CYTODYN INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

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Certain information included in this quarterly report on Form 10-Q contains, or
incorporates by reference, forward-looking statements within the meaning of
Section 21E of the Exchange Act. Words and expressions reflecting optimism,
satisfaction or disappointment with current prospects, as well as words such as
"believes," "hopes," "intends," "estimates," "expects," "projects," "plans,"
"anticipates" and variations thereof, or the use of future tense, identify
forward-looking statements, but their absence does not mean that a statement is
not forward-looking.

Our forward-looking statements are not guarantees of performance, and actual
results could vary materially from those contained in or expressed by such
statements. In evaluating all such statements, we urge you to specifically
consider various risks identified in this quarterly report, and those set forth
in Item 1A. Risk Factors in our 2022 Form 10-K, any of which could cause actual
results to differ materially from those indicated by our forward-looking
statements. Our forward-looking statements reflect our current views with
respect to future events and are based on currently available financial,
economic, scientific, and competitive data and information about current
business plans. Forward-looking statements include, among others, statements
about leronlimab, its ability to have positive health outcomes, the Company's
ability to resolve the clinical holds imposed by the U.S. Food and Drug
Administration (the "FDA") and information regarding future operations, future
capital expenditures and future net cash flows. You should not place undue
reliance on our forward-looking statements, which are subject to risks and
uncertainties relating to, among other things: the regulatory determinations of
leronlimab's safety and effectiveness by the FDA and various drug regulatory
agencies in other countries; the Company's ability to raise additional capital
to fund its operations; the Company's ability to meet its debt and other payment
obligations; the Company's ability to enter into or maintain partnership or
licensing arrangements with third-parties; the Company's ability to retain key
employees; the timely and sufficient development, through internal resources or
third-party consultants, of analyses of the data generated from the Company's
clinical trials required by the FDA or other regulatory agencies in connection
with the Company's Biologic License Application ("BLA") resubmission or other
applications for approval of the Company's drug product; the Company's ability
to achieve approval of a marketable product; the design, implementation and
conduct of the Company's clinical trials; the results of the Company's clinical
trials, including the possibility of unfavorable clinical trial results; the
market for, and marketability of, any product that is approved; the existence or
development of vaccines, drugs, or other treatments that are viewed by medical
professionals or patients as superior to the Company's products; regulatory
initiatives, compliance with governmental regulations and the regulatory
approval process; legal proceedings, investigations or inquiries affecting the
Company or its products; general economic and business conditions; changes in
foreign, political, and social conditions; stockholder actions or proposals with
regard to the Company, its management, or its Board of Directors; and various
other matters, many of which are beyond the Company's control. Should one or
more of these risks or uncertainties develop, or should underlying assumptions
prove to be incorrect, actual results may vary materially and adversely from
those anticipated, believed, estimated, or otherwise indicated by our
forward-looking statements. Except as required by law, we do not undertake any
responsibility to update these forward-looking statements to take into account
events or circumstances that occur after the date of this quarterly report.
Additionally, we do not undertake any responsibility to update you on the
occurrence of any unanticipated events that may cause actual results to differ
from those expressed or implied by these forward-looking statements.

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our Annual Report on Form 10-K
(the "2022 Form 10-K"), and the other sections of this Form 10-Q, including our
consolidated financial statements and related notes set forth in Part I, Item 1.
This discussion and analysis contain forward-looking statements, including
information about possible or assumed results of our financial condition,
operations, plans, objectives and performance that involve risks, uncertainties
and assumptions. The actual results may differ materially from those anticipated
and set forth in such forward-looking statements.

Insight

The Company is a biotechnology company focused on the clinical development and
potential commercialization of its product candidate, leronlimab, which is being
studied for the treatment of HIV infection, NASH, and solid tumors in oncology.
Our current business strategy is to seek the removal of the partial and full
clinical holds imposed by the US FDA in March 2022, evaluate the feasibility of
the resubmission of the clinical section of the BLA for leronlimab as a

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combination therapy for highly experienced HIV patients, and to seek further development of leronlimab in NASH, NASH-HIV and solid tumors in oncology.

As further discussed in Part I, Item 1, Note 2, Summary of Significant
Accounting Policies - Inventories, Note 3, Inventories, net, and Note 9,
Commitments and Contingencies, the Company capitalized procured or produced
pre-launch inventories in preparation for product launches. The Company
considers anticipated future sales, shelf-lives, and expected approval date when
evaluating realizability of prelaunch inventories. The shelf-life of a product
is determined as part of the regulatory approval process; however, in assessing
whether to capitalize pre-launch inventory, the Company considers the stability
data of all inventories. As inventories approach their shelf-life expiration,
the Company may perform additional stability testing to determine if the
inventory is still viable, which may result in an extension of its shelf-life.
Further, in addition to performing additional stability testing, certain raw
materials inventory may be sold in its then current condition prior to reaching
expiration. In determining whether pre-approval inventory remains salable, the
Company considers a number of factors, including potential delays in obtaining
regulatory approval, the introduction of competing products that may negatively
impact the demand for our product, the likelihood that physicians would be
willing to prescribe leronlimab to their patients, and whether the target
patient population would be willing to try leronlimab as a new therapy.

First Quarter Overview

BLA HIV and clinical developments

The remaining BLA section to be completed and submitted remains in the clinical
section as of the date of this report. The Company is in a dispute with its
former contract research organization ("CRO"); the Company obtained an order
requiring the CRO to release the Company's clinical data related to the BLA and
other clinical trials, which the CRO had been withholding, thereby preventing
the Company from completing necessary clinical data submissions to the FDA. The
order granted the Company access to the data and the right to perform an audit
of the CRO's services. In March 2022, the FDA notified the Company that it had
placed a partial clinical hold on the Company's HIV program; the Company was not
enrolling any new patients in the trials placed on hold. The partial clinical
hold on the HIV program impacted patients enrolled in HIV extension trials. The
affected patients have been transitioned to other available therapeutics. No
clinical studies can be initiated or resumed until the partial clinical hold is
resolved, which may affect our ability to resubmit the BLA. The Company's
efforts are focused on activities that will allow us to resolve the partial
clinical hold and potentially resume the BLA resubmission process. The Company
will update the feasibility of the resubmission of the clinical section of the
BLA once it completes its evaluation of the clinical data, results of the CRO
audit, and the timelines of the clinical holds.

