CLDI 10-K & 10-Q changes, risk factors and insider trading

We are ana immuno-oncologybiotechnology company with a limited operating history and have not generated any revenue to date from product sales.

● successfully complete our ongoing and planned preclinical studies and clinical trials for our allogeneicproduct stem cell delivery of on oncolytic virus programscandidates;

● timely file and receive acceptance of our Investigational New Drug applications,applications or INDs,(“INDs”), in order to commence our planned clinical trials or future clinical trials;

● successfully enroll subjects in, and complete, clinical trials for our oncolyticproduct viral allogeneic stem cell programscandidates;

Our enveloped vaccina virus and engineered allogeneic stem cell and enveloped vaccina virus product candidates represent a novel approach to cancer treatment that creates significant challenges.

We are developing a pipeline of enveloped vaccina virus and allogeneic stem cell product candidates engineered from healthy donor adipose-derived mesenchymal stem cells and enveloped vaccina virus to potentiate and deliver oncolytic viruses to the tumor site and are intended for use in any patient with certain cancers. Advancing these novel product candidates creates significant challenges for us, including:

● obtaining regulatory approval, as the FDA and other regulatory authorities have limited experience with the development and regulation of enveloped vaccina virus and allogeneic stem cell and enveloped vaccina virus therapies for cancer; and

The development of biopharmaceutical products is capital intensive. We are currently advancing our product candidates through pre-clinical pre-clinical testing and clinical development across a number of potential indications. We have in-licensed our lead product candidate CLD-101 for newly diagnosed high grade glioma (“HGG”) that has completed a Phase 1 clinical trial sponsored by Northwestern University. We intend to initiate a Phase 1b or Phase 2 clinical trial under our in-licensed IND for CLD-101 for patients with newly diagnosed HGG. Our second program using our SuperNova™ technology has completed a limited physician investigator-sponsored pre-IND open-label, nonrandomized dose-escalation study prospectively reviewed by the International Cell Surgical Society Institutional Review Board. This study involved a TK-positive oncolytic vaccinia virus delivered by autologous adipose stromal vascular fraction stem cells and was completed in 2018. Since the completion of the study, the FDA has asserted that in-human studies involving autologous adipose stromal vascular fraction stem cells are regulated under the Federal Food, Drug, and Cosmetics Act and require an IND from the FDA in order to conduct clinical trials. We intendhave to apply for anreceived IND approval from the FDA andto initiate a Phase 1 clinical trial for our product candidate CLD-201 that utilizes allogeneic adipose-derived mesenchymal stem cell (“AD-MSC”) line VP-001 loaded with tumor selective “CAL1” oncolytic vaccinia virus strain. Our third program involves significant preclinical research involving enveloping vaccinia virus within a cellular membrane.membrane is in IND-enabling studies. Consequently, we expect our expenses to significantly increase in connection with our ongoing activities, particularly as we continue our pre-clinical studies and initiate our planned clinical trials or initiate future trials on other product candidates and and pursue the research and development of, and seek marketing approval for, our product candidates. In addition, depending on the status status of regulatory approvals or, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization commercialization expenses related to product sales, marketing, manufacturing and distribution. We may also need to raise additional funds sooner if we choose to pursue additional indications and/or geographies for our product candidates or otherwise expand more rapidly than we presently anticipate. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate certain of our research and development programs or future commercialization efforts, and may be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.

● the scope, progress, results and costs of product discovery, preclinical and clinical development, laboratory testing and clinical trials for the development of CLD-101 for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, and CLD-400 or our other potential product candidates;

● the timing of, and the costs involved in, obtaining marketing approvals for CLD-101our inproduct newly diagnosed HGG, CLD-101 for recurrent HGG as well as for CLD-201 and CLD-400candidates in our initial target indications and our other potential product candidates that we may develop;

● if approved, the costs of commercialization activities for CLD-101our forproduct newly diagnosed HGG, CLD-101 for recurrent HGG or CLD-201candidates for any approved indications or any other product candidate that receives regulatory approval to the extent such costs are not the responsibility of a collaborator that we may contract with in the future, including the costs and timing of establishing product sales, marketing, distribution and manufacturing capabilities;

Our business is highly dependent on the success of CLD-101our forRedTail newlyproduct diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, and CLD-400.candidates. If we are unable to obtain approval for CLD-101our forRedTail newlyproduct diagnosed HGG, CLD-101 for recurrent HGG, CLD-201 and/or CLD-400candidates and effectively commercialize any of these product candidatesthem for the treatment of patients in its approved indications, our business would be significantly harmed.

Our business and future success depend on our ability to obtain regulatory approval of, and then successfully commercialize, our most advancedRedTail product candidate,candidates. CLD-101 for newly diagnosed HGG. CLD-101 for newly diagnosed HGGCLD-401 is in the early stages of development and has only not been administered toon ahuman limited number of patients in a Phase 1 physician-sponsored clinical trial.patients. The preclinical results to date may not predict outcomes for our planned clinical trial or any future studies of CLD-101 for newly diagnosed HGGCLD-401 or any otherenveloped allogeneic neural stem cellvirus product candidate. Because CLD-101 for newly diagnosed HGGCLD-401 is the first allogeneicenveloped virus product to be evaluatedin inpre IND studies for the clinic, its failure, or the failure of other allogeneicenveloped neural stem cellvirus therapies, may significantly influence physicians’ and regulators’ opinions regarding the viability of our entire pipelineRedTail of allogeneic neural stem cell therapies. We are also dependent on Northwestern University to conduct an additional non-pivotal CLD-101 for newly diagnosed HGG Phase 1 trial in a timely and appropriate manner so that we can sponsor the pivotal Phase 2 trial for CLD-101 for newly diagnosed HGG. If Northwestern University does not conduct the trial on the timeline we expect, or otherwise fails to support the trial, our leadership position in the allogeneic neural stem cell industry and ability to progress additional product candidates may be significantly harmed.platform.

