Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and the accompanying notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our audited financial statements and the accompanying notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025, as previously filed with the U.S. Securities and Exchange Commission. This discussion and analysis contains forward-looking statements and forward-looking information that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements and information as a result of many factors. See section heading "Special Note Regarding Forward-Looking Statements."

Overview

The Company is a commercial stage biopharmaceutical company dedicated to developing treatments for patients suffering from neurodegenerative diseases, such as AD, for which there are limited or no treatment options. The Company focuses on the commercial manufacturing and commercial sales of ZUNVEYL oral tablet formulation. The Company's commercial program for ZUNVEYL is primarily focused on its long-term care commercial team that can focus on providing key points of differentiation, exploiting key issues with existing AChEI treatments, and franchising potential additional indications and new products.

The Company launched ZUNVEYL on March 19, 2025, and targets the largest volume nursing homes specializing in AD, leveraging an account-based sales team with demonstrated success in Long-term care ("LTC"), positioning ZUNVEYL with Medicare payors, and developing strategic and clinical partnerships with consultant pharmacists and long-term care pharmacies. Alpha Cognition has set the Wholesale Acquisition Cost ("WAC") for its therapeutic product at $869.36 per bottle. This pricing reflects the company's commitment to balancing patient access with the value of innovative healthcare solutions. By establishing a competitive WAC price, Alpha Cognition aims to enhance affordability and ensure patients can benefit from our advanced treatment options. Patients' out-of-pocket cost for treatment with ZUNVEYL will depend on their length of treatment and their insurance. The Company has two additional pre-clinical development programs: (1) ZUNVEYL in combination with memantine for the treatment of moderate-to-severe AD and (2) ALPHA-1062 sublingual oral tablet ("ALPHA-1062IN") formulation for treatment of mild-moderate AD and for the treatment of cognitive impairment with mild traumatic brain injury (mTBI; otherwise known as concussion).

ZUNVEYL is a patented new innovative product being positioned as a next generation acetylcholinesterase inhibitor for the treatment of AD, with expected minimal gastrointestinal side effects. ZUNVEYL's active metabolite is differentiated from donepezil and rivastigmine in that it binds neuronal nicotinic receptors, most notably the alpha-7 subtype, which is known to have a positive effect on cognition. ZUNVEYL is in pre-clinical development in combination with memantine to treat moderate to severe AD, in pre-clinical development with sublingual formulation for patients suffering from dysphagia, and is in pre-clinical development for cognitive impairment with mTBI.

The Company is the parent company of Alpha Cognition Canada Inc. ("Alpha Canada" or "ACI Canada") which is the parent company of Alpha Cognition USA Inc. ("ACI USA"). As of May 1, 2023, the Company's Common Stock commenced trading on the CSE under the symbol "ACOG", previously the Company's Common Stock was traded on the TSX-V until April 28, 2023, when the Company had them delisted. As of November 12, 2024, the Company's Common Stock commenced trading on The Nasdaq Capital Market under the symbol "ACOG". The Company's Common Stock was voluntarily delisted from the CSE on December 17, 2024.

Operations

As of September 30, 2026, the Company had an accumulated deficit of $118,909,554 which has been primarily financed by equity. The Company had $37,801,828 in cash and cash equivalents and $8,037,719 in current liabilities (of which $44,464 is payable from the Company's available restricted cash balance) as of September 30, 2026. The Company's continuing operations, as intended, are highly dependent upon its ability to obtain additional funding and eventually generate positive cash flows. Management is of the opinion that it does have sufficient working capital to fully meet the Company's liabilities and commitments as outlined and planned in the following discussion. Management is of the opinion it will need to raise additional capital to cover upcoming planned research and development ("R&D"), continued commercialization of ZUNVEYL and operating costs. Possible sources of such capital may come from our "at the market" facility and future private placements, and public offerings of the Company's Common Stock and funds received from the exercise of warrants and stock options. Additionally, the Company will also consider funding that may arise through partnership activities, including royalties, and debt. There is a risk that additional financing will not be available on a timely basis, on terms acceptable, or at all to the Company.

The Company is also contemplating raising capital by pursuing both dilutive and non-dilutive strategic sources of capital to fully execute its commercialization and operating plans for ZUNVEYL from the US Food and Drug Administration ("FDA"). Any additional capital is expected to further support our planned costs for commercial activities.

