Quarterly Report for Quarter Ending SEPTEMBER 30, 2025 (Form 10-Q)

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

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate" or "continue" or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.

Description of Business

Overview

Our objective is to develop and commercialize our product candidates to treat diseases where inflammation and immunology cause a dysfunctional immune system contributing to disease. Immune dysfunction can occur for a variety of reasons including genetics, lifestyle, and other factors. However, age plays a significant role in the development of immune dysfunction. Immune dysfunction can be seen in cancer where Natural Killer ("NK") cells are impaired and facilitate a tumor's evasion of the immune system and subsequent disease progression. Chronic inflammation is implicated in various diseases, where it impairs the immune system. Our primary focus continues to be treatment of Alzheimer's Disease ("AD") with XPro1595 ("XPro™ and DN-TNF) and treatment of recessive dystrophic epidermolysis bullosa ("RDEB") with CORDStrom, a proprietary, pooled, human umbilical cord mesenchymal stromal cell platform. RDEB is a pediatric orphan disease caused by mutations in the COL7A1 gene which results in highly debilitating skin blistering, dysphagia and failure to thrive with chronic wound problems that often result in fatal squamous cell carcinoma.

XPro for AD has completed Phase I and Phase II trials with enrollment of patients at clinical sites in the United Kingdom, EU, Australia and Canada. The INKmune program has nearly completed an open label Phase II trial in metastatic castrate resistant prostate cancer ("mCRPC"). CORDStrom for the treatment of children with RDEB has completed a pivotal blinded randomized cross-over trial. The data will be submitted for marketing authorization by filing a Marketing Authorization Application (MAA) in the United Kingdom followed by a Biologics License Application ("BLA") with the FDA in the US which is anticipated in 2026.

We believe our XPro™ platform can be used as a CNS ("central nervous system") therapy to target glial activation to prevent progression of AD along with other inflammatory diseases. The primary focus of the Company's development efforts for XPro is AD. In each case, we believe neutralizing sTNF is a cornerstone to the treatment of neuroinflammation and immune dysfunction in these diseases.

We believe the DN-TNF platform can be used to treat selected neurodegenerative diseases by reducing neuroinflammation without immunosuppression. The Company believes the core pathology of cognitive decline is a combination of neurodegeneration and synaptic dysfunction. Neurodegeneration is nerve cell death that may include demyelination. Synaptic dysfunction means the connections between nerve cells cease to work efficiently and may decrease in number. The combination of neurodegeneration and synaptic dysfunction causes cognitive decline and behavioral changes associated with AD. XPro completed a Phase I trial treating patients with Alzheimer's disease that was partially funded by a Part-the-Clouds Award from the Alzheimer's Association. We believe XPro targets activated microglia and astrocytes of the brain that produce sTNF that promotes nerve cell loss, synaptic dysfunction and prevents myelin repair - key elements in the development of dementia. In animal models, elimination of sTNF prevents nerve cell dysfunction, reverses synaptic pruning and promotes myelin repair. The Phase I trial in patients with biomarkers of inflammation with AD has been completed. The open label, dose escalation trial was designed to demonstrate that XPro can safely decrease neuroinflammation in patients with AD and biomarkers of inflammation (ADi). The goal of the Phase 1 trial was to demonstrate safety in the target population (patients with AD), demonstrate target engagement by showing XPro got into the brain in therapeutically relevant concentrations and reduced neuroinflammation) and identify the best dose for phase 2. XPro got into the brain (Figure 1a) and dose dependently decreased biomarker of neuroinflammation in the CSF (Figure 1b) with patients treated with the highest dose (1mg/kg/week dose) having the greatest reduction in neuroinflammation. A broad analysis of proteomic changes following treatment of XPro revealed significant changes in CSF proteins related to CNS neuronal function, immune/inflammatory response, Cytoskeletal, metabolic processes, and dendritic spine morphogenesis and synaptic plasticity. Of note, XPro reduced neuronal injury markers Visinin-like protein-1 (91%) and Neurofilament light (84%), improved measures of synaptic function as evinced by a 222% increase in Contactin 2 and a 56% decrease neurogranin. Finally, XPro significantly reduced CSL levels of p-Tau217 (43%) and pTau181 (2%) after 3 months of therapy (Figure 1c).