Our product candidates, including CLD-101 for newly diagnosed HGG, CLD-201 and CLD-101 for recurrent HGG,candidates will require additional clinical and non-clinical development, regulatory review and approval in multiple jurisdictions, a substantial investment, access to sufficient commercial manufacturing capacity and significant marketing efforts before we can generate any revenue from product sales. In addition, because CLD-101 for newly diagnosed HGGCLD-401 is our most advanced product candidate from the RedTail platform and our other developing product candidates are based on similar technology, if CLD-101 for newly diagnosed HGGCLD-401 encounters safety or efficacy problems, manufacturing problems, developmental delays, regulatory issues, or other problems, our development plans and business would be significantly harmed.

Before obtaining regulatory approvals for the commercial sale of our product candidates, including CLD-101 for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201 or CLD-400 or any other product candidates we develop, we must demonstrate the safety and efficacy of our product candidates for use in each target indication through lengthy, complex, and expensive preclinical studies and clinical trials. trials. Failure can occur at any time during the preclinical study and clinical trial processes and there is a high risk of failure, so we may never succeed in developing marketable products. Any preclinical studies or clinical trials that we may conduct may not demonstrate the safety and efficacy necessary to obtain regulatory approval to market any of our product candidates. If the results of our ongoing or future preclinical studies and clinical trials are inconclusive with respect to the safety and efficacy of our product candidates, if we do not meet the clinical endpoints with statistical and clinically meaningful significance, or if there are safety concerns associated with our product candidates, we may be prevented or delayed in obtaining marketing approval for such product candidates. In some instances, there can be significant variability in safety or efficacy results between different preclinical studies and clinical trials of the same product candidate due to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations, changes in and adherence to the clinical trial protocols and the rate of dropout among clinical trial participants. While we are currently planning for either a physician-sponsored Phase 1b or a company-sponsored Phase 2 clinical trial for CLD-101 for newly diagnosed HGG and are in early stages of clinical development for CLD-101 for recurrent HGG, CLD-201, or CLD-400 it is likely, as is the case with many oncology therapies, that there may be side effects associated with their use.

From time to time, we may publish interim, top line or preliminary data from our clinical trials. We may decide to conduct an interim analysis of the data after a certain number or percentage of patients have been enrolled, or after only a part of the full follow-up period but before completion of the trial. Similarly, we may report top line or preliminary results of primary and key secondary endpoints before the final trial results are completed. Preliminary, top line and interim data from our clinical trials may change as more patient data or analyses become available. Preliminary, top line or interim data from our clinical trials are not necessarily predictive of final results and are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollmentenrolment continues, more more patient data become available and we issue our final clinical trial report. TheseThe data also remainremains subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, preliminary, interim and top line data should be viewed with caution until the final data are available. Material adverse changes in the final data compared to the interim data could significantly harm our business prospects.

Additionally, some of past, ongoing and planned clinical trials utilize andan “open-label” study design. An “open-label” clinical trial is one where both the patient and investigator know whether the patient is receiving the investigational product candidate or either an existing approved drug or placebo. Most typically, open-label clinical trials test only the investigational product candidate and sometimes may do so at different dose levels. Open-label clinical trials are subject to various limitations that may exaggerate any therapeutic effect, as patients in open-label clinical trials are aware when they are receiving treatment. Open-label clinical trials may be subject to a “patient bias” where patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental treatment. Moreover, patients selected for early clinical studies often include the most severe sufferers and their symptoms may have improved notwithstanding the new treatment. In addition, open-label clinical trials may be subject to an “investigator bias” where those assessing and reviewing the physiological outcomes of the clinical trials are aware of which patients have received treatment and may interpret the information of the treated group more favorably given this knowledge.

Our product candidates are based on a novel approach to the treatment of cancer using vaccinia virus enveloped in a cellular membrane, allogeneic neural stem cell, and allogeneic adipose-derived mesenchymal stem cell (“AD-MSC”) loaded with an oncolytic virus, and vaccinia virus envelopedwhich in a cellular membrane which makes it difficult to predict the time and cost of product candidate development and subsequently obtaining regulatory approval, if at all.

We have concentrated all of our research and development efforts on our CLD-101 for newly diagnosed HGG, CLD-201, and CLD-400 product candidates, and our future success depends on the successful development of these therapeutic approaches. In particular, CLD-101 for newly diagnosed HGG utilizes NSC-CRAd-S-pk7, an engineered oncolytic adenovirus delivered by neural stem cells to activate the innate and adaptive immune system. To our knowledge, there are no FDA-approved products for the treatment of cancer that utilize the adenovirus.

We expect the novel nature of our product candidates using allogeneic neural stem cells and allogeneic adipose-derived mesenchymal stem cells (“AD-MSC”) to create significant challenges in obtaining regulatory approval. Few viral immunotherapies have been approved globally or by the FDA to date. While the first viral immunotherapy, talimogene laherparepvec (Imlygic, Amgen), has received FDA approval, regulatory agencies have reviewed relatively few viral immunotherapy product candidates such as CLD-101our forproduct newly diagnosed HGG and CLD-201.candidates. This may lengthen the regulatory review process, increase our development costs and delay or prevent commercialization of our product candidates. Further, any viral immunotherapies that are approved may be subject to extensive post-approval regulatory requirements, including requirements pertaining to manufacturing, distribution and promotion. We may need to devote significant time and resources to compliance with these requirements.

Furthermore, there has been limited historical clinical trial experience for the development of products that utilize the adenovirus. Moreover, the the design and conduct of our clinical trials utilizing vaccinia virus enveloped in a cellular membrane and both neural stem cells and adipose-derived mesenchymal stem cells (“AD-MSC”) and vaccinia virus enveloped in a cellular membrane to deliver oncolytic viruses differs from the design and conduct of previously conducted clinical trials in this area. As a result, there is substantial risk that the design or outcomes of our clinical trials will not be satisfactory to support marketing approval.

