtain licenses to those patents or to develop or obtain alternative technology. LNHC may not be able to obtain any such licenses on acceptable terms, or at all. Any failure to obtain such licenses could delay or prevent LNHC from pursuing the development or commercialization of its potential products, platform and technology.

Generally, LNHC’s success will depend on its and its licensors’ ability to obtain and maintain patents and other intellectual property rights for its potential products and technologies. LNHC’s patent position is uncertain and involves complex legal and technical questions for which legal principles are unresolved. Even if LNHC does obtain patents, such patents may not adequately protect the technology it owns or has licensed.

The patents that cover LNHC’s branded products are listed in the Orange Book. If a third party submits a new drug application (“NDA”) or abbreviated new drug application (“ANDA”) for a generic drug product that relies in whole or in part on studies contained in the NDA for one of LNHC’s branded products, the third party will have the option to certify to the FDA that, in the opinion of that third party, the patents listed in the Orange Book for LNHC’s branded product are invalid, unenforceable, or will not be infringed by the manufacture, use or sale of the third party’s generic drug product. A third party certification that a new product will not infringe Orange Book-listed patents, or that such patents are invalid, is called a paragraph IV patent certification. If the third party submits a paragraph IV patent certification to the FDA, a notice of the paragraph IV patent certification must be sent to the NDA owner and the owner of the patents that are subject to the paragraph IV patent certification notice once the third-party’s NDA or ANDA is accepted for filing by the FDA. A lawsuit may then be initiated to defend the patents identified in the notice. The filing of a patent infringement lawsuit within 45 days of the receipt of notice of a paragraph IV patent certification automatically prevents the FDA from approving the generic NDA or ANDA until the earlier of the expiration of a 30-month period, the expiration of the patents, the entry of a settlement order stating that the patents are invalid or not infringed, a decision in the infringement case that is favorable to the NDA or ANDA applicant, or such shorter or longer period as the court may order. If a patent infringement lawsuit is not initiated within the required 45-day period, the third-party’s NDA or ANDA will not be subject to the 30-month stay. Third parties may challenge the patents covering LNHC’s branded products. LNHC may from time to time become party to litigation or other proceedings as a result of paragraph IV patent certifications.

In addition, LNHC cannot assure you that all of the potentially relevant prior art information that was or is deemed available to a person of skill in the relevant art prior to the priority date of the claimed invention-relating to our patents and patent applications has been found. If such prior art exists, it can invalidate a patent or prevent a patent from issuing from a pending patent application (whether owned by LNHC or in-licensed from Ligand or another third party), and LNHC may be subject to a third party pre-issuance submission of prior art to the United States Patent and Trademark Office (“USPTO”). Even if LNHC’s patent applications (whether owned by LNHC or in-licensed from Ligand or another third party) do successfully issue and even if such patents cover its products or potential products, third parties may initiate litigation or opposition, interference, re-examination, post-grant review, inter partes review, nullification or derivation action in court or before patent offices, or similar proceedings challenging the validity, enforceability or scope of such patents, which may result in the patent claims being narrowed or invalidated, may allow third parties to commercialize LNHC’s products and compete directly with it, without payment to LNHC, or limit the duration of the patent protection of its technology and products.

In addition, similar to what other companies in LNHC’s industry have experienced, it expects its competitors and others may have patents or may in the future obtain patents and claim that making, having made, using, selling, offering to sell or importing LNHC’s technologies infringes these patents. Defense of infringement and other claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of management and employee resources from LNHC’s business. Parties making claims against LNHC may be able to sustain the costs of complex patent litigation more effectively than it can because they have substantially greater resources, or may be able to obtain injunctive or other relief, which could block LNHC’s ability to develop, commercialize, and sell products or services and could result in the award of substantial damages against it, including treble damages, attorney’s fees, costs and expenses if LNHC is found to have willfully infringed. In the event of a successful claim of infringement against LNHC, it may be required to pay damages and ongoing royalties and obtain

one or more licenses from third parties, or be prohibited from selling certain products or services. As discussed above, LNHC may not be able to obtain these licenses on acceptable or commercially reasonable terms, if at all, or these licenses may be non-exclusive, which could result in LNHC’s competitors gaining access to the same intellectual property. In addition, LNHC could encounter delays in product or service introductions while it attempts to develop alternative products or services to avoid infringing third-party patents or proprietary rights. Defense of any lawsuit or failure to obtain any of these licenses could prevent LNHC from commercializing products or services, and the prohibition of sale of any of its technologies could materially affect its business and its ability to gain market acceptance for its technology.

Litigation or other proceedings to enforce or defend intellectual property rights are often very complex in nature, may be very expensive and time-consuming, may divert LNHC’s management’s attention from its core business, and may result in unfavorable results that could adversely impact its ability to prevent third parties from competing with its products or technologies. Any adverse outcome of such litigation or other proceedings could result in one or more of LNHC’s patents (whether owned by LNHC or in-licensed from Ligand or another third party) being held invalid or unenforceable, which could adversely affect its ability to successfully execute its business strategy and negatively impact its financial condition and results of operations. However, given the unpredictability inherent in litigation, LNHC cannot predict or guarantee the outcome of these matters or any other litigation. Regardless of how these matters are ultimately resolved, these matters may be costly, time-consuming and distracting to LNHC’s management, which could have a material adverse effect on its business. It may be necessary for LNHC or its licensors to pursue litigation or adversarial proceedings before the patent office in order to enforce their patent and proprietary rights or to determine the scope, coverage and validity of the proprietary rights of others. The outcome of any such litigation might not be favorable, and even if LNHC or its licensors were to prevail, such litigation could result in substantial costs and diversion of resources and could have a material adverse effect on LNHC’s business, operating results or financial condition.

In addition, periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to the U.S. and various foreign patent offices at various points over the lifetime of LNHC’s and its licensors’ patents and/or applications. LNHC will rely on Ligand to pay these fees with respect to the patents covering ZELSUVMI for the treatment of molluscum contagiosum and cannot ensure Ligand will pay these fees in a timely manner. Additionally, the U.S. and various foreign patent offices require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. LNHC will rely on Ligand to comply with these requirements. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with rules applicable to the particular jurisdiction. However, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If such an event were to occur, it could have a material adverse effect on LNHC’s business.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of LNHC’s confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of LNHC’s common stock.

Any conflicts with the patent rights of others could significantly reduce the coverage of LNHC’s patents (whether owned by LNHC or in-licensed from Ligand or another third party) or limit its ability to obtain meaningful patent protection. In addition, any determination that LNHC’s patent rights are invalid may result in early termination of its agreements with its license partners and could adversely affect its ability to enter into new license agreements. LNHC also relies on unpatented trade secrets and know-how to protect and maintain its competitive position. LNHC requires its employees, consultants, licensees, and others to sign confidentiality agreements when they begin their relationship with LNHC. These agreements may be breached, and LNHC may not have adequate remedies for any breach. In addition, LNHC’s competitors may independently discover its trade secrets.

LNHC may also need to initiate litigation, which could be time-consuming and expensive, to enforce its proprietary rights or to determine the scope and validity of others’ rights. If this occurs, a court may find LNHC’s patents or those of its licensors invalid or may find that LNHC has infringed on a competitor’s rights. In addition, if any of LNHC’s competitors have filed patent applications in the United States prior to March 2013 which claim technology LNHC also has invented, the USPTO may require LNHC or its licensors to participate in expensive interference proceedings to determine who has the right to a patent for the technology.

In addition, LNHC’s agreements with some of its suppliers or other entities with whom it does business require LNHC to defend or indemnify these parties to the extent they become involved in infringement claims, including the types of claims described above. LNHC could also voluntarily agree to defend or indemnify third parties in instances where it is not obligated to do so if it determines it would be important to its business relationships. If LNHC is required or agrees to defend or indemnify third parties in connection with any infringement claims, it could incur significant costs and expenses that could adversely affect its business, financial condition, results of operations, and prospects. The occurrence of any of the foregoing problems could be time-consuming and expensive and could adversely affect LNHC’s financial position, liquidity and results of operations.

LNHC’s success depends in part on its and its licensor’s ability to obtain and maintain adequate protection of the intellectual property it may own solely and jointly with others or otherwise have rights to, particularly patents, in the United States and in other countries with respect to its platform, its software and its technologies, without infringing the intellectual property rights of others.

LNHC strives to protect and enhance the proprietary technologies that it believes are important to its business, including seeking patents intended to cover its platform and related technologies and uses thereof, as it deems appropriate. However, obtaining and enforcing patents in its industry is costly, time-consuming and complex, and LNHC may fail to apply for patents on important products and technologies in a timely fashion or at all, or it may fail to apply for patents in potentially relevant jurisdictions. There can be no assurance that the claims of its patents or any patent application that issues as a patent (whether owned by LNHC or in-licensed from Ligand or another third party) will exclude others from making, using, importing, offering for sale, or selling products or services that are substantially similar to its. LNHC also relies on trade secrets to protect aspects of its business that are not amenable to, or that it does not consider appropriate for, patent protection. In countries where LNHC has not sought and does not seek patent protection, third parties may be able to manufacture and sell its technology without its permission, and it may not be able to stop them from doing so. LNHC may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner. It is also possible that LNHC will fail to identify patentable aspects of its research and development output before it is too late to obtain patent protection. LNHC may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the rights to patents licensed to third parties. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of its business.

It is possible that none of its pending patent applications (whether owned by LNHC or in-licensed from Ligand or another third party) will result in issued patents in a timely fashion or at all, and even if patents are granted, they may not provide a basis for intellectual property protection of commercially viable products or services, may not provide LNHC with any competitive advantages, or may be challenged and invalidated by third parties or deemed unenforceable by a court. It is possible that others will design around its current or future patented technologies. As a result, its owned and licensed patents and patent applications comprising its patent portfolio may not provide LNHC with sufficient rights to exclude others from commercializing technology and products similar to any of its products, platform and technology.

In addition, LNHC may identify third party intellectual property and technology it may need to acquire or license in order to engage in its business, including to develop or commercialize new technologies. However, such licenses may not be available to LNHC on acceptable terms or at all. Furthermore, geopolitical actions in the United States and in foreign countries could increase the uncertainties and costs surrounding the prosecution or maintenance of its patent applications or those of any current or future license partners and the maintenance, enforcement or defense of its issued patents or those of any current or future license partners. For example, the United States and foreign government actions related to Russia’s conflict in Ukraine may limit or prevent filing, prosecution, and maintenance of patent applications in Russia. Government actions may also prevent maintenance of issued patents in Russia. These actions could result in abandonment or lapse of its or its license partners’ patents or patent applications, resulting in partial or complete loss of patent rights in Russia. If such an event were to occur, it could have a material adverse effect on its business. In addition, a decree was adopted by the Russian government in March 2022, allowing Russian companies and individuals to exploit inventions owned by patentees from the

United States without consent or compensation. Consequently, LNHC or its license partners would not be able to prevent third parties from practicing its or its inventions in Russia or from selling or importing products made using its inventions in and into Russia. Accordingly, its competitive position may be impaired, and its business, financial condition, results of operations and prospects may be adversely affected.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability. Some of LNHC’s patents or patent applications (whether owned by LNHC or in-licensed from Ligand or another third party) may be challenged at a future point in time in opposition, derivation, reexamination, inter partes review, post-grant review or interference. Any successful third party challenge to its patents in this or any other proceeding could result in the unenforceability or invalidity of such patents or amendment to its patents in such a way that any resulting protection may lead to increased competition to its business, which could harm its business. In addition, in patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. The outcome following legal assertions of invalidity and unenforceability during patent litigation is unpredictable. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, LNHC would lose at least part, and perhaps all, of the patent protection on certain aspects of its platform technologies. In addition, if the breadth or strength of protection provided by its patents and patent applications (whether owned by LNHC or in-licensed from Ligand or another third party) is threatened, regardless of the outcome, it could dissuade companies from collaborating with LNHC to license, develop or commercialize current or future products, platform and technology.