Components of our Results of Operations

Revenue

The Company generates revenue from product sales and licensing arrangements.

Product Sales, Net

Product revenue consists primarily of sales of the Company's commercial product to wholesalers and pharmacies. Revenue is recognized at a point in time when control of the product transfers to the customer.

Product revenue is recorded net of variable consideration, including expected prompt pay discounts, chargebacks, product returns, recalls, rebates, and consideration payable to customers. Consideration payable to customers includes fees paid to distributors, which are generally calculated as a percentage of product sales and are recognized as a reduction of revenue when the related services are not distinct from the Company's promise to transfer the product. These deductions represent estimates of the related obligations and, as such, knowledge and judgment are required when estimating the impact of these revenue deductions on gross sales for a reporting period. The amount of variable consideration can vary from period to period due to fluctuations in these deductions.

Licensing Revenue

Licensing revenue consists of revenue from our License, Collaboration and Distribution Agreement with CMS International Development and Management Limited, "CMSI" (the "CMSI License Agreement"), including upfront payments, potential milestone and royalty payments, as well as revenue from the sale of active pharmaceutical ingredient ("API"), finished goods, and reimbursable costs.

Our revenue to date has been generated primarily from the upfront payment received from CMSI under the CMSI License Agreement. In addition to the upfront payment, we may also be entitled to development, regulatory, and sales milestone payments, as well as royalties on net sales, upon achieving predefined objectives. We recognize license revenue when the related performance obligations are satisfied. If achievement of a milestone is considered probable and it is probable that a significant revenue reversal will not occur, the associated milestone amount is included in the transaction price.

License revenue also includes revenue from the sale of API and finished goods to CMSI, which are generally priced at cost plus a margin, as well as certain reimbursable pass-through costs. These amounts are recognized on a gross basis and are generally recognized upon shipment or delivery, depending on the applicable shipping terms.

We expect that license revenue under the CMSI License Agreement, and from any potential future licensing arrangements, will fluctuate based on the timing and amount of upfront, milestone, and royalty payments, as well as the level of API sales and reimbursable activities.

Cost of Product Sales, Excluding Amortization of Intangible Assets

Cost of product sales consists primarily of costs related to the manufacturing of ZUNVEYL, logistics costs, inventory impairment expense, and royalty payments under license or purchase agreements.

Cost of Licensing Revenue

Cost of licensing revenue consists primarily of costs incurred to support the Company's licensing arrangements, including the cost of API and finished goods sold to CMSI, as well as other costs associated with fulfilling obligations under the CMSI License Agreement, including reimbursable pass-through costs.

Research and Development

R&D expenses represent costs incurred to conduct research, such as the discovery and development of our product candidates. We recognize all research and development costs as they are incurred unless there is an alternative future use in other research and development projects or otherwise.

R&D expenses consist primarily of the following:

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costs related to production of clinical supplies and non-clinical materials, including fees paid to contract manufacturers.

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employee-related expenses, which include salaries, benefits, and stock-based compensation.

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other expenses including travel and consulting services.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist of personnel costs, other outside professional services including legal, human resources, audit and accounting services, consulting and pre-commercialization expenses, including selling and marketing costs as well as attendance to various conferences. Personnel costs consist of salaries, benefits, and stock-based compensation. We expect to continue to incur expenses to support our continued operations as a public company, including expenses related to existing and future compliance with rules and regulations of the stock exchanges on which our securities are now traded, insurance expenses, investor relations, audit fees, professional services and general overhead and administrative costs.

