The following discussion and analysis of our financial condition and results ofoperations should be read in conjunction with our audited consolidated financialstatements and related notes thereto included elsewhere in this Annual Report onForm 10-K for the period ended December 31, 2022. As further described in Note1of the notes to our consolidated financial statements included elsewhere inthis Annual Report, Private Histogen was determined to be the accountingacquirer in the Merger. In addition, references to the Company's operatingresults prior to the Merger will refer to the operating results of PrivateHistogen. Except as otherwise indicated herein or as the context otherwiserequires, references in this Annual Report on Form 10-K to "Histogen" "theCompany," "we," "us" and "our" refer to Histogen Inc., a Delaware corporation,on a post-Merger basis, and the term "Private Histogen" refers to the businessof privately-held Histogen Inc. prior to completion of the Merger. The followingdiscussion and analysis of our financial condition and results of operationscontains forward-looking statements that involve a number of risks,uncertainties and assumptions. Actual events or results may differ materiallyfrom our expectations. Important factors that could cause actual results todiffer materially from those stated or implied by our forward-looking statementsinclude, but are not limited to, those set forth in the "Risk Factors" sectionof this annual report, many of which are outside of our control. Allforward-looking statements included in this annual report are based oninformation available to us as of the time we file and, except as required bylaw, we undertake no obligation to update publicly or revise any forward-lookingstatements.

Overview

We are clinical-stage therapeutics company focused on developing potentialfirst-in-class clinical and preclinical small molecule pan-caspase and caspaseselective inhibitors that protect the body's natural process to restore immunefunction. Our product candidates include emricasan, CTS-2090 and CTS-2096.Currently, we are developing emricasan for acute bacterial skin and skinstructure infections (ABSSSI) as well evaluating its use for other infectiousdiseases. Our pipeline also includes novel preclinical product candidatesincluding CTS-2090 and CTS-2096, which are highly selective small moleculeinhibitors of caspase-1 designed for the treatment of certain inflammatorydiseases.

Previously, our focus was on developing our proprietary hypoxia-generated growthfactor technology platform and stem cell-free biologic products as potentialfirst-in-class restorative therapeutics that ignite the body's natural processto repair and maintain healthy biological function. In December 2022, weannounced termination of our HST-003 study for futility related to patientrecruitment and due to pipeline reprioritization, in the third quarter of 2022,we suspended all IND enabling activities on our HST-004 program.

While we are actively seeking collaboration partners or acquirors for our HumanMultipotent Cell Conditioned Media, or CCM and our Human Extracellular Matrix,or hECM, there are no assurances that we will find a collaboration partner oracquirer for CCM or hECM or that the terms and timing of any such arrangementswould be acceptable to us.

Components of Results of Operations

Revenue

Our revenues to date have been generated primarily from the sale of cosmeticingredient products ("CCM"), license fees, professional services revenue, and aNational Science Foundation grant award.

License and Product Revenue

Our license and product revenue to date has been generated primarily frompayments received under the Allergan Agreements.

Grant Revenue

In March 2017, the National Science Foundation ("NSF"), a government agency,awarded us a research and development grant to develop a novel wound dressingfor infection control and tissue regeneration. As of March 31, 2021, wecompleted all obligations under the NSF grant and, as such, no longer generateany revenue in connection with the research and development grant.

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Cost of product revenue represents direct and indirect costs incurred to bringthe product to saleable condition, including write-offs of inventory.

Research and Development

Research and development expenses consist primarily of costs incurred for thepreclinical and clinical development of our product candidates, which include:

expenses under agreements with third-party contract organizations, investigativeclinical trial sites that conduct research and development activities on ourbehalf, and consultants;

costs related to develop and manufacture preclinical study and clinical trialmaterial;

salaries and employee-related costs, including stock-based compensation;

costs incurred and reimbursed under our grant awarded by the U.S. Department ofDefense ("DoD") to partially fund our Phase 1/2 clinical trial of HST-003 forregeneration of cartilage in the knee;

costs incurred for IND enabling activities for HST-004 for spinal disc repair;

costs incurred for completing the feasibility assessment of emricasan for thepotential treatment of skin bacterial infections including those related toABSSSI's, as well as other infectious diseases; and

laboratory and vendor expenses related to the execution of preclinical andclinical trials.