NASH Clinical Developments

Non-alcoholic steatohepatitis (NASH) is a chronic liver disease characterized by
the presence of hepatic inflammation and cell. Patients with advanced fibrosis
due to NASH are at significantly higher risk of liver­related mortality. There
is currently no approved drug for NASH. Liver disease is one of the leading
causes of non-AIDS-related death in HIV patients. The Company is identifying the
next steps in clinical development to continue the investigation of leronlimab
in the NASH indication and HIV patients with NASH.

In NASH, liver homeostasis is impaired due to an accumulation of toxic lipids
which can activate both Kupffer cells (KCs) and tissue-resident macrophages
resulting in the production of fibrogenic cytokines and chemoattractant
chemokines such as transforming growth factor-beta (TGF-?) and monocyte
chemoattractant protein-1 (MCP-1). Not only do these cytokines/chemokines
promote transdifferentiation of hepatic stellate cells (HSCs) into
myofibroblasts (the primary source for fibrillary collagens), but they also
amplify the immune response by recruiting additional cells into the damaged
area. Recruitment of extra-hepatic inflammatory cells to the site of hepatic
injury is typically mediated by interactions between cytokines/chemokines and
their receptors. It has also been shown that patients with NASH also have high
levels of C-C chemokine receptor 5 (CCR5) and the associated ligand, CCL5, thus
demonstrating a potential role of CCR5 and its ligands in liver fibrosis.

The potential of leronlimab in the treatment of NASH has been demonstrated in a preclinical model of fatty liver disease. Immunodeficient NOD-SCID Gamma (NSG) mice were fed a NASH-inducing high-fat diet, transplanted with

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human stem cells to repopulate the deficient immune system, and treated with
leronlimab. Sixteen (16) male NOD.Cg-Prkdcscid Il2rgtm1Wjl/SzJ, commonly known
as the NOD scid IL-2 receptor gamma knockout mice (NSG) were first humanized by
intravenous inoculation with normal human umbilical cord blood cells (105).
After 5 weeks on normal mouse chow, mice were successfully humanized,
demonstrating >25% human CD45 cells in peripheral blood. Mice were switched to
high fat (52%) high cholesterol (1.25%) diet (FPC diet: fructose, palmitate,
cholesterol, trans-fat; Envigo-Teklad TD.160785). Leronlimab and control
antibody (normal human IgG, Sigma) were administered i.p. at a dose of 2mg i.p.
twice weekly, n=8 mice/group. The results showed that leronlimab inhibited fatty
liver development, a key characteristic of early-stage NASH, such that treatment
of humanized NSG mice with leronlimab caused a three fold reduction in hepatic
steatosis compared to control in an animal model of high fructose, high
palmitate, high cholesterol diet.

The Company has reported clinical data from patients with NASH from the
CDI-NASH-01 trial which was designed as a multi-center Phase 2a study and was
subsequently converted into an exploratory study to evaluate the dose, efficacy,
and safety of leronlimab at 350 mg and 700 mg, versus placebo. The study also
included an expansive biomarker program designed to inform future clinical
trials and to more fully understand leronlimab's mechanism of action within the
NASH setting. CDI-NASH-01 was run in two parts, Part 1 of the study was to
assess the efficacy of leronlimab 700 mg (n=22) in improving NAFLD/NASH measures
in adult patients diagnosed with NASH compared to placebo (n=28). Part 2 was
subsequently added to assess leronlimab 350 mg in improving NAFLD/NASH measures
in adult patients diagnosed with NASH (n=22). In Part 1 of the study, eligible
subjects were randomized 1:1 to one of the two study arms to receive either
leronlimab 700mg (Group A), or placebo (Group B), given once per week (±1day) at
the study site for up to 13 weeks during the treatment period (with up to 60
participants). In Part 2 of the study, eligible subjects enrolled to receive
leronlimab 350 mg open-label given once per week (±1day) at the study site for
up to 13 weeks during the treatment period (with up to 28 participants). The
primary efficacy objective was percent change from baseline in hepatic fat
fraction, as assessed by magnetic resonance imaging-derived proton density fat
fraction (MRI-PDFF) at week 14. The secondary efficacy objective was absolute
change from baseline in fibro-inflammatory activity in the liver as assessed by
MRI-corrected T1 imaging (MRI-cT1) at week 14. MRI-cT1 is obtained by
multiparametric magnetic resonance imaging of the liver and is a quantitative
metric for assessing a composite of liver inflammation and fibrosis, expressed
in milliseconds (msec). MRI-PDFF is being studied as an imaging surrogate
endpoint for the fat density in the liver. MRI-cT1 is being studied as an
imaging surrogate endpoint for hepatic fibro-inflammation. This is a critical
unmet need in the NASH space, as many agents have been unable to show reductions
in fibro-inflammation despite reductions in hepatic steatosis.

All analyses performed were exploratory. Treatment with leronlimab was well
tolerated in both Part 1 and Part 2 compared to placebo. In Part 1 of the study,
leronlimab 700 mg did not reduce mean change in PDFF and cT1 from baseline to
week 14 vs. placebo. In Part 2, leronlimab 350 mg reduced mean change in PDFF
and cT1 from baseline to week 14 vs. the placebo group from Part 1, despite
increased degree of baseline fibro-inflammation. In the combined group of
patients with moderate (? 875 msec) and severe (? 950 msec) cT1 values at
baseline, leronlimab 350 mg reduced cT1 from baseline to week 14 vs. placebo.
Based on post hoc CCR5 haplotype analysis of a small subgroup (n=5), we are
considering further investigation of the 700mg dose of leronlimab for specific
haplotypes.