The commercial success of adenovirus we use in our CLD-101 for newly diagnosed HGG and CLD-101 for recurrent HGG product candidates or ACAM2000, a thymidine kinase (TK)-positive strain of vaccinia virus (used as the current smallpox vaccine in the United States) we anticipateare using in our CLD-401 and CLD-201 product candidate, and the vaccinia virus we intend to utilize in CLD-400 candidates, will depend in part on public acceptance of the use of immuno-oncology, and, in particular, oncolytic viral immunotherapy. Adverse events in clinical trials of CLD-101our forcurrent newly diagnosedproduct HGG, CLD-201 or any other adenovirus or any other ACAM2000-basedcandidates or vaccinia virus based product candidates which we may develop, or or in clinical trials of others developing similar products and the resulting publicity, as well as any other negative developments in the field of immuno-oncology that may occur in the future, including in connection with competitor therapies, could result in a decrease decrease in demand for any adenovirus-, vaccinia virus or ACAM2000-based product candidates that we may develop. These events could also result in the suspension, discontinuation, or clinical hold of or modification to our clinical trials. If public perception is influenced by claims that the use of oncolytic immunotherapies is unsafe, whether related to our therapies or those of our competitors, our product candidates may not be accepted by the general public or the medical community and potential clinical trial subjects may be discouraged from enrolling in our clinical trials. In addition, responses by national or state governments to negative public perception may result in new legislation or regulations that could limit our ability to develop or commercialize any product candidates, obtain or maintain regulatory approval or otherwise achieve profitability. More restrictive statutory regimes, government regulations or negative public opinion would have an adverse effect on our business, financial condition, prospects and results of operations and may delay or impair the development and commercialization of our product candidates or demand for any products we may develop. As a result, we may not be able to continue or may be delayed in conducting our development programs.

Identifying and qualifying patients to participate in clinical trials of our product candidates is critical to our success. The timing of completion of our clinical trials depends in part on the speed at which we can recruit patients to participate in testing our product candidates, and we may experience delays in our clinical trials if we encounter difficulties in enrollment.enrolment. We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials as required by the FDA or other regulatory authorities, or as needed to provide appropriate statistical power for a given trial. In particular, because we are focused on patients with brain cancer for the development of CLD-101 for newly diagnosed HGG and CLD-101 for recurrent HGG, our ability to enroll eligible patients may be limited or enrollmentenrolment may be slower than we anticipate due to to the small eligible patient population.

The enrollmentenrolment of patients further depends on many factors, including:

The development and commercialization of new product candidates is highly competitive. We face competition from major pharmaceutical, specialty pharmaceutical and biotechnology companies among others with respect to CLD-101our forproduct newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201 and CLD-400candidates and will face similar competition with respect to any product candidates that we may seek to develop or commercialize in the future. We compete in pharmaceutical, biotechnology and other related markets that develop immuno-oncology therapies for the treatment of cancer. There are other companies working to develop viral immunotherapies for the treatment of cancer, including divisions of large pharmaceutical and biotechnology companies of various sizes. The large pharmaceutical and biotechnology companies that have commercialized and/or are developing immuno-oncology treatments for cancer include AstraZeneca, Bristol-Myers Squibb, Gilead Sciences, Merck, Novartis, Pfizer and Roche/Genentech.

The regulatory approval processes of the FDA and other regulatory authorities are lengthy, time consuming and inherently unpredictable. If we are not able to obtain, or experience delays in obtaining, required regulatory approvals, we will not be able to commercialize CLD-101 forour newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates as expected, and our ability to generate revenue may be materially impaired.

The time required to obtain approval by the FDA and other regulatory authorities is unpredictable, but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. These regulatory requirements may require us to amend our clinical trial protocols, including to comply with the protocols of any applicable Special Protocol Assessment (“SPA”) we receive from the FDA; conduct additional preclinical studies or clinical trials that may require regulatory or independent institutional review board, or IRB, approval; or otherwise cause delays in obtaining approval or rejection of an application. Any delay in obtaining or failure to obtain required approvals could materially adversely affect our ability to generate revenue from the particular product candidate, which may materially harm our business, financial condition, results of operations, stock price and prospects. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing approval of a product candidate. The number and types of preclinical studies and clinical trials that will be required for regulatory approval also varies depending on the product candidate, the disease or condition that the product candidate is designed to address, and the regulations applicable to any particular product candidate. Approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions, and there may be varying interpretations of data obtained from preclinical studies or clinical trials, any of which may cause delays or limitations in the approval or a decision not to approve an application. It is possible that CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates will never obtain the appropriate regulatory approvals necessary for us to commence product sales.

Undesirable side effects caused by CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201current or any future product candidates could also result in denial of regulatory approval by the FDA or other regulatory authorities for any or all targeted indications or the inclusion of unfavorable information in our product labeling, such as limitations on the indicated uses for which the products may be marketed or distributed, a label with significant safety warnings, including boxed warnings, contraindications, and precautions, a label without statements necessary or desirable for successful commercialization, or may result in requirements for costly post-marketing testing and surveillance, or other requirements, including REMS, to monitor the safety or efficacy of the products, and in turn prevent us from commercializing and generating revenues from the sale of CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates. Any such limitations or restrictions could similarly impact any supplemental marketing approvals we may obtain for CLD-101 forour newlyproduct diagnosed HGG, CLD-101 for recurrent HGG and CLD-201.candidates. Undesirable side effects may limit the potential market for any approved products or could result in restrictions on manufacturing processes, the discontinuation of the sales and marketing of the product, or withdrawal of product approvals. We could also be sued and held liable for harm caused to patients, or become subject to fines, injunctions or the imposition of civil or criminal penalties.

If CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates are associated with serious adverse events or undesirable side effects or have properties that are unexpected, we may need to abandon development or limit development of that product candidate to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. The therapeutic-related side effects could affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims.

We may seek Breakthrough Therapy designation for somesome, or allall, of our future product candidates. A Breakthrough Therapy is defined as a drug or biologic that is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug or biologic may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints. Sponsors of product candidates that have been designated as Breakthrough Therapies are eligible to receive more intensive FDA guidance on developing an efficient drug development program, an organizational commitment involving senior managers, and eligibility for rolling review and priority review. Drugs and biologics designated as Breakthrough Therapies by the FDA may also be eligible for other expedited approval programs, including accelerated approval.