LNHC may not be aware of all third party intellectual property rights potentially relating to its products, platform and technology. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until approximately 18 months after filing or, in some cases, not until such patent applications issue as patents. LNHC or its licensors might not have been the first to make the inventions included in each of its pending patent applications and LNHC or its licensors might not have been the first to file patent applications for these inventions. There is also no assurance that all of the potentially relevant prior art relating to its patents and patent applications or licensed patents and patent applications has been found, which could be used by a third party to challenge their validity or prevent a patent from issuing from a pending patent application.

To determine the priority of these inventions, LNHC may have to participate in interference proceedings (with respect to patent applications filed prior to March 2013), derivation proceedings or other post-grant proceedings declared by the USPTO that could result in substantial cost to it. The outcome of such proceedings is uncertain. No assurance can be given that other patent applications will not have priority over its patent applications (whether owned by LNHC or in-licensed from Ligand or another third party). In addition, changes to the patent laws of the United States allow for various post-grant opposition proceedings that have not been extensively tested, and their outcome is therefore uncertain. Furthermore, if third parties bring these proceedings against its patents (whether owned by LNHC or in-licensed from Ligand or another third party), LNHC could experience significant costs and management distraction.

Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents, and may diminish LNHC’s ability to protect its inventions, obtain, maintain, enforce and protect its intellectual property rights and, more generally, could affect the value of its intellectual property or narrow the scope of its future owned and licensed patents. Depending on future actions by the United States Congress, the United States courts, the USPTO and the relevant law-making bodies in other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken LNHC’s or its license partners’ ability to obtain new patents and patents that LNHC or its license partners might obtain in the future. For example, on June 1, 2023, the European Union Patent Package (“EU Patent Package”) regulations were implemented with the goal of providing a single pan-European Unitary Patent and a new European Unified Patent Court (“UPC”) for litigation involving European patents. As a result, all European patents, including those issued prior to ratification of the EU Patent Package, now by default automatically fall under the jurisdiction of the UPC. It is uncertain how the UPC will impact granted European patents in the biotechnology and pharmaceutical industries. LNHC’s or its license partners’

European patent applications, if issued, could be challenged in the UPC. During the first seven years of the UPC’s existence, the UPC legislation allows a patent owner to opt its European patents out of the jurisdiction of the UPC. LNHC or its license partners may decide to opt out future European patents from the UPC, but doing so may preclude LNHC or its license partners from realizing the benefits of the UPC. Moreover, if LNHC or its license partners do not meet all of the formalities and requirements for opt-out under the UPC, LNHC’s or its license partners’ future European patents could remain under the jurisdiction of the UPC. The UPC will provide LNHC’s and its license partners’ competitors with a new forum to centrally revoke LNHC’s European patents and allow for the possibility of a competitor to obtain pan-European injunction. Such a loss of patent protection could have a material adverse impact on LNHC’s or its license partners business and ability to commercialize its technology and product candidates and, resultantly, on LNHC’s business, financial condition, prospects and results of operations.

In addition, the U.S. federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act (Bayh-Dole Act). For example, certain patents and patent applications licensed from the University of North Carolina at Chapel Hill (through Ligand) were made with financial assistance from the federal government. The federal government retains a “nonexclusive, nontransferable, irrevocable, paid-up license” for its own benefit. The Bayh-Dole Act also provides federal agencies with “march-in rights.” March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a “nonexclusive, partially exclusive, or exclusive license” to a “responsible applicant or applicants.” If the patent owner refuses to do so, the government may grant the license itself. If LNHC chooses to collaborate with academic institutions for its research or development, LNHC cannot be sure that any co-developed intellectual property will be free from government rights pursuant to the Bayh-Dole Act. If, in the future, LNHC co-owns or licenses in technology which is critical to its business that is developed in whole or in part with federal funds subject to the Bayh-Dole Act, LNHC’s ability to enforce or otherwise exploit patents covering such technology may be adversely affected.

LNHC is party to royalty-bearing license agreements that grant LNHC rights to practice certain patent rights that are related to its products, platform and technology, including the NITRICIL platform technology in-licensed from the University of North Carolina at Chapel Hill (through Ligand). In spite of LNHC’s efforts to comply with its obligations under its in-license agreements, its licensors might conclude that LNHC has materially breached its obligations under its license agreements and might therefore, including in connection with any aforementioned disputes, terminate the relevant license agreement, thereby removing or limiting LNHC’s ability to develop and commercialize technology covered by these license agreements. If any such in-license is terminated, or if the licensed patents fail to provide the intended exclusivity, competitors or other third parties might have the freedom to market or develop technologies similar to LNHC’s.

In some circumstances, LNHC may not have the right to control the preparation, filing, prosecution, maintenance and defense of patent applications or patents covering technology that LNHC licenses from third parties. In such circumstances, its licensors generally have rights to file, prosecute, and maintain the licensed patents in their name, generally with LNHC’s right to comment on such filing, prosecution, and maintenance, with some obligation for the licensor to consider or incorporate LNHC’s comments. If its licensors having rights to file, prosecute and maintain LNHC’s patent rights fail to conduct these activities for patents or patent applications covering any of LNHC’s product candidates, its ability to develop and commercialize those product candidates may be adversely affected and LNHC may not be able to prevent competitors from making, using or selling competing products. Additionally, there could also be delays at the USPTO caused by staffing cuts and other U.S. government actions as a result of the Department of Government Efficiency or other executive actions to reduce the size of the U.S. government, which may adversely affect LNHC or its licensors. LNHC cannot be certain that such activities by its licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patents or other intellectual property rights.

In addition, absent the rights granted to LNHC under its license agreements, LNHC may infringe the intellectual property rights that are the subject of those agreements, LNHC may be subject to litigation by the licensor, and if such litigation by the licensor is successful LNHC may be required to pay damages to its licensor, or LNHC may be required to cease its development and commercialization activities that are deemed infringing, and in such event

LNHC may ultimately need to modify its activities or technologies to design around such infringement, which may be time- and resource-consuming, and which ultimately may not be successful. Any of the foregoing could have a material adverse effect on LNHC’s business, financial condition, results of operations and prospects.

In addition, LNHC’s rights to certain components of its technology platform, may be licensed to LNHC on a non-exclusive basis. The owners of these non-exclusively licensed technologies are therefore free to license them to third parties, including LNHC’s competitors, on terms that may be superior to those offered to LNHC, which could place LNHC at a competitive disadvantage.

Moreover, LNHC’s licensors may own or control intellectual property that has not been licensed to LNHC and, as a result, LNHC may be subject to claims, regardless of their merit, that LNHC is infringing or otherwise violating the licensor’s rights. In addition, certain of LNHC’s agreements with third parties may provide that intellectual property arising under these agreements, such as data that could be valuable to LNHC’s business, will be owned by the third party, in which case, LNHC may not have adequate rights to use such data or have exclusivity with respect to the use of such data, which could result in third parties, including LNHC’s competitors, being able to use such data to compete with LNHC.

LNHC or its licensors may be subject to claims that former employees or other third parties have an interest in LNHC’s or its in-licensed patents, trade secrets or other intellectual property as an inventor or co-inventor. Litigation may be necessary to defend against these and other claims challenging inventorship of LNHC’s or its licensors’ ownership of its owned or in-licensed patents, trade secrets or other intellectual property. If LNHC or its licensors fail in defending any such claims, in addition to paying monetary damages, LNHC may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, intellectual property that is important to its systems, including its software, workflows, consumables and reagents. Even if LNHC is successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees, and certain partners may defer engaging with LNHC until the particular dispute is resolved. Any of the foregoing could have a material adverse effect on LNHC’s business, financial condition, results of operations and prospects.

LNHC relies on trade secrets and confidentiality agreements to protect its unpatented know-how, technology and other proprietary information, including parts of its technology platform, and to maintain its competitive position. However, trade secrets and know-how can be difficult to protect. In addition to pursuing patents on its technology, LNHC takes steps to protect its intellectual property and proprietary technology by entering into agreements, including confidentiality agreements, non-disclosure agreements and intellectual property assignment agreements, with its employees, consultants, academic institutions, corporate partners and, when needed, its advisers. However, LNHC cannot be certain that such agreements have been entered into with all relevant parties, and LNHC cannot be certain that its trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to its trade secrets or independently develop substantially equivalent information and techniques. For example, any of these parties may breach the agreements and disclose LNHC’s proprietary information, including its trade secrets, and LNHC may not be able to obtain adequate remedies for such breaches. Such agreements may not be enforceable or may not provide meaningful protection for LNHC’s trade secrets or other proprietary information in the event of unauthorized use or disclosure or other breaches of the agreements, and LNHC may not be able to prevent such unauthorized disclosure, which could adversely impact its ability to establish or maintain a competitive advantage in the market. If LNHC is required to assert its rights against such party, it could result in significant cost and distraction.

Monitoring unauthorized disclosure and detection of unauthorized disclosure is difficult, and LNHC does not know whether the steps it has taken to prevent such disclosure are, or will be, adequate. If LNHC were to enforce a claim that a third party had illegally obtained and was using its trade secrets, it would be expensive and time-consuming, and the outcome would be unpredictable. In addition, some courts both within and outside the United States may be less willing, or unwilling, to protect trade secrets. Further, LNHC may need to share its trade secrets and confidential know-how with current or future partners, collaborators, contractors and others located in countries at heightened risk of theft of trade secrets, including through direct intrusion by private parties or foreign actors, and those affiliated with or controlled by state actors.

LNHC also seeks to preserve the integrity and confidentiality of its confidential proprietary information by maintaining physical security of its premises and physical and electronic security of its information technology systems, but it is possible that these security measures could be breached. If any of LNHC’s confidential proprietary information were to be lawfully obtained or independently developed by a competitor or other third party, absent patent protection, LNHC would have no right to prevent such competitor from using that technology or information to compete with LNHC, which could harm its competitive position. If any of LNHC’s trade secrets were to be disclosed to or independently discovered by a competitor or other third party, it could harm LNHC’s business, financial condition, results of operations and prospects.

LNHC relies on its trademarks, trade names and brand names to distinguish its products from the products of its competitors and has registered or applied to register many of these trademarks. LNHC cannot guarantee that its trademark applications will be approved. Third parties may also oppose LNHC’s trademark applications or otherwise challenge its use of the trademarks. LNHC’s registered and unregistered trademarks, trade names, and brand names may be challenged, infringed, circumvented, declared generic or determined to be violating or infringing on other marks. LNHC may not be able to protect its rights to these trademarks, trade names, and brand names which it relies upon to build name recognition among potential partners and customers in its markets of interest. In the event that LNHC’s trademarks are successfully challenged, LNHC could be forced to rebrand its products, which could result in loss of brand recognition and could require LNHC to devote resources to advertising and marketing new brands. Further, there can be no assurance that competitors will not infringe LNHC’s trademarks or that LNHC will have adequate resources to enforce its trademarks.

In the United States and some foreign jurisdictions there have been, and continue to be, a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could, among other things, restrict or regulate post-approval activities with respect to ZELSUVMI and affect LNHC’s ability to profitably sell its products. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the United States and elsewhere, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative and regulatory initiatives. LNHC expects that current laws, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that LNHC may receive for ZELSUVMI or any product candidates approved for sale. New and changing laws and regulations may also create uncertainty about how such laws and regulations will be interpreted and applied. If LNHC is found to have violated laws and regulations, it could materially adversely affect LNHC’s business, results of operations and financial condition.

The ACA was signed into law in 2010. The ACA substantially changed the way healthcare is financed by both governmental and private insurers, and significantly affects the U.S. pharmaceutical industry. Among the provisions of the ACA of importance to LNHC’s business, including, without limitation, its ability to commercialize and the prices LNHC may obtain for any product candidates that are approved for sale, are the following:

Since its enactment, certain provisions of the ACA have been subject to judicial, executive, and legislative challenges and may be subject to additional challenges in the future. In addition, other legislative changes have been proposed and adopted since the ACA was enacted. For example, on March 11, 2021, the American Rescue Plan Act of 2021 was signed into law, which eliminated the statutory Medicaid drug rebate cap, beginning January 1, 2024. Previously, the Medicaid rebate was capped at 100% of a drug’s average manufacturer price.