We accrue all research and development costs in the period for which they areincurred. Costs for certain development activities are recognized based on anevaluation of the progress to completion of specific tasks using information anddata provided to us by our vendors, collaborators and third-party serviceproviders. Advance payments for goods or services to be received in futureperiods for use in research and development activities are deferred and thenexpensed as the related goods are delivered and as services are performed.

We expect our research and development expenses to increase substantially forthe foreseeable future as we: (i) invest in additional operational personnel tosupport our planned product development efforts, and (ii) continue to invest indeveloping our product candidates as our product candidates advance into laterstages of development, and as we begin to conduct larger clinical trials.Product candidates in later stages of clinical development generally have higherdevelopment costs than those in earlier stages of clinical development,primarily due to the increased size and duration of later-stage clinical trials.

Our direct research and development expenses are tracked by product candidateand consist primarily of external costs, such as fees paid under third-partylicense agreements and to outside consultants, contract research organizations("CROs"), contract manufacturing organizations and research laboratories inconnection with our preclinical development, process development, manufacturingand clinical development activities. We do not allocate employee costs and costsassociated with our discovery efforts, laboratory supplies and facilities,including other indirect costs, to specific product candidates because thesecosts are deployed across multiple programs and, as such, are not separatelyclassified. We use internal resources primarily to conduct our research as wellas for managing our preclinical development, process development, manufacturingand clinical development activities. These employees work across multipleprograms and, therefore, we do not track our costs by product candidate unlesssuch costs are

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includable as subaward costs. The following table shows our research anddevelopment expenses by type of activity (in thousands):

Total research and development expenses $ 5,021 $ 8,473

We cannot determine with certainty the timing of initiation, the duration or thecompletion costs of current or future preclinical studies and clinical trials ofour product candidates due to the inherently unpredictable nature of preclinicaland clinical development, including any potential expanded dosing beyond theoriginal protocols based in part on ongoing clinical success. Clinical andpreclinical development timelines, the probability of success and developmentcosts can differ materially from expectations. We anticipate that we will makedeterminations as to which product candidates to pursue and how much funding todirect to each product candidate on an ongoing basis in response to the resultsof ongoing and future preclinical studies and clinical trials, regulatorydevelopments and our ongoing assessments of each product candidate's commercialpotential. We will need to raise substantial additional capital in the future.In addition, we cannot forecast which product candidates may be subject tofuture collaborations, when such arrangements will be secured, if at all, and towhat degree such arrangements would affect our development plans and capitalrequirements.

General and Administrative

General and administrative expenses consist primarily of personnel-relatedcosts, insurance costs, facility costs and professional fees for legal, patent,consulting, investor and public relations, accounting and audit services.Personnel-related costs consist of salaries, benefits, and stock-basedcompensation. We expect our general and administrative expenses to increasesubstantially as we: (i) incur additional costs associated with being a publiccompany, including audit, legal, regulatory, and tax-related services associatedwith maintaining compliance with exchange listing and SEC requirements, directorand officer insurance premiums, and investor relations costs, (ii) hireadditional personnel, and (iii) protect our intellectual property.

Other Income (Expense)

Interest Income

Interest income consists of interest earned on our cash equivalents, whichconsist of money market funds. Our interest income has not been significant dueto low interest earned on invested balances.

Other Income

Other income primarily consists of the Paycheck Protection Program Loan forgivenby the Small Business Administration on May 21, 2021.

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Results of Operations

Comparison of Years Ended December 31, 2022 and 2021

The following table sets forth our selected statements of operations data forthe years ended December 31, 2022 and 2021 (in thousands):

For the years ended December 31, 2022 and 2021, we recognized license revenuesof $3.8 million and $27 thousand, respectively. The increase in the currentperiod is due to a one-time payment of $3.75 million received in March 2022 asconsideration for execution of the Allergan Letter Agreement.

For the years ended December 31, 2022 and 2021, we recognized product revenuesof $0 and $0.9 million, respectively. The product revenue for the year endedDecember 31, 2021 was due to a one-time unanticipated sale of CCM to Allergan,unrelated to the Allergan Agreements. As of March 31, 2021, all obligations ofthe Company related to the additional supply of CCM to Allergan under theAllergan Agreements had been completed.

For the years ended December 31, 2022 and 2021, we recognized grant revenue of$0 and $0.1 million, respectively. The grant revenue for 2021 is associated witha research and development grant awarded to the Company from the NSF. As ofMarch 31, 2021, all work required by the Company under the grant has beencompleted.

For the years ended December 31, 2022 and 2021, we recognized $0 and $0.2million, respectively, for cost of product sold to Allergan under the AllerganAgreements.