Cancer Clinical Developments

The Company identifies the next steps in clinical development and explores potential commercial opportunities to further investigate leronlimab for solid tumors in oncology based on the data generated to date by the Company.

Summary of TNBC Data

To assess the impact of leronlimab treatment on mTNBC patients, we pooled the
data from 3 studies: CD07_TNBC Phase 1b/2, CD07_TNBC_Compassionate Use, and
CD-09 Basket. The study population for pooled efficacy analysis was a total of
28 subjects (10 subjects from the Phase 1b/2 study, 16 subjects from the
Compassionate Use Study, and 2 subjects were from the Basket Study).

To explore the impact of leronlimab in the mTNBC patients' disease progression,
investigator assessed Progression Free Survival (PFS) was analyzed in the 28
subjects. There was a total of 19 subjects dosed between 525 mg and 700 mg (4
subjects increased dose from 350 mg to 525 mg and were included in the higher
dose cohort). The median PFS

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(mPFS) for the 525 mg - 700 mg cohort was 6.2 months (95% CI 2.6 months - 7.5
months). There were 9 subjects dosed at 350 mg, mPFS was 2.2 months (95% CI 0.7
months - 12+ months). There was a meaningful PFS advantage at the higher doses
when compared with the lower, 350 mg dose cohort.

Furthermore, the preliminary results of the leronlimab studies also showed
similarity in the PFS outcomes of mTNBC patients treated with leronlimab +
carboplatin compared to overall leronlimab treated population. Of the 28
subjects enrolled, 13 subjects received leronlimab + carboplatin treatment. The
mPFS for leronlimab + carboplatin population was 3.9 months (95% CI 2.3 months -
6.0 months).

The subgroup analysis of PFS based on the individual subjects in each study were
also reviewed. The mPFS for Phase 1b/2 study was 3.9 months (95% CI 2.3 months -
6.2 months), mPFS for the Compassionate Use study was 3.3 months (95% CI 1.3
months - 7.5 months), and mPFS for the Basket Study was 2.8 months (95% CI N/A).

Combined, the overall mPFS for all 28 patients treated with leronlimab in the
population of mTNBC patients regardless of dosage, conjunction therapy type,
brain or bone metastases that have failed more than one line of previous therapy
was 4.1 months (95% CI 2.5 months - 7.0 months). The mean PFS was 3.7 ± 2.93
standard deviation (SD).

To explore the impact of leronlimab in the mTNBC patients' disease progression,
Overall Survival (OS) was analyzed in the same 28 subjects. The median OS (mOS)
for leronlimab + carboplatin population was 12+ months (95% CI 5.4 months - 12+
months).

The mOS for the 350 mg cohort was 4.6 months (95% CI 1.1 months -12+ months). The mOS for the 525-700 mg cohort was 12+ months (95% CI 5.5 months – 12+ months).

The overall median OS for leronlimab treated population of mTNBC patients
regardless of brain or bone metastases that have failed more than one line of
previous therapy was 6.5 months (95% CI 5.0 months - 12+ months). The mean value
for OS was 5.5 ±4.31 standard deviation (SD).

COVID-19 Clinical Developments

The Company has made the business decision to currently discontinue its
investigation of leronlimab for the COVID-19 indications due to challenges in
clinical enrollment in the severe/critical COVID-19 population, and the unclear
path for regulatory approval of COVID-19 post-acute sequelae SARS-CoV-2
infection (PASC).

Corporate developments

In June 2022, the Company concluded a private placement of common stock and
warrants through a placement agent, selling approximately 50.7 million
additional shares of common stock for gross proceeds of $12.9 million and net
proceeds of $11.3 million. Refer to Note 6, Equity Awards and Warrants - Private
Placement of Common Stock and Warrants through Placement Agent for details.

Effective July 9, 2022, Cyrus Arman, Ph.D. was appointed President, and Antonio
Migliarese ceased his role as interim President. Dr. Arman previously held
positions with a number of biotechnology companies, most recently serving as
Chief Business Officer of Nimble Therapeutics, Inc., a company focused on
engineering peptides. Prior to Nimble he was Vice President of Corporate
Development and Strategy of NEUVOGEN, Inc., an 29mmune-oncology company,
developing therapeutic whole cell cancer vaccines, from 2019 until 2021.
Beginning in 2017, he served as co-founder and managing partner of BioVega
Capital, LLC, a life sciences hedge fund. From 2014 through 2019, he served in a
variety of strategy roles at Amgen (NASDAQ: AMGN), a leading independent
biotechnology company, including as Director of Corporate Strategy and Global
Director and Head of Competitive Intelligence and Strategy. Prior to Amgen he
was a Principal at Deallus Consulting, a global lifesciences competitive
strategy consulting firm. He received an M.S. degree in biomedical engineering
and a Ph.D. in neuroscience from the University of Southern California and an
M.B.A from the UCLA Anderson School of Management.

On August 24, 2022, Ryan Dunlap was appointed to the Company Board of Directors
and was subsequently appointed chair of the Audit Committee. Mr. Dunlap has over
25 years' experience in accounting, finance and operations leadership,
developing significant expertise in strategy setting, improving operational
efficiency and effectiveness, fundraising and investor relations, financial
reporting and compliance, and risk management. Mr. Dunlap currently serves as
the CFO of Gurobi Optimization, a private, equity backed software company
offering customers decision intelligence solutions utilizing mathematical
optimization, where he started in October 2019. Prior to that, he spent 7

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years as a CFO in the biotech and life science industries, including at
MolecularMD (now ICON Specialty Labs), a growth equity-backed molecular
diagnostics company, and Galena Biopharma, a publicly-traded oncology drug
development company. Earlier in his career, Mr. Dunlap held various financial
and operational leadership roles in large, multinational organizations, and
spent 11 years with public accounting firms such as PwC, KPMG, and Moss Adams,
where he provided business assurance and advisory services to both public and
private companies predominately in the software, technology, and life sciences
industries. Mr. Dunlap earned a B.S. degree in Accounting from the University of
Oregon and is an active licensed CPA in the state of Oregon.