The cost of prescription pharmaceuticals in the United States has also been the subject of considerable discussion in the United States. There have been several Congressional inquiries, as well as legislative and regulatory initiatives and executive orders designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.

Most significantly, in August 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare, with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation (first due in 2023); redesigns the Medicare Part D benefit (which began in 2024); and replaces the Part D coverage gap discount program with a new manufacturer discount program (which began in 2025). CMS has published the negotiated prices for the initial ten drugs, which will first be effective in 2026, and the list of the subsequent 15 drugs that will be subject to negotiation. The IRA permits the Secretary of the Department of Health and Human Services (“HHS”) to implement many of these provisions through guidance, as opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these programs are implemented, although the Medicare drug price negotiation program is currently subject to legal challenges. The impact of the IRA on LNHC and the pharmaceutical industry cannot yet be fully determined, but is likely to be significant.

Congress and the Trump administration are considering significant reductions in the funding of the Medicaid program. If such reductions are adopted and decrease the number of persons enrolled in Medicaid or reduce the services covered by Medicaid, LNHC’s sales of ZELSUVMI could be adversely affected.

Moreover, the federal government and the individual states in the United States have become increasingly active in developing proposals, passing legislation and implementing regulations designed to control drug pricing, including price or patient reimbursement constraints, discounts, formulary flexibility, marketing cost disclosure, drug price reporting, and other transparency measures. Some states have enacted legislation creating so-called prescription drug affordability boards, which ultimately may attempt to impose price limits on certain drugs in these states. These types of initiatives may result in additional reductions in Medicare, Medicaid, and other healthcare funding, and may otherwise affect the prices LNHC may obtain for ZELSUVMI or the frequency with which ZELSUVMI is prescribed or used.

LNHC expects that these and other healthcare reform measures that may be adopted in the future may result in more rigorous coverage and payment criteria and in additional downward pressure on the price that LNHC receives for any approved drug. Any reduction in reimbursement from Medicaid or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent LNHC from being able to generate revenue, attain profitability, or commercialize its

drugs. LNHC expects that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for LNHC’s product candidates or additional pricing pressures. LNHC cannot predict with certainty what impact any federal or state health reforms will have on it, but such changes could impose new or more stringent regulatory requirements on its activities or result in reduced reimbursement for its products, any of which could adversely affect LNHC’s business, results of operations and financial condition.

The pricing of prescription pharmaceuticals is also subject to governmental control outside the United States. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, LNHC may be required to conduct a clinical trial that compares the cost effectiveness of ZELSUVMI to other available therapies. If reimbursement of LNHC’s products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, its ability to generate revenues and become profitable could be impaired.

Medicaid is a joint federal and state program administered by the states for low income and disabled beneficiaries. LNHC intends to participate in and will have certain price reporting obligations under the Medicaid Drug Rebate Program (“MDRP”) as a condition of having covered outpatient drugs payable under Medicaid. The MDRP requires LNHC to pay a rebate to state Medicaid programs every quarter for each unit of its covered outpatient drugs dispensed to Medicaid beneficiaries and paid for by a state Medicaid program. The rebate is based on pricing data that LNHC must report on a monthly and quarterly basis to CMS, the federal agency that administers the MDRP and other governmental healthcare programs. These data include the average manufacturer price (“AMP”) for each drug and, in the case of innovator products, the best price, which in general represents the lowest price available from the manufacturer to certain entities in the United States in any pricing structure, calculated to include all sales and associated rebates, discounts and other price concessions. The Medicaid rebate consists of two components, the basic rebate and the additional rebate, which is triggered if the AMP for a drug increases faster than inflation. If LNHC becomes aware that its MDRP government price reporting submission for a prior quarter was incorrect or has changed as a result of recalculation of the pricing data, LNHC must resubmit the corrected data for up to three years after those data originally were due. If LNHC fails to provide information timely or is found to have knowingly submitted false information to the government, LNHC may be subject to civil monetary penalties and other sanctions, including termination from the MDRP. In the event that CMS terminates LNHC’s rebate agreement pursuant to which it participates in the MDRP, no federal payments would be available under Medicaid for its covered outpatient drugs. LNHC’s failure to comply with its MDRP price reporting and rebate payment obligations could negatively impact its financial results.

Federal law requires that any company that participates in the MDRP also participate in the Public Health Service’s 340B drug pricing program in order for federal funds to be available for the manufacturer’s drugs under Medicaid. LNHC intends to participate in the 340B program, which is administered by the Health Resources and Services Administration (“HRSA”) and requires LNHC to charge statutorily defined covered entities no more than the 340B “ceiling price” for its covered outpatient drugs. These 340B covered entities include a variety of community health clinics and other entities that receive health services grants from the Public Health Service, as well as hospitals that serve a disproportionate share of low-income patients. The ACA expanded the list of covered entities to include certain free-standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals, but exempts “orphan drugs” from the ceiling price requirements for these covered entities. The 340B ceiling price is calculated using a statutory formula based on the AMP and rebate amount for the covered outpatient drug as calculated under the MDRP, and in general, products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price calculation and discount requirement. LNHC will be required to report 340B ceiling prices to HRSA on a quarterly basis, and HRSA publishes those prices to 340B covered entities. In addition, HRSA has finalized regulations regarding the calculation of the 340B ceiling price and the imposition of civil monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities for 340B-eligible drugs. HRSA has also finalized a revised regulation implementing an administrative dispute resolution process through which 340B covered entities may pursue claims against participating manufacturers for overcharges, and through which manufacturers may pursue claims against 340B covered entities for engaging in unlawful diversion or duplicate discounting of 340B drugs. LNHC’s failure to comply with 340B program requirements could

negatively impact its financial results. Any additional future changes to the definition of average manufacturer price and the Medicaid rebate amount under legislation or regulation could affect LNHC’s 340B ceiling price calculations and also negatively impact its financial results.

In order for ZELSUVMI or any product candidates, if approved, to be paid for with federal funds under the Medicaid and Medicare Part B programs and purchased by certain federal agencies and grantees, LNHC also participates in the U.S. Department of Veterans Affairs (“VA”) Federal Supply Schedule (“FSS”) pricing program. As part of this program, LNHC is required to make its products available for procurement on an FSS contract under which LNHC must comply with standard government terms and conditions and charge a price that is no higher than the statutory Federal Ceiling Price (“FCP”) to four federal agencies (VA, U.S. Department of Defense (“DOD”), Public Health Service, and U.S. Coast Guard). The FCP is based on the Non-Federal Average Manufacturer Price, or Non-FAMP, which LNHC must calculate and report to the VA on a quarterly and annual basis. Pursuant to applicable law, knowing provision of false information in connection with a Non-FAMP filing can subject a manufacturer to significant civil monetary penalties for each item of false information. The FSS pricing and contracting obligations also contain extensive disclosure and certification requirements.

LNHC also intends to participate in the Tricare Retail Pharmacy program, under which LNHC will be required to pay quarterly rebates on utilization of innovator products that are dispensed through the Tricare Retail Pharmacy network to Tricare beneficiaries. The rebates are calculated as the difference between the annual Non-FAMP and FCP. LNHC is required to list its innovator products on a Tricare Agreement in order for them to be eligible for DOD formulary inclusion. If LNHC overcharges the government in connection with its FSS contract or Tricare Agreement, whether due to a misstated FCP or otherwise, LNHC is required to refund the difference to the government. Failure to make necessary disclosures and/or to identify contract overcharges could result in allegations against LNHC under the False Claims Act (“FCA”) and other laws and regulations. Unexpected refunds to the government, and responding to a government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse effect on LNHC’s business, financial condition, results of operations and growth prospects.

Individual states continue to consider and have enacted legislation to limit the growth of healthcare costs, including the cost of prescription drugs and combination products. A number of states have either implemented or are considering implementation of drug price transparency legislation. Requirements of pharmaceutical manufacturers under such laws include advance notice of planned price increases, reporting price increase amounts and factors considered in taking such increases, wholesale acquisition cost information disclosure to prescribers, purchasers, and state agencies, and new product notice and reporting. Such legislation could limit the price or payment for certain drugs, and a number of states are authorized to impose civil monetary penalties or pursue other enforcement mechanisms against manufacturers who fail to comply with drug price transparency requirements, including the untimely, inaccurate, or incomplete reporting of drug pricing information.

Pricing and rebate calculations vary among products and programs. The calculations are complex and are often subject to interpretation by LNHC, governmental or regulatory agencies, and the courts. CMS, the Department of Health & Human Services Office of Inspector General, and other governmental agencies have pursued manufacturers that were alleged to have failed to report these data to the government in a timely or accurate manner. Governmental agencies may also make changes in program interpretations, requirements or conditions of participation, some of which may have implications for amounts previously estimated or paid. LNHC cannot assure you that any submissions it is required to make under the MDRP, the 340B program, the VA/FSS program, the Tricare Retail Pharmacy Program, and other governmental drug pricing programs will not be found to be incomplete or incorrect.

Healthcare providers, physicians and others will play a primary role in the recommendation and prescription of ZELSUVMI, and other product candidates, if approved. LNHC’s arrangements and interactions with healthcare professionals, third-party payors, patients and others will expose LNHC to broadly applicable fraud and abuse, antikickback, false claims and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which LNHC markets, sells, and distributes ZELSUVMI and other product candidates, if LNHC obtains regulatory approval. The U.S. federal healthcare laws and regulations that may affect LNHC’s ability to operate include, but are not limited to:

Ensuring that LNHC’s business arrangements and interactions with healthcare professionals, third-party payors, patients and others comply with applicable healthcare laws and regulations will require substantial resources. Various state, federal and foreign regulatory and enforcement agencies continue actively to investigate violations of healthcare laws and regulations, and the United States Congress continues to strengthen the arsenal of enforcement tools.

It is possible that governmental authorities will conclude that LNHC’s business practices do not comply with current or future statutes, regulations or case law involving applicable healthcare laws and regulations. If LNHC’s operations are found to be in violation of any of these laws or any other governmental regulations that may apply to LNHC, LNHC may be subject to costly investigations, significant civil, criminal and administrative monetary penalties, imprisonment, damages, fines, disgorgement, exclusion from government funded healthcare programs, such as Medicare and Medicaid, contractual damages, diminished profits and future earnings, and the curtailment or restructuring of LNHC’s operations, any of which could substantially disrupt LNHC’s operations or financial results. Any action against LNHC for violation of these laws or regulations, even if it successfully defends against it, could cause LNHC to incur significant legal expenses and generate negative publicity, which could harm its financial condition and divert its management’s attention from the operation of its business.

LNHC and its partners are or may become subject to federal, state, and foreign laws, requirements and regulations that govern data privacy and security. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues. Implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and LNHC cannot yet determine the impact of future laws, regulations, standards, or perception of their requirements may have on LNHC’s business. This evolution may create uncertainty in LNHC’s business, affect LNHC’s ability to operate in certain jurisdictions or to collect, store, transfer, use, and share personal information, necessitate the acceptance of more onerous obligations in LNHC’s contracts, result in liability, or impose additional costs on LNHC. The cost of compliance with these laws, regulations, and standards is high and likely to increase in the future.

In the United States, numerous federal and state laws and regulations govern the collection, use, disclosure, and protection of personal information, including state data breach notification laws, federal and state health information privacy laws, and federal and state consumer protection laws. Each of these laws is subject to varying interpretations by courts and government agencies, creating complex compliance issues. If LNHC fails to comply with applicable laws and regulations, LNHC could be subject to penalties or sanctions, including criminal penalties if LNHC knowingly obtains or discloses individually identifiable health information from a covered entity in a manner that is not authorized or permitted by HIPAA or applicable state laws. HIPAA imposes, among other things, certain standards relating to the privacy, security, transmission, and breach reporting of individually identifiable health

information. LNHC may obtain health information from third parties (including research institutions from which LNHC obtains clinical trial data) that are subject to privacy and security requirements under HIPAA. Depending on the facts and circumstances, LNHC could be subject to significant penalties if we violate HIPAA.