Research and Development Expenses

Research and development expenses for the years ended December 31, 2022 and 2021were $5.0 million and $8.5 million, respectively. The decrease of $3.5 millionwas primarily due to decreases in personnel related expenses, the number ofclinical and preclinical candidates in development and corresponding reductionof costs, partially offset by facility rent increases.

General and Administrative Expenses

General and administrative expenses for the years ended December 31, 2022 and2021 were $9.4 million and $7.8 million, respectively. The increase of $1.6million was primarily due to increases in royalty expenses, legal fees,

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outside services, rent expenses and personnel expenses, partially offset byreductions in insurance and other administrative expenses.

Liquidity and Capital Resources

From inception through December 31, 2022, we have an accumulated deficit of$88.3 million and expect to incur operating losses and generate negative cashflows from operations for the foreseeable future. As of December 31, 2022, wehad approximately $12.1 million in cash and cash equivalents.

We have not yet established ongoing sources of revenues sufficient to cover ouroperating costs and will need to continue to raise additional capital to supportour future operating activities, including progression of our developmentprograms, preparation for potential commercialization, and other operatingcosts. Our plans with regard to these matters include entering into acombination of additional debt or equity financing arrangements, strategicpartnerships, collaboration and licensing arrangements, or other similararrangements. There can be no assurance that we will be able to obtainadditional financing on terms acceptable to us, on a timely basis or at all. Theaforementioned factors raise substantial doubt about our ability to continue asa going concern.

The consolidated financial statements have been prepared assuming that theCompany will continue as a going concern, which contemplates the realization ofassets and the satisfaction of liabilities and commitments in the normal courseof business. Based on the current business plan and operating budget, there issubstantial doubt about the Company's ability to continue as a going concernwithin one year from the date the consolidated financial statements are issued.The consolidated financial statements do not include any adjustments to reflectthe possible future effects on the recoverability and classification of assetsor the amounts and classification of liabilities that may result from theoutcome of this uncertainty.

Redeemable Convertible Preferred Stock

March 2022 Offering of Preferred Stock

As described in Note 7 to the consolidated financial statements, in March 2022,the Company completed a private placement offering (the "March 2022 Offering")of Series A Preferred Stock and Series B Preferred Stock. The proceeds of $4.76million were held in escrow and were only permitted to be disbursed to theCompany upon conversion of the Series A and Series B Preferred Stock.

Between June 2, 2022, and June 29, 2022, the Company redeemed for cash proceedstotaling $5,250,500, 2,500 outstanding shares of Series A Preferred Stock and2,500 outstanding shares of Series B Preferred Stock based on the receipt of theRedemption Notices (the "Preferred Redemption") at a price equal to 105% of the$1,000 stated value per share.

As of December 31, 2022, all shares of the Series A and B Preferred Stock are nolonger outstanding and the Company's only class of outstanding stock is itscommon stock. No proceeds were received from the March 2022 Offering.

Common Stock

January 2021 Offering of Common Stock

In January 2021, the Company completed an S-1 offering (the "January 2021Offering") of an aggregate of 580,000 shares of common stock, pre-fundedwarrants to purchase up to 120,000 shares of its common stock, and common stockwarrants to purchase up to an aggregate of 700,000 shares of common stock. Tothe extent that an investor determines, at their sole discretion, that theywould beneficially own in excess of the Beneficial Ownership Limitations (or assuch investor may otherwise choose), in lieu of purchasing shares of CommonStock and Common Warrants, such investor could have elected to purchasePre-Funded Warrants and Common Warrants at the Pre-Funded Purchase Price in lieuof the shares of Common Stock and Common Warrants in such a manner to result inthe same aggregate purchase price being paid by such investor to the Company.The combined purchase price of one share of common stock and the accompanyingcommon stock warrant was $20.00, and the combined purchase price of onepre-funded

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warrant and accompanying common stock warrant was $19.998. The common stockwarrants are exercisable for five (5) years at an exercise price of $20.00 pershare. The pre-funded warrants are immediately exercisable at an exercise priceof $0.002 per share and may be exercised at any time until all of the pre-fundedwarrants are exercised in full. Placement agent warrants were issued to purchaseup to 35,000 shares of common stock, are immediately exercisable for an exerciseprice of $25.00, and are exercisable for five (5) years following the date ofissuance. The Company received gross proceeds of $14.0 million and incurredplacement agent's fees and other offering expenses of approximately $1.9million.