On August 31, 2022, the Company's stockholders approved a proposal to increase
the total number of authorized shares of common stock from 1.0 billion shares to
1.35 billion shares at a special stockholders' meeting.

Operating results

Fluctuations in operating results

The Company's operating results may fluctuate significantly depending on the
outcomes of clinical trials, patient enrollment and/or completion rates in
clinical trials, entering into new clinical trial protocols, and their related
effect on research and development expenses, regulatory and compliance
activities, activities related to the HIV BLA, general and administrative
expenses, professional fees, and legal proceedings and the related outcomes. We
require a significant amount of capital to continue to operate; therefore, we
regularly conduct offerings to raise capital, which can create various forms of
non-cash interest expense or other expenses. Additionally, we periodically
negotiate settlement of debt payment obligations in exchange for equity
securities of the Company and enter into warrant exchanges or modifications that
may create non-cash charges. Our ability to continue to fund operations will
depend on our ability to raise additional capital. Refer to Risk Factors,
Liquidity and Capital Resources, and Going Concern sections included in this
quarterly report.

Operating results are as follows for the periods presented:

                                            Three months ended August 31,              Change
(in thousands, except for per share
data)                                         2022                2021              $            %
                                                             (Restated) (1)
Revenue                                  $             -     $            41    $     (41)      (100)
Cost of goods sold                                     -                   1           (1)      (100)
Gross margin                                           -                  40          (40)      (100)
Operating expenses:
General and administrative                         6,333               7,617       (1,284)       (17)
Research and development                             576              12,020      (11,444)       (95)
Amortization and depreciation                         99                 276         (177)       (64)
Inventory charge                                   2,704               1,764           940         53
Total operating expenses                           9,712              21,677      (11,965)       (55)
Operating loss                                   (9,712)            (21,637)        11,925         55
Interest and other expense:
Interest on convertible notes                    (1,146)             (1,686)           540         32
Amortization of discount on
convertible notes                                  (576)               (952)           376         39
Amortization of debt issuance costs                 (16)                (28)            12         43
Loss on induced conversion                             -            (18,530)        18,530        100
Finance charges                                    (940)                (35)         (905)    (2,586)
Inducement interest expense                            -               (528)           528        100
Legal settlement                                       -             (1,941)         1,941        100
Loss on derivatives                              (8,601)                   -       (8,601)      (100)
Total interest and other expense                (11,279)            (23,700)        12,421         52
Loss before income taxes                        (20,991)            (45,337)        24,346         54
Income tax benefit                                     -                   -             -          -
Net loss                                        (20,991)            (45,337)        24,346         54
Basic and diluted:
Weighted average common shares
outstanding                                      787,856             632,597    $  155,259         25
Loss per share                           $        (0.03)     $        (0.07)          0.04         55

(1) See Note 2, Summary of main accounting policies.

Product Revenue, Cost of Goods Sold (“COGS”) and Gross Margin

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We had no revenue in the three months ended August 31, 2022 as compared to
approximately $41.0 thousand in the comparable period of the previous year.
Revenue was related to the fulfillment of orders under a Compassionate Special
Permit ("CSP") in the Philippines for the treatment of COVID-19 patients. Sales
were made under the April 2021 exclusive supply and distribution agreement
granting Chiral the right to distribute and sell up to 200,000 vials of
leronlimab through April 15, 2022. At the time of the sales, FDA approval had
not yet been received for leronlimab and the product sold was previously
expensed as research and development expense due to its being manufactured prior
to the commencement of the manufacturing of commercial grade pre-launch
inventories. Therefore, COGS consists only of the costs of packaging and
shipping of the vials, including related customs and duties.

General and administrative expenses

General and administrative expenses consisted of the following items:

                                      Three months ended August 31,               Change
(in thousands)                         2022                  2021              $            %
Salaries, benefits, and other
compensation                      $         1,278       $           385    $      893        232
Stock-based compensation                    1,341                 2,597       (1,256)       (48)
Legal fees                                  1,453                 2,351         (898)       (38)
Other                                       2,261                 2,284    

(23) (1) Total general and administrative expenses $6,333 $7,617 ($1,284) (17)


General and administrative expenses decreased approximately $1.3 million, or
17%, for the three months ended August 31, 2022, compared to the same period in
the prior year primarily due to a reduction in stock-based compensation expense
and legal fees, offset by an increase in salaries, benefits, and other
compensation. The decrease in stock-based compensation expense was the result of
fewer equity awards granted during the three months ended August 31, 2022. Legal
fees decreased due to legal expenses paid by the Company's insurance carrier.
The increase in salaries, benefits, and other compensation was the result of a
reclassification in the three-months ended August 31, 2021 of approximately $1.6
million of previously accrued incentive compensation to stock-based compensation
due to the compensation being issued in shares of common stock.

Research and development costs

Research and development costs consist of the following items:

                                    Three months ended August 31,                 Change
(in thousands)                      2022                   2021                 $            %
Clinical                        $          20       $            9,227     $   (9,207)     (100)
CMC                                       323                    2,559         (2,236)      (87)
License and patent fees                   233                      234             (1)       (0)
Total research and development  $         576       $           12,020    

($11,444) (95)


For the three months ended August 31, 2022, research and development expenses
decreased approximately $11.4 million, or 95%, compared to the same period last
year, primarily due to lower clinical trial expenses as a result of clinical
trials related to US COVID-19, oncology, and NASH having been completed that
were active in the same period last year; the pausing of the Brazilian COVID-19
trials; and the closing of HIV extension studies in March 2022 due to clinical
holds placed on the Company by the FDA. The future trend of such expenses is
dependent on the timing of FDA clearance from the clinical holds, the future
clinical development of leronlimab in the treatment of HIV, NASH, NASH-HIV and
oncology, the outcome of pre-clinical studies for additional cancer indications,
the outcome or cessation of the Brazilian COVID-19 trials, and the feasibility
of the resubmission of the clinical section of the BLA. The decrease in
CMC-related expenses from the same period last year was the result of the
Company having concluded the majority of its CMC manufacturing and HIV BLA
related activities in the prior year.