Results of Operations

Comparison of the Three Months Ended September 30, 2026 and 2025

		For the Three Months Ended September 30,								Dollar				Percentage
		2026				2025				Change				Change
Revenue
Product sales, net		$	7,749,959			$	2,334,222			$	5,415,737				232	%
Licensing revenue			27,043				506,636				(479,593	)			(95	)
Total revenue			7,777,002				2,840,858				4,936,144				174
Cost of Revenues
Cost of product sales, excluding amortization of intangible assets			372,097				162,777				209,320				129
Cost of licensing revenue			22,326				465,284				(442,958	)			(95	)
Amortization of intangible assets			87,998				5,387				82,611				1,534
Total cost of revenues			482,421				633,448				(151,027	)			(24	)
Gross Profit			7,294,581				2,207,410				5,087,171				230
Operating Expenses
Research and development			1,344,947				513,783				831,164				162
Selling, general and administrative expenses			12,380,338				5,113,159				7,267,179				142
Total operating expenses			13,725,285				5,626,942				8,098,343				144
Loss from operations			(6,430,704	)			(3,419,532	)			(3,011,172	)			88
Other income (expense)
Interest income, net			357,993				377,671				(19,678	)			(5	)
Gain (loss) on warrant liabilities			(1,523,393	)			3,671,758				(5,195,151	)			(141	)
Loss on foreign currency contracts			(5,906	)			-				(5,906	)			100
Other income (expenses)			(14,717	)			(55,517	)			40,800				(73	)
Total other income (expense)			(1,186,023	)			3,993,912				(5,179,935	)			(130	)
Net income (loss) and comprehensive income (loss)		$	(7,616,727	)		$	574,380			$	(8,191,107	)			(1,426	)

Comparison of the Nine Months Ended September 30, 2026 and 2025

		For the Nine Months Ended September 30,								Dollar				Percentage
		2026				2025				Change				Change
Revenue
Product sales, net		$	17,295,286			$	4,257,562			$	13,037,724				306	%
Licensing revenue			108,488				3,169,637				(3,061,149	)			(97	)
Total revenue			17,403,774				7,427,199				9,976,575				134
Cost of Revenues
Cost of product sales, excluding amortization of intangible asset			898,416				294,672				603,744				205
Cost of licensing revenue			84,611				1,368,402				(1,283,791	)			(94	)
Amortization of intangible assets			167,614				16,160				151,454				937
Total cost of revenues			1,150,641				1,679,234				(528,593	)			(31	)
Gross Profit			16,253,133				5,747,965				10,505,168				183
Operating Expenses
Research and development			3,368,416				1,320,339				2,048,077				155
Selling, general and administrative expenses			34,085,949				19,699,397				14,386,552				73
Total operating expenses			37,454,365				21,019,736				16,434,629				78
Loss from operations			(21,201,232	)			(15,271,771	)			(5,929,461	)			39
Other income (expense)
Interest income, net			1,244,784				1,265,210				(20,426	)			2
Loss on warrant liabilities			(1,813,588	)			(352,451	)			(1,461,137	)			415
Loss on foreign currency contracts			(48,157	)			-				(48,157	)			100
Other income (expenses)			15,414				9,091				6,323				70
Total other income (expense)			(601,547	)			921,850				(1,523,397	)			(165	)
Net loss and comprehensive loss		$	(21,802,779	)		$	(14,349,921	)		$	(7,452,858	)			52

Revenue

Comparison of Revenue for the Three Months Ended September 30, 2026 and 2025

Revenue increased by $4,936,144, or 174%, from $2,840,858 for the three months ended September 30, 2025 to $7,777,002 for the three months ended September 30, 2026.

The increase was primarily attributable to higher prescription volume resulting from increased utilization of ZUNVEYL. During the three months ended September 30, 2026, the increase in volume was 215% when compared to the three months ended September 30, 2025.

Product revenue was also positively impacted from the increase in average WAC from $788.83 per bottle to $869.36 per bottle. The increase in WAC per bottle resulted in an increase of 21% in gross product sales.

These increases were partially offset by higher GTN deductions, including government and commercial rebates, chargebacks, and distribution-related fees. GTN deductions represented 25.5% of gross product sales during the three months ended September 30, 2026 compared with 21.9% during the comparable prior period.

Product revenue is presented net of estimated GTN deductions. GTN deductions increased from $629,996 during the three months ended September 30, 2025 to $2,662,627 during the current period.

The change in GTN deductions was primarily attributable to:

●

increased distribution service fees resulting from higher commercial sales activity

●

increased Medicare Part D Manufacturer Discount Program obligations resulting from increased utilization among Medicare beneficiaries;

●

increased government rebates resulting from higher prescription volumes and expanded payer utilization; and

●

increased chargebacks associated with growth in contracted accounts and government program participation;

Changes in the ratio of GTN deductions to gross sales were primarily attributable to changes in payer mix, channel mix and utilization of patient support programs.

The Company expects that revenue from commercial sales of ZUNVEYL will continue to grow over the year as the Company expands its sales force and implements its sales strategy.

Licensing revenue recognized during the three months ended September 30, 2025 and 2026 related to services performed by the Company to provide certain regulatory, technical, and clinical assistance to CMSI.

