Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes appearing at the end of this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should read "Cautionary Note Regarding Forward-Looking Statements" and Item 1A. Risk Factors of this Annual Report on Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

Company Overview

We are a late-stage clinical drug platform company addressing neurodegeneration, such as Alzheimer's disease ("AD") and Parkinson's disease ("PD"). We are developing our lead product candidate, buntanetap, which is designed to address AD, PD, and potentially other chronic neurodegenerative diseases. Buntanetap is a synthetically produced small molecule, orally administered, brain penetrant compound. In several studies, buntanetap was observed to inhibit the synthesis of neurotoxic proteins - APP/Aβ ("APP"), tau/phospho-tau ("tau"), α-Synuclein ("αSYN") and TDP43 - that are some of the main causes of neurodegeneration. High levels of neurotoxic proteins lead to reduced axonal transport, which is responsible for communication between and within nerve cells. When that communication is compromised, the immune system is activated and attacks the nerve cells, eventually killing them. We have observed in our completed clinical studies in AD and PD patients and preclinical studies in mice and rats that buntanetap lowered neurotoxic protein levels leading to improved axonal transport, reduced inflammation, lower nerve cell death and improved affected function.

We designed our studies by applying our understanding of the underlying neurodegenerative disease states and measured both target and pathway validation in the spinal fluid of patients to determine whether patients' underlying disease condition improved following treatment. In addition to meeting their primary endpoints of safety and tolerability and secondary endpoint of pharmacokinetics ("PK") of buntanetap, our AD/PD Trials also met exploratory endpoints of measures of biomarkers and improvements in cognition in AD patients as well as function in PD patients. We believe that the AD/PD Trials represent the first double-blind, placebo-controlled study that showed improvements in AD patients, as measured by Alzheimer's Disease Assessment Scale-Cognitive Subscale ("ADAS-Cog"), and in PD patients, as measured by Unified Parkinson's Disease Rating Scale ("MDS-UPDRS" or "UPDRS").

Currently we are conducting two clinical studies - a pivotal Phase 3 study in early AD ("Phase 3 AD Trial") (NCT06709014) and an open-label extension ("OLE") study in PD (NCT07284784), and we plan for a third study in Parkinson's disease dementia ("PDD").

In February of 2025, we initiated the FDA-cleared pivotal Phase 3 AD Trial: a randomized, double-blind, placebo-controlled, multicenter Phase 3 study in 760 early AD patients. The trial investigates buntanetap and consists of two parts: a 6-month treatment period aimed at confirming buntanetap's symptomatic efficacy, followed by an additional 12 months of treatment to show potential disease-modifying efficacy at 18 months. After the 6-month treatment period has been completed, patients will continue to be blinded for an additional 12 months. If well-designed and well-executed, the symptomatic portion of the trial may be sufficient to support a New Drug Application ("NDA") filing, potentially within one year of the 6-month treatment period completion. A similar pathway could be available after 18 months, where a second NDA for disease modification may be supportable with a well-designed and well-executed long-term portion of the trial.

This pivotal Phase 3 AD Trial will utilize standard clinical outcome measures including Alzheimer's Disease Assessment Scale-Cognitive Subscale 13 ("ADAS-Cog13") and Alzheimer's Disease Cooperative Study-Instrumental Activities of Daily Living ("ADCS-iADL"). Volumetric MRI imaging and certain plasma biomarkers will also be assessed, including p-tau217 levels, leveraging recent biomarker assay advances in AD to better diagnose Alzheimer's patients and disease progression.

In January of 2026, we began an OLE study to evaluate the long-term safety and efficacy of buntanetap in PD patients. The study aims to enroll 500 patients, who will be treated with buntanetap for 36 months or until buntanetap is on the market. The patient population consists of two cohorts: cohort 1 with invited participants from prior clinical studies and cohort 2 with patients who did not take part in earlier trials but have been receiving deep brain stimulation ("DBS") for at least 12 months following successful surgery. The OLE PD study represents an important step toward a future NDA submission by helping meet the FDA patient exposure requirements.