Designation as a Breakthrough Therapy is within the discretion of the FDA. Accordingly, even if we believe one of our product candidates meets the criteria for designation as a Breakthrough Therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a Breakthrough Therapy designation for a product candidate may not result in a faster development process, review or approval compared to product candidates developed and considered for approval that have not received Breakthrough Designation and does not assure ultimate approval by the FDA. In addition, even if one or more of our product candidates qualify as Breakthrough Therapies, the FDA may later decide that the product no longer meets the conditions for qualification. Thus, even though we may seek Breakthrough Therapy designation for CLD-101 for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current or some or all of our future product candidates for the treatment of various cancers, there can be no assurance that we will receive breakthrough therapy designation.

Even if our development efforts are successful, we may not obtain regulatory approval of CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current or any future product candidates in the United States or other jurisdictions, which would prevent us from commercializing CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates. Even if we obtain regulatory approval for CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates, any such approval may be subject to limitations, including with respect to the approved indications or patient populations, which could impair our ability to successfully commercialize CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current or any future product candidates.

We are not permitted to market or promote or sell CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current or any future product candidates before we receive regulatory approval from the FDA or other regulatory authorities, and we may never receive such regulatory approval. Securing marketing approval requires the submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy for that indication. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities and clinical trial sites by, the regulatory authorities. If we do not receive approval from the FDA and other regulatory authorities for any of CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates, we will not be able to commercialize such product candidates in the United States or in other jurisdictions. If significant delays in obtaining approval for and commercializing CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates occur in any jurisdictions, our business, financial condition, results of operations, stock price and prospects will be materially harmed. Even if CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates are approved, they may:

We have not previously submitted a Biologics License Application, or BLA, to the FDA, or a similar marketing application to other regulatory authorities, for CLD-101 for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400 or anyour product candidate,candidates, and we can provide no assurance that we will ultimately be successful in obtaining regulatory approval for claims that are necessary or desirable for successful marketing, if at all.

As product candidates are developed through preclinical studies to later-stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods and formulation, are altered along the way in an effort to optimize processes and results. Any of these changes could cause CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current or any future product candidates to perform differently and affect the results of planned clinical trials or other future clinical trials conducted with the altered materials. Changes in third-party manufacturers and manufacturing processes may also require additional testing, or notification to, or approval by the FDA or another regulatory authority. Such changes could be further delayed due to development of commercial scale manufacturing operations in our new facility or at third-party manufacturers. This could delay completion of clinical trials, require the conduct of bridging clinical trials or studies, require the repetition of one or more clinical trials, increase clinical trial costs, delay approval of CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates and jeopardize our ability to commence product sales and generate revenue.

Future legislative and regulatory proposals may materially impact the ability of the FDA and other regulatory agencies to operate as they have historically operated. We cannot be sure whether additional legislative changes or executive orders will be enacted, or whether any of the FDA’s regulations, guidance or interpretations will be changed, or what the impact of such changes on the agency and its scientific review staff, if any, may be. For example, the next FDA user fee reauthorization package is(PDUFA expectedVIII) to enter entered stakeholder negotiations beginning in mid-2025, with anyan agreement anticipated to be sent to Congress in early 2027 for purposes of initiating the legislative process. Reauthorization of the prescription drug user fee program would need to be finalized by Congress by the end of September 2027 in order to avoid a disruption in FDA’s review goals for NDAs and other activities supported by user fees assessed against industry.

Even if CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current or any future product candidates receive regulatory approval, we will be subject to ongoing obligations and continued regulatory review, which may result in significant additional expense and limit how we manufacture and market our products.

The FDA and other regulatory authorities will continue to closely monitor the safety profile of any product even after approval. If the FDA or other regulatory authorities become aware of new safety information after approval of any of CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates, they may withdraw approval, issue public safety alerts, require labeling changes or establishment of a REMS or similar strategy, impose significant restrictions on a product’s indicated uses or marketing, or impose ongoing requirements for potentially costly post-approval studies or post-market surveillance. Any such restrictions could limit sales of the product.

We must comply with requirements concerning advertising and promotion for any product candidates for which we obtain marketing approval. Promotional communications with respect to therapeutics are subject to a variety of legal and regulatory restrictions and continuing review by the FDA, Department of Justice, Department of Health and Human Services’ Office of Inspector General, state attorneys general, members of Congress and the public. When the FDA or other regulatory authorities issue regulatory approval for a product candidate, the regulatory approval is limited to those specific uses and indications for which a product is approved. If we are not able to obtain FDA approval for desired uses or indications for CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates, we may not market or promote them for those indications and uses, referred to as off-label uses, and our business, financial condition, results of operations, stock price and prospects will be materially harmed. We also must sufficiently substantiate any claims that we make for any products, including claims comparing those products to other companies’ products, and must abide by the FDA’s strict requirements regarding the content of promotion and advertising.

If we are found to have impermissibly promoted any of CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current and future product candidates, we may become subject to significant liability and government fines. The FDA and other agencies actively enforce the laws and regulations regarding product promotion, particularly those prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted a product may be subject to significant sanctions. The federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined several companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. In the United States, engaging in the impermissible promotion of any products, following approval, for off-label uses can also subject us to false claims and other litigation under federal and state statutes. These include fraud and abuse and consumer protection laws, which can lead to civil and criminal penalties and fines, agreements with governmental authorities that materially restrict the manner in which we promote or distribute therapeutic products and conduct our business. These restrictions could include corporate integrity agreements, suspension or exclusion from participation in federal and state healthcare programs, and suspension and debarment from government contracts and refusal of orders under existing government contracts. These False Claims Act lawsuits against manufacturers of drugs and biologics have increased significantly in volume and breadth, leading to several substantial civil and criminal settlements pertaining to certain sales practices and promoting off-label uses. In addition, False Claims Act lawsuits may expose manufacturers to follow-on claims by private payers based on fraudulent marketing practices. This growth in litigation has increased the risk that a biopharmaceutical company will have to defend a false claim action, pay settlement fines or restitution, as well as criminal and civil penalties, agree to comply with burdensome reporting and compliance obligations, and be excluded from Medicare, Medicaid, or other federal and state healthcare programs. If we do not lawfully promote our approved products, if any, we may become subject to such litigation and, if we do not successfully defend against such actions, those actions may have a material adverse effect on our business, financial condition, results of operations, stock price and prospects.