Amortization and depreciation charges

Amortization and depreciation expense totaled approximately $0.1 million for the
three months ended August 31, 2022, a decrease of approximately $0.2 million, or
64% from the same period in the prior year. The decrease was

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attributable to the intangible write-off of a proprietary algorithm intangible
asset during the fiscal year ended May 31, 2021 and the ProstaGene noncompete
intangible asset becoming fully amortized as of November 30, 2021, resulting in
decreased amortization expense of intangibles.

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Interest and other expense

Interest and other charges consisted of the following items:

                                 Three months ended August 31,              Change
                                   2022               2021                $           %
(in thousands)                                     (Restated) (1)
Interest on convertible notes
payable                        $      1,146     $           1,686    $     (540)      (32)
Amortization of discount on
convertible notes                       576                   952          (376)      (39)
Amortization of debt issuance
costs                                    16                    28           (12)      (43)
Loss on induced conversion                -                18,530       (18,530)     (100)
Finance charges                         940                    35            905     2,586
Inducement interest expense               -                   528          (528)     (100)
Legal settlement                          -                 1,941        (1,941)     (100)
Loss on derivatives                   8,601                     -          8,601       100
Total interest and other
expense                        $     11,279     $          23,700    $  (12,421)      (52)

See Note 2, Summary of Significant Accounting Policies.

For the three months ended August 31, 2022, interest and other expenses
decreased approximately $12.4 million, or 52%, compared to the same period last
year. The decrease was primarily due to a decrease in loss on induced conversion
and legal settlement offset by an increase in loss on derivatives. The decrease
in non-cash loss on induced conversions resulted from the Company not issuing
any common stock to settle any outstanding convertible debt during the current
period as compared to the same period last year (refer to Part II, Item 8, Note
14, Restatement in the 2022 Form 10-K). The decrease in legal settlement expense
was the result of the Company having no legal settlements during the three
months ended August 31, 2022. The increase in loss on derivatives was
attributable to the change in the fair value of liability classified warrants
related to the Surety Bond Backstop Agreement and placement agent warrants
issued in connection with a recent offering. These warrants became equity
classified upon the stockholders' approval of an increase in authorized shares
on August 31, 2022.

Cash and capital resources

As of August 31, 2022, we had a total of approximately $4.7 million in cash and
approximately $122.3 million in short-term liabilities. We expect to continue to
incur operating losses and require a significant amount of capital in the future
as we continue to develop and seek approval to commercialize leronlimab. Despite
the Company's negative working capital position, vendor relations remain
relatively accommodative, and we do not currently anticipate significant delays
in our business initiatives schedule due to liquidity constraints. We cannot be
certain, however, that future funding will be available to us when needed on
terms that are acceptable to us, or at all. We sell securities and incur debt
when the terms of such agreements are deemed favorable to both parties under
then current circumstances and as necessary to fund our current and projected
cash needs.

Cash
The Company's cash position of approximately $4.7 million as of August 31, 2022,
increased by approximately $0.5 million, when compared to the balance of $4.2
million as of May 31, 2022. This increase was primarily the result of
approximately $11.5 million in cash provided by financing activities offset by
approximately $11.1 million in cash used in our operating activities during the
three months ended August 31, 2022. Refer to Item 1, Note 2, Summary of
Significant Accounting Policies - Going Concern, and the Going Concern
discussion below for information regarding the Company's ability to continue to
fund its operations and satisfy its payment obligations and commitments. Summary
of cash flows and changes between the periods presented is as follows:

                                       Three months ended August 31,        

To change

(in thousands)                           2022                2021          

$

Net cash (used in) provided by:
Net cash used in operating
activities                          $      (11,074)     $      (31,741)    $     20,667
Net cash used in investing
activities                          $             -     $           (8)    $          8
Net cash provided by financing
activities                          $        11,519     $         4,348    $      7,171


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Cash flows used in operating activities

Net cash used in operating activities totaled approximately $11.1 million during
the three months ended August 31, 2022, representing an improvement of
approximately $20.7 million compared to the three months ended August 31, 2021.
The decrease in the net amount of cash used was due primarily to a decrease in
our net loss, attributable to decreased G&A expense, R&D expense, and non-cash
interest and other expense, and working capital fluctuations, all of which are
highly variable. Refer to General and Administrative, Research and Development,
and Interest and Other Expense sections for the discussion.

Cash used in investing activities

Net cash used in investing activities for the three months ended August 31, 2022
compared to the same period of the previous year has not changed significantly.

Cash provided by financing activities

Net cash provided by financing activities totaled approximately $11.5 million,
an increase of approximately $7.2 million compared to the three months ended
August 31, 2021. The increase in net amount of cash provided was the result of
receiving approximately $11.3 million through the private placement of common
stock and warrants through a placement agent and approximately $0.2 million
through the exercise of warrants (Refer to Note 6, Equity Awards and Stock-Based
Compensation).