In 2025, we further discussed a study in PDD with the FDA. After showing that the amyloid-positive PD population with the Mini Mental State Examination ("MMSE") score above 20 responds exceptionally well to our drug, buntanetap, we received approval to proceed. We are refining the proposed protocol for the PDD program and will initiate the study contingent on additional funding.

To date, we have concluded 12 clinical studies, most of which were in healthy volunteers to assess safety, food effect, PK, distribution, etc. The most important clinical studies are described below:

In 2021, we completed two Phase 1/2 clinical studies: one in 14 early AD patients and one in 54 early PD patients (together, the "AD/PD Trials"). In the AD/PD Trials, early AD patients were defined as those with a MMSE score between 19 and 28 and early PD patients as those at Hoehn & Yahr stages 1, 2 or 3. MMSE is a brief screening instrument used to assess cognitive function, with total scores ranging from 0 to 30 and a lower score indicating greater disease severity, while the Hoehn & Yahr scale is a medical assessment used to measure staging of the functional disability associated with PD where a higher stage indicates greater disease severity. In collaboration with the Alzheimer's Disease Cooperative Study ("ADCS"), we also conducted a trial in 16 early AD patients (the "ADCS Trial"). In the ADCS Trial, early AD patients were defined as those patients with a MMSE score between 19 and 28. At the completion of the ADCS Trial, the data showed that buntanetap acts as a translational inhibitor in humans just like in animals, and we further observed that there was statistical improvement in cognition in early AD patients, just like in the AD/PD Trials.

All three clinical trials above were double-blind and placebo-controlled. We designed the studies by applying our understanding of the underlying neurodegenerative disease states and measured both target and pathway validation in the spinal fluid of patients to determine whether patients' underlying disease condition improved following treatment. In addition to meeting their primary endpoints of safety and tolerability and secondary endpoint of PK of buntanetap, our AD/PD Trials also met exploratory endpoints of measures of biomarkers and improvements in cognition in AD patients as well as function in PD patients. We believe that the AD/PD Trials represent the first double-blind, placebo-controlled study that showed improvements in AD patients, as measured by ADAS-Cog and in PD patients, as measured by UPDRS. ADAS-Cog is an assessment scale that measures cognitive functions and non-cognitive functions such as mood and behavior. More specifically, ADAS-Cog11 is the cognitive assessment scale used to measure areas commonly seen to decline in AD patients. It consists of 11 specific tasks such as word recall, comprehension, object-naming, etc., in order to produce a scale measurement. UPDRS Part II and III are composed of a 42-item rating scale designed to assess PD-related disability and impairment and also evaluate the activities of daily living and motor function.

Following completion of the AD/PD Trials, we submitted our data to the FDA and requested direction to further pursue the development of buntanetap in early PD patients. With the FDA's guidance, we initiated a Phase 3 study in early PD patients in August 2022 (the "Phase 3 PD Trial"). In the Phase 3 PD Trial, early PD patients were defined as those at Hoehn & Yahr stages 1, 2 or 3 and OFF times of less than two hours per day. OFF time refers to periods when PD motor and/or non-motor symptoms occur between medication doses. We also submitted a proposed protocol for the treatment of moderate AD to the FDA, and after receiving permission to proceed, we initiated a Phase 2/3 study in mild to moderate AD patients in February 2023 ("Phase 2/3 AD Trial"). In the Phase 2/3 AD Trial, mild to moderate AD patients were defined as those with a MMSE score between 14 and 24. Our Phase 3 PD Trial and Phase 2/3 AD Trial each had built-in interim analyses.

Our Phase 3 PD Trial was completed on December 4, 2023, and we released the topline PD study efficacy data on July 2, 2024. The study data showed that in two subgroups, buntanetap improved UPDRS II, III, II+III and total. It also showed that in the entire ITT Alzheimer's population, buntanetap stopped the loss of cognition and that in the 12% of patients that already had cognitive issues, buntanetap improved cognition in a dose-dependent, statistically significant way. We asked the FDA for a Type C meeting to discuss the data and the continued development of buntanetap for Lewy body dementia. In response, we received a letter from the FDA saying that because Lewy body dementia is a challenging disease to treat and because there are no accepted endpoints, they would like to discuss the two conditions - dementia with Lewy bodies and PDD - separately and independently. However, the FDA did approve a protocol for an OLE study in PD patients, consisting of two cohorts: cohort 1 with invited participants from prior clinical studies and cohort 2 with patients who did not take part in earlier trials but have been receiving DBS for at least 12 months following successful surgery.