As of December 31, 2022, a total of 336,060 warrants issued in the January 2021Offering to purchase shares of common stock have been exercised and the Companyissued 336,060 shares of its common stock. The Company received gross proceedsof approximately $6.8 million.

As of December 31, 2022, the Company had 387,565 shares and 11,375 shares ofcommon stock reserved for issuance pursuant to the warrants and placementagent's warrants, respectively, issued by the Company in the January 2021Offering, at an exercise price of $20.00 per share and $25.00 per share,respectively.

June 2021 Offering of Common Stock

In June 2021, the Company completed a registered direct offering (the "June 2021Offering") of an aggregate of 298,865 shares of common stock, together withaccompanying warrants to purchase up to an aggregate of 239,093 shares of commonstock, at a public offering price of $22.00 per share. The accompanying warrantspermit the investor to purchase additional shares equal to 80% of the number ofshares of the Company's common stock purchased by the investor. The warrantshave an exercise price of $20.00 per share, are immediately exercisable, andexpire five and a half (5.5) years following the date of issuance. In addition,the Company's placement agent was issued compensatory warrants equal to 5.0%, or14,946 shares, of the aggregate number of common stock sold in the offering,which are immediately exercisable for an exercise price of $27.50 and expirefive (5) years following the date of issuance on June 7, 2026. The Companyreceived gross proceeds of $6.6 million and incurred cash-based placement agentfees and other offering expenses of approximately $0.9 million.

As of December 31, 2022, no warrants associated with the June 2021 Offering havebeen exercised.

As of December 31, 2022, the Company had 90,910 shares and 14,946 shares ofcommon stock reserved for issuance pursuant to the warrants and placementagent's warrants, respectively, issued by the Company in the June 2021 Offering,at an exercise price of $20.00 per share and $27.50 per share, respectively. Inconnection with the July 2022 Offering, the Company agreed to amend warrants, byreducing the exercise price and extending the expiration date, to purchase up toan aggregate of 148,183 shares of common stock of the Company that wereoriginally issued to the investor in the June 2021 Offering.

December 2021 Offering of Common Stock

In December 2021, the Company completed a registered direct offering (the"December 2021 Offering") of an aggregate of 411,764 shares of common stock and411,766 warrants to purchase up to 411,766 shares of common stock, at a publicoffering price of $8.50 per share. The accompanying warrants permit the investorto purchase additional shares equal to approximately the same number of sharesof the Company's common stock purchased by the investor. The warrants have anexercise price of $8.50 per share, may be exercised any time on or after 6months and one (1) day after the issuance date, and expire five and a half (5.5)years following the date of issuance. In addition, the Company's placement agentwas issued compensatory warrants equal to 5.0%, or 20,590 shares, of theaggregate number of shares of common stock sold in the offering, which areimmediately exercisable for an exercise price of $10.626 and expire five and ahalf (5.5) years following the date of issuance on June 21, 2027. The Companyreceived gross proceeds of $3.5 million and incurred cash-based placement agentfees and other offering expenses of approximately $0.5 million.

As of December 31, 2022, no warrants associated with the December 2021 Offeringhave been exercised.

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As of December 31, 2022, the Company had 164,707 shares and 20,590 shares ofcommon stock reserved for issuance pursuant to the warrants and placementagent's warrants, respectively, issued by the Company in the December 2021Offering, at an exercise price of $8.50 per share and $10.626 per share,respectively. In connection with the July 2022 Offering, the Company agreed toamend warrants, by reducing the exercise price and extending the expirationdate, to purchase up to an aggregate of 247,059 shares of common stock of theCompany that were originally issued to the investor in the December 2021Offering.

July 2022 Offering of Common Stock

On July 12, 2022, the Company entered into a Securities Purchase Agreement (the"July 2022 Purchase Agreement") with a single healthcare-focused institutionalinvestor for the sale by the Company of (i) a pre-funded warrant to purchase upto 1,774,309 shares of Common Stock (the "Pre-Funded Warrant"), (ii) a Series Awarrant to purchase up to an aggregate of 1,774,309 shares of common stock (the"Series A Warrant"), and (iii) a Series B warrant to purchase up to an aggregateof 1,774,309 shares of common stock (the "Series B Warrant," and together withthe Pre-Funded Warrant and the Series A Warrant, the "Warrants"), in a privateplacement offering (the "Offering"). The combined purchase price of onePre-Funded Warrant and accompanying Series A Warrant and accompanying Series BWarrant was $2.818.