Comparison of Revenue for the Nine Months Ended September 30, 2026 and 2025

Revenue increased by $9,976,575, or 134%, from $7,427,199 for the nine months ended September 30, 2025 to $17,403,774 for the nine months ended September 30, 2026.

The increase was primarily attributable to higher prescription volume resulting from increased utilization of ZUNVEYL. During the nine months ended September 30, 2026, the increase in volume was 285% when compared to the nine months ended September 30, 2025.

Product revenue was also positively impacted from the increase in average WAC from $770.58 per bottle to $853.24 per bottle. The increase in average WAC per bottle resulted in an increase of 10% in gross product sales.

These increases were partially offset by higher GTN deductions, including government and commercial rebates, chargebacks, and distribution-related fees. GTN deductions represented 25.2% of gross product sales during the nine months ended September 30, 2026 compared with 19.6% during the comparable prior period.

Product revenue is presented net of estimated GTN deductions. GTN deductions increased from $1,040,593 during the nine months ended September 30, 2025 to $5,826,630 during the current period.

The change in GTN deductions was primarily attributable to:

●

increased distribution service fees resulting from higher commercial sales activity

●

increased Medicare Part D Manufacturer Discount Program obligations resulting from increased utilization among Medicare beneficiaries;

●

increased government rebates resulting from higher prescription volumes and expanded payer utilization; and

●

increased chargebacks associated with growth in contracted accounts and government program participation;

Changes in the ratio of GTN deductions to gross sales were primarily attributable to changes in payer mix, channel mix and utilization of patient support programs.

The Company expects that revenue from commercial sales of ZUNVEYL will continue to grow over the year as the Company expands its sales force and implements its sales strategy.

Licensing revenue was $3,169,637 during the nine months ended September 30, 2025 compared to $108,488 during the nine months ended September 30, 2026. The decrease of $3,061,149 was primarily due to the recognition of $2,396,600 during the nine months ended September 30, 2025 related to the one-time transfer of intellectual property to CMSI.

Cost of Product Sales and Cost of Licensing Revenue

Comparison of Cost of Sales and Cost of Licensing Revenue for the Three Months Ended September 30, 2026 and 2025

Cost of product sales increased by $209,320, or 129%, from $162,777 for the three months ended September 30, 2025 to $372,097 for the three months ended September 30, 2026. The increase was primarily attributable to higher commercial sales volume of ZUNVEYL. The Company expects that cost of product sales will continue to increase over the year in relation to expected increased sales of ZUNVEYL as the Company expands its sales of ZUNVEYL.

Cost of licensing revenue decreased by $442,958, or 95%, from $465,284 for the three months ended September 30, 2025 to $22,326 for the three months ended September 30, 2026. The decrease is from a reduction of royalty payments and pass-through costs, such as consulting fees and active pharmaceutical ingredients, that were allocated to activities supporting the CMSI agreement. The Company expects that cost of licensing revenue will continue to decrease over the year until the requirements of the CMSI agreement have been fulfilled.

Comparison of Cost of Sales and Cost of Licensing Revenue for the Nine Months Ended September 30, 2026 and 2025

Cost of product sales increased by $603,744, or 205%, from $294,672 for the nine months ended September 30, 2025 to $898,416 for the nine months ended September 30, 2026. The increase was primarily attributable to higher commercial sales volume of ZUNVEYL. The Company expects that cost of product sales will continue to increase over the year in relation to expected increased sales of ZUNVEYL as the Company expands its sales of ZUNVEYL.

Cost of licensing revenue decreased by $1,283,791, or 94%, from $1,368,402 for the nine months ended September 30, 2025 to $84,611 for the nine months ended September 30, 2026. The decrease is from a reduction of royalty payments and pass-through costs, such as consulting fees and active pharmaceutical ingredients, that were allocated to activities supporting the CMSI agreement. The Company expects that cost of licensing revenue will continue to decrease over the year until the requirements of the CMSI agreement have been fulfilled.

Research and Development Expenses

Comparison of Research and Development for the Three Months Ended September 30, 2026 and 2025

Research and development expenses increased by $831,164, or 162%, from $513,783 for the three months ended September 30, 2025, to $1,344,947 for the three months ended September 30, 2026. The increase was attributable to time allocated in employee and management costs incurred for the development of the dissolvable tablet and clinical studies.