In the United States, the promotion of biopharmaceutical products is subject to additional FDA requirements and restrictions on promotional statements. If, after CLD-101our for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, CLD-400current or any future product candidates obtains marketing approval, the FDA determines that our promotional activities violate its regulations and policies pertaining to product promotion, it could request that we modify our promotional materials or subject us to regulatory or other enforcement actions, including issuance of warning letters or untitled letters, suspension or withdrawal of an approved product from the market, requests for recalls, payment of civil fines, disgorgement of money, imposition of operating restrictions, injunctions or criminal prosecution, and other enforcement actions. Similarly, industry codes in foreign jurisdictions may prohibit companies from engaging in certain promotional activities, and regulatory agencies in various countries may enforce violations of such codes with civil penalties. If we become subject to regulatory and enforcement actions, our business, financial condition, results of operations, stock price and prospects will be materially harmed.

The FDA or other regulatory authorities may require us to file separate INDs for additional clinical trials we plan to conduct with our current current lead product candidates, CLD-101 for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201 and CLD-400.candidates. We may not be able to file any additional INDs required for our current product candidates and any future product candidates on the timelines we expect. For example, we may experience manufacturing delays or other delays with IND-enabling studies, including due to a contagious disease outbreak such as the COVID-19 pandemic on suppliers, study sites or third-party contractors and vendors on whom we depend. Moreover, we cannot be sure that submission of an IND will result in the FDA or other regulatory authorities allowing further clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate clinical trials. Additionally, even if such regulatory authorities agree with the design and implementation of the clinical trials set forth in an IND, we cannot guarantee that such regulatory authorities will not change their requirements in the future. These considerations also apply to new clinical trials we may submit as amendments to existing INDs or to a new IND. Any failure to file INDs on the expected timelines to obtain regulatory approvals for our trials may prevent us from completing our clinical trials or commercializing our products on a timely basis, if at all. There are similar risks related to the review and authorization of our protocols and amendments by other regulatory authorities.

The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that could prevent or delay marketing approval of our current or any future product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell a product for which we obtain marketing approval. Changes in regulations, statutes or the interpretation of existing regulations could impact our business in the future by requiring, for example: (i) changes to our manufacturing arrangements, (ii) additions or modifications to product labeling, (iii) the recall or discontinuation of our products or (iv) additional record-keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of our business. More recently, however, on January 28, 2021, President Biden issued a new Executive Order which directs federal agencies to reconsider rules and other policies that limit Americans’ access to healthcare and to consider actions that will protect and strengthen that access.

Our ability to successfully launch and secure market acceptance of our pipeline candidates, CLD-101 for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201, and CLD-400 (if approved),candidates may be impacted by contagious disease outbreaks such as the COVID-19 pandemic, the potential impact of which we may be able to predict or quantify with any degree of certainty.

We expect initially to develop our leadcurrent product candidates,candidates. CLD-101 for newly diagnosed HGG, CLD-101 for recurrent HGG, CLD-201 and CLD-400. A key part of our strategy, however, is to pursue clinical development of additional product candidates. Developing, obtaining marketing approval for, and commercializing additional product candidates will require substantial funding and will be subject to the risks of failure inherent in medical product development. We cannot assure you that we will be able to successfully advance any of these additional product candidates through the development process.

If we or third-party contract research organizations, or CROs, or other contractors or consultants fail to comply with applicable federal, state/provincial or local regulatory requirements, we could be subject to a range of regulatory actions that could affect our or our contractors’ ability to develop and commercialize our therapeutic candidates and could harm or prevent sales of any affected therapeutics that we are able to commercialize, or could substantially increase the costs and expenses of developing, commercializing and marketing our therapeutics. Any threatened or actual government enforcement action could also generate adverse publicity and require that we devote substantial resources that could otherwise be used in other aspects of our business. Increasing use of social media could give rise to liability, breaches of data security or reputational damage.

Social media is increasingly being used to communicate about our clinical development programs and the diseases our therapeutics are being developed to treat, and we intend to utilize appropriate social media in connection with our commercialization efforts following approval of our product candidates, if any. Social media practices in the biotechnology and biopharmaceutical industry continue to evolve and regulations and regulatory guidance relating to such use are evolving and not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business, resulting in potential regulatory actions against us, along with the potential for litigation related to off-label marketing or other prohibited activities and heightened scrutiny by the FDA, the SEC and other regulators. For example, patients may use social media channels to comment on their experience in an ongoing blinded clinical trial or to report an alleged adverse event. If such disclosures occur, there is a risk that trial enrollmentenrolment may be adversely impacted, that we may fail to monitor and comply with applicable adverse event reporting obligations or that we may not be able to defend our business or the public’s legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our product candidates. There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social networking website. In addition, we may encounter attacks on social media regarding our company, management, product candidates or products. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face regulatory actions or incur other harm to our business.

RecentPast statements and proposed action by the United States House of Representatives has been critical of the Chinese biopharmaceutical industry and may raise scrutiny as to the use of our contract manufacturer in China.