Subject to certain ownership limitations, the Series A Warrant is exercisableimmediately after the issuance date at an exercise price equal to $2.568 pershare of common stock, subject to adjustments as provided under the terms of theSeries A Warrant, and has a term of five and a half (5.5) years from theissuance date. Subject to certain ownership limitations, the Series B Warrant isexercisable immediately after the issuance date at an exercise price equal to$2.568 per share of common stock, subject to adjustments as provided under theterms of the Series B Warrant, and has a term of one and a half (1.5) years fromthe issuance date. Subject to certain ownership limitations described in thePre-Funded Warrant, the Pre-Funded Warrant was immediately exercisable and maybe exercised at an exercise price of $0.0001 per share of common stock any timeuntil all of the Pre-Funded Warrant is exercised in full. As of December 31,2022, the Pre-Funded Warrant to purchase up to an aggregate of 1,774,309 sharesof common stock had been fully exercised and the Company issued 1,774,309 sharesof common stock.

The Company also agreed to amend certain warrants to purchase up to an aggregateof 447,800 shares of common stock of the Company that were issued to theinvestor in the private placement in November 2020, June 2021 and December 2021with exercise prices ranging from $8.50 to $34.00 per share and expiration datesranging from May 18, 2026 to June 21, 2027, so that such warrants have a reducedexercise price of $2.568 per share and expiration date of five and a half (5.5)years following the closing of the private placement, for an additional offeringprice of $0.0316 per amended warrant. The incremental fair value resulting fromthe modifications to the warrants was adjusted against the gross proceeds fromthe offering as an equity issuance cost.

The gross proceeds to the Company were approximately $5 million, beforededucting the placement agent's fees and other offering expenses, and excludingthe proceeds, if any, from the exercise of the Series A Warrant, the Series BWarrant, and amended warrants.

As of December 31, 2022, no warrants associated with the July 2022 PurchaseAgreement have been exercised.

As of December 31, 2022, the Company had 3,996,418 shares and 124,202 shares ofcommon stock reserved for issuance pursuant to the warrants and placementagent's warrants, respectively, issued by the Company in the July 2022 PurchaseAgreement, at an exercise price of $2.568 per share and $3.5225 per share,respectively.

Common Stock Purchase Agreement with Lincoln Park

In July 2020, the Company entered into a common stock purchase agreement (the"2020 Purchase Agreement") with Lincoln Park which provided that, upon the termsand subject to the conditions and limitations in the 2020 Purchase Agreement,Lincoln Park was committed to purchase up to an aggregate of $10.0 million ofshares of the Company's common stock at the Company's request from time to timeduring a 24 month period that began in July 2020 and at prices based on themarket price of the Company's common stock at the time of each sale. Uponexecution of the 2020 Purchase Agreement, the Company sold 16,425 shares ofcommon stock at $60.88 per share to Lincoln Park for gross

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proceeds of $1.0 million. During the year ended December 31, 2020, the Companysold an additional 15,000 shares of common stock to Lincoln Park for grossproceeds of approximately $0.5 million. In addition, in consideration forentering into the 2020 Purchase Agreement and concurrently with the execution ofthe 2020 Purchase Agreement, the Company issued 3,348 shares of its common stockto Lincoln Park. During the year ended December 31, 2022, the Company did notsell any shares of common stock to Lincoln Park.

The 2020 Purchase Agreement expired automatically pursuant to its term on August1, 2022, and the Company did not sell any additional shares of common stock toLincoln Park through the date of expiration of the 2020 Purchase Agreement.

Common Stock Warrants

In 2016, Private Histogen issued warrants to purchase common stock asconsideration for settlement of prior liability claims. The warrants for thepurchase of up to 180 common shares at an exercise price of $461.60 per shareexpired on July 31, 2021.

In addition, as of December 31, 2022, warrants to purchase 68 shares of commonstock with an exercise price of $1,486.00 per share remain outstanding that wereissued by Conatus in connection with obtaining financing in 2016. These warrantsexpire on July 3, 2023.

See warrant discussion above in connection with the January 2021 Offering, theJune 2021 Offering, the December 2021 Offering, and the July 2022 Offering.

Cash Flow Summary for the Years Ended December 31, 2022 and 2021

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HISTOGEN INC. Management's Discussion and Analysis of Financial Condition and Results of Operations. (form 10-K) - Marketscreener.com