A	B	C

Figure 1: (A) XPro gets into the brain at therapeutically relevant concentrations. XPro neutralizes 99.9% of soluble TNF when drug levels exceed two logs. (B) XPro dose dependently reduces CSF inflammation in the brain. CSF composite - a composite score of change of all cytokines measured in the OLINK Target 48 Cytokine panel. (C) XPro (at 1 mg/kg dose) reduces CSF pTau217 and pTau181 as measure by proteomics.

The Phase II study, also known as AD-02 and MINDFuL, was a multicenter, randomized, double-blind, placebo-controlled clinical trial evaluating the safety, tolerability, and efficacy of XPro1595 in individuals with early Alzheimer's disease with biomarkers of inflammation (ADi). The primary goal of AD02 was to determine if XPro could affect cognition following 6 months of treatment. Participants with a diagnosis of early AD (mild cognitive impairment or mild AD) were randomized in a 2:1 (XPro:Placebo) ratio to receive either 1.0 mg/kg of XPro1595 or placebo via weekly subcutaneous injections for 6 months. An enrichment strategy mirroring to the successful strategy used in the Phase I trial was used to align the mechanism of the drug with the patients AD pathology. Eligibility required the presence of at least one inflammatory biomarker-either high-sensitivity C-reactive protein (hsCRP > 1.5 mg/L), erythrocyte sedimentation rate (ESR > 10 mm/h), hemoglobin A1c (HbA1c > 6.0% DCCT), or at least one APOE4 allele. The primary endpoint was the Early and Mild Alzheimer's Cognitive Composite (EMACC), with secondary endpoints of Clinical Dementia Rating Scale - Sum of Boxes (CDR-SB), Everyday Cognition Scale (E-Cog), Neuropsychiatric Inventory (NPI-12), ADCS-ADL, and biomarkers such as pTau-217 and GFAP. MRI-based neuroinflammation and brain volumetrics are also evaluated. The AD program had sites in Australia, Canada, the United Kingdom, France, Germany, Spain, Czech Republic and Slovakia.

Full enrollment in the Phase II AD trial occurred in late 2024 with 208 patients enrolled and top-line data was received during June 2025. In the Phase 2 MINDFuL trial of XPro™ in patients with early Alzheimer's Disease (AD) with biomarkers of inflammation, the modified intent-to-treat (mITT) population (n=200) did not meet the primary and key secondary endpoints (figure 1). Efficacy, Demographics and Safety data are shown below.

Figure 1: Phase 2 Study Results - mITT population Primary and Key Secondary Endpoints, Change From Baseline

Figure 1: As these graphs depict, the primary and secondary endpoints in this trial were not met as no decline in the placebo groups were observed. A trend was observed in NPI that favored XPro1595 over placebo. For reference, A higher EMACC score =better, A lower CDR and NPI score is better. EMACC: LS Mean Diff (SE): -0.018 (0.0414), 90% CI: -0.0860, 0.0509, p-value: 0.672. CDR-SB: LS Mean Diff (SE): -0.11 (0.185), 90% CI: -0.417, 0.195, p-value: 0.5491. NPI: LS Mean Diff (SE): -0.9 (0.78), 90% CI: -2.18, 0.39, p-value: 0.2499

Prespecified subgroups analyses suggested a signal that favored XPro in a predetermined population of patients that were both amyloid positive and had a higher burden of inflammation defined by 2 or more biomarkers of inflammation (from hereon referred to as enriched group). As shown in figure 2, the mITT placebo group did not decline whereas patients in the enriched group did decline. Decline in the placebo group is required to test the ability of a treatment to prevent or slow decline.

Figure 2: Phase 2 Study Results - Placebo group decline in the mITT and enriched population

Figure 2: Placebo patients in the mITT did not show decline on the EMACC over the 24 week study. In the enriched group, placebo patients did decline over 24 weeks.

To evaluate a subgroup after missing the primary endpoint, we used effect size as the primary metric due to the smaller sample size (n=100). Effect size, measured by Cohen's D, is well-suited for small samples and allows comparisons across different measures (e.g., cognitive tests and biomarkers). Unlike p-values, which indicate the likelihood of results being due to chance, effect size reflects clinical relevance and is commonly used for signal detection in Phase 2 studies.

We defined a promising signal as a minimum effect size of 0.2, where XPro outperformed placebo on multiple endpoints aligned with our hypothesis and the drug's mechanism of action. Results must also be appropriate for the trial's parameters, meaning the observed effects should align with the trial's duration and endpoints. For example, if a clinical measure typically requires a longer time to show meaningful change than the trial's 6-month timeframe, an observed effect on that endpoint would not be considered supportive. Signal detection was based on the effect size difference in LS mean change from baseline (MMRM model) between XPro and placebo at 6 months, ensuring results were meaningful, relevant, and appropriate for the trial's design and objectives.

Using this method, the enriched population (50% of the total sample, n=100) showed trends toward improvement with XPro on the primary endpoint (EMACC) and a key secondary endpoint (NPI) (Figure 3a). With the placebo group showing the expected decline on EMACC over six months, a beneficial effect of XPro became evident. EMACC, which measures cognition (higher scores are better), showed an effect size of 0.27, exceeding the company's threshold of 0.2, though the p-value of 0.16 fell short of the <0.1 target. For neuropsychiatric symptoms (NPI), the enriched population showed a stronger beneficial effect compared to the overall population, with an effect size of -0.23 and a p-value of 0.2. There was no effect on CDR-SB, which measures cognition and function (lower scores are better). Within the dose compliant group of patients, there was an increased benefit seen corresponding to the amount of XPro received during the trial (Figure 3b). We also evaluated the effect size of additional endpoints (Figure 4). Across most endpoints, XPro showed favorable trends, with effect sizes approaching the 0.2 threshold for clinical relevance.

Figure 3a: Phase 2 Study Results - Enriched population primary and key secondary endpoints, change from baseline

Figure 3: The enriched population show effect size >0.2 favoring XPro1595 on the EMACC and NPI. , A higher EMACC score =better, A lower CDR and NPI score is better. EMACC: LS Mean Diff (SE): 0.086 (0.0603), 90% CI: -0.0146, 0.1857, p-value: 0.1594. CDR-SB: LS Mean Diff (SE): -0.08 (0.307), 90% CI: -0.593, 0.426, p-value: 0.7859. NPI: LS Mean Diff (SE): -1.6 (1.25), 90% CI: -3.71, 0.47, p-value: 0.2003

Figure 3b: Phase 2 Study Results - XPro had greater impact on dose compliant patients

Figure 4: Effect size of XPro across multiple endpoints described as absolute effect sizes (cohen's D).

Demographics

Safety

Safety: Treatment Emergent Adverse Events (TEAEs): Safety Analyses Set
Event, n (%)	Placebo (n=67)	XPro1595 (n=139)	Total (n=206)
Any TEAE	59 (88.1%)	131 (94.2%)	190 (92.2%)
Any TEAE by Maximum Severity Mild Moderate Severe	34 (50.7%) 22 (32.8%) 3 (4.5%)	73 (52.5%) 56 (40.3%) 2 (1.4%)	107 (51.9%) 78 (37.9%) 5 (2.4%)
Any Serious TEAE	5 (7.5%)	8 (5.8%)	13 (6.3%)
Any Treatment-Related Serious TEAE	0	2 (1.4%)	2 (1.0%)
Any TEAE Leading to Treatment Discontinuation	2 (3.0%)	12 (8.6%)	14 (6.8%)
Any TEAE Leading to Study Withdrawal	2 (3.0%)	12 (8.6%)	14 (6.8%)
Any TEAE with Fatal Outcome	0	0	0

The Company believes these findings from the Phase 2 results indicate that XPro may offer benefits to a readily identified subgroup of Alzheimer's patients across all ages with biomarker-defined neuroinflammation, regardless of comorbidities or ApoE4 status and potentially lays the foundation for advancing XPro as a promising treatment for AD. The Company is planning an end-of-phase 2 meeting with the FDA, which is expected to occur towards the end of 2025 or early 2026, to determine next steps and expects to be eligible for one of the accelerated pathways.

CORDStrom, developed by INmune Bio circa 2020, represents a breakthrough in mesenchymal stromal cell technology. The CORDStrom platform leverages, among other things, proprietary screening, pooling and expansion techniques to create off-the-shelf, allogeneic, pooled human umbilical cord -derived mesenchymal stromal cells (HucMSCs) as medicines to treat complex inflammatory diseases. CORDStrom products are designed to provide high-quality, off-the-shelf, batch-to-batch consistent, scalable, cGMP manufactured, potent cellular medicines that can be produced at low cost and with repeatable specification. Initially developed at the INKmune manufacturing facilities utilizing United Kingdom academic grant funding, CORDStrom is a product platform that shows promise as a therapy for RDEB and many other debilitating conditions. While the first generation CORDStrom product is agnostic to indication, the platform enables creation of indication-specific products, which can be tuned for optimization of anti-inflammatory, immunomodulatory, wound healing, and other characteristics.

The CORDStrom product platform shares many similarities, including raw materials, equipment, and procedures, with the Company's INKmune oncology product, enabling the Company to leverage economies of scale, experienced staff, and other resources to strategically manufacture both products in a rotational campaign with resource and environmental efficiencies.

Children with RDEB have skin that is damaged by even the smallest amount of friction which causes severe blistering, deep wounds, and scars. It is caused by a fault in a gene that makes collagen, a protein that holds the skin layers together. There are limited options available for treatment, none that adequately meet the needs of patients, and the condition gets worse over time with most children reliant on a wheelchair as they move into their teenage years. Many of those with an RDEB diagnosis will also go on to develop aggressive life-threatening skin cancer in adulthood caused by the accumulated damage to their skin. The Company estimates roughly 2,000 people suffer from RDEB in the US, United Kingdom and EU representing a large unmet opportunity to potentially provide routine clinical care to these children.

Since 2020, the Company has supplied CORDStrom HucMSCs as an investigational medical product to the Great Ormond Street Hospital ("GOSH"), London, in connection with the MissionEB study, which was primarily funded by a grant from the National Institute for Health and Care Research ("NIHR") in the United Kingdom. INmune Bio was compensated for CORDStrom used in the trial and was not a sponsor of the Mission EB study. Investigators recently concluded a double blinded, placebo-controlled arm of the study, which evaluated the safety and efficacy of CORDStrom in 30 pediatric patients (less than 16 years old) in the United Kingdom with intermediate and severe RDEB using a novel cross-over clinical trial design. Patients were randomized to CORDStrom or placebo arms and received 2, intravenous infusions two weeks apart and then followed for 9 months. Each child then crossed over to the other arm and received two doses of placebo or CORDStrom two weeks apart with a further 9-month follow-up.

All patients were treated as day-cases and no CORDStrom related serious adverse events were reported through the study. Top-line results showed the treatment was easily administered, well tolerated and there were beneficial effects across all types of patients receiving CORDStrom with respect to Itch Man Scale, iscorEB clinician score and iscorEB skin involvement. Most notably, CORDStrom significantly reduced itch scores as measured by the Itch Man Scale. In patients with the most severe disease activity, CORDStrom reduced itch at 3 months and led to a sustained reduction of over 27% at 6 months. These results demonstrate a clinically meaningful reduction in itch severity sustained over time. Intermediate group patients showed a broader range of improvements, including reduced skin involvement and less pain as well as large reduction in itch. The younger patients (less than 10 years old) showed improvements in skin score, indicating better skin integrity and reduced disease activity. Interviews with patients and caregivers on completing follow up strongly support the clinical benefits of the therapy; both caregivers and patients were able to correctly identify which treatment had been CORDStrom and which had been placebo. Those who completed the study are asking to continue on therapy, which the Company intends to pursue as an open-label study.

The Mission EB data form the basis of a license that was entered into between INmune Bio and GOSH, whereby the Company gains exclusive access to the clinical study data for commercial uses in exchange for payment of an initiation milestone of approximately $0.3 million which the Company paid during July 2025 and a single development milestone of approximately £6 million (approximately $8.1 million at September 30, 2025) due on receipt of first marketing authorization from the FDA, EMA, or MHRA, which has not occurred yet, and an ongoing commitment to supply CORDStrom to patients enrolled in an open label arm of the Mission EB trial, subject to certain limitations.

After reviewing results of the Mission EB study, the Company initiated a Type C meeting with the FDA to obtain CMC and regulatory feedback and submitted information, data and requests for Rare Pediatric Disease and Orphan Drug Designations (RPDD/ODD).

The FDA granted RPDD to the Company's CORDStrom product on December 13, 2024, ahead of the sunset period under Section 529(b)(5) of the Federal Food, Drug, and Cosmetic Act. As such, CORDStrom remains eligible to receive a Priority Review Voucher (PRV) if approved by the FDA on or prior to September 30, 2026, assuming the PRV program is not extended. If granted, a PRV can be redeemed to receive priority review for a different product. Alternatively, a PRV may be transferred or sold to another organization.

The FDA granted ODD to the Company's CORDStrom product on January 6, 2025. Benefits of ODD include certain tax credits and eligibility for select grants, waiver of FDA user fees, including the BLA application fees, access to frequent meetings with the FDA for efficient drug development, and eligibility for seven (7) years of market exclusivity post approval.

The Company plans to prepare for and hold a pre-BLA meeting to discuss particulars of its planned BLA submission, with intent to submit a BLA this year seeking approval of CORDStrom for treatment of RDEB. Concurrently, the Company will also seek to submit MAAs to the EU and United Kingdom in 2026.

We have demonstrated that INKmune improves the ability of the patient's own NK cells to attack their tumor. INKmune interacts with the patient's NK cells to convert them from inert resting NK cells into memory-like NK cells that kill the patient's cancer cells. INKmune is designed to be given to patients after their immune system has recovered after cytotoxic chemotherapy to target the residual disease that remains after treatment with cytotoxic therapy. We believe INKmune can be used to treat numerous hematologic malignancies and solid tumors including leukemia, multiple myeloma, lymphoma, lung, ovary, breast, renal and prostate cancer. The Company sponsored a Phase I trial using INKmune to treat patients with high risk MDS/AML, a form of leukemia in the UK. Due to Covid restrictions only one patient completed treatment and follow-up in the Phase I trial for MDS; a further three AML patients were treated compassionately. Due to the post-Covid recruitment problems, the Company decided to terminate further enrollment in the MDS/AML trial in March 2024. Nonetheless, from the four patients treated and completing follow-up it was determined that INKmune therapy is safe and promotes development of cancer killing memory-like NK cells that are activated and can kill NK-resistant cancer cells which can be found in the patient's circulation for up to 4 months after completion of treatment. The Company initiated a separate multicenter Phase I/II trial of INKmune in a metastatic castrate resistant prostate cancer in the US. The open label trial enrolled the first patient in December 2023 and is currently in Phase II across 6 US sites.

The Phase I/II trial using INKmune to treat patients with metastatic castrate resistant prostate cancer (mCPRC) is an open label trial. Biomarker data from the patients will be visible as patients are treated. The Company plans to report data from each cohort as it becomes available. Because of the modified Bayesian design, the Company estimates the trial will be completely enrolled during the fourth quarter of 2025 with top-line data anticipated approximately 6 months thereafter. Topline data are divided into immunologic and tumor response variables. The most important immunologic response variable is related to memory-like NK cell persistence. There are 3 important variables to tumor response: i) blood PSA changes; ii) change in PSMA-PET scan and iii) change in circulating tumor DNA (ctDNA). INKmune is not a hormone-targeting treatment and will not directly reduce PSA levels but tumor load measured by PSMA-PET and/or ctDNA are expected to decrease with treatment. We do not expect this 6-month trial to provide survival data.

We continue to incur significant development and other expenses related to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses in each period since our inception, resulting in substantial doubt in our ability to continue as a going concern. We reported a net loss of $40.7 million for the nine months ended September 30, 2025. As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $27.7 million and $20.9 million, respectively. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product candidates. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues, if any.

Our recurring net losses and negative cash flows from operations raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our unaudited condensed consolidated financial statements for the nine months ended September 30, 2025. Until we can generate sufficient revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financings or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. To date, the Company has relied on equity and debt financing to fund its operations.

Other Developments

The new U.S. administration has announced or imposed a series of tariffs on U.S. trading partners. In response, several countries have threatened or imposed retaliatory measures. At this time, we do not anticipate the tariffs and changes in trade policies in place as of the filing of this Quarterly Report on Form 10-Q to have a significant adverse effect on our business or operations.

Following recent changes more broadly within the NIH and FDA, we have not noticed any disruption of communications with the NIH and FDA to date and continue to maintain productive interactions. To date, there has been no impact to the Company's operations due to any changes at the NIH or FDA.

Research and Development

Research and development expense consists of expenses incurred while performing research and development activities to discover and develop our product candidates. This includes conducting preclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings for product candidates. We recognize research and development expenses as they are incurred. Our research and development expense primarily consist of:

●

clinical trial and regulatory-related costs;

	●	expenses incurred under agreements with investigative sites and consultants that conduct our clinical trials;
	●	manufacturing and testing costs and related supplies and materials; and
	●	employee-related expenses, including salaries, benefits, travel and stock-based compensation.

The following table summarizes our research and development expenses by product candidate for the periods indicated (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2025				2024				2025				2024
External Costs
DN-TNF - Alzheimer's disease		$	1,188			$	7,629			$	9,289			$	18,759
INKmune - High Risk MDS/AML & Prostate cancer and CORDStrom			1,084				1,214				3,449				3,468
Preclinical and other programs			90				157				152				518
Accrued research and development rebate			(150	)			(262	)			(486	)			(1,524	)
Total external costs			2,212				8,738				12,404				21,221
Internal costs			2,675				1,329				5,926				4,592
Total		$	4,887			$	10,067			$	18,330			$	25,813

We typically use our employee resources across our development programs. We track outsourced development costs by product candidate or development program, but we do not allocate internal costs personnel costs including salaries and stock-based compensation to specific product candidates or development programs.

We participate, through our wholly owned subsidiary in Australia, in the Australian research and development tax incentive program, such that a percentage of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured.

We participate, through our wholly owned subsidiary in the United Kingdom, in the research and development program provided by the United Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United Kingdom government, and such incentives are reflected as a reduction of research and development expense. The United Kingdom research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured.

Substantially all our research and development expenses to date have been incurred in connection with our current and future product candidates. We expect our research and development expenses to increase significantly for the foreseeable future as we advance an increased number of our product candidates through clinical development, including the conduct of our planned clinical trials and manufacturing drug to be used in those clinical trials. The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. The successful development of product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs required to complete the remaining development of any product candidates. This is due to the numerous risks and uncertainties associated with the development of product candidates.

The costs of clinical trials may vary significantly over the life of a project owing to, but not limited to, the following:

	●	per patient trial costs;
	●	the number of sites included in the clinical trials;
	●	the countries in which the clinical trials are conducted;
	●	the length of time required to enroll eligible patients;
	●	the number of patients that participate in the clinical trials;
	●	the number of doses that patients receive;
	●	the cost of comparative agents used in clinical trials;
	●	the drop-out or discontinuation rates of patients;

	●	potential additional safety monitoring or other studies requested by regulatory agencies;
	●	the duration of patient follow-up;
	●	the efficacy and safety profile of the product candidate; and
	●	the cost of manufacturing, finishing, labelling and storage drug used in the clinical trial.

We do not expect any of our product candidates to be commercially available for at least the next several years, if ever. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future, which may fluctuate significantly from quarter-to-quarter and year-to-year. We anticipate that our expenses will increase substantially as we:

	●	continue research and development, including preclinical and clinical development of our existing product candidates;
	●	potentially seek regulatory approval for our product candidates;
	●	seek to discover and develop additional product candidates;
	●	establish a commercialization infrastructure and scale up our manufacturing and distribution capabilities to commercialize any of our product candidates for which we may obtain regulatory approval;

	●	seek to comply with regulatory standards and laws;
	●	maintain, leverage and expand our intellectual property portfolio;
	●	hire clinical, manufacturing, scientific and other personnel to support our product candidates development and future commercialization efforts;
	●	add operational, financial and management information systems and personnel; and
	●	incur additional legal, accounting and other expenses in operating as a public company.

Results of Operations

Comparison of the Three Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations for the periods indicated:

		Three Months Ended September 30,
(in thousands)		2025				2024				Change
Revenues		$	-			$	-			$	-
Operating expenses:
Research and development			4,887				10,067				(5,180	)
General and administrative			2,546				2,219				327
Total operating expenses			7,433				12,286				(4,853	)
Loss from operations			(7,433	)			(12,286	)			4,853
Other income, net			961				193				768
Net loss		$	(6,472	)		$	(12,093	)		$	5,621

Research and Development

Research and development expenses were approximately $4.9 million during the three months ended September 30, 2025, compared to approximately $10.1 million during the three months ended September 30, 2024. The change in research and development expenses during the three months ending September 30, 2025 compared to the three months ending September 30, 2024 is mainly due to the Company incurring $6.4 million less expenses related to our Alzheimer's clinical program due to the Company completing the Phase 2 clinical trial, partially offset by incurring additional compensation expense of $1.3 million mainly due to costs associated with the termination of employees.

General and Administrative

General and administrative expenses were approximately $2.5 million during the three months ended September 30, 2025, compared to $2.2 million during the three months ended September 30, 2024. The increase in general and administrative expenses was mainly due to the Company incurring $0.6 million higher stock-based compensation during 2025, partially offset by $0.2 million lower professional fees.

Other Expense, net

During the three months ended September 30, 2025, the Company recorded $1.0 million of other income, of which approximately $0.6 million was gain on forgiveness of payables from two vendors and approximately $0.4 million was due to interest income.

During the three months ended September 30, 2024, the Company's other income consisted of interest income partially offset by interest expense.

Comparison of the Nine Months Ended September 30, 2025 and 2024

The following table summarizes our results of operations for the periods indicated:

		Nine Months Ended September 30,
(in thousands)		2025				2024				Change
Revenues		$	50			$	14			$	36
Operating expenses:
Research and development			18,330				25,813				(7,483	)
General and administrative			7,115				7,369				(254	)
Impairment of acquired in-process research and development intangible assets			16,514				-				16,514
Total operating expenses			41,959				33,182				8,777
Loss from operations			(41,909	)			(33,168	)			(8,741	)
Other income, net			1,240				304				936
Net loss		$	(40,669	)		$	(32,864	)		$	(7,805	)

Revenues

During the nine months ended September 30, 2025, the Company recognized revenue from a license agreement that was terminated during 2025. During the nine months ended September 30, 2024, the Company recognized revenue from the sale of MSC's.

Research and Development

Research and development expenses were approximately $18.3 million and $25.8 million during the nine months ended September 30, 2025 and 2024, respectively. The change in research and development expenses during the nine months ending September 30, 2025 compared to the nine months ending September 30, 2024 is mainly due to the Company incurring $9.5 million less Alzheimer's clinical program expenses due to the trial being completed in 2025, partially offset by the Company incurring $1.3 million of additional compensation expense primarily in connection with the termination of employees and recording $1.0 million less accrued rebate during the nine months ended September 30, 2025.

General and Administrative

General and administrative expenses were approximately $7.1 million and $7.4 million during the nine months ended September 30, 2025 and 2024, respectively. The decrease in general and administrative expenses during the nine months ended September 30, 2025 was mainly due to the Company incurring $0.3 million lower investor relations expense and $0.1 million lower professional fees, partially offset by $0.3 million higher stock-based compensation.

Impairment of acquired in-process research and development intangible assets

During the nine months ended September 30, 2025, the Company released the Phase 2 clinical trial results for our Alzheimer's drug candidate, XPro, which failed to meet the primary endpoint, though a subgroup showed potential benefits. Due to insufficient resources to fund further trials, the Company has halted immediate plans to develop XPro for Alzheimer's or other indications and are instead seeking a partner to continue these studies. As part of preparing its interim unaudited condensed consolidated financial statements, the Company determined that the intangible asset's fair value was likely below its carrying value. Following a quantitative impairment assessment, the Company estimated the asset's fair value at $0, resulting in a recorded impairment of $16.5 million during the second quarter of 2025.

Other Income, net

During the nine months ended September 30, 2025, the Company recorded $1.2 million of other income, of which $0.6 million was due to the Company earning interest income on its cash investments and $0.6 million was gain on forgiveness of payables. During the nine months ended September 30, 2024, the Company earned $0.3 million of other income consisting of interest income partially offset by interest expense.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis.

We incurred a net loss of $40.7 million and $32.9 million for the nine months ended September 30, 2025 and 2024, respectively. Net cash used in operating activities was $19.6 million and $22.3 million for the nine months ended September 30, 2025 and 2024, respectively. Since inception, we have funded our operations primarily with proceeds from the sales of our common stock. As of September 30, 2025, we had cash and cash equivalents of $27.7 million. We anticipate that operating losses and net cash used in operating activities will increase over the next few years as we advance our products under development.

During the nine months ending September 30, 2025, the Company sold 1,304,707 shares of common stock at an average price of $8.01 for gross proceeds of approximately $10.4 million under the ATM offering.

During June 2025, the Company entered into securities purchase agreements with investors whereby the Company sold 3,000,000 shares of the common stock in a registered direct offering in exchange for gross proceeds of $18.9 million (net proceeds of approximately $17.4 million).

Our primary uses of capital are, and we expect will continue to be, third-party clinical and preclinical research and development services, costs incurred to manufacture our drugs under development, compensation and related expenses, legal, patent and other regulatory expenses and general overhead costs. We believe our use of CROs provides us with flexibility in managing our spending.

The Company incurs significant research and development expenses in Australia and the United Kingdom. Fluctuations in the rate of exchange between the United States dollar and the pound sterling as well as the Australian dollar could adversely affect our financial results, including our expenses as well as assets and liabilities. We currently do not hedge foreign currencies but will continue to assess whether that strategy is appropriate. As of September 30, 2025, the cash balance held by our foreign subsidiaries with currencies other than the United States dollar was approximately $0.2 million.

Our recurring net losses and negative cash flows from operations, as well as forecast of continued losses and negative cash flows from operations, raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our unaudited condensed consolidated financial statements for the nine months ended September 30, 2025. Until we can generate sufficient revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financing or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. Our cash and cash equivalents were $27.7 million and total current assets were $30.7 million at September 30, 2025, which the Company is projecting will be insufficient to sustain its operations through one year following the date that the financial statements are issued.

Additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates or cease operations. If we raise additional funds through the issuance of additional debt or equity securities it could result in dilution to our existing stockholders, increased fixed payment obligations and these securities may have rights senior to those of our common stock and could contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license our intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.

Financing strategies we may pursue include, but are not limited to, the public or private sale of equity, debt financing or funds from other capital sources, such as government or grant funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. There can be no assurances additional capital will be available to secure additional financing, or if available, that it will be sufficient to meet our needs on favorable terms. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates. If we raise additional funds through the public or private sale of equity or debt financings, it could result in dilution to our existing stockholders or increased fixed payment obligations and these securities may have rights senior to those of our common stock and could contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license our intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

		Nine Months Ended September 30,
(in thousands)		2025				2024
Net cash and cash equivalents (used in) provided by:
Operating activities		$	(19,638	)		$	(22,348	)
Investing activities			(899	)			-
Financing activities			27,545				20,289
Change in cash and cash equivalents			7,008				(2,059	)
Impact on cash from foreign currency translation			(196	)			(237	)
Cash and cash equivalents, beginning of period			20,922				35,848
Cash and cash equivalents, end of period		$	27,734			$	33,552

Operating Activities

Operating activities used approximately $19.6 million of cash during the nine months ended September 30, 2025, resulting mainly from our loss of $40.7 million, changes in our net operating assets and liabilities of $1.5 million, and gain on forgiveness of accounts payable of $0.6 million, partially offset by an intangibles impairment expense of $16.5 million and non-cash stock-based compensation of $6.6 million. The change in our net operating assets and liabilities was mainly due to an increase in other assets of $0.7 million, an increase in research and development tax credit receivable of $0.5 million, an increase in other tax receivable of $0.5 million and a decrease in deferred liabilities of $0.5 million, partially offset by a decrease in accounts payable and accrued liabilities of $1.0 million.

Operating activities used approximately $22.3 million of cash during the nine months ended September 30, 2024, resulting from our loss of $32.9 million, partially offset by changes in our net operating assets and liabilities of $4.6 million and non-cash stock-based compensation of $5.8 million. The change in our net operating assets and liabilities was mainly due to an increase in accounts payable and accrued liabilities of $2.7 million, a decrease in research and development tax receivable of $0.8 million, a decrease in prepaid expenses of $0.6 million and a decrease in other tax receivable of $0.2 million.

Investing Activities

During the nine months ended September 30, 2025, the Company acquired $0.9 million of equipment to be used in its CORDStrom clinical program.

Financing Activities

During the nine months ended September 30, 2025, the Company sold 1,304,707 shares of common stock under its ATM program for net proceeds of $10.1 million.

During June 2025, the Company sold 3,000,000 shares of its common stock in a registered direct offering in exchange for gross proceeds of $18.9 million (net proceeds of $17.4 million).

During the nine months ended September 30, 2024, the Company sold 247,126 shares of its common stock under its ATM programs for net proceeds of approximately $2.4 million.

During the nine months ended September 30, 2024, the Company sold 3,898,852 shares of its common stock and 3,898,852 warrants to purchase its common stock in registered direct offerings for net proceeds of approximately $25.4 million.

During the nine months ended September 30, 2024, the Company repaid $7.5 million of its debt.

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. Actual results may differ from these estimates. Our critical accounting estimates are discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, and there have been no material changes during the nine months ended September 30, 2025.