Certain states have also adopted comparable privacy and security laws and regulations, which govern the privacy, processing and protection of health-related and other personal information. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for LNHC and its future customers and strategic partners. For example, the California Consumer Privacy Act of as amended by the California Privacy Rights Act (collectively, the “CCPA”) requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business’s collection, use, and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business’s behalf. Additional compliance investment and potential business process changes may be required. Similar laws have passed in other states and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. In the event that LNHC is subject to or affected by HIPAA, the CCPA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect LNHC’s financial condition.

LNHC is also or may become subject to rapidly evolving data protection laws, rules and regulations in foreign jurisdictions. For example, the European Union General Data Protection Regulation (“GDPR”) went into effect in May 2018 and imposes strict requirements for processing the personal data of individuals within the European Economic Area (“EEA”) or in the context of our activities within the EEA. Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater. In addition to fines, a breach of the GDPR may result in regulatory investigations, reputational damage, orders to cease/change LNHC’s data processing activities, enforcement notices, assessment notices (for a compulsory audit) and/or civil claims (including class actions). Among other requirements, the GDPR regulates transfers of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States, and the efficacy and longevity of current transfer mechanisms between the EEA and the United States remains uncertain. Case law from the Court of Justice of the European Union (“CJEU”) states that reliance on the standard contractual clauses - a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism - alone may not necessarily be sufficient in all circumstances and that transfers must be assessed on a case-by-case basis. On July 10, 2023, the European Commission adopted its Adequacy Decision in relation to the new EU-US Data Privacy Framework (“DPF”), rendering the DPF effective as a GDPR transfer mechanism to U.S. entities self-certified under the DPF. LNHC expects the existing legal complexity and uncertainty regarding international personal data transfers to continue. In particular, LNHC expects the DPF Adequacy Decision to be challenged and international transfers to the United States and to other jurisdictions more generally to continue to be subject to enhanced scrutiny by regulators. As a result, LNHC may have to make certain operational changes and LNHC will have to implement revised standard contractual clauses and other relevant documentation for existing data transfers within required time frames. Further, the U.S. Department of Justice recently issued a final rule that went into effect in April 2025, known as the “Data Security Program,” (the “DSP Rule”), which regulates data transactions that could grant access to US sensitive personal data to certain foreign actors with connections to “countries of concern,” such as China, which the DSP refers to as “covered persons.” As supervisory authorities issue further guidance on personal data export mechanisms, and/or start taking enforcement action, LNHC could suffer additional costs, complaints and/or regulatory investigations or fines, and/or if LNHC is otherwise unable to transfer personal data between and among countries and regions in which LNHC operates, it could affect the manner in which LNHC provides its services, the geographical location or segregation of LNHC’s relevant systems and operations, and could adversely affect LNHC’s financial results.

Since the beginning of 2021, after the end of the transition period following the United Kingdom’s departure from the European Union, LNHC is also subject to the United Kingdom General Data Protection Regulation and Data Protection Act 2018 (collectively, the “UK GDPR”), which imposes separate but similar obligations to those under the GDPR and comparable penalties, including fines of up to £17.5 million or 4% of a noncompliant company’s

global annual revenue for the preceding financial year, whichever is greater. On October 12, 2023, the UK Extension to the DPF came into effect (as approved by the UK Government), as a data transfer mechanism to U.S. entities self-certified under the DPF. As LNHC continues to expand into other foreign countries and jurisdictions, LNHC may be subject to additional laws and regulations that may affect how LNHC conducts business. Failure or perceived failure to comply with the GDPR, the UK GDPR, and other countries’ privacy or data security-related laws, rules, or regulations could result in significant regulatory penalties and fines, affect LNHC’s compliance with contracts entered into with LNHC’s partners, collaborators and other third-party payors, and could have an adverse effect on LNHC’s reputation, business, and financial condition.

Furthermore, the Federal Trade Commission (“FTC”) also has authority to initiate enforcement actions against entities that make deceptive statements about privacy and data sharing in privacy policies, fail to limit third-party use of personal health information, fail to implement policies to protect personal health information or engage in other unfair practices that harm customers or that may violate Section 5 of the Federal Trade Commission Act. Failing to take appropriate steps to keep consumers’ personal information secure can constitute unfair acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities. Additionally, federal and state consumer protection laws are increasingly being applied by FTC and states’ attorneys general to regulate the collection, use, storage, and disclosure of personal or personally identifiable information, through websites or otherwise, and to regulate the presentation of website content.

Compliance with applicable data privacy and security laws, rules and regulations could require LNHC to take on more onerous obligations in its contracts, require LNHC to engage in costly compliance exercises, restrict its ability to collect, use and disclose data, or in some cases, impact LNHC’s or its partners’ ability to operate in certain jurisdictions. Each of these constantly evolving laws can be subject to varying interpretations, and may conflict with one another or other legal obligations with which LNHC must comply. Any failure or perceived failure by LNHC or its employees, representatives, contractors, consultants, collaborators, or other third parties comply with any such laws, rules, or regulations, or adequately address privacy and security concerns, even if unfounded, could result in government investigations and/or enforcement actions, fines, civil or criminal penalties, private litigation or adverse publicity that could adversely affect LNHC’s business, financial condition and results of operations.

As is common in LNHC’s industry, LNHC and its partners face an inherent risk of product liability as a result of the clinical testing of LNHC’s product candidates in clinical trials and face an even greater risk for commercialized products. Although LNHC is not currently a party to product liability litigation, if LNHC is sued, it may be held liable if any product or product candidate it develops causes injury or is found otherwise unsuitable during product testing, manufacturing, marketing or sale. Regardless of merit or eventual outcome, liability claims may result in decreased demand for any product candidates, partnered products or products that LNHC may develop, injury to LNHC’s reputation, discontinuation of clinical trials, costs to defend litigation, substantial monetary awards to clinical trial participants or patients, loss of revenue and product recall or withdrawal from the market and the inability to commercialize any products that LNHC develops. LNHC’s parent, Ligand, has product liability insurance that covers its clinical trials up to a $15.0 million annual limit. LNHC’s insurance coverage may not be sufficient to cover all of LNHC’s product liability-related expenses or losses and may not cover it for any expenses or losses it may suffer. If LNHC is sued for any injury caused by its product candidates, partnered products or any future products, its liability could exceed its total assets.

LNHC’s operations are subject to complex and stringent environmental, health, safety and other governmental laws and regulations that both public officials and private individuals may seek to enforce. LNHC’s activities that are subject to these regulations include, among other things, LNHC’s use of hazardous materials and the generation, transportation and storage of waste. Although LNHC has secured clearance from the EPA historically, and currently is operating in material compliance with applicable EPA rules and regulations, LNHC’s business could be adversely affected if it discovers that it or an acquired business is not in material compliance with these rules and regulations.

In the future, LNHC may pursue the use of other surfactant substances that will require clearance from the EPA, and it may fail to obtain such clearance. Existing laws and regulations may also be revised or reinterpreted, or new laws and regulations may become applicable to LNHC, whether retroactively or prospectively, that may have a negative effect on its business and results of operations. It is also impossible to eliminate completely the risk of accidental environmental contamination or injury to individuals. In such an event, LNHC could be liable for any damages that result, which could adversely affect its business.

Certain regulations not specifically targeting the healthcare industry also could have material effects on LNHC’s operations. For example, the California Financing Law (“CFL”), Division 9, Sections 22000-22780.1 of the California Financial Code, could be applied to LNHC as a result of loans or similar arrangements LNHC enters into with partners. If a regulator were to take the position that such loans were covered by the California Financing Law, LNHC could be subject to regulatory action that could impair its ability to continue to operate and may have a material adverse effect on its profitability and business as it currently does not hold a CFL finance lenders license. Pursuant to an exemption under the CFL, a person may make five or fewer commercial loans with a California nexus in a 12-month period without a CFL finance lenders license if such loans are “incidental” to the business of the person making the loan. This exemption, however, creates some uncertainty as to which loans could be deemed as incidental to LNHC’s business. In addition, there is another exemption that would allow a person without a CFL finance lenders license to make a single commercial loan with a California nexus in a 12-month period.

LNHC is vulnerable to damage, business disruptions and/or loss of vital data from natural or man-made disasters, such as earthquakes, tornadoes, severe weather conditions, power loss, fire, floods and similar events, as well as from accidental loss or destruction. If any disaster were to occur, LNHC’s ability to operate its business could be seriously impaired. LNHC’s parent, Ligand, has property, liability, and business interruption insurance which may not be adequate to cover LNHC’s losses resulting from disasters or other similar significant business interruptions, and Ligand does not plan to purchase additional insurance to cover such losses due to the cost of obtaining such coverage. Any significant losses that are not recoverable under Ligand’s insurance policies could seriously impair LNHC’s business, financial condition and prospects.

The total purchase price pertaining to transactions that result in the fair valuing of assets and liabilities, may be allocated to net tangible assets, identifiable intangible assets, in-process research and development and goodwill. To the extent the value of goodwill or identifiable intangible assets or other long-lived assets become impaired, LNHC will be required to incur material charges relating to the impairment. Any impairment charges could have a material adverse impact on LNHC’s results of operations and the market value of LNHC.

LNHC’s results of operations could be materially negatively affected by economic conditions generally, both in the United States and elsewhere around the world. Concerns over inflation, energy costs, geopolitical issues, military conflicts, including the wars between Russia and Ukraine and Israel and Hamas, terrorism, public health emergencies or pandemics, the availability and cost of credit, and the U.S. financial markets have in the past contributed to, and may continue in the future to contribute to, increased volatility and diminished expectations for the economy and the markets. Sanctions imposed by the United States and other countries in response to military conflicts, including the wars between Russia and Ukraine and Israel and Hamas, may also adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. Domestic and international equity markets periodically experience heightened volatility and turmoil. These events may have an adverse effect on LNHC. In the event of a market downturn, LNHC’s results of

operations could be adversely affected by those factors in many ways, including making it more difficult for it to raise funds if necessary, and its value may decline. LNHC cannot provide assurance that its investments are not subject to adverse changes in market value. If LNHC’s investments experience adverse changes in market value, LNHC may have less capital to fund its operations.

Future pandemics, including the residual effects of the COVID-19 pandemic, or other public health epidemics, pose the risk that LNHC or its employees, contractors, including its CROs, suppliers, and other partners may be prevented from conducting business activities for an indefinite period of time, including due to spread of the disease within these groups or due to shutdowns that may be requested or mandated by governmental authorities. Although LNHC currently does not believe the COVID-19 pandemic is having a material impact on its business, LNHC cannot guarantee that pandemics, such as COVID-19 or the emergence of variants thereof, or a similar event, will not impact its operations in the future.

Although LNHC believes that it and its partners have adjusted their business practices to the impacts of the COVID-19 pandemic, in the future, LNHC may experience similar pandemics or epidemic diseases that could severely impact its business, drug manufacturing and supply chain, nonclinical activities and clinical trials, including due to delays or difficulties in enrolling patients in clinical trials, diversion of healthcare resources away from the conduct of clinical trials, interruption of, or delays in receiving, supplies of product or product candidates from contract manufacturing organizations due to staffing shortages, production slowdowns or stoppages and disruptions in delivery systems, interruption or delays to discovery and development pipelines and difficulties launching or commercializing products, including due to reduced access to doctors as a result of social distancing protocols.

The extent to which the emergence of new variants of COVID-19, or any other outbreak of a pandemic or epidemic disease, impacts LNHC’s results will depend on future developments that are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity of the virus and the actions to contain its impact. Further, to the extent any pandemic or epidemic disease adversely affects LNHC’s business and financial results, it may also have the effect of heightening many of the other risks described in this section.

In an effort to contain the U.S. federal deficit, the biopharmaceutical industry could be considered a potential source of savings and could be the target of legislative proposals aimed at reducing federal expenditures. Government action to reduce U.S. federal spending on entitlement programs, including Medicare, Medicaid or other publicly funded or subsidized health programs, or to lower drug spending, may affect payment for ZELSUVMI for the treatment of molluscum contagiosum. These and any other cost controls or any significant additional taxes or fees that may be imposed on the biopharmaceutical industry as part of deficit reduction efforts could reduce cash flows and adversely affect LNHC’s business, financial condition or results of operations.