Recently, theThe U. S. House of Representatives has been become critical of the Chinese biopharmaceutical industry with a focus on their alleged ties to the Chinese Communist Party and handling of Americans’ data. Proposed action by the House of Representatives includesincluded legislation that could restrict the ability of U.S. biopharmaceutical companies to collaborate with certain Chinese entities without losing the ability to contract with the U.S. government. We currentlyhave use Genscriptutilized ProBio in China tofor manufacturemanufacturing of the “CAL1” oncolytic vaccinia virus strain. Although GenscriptWhile ProBio hasis not been currently identified as a “biotechnology company of concern” as set forth in the proposed legislation, in the event that Genscript ProBio is defined as such, or their activities are otherwise scrutinized by the U.S. government, this determination could adversely affect our ability to contract manufacture the CAL1 oncolytic vaccinia virus strain to be use with our allogeneic adipose-derived mesenchymal stem cells.

We may rely on third-party contract manufacturers to manufacture our clinical trial product supplies and for commercial scale manufacturing. There can be no assurance that our clinical development will not be limited, interrupted, or of satisfactory quality or continue to be available at acceptable prices. In particular, any replacement of our contract manufacturer could require significant effort and expertise because there may be a limited number of qualified replacements. Any delays in obtaining adequate supplies of our product candidates that meet the necessary quality standards, including delays caused by the COVID-19 pandemic,standards may delay our development or commercialization.

Since inception, our operations have focused on organizing and staffing our company, business planning, raising capital, acquiring and developing our technology, establishing our intellectual property portfolio, identifying potential product candidates and undertaking preclinical studies and manufacturing. We do not have any products approved for sale and have not generated any revenue from product sales. We have funded our operations primarily through private sales of common stock, convertible preferred stock, contingentlywarrants, convertible and convertible promissory notes, term loans, lines of credit,debt, and Simplethe Agreementsissuance of forpublicly Futuretraded Equity (“SAFE”).securities. These investments have included and have been made by various related parties, including our largestformer investorchief executive officer and Chiefformer Executive Officer and Chairmanchairman of the Board of Directors.

Changes in economic conditions, including rising interest rates, public health issues, lower consumer confidence, volatile equity capital marketsmarkets, andtariffs, ongoing supply chain disruptionsdisruptions, and the impacts of geopolitical conflicts, may also affect our business.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliancesalliances, and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our inability to raise capital or enter into such agreements as, and when needed, could have a material adverse effect on our business, results of operations and financial condition.

Based on our operating plan, we believe we do not have sufficient cash on hand to support current operations for at least one year from the date of issuance of our consolidated financial statements as of,of and for the year ended December 31, 2024.2025. We have concluded that this circumstance raises substantial doubt about our ability to continue as a going concern. See Note 1 to our annualaudited consolidated financial statements. In addition, we will be required to raise additional capital through the issuance of our equity securities to support our operations which will have an ownership and economic dilutive effect to our current shareholders who purchased their shares of common stock at prices above our current trading price, and such capital raising may adversely affect the price of our common stock. Further, the sale of or the perception of a sale of a substantial number of our common stock by certain selling securityholders pursuant to another registration statement filed with the SEC will adversely affect the price of our common stock due to our limited trading volume andvolume, adversely affect the share price that we may obtain in future financingsfinancings, and may adversely affect our ability to conduct and complete future financings.

For additional discussion on our liquidity and the Closing of the FLAG Merger,liquidity, see the section below and further disclosures in the section titled “Liquidity and Capital Resources” included herein.

We track external research and development costs on a program-by-program basis beginning, with respect to each program, upon our internal internal nomination of a candidate in that program for further preclinical and clinical development. External costs include fees paid to consultants, contractors and vendors, including contract development and manufacturing organizations (“CMOsCDMOs”), and clinical research organizations (“CROs”), in connection with our preclinical, clinical and manufacturing activities and license milestone payments related to candidate development.

General and administrative expenses include salaries and other compensation-related costs, including stock-based compensation, for personnel in executive, finance and accounting, business development, operationsoperations, and administrative roles. Other significant costs include professional service and consulting fees including legal fees relating to intellectual property and corporate matters, accounting fees, recruiting costs and costs for consultants utilized to supplement our personnel, insurance costs, travel costs, facility and office-related costs not included in research and development expenses and depreciation and amortization.

Other Income or Expenses,(Expenses), Net

Other income or expenses,(expenses), net, primarily includes the changes in fair value of debt instruments, warrants,warrants and derivatives. The changes in the fair value of these instruments are recorded in change in fair value of debt, other liabilities,liabilities and derivatives, and change in fair value of debt, other liabilities, and derivatives – related party, included as a component of other income or expenses,(expense), net, in the consolidated statements of operations.

Interest expense primarily consists of amortization of discounts on convertible and term notes, including from related parties, and other interest expense incurred from financing leases and other obligations.

Other income also includes grant income generated from a grant awarded to us by the California Institute for Regenerative Medicine (“CIRM”) in December 2022. Proceeds from the CIRM grant are recognized over the period necessary to match the related research and development expenses when it is probable that we have complied with the CIRM conditions and will receive the proceeds pursuant to the milestones defined in the grant as reimbursement of those expenditures. Any CIRM grant proceeds received in advance of having incurred the related research and development expenses are recorded in accrued expenses and other current liabilities and recognized as othergrant income onin our consolidated statements of operations when the related research and developments expenses are incurred.

Income TaxesTax Provision

Since inception, we have incurred net operating losses primarily for U.S. federal and state income tax purposes and have not reflected any benefit of such net operating loss carryforwards for any periods presented in this Form 10-K. The income tax provision in the periods periods presented is entirely attributable to amounts recorded from StemVacStemVac, GmbH operations, our wholly-owned German subsidiary that provides research and development services to us under a cost-plus development agreement.

Research and development expenses for the year ended December 31, 2024,2025, and 20232024 were $8.9$9.7 million and $13.0$8.9 million, respectively. The $4.1$0.8 million decreaseincrease was primarily attributable to decreaseincreases in consulting costs of $0.5 million, rent expenses of $0.3 million, drug manufacturing and preclinical studiesexpenses of $3.4$0.2 million, and office expenses of $0.2 million, partially offset by decrease in salaries and benefits of $0.3 million, lab supplies of $0.2 million, consulting costs of $0.1 million, and other expenses of $0.1$0.4 million.