Our Phase 2/3 AD Trial was completed on February 13, 2024, and on April 29, 2024, we announced topline efficacy data. The data showed that in early AD patients, buntanetap improved ADAS-Cog11 in a dose-dependent fashion and was statistically significant from placebo and from baseline.

On October 10, 2024, the Company met with the FDA in an end-of-phase 2 meeting to discuss the Phase 2/3 AD data and to agree on a regulatory path forward. Annovis and the FDA have aligned on a development path for buntanetap towards the filing of NDAs, one for short-term and one for long-term efficacy. During the end-of-phase 2 meeting for AD, the FDA raised no concerns with our data on buntanetap's safety, including impact on liver enzymes, drug interactions, dose selection, PK and population PK. Further, the FDA confirmed that future development can proceed using the new crystal form of buntanetap.

We believe that we are the only company developing a drug for AD and PD that inhibits more than one neurotoxic protein and has a mechanism of action designed to restore nerve cell axonal and synaptic activity. By improving brain function, our goal is to treat memory loss and dementia associated with AD, as well as body and brain function issues associated with PD. Based on preclinical and clinical data collected to date, we believe that buntanetap has the potential to be the first drug to interfere with the underlying mechanism of neurodegeneration, potentially enabling buntanetap to be the only drug to improve cognition in AD and motor function in PD. The industry has historically encountered challenges in specifically targeting one neurotoxic protein, be it APP, tau or αSYN, indicating that doing so does not change the underlying course of neurodegeneration. Our ultimate goal is to develop a disease modifying drug ("DMD") for patients with neurodegeneration by leveraging our clinical and preclinical data, which shows inhibition of the most relevant neurotoxic proteins. Studies have found that AD and PD are the most common neurodegenerative diseases in the United States, and accordingly these diseases present two unmet needs of the aging population and two potentially large U.S. markets, when DMD is developed and approved.

We have never been profitable and have incurred net losses since inception. Our accumulated deficit on December 31, 2025 was $163.7 million. We expect to incur losses for the foreseeable future, and we expect these losses to increase as we continue our development of, and seek regulatory approvals for, our product candidates. Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when we will be able to achieve or maintain profitability, if at all.

Financial Operations Overview

The following discussion sets forth certain components of our statements of operations as well as factors that impact those items.

Segment Information

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As of December 31, 2025, we viewed our operations and managed our business as one operating segment consistent with how our chief operating decision-maker ("CODM"), our Chief Executive Officer, makes decisions regarding resource allocation and assessing performance. As of December 31, 2025, substantially all of our assets were located in the United States. Our headquarters is located in Malvern, Pennsylvania.

Research and Development Expenses

Our research and development expenses consist of expenses incurred in development and clinical studies relating to our product candidates, including:

Research and development costs are either expensed as incurred or recorded separately as a prepaid asset, whereby expense is recognized when the service is performed. Clinical development expenses for our product candidates are a significant component of our current research and development expenses. Product candidates in later stage clinical development generally have higher research and development expenses than those in earlier stages of development, primarily due to increased size (e.g., patient population) and duration of the clinical trials. We track and record information regarding external research and development expenses for each study

or trial that we conduct. We often use third-party CROs, contractor laboratories and independent contractors to help us complete clinical studies. We recognize the expenses associated with third parties performing these services for us in our clinical studies based on the percentage of each study (or study activity) completed at the end of each reporting period.

Our research and development expenses in 2025 were primarily related to our Phase 3 AD Trial which started in February 2025. Our research and development expenses in 2024 were primarily related to the wind-down and analysis of our Phase 3 study in early PD patients and our Phase 2/3 study in AD patients, as well as preparatory work for our pivotal Phase 3 AD study program in early AD patients. We expect that our research and development expenses in 2026 and for the next several years will continue to remain elevated as a result of costs associated with completing our Phase 3 trial for AD, the OLE PD study, our planned Phase 3 trial for PDD, and other subsequent planned activities leading up to a potential NDA filing(s) with the FDA. These expenditures are subject to numerous uncertainties regarding timing and cost to achieve completion. Completion of our clinical development and clinical trials may take several years or more and the length of time generally varies according to the type, complexity, novelty and intended use of our product candidates. The cost of clinical trials may vary significantly over the life of a project as a result of differences arising during clinical development.