Following completion of the Merger, the combined company will be susceptible to many of the risks described in the sections herein entitled “Risks Related to Channel” and “Risks Related to LNHC,” including those incorporated by reference to Channel’s filings with the SEC. To the extent any of the events in the risks described in those sections occurs, the potential benefits of the Merger may not be realized, and the results of operations and financial condition of the combined company could be adversely affected in a material way. This could cause the market price of the combined company common stock to decline.

The market price of the combined company common stock following the Merger could be subject to significant fluctuations. Some of the factors that may cause the market price of the combined company common stock to fluctuate include:

Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of the combined company common stock. In addition, macroeconomic conditions, a recession, depression or other sustained adverse market event resulting from the spread of diseases or otherwise could materially and adversely affect the combined company’s business and the value of its common stock. In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against such companies. Furthermore, market volatility may lead to increased stockholder activism if the combined company experiences a market valuation that activists believe is not reflective of its intrinsic value. Activist campaigns that contest or conflict with the combined company’s strategic direction or seek changes in the composition of its board of directors could have an adverse effect on its operating results and financial condition.

Developing and commercializing pharmaceutical products is a time-consuming, expensive and uncertain process that takes years to complete. The combined company expects to continue to incur significant expenses over the next several years as it commercializes ZELSUVMI, continues to research, develop and conduct preclinical studies of any product candidates, and begins to operate as a public company. In addition, the combined company anticipates incurring significant commercialization expenses related to product manufacturing, marketing, sales and distribution activities to launch ZELSUVMI. Although ZELSUVMI has been approved by the FDA for the treatment of molluscum contagiosum in adult and pediatric patients one year of age and older, it may not achieve commercial success. The combined company has incurred, and expects to continue to incur, significant commercialization expenses related to the launch and product sales, marketing, distribution and manufacturing of ZELSUVMI as well as any future product candidates for which it receives regulatory approval.

Following the Merger and the PIPE Financing, the combined company will also incur additional costs associated with operating as a public company. Based on its current operating plan, and assuming the Merger and the PIPE Financing are successfully completed, and assuming LNHC obtains at least $25 million in venture debt financing in connection with the closing of the Merger, LNHC believes that its existing cash, cash equivalents and short-term investments should be sufficient to fund its operations for at least one year after the consummation of the Merger. This estimate is based on assumptions that may prove to be materially wrong, and the combined company could use its available capital resources sooner than it currently expects. The combined company’s future capital requirements will depend on many factors, including:

The combined company will require additional capital to pursue its business objectives. Following the closing of the Transactions, Ligand will not have any obligation to make further investments in the combined company and may not be willing, able or permitted to make further investments in the combined company. Additional funds may not be available from other sources on a timely basis, on favorable terms, or at all, and such funds, if raised, may not be sufficient to enable the combined company to continue to implement its long-term business strategy. If the combined company is unable to raise sufficient additional capital, it could be forced to curtail its planned operations and the pursuit of its growth strategy. Following the Merger, the combined company’s board of directors may pause the development of all or some of its product candidates based on its cash position.

LNHC is seeking a venture debt term loan and an accounts receivables credit line, to close substantially concurrently with the closing of the Merger. The intended purpose of the proposed debt financing is to provide additional capital to LNHC for working capital and general corporate purposes. The proposed debt financing will be subject to definitive documentation and customary closing conditions; accordingly, no assurance can be given that the proposed debt financing will be available on terms acceptable to LNHC, including the amount available to be borrowed described above, or at all. The inability to obtain the proposed debt financing would have a material adverse effect on the combined company’s operating results, its ability to raise capital needed to commercialize products and its overall financial condition.

Any future indebtedness, including the proposed debt financing, will likely contain financial and operating covenants, including limitations that will restrict the combined company’s ability to incur additional debt and make distributions or other payments to its shareholders, and it may restrict its ability to make investments or engage in transactions with affiliates. These covenants may restrict the combined company’s ability to engage in transactions that it believes would otherwise be in the best interests of its shareholders. If the combined company violates covenants in its future debt agreements, including the proposed debt financing, it could be required to repay all or a portion of its indebtedness before maturity at a time when it might be unable to arrange financing for such repayment on attractive terms, if at all.

The combined company may finance its cash needs through a combination of equity offerings, debt financings and license and collaboration agreements. Any additional fundraising efforts may divert the combined company’s management from their day-to-day activities, which may adversely affect its business. To the extent that the combined company raises additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a shareholder. Debt financing or refinancing may result in the imposition of debt covenants, increased fixed payment obligations or other restrictions that may affect the combined company’s business. If the combined company raises additional funds through upfront payments or milestone payments pursuant to future collaborations with third parties, it may have to relinquish valuable rights to product development programs, or grant licenses on terms that are not favorable to it. The combined company’s ability to raise additional capital may be adversely impacted by global macroeconomic conditions and volatility in the credit and financial markets in the U.S. and worldwide, over which the combined company may have no or little control. Its failure to raise capital as and when needed or on acceptable terms would have a negative impact on its financial condition and its ability to pursue its business strategy, and the combined company may have to delay, reduce the scope of, suspend or eliminate clinical trials, product development programs or future commercialization efforts.

The combined company may never become profitable, even if the combined company is able to complete clinical development for one or more product candidates and eventually commercialize such product candidates. The combined company will need to successfully complete significant research, development, testing and regulatory compliance activities that, together with projected general and administrative expenses, is expected to result in substantial increased operating losses for at least the next several years. Even if the combined company does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis.

The combined company will incur significant legal, accounting and other expenses as a public company that LNHC did not incur as a private company, including costs associated with public company reporting obligations under the Exchange Act. The combined company’s management team will consist of the executive officers of LNHC and Channel prior to the Merger, some of whom have not previously managed and operated a public company. These executive officers and other personnel will need to devote substantial time to gaining expertise related to public company reporting requirements and compliance with applicable laws and regulations to ensure that the combined company complies with all of these requirements. Any changes the combined company makes to comply with these obligations may not be sufficient to allow it to satisfy its obligations as a public company on a timely basis, or at all. These reporting requirements, rules and regulations, coupled with the increase in potential litigation exposure associated with being a public company, could also make it more difficult for the combined company to attract and retain qualified persons to serve on the board of directors or on board committees or to serve as executive officers, or to obtain certain types of insurance, including directors’ and officers’ insurance, on acceptable terms.

The combined company will be subject to the reporting requirements of the Exchange Act, which requires, among other things, that the combined company file with the SEC, annual, quarterly and current reports with respect to the combined company’s business and financial condition, as well as other disclosure and corporate governance requirements. However, as a “smaller reporting company”, the combined company may take advantage of exemptions from various requirements such as an exemption from the requirement to have the combined company’s independent auditors attest to the combined company’s internal control over financial reporting under Section 404 and other reduced disclosure obligations regarding executive compensation in the combined company’s periodic reports and proxy statements. If the combined company no longer qualifies as a smaller reporting company or otherwise does not qualify for these exemptions, the combined company will be required to comply with these additional legal and regulatory requirements applicable to public companies and will incur significant legal, accounting and other expenses to do so. If the combined company is not able to comply with the requirements in a timely manner or at all, the combined company’s financial condition or the market price of the combined company common stock may be harmed. For example, if the combined company or its independent auditor identifies deficiencies in the combined company’s internal control over financial reporting that are deemed to be material weaknesses the combined company could face additional costs to remedy those deficiencies, the market price of the combined company’s stock could decline or the combined company could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

The unaudited pro forma financial data for Channel and LNHC included in this information statement is presented for illustrative purposes only and is not necessarily indicative of the combined company’s actual financial condition or results of operations of future periods, or the financial condition or results of operations that would have been realized had the entities been combined during the periods presented. The unaudited pro forma financial statements have been derived from the historical financial statements of Channel and LNHC and adjustments and assumptions have been made regarding the combined company after giving effect to the transaction. The information

upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the unaudited pro forma financial statements do not reflect all costs that are expected to be incurred by the combined company in connection with the transactions or that have been incurred since the date of such unaudited pro forma financial statements. The assumptions used in preparing the unaudited pro forma financial information may not prove to be accurate, and other factors may affect the combined company’s financial condition following the transaction. For example, the exchange ratio reflected in this information statement is preliminary. The final exchange ratio could differ materially from the preliminary exchange ratio used to prepare the pro forma adjustments. The combined company’s actual results and financial position after the Merger may differ materially and adversely from the unaudited pro forma financial data included in this information statement. For more information see the section titled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 250.

Channel and LNHC have incurred and are expected to continue to incur a number of non-recurring costs associated with negotiating and completing the Merger. These costs have been, and will continue to be, substantial and, in many cases, will be borne by Channel and LNHC whether or not the Merger is completed. A substantial majority of non-recurring expenses will consist of transaction costs and include, among others, fees paid to financial, legal, accounting and other advisors, and filing fees. Channel and LNHC will continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in connection with the Merger. While Channel and LNHC have assumed that a certain level of expenses would be incurred, there are many factors beyond their control that could affect the total amount or the timing of the expenses. The costs described above and any unanticipated costs and expenses, many of which will be borne by Channel and LNHC even if the Merger is not completed, could have an adverse effect on each of Channel’s and LNHC’s business, financial condition and results of operations.

Provisions that will be included in the combined company’s articles of incorporation and bylaws may discourage, delay or prevent a merger, acquisition or other change in control of the combined company that stockholders may consider favorable, including transactions in which its common stockholders might otherwise receive a premium price for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of the combined company common stock, thereby depressing the market price of its common stock. In addition, because the combined company’s board of directors will be responsible for appointing the members of the combined company’s management team, these provisions may frustrate or prevent any attempts by the combined company’s stockholders to replace or remove its current management by making it more difficult for stockholders to replace members of the combined company’s board of directors. Among other things, these provisions:

Moreover, because the combined company is incorporated in Nevada, it is governed by the provisions of NRS, which generally prohibits a person who, together with their affiliates and associates, beneficially owns 10% or more of the company’s outstanding voting stock from, among other things, merging or combining with the company for a period of two years after the date of the transaction in which the person acquired ownership of 10% or more of the

company’s outstanding voting stock, unless the merger or combination, or the acquisition that causes such person to beneficially own more than 10% of the outstanding stock, is approved in a prescribed manner.

The articles of incorporation of the combined company will provide that, to the fullest extent permitted by law, and unless the company consents in writing to the selection of an alternative forum, the Second Judicial District Court of Washoe County, Nevada is the sole and exclusive forum for the following types of proceedings: (a) any derivative action or proceeding brought in the name or right of the combined company or on its behalf, (b) any action asserting a claim for breach of any fiduciary duty owed by any of the combined company’s directors, officers, employees or its stockholders and (c) any action arising or asserting a claim arising pursuant to any provision of Chapters 78 or 92A of the NRS or any provision of the articles of incorporation or bylaws.

Choice-of-forum provisions of the type and scope included in the articles of incorporation of the combined company are expressly permitted by Section 78.046 of the NRS, but application of these choice-of-forum provisions may be limited in some instances by law. Section 27 of the Exchange Act establishes exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and therefore the choice-of-forum provision would not apply to actions arising under, or brought to enforce a duty or liability created by, the Exchange Act or any other claim for which the U.S. federal courts have exclusive jurisdiction. However, Section 22 of the Securities Act provides that federal and state courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, and the choice-of-forum provision would apply to actions arising under, or brought to enforce a duty or liability created by, the Securities Act. To the extent the text of the choice-of-forum provision in the combined company’s articles of incorporation purports to restrict the courts in which claims arising under the Securities Act may be brought, there remains some uncertainty as to whether a court would enforce such a provision. We note that the choice-of-forum provision will not relieve the combined company of its duties to comply with the federal securities laws and the rules and regulations thereunder, and the combined company’s stockholders will not be deemed to have waived compliance with these laws, rules and regulations.