General and administrative expenses for the year ended December 31, 20242025 and 20232024 were $12.9$10.5 million and $16.0$12.9 million, respectively. The $3.1$2.4 million decrease was primarily due to decreases in compensationinsurance costs of $3.0$0.7 million arising from lower share based compensation expenses, decrease in headcount and lower separation costs,million, legal and settlement expenses of $0.9$0.6 million, consultingsalaries and directors’ expenses benefits of $0.4$0.3 million, and otheraccounting expenses of $0.3 million, partially offset by increases in insurance costs of $0.9 million, marketing and advertising expenses of $0.3 million, and certain other public company expenses of $0.3$0.2 million, investor relations expenses of $0.2 million, and rent expenses of $0.1 million.

Other income (expense), net for the year ended December 31, 20242025 and 20232024 were $0.4 million and $0.2 million other expense,income respectively. Theand $0.2$0.4 million increaseother expense, respectively. The $0.6 million decrease in net expenses primarily relates to a decrease in grantinterest expense of $0.7 million, increase in other income fromof CIRM$0.2 million, primarily related to the gain on sale of $2.7our millioninvestment andin theNova Cell, partially offset by a net change in fair value of Forwardother Purchase Agreement Derivative Asset, Public Warrants,liabilities and Private Placement Warrantsderivatives of $0.8 million, partially offset by decreases in Series B Convertible Preferred Stock financing costs of $2.7 million, debt extinguishment losses of $0.5 million, and interest expense of $0.1$0.3 million.

Since inception, we have funded our operations primarily through private sales of common stock, convertible preferred stock, contingently convertible and convertiblewarrants, promissory notes, term loans,debt, linesand the issuance of credit,publicly andtraded SAFEs.securities. TheseCertain of these investments havewere also been made by and includedwith various related parties.

As of December 31, 2024,2025, we had a cash balance of $9.6$5.6 million and restricted cash of $0.2 million. Our debt and liability obligations as of December 31, 20242025 include $4.4$2.4 million in accounts payable and accrued expenses and other current liabilities, including related party amounts, $3.1$1.7 million in operating lease liabilities, $3.0$0.6 million in term notes payable, including related party amounts, $0.6 million in promissory notes, $0.6 million in related party other current liabilities, $0.2 million in bridge loan payable, $0.2$0.3 million in finance lease liabilities, and $0.1 million in warrant liabilities, including related party amounts. Subsequent to December 31, 2024, principal and interest of $2.8 million were paid.

March 2026 Confidentially Marketed Public Offering (CMPO)

During the three and six months ended MarchJune 31,30, 2026, there have been no material changes from the risk factors previously disclosed under the heading heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 27, 2026.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the period ended MarchJune 31,30, 2026 (this “Quarterly Report”). This information should also be read in conjunction with our audited consolidated financial statements and related notes included in our Form 10-K for the fiscal year ended December 31, 2025 (“Form 10-K”) filed with the Securities and Exchange Commission, or SEC. References to “Note” are to the notes included in our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report.

We are a publicly traded biotechnology company pioneering the development of targeted therapies with the potential to deliver genetic medicines to distal sites of disease. Our proprietary RedTail platform features an engineered enveloped oncolytic virus designed for systemic delivery and targeting of metastatic sites. This advanced enveloped technology is intended to shield the virus from immune clearance, allowing virotherapy to effectively reach tumor sites, induce tumor lysis, and deliver potent genetic medicine(s) to metastatic locations. We expect to file an investigational new drug (“IND”) application for a Phase I trial byenter the endclinic in the first quarter of 20262027 with CLD-401, the first compound from the RedTail platform, delivering IL-15 superagonist to the tumor microenvironment (“TME”).

CLD-401, the first lead derived from the RedTail platform. CLD-401 is enveloped and overexpressed CD55 on its outer membrane. It is tropic for tumor cells and, when replicating, expresses IL-15 superagonist at high concentrations in the tumor microenvironment. In animal models, CLD-401 can be given systemically and clear metastatic sites in syngeneic tumor mouse models with demonstrated enhanced biological efficacy. The combination of the RedTail virus with its genetic payload drives complete tumor eradication in the tumor models compared to the RedTail virus alone. We believe that RedTail, given its systemic administration and targeting to metastatic sites and its delivery of genetic medicines, represents a major advancement in the space of oncolytic virus in oncology. We are developing additional leads from the RedTail platform including compounds that simultaneously express a bispecific T-cell engagerCLD-501 (“TCE”anti-TROP2) and aCLD-502 T-cell(anti-EpCAM), activatorwhich co-express an in situ TCE and asan wellIL-15 as compounds for use outside of oncology.superagonist.

Since inception, we have incurred significant operating losses. Our net loss was $4.1$8.3 million for the six-month period ended MarchJune 31, 30, 2026. As of March 31,June 30, 2026, we had an accumulated deficit of $145.7$149.9 million. We expect to continue to incur significant and increasing expenses and operating losses for the foreseeable future, as we advance our current and future product candidates through preclinical and clinical development, manufacture drug product and drug supply, seek regulatory approval for our current and future product candidates, maintain and expand our intellectual property portfolio, hire additional research and development and business personnel and operate as a public company.

Based on our operating plan, we believe we do not have sufficient cash on hand to support current operations for at least one year from the date of issuance of our unaudited condensed consolidated financial statements as of and for the three and six months ended MarchJune 31,30, 2026. We We have concluded that this circumstance raises substantial doubt about our ability to continue as a going concern. See Note 1 to our unaudited unaudited condensed consolidated financial statements. In addition, we will be required to raise additional capital through the issuance of our equity securities to support our operations which will have an ownership and economic dilutive effect to our current shareholders who who purchased their shares of common stock at prices above our current trading price, and such capital raising may adversely affect the price price of our common stock. Further, the sale of or the perception of a sale of a substantial number of our common stock by certain selling securityholders pursuant to another registration statement filed with the SEC will adversely affect the price of our common stock due to our limited trading volume, adversely affect the share price that we may obtain in future financings, and may adversely affect our ability to conduct and complete future financings.

On May 6, 2026, we issued a warrant (“Warrant”) to an accredited investor to purchase up to 17,391,3041,086,957 unvested shares of our common stock (“Common Stock”) with an exercise price of $0.23$3.68 in a private placement transaction. The Warrant is exercisable beginning on the date that is six months from the issue date, and is subject to certain vesting conditions as described further. The holder of the Warrant may from time to time prior to July 8, 2026, agree to acquire, and we may agree to sell to such holder, up to an aggregate of $4$4.0 million of Common Stock in issuances registered under the Securities Act of 1933, as amended (the “Securities Act”).Act. The Warrant will vest in proportion to issuances described in the preceding sentence that are consummated. Neither the holder of the Warrant nor we have any any obligation to agree to or consummate any such issuances.

We track external research and development costs on a program-by-program basis beginning, with respect to each program, upon our internal nomination of a candidate in that program for further preclinical and clinical development. External costs include fees paid to consultants, contractors and vendors, including contract development and manufacturing organizations (“CDMOs”), and clinical research organizations (“CROs”), in connection with our preclinical, clinical and manufacturing activities and license milestone payments related to candidate development.

General and administrative expenses include salaries and other compensation-related costs, including stock-based compensation, for personnel in executive, finance and accounting, operations, and administrative roles. Other significant costs include professional service and consulting fees including legal fees relating to intellectual property and corporate matters, accounting fees, and costs for consultants consultants utilized to supplement our personnel, insurance costs, travel costs, facility and office-related costs not included in research and development expenses and depreciation and amortization. We anticipate these expenses continuing and we also anticipate continued expenses associated with being a public company, including costs for audit, legal, regulatory and tax-related services related to compliance with the rules and regulations of the SEC, and listing standards applicable to companies listed on a national securities exchange, director and officer insurance premiums, and investor relations costs.

Other Income,Income (Expense), Net

Other income,income (expense), net, primarily includes interest income, interest expense, and the changes in fair value of warrants and derivatives. The The changes in the fair value of these instruments are recorded in change in fair value of other liabilities and derivatives, and change in fair value of other liabilities and derivatives – related party, included as a component of other income,income (expense), net, in the the unaudited condensed consolidated statements of operations.

Other income,income (expense), net, for 2025, also includes grant income generated from a grant awarded to us by the California Institute for Regenerative Medicine (“CIRM”) in December 2022. Proceeds from the CIRM grant are recognized over the period necessary to match the related research and development expenses when it is probable that we have complied with the CIRM conditions and will receive the proceeds pursuant to the milestones defined in the grant as reimbursement of those expenditures. Any CIRM grant proceeds received in advance of having incurred the related research and development expenses are recorded in accrued expenses and other current liabilities and recognized as grant income on our unaudited condensed consolidated statements of operations when the related research and developments expenses are incurred.

Comparison of Three Months Ended MarchJune 31,30, 2026 and 2025

The following table summarizes our results of operations for the three months ended MarchJune 31,30, 2026 and 2025 (in thousands):

Research and development expenses were substantially flat for the three months ended MarchJune 31,30, 2026 and 2025 wereat $2.6 millionmillion. andDuring $2.4the million,three months respectively.ended The $0.2June million30, increase2026, waswe primarily attributable torecognized an increase in drug manufacturing and preclinical expenses of $0.3$0.6 million, offset by a decrease in rent expenses of $0.1$0.3 million, and salaries and benefits of $0.1$0.2 million, partially offset by decrease inand regulatory consulting costs of $0.1 million when $0.3compared million.to the same period in 2025.

General and administrative expenses for the three months ended MarchJune 31,30, 2026 and 2025 were $1.6 million and $2.6$3.1 million, respectively. The $1.0$1.5 million decrease during the three months ended June 30, 2026 was primarily due to a decrease in salaries and benefits of $0.6$1.1 million due to reduced headcount, legal expenses of $0.2 million, accounting expenses of $0.2$0.1 million, and consulting costs of $0.1 million million,when andcompared rentto expensesthe ofthree $0.1months million.ended June 30, 2025.

Other Income,Income (Expense), Net

Other income,expense, net for the three months ended MarchJune 31,30, 2026 and 2025 were $0.1 million$5,000 and $3,000,$0.1 million, respectively. The $0.1 million increasedecrease during the three months ended June 30, 2026 was primarily due to an increase in interest income and a decrease of interest expense due to lower principal amounts owed on our debt.debt when compared to the three months ended June 30, 2025.

During the threesix months ended MarchJune 31,30, 2026, we undertookreceived certain financing and financing-related transactions. Approximatelyapproximately $5.1 million in in net proceeds were received from the March 2026 confidentially marketed public offering.offering and $2.2 million in net proceeds from the At the Market Offering.

On October 10, 2022, we entered into an Office Lease Agreement (the “San Diego Lease”) that serves as our principal executive executive and administrative offices and laboratory facility. To secure and execute the San Diego Lease, Mr. Allan J. Camaisa, former Chief Executive Officer, provided a personal Guaranty of Lease of up to $0.9 million (the “Guaranty”) to the lessor for our future performance under the San Diego Lease agreement. As consideration for the Guaranty, we agreed to pay Mr. Camaisa 10% of the Guaranty amount for the first year of the San Diego Lease, and 5% per annum of the Guaranty amount thereafter through the life of the lease, with all amounts accrued and payable at the termination of the San Diego Lease or release of Mr. Camaisa from the Guaranty by the lessor, whichever occurs first. The amount due was partially settled in April 2025. The San Diego Lease hashad an initial term of 4 years.

We further entered into separate license agreements with Northwestern University and City of Hope and the University of Chicago, wherein we may be liable to make certain contingent payments, under certain conditions that are in our control, pursuant to the terms and conditions conditions of the license agreements. As of MarchJune 31,30, 2026, we do not believe it probable that we will incur these payments.

Cash Flow Summary for the threesix months ended MarchJune 31,30, 2026 and 2025