Comparison of Research and Development for the Nine Months Ended September 30, 2026 and 2025

Research and development expenses increased by $2,048,077, or 155%, from $1,320,339 for the nine months ended September 30, 2025, to $3,368,416 for the nine months ended September 30, 2026. The net change is due to increase in time allocated in employee and management costs for the development of the dissolvable tablet and clinical studies.

Selling, General and Administrative Expenses

Comparison of Selling, General and Administrative Expenses for the Three Months Ended September 30, 2026 and 2025

Selling, general and administrative expenses increased by $7,267,179 or 142%, from $5,113,159 for the three months ended September 30, 2025, to $12,380,338, for the three months ended September 30, 2026. In support of the Company's expansion in commercial operations and launch of ZUNVEYL, there has been an increase of $2.4 million in employee costs due to the increase in sales representatives and administrative support; an increase of $1.6 million in marketing and commercial operations due to increased sales activity and implementation of the speaker bureau program; an increase in regulatory costs of approximately $0.3 million for the FDA user fees; an increase of $1.0 million in other general and administrative expenses due to increased sales activity; and an increase of $2.0 million in stock-based compensation due to graded vesting nature of equity awards issued during the 2025 and 2026 fiscal years.

Comparison of Selling, General and Administrative Expenses for the Nine Months Ended September 30, 2026 and 2025

Selling, general and administrative expenses increased by $14,386,552 or 73%, from $19,699,397 for the nine months ended September 30, 2025, to $34,085,949, for the nine months ended September 30, 2026. In support of the Company's expansion in commercial operations and launch of ZUNVEYL, there has been an increase of $8.3 million in employee costs due to the increase in sales representatives and administrative support; an increase of $4.0 million in marketing, sales and commercial operations due to increased sales activity and implementation of the speaker bureau program; an increase in regulatory costs of approximately $1.0 million for the FDA user fees; an increase of $1.6 million in other general and administrative expenses due to increased sales activity; $0.4 million increase in manufacturing related costsand a decrease of $1.0 million in stock-based compensation due to change of liability classified options to equity classified and graded vesting nature of equity awards issued during the 2025 and 2026 fiscal years.

Interest Income

Interest income consists of interest earned on the Company's cash and cash equivalents.

Interest income had a decrease of $19,678 or 5% from interest income of $377,671 for the three months ended September 30, 2025, to interest income, net of $357,993 for the three months ended September 30, 2026. Interest income had a net change of $20,426 or 2% from interest income of $1,265,210 for the nine months ended September 30, 2025, to interest income, net of $1,244,784 for the nine months ended September 30, 2026.

Change in Fair Value of Warrant Liabilities

During the three months ended September 30, 2026, the change in the fair value of the Company's warrant liabilities resulted in a loss of $1,523,393 compared to a gain of $3,671,758 during the three months ended September 30, 2025. For both periods, the change in fair value primarily resulted from changes in the Company's Common Stock price during the respective quarter.

During the nine months ended September 30, 2026, the change in the fair value of the Company's warrant liabilities resulted in a loss of $1,813,588 compared to a loss of $352,451 during the nine months ended September 30, 2025. For both periods, the change in fair value primarily resulted from changes in the Company's Common Stock price during the respective period.

The Company uses various valuation models to estimate the fair value of its warrant liabilities. These models require the input of subjective assumptions including the expected term of the warrants and the expected volatility of the Company's Common Stock price during this term. Changes in the input assumptions can materially affect the fair value estimate and the Company's net loss and liabilities.

Liquidity and Capital Resources

Sources of Liquidity

The Company does not have sufficient operating revenue to finance its existing obligations and has relied on external financing, such as debt and equity raises, since incorporation to generate capital to maintain its capacity to meet working capital requirements. The Company has successfully raised funds that exceed the Company's working capital requirements for the next 12 months from the date of issuance of the consolidated financial statements contained in this report. The Company expects to continue to rely on debt and the issuance of Common Stock, and possibly other non-dilutive financing options to finance its ongoing operations and plans for commercialization of ZUNVEYL. However, there is a risk that additional financing will not be available on a timely basis or on terms acceptable to the Company.