This exclusive forum provision may make it more expensive for stockholders to bring a claim than if the stockholders were permitted to select another jurisdiction and may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the combined company or its directors, officers or other employees or stockholders, which may discourage such lawsuits against the combined company and its directors, officers and other employees and stockholders. Alternatively, if a court were to find the choice of forum provision contained in the combined company’s articles of incorporation to be inapplicable or unenforceable in an action, the combined company may incur additional costs associated with resolving such action in other jurisdictions, which could materially and adversely affect its business, financial condition and results of operations.

The combined company’s ability to use its federal and state net operating losses (“NOLs”) to offset potential future taxable income and related income taxes that would otherwise be due is dependent upon the combined company’s generation of future taxable income, and Channel and LNHC cannot predict with certainty when, or whether, the combined company will generate sufficient taxable income to use all of its available NOLs.

Under Sections 382 and 383 of the Code and corresponding provisions of state law, if a corporation undergoes an “ownership change,” its ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research and development tax credits) to offset its post-change income may be limited. A Section 382 “ownership change” is generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain 5% stockholders over a three-year period. Channel may have experienced such ownership changes in the past, including as a result of its public offering of shares of common stock in February 2024, and the Merger, if completed, will result in an ownership change. Channel may experience additional ownership changes in the future due to subsequent shifts in its stock ownership (some of which are outside of its control). LNHC may have experienced ownership changes in the past, may experience an ownership change as a result of the Merger and the PIPE Financing, and may experience ownership changes

in the future due to subsequent shifts in the combined company’s stock ownership (some of which are outside of its control). Consequently, even if the combined company achieves profitability, it may not be able to utilize a material portion of LNHC’s, Channel’s or the combined company’s NOL carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations. Similar provisions of state tax law may also apply to limit the combined company’s use of accumulated state tax attributes. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, the combined company’s existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. In addition, if Channel is not deemed to continue its historic business for two years after an ownership change, the Channel pre-change NOL carryforwards and other pre-change tax attributes may be reduced to zero ($0).

The current expectation is that the combined company will retain its future earnings, if any, to fund the growth of the combined company’s business as opposed to paying dividends. As a result, capital appreciation, if any, of the common stock of the combined company will be your sole source of gain, if any, for the foreseeable future.

An active trading market for the combined company common stock may not develop and its stockholders may not be able to resell their shares of common stock for a profit, if at all.

Prior to the Merger, there had been no public market for shares of LNHC common stock. An active trading market for the combined company’s shares of common stock may never develop or be sustained. If an active market for the combined company common stock does not develop or is not sustained, it may be difficult for its stockholders to sell their shares at an attractive price or at all.

If existing securityholders of Channel and Ligand sell, or indicate an intention to sell, substantial amounts of the combined company common stock in the public market after legal restrictions on resale discussed in this information statement lapse, the trading price of the common stock of the combined company could decline. Based on shares outstanding as of May 23, 2025 and, the shares of Channel Series A Preferred Stock expected to be issued upon completion of the Transactions, the combined company is expected to have outstanding a total of approximately 6,997,110 shares of common stock and 81,353.76 shares preferred stock immediately following the completion of the Merger, and after giving effect to the PIPE Financing. All of the shares of Channel common stock, will become available for sale in the public market beginning on December 31, 2025, subject to certain exceptions, as a result of the expiration of lock-up agreements between Channel on the one hand and certain securityholders of Channel and Ligand on the other hand. All other outstanding shares of common stock, other than shares held by affiliates of the combined company, will be freely tradable, without restriction, in the public market. If these shares are sold, the trading price of the combined company common stock could decline.

Upon the completion of the Merger, and without giving effect to the PIPE Financing, it is anticipated that the combined company’s executive officers, directors and principal stockholders will, in the aggregate, beneficially own approximately 84.9% of the combined company’s outstanding shares of capital stock, on a fully diluted basis, subject to certain assumptions, including, but not limited to, (a) a valuation for Channel equal to $15 million, and (b) a valuation for LNHC equal to $67 million, in each case as further described in the Merger Agreement. As a result, if these stockholders were to choose to act together, they would be able to control or significantly influence all matters submitted to the combined company’s stockholders for approval, as well as the combined company’s management and affairs. For example, these persons, if they choose to act together, would control or significantly influence the election of directors and approval of any merger, consolidation or sale of all or substantially all of the combined company’s assets. This concentration of voting power could delay or prevent an acquisition of the combined company on terms that other stockholders may desire.

The combined company may be exposed to increased litigation from stockholders, suppliers and other third parties due to the combination of Channel’s business and LNHC’s business following the Merger. Such litigation may have an adverse impact on the combined company’s business and results of operations or may cause disruptions

to the combined company’s operations. In addition, in the past, stockholders have initiated class action lawsuits against biotechnology companies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted against the combined company, could cause the combined company to incur substantial costs and divert management’s attention and resources, which could have a material adverse effect on the combined company’s business, financial condition and results of operations.

The trading market for the combined company common stock will be influenced by the research and reports that equity research analysts publish about it and its business. Equity research analysts may elect not to provide research coverage of the combined company common stock after the completion of the Merger, and such lack of research coverage may adversely affect the market price of its common stock. In the event it does have equity research analyst coverage, the combined company will not have any control over the analysts or the content and opinions included in their reports. The price of the combined company common stock could decline if one or more equity research analysts downgrade its stock or issue other unfavorable commentary or research. If one or more equity research analysts ceases coverage of the combined company or fails to publish reports on it regularly, demand for its common stock could decrease, which in turn could cause its stock price or trading volume to decline.

As a privately held company, LNHC was not required to evaluate its internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404. Following the Merger, the combined company’s management will be required to report on the effectiveness of the combined company’s internal control over financial reporting. The rules governing the standards that must be met for the combined company’s management to assess the combined company’s internal control over financial reporting are complex and require significant documentation, testing and possible remediation.

Any failure to maintain effective internal control over financial reporting could severely inhibit the combined company’s ability to accurately report its financial condition, results of operations or cash flows. If the combined company is unable to conclude that its internal control over financial reporting is effective, or if the combined company’s independent registered public accounting firm determines the combined company has a material weakness or significant deficiency in the combined company’s internal control over financial reporting once that firm begins its reporting on internal control over financial reporting, investors may lose confidence in the accuracy and completeness of the combined company’s financial reports, the market price of the combined company common stock could decline, and the combined company could be subject to sanctions or investigations by The NYSE American, the SEC or other regulatory authorities. Failure to remedy any material weakness in the combined company’s internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict the combined company’s future access to the capital markets.

The combined company will have broad discretion over the use of proceeds from the PIPE Financing (if completed). You may not agree with the combined company’s decisions, and its use of the proceeds may not yield any return on the investment. The combined company’s failure to apply the net proceeds of the PIPE Financing (if completed) effectively could compromise its ability to pursue its growth strategy and the combined company might not be able to yield a significant return, if any, on its investment of these net proceeds. You will not have the opportunity to influence the combined company’s decisions on how to use the net proceeds from the PIPE Financing (if completed).

Immediately following the consummation of the Transactions, Ligand will own 49.9% of the voting power of the combined company’s outstanding capital stock. As long as Ligand beneficially controls a substantial portion of the voting power of the combined company’s outstanding capital stock, it may influence the outcome of such

corporate actions requiring stockholder approval, including the election and removal of directors. If Ligand continues to hold its shares of Channel Series A Preferred Stock and/or common stock, it could retain this influence for an extended period of time or indefinitely.

The management of and beneficial ownership in Ligand by the combined company’s executive officers and directors may create, or may create the appearance of, conflicts of interest. For example, Todd Davis, a director on the combined company’s Board, is Chief Executive Officer and a director of Ligand.

Management and ownership by the combined company’s executive officers and directors in Ligand may create, or may create the appearance of, conflicts of interest when these individuals are faced with decisions that could have different implications for Ligand than such decisions have for the combined company, including decisions that relate to its License Agreement and Master Services Agreement (“MSA”), each dated March 24, 2025, with LNHC, as well as potential future agreements. Any perceived conflicts of interest resulting from investors questioning the independence of the combined company’s management or the integrity of corporate governance procedures may materially affect its stock price.

The License Agreement and MSA were prepared while Ligand owned 100% of LNHC’s common stock. Accordingly, at the time this agreement was prepared LNHC did not have a separate or independent board of directors or a management team that was independent of Ligand. As a result, the terms of those agreements may not reflect terms that would have resulted from arm’s-length negotiations between unaffiliated third parties.

Disputes may arise between Ligand and the combined company in a number of areas relating to its past and ongoing relationships, including:

Because the combined company has not operated as an independent company in the past, it may have difficulty doing so. In addition to those provided to it by Ligand, the combined company will need to acquire additional financial resources, assets and resources to support its operations as an independent company. Additionally, the combined company may also face difficulty in separating its resources and operations from Ligand. For example, the combined company may face difficulties hiring additional personnel to assist with administrative and technical functions and acquiring office and laboratory space for use in the ordinary course operations of its business. If the combined company has difficulty operating as an independent company, fails to acquire assets or hire requisite personnel that it needs to operate, or incurs unexpected costs in separating its business from Ligand’s business, its financial condition and results of operations will be adversely affected.

The historical financial information included in this information statement does not necessarily reflect the financial condition, results of operations or cash flows that LNHC would have achieved as an independent company during the periods presented or those that it will achieve in the future, and the assumptions used in preparing its

financial information may not be accurate. LNHC’s historical financial information reflects allocations of corporate expenses from Ligand for various corporate functions. LNHC believes that these allocations are comparable to the expenses it would have incurred had it operated as a separate company, although it may incur higher expenses as a separate company.

This section and the section titled “The Merger Agreement” beginning on page 129 of this information statement describe the material aspects of the Merger and the Merger Agreement. While Channel and LNHC believe that this description covers the material terms of the Merger and the Merger Agreement, it may not contain all of the information that is important to you. You should read carefully this entire information statement for a more complete understanding of the Merger and the Merger Agreement and the other documents to which you are referred in this information statement. See the section titled “Where You Can Find More Information” beginning on page 285 of this information statement.

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. The following chronology does not purport to catalogue every conversation among the Channel board of directors or committees thereof or the representatives (including management) of Channel and other parties.

Since Channel’s IPO in February 2024, the Channel board of directors, together with Channel’s senior management team, regularly reviews Channel’s performance, growth prospects and overall strategic direction and evaluates potential opportunities to strengthen Channel’s business and enhance value for its stockholders. Among other things, these reviews focus on the opportunities and risks associated with Channels’s capital raising strategy, financial condition, strategic relationships and potential long-term strategic options. From time to time, these reviews and evaluations have included an evaluation of Channel’s strategy as a standalone company and potential opportunities for business combinations, partnerships, licensing arrangements, collaborations and other strategic transactions.

On April 3, 2024, Ligand publicly announced via a press release that Ligand had launched Pelthos Therapeutics, a subsidiary focused on the commercialization of ZELSUVMI, led by Scott Plesha as Chief Executive Officer. The press release disclosed that Ligand intended to commercialize ZELSUVMI in partnership with a capital provider or strategic partner.

On November 5, 2024, Francis Knuettel II, Chief Executive Officer and Chief Financial Officer of Channel and Todd Davis, Chairman of the Channel board of directors, discussed opportunities with respect to Channel and potential strategic alternatives and business combination transactions involving both LNHC and Channel.

On November 11, 2024, Mr. Davis, introduced Mr. Knuettel to Richard Baxter, Senior Vice President, Investment Operations of Ligand, to discuss those potential strategic alternatives and business combination transactions.

On November 12, 2024, Mr. Baxter and Mr. Knuettel spoke for the first time alone to discuss the LNHC opportunity and the concept of a potential merger of a subsidiary of Channel with and into LNHC.