Pre-launch inventories

During the fourth fiscal quarter of 2022, the Company concluded that a
significant portion of inventories no longer qualify for capitalization as
pre-launch inventories due to expiration of shelf-life prior to expected
commercial sales and the ability to obtain additional commercial product
stability data until after shelf-life expiration. This is due to delays
experienced from the originally anticipated BLA approval date from the FDA.
Although these inventories are no longer being capitalized as pre-launch
inventories for US GAAP accounting purposes, the inventories written-off for
accounting purposes continue to be physically maintained, can be used for
clinical trials, and can be commercially sold if the shelf-lives are extended as
the result of the performance of on-going continued stability testing of drug
product. In the event the shelf-lives of these written-off inventories are
extended, and the inventories are sold commercially, the Company will not
recognize any costs of goods sold on the previously expensed inventories. The
Company also concluded that, due to delays of future production, certain raw
materials would expire prior to production and as such no longer qualify for
capitalization. Specifically, the Company evaluated its raw materials, which
consist of specialized raw materials, resins, and other, against the anticipated
production date and determined that while the next production date is
indeterminable as of May 31, 2022, specialized raw materials have remaining
shelf-lives ranging from 2023 to 2026. Therefore, a reserve of $10.2 million for
the entire remaining value of specialized and other raw materials was recorded
as of May 31, 2022. The Company also concluded that approximately $29.1 million,
composed of five batches of drug product, out of total of nine manufactured, is
likely to expire prior to the anticipated date the product may be approved for
commercialization. Additionally, the Company anticipates that approximately
$34.2 million of the drug product comprising the remaining four manufactured
batches, with shelf-lives lasting into 2026, may expire prior to receiving
approval for commercialization. The Company wrote-off the entire remaining
balance of the drug product, in the amount of $63.3 million, as of May 31, 2022.

During the first quarter of fiscal 2023, the Company reviewed purchase
commitments made by its manufacturing partner, Samsung BioLogics Co., Ltd.
("Samsung"), under the master agreement between the Company and Samsung, and its
vendors for specialized raw materials for which the Company made a prepayment in
the amount of $2.7 million in the third quarter of fiscal 2022, which were
recorded as other assets in the consolidated financial statements as of May 31,
2022. The Company and its manufacturing partner have been in discussions, among
other things, about cancelling the commitments to the suppliers, which have been
unsuccessful to date. These additional specialized raw materials are estimated
to have shelf-lives ranging from 2023 to 2026. The entire amount was reserved
for as of August 31, 2022.

During the fourth fiscal quarter of 2022, the Company completed its validation
of the resins' properties based on the number of cycles they have been used for,
and the remaining number of manufacturing cycles they may be used for; the

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Company did not identify any resins that failed suitability validation. As of
August 31, 2022, the remaining life of resins remained unchanged, ranging
between 37 and 62 cycles. The Company will continue to present its resins
inventory based on the remaining shelf-lives until a new shelf-life is assigned
based on the results of usability testing.

Convertible debt

April 2, 2021 Convertible note

On April 2, 2021, we issued a convertible note with a principal amount of $28.5
million resulting in net cash proceeds of $25.0 million, after $3.4 million of
debt discount and $0.1 million of offering costs. The note accrues interest
daily at a rate of 10% per annum, contains a stated conversion price of $10.00
per share, and matures in April 2023. The April 2, 2021 Note required monthly
debt reduction payments of $7.5 million for the six months beginning in May
2021, which could also be satisfied by payments on other notes held by the
noteholder or its affiliates. Beginning six months after the issuance date, the
noteholder may request monthly redemptions of up to $3.5 million. As of August
31, 2022, the outstanding balance of the April 2, 2021 Note, including accrued
interest, was approximately $12.4 million.

April 23, 2021 Convertible note

On April 23, 2021, we issued a convertible note with a principal amount of $28.5
million resulting in net cash proceeds of $25.0 million, after $3.4 million of
debt discount and $0.1 million of offering costs. The note accrues interest
daily at a rate of 10% per annum, contains a stated conversion price of $10.00
per share, and matures in April 2023. Beginning six months after the issuance
date, the noteholder may request monthly redemptions of up to $7.0 million. As
of August 31, 2022, the outstanding balance of the April 23, 2021 Note,
including accrued interest, was approximately $31.6 million.

Ordinary actions

We have 1,350.0 million common shares authorized. The table below summarizes the intended uses of the Common Shares.

                                                                                             As of
(in millions)                                                                           August 31, 2022
Issuable upon:
Warrants exercise                                                                                 176.2
Convertible preferred stock and undeclared dividends conversion                                    32.2
Outstanding stock options exercise or vesting of outstanding RSUs                                  17.4

Reserved for issuance under future equity-based awards under an equity incentive plan

            26.1
Reserved and issuable upon conversion of outstanding convertible notes                             12.0
Total shares reserved for future uses                                      
                      263.8
Common stock outstanding                                                                          812.3


As of August 31, 2022, we had approximately 273.9 million unreserved authorized
shares of common stock available for issuance. Our ability to continue to fund
our operations depends on our ability to raise capital. The funding necessary
for our operations may not be available on acceptable terms, or at all. If we
deplete our cash reserves, we may have to discontinue our operations and
liquidate our assets, in extreme cases, we could be forced to file for
bankruptcy protection, discontinue operations or liquidate assets.

Off-balance sheet arrangements

From August 31, 2022we had no off-balance sheet arrangements that have, or are reasonably likely to have, a material effect on our current or future financial condition, results of operations, liquidity, capital expenditures or capital resources .

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Contractual Obligations

Refer to Note 4, Accounts Payable and Accrued Liabilities, Note 5, Convertible
Instruments and Accrued Interest, and Note 9, Commitments and Contingencies
included in Part I, Item 1 of this Form 10-Q, and in Item 7 in the 2022 Form
10-K.

Legal Proceedings

The Company is a party to various legal proceedings described in Part I, Item 1,
Note 9, Commitments and Contingencies - Legal Proceedings of this Form 10-Q. We
are unable to predict the outcome of these proceedings, including the defense
and other litigation-related costs and expenses that may be incurred by the
Company, as the outcomes of legal proceedings are inherently uncertain.
Therefore, it is possible that the ultimate outcome of any proceeding, if in
excess of a recognized accrual, if any, could be material to the Company's
consolidated financial statements. As of August 31, 2022, the Company did not
record any legal accruals related to the outcomes of the matters discussed
in
this Form 10-Q.

Regulatory Matters

FDA Refusal Letter to File HIV BLA Application

In July 2020, the Company received a Refusal to File letter from the FDA
regarding its BLA submission for leronlimab as a combination therapy with HAART
for highly treatment-experienced HIV patients. The FDA informed the Company the
BLA did not contain certain information and data needed to complete a
substantive review and therefore, the FDA would not file the BLA. The
deficiencies cited by FDA included administrative deficiencies, omissions,
corrections to data presentation and related analyses, and clarifications
regarding the manufacturing processes. In November 2021, the Company resubmitted
the non-clinical and CMC sections of the BLA and is currently reevaluating the
clinical section. As of March 2022, the FDA had commenced its review of the CMC
section. Additionally, in March 2022 the FDA placed the HIV program on a partial
clinical hold, which may affect our ability to resubmit the BLA. The Company is
in dispute with its former contract research organization ("CRO"), as described
in Note 9, Commitments and Contingencies - Legal Proceedings in this Form 10-Q.
The Company previously obtained a court order requiring the CRO to release the
Company's clinical data related to the BLA and other clinical trials, which the
CRO had been withholding. Further, the order granted the Company the right to
perform an audit of the CRO's services. The Company is in the process of
evaluating the data, results of the audit, and implications of the partial
clinical hold. The Company will update the feasibility of the resubmission of
the clinical section of the BLA once it completes its evaluation.

FDA Warning Letter Regarding Improper COVID-19 Branding of Investigational Drug

In January 2022, the Company received a Warning Letter from the United States
FDA alleging that its former CEO had made references in a video interview to
COVID-19 and leronlimab in a promotional context to the effect that leronlimab,
an investigational new drug, is safe and effective for the purpose for which it
is being investigated or otherwise promoted the drug. The FDA warned the Company
that leronlimab has not been approved or authorized by the FDA, its safety and
effectiveness has not yet been established, and that the related clinical trial
data was mischaracterized in the video. The FDA further alleged the video
misbranded leronlimab under section 502(f)(1) of the FD&C Act and in violation
of section 301(a) of the FD&C Act, as the claims in the video made
representations in a promotional context regarding the safety and efficacy of an
investigational new drug that has not been approved or authorized by the FDA.
This matter was resolved with the FDA on September 26, 2022.

FDA Partial Clinical Waiting Letters for HIV and Full Clinical Waiting Letters for COVID-19

In March 2022, the United States FDA placed a partial clinical hold on the
Company's HIV program and a full clinical hold on its COVID-19 program in the
United States. The Company was not enrolling any new patients in the trials
placed on hold in the United States. Under the full clinical hold on the
COVID-19 program, no new clinical studies may be initiated until the clinical
hold is resolved. As discussed above, the Company has made a business decision
not to

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currently pursue the use of leronlimab in COVID-19 patients and has no plans for
further trials under the COVID-19 indication. CytoDyn is working closely with
the FDA to resolve the partial clinical hold as soon as possible. As of the date
of this filing, the Company has submitted the updated Investigator Brochure to
the FDA in connection with the lifting of the clinical hold. The Company is in
the process of completing additionally requested materials and will submit them
as soon as possible.

Under the full clinical hold on the COVID-19 program, no new clinical studies
may be initiated until the clinical hold is resolved. The Company is not
currently conducting any COVID-19 trials in the United States, and the Company
has made the business decision to discontinue its investigation of leronlimab
for COVID-19.

Going Concern
The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. As presented in the
accompanying consolidated financial statements, the Company had losses for all
periods presented. The Company incurred a net loss of approximately $21.0
million in the three months ended August 31, 2022 and has an accumulated deficit
of approximately $782.9 million as of August 31, 2022. These factors, among
several others, raise substantial doubt about our ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
relating to the recoverability and classification of assets and liabilities that
might be necessary should the Company be unable to continue as a going concern.

The Company has operated at a loss since inception. The Company's continuation
as a going concern is dependent upon its ability to obtain a significant amount
of additional operating capital, to continue to fund operations and pay its
liabilities and commitments, its research into multiple indications for and
development of its product candidate, to obtain FDA approval of its product
candidate for use in treating one or more indications, to outsource
manufacturing of its product, and ultimately to attain profitability. We intend
to seek additional funding through equity or debt offerings, licensing
agreements, supply and distribution agreements, and strategic alliances to
implement our business plan. There are no assurances, however, that we will be
successful in these endeavors. If we are not able to raise capital on a timely
basis on favorable terms, if at all, we may need to significantly change or
scale back operations, including our efforts related to the BLA and other
development and commercialization initiatives or to adequately fund legal
proceedings, all of which individually or in combination could materially impede
our ability to achieve profitability. The Company's failure to raise additional
capital could also affect our relationships with key vendors, including Samsung,
disrupting our ability to timely execute our business plan. In extreme cases,
the Company could be forced to file for bankruptcy protection, discontinue
operations or liquidate assets.

Since inception, the Company has financed its activities principally from the
public and private sale of equity securities as well as with proceeds from
issuance of convertible notes and related party notes payable. The Company
intends to finance its future operating activities and its working capital needs
largely from the sale of equity and debt securities. The sale of equity and
convertible debt securities to raise additional capital is likely to result in
dilution to stockholders and those securities may have rights senior to those of
common shares. If the Company raises funds through the issuance of additional
preferred stock, convertible debt securities or other debt or equity financing,
the related transaction documents could contain covenants restricting its
operations.

During fiscal 2021, the Company entered into long-term convertible notes that
are secured by all of our assets (excluding our intellectual property), and
include certain restrictive provisions, including limitations on incurring
additional indebtedness and future dilutive issuances of securities, any of
which could impair our ability to raise additional capital on acceptable terms.
During fiscal 2022, in exchange for warrants, the Company entered into a
backstop arrangement, as amended, with an accredited investor whereby the
Company pledged its patents and the investor agreed to indemnify the issuer of
the surety bond in the Amarex dispute with respect to the Company's obligations
under the surety bond. Future third-party funding arrangements may also require
the Company to relinquish valuable rights. Additional capital, if available, may
not be available on reasonable or non-dilutive terms.

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New accounting statements

Refer to Part I, Note 2, Summary of Significant Accounting Policies – Recent Accounting Pronouncements of this Form 10-Q for discussion.

Significant Accounting Policies and Estimates

Pre-launch inventories

We capitalize inventories procured or produced in preparation for product
launches sufficient to support estimated initial market demand. Typically,
capitalization of such inventory begins when the results of clinical trials have
reached a status sufficient to support regulatory approval, uncertainties
regarding ultimate regulatory approval have been significantly reduced and we
have determined that it is probable that these capitalized costs will provide
some future economic benefit in excess of capitalized costs. The material
factors considered by the Company in evaluating these uncertainties include the
receipt and analysis of positive Phase 3 clinical trial results for the
underlying product candidate, results from meetings with the relevant regulatory
authorities prior to the filing of regulatory applications, and the compilation
of the regulatory application. We closely monitor the status of the product
within the regulatory review and approval process, including all relevant
communication with regulatory authorities. If we are aware of any specific
material risks or contingencies other than the normal regulatory review and
approval process or if there are any specific issues identified relating to
safety, efficacy, manufacturing, marketing or labeling, the related inventory
may no longer qualify for capitalization.

We value inventory at the lower of cost or net realizable value using the
average cost method. Inventories currently consist of raw materials, bulk drug
substance, and drug product in unlabeled vials to be used for commercialization
of the Company's biologic, leronlimab, which is in the regulatory approval
process. Inventory purchased in preparation for product launches is evaluated
for recoverability by considering the likelihood that revenue will be obtained
from the future sale of the related inventory, in light of the status of the
product within the regulatory approval process. The Company evaluates its
inventory levels on a quarterly basis and writes down inventory that has become
obsolete or has a cost in excess of its expected net realizable value, and
inventory quantities in excess of expected requirements. In assessing the lower
of cost or net realizable value to pre-launch inventory, the Company relies on
independent analysis provided by third parties knowledgeable of the range of
likely commercial prices comparable to current comparable commercial product.

For inventories capitalized prior to FDA marketing approval in preparation of
product launch, anticipated future sales, shelf-lives, and expected approval
date are considered when evaluating realizability of pre-launch inventories. The
shelf-life of a product is determined as part of the regulatory approval
process; however, in assessing whether to capitalize pre-launch inventory the
Company considers the stability data of all inventories. As inventories approach
their shelf-life expiration, the Company may perform additional stability
testing to determine if the inventory is still viable, which can result in an
extension of its shelf-life. Further, in addition to performing additional
stability testing, certain raw materials inventory may be sold in its then
current condition prior to reaching expiration. We also consider potential
delays associated with regulatory approval in determining whether preapproval
inventory remains salable. In determining whether pre-approval inventory remains
salable, the Company considers a number of factors ranging from potential delays
associated with regulatory approval, whether the introduction of a competing
product could negatively impact the demand for our product and affect the
realizability of our inventories, whether physicians would be willing to
prescribe leronlimab to their patients, or if the target patient population
would be willing to try leronlimab as a new therapy.

Although the Company may conclude that certain inventories no longer qualify for
capitalization as pre-launch inventories due to expiration of shelf-life prior
to expected commercial sales and the ability to obtain additional commercial
product stability data until after shelf-life expiration, and are therefore
written-off for accounting purposes, we may continue to physically maintain them
and may use them for clinical trials, or may sell them if the shelf-lives can be
extended as a result of the performance of on-going continued stability testing
of drug product. In the event the shelf-lives of these written-off inventories
are extended, and the inventories are sold commercially, the Company will not
recognize any costs of goods sold on the previously expensed inventories.

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Stock-based compensation
We use the Black-Scholes option pricing model to estimate the fair value of
stock options on the date of grant utilizing certain assumptions that require
judgments and estimates. These assumptions include estimates for stock price
volatility, expected term and risk-free interest rates in determining the fair
value of the stock options. The risk-free interest rate assumption is based on
observed interest rates appropriate for the expected term of the equity award.
The expected volatility is based on the historical volatility of the Company's
common stock at monthly intervals. The computation of the expected option term
is based on the "simplified method," as the options issued by the Company are
considered "plain vanilla" options. In accordance with ASC 718, Compensation -
Stock Compensation, the Company has elected to recognize the effect of
forfeitures as they are incurred, and as such does not estimate future unvested
forfeitures for all periods presented. Quarterly expense is reduced during the
period when grants are forfeited, such that the full expense is recorded at the
time of grant and only reduced when the grant is forfeited.

We at times issue restricted common stock and/or restricted stock units to
executives or third parties as compensation for services rendered. Such awards
are valued at fair market value on the effective date of the Company's
obligation. From time to time, we also issue stock options and warrants to
consultants as compensation for services. Costs for these transactions are
measured at the fair value of the consideration received or the fair value of
the equity instruments issued, whichever is more readily measurable.

Contingent liabilities

We have significant license and contingent milestone and royalty liabilities. We
estimate the likelihood of paying these contingent liabilities periodically
based on the progress of our clinical trials, BLA approval status, and status of
commercialization. We are also party to various legal proceedings. We recognize
accruals for such proceedings to the extent a loss is determined to be both
probable and reasonably estimable. The best estimate of a loss within a possible
range is accrued; however, if no estimate in the range is more probable than
another, then the minimum amount in the range is accrued. If it is determined
that a material loss is not probable but reasonably possible it is disclosed and
if the loss or range of loss can be estimated, the possible loss is also
disclosed. It is not possible to determine the ultimate outcome of these
proceedings, including the defense and other litigation-related costs and
expenses that may be incurred by the Company, as the outcomes of legal
proceedings are inherently uncertain, and the outcomes could differ
significantly from recognized accruals. Therefore, it is possible that the
ultimate outcome of any proceeding, if in excess of a recognized accrual, if
any, could be material to the Company's consolidated financial statements. We
periodically reassess these matters when additional information becomes
available and adjust our estimates and assumptions when facts and circumstances
indicate the need for any changes. Refer to Part I, Item 1, Note 9, Commitments
and Contingencies of this Form 10-Q for additional information.

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