Future Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we continue the commercialization of ZUNVEYL, following the start of sales in the first quarter of 2025, and potentially seek to discover and develop additional product candidates, conduct our ongoing and planned clinical trials and pre-clinical studies, continue our R&D activities, utilize third parties to manufacture ZUNVEYL, hire additional personnel, expand and protect our intellectual property, and incur additional costs associated with being a public company.

Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our outstanding accounts payable, accrued expenses, and prepaid expenses. The timing and amount of our funding requirements will depend on many factors, including:

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the costs associated with the production, distribution and sales of ZUNVEYL, including any future expansion of production capabilities, expansion of distribution networks, expansion of our sales force and increased expenses on advertising or related sale costs;

●

the costs associated with our licensing arrangements for ZUNVEYL, including increased costs from such arrangements and increasing the number and types of licensing arrangements;

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the initiation, type, number, scope, progress, expansions, results, costs and timing of clinical trials and pre-clinical studies of ZUNVEYL and any future product candidates we may choose to pursue, including the costs of modification to clinical development plans based on feedback that we may receive from regulatory authorities and any third-party products used as combination agents in our clinical trials;

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the costs, timing and outcome of regulatory meetings and reviews of ZUNVEYL or any future product candidates, including requirements of regulatory authorities in any additional jurisdictions in which we may seek approval for ZUNVEYL and any future product candidates;

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the costs of obtaining, maintaining, enforcing and protecting our patents and other intellectual property and proprietary rights;

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our efforts to enhance operational systems and hire additional personnel to satisfy our obligations as a public company, including enhanced internal control over financial reporting;

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the costs associated with hiring additional personnel and consultants as our business grows, including additional executive officers and clinical development, regulatory, CMC (defined below) quality and commercial personnel;

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the costs and timing of establishing or securing sales and marketing capabilities of any future product candidate approval;

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our ability to achieve sufficient market acceptance, coverage, and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;

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our ability and strategic decision to develop future product candidates other than ZUNVEYL, and the timing of such development, if any;

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patients' willingness to pay out-of-pocket for any approved products in the absence of coverage and/or adequate reimbursement from third-party payors;

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the terms and timing of establishing and maintaining collaborations, licenses and other similar arrangements; and

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costs associated with any products or technologies that we may in-license or acquire.

Based upon our current operating plan, we estimate that our existing cash and cash equivalents as of the date of this filing, will be sufficient to fund our projected base ongoing operating expenses, commercialization costs of ZUNVEYL in AD, ongoing chemistry, manufacturing, and control(s) ("CMC") costs, pre-clinical formulation and study R&D work, and ongoing operating costs and capital expenditures through at least the next 12 months. We may choose to raise additional capital to continue to further advance our commercialization plans and ongoing operating costs. However, we may have based our estimates on assumptions that may prove to be wrong, and our operating plan may change as a result of many factors currently unknown to us. In addition, we could utilize our available capital resources sooner than we expected. The Company may also contemplate raising additional capital by pursuing both dilutive and non-dilutive strategic sources of capital to fully execute its commercial, R&D, and operating plans for ZUNVEYL. Any additional capital would further support our R&D and commercial activities related to U.S. sales of ZUNVEYL in AD.

In August 2025, the Company entered into an ATM agreement with H.C. Wainwright & Co., LLC as the sales agent. The Company currently has not utilized the ATM facility.

Until such time we can generate substantial product revenue, we expect to finance our operations through other capital sources, including current or potential future collaborations, licenses, royalties and other similar arrangements. We do not know what the terms of these future financings will be and whether they will be acceptable to the Company or not and, therefore, we may be unable to raise additional funds or enter into such other arrangements when needed on favorable terms or at all. To the extent we raise additional capital, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, engaging in acquisitions, merger or collaboration transactions, selling or licensing our assets, making capital expenditures, redeeming our Common Stock, making certain investments or declaring dividends. If we raise additional funds through collaborations or license agreements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves, or even cease operations.

Financing Activities

Recent capital raising activities

On October 2, 2025, the Company completed a public offering of Common Stock by issuing 4,651,516 shares of Common Stock at a public offering price of $6.25 per share and 948,484 pre-funded warrants exercisable into Common Stock with an exercise price of $0.001 per share for total gross proceeds of approximately $35 million. In connection with this offering, the Company incurred underwriting fees of approximately $2.11 million.