Also on November 12, 2024, Anish Mokha of Ligand sent a Non-Confidential Introduction Presentation, dated September 2024, together with a draft term sheet (the “Term Sheet”) to Mr. Knuettel. The draft Term Sheet outlined the terms on which Ligand would be willing to proceed with a transaction in which: (1) Channel would acquire LNHC in exchange for an issuance of Channel stock to Ligand, and (2) Ligand would provide equity financing to fund the combined company’s continuing operations and the commercialization of ZELSUVMI, (3) Channel and LNHC could concurrently raise incremental equity financing from third parties, including Murchinson Ltd., a Toronto based investment firm (“Murchinson”), and (4) Ligand and certain other equity financing sources would receive a royalty on sales of ZELSUVMI and other products in Channel’s pipeline.

On November 13, 2024, the Channel board of directors held a meeting attended by Channel’s senior management team and Sullivan & Worcester LLP (“Sullivan”) as outside counsel to Channel, to discuss the Term Sheet received from Ligand. After consultation with its outside counsel, including regarding its fiduciary duties in considering proposals for a possible acquisition and appropriate approaches to identify and manage potential conflicts of interest, the Channel Board decided to form the Special Committee consisting of Ezra Friedberg, Richard Malamut and Chia Lin Simmons and delegated authority to the Special Committee to (a) establish, approve, modify, monitor and direct the process and procedures related to the review, evaluation and negotiation of the Transactions; (b) review and make such investigation of the Transactions as the Special Committee deems appropriate; (c) evaluate the terms and conditions of the Transactions; (d) contact and negotiate with Ligand or its representatives regarding any element of the Transactions, including the Transactions structure, price, terms and conditions (including the terms and conditions of any definitive agreements with respect to the Transactions); (e) contact and negotiate with third parties

and their representatives (including potential investors, lenders and other parties) regarding any element of the Transactions; (f) in the event the Transactions involved stock consideration, investigate the appropriate relative valuations of Channel, Ligand or any other third party, as applicable; (g) to the extent the Special Committee deems it appropriate, report to the full Channel board of directors its recommendations and conclusions with respect to the Transactions, including a recommendation and determination as to whether the Transactions are advisable and in the best interests of Channel and Channel stockholders and should be approved or rejected by the full Channel board of directors; (h) in connection with its recommendation to the full Channel board of directors, communicate (including, but not limited to, communications with the stockholders, management, advisors and representatives of Channel) regarding the Transactions; (i) following the execution of any agreements relating to the Transactions, if any, take any other actions contemplated by such agreements to be taken by the Special Committee, including to take (or determine not to take) actions with respect to any intervening event; (j) to the fullest extent permitted by Nevada law, as amended from time to time, exercise any other power or authority that may be otherwise exercised by the Channel board of directors that the Special Committee may determine to be necessary or advisable to carry out and fulfill its duties and responsibilities; and (k) determine to elect not to pursue the Transactions.

On November 14, 2024, Ligand and Channel executed a customary mutual non-disclosure agreement.

On November 15, 2025, Mr. Baxter sent Mr. Knuettel the sales forecast and P&L model, the brand plan, the pricing research proposal and clinical information on ZELSUVMI.

Between November 13, 2024 and February 6, 2024, Mr. Knuettel engaged in ongoing discussions with the Special Committee and provided the Special Committee with multiple updates regarding the negotiation and finalization of the draft Term Sheet.

On November 18, 2025, Mr. Baxter and Mr. Knuettel engaged in a detailed discussion regarding LNHC’s business plan, product, manufacturing and supply process, market access, personnel and other aspects of the business and potential merger.

On November 21, 2024, Mr. Knuettel and Mr. Plesha had an introductory call to discuss the potential merger.

On November 25, 2024, Mr. Knuettel led an in-person discussion and due diligence meeting with Ezra Friedberg of the Special Committee, Marc Manuel, seven (7) officers and/or employees of Ligand,¹ and a representative from Raymond James, which was held at the LNHC facility in Durham, North Carolina.

On December 4, 2024, Mr. Knuettel and Mark Bistricer, Chief Executive Officer of Murchinson, discussed a prospective terms of an investment in the surviving corporation of the Merger by Murchinson and details with respect to the launch of ZELSUVMI.

On December 11, 2024, Mr. Knuettel and Mr. Bistricer held a follow-up discussion on the terms and conditions of the prospective Murchinson investment.

On December 6, Mr. Baxter had a call with Mr. Friedberg and Mr. Knuettel, who introduced Mr. Baxter to Mr. Bistricer to discuss whether any of Murchinson’s investment funds would be interested in participating in a potential equity financing in connection with a business combination transaction involving Channel and LNHC.

On December 15, 2024, Mr. Baxter and Mr. Bistricer discussed the proposed equity financing and royalty terms contained in the Term Sheet, including with respect to the total amount of equity financing to be provided by Ligand and Murchinson, the valuation at which equity financing partners would invest in the combined company, the proposed timing of the closing of the equity financing and the potential royalties that would be paid to equity financing partners.

On December 17, 2024, Mr. Baxter separately sent Mr. Bistricer and Mr. Knuettel a revised Term Sheet reflecting the discussions between Ligand, Channel and Murchinson that had occurred in the preceding days.

Between December 17, 2024 and February 6, 2025, Channel and Ligand continued to engage in ongoing negotiations of, and exchanged revised drafts of the Term Sheet. During this process, the material points in the Term Sheet that were negotiated included, among other things: (1) the total amount of equity financing to be provided by Ligand and Murchinson and certain other third parties, (2) the valuation at which equity financing partners, including Ligand and Murchinson, would invest in the combined company, (3) the lock-up terms that Channel would expect

Ligand, Murchinson and other equity financing sources to agree to, (4) the potential royalties on ZELSUVMI and other Channel products that would be paid to equity financing partners, and (5) potential financing structures (including bridge financing) that could enable LNHC to fund the launch of ZELSUVMI prior to the closing of the Transactions.

Between January 3, 2025 and January 11, 2025, Mr. Baxter and Mr. Knuettel engaged in at least three conversations to further negotiate the material open items in the draft Term Sheet, including the terms of the Merger and the terms of the equity financing to be provided by Ligand, Murchinson and certain other third parties.

On January 13, 2025, representatives from LNHC, Channel, Murchinson, Sullivan, Latham & Watkins LLP (“Latham”) as outside counsel to Ligand, and Kelley Drye & Warren LLP (“Kelly Drye”) as outside counsel to Murchinson, discussed the structure of the proposed Merger and equity financing, which had then become a potential concurrent PIPE Financing.

On February 6, 2025, following discussion, the Special Committee authorized Channel to proceed with execution of the Term Sheet.

On February 6, 2025, Channel, Ligand and a Murchinson investment fund executed the Term Sheet.

On February 7, 2025, the parties to the transaction held a formal kick-off call with representatives of Channel, Sullivan, Ligand, Latham, Murchinson and Kelley Drye in attendance. The parties discussed transaction timing and process, key documentation and due diligence.

On February 17, 2025, representatives of Sullivan, on behalf of Channel, delivered an initial draft of the Merger Agreement to Ligand, Latham, Murchinson and Kelly Drye.

On February 19, 2025, representatives of Latham, on behalf of Ligand, delivered a due diligence request list regarding Channel’s operations to Channel and Sullivan.

On February 20, 2025, representatives of Kelly Drye, on behalf of Murchinson, delivered an initial draft Purchase Agreement and ancillary documents for the PIPE Financing to Ligand, Latham, Channel and Sullivan.

Also on February 20, 2025, Mr. Knuettel and John Gay, Chief Financial Officer of LNHC, had a call to discuss the status of LNHC’s audited financials and the LNHC Projections.

On February 25, 2025, representatives of Sullivan communicated to representatives of Latham that Channel would expect that Ligand be a party to the Purchase Agreement for purposes of providing representations, warranties and indemnities regarding LNHC to equity investors. In response, Latham communicated to Sullivan that, consistent with the terms of the term sheet, Ligand would expect all representations, warranties and indemnities to be provided by the combined public company (and not Ligand).

Also on February 25, 2025, representatives of Latham, on behalf of Ligand, delivered a revised draft Merger Agreement to Channel, Sullivan, Murchinson and Kelly Drye.

On February 27, 2025, Mr. Knuettel and Mr. Gay had a follow-up conversation to discuss the status of LNHC’s audited financials, the LNHC Projections, as well as the requirements with respect to the information statement to be filed in connection with the Transactions.

On March 3, 2025, representatives of Sullivan, on behalf of Channel, delivered a due diligence request list regarding LNHC’s operations to Ligand and Latham.

On March 4, 2025, representatives of Sullivan, on behalf of Channel, provided responses to Ligand’s due diligence requests regarding Channel’s operations and granted representatives of Ligand and Latham access to the virtual data room containing certain confidential information regarding Channel. Following the exchange of initial due diligence requests and materials, the parties continued to exchange supplemental due diligence requests and responsive diligence information regarding Channel’s operations.

On March 5, 2025, representatives of Latham, on behalf of Ligand, delivered revised drafts of the Purchase Agreement and ancillary documents for the PIPE Financing to Channel, Sullivan, Murchinson and Kelly Drye.

Following the exchange of the initial drafts of the Merger Agreement and Purchase Agreement, representatives of Latham, on behalf of Ligand, delivered drafts of certain other ancillary documents, including draft lock-up agreements, non-disclosure agreements and presentation materials for the PIPE Financing, bridge financing

promissory notes and funding commitments and LNHC Disclosure Schedules to the Merger Agreement, to Channel, Sullivan, Murchinson and Kelly Drye. Similarly, representatives of Sullivan, on behalf of Channel, delivered drafts of certain other ancillary documents, including draft Channel Disclosure Schedules to the Merger Agreement, to Ligand, Latham, Murchinson and Kelly Drye.

From February 25, 2025 to April 16, 2025, representatives of Channel, Sullivan, Ligand, Latham, Murchinson and Kelly Drye continued to exchange drafts and negotiate the terms and conditions of the Merger Agreement, Purchase Agreement and ancillary agreements relating to the Transactions. During this process, the material open points in the Merger Agreement and Purchase Agreement that were negotiated included, among other things: (1) the circumstances in which Ligand would be willing to provide representations and warranties that would survive the consummation of the Transactions; (2) the total quantum of transaction expenses that each party would be authorized to incur; (3) acceptable transaction sources & uses of equity financing; (4) termination rights; (5) the terms and conditions with respect to conversion of Series A Preferred Stock into Common Stock; and (6) obligations and risk allocation with respect to stockholder approvals and SEC filings.

On March 11, 2025, M&N Sarchet sent Mr. Knuettel the financial analyses used to prepare the Fairness Opinion. On March 13, 2025, M&N Sarchet sent Mr. Knuettel the final Fairness Opinion for review by the Special Committee and the Channel board of directors.

On March 14, 2025, Mr. Plesha and Mr. Knuettel discussed LNHC’s underlying sales forecasts, sales process and management and developing a sales and finance dashboard for management support of the surviving corporation in the Merger.

On March 17, 2025, representatives of Latham, on behalf of Ligand, provided responses to Channel’s due diligence requests regarding LNHC’s operations and granted representatives of Channel and Sullivan access to the virtual data room containing certain confidential information regarding LNHC. Following the exchange of initial due diligence requests and materials, the parties continued to exchange supplemental due diligence requests and responsive diligence information regarding LNHC’s operations.

On March 19, 2025, representatives of Channel, Sullivan, Ligand, Latham, Murchinson and Kelly Drye met via teleconference to discuss material open issues in the Transaction Agreements, including those noted above. During the following week, Mr. Baxter, Mr. Bistricer and Mr. Knuettel continued to discuss potential terms to resolve the above-described open issues, as well as potential financing structures (including bridge financing) that could enable LNHC to fund the launch of ZELSUVMI prior to the closing of the Transactions.

Between March 19, 2025 and March 22, 2025, Mr. Baxter spoke at least three times regarding the circumstances in which Ligand would be willing to provide representations and warranties that would survive the consummation of the Transactions and the potential investors, and their proposed investment amounts, in the PIPE Financing.

On April 4, 2025, Mr. Plesha and Mr. Knuettel spoke to continue to discuss forecasts, compensation plans and launch plans for ZELSUVMI.