Due to the ongoing and uncertain nature of our research and development, we are unable to accurately determine the duration or completion costs of our development of buntanetap. As a result of the difficulties of forecasting research and development costs of buntanetap as well as the other uncertainties discussed above, we are unable to determine when and to what extent we will generate revenues from the commercialization and sale of approved product candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries, benefits and other related costs, including public company costs as well as stock-based compensation, for personnel serving in our executive, finance, accounting, and administrative functions. Our general and administrative expenses also include professional fees for legal services, including patent-related expenses, consulting, tax and accounting services, insurance, rent and general corporate expenses. We expect that our general and administrative expenses will increase as a result of the continued clinical development and potential commercialization of our product candidates.

Income Taxes

As of December 31, 2025, the Company had U.S. federal net operating loss ("NOL") carryforwards of $72.4 million which may be available to offset future income tax liabilities and will expire beginning in 2032. As of December 31, 2025, the Company also had U.S. state NOL carryforwards of $74.9 million which may be available to offset future income tax liabilities and will expire beginning in 2028.

NOL and tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service (the "IRS") and may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders over a three-year period in excess of 50% as defined under Sections 382 and 383 in the Internal Revenue Code. This could substantially limit the amount of tax attributes that can be utilized annually to offset future taxable income or tax liabilities. The amount of the annual limitation is determined based on our value immediately prior to the ownership change. Subsequent ownership changes may further affect the limitation in future years. We have not yet conducted a comprehensive study to assess whether a change of ownership as defined by Section 382 has occurred since our inception.

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Results of Operations

Years ended December 31, 2025 and 2024

Operating expenses and other income (expense) were comprised of the following:

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Research and Development Expenses

Research and development expenses increased by $5.2 million for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was primarily attributable to $8.4 million increase in costs associated with our Phase 3 AD Trial patients and a $0.8 million increase in bioanalytical work. These increases are partially offset by a $2.6 million decrease in clinical material manufacturing costs, which resulted from a large supply of product being released for use in the Phase 3 studies during 2024, a $0.9 million decrease in statistical work, and a $0.5 million decrease in stock-based compensation expense. During the six months ended December 31, 2025, the Company incurred expenses of $10.6 million in our AD program and $1.5 million in our PD program.

General and Administrative Expenses

General and administrative expenses decreased by $2.2 million for the year ended December 31, 2025, compared to the year ended December 31, 2024. The decrease was primarily due to a $1.5 million decrease in stock-based compensation expense, $0.5 million decrease in reduced stock listing and transfer fees as well as a $0.2 million decrease in corporate legal costs.

Interest Income

Interest income increased by $0.4 million for the year ended December 31, 2025, compared to the year ended December 31, 2024. The increase was driven by increased cash and cash equivalent balances, as a result of our public offering with ThinkEquity, which closed in February 2025.

Other Financing Costs

There were no other financing costs incurred for the year ended December 31, 2025, compared to $1.9 million incurred for the year ended December 31, 2024. The $1.9 million decrease was attributable to the 2024 Equity Line of Credit ("ELOC") financing facility being exhausted prior to the year ended December 31, 2025, whereas during the same period during 2024 the facility was active.

Change in Fair Value of Warrants

Change in fair value of warrants was a gain of $0.1 million for the year ended December 31, 2025, compared to a gain of $3.6 million the year ended December 31, 2024. The $3.5 million difference between periods was primarily driven by increased volatility in our stock price during the first half of 2024, as compared to 2025.

Liquidity and Capital Resources

Since our inception in 2008, we have devoted most of our cash resources to research and development and general and administrative activities. We have financed our operations primarily with the proceeds from the sale of common stock and warrants. To date, we have not generated any revenues from the sale of products, and we do not anticipate generating any revenues from the sales of products for the foreseeable future. We have incurred losses and generated negative cash flows from operations since inception. As of December 31, 2025, our principal source of liquidity was our cash and cash equivalents, which totaled $19.5 million. We do not believe that our cash on hand will be sufficient to fund our operations for at least twelve months beyond the date of this filing.

October 2025 Registered Direct Offerings and Warrant Issuances

On October 10, 2025, the Company entered into a Securities Purchase Agreement, with the purchasers signatory thereto pursuant to which the Company agreed to issue and sell, in a registered direct offering an aggregate of 3,150,000 shares (the "Shares") of the Company's common stock, $0.0001 par value per share and pre-funded warrants to purchase up to an aggregate of 850,000 shares of Common Stock (the "Pre-Funded Warrants"). The Shares and the Pre-Funded Warrants are collectively referred to herein as the "Securities." The offering price of each Share is $1.50 per share. The offering price of each Pre-Funded Warrant is $1.4999 (equal to the offering price per Share, minus $0.0001, the exercise price of each Pre-Funded Warrant). In addition, in connection with this offering, the Company granted to a placement agent, warrants to purchase a total 200,000 shares of Common Stock (the "October 14, 2025 Placement Agent Warrants") that have an exercise price per share equal to $2.20 and a term of 5 years from the date of issuance. The net proceeds to the Company from the Offering were $5.5 million. The Company issued 850,000 shares of common stock upon the exercise of the pre-funded warrants during the year ended December 31, 2025. As of December 31, 2025, no pre-funded warrants remained outstanding.

On October 26, 2025, the Company entered into (i) a Securities Purchase Agreement, with the purchasers signatory thereto pursuant to which the Company agreed to issue and sell, in a registered direct offering an aggregate of 597,561 shares of the Company's common stock, $0.0001 par value per share and (ii) Stock Subscription Agreements (the "Subscription Agreements") with two members of the Board of Directors of the Company pursuant to which they agree to purchase an aggregate of 1,073,171 shares of Common Stock. An aggregate number of 1,670,732 shares of Common Stock was issued. The offering price of each share was $2.05 per share. In addition, in connection with this offering, the Company granted to a placement agent, warrants to purchase a total 83,357 shares of Common Stock (the "October 26, 2025 Placement Agent Warrants") that have an exercise price per share equal to $2.56 and a term of 5 years from the date of issuance. The aggregate fair market value was recorded as an offset to gross proceeds of the Offering and an increase to additional paid-in capital. The net proceeds to the Company from the Offering were $3.1 million.

February 2025 ThinkEquity Underwritten Offering and Warrant Issuance

On February 3, 2025, the Company entered into an Underwriting Agreement with ThinkEquity LLC ("ThinkEquity"), with respect to an underwritten public offering of 5.3 million units of the Company, each unit consisting of one share of common stock, par value $0.0001 per share and one warrant to purchase one share of the Company Stock (the "ThinkEquity Warrants"). The units were priced at $4.00 per unit and the offering resulted in gross proceeds of $21.0 million, before deducting underwriting discounts, fees and other related expenses. Net proceeds from the transaction totaled $19.3 million. The ThinkEquity Warrants have an exercise price of $5.00 per share, are immediately exercisable and expire five years from their date of issuance. The shares of common stock and warrants were issued separately. No ThinkEquity Warrants were exercised during the year ended December 31, 2025.

December 2024 ATM

On December 11, 2024, the Company entered into an Equity Distribution Agreement ("Distribution Agreement") with Oppenheimer & Co. Inc. ("OpCo") relating to the sale of shares of the Company's common stock. In accordance with the terms of the

Distribution Agreement, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $50.0 million from time to time through or to OpCo, acting as agent or principal.

During the year-ended December 31, 2025, the Company sold 2.1 million shares of common stock pursuant to the Distribution Agreement for gross proceeds of $6.8 million before commissions.

Future Capital Requirements

We do not have sufficient capital on hand to fund our operations for the next 12 months and will need to raise additional capital to meet our obligations as they become due. We believe that our current cash and cash equivalents will be sufficient to fund our operating expenses and capital expenditure requirements into the third quarter of 2026. We will need to raise substantial additional capital to complete the development and commercialization of our product candidates through public or private equity offerings, debt financings, collaboration and licensing arrangements or other financing alternatives. However, there can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to us. If we are unable to raise sufficient additional capital or defer sufficient operating expenses, we may be compelled to reduce the scope of our operations. Accordingly, we have concluded that substantial doubt exists with respect to our ability to continue as a going concern within one year after the date that these financial statements are issued.

We expect to incur significant operating losses for the foreseeable future. We also expect these losses to further increase, as we ramp up our clinical development programs and begin activities for commercial launch readiness. We may also encounter unforeseen expenses, difficulties, complications, delays and other currently unknown factors that could adversely affect our business.

Our future funding requirements, both near and long-term, will depend on many factors, including, but not limited to:

A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we will continue to require additional capital to meet operational needs and capital requirements associated with such operating plans. If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments or engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.

Adequate funding may not be available to us on acceptable terms, or at all. Our potential inability to raise capital when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. If we are unable to raise additional funds as required, we may need to delay, reduce, or terminate some or all development programs and clinical trials. We may also be required to sell or license our rights to product candidates in certain territories or indications that we would otherwise prefer to develop and commercialize ourselves. If we are required to enter into collaborations and other arrangements to address our liquidity needs, we may have to give up certain rights that limit our ability to develop and commercialize our product candidates or may have other terms that are not favorable to us or our stockholders, which could materially and adversely affect our business and financial prospects. See the section of this Annual Report on Form 10-K titled "Risk Factors" for additional risks associated with our substantial capital requirements.

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Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities the years ended December 31, 2025 and 2024.

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Operating Activities

For the year ended December 31, 2025, cash used in operations was $25.6 million compared to $21.9 million for the year ended December 31, 2024. The increase in cash used in operations was primarily the result of additional cash paid for clinical trials and related expenses, given the planned timing of study costs and related disbursements.

Contingent upon continued achievement of our fundraising requirements, we expect cash used in operating activities to remain at elevated levels, due to expected operating expenditures associated with continued development of our product candidates. More specifically, we expect elevated operating cash burn as a result of costs associated with completing our active Phase 3 trial for AD.

Financing Activities

Cash provided by financing activities was $34.6 million during the year ended December 31, 2025, which primarily consisted of the $19.2 million of proceeds from our registered offering with ThinkEquity, $6.8 million of proceeds from our ATM facility with OpCo., $5.5 million of proceeds from our registered offering of shares and Pre-Funded Warrants, as well as $3.1 million of proceeds from our registered offering of shares with our two members of the Board of Directors.

Cash provided by financing activities was $26.7 million during the year ended December 31, 2024, which primarily consisted of $8.2 million from warrant exercises, a combined $3.9 million received from our two March registered direct offerings and $14.6 million of proceeds from share issuances under our ELOC Purchase Agreement.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements during the periods presented, and we do not currently have any off-balance sheet arrangements as defined in the rules and regulations of the SEC.

Critical Accounting Policies and Use of Estimates

We have based our management's discussion and analysis of financial condition and results of operations on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those related to clinical development expenses, fair value of warrants and stock-based compensation. The clinical development cost to advance any of our product candidates to marketing approval is substantial and involves numerous risks and uncertainties associated with pharmaceutical product development. As a result, we are unable to accurately predict the timing or amount of increased expenses and, as a result, clinical development expense could be materially different as the costs are incurred. In determining warrant fair value, we maximize the use of quoted prices and observable inputs. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from independent sources. We measure and record stock compensation expense using the

applicable accounting guidance for share-based payments using the Black-Scholes option pricing model to value option awards which requires the use of subjective assumptions, including the expected life of the option and expected share price volatility. These assumptions used in calculating the fair value of stock-based awards represent our best estimates and involve inherent uncertainties and the application of judgment. As a result, if factors change and we used different assumptions, stock-based compensation expense could be materially different for stock-based awards.

While our significant accounting policies are more fully discussed in Note 2 to our audited financial statements appearing at the end of this Annual Report on Form 10-K, we believe that the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our financial statements.

Research and Development Expenses and Clinical Trial Accruals

As part of the process of preparing the financial statements included elsewhere in this Annual Report on Form 10-K, we are required to estimate and record expenses, for which a large portion are research and development expenses. Research and development expenses include, among other categories - development, clinical trials, and regulatory compliance costs incurred with research organizations, contract manufacturers, and other third-party vendors. We rely on third parties to conduct our clinical studies and to provide many of these services, including data and project management, statistical analysis and electronic compilation. At the end of each reporting period, the estimation process involves identifying services that have been performed on our behalf by third parties, estimating and accruing expenses in our financial statements based on the evaluation of the progress to completion of specific tasks and the facts and circumstances known to us at the time of the estimate, and assessing the accuracy of these estimates going forward to determine if adjustments are required. We periodically collaborate with our third-party vendors to assist in determining our estimates. Payments for these activities performed by our third-party vendors are based on the terms of the individual arrangements with our third-party vendors, which may differ from the pattern of costs incurred, and are reflected in the financial statements as prepaid or accrued research and development expense, as applicable. We believe our estimates and assumptions are reasonable under the current conditions; however, actual results may differ from these estimates. Any changes to estimates will be recorded in the period in which a circumstance causing a change in estimate becomes known and the impact of any change in estimate could be material.

Stock-Based Compensation

We account for our stock-based compensation awards in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718, Compensation-Stock Compensation ("ASC 718"). We have issued stock-based compensation awards that are stock options, in accordance with ASC 718. ASC 718 requires all stock-based payments, including grants of stock options, to be recognized in the statements of operations based on their grant date fair values. We use the Black-Scholes option-pricing model to determine the fair value of options granted. We recognize forfeitures as they occur. Expense related to stock-based compensation awards are recorded to research and development expense or general and administrative expense based on the underlying function of the individual that was granted the stock-based compensation award. Estimating the fair value of stock options requires the input of subjective assumptions, including the expected term of the stock option, stock price volatility, the risk-free interest rate, and expected dividends. The assumptions used in our Black-Scholes option-pricing model represent our best estimates and involve a number of variables, uncertainties, assumptions, and the application of our judgment, as they are inherently subjective.

The assumptions used in our Black-Scholes option-pricing model for stock options are as follows:

Expected Term. As we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term, the expected term of employee options is determined using the "simplified" method, as prescribed in SEC's Staff Accounting Bulletin No. 107, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option.

Expected Volatility. The expected volatility is based on our historical volatilities and that of similar entities within our industry for periods commensurate with the assumed expected term.

Risk-Free Interest Rate. The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected term.

Expected Dividends. The expected dividend yield is 0% because we have not historically paid, and do not expect for the foreseeable future to pay, a dividend on our common stock.

Stock-based compensation expense was $1.8 million and $3.8 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025, we had $1.1 million of unrecognized stock-based compensation expense, related to service-based options, which will be recognized over a remaining weighted-average period of 1.1 years.

Valuation of Common Stock Warrant Liabilities

The fair value of Common Stock Warrant Liabilities is determined using a Black-Scholes option-pricing model. Determining the appropriate fair value model and calculating the fair value of Common Stock Warrants requires considerable judgment. Any change in the estimates used may cause the value to be higher or lower than that reported. The Common Stock Warrants are not traded in an active market, and the fair value is determined using valuation techniques. The estimates may be significantly different from those recorded in the financial statements because of the use of judgment and the inherent uncertainty in estimating the fair value of these instruments that are not quoted in an active market. All changes in the fair value are recorded in the statements of operations each reporting period.

Recently Adopted Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), which improves income tax disclosures by requiring: (1) consistent categories and greater disaggregation of information in the rate reconciliation, and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The ASU indicates that all entities will apply the guidance prospectively with an option for retroactive application to each period presented in the financial statements. The Company adopted this guidance for the year ending December 31, 2025, and have provided the required disclosures. See Note 10 Income Taxes.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"), which requires public entities, at annual and interim reporting periods, to disclose in a tabular format additional information about specific expense categories in the notes to the financial statements. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the impacts of this ASU on its future financial statements and disclosures.

JOBS Act

Section 107 of the JOBS Act also provides that an "emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an "emerging growth company" can delay the adoption of new or revised accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. As of December 31, 2025, we no longer qualify as an emerging growth company.