On October 17, 2025, the underwriter of the Company's public offering exercised its over-allotment option in full to purchase an additional 840,000 of Common Stock at the public offering price of $6.25 per share for additional gross proceeds of approximately $5.25 million and underwriting fees of $341,250.

Cash Flows

The following table provides information regarding our cash flows for the nine months ended September 30, 2026, and 2025:

		For the Nine Months Ended September 30,								Dollar				Percentage
		2026				2025				Change				Change
Consolidated Statement of Cash Flows Data
Cash used in operating activities		$	(23,504,126	)		$	(13,473,949	)		$	(10,030,177	)			74	%
Cash used in investing activities		$	(6,188,688	)		$	(145,966	)		$	(6,042,722	)			4,140	%
Cash provided by financing activities		$	1,447,853			$	513,132			$	934,721				182	%

Cash used in operating activities

Cash used in operating activities increased by $10,030,177 to $23,504,126 for the nine months ended September 30, 2026, from $13,473,949 for the comparative period. The increase is related to higher employee costs of approximately $5.6 million, commercial, marketing and other general and administrative costs increased by approximately $2.6 million and $1.7 million increase in research and development for clinical studies.

Cash used in investing activities

Cash used in investing activities increased by $6,042,722 to $6,188,690 for the nine months ended September 30, 2026 from $145,966 compared to the comparative period. During the nine months ended September 30, 2025 and 2026, investing activities consisted of acquiring computer equipment and software. During the nine months ended September 30, 2026, the Company paid $5,906,702 for the acquisition of an intangible asset in connection with the Galantos Pharma royalty settlement.

Cash provided by financing activities

Cash provided by financing activities for the nine months ended September 30, 2026, increased by $934,721 compared to the comparative period. During the nine months ended September 30, 2025, financing activities primarily consisted of principal repayment of the promissory note of $911,463, proceeds of $1,019,461 from the exercise of warrants, and receiving $174,675 in government grant proceeds offset by $134,146 of related grant expenses. During the nine months ended September 30, 2026, financing activities was proceeds of $1,030,789 from the exercise of warrants and $417,066 from the exercise of common and performance legacy options.

Contractual Obligations and Other Commitments

In the normal course of business, we enter into agreements with contract service providers to assist in the performance of R&D and clinical and commercial manufacturing activities. We currently have three license agreements, the CMSI License Agreement, ALPHA-1062 technology and ALPHA-0602 technology, which are outlined below. We expect to enter into additional clinical development, contract research, clinical and commercial manufacturing, supplier, and collaborative research agreements in the future, which may require upfront payments and long-term commitments of capital resources.

See "Note 16 - Commitments and Contingencies" from the notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 for a discussion of our contractual obligations and long-term commitments.

Contingencies

The Company did not have any contingencies as of September 30, 2026, or the date of this report.

Critical Accounting Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the consolidated financial statements and expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We consider an accounting estimate to be critical if (i) it requires significant judgment and the use of assumptions about matters that are inherently uncertain, and (ii) changes in those assumptions could have a material impact on our consolidated financial statements.

The following are the accounting estimates that we believe are most critical to understanding our financial condition and results of operations.

Revenue Recognition, Including Variable Consideration

We generate revenue from product sales and licensing arrangements. Revenue is recognized when control of promised goods or services is transferred to customers in an amount that reflects the consideration we expect to receive. For product sales, revenue is recorded net of variable consideration, including estimated rebates, chargebacks, discounts, returns and other allowances.

Significant judgment is required in (i) estimating variable consideration, particularly given the early stage of commercialization of ZUNVEYL, (ii) determining standalone selling prices in licensing arrangements, and (iii) assessing performance obligations and allocation of transaction price. These estimates require the use of assumptions related to payer mix, contractual terms, product returns, and market adoption. Given our limited commercialization history, these estimates may be subject to increased variability, and changes in assumptions could materially impact revenue in future periods.

Product revenue is recognized net of estimated variable consideration, which consists primarily of chargebacks, payer rebates, distribution service fees, prompt payment discounts and estimated product returns.

These reserves require significant judgment as they are based on contractual arrangements, historical experience, current channel inventory levels, expected payer mix, anticipated utilization trends and other market conditions. Because commercialization of ZUNVEYL remains in its early stages relative to more mature pharmaceutical products, certain estimates may be subject to greater variability as additional historical experience becomes available.

Chargebacks arise from contractual arrangements with customers that purchase products through wholesalers at negotiated pricing below wholesale acquisition cost. Chargeback reserves are estimated using contractual terms, inventory data and expected utilization.

Payer rebates include amounts payable under Medicaid, Medicare Part D and other government-sponsored healthcare programs. The Company estimates these liabilities based on applicable statutes, contractual provisions, payer mix and expected claims experience.

Distribution service fees include fees paid to specialty distributors and other channel partners for inventory management, distribution and related services.

Prompt payment discounts are estimated based on customer payment terms and historical payment experience.

Product return reserves are estimated using available information regarding product shelf life, inventory levels in the distribution channel, historical experience and anticipated demand.

Actual amounts may differ from estimates and are adjusted in the period in which such differences become known.

The Company continually evaluates the adequacy of its estimates as additional information becomes available and records adjustments in the period such information becomes known.

Fair Value of Warrant, Option, and Derivative Liabilities

Certain freestanding warrants and stock options are accounted for as liabilities and are remeasured at fair value at each reporting period, with changes recognized in the consolidated statement of operations and comprehensive loss. In addition, previously outstanding convertible instruments included embedded derivatives that required fair value measurement.

Significant judgments required in estimating the fair value of these financial instruments and embedded derivatives include (i) the selected valuation technique, (ii) volatility assumptions, and (iii) expected term. Changes in these assumptions can result in significant non-cash gains or losses in the consolidated statement of operations and comprehensive loss.

Stock-Based Compensation

We measure stock-based compensation based on the fair value of equity awards granted to employees and non-employees. The determination of fair value requires significant estimates, including (i) expected volatility of our Common Stock, (ii) expected term of awards, (iii) for certain awards, classification between equity and liabilities. Changes in these assumptions could materially impact the amount and timing of compensation expense recognized.

Emerging Growth Company Status and Smaller Reporting Company Status

We are an emerging growth company, as defined in the JOBS Act. The JOBS Act permits an emerging growth company such as us to take advantage of an extended transition period to comply with new or revised accounting standards. We have elected to avail ourselves of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we can adopt the new or revised standard at the time private companies adopt the new or revised standard and may do so until such time that we either (i) irrevocably elect to opt out of such extended transition period or (ii) no longer qualify as an emerging growth company. We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. We will continue to remain an emerging growth company until the earliest of the following: (1) December 31, 2029; (2) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.235 billion; (3) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or (4) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

We are also a smaller reporting company as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting Common Stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting Common Shares held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Special Note regarding Forward-looking Statements

This report includes forward-looking statements within the meaning of applicable securities laws. Except for statements of historical fact, any information contained in this report may be a forward-looking statement that reflects the Company's current views about future events and are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Such statements include but are not limited to statements regarding the future success of the commercialization of ZUNVEYL, statement regarding the timing and potential outcomes of the Company's ongoing clinical and preclinical studies, statements regarding future presentations, statements regarding potential product approvals and other statements regarding the future anticipated operations of the Company. In some cases, you can identify forward-looking statements by the words "may," "might," "will," "could," "would," "should," "expect," "intend," "plan," "objective," "anticipate," "believe," "estimate," "predict," "project," "potential," "target," "seek," "contemplate," "continue" and "ongoing," or the negative of these terms, or other comparable terminology intended to identify statements about the future. Although the Company believes to have a reasonable basis for each forward-looking statement, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain. The Company cannot ensure that the actual results will be consistent with these forward-looking statements. These forward-looking statements are subject to certain risks, including risks regarding our ability to raise sufficient capital to implement our plans to continue to commercialize ZUNVEYL, risks regarding the efficacy and tolerability of ZUNVEYL, risks related to ongoing regulatory oversight on the safety of ZUNVEYL, risk related to market adoption of ZUNVEYL, risks related to the Company's intellectual property in relation to ZUNVEYL, risks related to the commercial manufacturing, distribution, marketing and sale of ZUNVEYL, risks related to product liability, risks related to our ongoing clinical trials and other risks as described in the Company's filings with the Commission, including those risk factors under the heading "Risk Factors" in the Company's most recent Annual Report on Form 10-K filed with the SEC on March 31, 2026 and the Company's other filings with the SEC available at www.sec.gov. These forward-looking statements speak only as of the date of this news release and the Company undertakes no obligation to revise or update any forward-looking statements for any reason, even if new information becomes available in the future, except as required by law.