On April 9, 2025, the Special Committee and the Channel board of directors both met, at which time they reviewed a Power Point presentation prepared by Mr. Knuettel and the Fairness Opinion prepared by M&N Sarchet, provided in advance of the meetings, and discussed the final terms of the Merger Agreement, Purchase Agreement and other ancillary agreements relating to the Transactions. The Special Committee agreed to formally provide the Special Committee’s recommendation by unanimous written consent, and the Channel board of directors agreed to formally provide their approval of the Transaction Agreements and the Transactions by written consent as well.

On April 11, 2025, the Special Committee delivered the Special Committee Recommendation in the form of a unanimous written consent to the Channel board of directors recommending that the Channel board of directors approve the execution by Channel of definitive transaction documents and recommend that Channel’s stockholders vote to adopt and approve the Transaction Agreements and the consummation of the Transactions.

Also on April 11, 2025, acting upon the Special Committee Recommendation, the Channel board of directors unanimously by written consent (a) determined that the terms and conditions of the Transaction Agreements and the Transactions are advisable, fair to and in the best interests of Channel and its stockholders, (b) approved and declared advisable the Transaction Agreements, including the Transactions, (c) authorized and approved the execution, delivery and performance by Channel of the Transaction Agreements and the consummation of the Transactions, upon the terms and subject to the conditions set forth therein and (d) recommended the adoption and approval of the

Transaction Agreements and the consummation of the Transactions by the stockholders of Channel. In reaching its decision, the Channel board of directors considered and relied upon the analyses and the unanimous Special Committee Recommendation as set forth in the section entitled “The Merger — Recommendation of the Special Committee; Channel’s Reasons for the Merger” beginning on page 107 in arriving at this determination and recommendation. In considering the Special Committee’s analyses and the Special Committee Recommendation, the Channel board of directors reviewed and discussed information with respect to Channel’s, LNHC’s and Ligand’s financial condition, results of operations, competitive position and business strategy, as well as current industry, economic and market conditions and trends. The material factors that supported the Channel board of directors’ determination and recommendation, in addition to the Special Committee Recommendation, are those set forth in the section entitled “The Merger — Recommendation of the Special Committee; Channel’s Reasons for the Merger” beginning on page 107.

Following approval by the Channel board of directors, representatives of Channel and Sullivan proceeded to collect executed Purchase Agreements and Lock-Up Agreements from third parties participating in the PIPE Financing.

On the evening of April 16, 2025, representatives of Channel and Sullivan reported to representatives of Ligand, Latham, Murchinson and Kelly Drye that it had collected signatures in escrow to the Purchase Agreements and Lock-Up Agreements from all third parties participating in the PIPE Financing and that Channel was prepared to proceed with execution of the Merger Agreement and other Transaction Agreements. Following such confirmation, Channel, LNHC, and the third parties participating in the PIPE Financing executed the Transaction Agreements.

Also on the evening of April 16, 2025, pursuant to the terms of the Merger Agreement, Channel provided LNHC with the Written Consent of Channel stockholders beneficially owning or having sole voting power over 3,996,296 shares of Channel common stock, representing approximately 65.04% of the aggregate voting power of the issued and outstanding shares of Channel common stock, consenting to the adoption of the Transaction Agreements and the Transactions, among other items.

On the following day, before the opening of trading on NYSE American, Ligand and Channel issued a press release announcing the execution of the Transaction Agreements.

During the course of its evaluation of the Merger Agreement and the transactions contemplated by the Merger Agreement, the Channel board of directors held numerous meetings, consulted with Channel’s senior management, legal counsel and financial advisors, and reviewed and assessed a significant amount of information. On April 11, 2025, the Special Committee unanimously determined that the Transaction Agreements and the Transactions, on the terms and subject to the conditions set forth therein, are advisable, fair to and in the best interests of Channel and Channel stockholders. The Special Committee further (a) recommended that the Merger Agreement and the other transactions contemplated by the Merger Agreement, including the Merger, be approved by the Channel board of directors; (b) recommended that the Purchase Agreement and the other transactions contemplated by the Purchase Agreement, including the PIPE Financing, be approved by the Channel board of directors; and (c) directed M&N Sarchet to deliver the Fairness Opinion to the Channel board of directors in connection with its deliberations and consideration of the foregoing recommendations.

In the course of reaching its determination and making its recommendation, the Special Committee considered a number of factors, including, but not limited to, the following (which factors are not necessarily presented in order of relative importance):

See the section titled “The Merger Agreement” beginning on page 129 in this information statement for a detailed discussion of the terms and conditions of the Merger Agreement.

In particular, the Special Committee considered the following:

In the course of its deliberations, the Special Committee also considered a variety of risks and other countervailing factors related to the Merger and other transactions contemplated by the Merger Agreement, including, among others:

After taking into account all of the factors set forth above, as well as others, the Special Committee concluded that the risks, uncertainties, restrictions and potentially negative factors associated with the Transactions were outweighed by the potential benefits of the Transactions to Channel and Channel stockholders. The foregoing information and factors considered by the Channel board of directors are not intended to be exhaustive but are believed to include all of the material factors considered by the Channel board of directors. In view of the wide variety of factors considered in connection with its evaluation of the Merger and the other transactions contemplated by the Merger Agreement and the complexity of these matters, the Channel board of directors did not find it useful,

and did not attempt, to quantify, rank or otherwise assign relative weights to these factors. In considering the factors described above, individual members of the Channel board of directors may have given different weight to different factors. The Channel board of directors conducted an overall analysis of the factors described above, including thorough discussions with, and questioning of, Channel’s management team and legal and financial advisors, and considered the factors overall to be favorable to, and to support, its determination.

On April 11, 2025, acting upon the Special Committee Recommendation, the Channel board of directors unanimously (a) determined that the terms and conditions of the Transaction Agreements and the Transactions are advisable, fair to and in the best interests of Channel and its stockholders, (b) approved and declared advisable the Transaction Agreements, including the Transactions, (c) authorized and approved the execution, delivery and performance by Channel of the Transaction Agreements and the consummation of the Transactions, upon the terms and subject to the conditions set forth therein and (d) recommended the adoption and approval of the Transaction Agreements and the consummation of the Transactions by the stockholders of Channel.

The Channel board of directors considered and relied upon the analyses and the unanimous Special Committee Recommendation as set forth in the section entitled “The Merger — Recommendation of the Special Committee; Channel’s Reasons for the Merger” beginning on page 107 in arriving at this determination and recommendation. In considering the Special Committee’s analyses and the Special Committee Recommendation, the Channel board of directors reviewed and discussed information with respect to Channel’s, LNHC’s and Ligand’s financial condition, results of operations, competitive position and business strategy, as well as current industry, economic and market conditions and trends. The material factors that supported the Channel board of directors’ determination and recommendation, in addition to the Special Committee Recommendation, are those set forth in the section entitled “The Merger — Recommendation of the Special Committee; Channel’s Reasons for the Merger” beginning on page 107.

The following discussion sets forth material factors considered by the LNHC board of directors in reaching its determination to authorize the Merger Agreement and approve the Merger. However, it may not include all of the factors considered by the LNHC board of directors. In light of the number and wide variety of factors considered in connection with its evaluation of the Merger Agreement and the Merger, the LNHC board of directors did not consider it practicable to, and did not attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its determination. The LNHC board of directors viewed its position and determinations as being based on all of the information available and the factors presented to and considered by it.

In the course of reaching its determination, the LNHC board of directors considered a number of factors, including, but not limited to, the following (which factors are not necessarily presented in order of relative importance):

In the course of its deliberations, the LNHC board of directors also considered a variety of risks and other countervailing factors related to the Merger and other transactions contemplated by the Merger Agreement, including, among others:

After taking into account all of the factors set forth above, as well as others, the LNHC board of directors concluded that the risks, uncertainties, restrictions and potentially negative factors associated with the Transactions were outweighed by the potential benefits of the Transactions to LNHC and its sole stockholder. The foregoing information and factors considered by the LNHC board of directors are not intended to be exhaustive but are believed to include all of the material factors considered by the LNHC board of directors. In view of the wide variety of factors considered in connection with its evaluation of the Merger and the other transactions contemplated by the Merger Agreement and the complexity of these matters, the LNHC board of directors did not find it useful, and did not attempt, to quantify, rank or otherwise assign relative weights to these factors. In considering the factors described above, individual members of the LNHC board of directors may have given different weight to different factors.

Channel engaged M&N Sarchet to issue the Fairness Opinion in connection with the Merger. Channel selected M&N Sarchet based on M&N Sarchet’s significant valuation experience, including at a Big Four accounting firm, knowledge of the sector and prior experience with M&N Sarchet’s high quality work product. As part of M&N Sarchet’s engagement, the Special Committee and the Channel board of directors requested M&N Sarchet’s opinion as to the fairness, from a financial point of view and as of the date of such opinion, of the Merger Partner Valuation (as defined in the Fairness Opinion) used to calculate the exchange ratio described in more detail in the section titled “The Merger-Exchange Ratio” beginning on page 125 of this information statement. On April 11, 2025, M&N Sarchet delivered to the Special Committee and the Channel board of directors its opinion, dated March 13, 2025, to the effect that, as of the date of the Fairness Opinion and based upon and subject to the factors, considerations, qualifications, limitations and assumptions set forth therein, the Merger Partner Valuation (as defined in the Fairness Opinion) used to calculate the exchange ratio under the Merger agreement and which was assumed to be $67.0 million on a pre-Transactions basis (as more fully described below) was fair to Channel’s stockholders from a financial point of view.

The full text of the Fairness Opinion is attached as Annex F to this information statement and is incorporated herein by reference. This summary of the Fairness Opinion contained in this information statement is qualified in its entirety by reference to the full text of the Fairness Opinion. Channel stockholders are urged to read the Fairness Opinion carefully and in its entirety for a discussion of the procedures followed,

assumptions made, matters considered, and qualifications and limitations on the review undertaken by M&N Sarchet in connection with the Fairness Opinion. The Fairness Opinion speaks only as of the date of the Fairness Opinion. The Fairness Opinion was for the information of, and was directed to, the Special Committee and the Channel board of directors (in its capacity as such) for its information and assistance in connection with its consideration of the financial terms of the Merger. The Fairness Opinion addressed only the fairness, from a financial perspective, to Channel of Merger Partner Valuation used to calculate to the exchange ratio pursuant to the Merger Agreement. It did not address the underlying business decision of the Channel board of directors or Channel to proceed with or effect the Merger or constitute a recommendation to the Channel board of directors in connection with the Merger or any other matter, and it does not constitute a recommendation to any stockholder of Channel or any stockholder of any other entity as to how to vote in connection with the Merger or as to any other action that a stockholder should take with respect to the Merger.

At the direction of Channel and without independent verification, M&N Sarchet relied upon and assumed that, pursuant to the terms of the draft Merger Agreement that it had reviewed, each share of Merger Sub common stock, par value $0.001 par value per share, issued and outstanding immediately prior to the Effective Time will be converted into and become one fully paid and nonassessable share of LNHC common stock. Each share of LNHC common stock, other than shares to be cancelled and any dissenting shares, issued and outstanding immediately prior to the Effective Time will be automatically converted into the right to receive a number of shares of Channel common stock equal to the exchange ratio. As of the Effective Time, all such shares of LNHC common stock will cease to be outstanding and shall automatically be cancelled and will cease to exist, and each holder of a certificate or non-certificated book entry representing any such shares of LNHC common stock will cease to have any rights with respect thereto, except the right to receive the shares of Channel common stock and any cash in lieu of fractional shares of Channel common stock.

M&N Sarchet referred to the terms and conditions of the Merger as set forth in the Merger Agreement. M&N Sarchet also acknowledged their understanding that LNHC owns the FDA approved product ZELSUVMI, approved for the treatment of Molluscum contagiosum (molluscum) in adults and pediatric patients one year of age and older.

For purposes of the Fairness Opinion, M&N Sarchet made such reviews, analyses and inquiries as M&N Sarchet deemed necessary and appropriate under the circumstances. Among other things, M&N Sarchet: